Detailed Narrative
Q3 FY26 Financial Performance Overview
Persistent Systems reported a healthy Q3 FY26 with USD revenue growing 4.0% QoQ and 17.3% YoY to $422.5 million, and INR revenue up 5.5% QoQ and 23.4% YoY to ₹37,782.1 million. Constant currency growth stood at 4.1% QoQ. EBIT margin was 14.4%, impacted by a one-time📎 230 bps provisioning for new labor codes, but would have been 16.7% otherwise, a 40 bps improvement QoQ. Profit After Tax grew 17.8% YoY to ₹4,394.5 million, translating to a PAT margin of 11.6%.
Robust Deal Wins and Client Mining
The company secured a Total Contract Value (TCV) of $674.5 million, with new bookings contributing $369.1 million. Annual Contract Value (ACV) was $501.9 million, including $255.8 million from new bookings. Persistent demonstrated strong client mining, with Top 5 customer revenue growing by 25.6% and Top 100 customers by 20.1%. Notable wins included a $100 million TCV deal with a Tier-I bank and a $50 million plus engagement in the pathology and laboratory automation domain.
AI-Driven Margin Expansion and Strategic Investments
AI platforms and tool-driven pricing models contributed a significant 150 basis points improvement to margins this quarter. Persistent is heavily investing in developing new AI tools like SASVA and iAURA, which are capitalized as intangible assets, and these investments are now generating revenue. The company aims to monetize its technology through upfront fees and productivity gains, reinvesting to maintain competitive differentiation rather than continuously pushing margins higher.
Geographic and Vertical Growth Drivers
North America and Europe showed strong year-on-year growth at 18.6% and 22.0% respectively, while India declined by 2.5%. BFSI vertical led industry segment growth at 29.3%, followed by Software Hi-Tech and Emerging Industries at 14.7%, and Healthcare, Life Sciences at 7.4%. Management noted strong demand in Healthcare for application and data modernization, and in Hi-Tech for AI in product development.
Operational Efficiencies and Talent Management
Headcount increased by 487 to 26,711, while trailing twelve months attrition improved to 13.5% from 13.8% in the previous quarter. Favorable currency movement, lower subcontractor costs, and higher utilization combined with pyramid rationalization contributed to margin tailwinds. The company also improved its S&P Global ESG score to 86, reflecting its commitment to sustainability.
Capital Allocation and Shareholder Returns
The Board declared an interim dividend of ₹22 per share, continuing a consistent dividend payout ratio. Total cash and investments stood at ₹29,046.5 million as of December 31, 2025. An earn-out credit of ₹129.8 million from a recent acquisition boosted other income. The cost impact from ESOP allocations is expected to reduce in FY26 and further in FY27, providing a future margin tailwind.
Long-term Vision and AI Leadership
Persistent reiterated its long-term aspirations of reaching $2 billion in annual revenue by March 2027 and $5 billion by March 2031. The company highlighted its leadership in AI, being recognized by Microsoft and awarded the prestigious CII AI Award. Internally, AssistX, a modular agentic AI platform, is transforming operations, with N(AI)vigateAssist reducing proposal prep time, PiAssist resolving 83% of HR queries, and ITAssist cutting incident resolution time by 70%. Externally, platforms like SASVA and iAURA are helping clients with engineering hyper-productivity and data readiness.