Excelsoft Technologies Limited — Q3 FY26 earnings call

Call held 9 Feb 2026

Management summary

Excelsoft Technologies Limited reported robust Q3 FY26 performance with a 29.5% YoY revenue growth to ₹710 million, primarily driven by its education technology services segment. Despite a compression in EBITDA margin to 27.7% due to one-off M&A-related expenses, adjusted PAT grew 40% YoY. The company highlighted strategic market expansion, client optimization, and landmark partnerships, while maintaining a strong cash position for future growth and M&A activities.

Highlights

  • Revenue of ₹710 million, up 29.5% YoY in Q3 FY26

  • Education technology services segment grew 58% YoY in Q3 FY26

  • Adjusted PAT increased 40% YoY to ₹133 million in Q3 FY26

  • Secured landmark partnerships with AQA in the UK and Civil Services Commission of the Philippines

  • Strong net cash balance of ₹421 crores for strategic investments and M&A

Concerns

  • EBITDA margin compressed to 27.7% in Q3 FY26 from 32.8% in Q3 FY25

  • Other expenses increased 61% YoY in Q3 FY26, driven by higher vendor stock resources and M&A-related legal/professional fees

  • New labor code implementation impacted Q3 PAT by ₹40.7 million

Key financials

2 periods

Q3 FY26

  • Revenue
    710 Mn
    YoY +29.5%
  • EBITDA
    197 Mn
    YoY +9.2%
  • EBITDA Margin
    27.7%
  • PAT
    103 Mn
    YoY +7.7%
  • Adjusted PAT
    133 Mn
    YoY +40%

9M FY26

  • Revenue
    1,914 Mn
    YoY +17.1%
  • EBITDA
    472 Mn
    YoY +7%
  • EBITDA Margin
    24.7%
  • PAT
    268 Mn
    YoY +88%
  • Adjusted PAT
    298 Mn
    YoY +110%

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

  • Q3 FY26 Revenue Contribution
    65.7% Educational Technology Services21% Assessment and Proctoring Solutions9.6% Learning and Student Success Solutions3.6% Learning, Design and Content
  • 9M FY26 Revenue Contribution
    57.5% Educational Technology Services26.4% Assessment and Proctoring Solutions10.7% Learning and Student Success Solutions5.3% Learning, Design and Content
  • Q3 FY26 Geography Contribution
    72.2% North America18.3% Europe and UK
  • 9M FY26 Geography Contribution
    65.7% North America21.5% Europe and UK

Order book

low confidence

Pipeline

deal pipeline tcv

Robust deal pipeline growth

Management reported robust deal pipeline growth and order inflows, particularly in the last few months, but did not quantify the order book or inflow.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹150 Mn
    • Upgrading infrastructure and M&A ₹150 Mn
    • Land acquisition ₹30 Mn
    • Implementing AI and buying AI devices and tools
    Rs.180 crores new cash you have taken into the IPO, and out of that you had spent Rs.30 crores for the land and the rest of the Rs.150 crores is yet to be spent for upgrading your infrastructure and M&A, is my understanding right or is there any change over there?
  • Debt Debt disclosed
    • Repayment Withdrawn corporate guarantee ₹300 Mn
    • Repayment Released fixed deposit lien ₹165 Mn
    On a different note, we have successfully withdrawn the Rs.300 crores corporate guarantee and also released the Rs.165 crores fixed deposit lien that was marked earlier. These milestones reduce contingent liabilities and provide us with the financial flexibility to aggressively invest in innovation and growth through organic and inorganic means.
  • Liquidity Cash ₹421 Cr
    Ravi Subramaniam: Rs.421 crores.

What to watch in Q4 FY26

AQA Contract Signing

Q4 FY26 (Jan-Mar 2026)
Current Nearly finalized
Target Contract signed

Why it matters

Confirmation of a significant new partnership that will drive future revenue growth.

The contract is nearly finalized. So, it will be a contract signed this quarter and we will start seeing revenues starting next quarter and revenues will grow and build up over the next few years as the number of exams that are put through our system increase.

Risks & concerns

  • EBITDA Margin Compression due to One-off Expenses

    medium

    Q3 FY26 EBITDA margin was 27.7% vs 32.8% in Q3 FY25, primarily due to ₹2.9 crores in legal and professional fees for M&A due diligence.

    EBITDA margins were 27.7% compared to 32.8% in the prior year. The reduction in the margin is primarily attributed to a 61% increase in other expenses which rose from Rs.98 million to Rs.157 million, driven by higher vendor stock resources cost as well as legal and professional fees.

    Management acknowledged

  • Impact of New Labor Code

    low

    The new labor code implementation impacted Q3 PAT by ₹40.7 million due to increased gratuity and leave encashment policy.

    We have implemented the new labor code, the impact of which is to the tune of Rs.40.7 million on increased gratuity and leave encashment policy.

    Management acknowledged

  • AI-related Headwinds in IT Services

    low

    Management believes their niche business in assessment and testing is not subject to AI-related headwinds seen in broader IT services.

    Al has been an important feature as you would see that adoption of AI generally in the IT sector has been prevalent. In our case, Al adoption in the use of test and assessment technology has been primarily focused in the domain of assessments and testing. So, the kind of headwinds you see in IT services area due to AI, we do not see in our area because of the niche nature of our business. We are not seeing any headwinds.

    Management downplayed

Q&A highlights

7 direct, 1 evasive
Seasonality of Business Direct
It is not a linear quarter-on-quarter growth. It is typically heavier on the second half. If you look at the quarter wise, traditionally, last several years Q4 is the heaviest, that means it is upwards of 30%. That has been the trend. 30% of the total revenue for the year is what we clock in Q4 and that has been a trend for the last several years and this year could be no exception.

Clarifies the company's revenue recognition pattern, indicating Q4 is typically the strongest quarter.

Asked by Deepak Poddar

Quantification of Order Book and Inflow Evasive
I am not sure if we are allowed to, but if we are allowed, we will send you a note on all the new order wins.

Management declined to provide specific numbers for order book or inflow, indicating a lack of transparency on a key IT services metric.

Asked by Deepak Poddar

AQA Partnership Opportunity Size and Revenue Start Direct
Firstly, the AQA is a massive size, because globally they are one of the biggest as I said earlier biggest assessment and certification authority... it will be a contract signed this quarter and we will start seeing revenues starting next quarter and revenues will grow and build up over the next few years as the number of exams that are put through our system increase.

Provides insight into the significance and revenue timeline of a major new partnership.

Asked by Deepak Poddar

Margin Profile of AQA Deal Direct
Definitely better and not below, it is mostly licensed, it will be better than the company average.

Indicates that the new AQA contract is expected to be accretive to the company's overall margin profile.

Asked by Deepak Poddar

Impact of One-off Expenses on Q3 Margins Direct
the legal and professional fees that Mr. Ravi mentioned about which is particularly driven by legal and professional fees towards the acquisition opportunities that we were going after... This is one-off expense in the quarter which was to the tune of roughly almost Rs.2.9 crores. So, Rs.2.9 crores is what the expense towards this one-off item on legal and professional services. So that if you add that back into the EBITDA, the EBITDA margin would be 32%, which is in line with the previous period.

Quantifies the specific impact of one-off M&A-related expenses on Q3 EBITDA margins, clarifying the underlying operational profitability.

Asked by Praful Rai

Acquisition Timeline and Net Cash Balance Direct
We have an American company where we have completed due diligence and we are discussing valuations... There are a couple of other targets in the UK, where due diligence has started... Ravi Subramaniam: Rs.421 crores.

Provides an update on the company's M&A pipeline and confirms a strong cash position available for these strategic initiatives.

Asked by Praful Rai

AI Capabilities and Differentiation Direct
AI comes in very handy to make sure that repetition is not there, errors are not there in the exams that are delivered and the ability to analyze the outcomes of these tests is smart and high... We have delivered a 98.6% accuracy on the AI-based extraction of handwritten text... we use Al in the proctoring area where you have an individual student attending an exam sitting somewhere else and he is watched over by a set of AI tools helping an individual human proctor or human in which later sitting somewhere else, right?

Details the specific applications of AI in the company's products, highlighting competitive advantages in assessment and proctoring.

Asked by Pulavarthi Sai Kiran

Market Expansion Initiatives Direct
Our direct presence in those markets is primarily to provide the frontline sales efforts as well as proximity to the customers... We have been successful in adding a few people already in the US, in Middle East, Singapore, and we are many more adding into the sales force... we have hired consultants in each of these geographies. Consultants who have worked earlier with our clients but have retired or moved on to some other company and now have become independent consultants.

Explains the strategy and progress in expanding geographical reach through direct sales and strategic consultant partnerships.

Asked by Pulavarthi Sai Kiran

2 min read 6 chapters

Detailed narrative

Robust Q3 FY26 Performance Driven by Education Technology

Excelsoft reported a strong Q3 FY26 with revenue from operations growing 29.5% YoY to ₹710 million. This growth was significantly bolstered by the education technology services segment, which saw a 58% YoY increase. For the first nine months of FY26, revenue stood at ₹1,914 million, marking a 17.13% YoY growth. Adjusted PAT for Q3 FY26, after accounting for one-off items, reached ₹133 million, representing a 40% YoY increase.

Strategic Market Expansion and Client Optimization

The company is actively pursuing market expansion by scaling its geographical footprint and establishing sales teams in key regions like the US and UK. This strategy aims to acquire new customers and deepen international presence. Concurrently, Excelsoft focuses on client optimization through cross-selling products and services to existing customers, which has led to healthy order booking and higher-margin platform-led engagements. The top five customers contributed 72.2% of Q3 revenue, reflecting stable long-term relationships.

Landmark Partnerships and Deal Wins

Excelsoft secured significant partnerships, including one with the Civil Services Commission of the Philippines to power digital examinations starting in 2026, utilizing its SARAS eAssessment platform. Another major multi-year engagement was signed with VTCT Skills in the UK to deploy the next-generation SARAS eTesting platform for 300,000 vocational and technical examinations annually. These wins underscore the company's leadership in the assessment space.

Investment in AI-Native Product Development and Infrastructure

The company is heavily investing in building its own AI hardware infrastructure, including GPU farms and large language models, to develop AI-native testing and assessment solutions. This includes e-marking for handwritten text with 98.6% accuracy and AI-based proctoring. Excelsoft plans to spend ₹150 million over the next two years to upgrade its infrastructure, integrating AI devices and tools across its network to become a fully AI-enabled entity.

M&A Strategy and Strong Liquidity Position

Excelsoft is actively pursuing inorganic growth opportunities, with due diligence completed for an American company and valuation discussions underway. Due diligence has also commenced for other targets in the UK. The company maintains a strong net cash balance of ₹421 crores, providing significant financial flexibility for these strategic acquisitions and innovation. One-off legal and professional fees of ₹2.9 crores related to M&A due diligence impacted Q3 margins, though future M&A-related expenses are expected to be lower.

EBITDA Margin Dynamics and Q4 Outlook

Q3 FY26 EBITDA margin compressed to 27.7% from 32.8% in Q3 FY25, primarily due to a 61% increase in other expenses, including vendor stock resources and M&A-related fees. However, management clarified that if the one-off M&A expenses were excluded, the EBITDA margin would have been 32%. The company expects Q4 to be the heaviest quarter, contributing upwards of 30% of annual revenue, and anticipates Q4 EBITDA margins to remain strong, as one-off M&A expenses (retainership) have ceased.

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