Persistent Systems Limited

Persistent Systems reported robust Q2 FY26 results with revenue reaching $406.2 million, marking a 17.6% YoY growth and 4.2% QoQ growth. In INR terms, revenue was Rs. 35,807.2 million, up 23.6% YoY. EBIT margin expanded to 16.3%, a 230 basis point improvement YoY, driven by tailwinds like software license cost reduction (80 bps) and favorable currency movements (60 bps). Profit after tax grew 45.1% YoY to Rs. 4,714.7 million, with EPS at Rs. 30.3.

The company secured a Total Contract Value (TCV) of $609.2 million, including $350.8 million in new bookings, and an Annual Contract Value (ACV) of $447.9 million, with new ACV bookings at $254.4 million. This growth was broad-based across clients, with top 5 clients' revenue increasing by 23.4% YoY and the number of $1M+ clients expanding from 184 to 191. Management noted that top 100 customers contribute over 82% of revenues.

Persistent is advancing its AI-led platform-driven strategy, encompassing AI for Technology, AI for Business, and Enterprise Data Readiness. The SASVA platform saw 20 new patents filed this quarter, bringing the total to 75. Internal AI initiatives like 'Persistent Assist' won two CII National AI Awards, and the company achieved ISO 42001 certification for its AI management systems, demonstrating commitment to responsible AI governance.

Europe led geographic growth at 37.9% YoY, followed by India at 19% and North America at 15.4%. BFSI was the strongest vertical, growing 30% YoY, while Software Hi-Tech & Emerging grew 15.5%, and Healthcare Life Sciences grew 6.6%. Management noted that healthcare is expected to continue its growth trajectory after a temporary dip, with a strategy to go deeper into its four sub-segments.

While EBIT margins improved significantly YoY, the company anticipates a 180 basis point impact on next quarter's margins due to merit increments effective October 1, 2025. However, management expects to offset 80-100 basis points through levers like offshoring, utilization optimization, and SG&A efficiency, maintaining a comfortable utilization range of 83-85%. Sequential headwinds included 50 bps from doubtful debts and 20 bps from utilization decline.

Persistent reiterated its aspiration to achieve $2 billion in revenue by the end of FY27. Management also guided for a 100 basis point EBIT margin improvement in FY26 and potentially another 100 basis points in FY27, aiming for a total 200-300 basis point expansion over the next 2-3 years, after which growth will be the primary focus. The effective tax rate for FY26 is expected to remain in the range of 22.5%-23.5%.

The company's headcount increased by 884 to 26,224, with trailing 12-month attrition slightly improving to 13.8% from 13.9%. Utilization stood at 88.2%, down 50 bps QoQ. Persistent continues to invest in employee upskilling, achieving over 23,550 hyperscaler certifications and over 8,300 internal AI certifications, reinforcing its talent base for future growth and supporting its AI strategy.