eClerx Services Limited — Q3 FY26 earnings call

Call held 29 Jan 2026

Management summary

eClerx delivered a strong Q3 FY26 with robust revenue growth and healthy margins, maintaining its trajectory toward top-quartile industry growth. Management highlighted successful client diversification and the early-stage rollout of 'Agentic AI' solutions to drive productivity. While cautioning about potential volatility and a 'softer' Q4, the company remains confident in its medium-term outlook and maintained its 24-28% EBITDA margin guidance.

Highlights

  • Operating revenue reached $121.7 million, a sequential growth of 5.4% and 20% YoY in constant currency

  • EBITDA for the quarter stood at ₹3,075 million with a margin of 27.9%, despite a 90 bps sequential margin decline

  • Profit After Tax (PAT) was ₹1,920 million, representing a 17.5% margin and nearly 5% sequential growth

  • Deal wins (ACV) for Q3 were healthy at $45 million, with 9-month ACV already showing improvement over prior years

  • Top 10 client concentration reduced to 60%, down from 62-64% in previous quarters, indicating successful diversification

  • Board approved a 1:1 bonus issue and completed a buyback of 625,000 shares in January

  • 9M FY26 USD operating revenue grew 18.4% YoY to $346.5 million, while PAT grew 33% YoY to ₹5,168 million

Key financials

  1. Operating Revenue 10,703 Mn +22%YoY
  2. EBITDA Margin 27.9% +1.9%YoY
  3. PAT 1,920 Mn +33%YoY
  4. Deal Wins (ACV) $45 Mn
  5. DSO 78 days
  6. EBITDA Conversion 82%

What they filed

Q1 FY27: revenue up 23.2%, net profit up 15.5% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue832 854 898 935 1,005 +21%1,070 +25%1,107 +23%1,152 +23%
EBITDA216 207 219 224 271 +25%276 +33%283 +29%265 +18%
Net profit140 137 153 142 183 +31%192 +40%190 +24%164 +15%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Analytics and Automation
    10% Growth
  • Financial Services
    0 positive Demand Outlook

Guidance & targets

Margin

  • EBITDA Margin Band Margin · Medium Term · High confidence 24% to 28%

    From 24% to 28% today

    On the margin, like I said, we'll continue to invest in terms of on tech, AI, on sales. And at this stage, I think our view is that 24% to 28% is what we would like to maintain as the overall guidance for the margin

    — Kapil Jain, Managing Director and Group CEO

Revenue

  • Growth vs Peers Revenue · FY26 · High confidence Top Quartile
    And we'll continue to deliver on those in terms of growth in the top quartile of the peer segment that we operate.

    — Kapil Jain, Managing Director and Group CEO

  • Q4 Growth Outlook Revenue · Q4 FY26 · Medium confidence Softer than first 3 quarters
    While near-term volatility is inherent in our business and may result in Q4 being softer than the first 3 quarters, underlying demand remains healthy.

    — Kapil Jain, Managing Director and Group CEO

Other

  • Annual Deal ACV Other · FY26 · High confidence Higher than FY25
    I had said in Q2 that overall ACV of the deal closures that we will do in FY25 - 26 will be higher than what we did last year, and I continue to maintain I'm confident of delivering on the same.

    — Kapil Jain, Managing Director and Group CEO

Risks & concerns

  • Q4 Volatility and Seasonality

    medium

    Management explicitly warned that Q4 might be softer than the first three quarters due to inherent business volatility.

    Management acknowledged

  • Macroeconomic and Geopolitical Uncertainty

    medium

    Kapil Jain used the term 'cautiously optimistic' specifically due to the global geopolitical and macroeconomic environment.

    Management acknowledged

  • DSO Increase

    low

    DSO moved up by 2 days to 78, though not highlighted as a major concern.

    Management acknowledged

Areas of evasion (1)

  • Specific revenue split of the Analytics business across industry segments was not provided in detail.

Q&A highlights

2 direct
AI Productivity Targets Direct
Typically, clients have this gating criteria between 15% upwards. So, all the projects that we've seen make it to production to have this kind of productivity improvement metric.

Confirms that AI-driven productivity gains are a prerequisite for moving pilots to production, validating the 20% target mentioned in earlier calls.

Asked by Dipesh Mehta, Emkay Global

Sales and Marketing Investment Partial
We have added a few people, but we have also seen repurpose some of the people... we are not shying away from hiring good sales guys.

Addresses concerns about flat sales headcount despite aggressive growth targets; management claims efficiency in sales resource allocation.

Asked by Girish Pai, BOB Capital Markets

Productivity Pass-backs to Top Clients Direct
Productivity is if you are purely doing FTE and 'bum-on-a-seat' model. The value proposition comes in from the Analytics insights... we have not seen it because the clients are seeing the overall value proposition.

Highlights eClerx's shift away from commoditized FTE-based pricing toward value-based pricing, protecting margins from annual productivity discount requests.

Asked by Girish Pai, BOB Capital Markets

2 min read 5 chapters

Detailed narrative

Robust Revenue and Margin Performance

eClerx reported Q3 FY26 operating revenue of ₹10,703 million, up 6.5% sequentially. EBITDA margins remained strong at 27.9%, although they saw a 90 bps sequential decline primarily due to higher variable payouts (75 bps) and increased travel/marketing spend (25 bps). This was partially offset by a 30 bps improvement in delivery costs driven by higher utilization, which rose by 1.4% during the quarter.

Client Diversification and Concentration

A significant highlight of the quarter was the reduction in top 10 client concentration to 60%, down from 62-64% in prior quarters. Management noted that growth in non-top 10 clients outpaced the top 10, driven by successful cross-selling and upselling strategies. The company is seeing steady increases in the number of $1M+, $3M+, and $5M+ customers, which they attribute to a concerted strategy to grow clients in every segment.

AI and Automation Strategy

The company is aggressively pivoting toward 'Agentic AI' for self-healing services and trade settlement exception management. Management reported that AI pilots typically require a 15% productivity improvement 'gating criteria' before moving to production. While it is too early to quantify the long-term revenue impact, eClerx has already won deals for Agentic AI deployments and is running pilots across its client base to drive efficiency and cost takeouts.

Segmental Growth Drivers

Growth was broad-based across industry segments, with strong performance in Hi-tech and Manufacturing & Distribution (M&D). The Financial Services segment showed modest growth but remains a key area for AI-driven operations and change projects. The 'Emerging' business segment also grew strongly, particularly in F&O and order management services, with expansion into new delivery centers like Cairo, Egypt, resonating well with clients.

Capital Allocation and Shareholder Returns

eClerx continues to demonstrate a shareholder-friendly capital allocation policy. The company completed a buyback in January, extinguishing 625,000 shares, and the Board has approved a 1:1 bonus issue. Despite these payouts, the company maintains a healthy cash position with net operating cash flow of ₹2,536 million for the quarter and an 82% EBITDA-to-cash conversion rate.

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