Q1 26/27

Aug 6, 2026

Summary

Q1 FY27 revenue grew 9.9% YoY, while EBITDA rose 33.1% and margin expanded to 19.7%. FY27 high-single-digit growth guidance stands, with AI platforms and modernization deals key to growth amid market softness and automation/captive risks.

Ladies and gentlemen, good day and welcome to the Datamatics Global Services Limited Q1 FY27 earnings conference call. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then Zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Pratik Jagtap from EY Investor Relations. Thank you, and over to you, sir. Thank you, Anushka. Good evening to all the participants in the call today, and welcome to Q1 FY27 earnings call of Datamatics Global Services Limited. The results and presentation have already been mailed to you, and they are also available on the website of Datamatics. In case anyone has not received a copy of our press release and presentation, please do write to us and we will be happy to send you all. To take us through the results today and to answer your questions, we have with us the top management of the company, represented by Rahul Kanodia, Vice Chairman and CEO, Ankush Akar, EVP and CFO, Mitul Mehta, EVP and CMO. Rahul will start the call with a brief overview of the quarter on business, which will be then followed by Ankush, who will take us through the financials. Then we will open the floor for Q&A session. I would like to remind you that anything that is said on this call, which gives any outlook for the future or which can be construed as a forward-looking statement, must be viewed in conjunction with the risks and uncertainties that we face. These risks and uncertainties are included, but not limited to what we have mentioned in the prospectus filed with SEBI and subsequent annual reports, which you can find on our website. With that said, I now hand over the call to Rahul, sir. Over to you, sir. Thank you, Prateek, and good day, everyone, and thank you for joining the Datamatics Quarter 1 FY25 earnings call. I will begin by sharing some key highlights from our quarterly performance, following which Ankush will take you through the financial update in great detail. We will then open the floor for a Q&A session. We have started the financial year 27 on a positive note, demonstrating the resilience of our business model and the trust our customers have placed in us. Our revenue for quarter 1 FY27 grew at 9.9% on a year-on-year basis to INR 513.9 crores. EBITDA for the quarter stood at INR 101.1 crores, representing a 31.1% year-on-year increase, while our EBITDA margins improved by 343 basis points to 19.7%. This financial performance is a direct reflection of a continued focus on innovation, discipline, cost management, and operational excellence. We are seeing strong market validation of our AI-first strategy. Customers are increasingly choosing Datamatics for our ability to combine AI innovation with execution excellence, enabling us to win larger, higher-value engagements across both existing and new customers. The majority of our new deals we have won this year have been on the back of our AI capabilities, and some recent examples include the SBI Life Insurance project, which selected Datamatics' TruAI Underwriting to redefine underwriting operations using agentic AI-powered automation. An American pet and wellness and veterinary care provider expanded its engagement with Datamatics to deploy an AI-powered voice agent, driving natural conversation, faster response time, and enhanced customer satisfaction. A leading American consumer product company selected Datamatics' TruAI BRE and TruAI SDLC as an agentic AI-powered solution to extract and transform complex legacy business logic, accelerating application modernization while enhancing scalability, reliability, and performance. These wins underscore the growing confidence customers place in our AI capabilities and our ability to translate AI innovation into measurable business benefits. I am pleased to announce that the integration of TNQTech into Lumina Datamatics is now complete. The combined organization has extended our capabilities and continues to show healthy growth. We have firmly reinforced our position as a global leader and rank among the top three digital content outsourcing companies in the world. Looking ahead, we are focused on building upon this strong start of the year by accelerating the adoption of AI and advanced technologies across our solutions. We remain well-positioned to help our customers stay ahead of the curve while driving sustainable long-term growth for our stakeholders. With that, I would now like to hand over the call to Ankush Akar for the financial update. Thank you, Rahul. Welcome, everyone, and thank you for joining us for our Q1 FY27 earnings call. Let me take you through the financial performance for Q1 FY27. Our Q1 FY27 revenue stood at INR 513.9 crore, reflecting a growth of 9.9% year-on-year. Our EBITDA stood at INR 101.1 crore, a growth of 33.1% year-on-year. Our EBITDA margin for the quarter stood at 19.7%, reflecting an expansion of 343 basis points year-on-year. Our EBIT stood at INR 78.4 crore, a growth of 39% year-on-year. Our EBIT margin for the quarter was 15.3%, reflecting an expansion of 319 basis points year-on-year. Our PAT after non-controlling interest was INR 72.3 crore, up by 43.5% year-on-year. Our PAT margin stood at 13.6% for the quarter. I am pleased to share that we have recently rolled out our annual salary increment effective April 2026, and impact has been accounted during the quarter. In terms of segment, Digital Operations revenue for the quarter stood at INR 296.8 crore, which is up by 16.1% year-on-year. Digital Operations EBIT margin was at 19.3% for the quarter. Digital Technologies revenue for the quarter stood at INR 153.1 crore, which is up by 6.1% year-on-year. Digital Technologies EBIT margin was at 8.9% for the quarter. Digital Experiences revenue is seated at INR 64 crore, which is down by 5.3% year-on-year. Digital Experiences EBIT margin was 11.7% for the quarter. Our bill DSO was at 60 days as of June 2026. We continue to maintain a healthy balance sheet as of 30th of June 2026. Our net cash and investments, net of debts, stood at INR 710.2 crore. In terms of industry footprints, education publishing was the largest segment for us, contributing 29% of the revenue, followed by technology and consulting contributing 20%, BFSI contributing 19%, manufacturing and logistics contributing 11%, retail contributing 9%, not for profit and government contributing 8%, and the rest are 4% of the revenues. Our client concentration remains very healthy, with top 5, 10, and 20 clients contributing 30%, 41%, and 54% respectively. Overall, we are pleased with our quarterly financial performance and remain confident in our strategy to drive sustainable growth. With this, I will now pass on the call to the operator to open the floor for questions. Thank you for your patience and continued interest in Datamatics. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We take the first question from the line of Yajad Shah, an individual investor. Please proceed. Hi, sir. We expense approximately INR 40-INR 50 crore a year as AI R&D investment. What would be the guidance there for this year? Are we expending more or less this year as well? We will keep it at approximately the same level, because right now there is a lot happening in that space, and we need to keep abreast with what is happening with the latest technology. Plus, we are investing in the platforms that we are building, so we will sustain it at the same levels for this year. All right, sir. Sir, one more thing I wanted to ask. We have reported INR 710 crore across cash balances. This is before the INR 200 crore TNQTech payout. That is correct. That payout was in this quarter. The number you are looking at, 710, pertains to the last quarter end. At current run rate, we would have 500 and approximately 200 more crore from the remaining three quarters. So we would again have maybe INR 700 crore. Is there a plan for a buyback or will that be used for a better allocation like some acquisition or something? We are in dialogue with some companies from an M&A point of view, and no conversation has matured to the level that we need to report it. We are in dialogue with some companies. All right, sir. Last question. Sir, would we report segment-wise data for AI as a service sooner or later since we are ramping up there? A lot of the projects will have an integral AI component and therefore it might be difficult to call out just AI in itself. There are some projects that are pure AI, but many other projects have a combination of AI and the legacy work. So it may be difficult to fully pull out only AI, because everything will be automated on the back of AI. So let's see how the projects unfold right now, but I don't think we'll end up doing a pure AI reporting because pretty much across the board we will be implementing AI. All right, sir. Thank you. Thank you. Thank you. Ladies and gentlemen, in order to ask a question, you may press star and one on your touchtone telephone. We take the next question from the line of George John from Equity Intelligence. Please proceed. Hi, good evening. Good evening. It's good to see the pickup in revenues and margins of your Digital Operations segment. But over the past few periods, the Digital Technologies segment has kind of had a muted growth alongside some margin pressure. Is there some sort of seasonality in Q1 or, and the fact that we have added some noteworthy clients in the past few quarters, what are your aspirations for growth and margin, especially in the segment going forward. We are seeing a good traction. We are getting on the TruAI Underwriting solution and the TruAI SDLC and TruAI BRE solutions. These are for enterprise modernization. We have kicked off some projects in that space already. The customer response has been very encouraging, because these are for legacy modernization and using these tools, which are all AI-powered or largely driven by AI, actually. The risk factor comes down, the timeline comes down. A project that would take 3 years can probably be done in 6 months now. Because of that, we see a lot of interest from customers looking at legacy modernization. It reverse-engineers legacy systems, extracts business rules, and then forward-engineers that to the target environment. I'm quite bullish on the Digital Technologies. Also, the underwriting solution that we built is also getting some very good response. We are in dialogue with all the top insurance companies in India and of course, some of the good ones in the U.S. and Europe as well. Once again, I am very confident that that will give us a good revenue stream. This underwriting product is going to be clubbed within Digital Technologies, is it? Yes. What's happening actually is that we are getting a combination of both. Operations and technologies are coming together because the operations understand business processes and technology understands technology. It's only when they work together that you are able to deliver the maximum value to the customers. We are seeing more and situations where they need to work as an integrated solution, and then it becomes a little difficult to separate them out as independent units or independent streams. Yes, right now, a lot of our investments that we are making, we talked about it, has been going into the Digital Technology space. We will recognize revenue there as well. Have you started booking revenue for this particular product or are we yet to see? No, we started booking. We've got the first customer. We'll have a few more very soon. Okay. Thank you. Thank you. Thank you. Before we proceed, a reminder to the participants, in order to ask a question, you may press star and one on your touchtone telephone. We take the next question from the line of Nishita Shanklesha from Sapphire Capital. Please proceed. Yes. Hello, am I audible? Hello. Yes. Yeah. Is it better now? Yeah. Yeah. I just wanted to understand, you had a very good growth in Q1 FY27 year-over-year. Is this growth trajectory going to continue? What sort of growth can we see for the whole year FY27? We have projected a high single-digit growth in our guidance. We are maintaining that. There is still a degree of softness in the market because of the war and the uncertainties. Fortunately, the conversions on AI deals has been high. If you look at this current financial year, about 50% of the deals we won have been AI-led or largely AI-driven. We see a good conversion ratio there, but we do see still some degree of softness in the market. Right. In Q1, we did around 43% growth YoY, and you are giving us single-digit growth guidance for the whole year. Things will look up because of some seasonality where H1 is more dominating than H2. Is that the case? What we are highlighting is the revenue growth to be, which is a YoY growth of 9.9%, which you see right now. INR 513.9 crore is what we did. The 43% growth is for the PAT, which is there. We will continue to maintain the healthy EBITDA margins, and we will sustain that. Okay. Thank you. My second question is that are TNQTech integrations fully completed? What sort of revenue did TNQTech contribute in Q1? TNQTech, anyways, it has been integrated fully in our business. What you see in terms of the Digital Operations revenue, it is already integrated into that, and that's the kind of improvement and growth that we have seen across all DO segments. TNQTech is growing healthy, but I think going forward, what we need to look at is our digital content space, which is part of Digital Operations and an integral offering. But I think their growth rate was, if I had to hazard a guess, and I don't have the exact numbers with me, somewhere in the range of about 12%-14%. It's been a very good acquisition for us. Okay. Understood. Yeah. Thank you so much. Thank you. Ladies and gentlemen, in order to ask a question, you may press star and 1 on your touchtone telephone. Participants who wish to ask a question, please press star and 1 on your touch tone telephone. Reminder to the participants, in order to ask a question, you may press star and 1 on your touch tone telephone. Hello. Hello. Pradeep? Hello. Can you hear us? Hello. Yes, sir. I think if there are no further questions, I think we can close the call. Close the call. Hello, sir. We have two questions on the line. I will take them. Okay. Yeah. We will take the next question from the line of Yajad Shah, an individual investor. You may proceed. Hi, sir. One question regarding our business transformation. As we are integrating towards the TNQ and Lumina publishing businesses, I can see that the margins there are significantly higher at 24%-25% EBITDA, compared to the original business. Do we plan on eventually shifting towards high 20s margin? Across the board, right now we are about 19% odd EBITDA margin. We are looking at about, let's say, roughly a 0.5% improvement in this financial year. So we should be hitting closer to 20 this financial year. Some of the other practices are showing an upswing. Digital Experiences, we've got some good deals going. We've signed a few good deal sizes in this financial year. So that is seeing an upswing. On the Digital Technologies front, there are two parts to it. One is that we continue to book all our investments into this service area, because all our investments are fundamentally in the area of technology. So I think if you remove 40 to 50 crore of investment, then you can see a much healthier EBITDA margin on that practice area. I think if you make those adjustments, you'll see a fairly healthy type margin across the board. A follow-up to that. You were saying that if we add back the R&D spend, is the R&D spend fixed for every year? Or eventually we will reduce it or instead increase it? Is there a guidance on that spend? Right now for this year, we will maintain it. In the past, we have maintained it at that level. Really, because the whole world of AI is moving so fast and so many new things are coming, it is very hard to predict what will be the budget next year. But certainly for this year, we will maintain that spend. When we do our planning for next year, we will take a call as to what really the spend should be next year. But at this juncture, it is too early to say what the budget will be for next year. All right, sir. On the customer front, are we transitioning and looking for more sectors outside the insurance, banking, and logistics side, except for those? We are not really. We are trying to focus on these sectors, and I think focus is very important. Occasionally, we do come across opportunities. When we come across opportunities, we may pick it up. But we are not focused on those other sectors. We are focused on these core sectors. All right, sir. That will be all from my side. All the best and thank you. Thank you. Thank you. We will take the next question from the line of Ritika Seth from Ananta Wealth Advisors. Please proceed. Good evening. Firstly, thank you for a lovely set of numbers. Just wanted to ask more of a logical question regarding the competitive position. How do you feel the competitive landscape has evolved over the last three to six quarters, considering a lot of companies which are into digital tech and digital operations, particularly the larger ones like Persistent or Coforge. How do we see the competitive scenario in this business avenues going forward? I cannot comment on Persistent and Coforge types of companies. We do not tend to come across them too much in the customers that we are targeting. But we do see competitive situations coming up with many local small start-up type companies who are well-funded, who are bringing new technology solutions to the market. So we tend to come across those. And then, of course, we also come across the internal tech teams or their own captives. Many companies are looking at India for setting up their captives. And also their own tech teams are playing around with artificial intelligence. So we see more competition coming from internal teams, from GCCs, and not so much from the other tech players because the start-up ecosystem, which tends to be well-funded and they bring in some interesting solutions. Okay. Thank you so much. One more question is, do we have any 5-year blueprint on where the company wants to reach by, say, year 2032 or say 2030 in terms of margins or in terms of net profit growth in any of these metrics? Yeah. We are looking at about a 3-year window of about INR 3,000 odd crores. We are about INR 2,000 right now, roughly. So we are looking at roughly in that range. Then, of course, on top of that, we might have some inorganic. So it's a mixture of organic and inorganic growth. That's the current outlook. Having said that, because there's so much change and transformation happening in the industry, it's very hard to predict exactly where you'll go. Because right now, I think the entire outsourcing industry and the tech and BPO industry will go through a huge change because of the dynamics of AI. Agreed, sir. Thank you. Just wanted a follow-up question on the existing answer. Is that INR 3,000 crores starting from FY 2027 or from FY 2028? Yes, the current year. We've already reached that. What are the EBITDA margins we looking at through your lens? We are roughly maintaining the same 19%-20% EBITDA margins. Okay. Sure. Thank you so much. All the very best. Thank you. Thank you. We take the next question from the line of Mr. Prateek Jagtap from EY Investor Relations. Please proceed. Hi, sir. As there are no further questions, I would like to take this opportunity and ask two questions. I just wanted to ask you, what are the key factors required to accelerate this revenue growth from here on? As you mentioned, you are targeting INR 3,000 crore mark by next three years, four years. What will be the key revenue drivers? I think the key revenue drivers is how well these AI deals-based platforms take off. So the agentic TruAI Underwriting, the claim processing, the TruAI BRE, the TruAI SDLC, the SuperCX that we have for contact center automation, front office automation. It's really these platforms that will be the key drivers, and that's where we are investing our energy behind. Okay. And then, of course, there will be some degree of bolt-on acquisitions as well. Okay, definitely. What can go wrong in this? If you say, like in FY 2027 or in next one year, what can go wrong? What are the risks here for us? I think the risks are that when the customers are automating, because today every customer is very sharply focused on automation, if they do a lot of automation, which they will, and they choose not to outsource the automation to companies like Datamatics and third-party organizations, but try to do things themselves then the outsourcing budgets will shrink, and that would have a pressure on all companies in the outsourcing world, in India particularly. Also there is a move towards captives. Some of the organizations are looking at setting up their own captives. So captives like GCC. That is where we could have some risk. So two risks. One is automation by themselves and the second is the captives. But the global economy, I think needs to stabilize right now. There is some degree of softness because of this uncertainty of the war. Every day, today there is war, tomorrow it stops, then day after starts again. So you really do not know which way it is going to go. I think that needs to settle down, and once that settles down, the world will be in a little more sort of stable situation. Okay. One more last question. How are the customer spending patterns evolving in different verticals, in different geographies like U.S. and Europe? Are we seeing any changes? No major changes. They are flirting more with the AI space, so they are investing more on automation. But outside of that, there is no really pattern shift other than some degree of softness that we see, but there is no as such pattern. The trends we talk about is GCC and automation, but those are the trends that we see generally. Yeah. Okay. Thank you. That is it from Okay. Yeah. The projects are becoming smaller tenure projects. versus the large annuities that there were in the industry traditionally. Because many of the AI projects are smaller, 3 months, 6 months, 9 months, and not 3 or 5-year types. Will those have any impact on margins or because if we are getting a smaller project, will those have any impact on our margins or our deal size is shrinking in that case? Actually, our deal sizes are going up. It is just that they are not the annuity types. The deal sizes have actually gone up. But margins are where they are. There is no major shrinkage. These are really long transformation-type projects, so yeah. Okay. That is it from my side. Thanks. Thank you. Thank you. Participants, in order to ask a question, you may press star and one on your touchtone telephone. As there are no further questions from the participants, I would now like to hand the conference over to the management for closing comments. Over to you, sir. Thank you everyone for participating in our quarter one earnings call. We really appreciate the time you have spent with us, and we look forward to speaking with you again at the end of next quarter. Thank you again, and wish you all the best. Thank you. On behalf of Datamatics Global Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.