Latent View — Q1 FY26 earnings call

Call held 21 Jul 2025

Management summary

Latent View reported its 10th consecutive quarter of growth with Q1 FY26 operating revenue at INR 236 crores, a 32% YoY increase. Financial Services continued its strong performance, growing 48.4% YoY, while the Tech vertical experienced a flattish quarter due to deal signing delays. The company remains confident in achieving its 18-19% full-year growth guidance, driven by new client wins, strategic investments in GenAI, and the Databricks partnership, despite short-term margin impacts from wage hikes and increased marketing. Management expects margins to recover to 23-24% for the full year.

Highlights

  • Achieved 10th consecutive quarter of growth.

  • Total operating revenue of INR 236 crores, marking a 32% YoY increase.

  • Financial Services revenue grew 21.3% QoQ and 48.4% YoY, with expectations to exceed 40% growth for the full year.

  • Secured 7 new accounts this quarter, with 3 demonstrating high growth potential, including one expected to scale from $0 to $5 million within 12 months.

  • Confirmed $6 million in GenAI work for the current year, with an additional $8 million in the pipeline, and established a GenAI Center of Excellence.

Concerns

  • Underlying business grew only 1.6% in rupee terms (2.8% in dollar terms) for Q1 FY26, impacted by currency appreciation and deal signing delays.

  • Tech vertical experienced a flattish quarter due to timing delays in converting Q4 one-off projects into follow-on work.

  • Reported EBITDA margin at 21.4% was impacted by higher wage hikes and increased marketing expenses.

  • Sales cycles remain long, though management noted that deals initiated 12-18 months ago are now converting.

Key financials

  1. Operating Revenue ₹236 Cr +32%YoY
  2. Decision Point Revenue ₹22.2 Cr
  3. EBITDA Margin (Reported) 21.4%
  4. EBITDA Margin (Adjusted) 22.2%
  5. PBT ₹62 Cr +18.9%YoY
  6. EPS ₹2.46 -5%QoQ
  7. Forex Gain (PBT Impact) ₹6 Cr
  8. Underlying Business Growth (INR) 1.6%
  9. Attrition Rate 23%
  10. Offshore Ratio 83%
  11. Utilization Rate 82%
  12. Other Income ₹23 Cr

What they filed

Q1 FY27: revenue up 21.6%, net profit down 7.8% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue209 228 232 236 258 +23%278 +22%289 +25%287 +22%
EBITDA45 50 55 50 56 +24%62 +24%68 +24%57 +14%
Net profit41 43 51 51 46 +12%51 +19%55 +8%47 −8%
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

  • Financial Services
    21.3% Revenue Growth48.4% Revenue Growth
  • Technology
    0% Revenue Growth

Order book

medium confidence

Inflow this quarter

7 clients

Pipeline

deal pipeline tcv

GenAI and agentic AI work in pipeline

Cancellations & deferrals

  • deferred: Timing delay in signing follow-on work for one-off projects in Tech vertical.
  • deferred: Marginal decline in industrial vertical due to one-time projects ending without follow-on.
  • renegotiated: Contraction in a couple of existing CPG accounts due to vendor rationalization.
Management noted a fairly strong order book and healthy pipeline, particularly in GenAI and Tech, despite some timing delays in deal closures.

Source: Prepared remarks

Capital allocation

high confidence
  • Debt Debt disclosed
    • Repayment Rationalizing some of the loans given to group companies to reduce forex gain/loss volatility.
    And going forward, the one update that I would like to give to all the analysts is that we are looking to rationalize some of the loans that have been given to our group companies.
  • M&A Decision Point Acquisition · Integrated

    Strategic acquisition to accelerate business growth, particularly in CPG.

    70% of acquisition payments completed, 10% paid this quarter, remaining 20% due around June next year. Consideration linked to revenue and floor EBITDA.

    So, the 70% acquisition, all the payments in relation to that has been completed. In fact, in the current quarter, we have made the acquisition of another 10% in Decision Point. So, with this, in terms of payout, what will be payable, and this will happen around June of next year, is the payment for the balance 20%.
  • Liquidity Liquidity disclosed Company continues to have a fairly healthy level of cash.
    From the balance sheet standpoint, of course, we continue to have a fairly healthy level of cash.

Guidance & targets

Revenue

  • Overall Revenue Growth Revenue · Full Year · High confidence 18-19%
    fairly strong order book, which gives us reasonable confidence to deliver the 18% to 19% growth that we've been talking about.

    — Rajan Venkatesan

  • Overall Revenue Growth Revenue · Full Year · High confidence >19%

    Previously 18-19% → >19%

    So, at this point in time, we are very confident of going past the 18%, 19% number. In fact, I was just having a debate with Raj before this call whether we should put up 20% at this time. We will hold our horses at this time, but there is a great deal of confidence that we will go past those numbers.

    — Rajan Sethuraman

  • Financial Services Growth Revenue · Full Year · High confidence >40%
    But at this point in time, we're fairly confident that the business could deliver a growth in excess of 40%.

    — Rajan Venkatesan

  • Technology Vertical Growth Revenue · Next Quarter · High confidence Growth Trajectory

    Previously Flattish → Growth Trajectory

    For technology, we are very confident that for the next quarter, we will sort of be back on the growth trajectory.

    — Rajan Venkatesan

  • CPG (ex-Decision Point) Growth Revenue · Full Year · Medium confidence Growth Trajectory

    Previously Contraction → Growth Trajectory

    on a full year basis, our CPG business [ex] of Decision Point, again, will be back on a growth trajectory.

    — Rajan Venkatesan

  • Total Revenue Revenue · Next 3 years (by FY28) · High confidence $200 million
    The first one is our strategy around the focus accounts that have been identified about 26 of them. There were 3 broad objectives there. ... I talked about 3 important pillars of our growth strategy in terms of getting to the USD 200 million mark over the next 3 years.

    — Rajan Sethuraman

  • Europe Revenue Contribution Revenue · 3-year time frame · Medium confidence >10%
    I mean, in the past, we had alluded to Europe contributing 10% plus, right, in terms of revenue for us, right, in a 3-year time frame.

    — Rajan Sethuraman

Profitability

  • Consolidated Margins Profitability · Full Year · High confidence 23-24%
    we want to keep the consolidated margins on a full year basis in that 23% to 24% sort of range.

    — Rajan Venkatesan

Costs

  • Transaction-Related Costs Costs · By March '26 · High confidence Phased out
    transaction-related costs, I think that will sort of play out for the next 3 quarters. And therefore, you will see this getting fully phased out by March of '26.

    — Rajan Venkatesan

Other Income

  • Other Income Other Income · Going forward · High confidence INR 17-18 crores

    Previously INR 23 crores (Q1 FY26) → INR 17-18 crores

    Yes, the other income should be going forward, in the range of INR 17 crores to INR 18 crores.

    — Rajan Venkatesan

What to watch in Q2 FY26

Tech Vertical Growth Trajectory

Next quarter (Q2 FY26)
Current Flattish quarter due to deal signing delays
Target Back on growth trajectory

Why it matters

Tech is a core growth driver, and its recovery is crucial for overall company growth and achieving full-year guidance.

For technology, we are very confident that for the next quarter, we will sort of be back on the growth trajectory.

Risks & concerns

  • Macroeconomic Headwinds

    medium

    Prevailing macroeconomic headwinds causing sluggishness in large initiatives and new decisions, particularly in CPG, for the past 18 months.

    Management acknowledged

  • Wage Hike Impact on Margins

    medium

    Higher-than-normal wage hikes, especially in variable pay, and increased marketing expenses impacted Q1 EBITDA margins.

    Management acknowledged

  • Long Sales Cycles

    medium

    Sales cycles remain long (18+ months), potentially delaying revenue recognition from pipeline opportunities.

    Management acknowledged

  • Timing Delays in Tech Deal Closures

    low

    Delays in converting pipeline opportunities and signing follow-on work for one-off projects in the tech vertical, leading to a flattish Q1.

    Management acknowledged

  • Short-term Impact from Strategic Investments

    low

    Planning for investments in Databricks and AI CoE could have some short-term impact on margins, though long-term margins are expected to be maintained.

    Management acknowledged

Q&A highlights

6 direct
Organic Business Growth Softness Direct
underlying business grew by only about 1.6%... there has been a timing delay in terms of signing on the additional work. ... small delay in converting some of those pipeline opportunities, which has resulted again in the slightly muted growth that you see in the core business.

Analyst challenged the softer organic growth, and management provided specific reasons (currency, deal delays) while maintaining confidence in future rebound.

Asked by Aditi Patil

Full Year Revenue Growth Guidance Direct
Not at all. In fact, as Raj mentioned, some of the things that we were expecting to come through, they are now starting to come through, and we have seen some of those conversions happen even already in the second quarter. So the second quarter numbers will not only be on track for the 18%, 19% that we have guided. In fact, it will also catch up with the slight dip that you have seen in the first quarter. So, at this point in time, we are very confident of going past the 18%, 19% number.

Management strongly reaffirmed and even hinted at exceeding the 18-19% full-year growth guidance, providing confidence despite Q1 softness.

Asked by Aditi Patil

Wage Hikes and Attrition Impact on Margins Direct
the percentage impact on the margins has been higher... we will look at all other levers. This could be pyramid restructuring, it could be looking at the on-site/offshore mix as well as looking at utilization, all of these are levers that we typically look at to sort of bring back the margins to normative levels or historical levels. So that's the commentary on wage hikes. And I would say that over the next couple of quarters, we should be able to salvage whatever we've lost in the form of margin loss that have come from the wage hikes.

Addressed concerns about margin compression from wage hikes and higher attrition, outlining specific strategies for margin recovery in upcoming quarters.

Asked by Vimal Gohil

Operating Leverage and Utilization Partial
operating leverage will come in, but the growth that we are anticipating, right, we are also in the process of building out buffers, specifically for the GenAI, Agentic AI type of opportunities also for the Databricks Center of Excellence, right, both on-site and offshore. So, I think that utilization, we will watch it carefully, but we also want to make sure that we are not shortchanging on the supply front, right, and the availability of skilled people.

Clarified that while operating leverage is expected, the company is prioritizing strategic investments in GenAI/Databricks and talent supply, which might temporarily affect utilization.

Asked by Vimal Gohil

GenAI Deal Characteristics and Contracting Model Direct
It's a combination. Obviously, GenAI, agentic AI being the new kid on the block, right, in terms of the buzz and the excitement. There will be a bunch of POCs, pilots and experimentation type of projects that are happening. But we are seeing instances where it's already moving into production with a longer-term kind of involvement in terms of executing the work using the new architecture and the framework that is emerging.

Provided insight into the nature of GenAI projects, indicating a mix of short-term pilots and longer-term production engagements, and the evolving role of the company as an AI integrator.

Asked by Pratap Maliwal

Macroeconomic Headwinds Impact Direct
macroeconomic headwinds have been prevailing for almost an 18-month kind of a period... continues to be a bit sluggish when it comes to large initiatives, new decisions on that side. Over the last 18 months, we have also experienced that. I mean the good news has been that with many of our existing stakeholders, incremental opportunities have been easy to come by.

Acknowledged the prolonged impact of macroeconomic headwinds on large deals but highlighted the resilience from existing client relationships and the potential for data engineering to drive future growth.

Asked by Pooja Jain

Other Income Volatility and Future Outlook Direct
forex-related gain... INR 6 crores... don't think we should model it for the future period... intention is to pare down or substantially trim the level of investments in Europe because of some of the transfer pricing changes... the other income should be going forward, in the range of INR 17 crores to INR 18 crores.

Clarified the one-time nature of a significant portion of Q1's other income and provided a more conservative, stable guidance for future quarters, linked to capital allocation decisions.

Asked by Aagam Shah

Data Engineering Service Line Sequential Drop Partial
Maybe in percentage terms, there has been a marginal drop, Aditi. I don't think in absolute terms there has been a drop, Like I said, right, there will always be some short-term quarter-to-quarter, if you see, there could be some projects that we execute, which could sort of not have follow-on revenue that could have an impact on a Q-o-Q basis. But then I think on a full year basis, we definitely are on track to deliver the same impact, if not higher than the company level of growth, the same level of growth in data engineering practice as well.

Addressed the sequential drop in data engineering, attributing it to project-specific factors, but maintained confidence in its full-year growth trajectory in line with or exceeding overall company growth.

Asked by Aditi Patil

3 min read 7 chapters

Detailed narrative

Q1 FY26 Performance Highlights and Growth Drivers

Latent View reported its 10th consecutive quarter of growth, with total operating revenue reaching INR 236 crores, a 32% year-on-year increase. This figure included INR 22.2 crores from Decision Point. The underlying business, excluding Decision Point, grew 1.6% in rupee terms (2.8% in dollar terms) for the quarter. The company remains confident in its full-year guidance of 18-19% growth, with expectations to potentially exceed this, and anticipates Q2 performance to compensate for the Q1 dip.

Vertical Performance and Outlook

Financial Services continued its strong momentum, with revenue growing 21.3% QoQ and 48.4% YoY, and management expects this vertical to deliver over 40% growth for the full year. The Technology vertical experienced a flattish quarter due to timing delays in converting Q4 one-off projects into follow-on work, but management is confident it will return to a growth trajectory in Q2. The CPG segment, excluding Decision Point, saw some contraction in existing accounts but is projected to be back on a growth trajectory for the full year.

Strategic Focus on GenAI and Databricks Partnership

The company is actively pursuing a strategy to reach USD 200 million within three years, driven by deepening client relationships, enhancing GenAI capabilities, and strengthening its partnership with Databricks. Latent View has already secured $6 million in confirmed GenAI work for the current year, with an additional $8 million in the pipeline. A GenAI Center of Excellence has been established with 10 people, and the company is expanding its GTM and sales teams for Databricks-related opportunities.

Margin Management and Cost Control

The reported EBITDA margin for Q1 FY26 was 21.4%, with an adjusted margin of 22.2%. Margins were impacted by higher-than-normal wage hikes, particularly in variable pay, and increased marketing expenses, though partially offset by lower visa costs. Management is confident in bringing full-year consolidated margins back to the 23-24% range by leveraging pyramid restructuring, utilization, and on-site/offshore mix. Transaction-related costs are expected to be fully phased out by March 2026.

Client Acquisition and Pipeline Health

Latent View added 7 new accounts this quarter, with 3 showing high growth potential, including one new account expected to grow from $0 to $5 million within 12 months. Despite some timing delays in deal conversions, the company maintains a robust pipeline for its core business. Management noted that sales cycles remain long (12-18 months), but deals initiated in prior periods are now converting, and new opportunities are continuously being added.

Capital Allocation and Other Income Outlook

The company maintains a healthy cash position and is rationalizing intercompany loans to group companies to reduce volatility from forex gains or losses. Other income for Q1 FY26 was INR 23 crores, which included a one-time forex gain of INR 6 crores. Going forward, other income is guided to be in the range of INR 17-18 crores. The acquisition of Decision Point is 80% paid, with the remaining 20% due around June next year, linked to its underlying performance.

Europe Expansion and Organizational Changes

Latent View is actively expanding its presence in Europe, focusing on Financial Services and Consumer Goods, and has relocated key personnel and plans to add client partners. The goal is for Europe to contribute over 10% of revenue within a three-year timeframe. Krishnan Venkata, the Chief Client Officer, is departing, and his teams will now report directly to the CEO, Rajan Sethuraman, as part of internal organizational adjustments.

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