R Systems International Limited

R Systems International Limited delivered robust financial results for Q4 CY25, with revenue reaching INR 555.1 crores, marking a 23.6% year-over-year and 11.3% quarter-over-quarter growth. Adjusted EBITDA for the quarter stood at INR 101.7 crores, an 18.3% margin, growing 27% YoY and 20.5% QoQ. For the full year CY25, total revenue was INR 1,958.2 crores, a 12.4% YoY increase, and adjusted EBITDA was INR 342.7 crores (17.5% margin), up 17.8% YoY. Adjusted net profit for the full year grew 24.6% to INR 193.6 crores, with adjusted EPS at INR 16.4.

The company is actively leveraging AI, with AI-based revenues currently trending at 27-28% of total revenue and expected to reach 30%. Management notes a shift from AI experimentation to implementation in 2026, leading to larger and more productive AI projects. R Systems is focusing on AI integration work, building AI capabilities on existing platforms, and developing AI-native products for vertical SaaS companies. This strategic pivot positions the company to capitalize on new market opportunities created by AI, including serving AI-native product companies and large enterprises modernizing legacy systems with AI.

R Systems reported strong order book health with trailing 12-month Annual Contract Value (ACV) bookings in the range of $74 million to $75 million, reaching $76.5 million in the last quarter. These bookings represent net new or existing new business, excluding renewals. The company has also demonstrated effective client mining, with top 10 clients growing from 22.7% to 25.2% of revenue, and the top client showing growth from 5.6% to 6.2%, indicating deepening relationships with key accounts.

Gross margin improved to 38.9% in Q4 CY25 from 35.5% in Q3 CY25, contributing to the overall EBITDA margin expansion. Management emphasized the commitment to maintaining margins despite significant investments in AI platforms, training, and infrastructure, including GPU servers. The goal is to sustain margins in the high 16s and 17s, with the Novigo acquisition expected to provide an additional 90-100 basis points bump to overall EBITDA.

The acquisition of Novigo, which closed in mid-November 2025, is a key strategic move. Novigo, an approximately INR 264 crores revenue company, is expected to contribute positively to R Systems' operating margins. The integration is aimed at accelerating agentic implementations and expanding reach into enterprises beyond tech companies. While Novigo's contribution is not yet fully reflected in the reported ACV, it is anticipated to enhance the company's overall profitability and market capabilities.

Organic capital expenditure for CY25 increased to INR 44 crores, compared to INR 20-22 crores in the preceding two years. This increase was attributed to adding people, establishing an experience center, and setting up new facilities in Pune and Chennai. Management indicated that this capex is more expansionary than maintenance-driven, with a potential return to maintenance capex levels in CY26, depending on growth. Cash and bank balances stood at INR 272.6 crores at year-end.

Management noted a growing 'tools fatigue' among clients who have invested in AI tools without achieving desired outcomes, creating an opportunity for R Systems to offer expert support and outcome-driven solutions. The company estimates AI can deliver 30-35% productivity gains in end-to-end project lifecycles, potentially reducing 100 man-hours to 65-70. While clients prefer certainty over outcome-based pricing, R Systems aims to maximize revenue by leveraging its expertise in AI integration and problem-solving.