Detailed Narrative
Strong Sequential Growth and BFSI Performance
Latent View Analytics achieved its 12th consecutive quarter of sequential growth in Q3 FY26, with dollar revenue increasing by 5.7% and rupee revenue by 8% quarter-on-quarter. The BFSI practice demonstrated exponential growth, contributing to an almost 4% increase in its share of overall revenue since the fiscal year began. This strong performance in BFSI is attributed to penetrating existing client organizations and adding new statements of work.
EBITDA and EPS Expansion
The company reported a Q3 FY26 EBITDA of 22.4%, which adjusted to 23% after accounting for transaction-related costs. Further adjusting for one-time📎 labor code restructuring costs, the EBITDA would be 24.6%. EPS saw a significant increase of 13% quarter-on-quarter, partly benefiting from ESOP exercise tax allowances in the US. SG&A expenses were managed effectively, showing a 12% reduction quarter-on-quarter.
Databricks Partnership Momentum
The Databricks partnership continues to be a key growth driver, with 4 joint wins secured in the quarter and over 30 leads identified. The conversion rate for these leads is strong, at 30-35%. Revenue from the joint approach this year is approximately $1.7 million, contributing to an overall Databricks-related revenue of $16-17 million expected for FY26. The company targets to reach $50 million in Databricks revenue within the next two years.
Vertical-Specific Headwinds and Outlook
While BFSI and Technology showed growth, the CPG and Retail segment experienced muted performance in Q3 due to a lack of follow-on work from Q2 projects and timing delays with a large beverage manufacturer. A significant headwind was identified in a large technology account, where client re-evaluation of vendor engagement is expected to result in an annualized revenue drop of $5-6 million, with clarity anticipated post March 31, 2026. Despite these, the company expects CPG vertical expansion in Q4.
Impact of New Labor Code and Restructuring
The company undertook a significant restructuring exercise in April 2025 to increase basic salaries to 50% of CTC, mitigating some impact from the new Labor Code. However, ongoing compliance restructuring is expected to result in an incremental cost of 10-15 basis points on earnings going forward⏳. Additionally, a one-time📎 restructuring cost of INR 4.6 crores (approximately USD 200,000) was incurred this quarter due to rationalization of roles.
Strategic Investments in AI and Client Relationships
Latent View is investing in its consulting practice, reorienting teams with specific domain focus, and deepening client relationships by adding client partners. The company also brought in a Chief Client Officer for consumer retail and marketplaces. A strong focus on AI strategy includes conversational analytics, business process automation, and governance, with initiatives like Velocity AI identifying over 10 opportunities in a top tech account and hackathons yielding agentic solutions.
Future Growth Targets and M&A Strategy
The company is on track to achieve FY26 revenue of $119-120 million, representing 19-20% growth, with an EBITDA margin of around 24%. Looking ahead, Latent View aims for $200 million in revenue by FY28. To bridge the $80 million gap to this target, the company plans a multi-pronged approach including organic growth and inorganic investments in agentic AI technology companies, traditional M&A, and potentially larger ticket deals, after being slow on M&A for the past 12-18 months.