Excelsoft Technologies Limited — Q2 FY26 earnings call

Call held 15 Dec 2025

Management summary

Excelsoft reported robust Q2 FY26 performance with 20% YoY revenue growth and 26% YoY EBITDA growth, driven by strong product traction and strategic partnerships. H1 FY26 PAT saw significant growth, though EBITDA margins faced pressure from increased other expenses and exceptional items. The company is actively deploying IPO proceeds for infrastructure and M&A, while navigating seasonal business cycles and aiming for a 35% steady-state EBITDA margin.

Highlights

  • Q2 FY26 Revenue from operations grew 20% YoY to INR 646 million.

  • Q2 FY26 EBITDA grew 26% YoY to INR 175 million, with margins expanding 1.2% to 27.1%.

  • H1 FY26 PAT grew 254% YoY to INR 164.9 million (adjusted 21% growth after deferred tax impact).

  • Assessment and Proctoring Solutions revenue increased 44% in H1 FY26.

  • Strong global partnerships with AQA and VTCT Skills validate technological capabilities and market position.

Concerns

  • H1 FY26 EBITDA margins declined to 22.9% from 24% YoY, primarily due to a 29% increase in other expenses.

  • Exceptional items in Q2 FY26 included INR 25.7 million for legal/professional fees and income tax refund write-off.

  • Working capital experienced a stretch in H1 FY26, with net cash from operating activities decreasing from INR 24 crores to INR 6 crores YoY.

Key financials

2 periods

Q2 FY26

  • Revenue
    646 Mn
    YoY +20%
  • EBITDA
    175 Mn
    YoY +26%
  • EBITDA Margin
    27.1%
  • PAT
    106 Mn
    YoY +18.6%

H1 FY26

  • Revenue
    1,203 Mn
    YoY +10.9%
  • EBITDA
    275.5 Mn
    YoY +5.5%
  • EBITDA Margin
    22.9%
  • PAT
    164.9 Mn
    YoY +254%

What they filed

Q1 FY27: revenue up 44.0%, net profit up 57.2% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue54 55 70 56 65 +20%71 +29%81 +16%80 +44%
EBITDA14 18 28 10 18 +26%20 +9%25 −13%13 +30%
Net profit9 10 20 6 11 +19%10 +8%17 −19%9 +57%
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

  • Q2 FY26 Revenue Contribution
    53.6% Educational Technology Services28.5% Assessment and Proctoring Solutions12.5% Learning and Student Success Solutions5.4% Learning Design and Content Solutions
  • H1 FY26 Revenue Contribution
    52.7% Education Technology Services29.6% Assessment Solutions11.4% Learning and Student Success Solutions6.3% Learning Design and Content
  • H1 FY26 Assessment and Proctoring Solutions Revenue Growth
    356 Mn Revenue44% Growth

Order book

medium confidence

Composition

Mix 2 geographies
  • North America 63%
  • Europe and UK 22.5%

Share of order book by geography· partial disclosure (85.5% of the book)

Pipeline

deal pipeline tcv

Actively pursuing potential acquisition targets, with INR 245 crores available from deposits.

Management highlighted strong progress in Q2 and H1 FY26, with healthy traction across product lines and significant growth in all four verticals. Strategic partnerships were secured, and the company is actively pursuing M&A opportunities.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹1,015 Mn partly from IPO proceeds and internal accruals
    • Land and construction of a new development center in Mysore ₹620 Mn
    • Upgrading existing Mysore facility (electrical, digital infrastructure, hardware, software, cloud systems, network enhancement) ₹395 Mn
    The utilization of IPO proceeds is progressing as planned and we have earmarked INR 62 crores of the IPO proceeds, plus part of it coming from internal accrual for purchase of land and construction of a new development center in Mysore. A further INR 39.5 crores is being invested towards upgrading our existing Mysore facility, including modernizing electrical and all digital infrastructure, hardware, software, cloud systems, and network enhancement, which is very critical for the business we are in.
  • Debt Net ₹252 Mn · 0.1× EBITDA
    Net worth stood at INR 3,877 million, while net debt stood at INR 252 million, resulting in a net debt-to-equity ratio of 0.07.
  • Liquidity Cash ₹2,449 Mn Bank balances are kept as fixed deposits.
    Please note that the Company has INR 2,449 million, that is about INR 245 crore of bank balances, other than the cash and cash equivalents, which is kept as fixed deposits in the bank.

Guidance & targets

Profitability

  • EBITDA Margin Profitability · steady state · Medium confidence 35%
    So, from the last year and taking out all the exceptional items in the previous years, we could safely say that 31%, which was the last year EBITDA is a safe margin to keep, although we are aiming at getting to a steady state of 35%.

    — Prashanth H. M.

Capex

  • New Physical Infrastructure Construction Capex · next 2 years · High confidence over two years
    While the physical infrastructure would be built over a period of two years, even that's what we have mentioned in the prospectus as well, that would incrementally create capacity for us, for our employees.

    — Prashanth H. M.

  • Payback Period for New Facility Capex · within 4 years · High confidence about four years
    We have looked at the physical infrastructure created to provide a return on investment, the new infrastructure that I am talking about, to the tune of about four years, in about four years, you would see that the return on investment would happen for a payback period of about four years.

    — Prashanth H. M.

M&A

  • M&A Pipeline Update M&A · next call/quarter · Medium confidence some indication
    Sir, I don't know. Maybe we will probably be able to provide some indication in the next call, sir. Maybe next quarter's call.

    — Prashanth H. M.

What to watch in Q3 FY26

M&A Pipeline Update

next call/quarter
Current Actively pursuing, INR 245 crores available from deposits
Target Some indication on M&A pipeline

Why it matters

M&A is a key growth strategy, and an update on potential targets or progress will signal future inorganic growth.

Sir, I don't know. Maybe we will probably be able to provide some indication in the next call, sir. Maybe next quarter's call.

Risks & concerns

  • Operational Risk in High-Stakes Assessments

    high

    Deployments for high-stakes assessments require zero defects, as even one failure is considered a full failure, emphasizing the need for reliability and security.

    Our approach to Al is rooted in responsibility and trust as we operate in domains where fairness and security are very critical. In most cases, our deployments have to be zero defects. Even one failure is a full failure.

    Management acknowledged

  • M&A Integration Risks

    medium

    Management is cautious about potential integration risks when pursuing acquisitions, prioritizing synergy and ensuring smooth transitions.

    And very, very important is that we want to look at the synergy between the two organizations and we are quite wary about the potential integration risks. We want to make sure that we have done all of those correctly.

    Management acknowledged

  • Working Capital Stretch

    medium

    Analyst noted a decrease in net cash from operating activities and an increase in trade receivables, indicating a working capital stretch, which management attributed to seasonality.

    So basically my question was operating profit before working capital on year-on-year basis has been same like INR 29.8 crores versus INR 29.5 crores previous year. But when we come to the net cash from operating activities, that has decreased from INR 24 crores previous year to INR 6 crores this year. And that is mainly because there has been increase in trade receivables, as well as increase in other financial assets and other assets. So I just wanted to understand this discrepancy. Why was the working capital basically stretched in the working capital for the first half of this year?

    Analyst downplayed

Q&A highlights

6 direct
Business Cyclicality and Seasonality Direct
Our H2 is typically higher than our H1. Typically, historically, if you look at the 4-5 years also, it is in the range of 40-60, 40% being the first half, 40%-45% in the first half, and 55%-60% in the second half from the revenue point of view. So, since revenue is lopsided in the second half, and at the same time, on the expenses side, it is fairly even. All the four quarters are even from the expenses point of view. Therefore, the margins are again significantly higher in the second quarter.

Clarified the company's revenue and margin seasonality, attributing it to customer budget cycles and large annual license arrangements in H2.

Asked by Raman KV

Growth Strategy for Learning & Student Success and Learning Design & Content Divisions Partial
On the Learnings Design and Content Solutions, what we do is a certain kind of work, let's say, building simulations, or it could be something which is content aligned to our other product segments, like for instance, assessment content. This kind of work is what we do, which go hand in hand with assessment and learning... our focus has been traditionally in the last 25 years, our focus has always been technology, building platforms and licensing platforms. Developing content has only been a supporting activity for us, because that makes our offerings complete, as well as we learn.

Addressed concerns about slower growth in these segments, explaining their strategic role as supporting activities for core technology platforms rather than primary growth drivers, though traction is increasing.

Asked by Raman KV

AI-Levate Monetization and Contribution Direct
So, these models are licensed separately as well as embedded into the existing platforms. That means you use AI-Levate item generation module to generate the questions and those questions become part of the larger question bank from where the tests are constructed... And in terms of the licensing model, there are per test models for AI-based module. For certain apps, for certain micro apps, there is an annual license as well, depending on the use case. Per user sometimes, yes, it will be per user as well, depends on the use case.

Provided details on how AI-Levate, a suite of micro-apps, is monetized through separate licensing or embedding into existing platforms, with various pricing models.

Asked by Srinivasu K.

EBITDA Margin Stability and Target Direct
So, from the last year and taking out all the exceptional items in the previous years, we could safely say that 31%, which was the last year EBITDA is a safe margin to keep, although we are aiming at getting to a steady state of 35%.

Management provided a clear target for EBITDA margin, indicating a path to 35% from the current 31% (excluding exceptional items).

Asked by Agam Shah

Investment Utilization Timeline and M&A Strategy Direct
We have looked at the physical infrastructure created to provide a return on investment, the new infrastructure that I am talking about, to the tune of about four years, in about four years, you would see that the return on investment would happen for a payback period of about four years... We have been actively pursuing this process of identifying and conducting due diligence and talking to potential acquisition targets. And we would be utilizing that money for acquisition in the future.

Clarified the timeline for physical infrastructure investments and the strategic criteria for M&A, including PAT positivity, synergy, and low integration risks.

Asked by Agam Shah

Trade Receivables and Working Capital Stretch Direct
See, if you check that, your balances of unbilled revenue of 31st March 2025 and 31st September 2025, there is INR 167 million in March 2025. And September 2025, it was INR 367 million... The last year, what we are comparing, cash flow is, 31st March 2024 versus September. So that is the period is no compared and calculated the cash flows. See, if you see this, what is this unbilled revenue in March '24 was INR 18 crore, billed revenue receivables is INR 29 crore. So if it's the same thing, if you take it in September, that is the unbilled revenue is INR 24 crore and billed revenue is 14 crore. So you put together, there's INR 38 crore and INR 47 crore. The difference is INR 9 crore is reductions because of this. See, when you see this, as explained by Prashanth, our business if you compare cash flow statement and all those things, it's very seasonal. The sales revenue is cyclical. Our expenses is constant, okay, there's no evenly it will go. So we cannot be able to compare, there's no in between years. So our cash flow will be no perfect, no receivables will be perfect when you compare to year-on-year. So these differences will go away 31st March number.

Addressed analyst's concern about increased trade receivables and stretched working capital, explaining it as a seasonal effect that will normalize by year-end.

Asked by Raman KV

Roadmap for AI-Levate and AI Strategy Direct
So our roadmap is have the latest LLMs available, install those LLMs on our GPUs for a given micro app or a problem we are solving. We use a particular sequence of relevant LLMs, not all the LLMs. We know which LLM is better for what. Based on that, the problem will use a chain of LLMs from what is available to us... we also anticipate there could be some rapid developments on the Al front and hence, we have a team of 45 people dedicated only to tracking what's happening in the world on the LLMs and in the AI space itself.

Provided a detailed strategic vision for AI-Levate, focusing on leveraging diverse LLMs, in-house infrastructure, and a dedicated R&D team to stay ahead in AI developments, including future quantum computing integration.

Asked by Myra Mittal

3 min read 7 chapters

Detailed narrative

Q2 & H1 FY26 Financial Performance Overview

Excelsoft reported a strong Q2 FY26 with revenue from operations growing 20% YoY to INR 646 million and EBITDA increasing 26% YoY to INR 175 million, resulting in a 1.2% margin expansion to 27.1%. For H1 FY26, revenue grew 10.9% YoY to INR 1,203 million, and PAT surged 254% YoY to INR 164.9 million (or 21% adjusted for deferred tax impact). However, H1 FY26 EBITDA margins saw a slight decline to 22.9% from 24% in H1 FY25, primarily due to a 29% increase in other expenses, including INR 25.7 million in exceptional legal and professional fees.

Strategic Partnerships and Product Traction

The company highlighted significant progress through strategic partnerships, including a joint AI task force with AQA for high-stakes assessments and being selected by VTCT Skills as their digital assessment partner for approximately 300,000 annual assessments. All four key verticals—Assessment & Proctoring, Learning & Student Success, Education Technology Services, and Learning Design & Content Solutions—demonstrated significant growth. The Assessment and Proctoring Solutions vertical, in particular, saw a 44% revenue increase in H1 FY26, underscoring the success of AI-enabled platforms.

IPO Proceeds Utilization and Capital Expenditure

Following its successful IPO, which raised INR 500 crores, Excelsoft is actively deploying the proceeds. INR 62 crores are earmarked for land acquisition and construction of a new development center in Mysore, with an additional INR 39.5 crores for upgrading existing facilities. A further INR 9 crores are allocated for general corporate purposes. These investments are aimed at scaling delivery capacity, accelerating innovation, and enhancing readiness for global opportunities, with a payback period of approximately four years for the new facility.

AI-Levate Strategy and Roadmap

Excelsoft's AI strategy, branded 'AI-Levate,' focuses on developing micro-apps for various use cases in assessment and learning. The company leverages an in-house GPU farm and multiple tuned LLMs, with a dedicated 45-member R&D team tracking AI advancements. AI-Levate modules are monetized through separate licensing or embedding into existing platforms, with per-test, annual license, or per-user models. The roadmap includes continuously integrating the latest LLMs and anticipating future integration with quantum computing.

Business Cyclicality and Working Capital Dynamics

Management explained the business's seasonality, with H2 typically generating 55-60% of annual revenue and higher margins due to customer budget cycles and large annual license arrangements in Q2 and Q4. An analyst raised concerns about a working capital stretch in H1 FY26, evidenced by a decrease in net cash from operating activities and an increase in unbilled revenue. Management clarified that these are seasonal effects, with billing cut-offs and revenue recognition patterns leading to normalization by the fiscal year-end (March 31st).

Geographical Growth and India Strategy

North America remains the largest market, contributing 63% of Q2 revenue, with Europe and UK showing strong traction (22.5% in Q2). India and Asia (outside India) also contributed meaningfully, particularly in digital learning and services. Management noted promising growth in the Middle East and Southeast Asia, with new customer wins. The company also confirmed plans to implement an India-specific strategy in the near future.

M&A Outlook and Client Concentration

Excelsoft has INR 245 crores available from deposits for inorganic growth and acquisitions, actively pursuing potential targets. The criteria for M&A include 'feet-on-street' in key markets (US, UK), complementary strengths, PAT positivity, synergy, and low integration risks. The company maintains strong client relationships, with its top 5 customers accounting for 64% of Q2 revenue and top 20 customers for 83%, indicating a concentrated but stable client base.

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