EXCELSOFT

Excelsoft Technologies reported a mixed Q4 FY26, with revenue from operations growing 16% YoY to ₹812 million. However, EBITDA declined 13% YoY to ₹246 million, leading to a significant margin compression from 40.5% to 30.3%. For the full year FY26, revenue from operations was ₹2,725 million (an 18.24% decline from FY25's ₹3,333 million, despite management stating 17% growth), while PAT grew 25% YoY to ₹434 million, primarily due to tax reductions. PAT margins for FY26 stood at 16% compared to 10.4% in FY25.

The company secured a 'transformational engagement' with a leading UK examination body (AQA), which has already gone live and is expected to contribute significantly to revenue over the next three to six years. This win, alongside partnerships with TQUK, VTCT, and CQI, reinforces Excelsoft's position in the UK vocational testing ecosystem. Geographically, North America remained the largest market, contributing 65% of FY26 revenue, followed by Europe and the UK at 23%. The company also added 14 new clients during the year.

Excelsoft has made deliberate investments in building full-stack AI capabilities, including a dedicated team of 45 for AI R&D, equipped with state-of-the-art infrastructure. These efforts have resulted in 38 AI-driven concepts, 16 prototypes, 9 customer pilots, and 4 commercially deployed AI products. A key launch was 'Saras Assessments in a Box,' a compact appliance for secure digital testing, particularly relevant for underserved markets. The company capitalized ₹12.2 crores in intangible assets last fiscal year, with a cumulative book value of ₹100 crores, amortized at ₹18 crores annually.

To address client demand for same-time-zone support, Excelsoft established a nearshore service capability in the US by hiring a team of 30 professionals, incurring an additional expense of ₹8.5 crores in Q4 FY26, treated as consultant costs. This investment led to a 13% decline in Q4 EBITDA and a 10.2 percentage point compression in EBITDA margins. Management expects this to be a one-off^📎 impact and anticipates margins to return to the 30-31% range in the future, with the new team already generating revenue, visible in April with ₹23 crores compared to ₹15 crores last year.

Mr. Doreswamy Palaniswamy joined as the new Chief Executive Officer, bringing extensive experience in finance, operations, and M&A, including 14 acquisitions in his career. His appointment is expected to drive the next phase of growth, with a focus on strategic and inorganic opportunities. The company's acquisition strategy is 'intact and in progress,' with Mr. Palaniswamy now fully involved in re-evaluating previous due diligence efforts to accelerate access to new customers, capabilities, and markets.

For FY27, management guided for an overall revenue growth of 20-25% and expects EBITDA margins to normalize to the 30-31% range. The order book, including confirmed and expected deals for FY27, stands at 'just over INR300 crores,' with ₹175 crores specifically for technology services. The company aims to grow through organic means, including leveraging existing client relationships, new AI-enabled products, and an expanded sales team, alongside inorganic opportunities.