Saksoft Q1 FY27 earnings call

Saksoft Limited reported Q1 FY27 revenue from operations at approximately INR 249 crores, remaining largely stable year-on-year. The company's EBITDA stood at INR 45 crores, reflecting a marginal decline of 1% year-on-year, while the EBITDA margin remained stable at 18.26%. Profit after tax was approximately INR 29 crores, translating to a PAT margin of 11.78%. Employee utilization, excluding trainees, was healthy at 83%.

The IT services industry continues to face macroeconomic and geopolitical uncertainties, leading to cautious customer decision-making and demand softness, a trend observed since Q3 FY26. Management noted that Q2 FY27 is also expected to be 'muted,' with hopes for growth emerging in the second half of the financial year. The underlying technology opportunity, particularly in AI, cloud modernization, and cybersecurity, remains strong, driving enterprise prioritization.

Saksoft is deliberately shifting its focus from traditional headcount-based contracts to value-based, outcome-based managed services. This transformation, while causing some near-term pain due to longer deal materialization and decision-making cycles, is expected to improve the quality of deals and provide long-term benefits. The company's pipeline has increased from USD 25 million to USD 28 million, reflecting this improved quality and strategic focus.

The company is making focused investments in AI capabilities, accelerators, and solutions, integrating AI into every project. AI is driving 30-50% efficiency gains in product engineering and 20-30% in managed services, as well as improving support operations (e.g., AI agents for recruitment). This pervasive AI integration enables Saksoft to bid for larger projects and enhances its competitive position, even as larger IT players increasingly compete for smaller deals.

The Americas remains the largest market, contributing 52% of total revenues, followed by Europe at 27%, and Asia Pacific/other regions at 21%. The company aims to increase the US revenue contribution to at least 65% in the next two to three years. Vertically, Emerging Verticals accounted for 45% of revenue, Banking and Financial Services for 30%, Transportation and Logistics for 16%, and Digital Commerce for 9%, with Emerging Verticals, BFS, and Logistics expected to drive future growth.

Total employee strength stood at 2,434, with 2,223 technical professionals. Employee utilization, excluding trainees, remained healthy at 83%. Management indicated that overall employee costs, which along with contractors constitute ~77% of total costs, are expected to decline over time^⏳ due to AI-driven productivity and the shift away from headcount-based contracts. New senior hires, including a Chief Growth Officer, were funded by repurposing existing costs, ensuring no overall increase in employee expenses.