Latent View

Latent View reported a robust Q2 FY26 with total operating revenue reaching INR 257 crores, marking an 11th consecutive quarter of sequential growth, up 9.1% QoQ and 23.2% YoY. This performance has propelled the company to an impressive INR 1,000 crores run rate. The adjusted EBITDA margin stood at 22.5%, demonstrating strong operational execution and effective cost management despite increased investments.

The company is heavily investing in its Databricks partnership and AI Center of Excellence (AI CoE). Databricks-related revenue is projected to exceed $19 million this year, an 80%+ growth from $11 million last year, with an ambitious 3-year target of $50 million. The AI CoE, staffed with 8 PhD-level experts, is developing three external value propositions, including synthetic data and agentic AI for churn analytics and CRM integration. New wins from Databricks totaled $1.4 million this quarter, and the Generative AI/Agentic AI pipeline stands at $7 million.

The Financial Services practice exhibited exceptional growth, up 94% YoY and 30% sequentially, driven by recent client wins, with one account potentially reaching $5-6 million+. The combined consumer goods practice is expected to grow 28% this year, benefiting from the Decision Point acquisition integration. While the technology vertical experienced a slower year with 7-8% growth, management aims to achieve low double-digit growth through strategic initiatives like cybersecurity analytics and enhanced AI capabilities.

Q2 saw higher operating expenses (opex) due to seasonal marketing events, increased H1B visa costs (~$220,000 vs Q1), and recruiting expenses (~$150,000-180,000) for new talent. Management expects opex to normalize to INR 30-33 crores per quarter going forward^⏳. The full-year adjusted EBITDA margin guidance has been revised slightly to 22-23% (from 23-24%) to accommodate sustained investments in growth. PBT was impacted by lower forex gains on intercompany loans, and PAT percentage decreased to ~16% due to a higher effective tax rate of 25-26% going forward^⏳.

Latent View maintains very healthy cash balances and is actively pursuing M&A opportunities in the data engineering or AI space, while remaining cautious on valuations and strategic alignment. The company has significantly pared down intercompany loans, leading to more stable forex impacts on PBT. No specific capex or shareholder return announcements were made this quarter, but the focus remains on deploying capital for growth.

Management noted general market tentativeness, sluggishness, and pricing pressure. Clients in the tech sector are particularly focused on efficiency due to their own massive investments in data centers and AI infrastructure, leading to demands for cost-effective solutions from service providers. Despite these headwinds, the company is seeing strong traction in new deal wins and a healthy pipeline, with a strategic focus on end-to-end value propositions and nearshore capabilities to address client needs and visa restrictions.