Firstsour.Solu.

Firstsource Solutions reported a strong Q4 FY26, with revenue growing 19.5% YoY in INR to INR25.8 billion and 13.2% YoY in USD to $283 million. Constant currency growth for the quarter was 11.6% YoY and 3% QoQ. The EBIT margin expanded to 12.2%, up 100 basis points YoY and 30 basis points QoQ, marking the sixth consecutive quarter of margin expansion. For the full year FY26, revenue reached INR95.6 billion ($1,082 million), growing 19.7% YoY in INR and 13.6% in constant currency, with an EBIT margin of 11.7%.

The company is evolving into a 'global intelligence partner' and has introduced a new strategic positioning called 'Intelligence that operates'. This strategy aims to bridge the gap between AI capability and operating model reality by combining deep domain expertise with AI-enabled operations. Management believes this approach creates a compounding advantage, allowing them to underwrite outcomes and expand their addressable market beyond traditional BPO services. This shift is expected to drive better customer experience, faster decisioning, and lower cost to serve for clients.

Firstsource signed four large deals in Q4 FY26, contributing to a total of 17 large deals for the full year, each with an ACV exceeding $5 million. The company added 11 new logos in Q4, including six strategic logos, and a total of 47 new clients in FY26, with 24 being strategic clients. Notably, seven of the large deals in FY26 came from new logos, compared to five in FY25, indicating strong new client acquisition. The deal pipeline remains healthy, exceeding $1 billion and at its highest-ever level.

The Banking and Financial Services (BFS) vertical grew 9% YoY and 5% QoQ in constant currency, adding six new logos. Healthcare revenues increased 16% YoY and 10% QoQ in constant currency, with one new logo. However, the Communications, Media and Technology (CMT) vertical experienced a soft Q4, growing only 3% YoY but degrowing 4% QoQ in constant currency due to volatility. The Diverse Portfolio grew 23% YoY but degrew 8% QoQ in constant currency, with four new logos added.

North America delivered strong performance with 4% sequential growth and 14% YoY growth in constant currency terms, driven by broad-based momentum across core verticals. Europe grew 4% YoY and remained flat QoQ in constant currency, with the region's pipeline increasing by 60% over the last four quarters. The company is also incubating new growth opportunities in Canada and leveraging the TeleMedik acquisition for a delivery presence in Puerto Rico, a lower-cost US-compliant location for healthcare and non-healthcare clients.

Firstsource closed FY26 with a headcount of 36,205, a net increase of 1,554 employees over the last year. The company's strategy emphasizes value per employee, with revenue per employee increasing by 12% over the last two years. Attrition significantly improved to 29.7%, down almost 6 percentage points over the last eight quarters, reflecting rising workforce stability. Offshore and nearshore hiring accounted for close to 80% of gross additions in FY26.

The company's net debt stood at INR16.3 billion as of March 31, 2026, compared to INR13.2 billion a year prior, with the increase primarily attributed to acquisitions. Cash balance including investments was INR3.1 billion at the end of Q4 FY26, after a dividend payout of INR3.8 billion during the quarter. Firstsource maintained strong cash conversion, with OCF to EBITDA at 78% and free cash flow to PAT at 160% for the year. The ROCE for FY26 improved to 17.7% from 15.6% in FY25.

For FY27, Firstsource is guiding for constant currency revenue growth in the range of 10% to 13% and an EBIT margin band of 12.25% to 12.75%. The effective tax rate is expected to be between 20% and 22%. The company aims to achieve an EBIT margin of 14% to 15% in the next couple of years, driven by its 'Intelligence that operates' strategy, which is expected to expand its addressable market and deepen client relationships.