Revenue
Margin
Demand
Guidance
Tone
Event Participants
Executives
2 Aneesh Reddy Boddu (Founder, Managing Director & CEO), Anant Choubey (Whole Time Director, CFO & COO)
Analysts
11 Achin, Akshay Jogani, Chintan Shah, Jayesh Agarkar, Kumar Saurabh, Rishi Junjunwala, Sanjay Kumar Elangovan, Sankar Narayan, Shaurya Yadav, Srinivasu, Vinay Melan
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue | ₹256 crores | +43% YoY; includes two months of Session M, currency tailwind of ~6%; organic growth 17% YoY |
| ARR | ₹1,026 crores | +34% YoY (₹765 cr FY26 → ₹1,026 cr Q1 FY27); driven by Session M, NRR, new ACV |
| New ACV (TTM) | ₹92 crores | +75% YoY excluding one large healthcare customer from base |
| Adjusted EBITDA | ₹44 crores | +132% YoY; margin ~17-18% overall; organic EBITDA margin ~20%+ |
| Rule of 40 | 60 | Growth 43% + EBITDA 17%; organic business at ~40 (17% growth + 23% EBITDA) |
| PAT (Reported) | -₹9.5 crores | Impacted by one-time cyber fraud exceptional loss and deferred tax liability |
| Normalized PAT | ₹25 crores | Up from ₹19 crores in Q4 FY26; excludes fraud loss and deferred tax |
| Organic NRR | 111% | 116% excluding largest customer; breakdown: 4-5% inflationary/overages, ~10% upsell/new cohorts |
| Churn | ~5% | Net of churn included in NRR calculation |
| Subscription Gross Margin | 66% | Overall incl. inorganic; organic upward of 75% for last few quarters |
| Server Cost (Session M) | ~50% of revenue | vs Capillary's 7-9%; cost rationalization opportunity |
| aiRA ARR | $2-2.5 million | ~26 customers live, <10 paying; target 5-10% of revenue in FY27 |
| Customers | 465 brands | 25 Fortune 500; 2.7 billion consumer profiles; 53 countries |
| Headcount | 750 employees | 19 offices globally |
| Acquisitions | Session M: $32M ARR | Paid |
| Depreciation & Amortization | ₹20 crores | Up from ₹17 crores YoY due to Session M and Kognitiv acquisitions |
| ESOP Expense | ₹12-15 crores | Expected for FY27; maintained at 1-2% of revenue |
Geographic & Segment Commentary
- United States (~60% of revenue): Largest market with strong organic inbound momentum. Fortune 50/500 customers (major healthcare, pharmacy, fuel retail) were all organic wins. Brand awareness building since US entry ~5 years ago is now translating to inbound demand.
- Europe (~15% of revenue): Good new ACV momentum; Session M adds QSR and airline customers strengthening European presence.
- Asia (~25% of revenue): Solid new logo wins across markets; Kognitiv (APAC-heavy) and Session M strengthen portfolio.
- Product Segments: Loyalty stack drives >90% of revenue; Engage ~5%, Rewards ~5-7%; Insights and data platform not monetized directly. aiRA (AI stack) has 26 customers live with ~10 paying; run rate $2-2.5M ARR. Experiences+ (CustomerGlu) being rebranded for front-end gamified experiences.
- Market Position: Forrester Loyalty Wave leader; 5/5 score on 22 of 27 criteria; most AI-first platform. Software players hold <10% of loyalty spend vs agencies (Epsilon ~$2B revenue, Merkle ~$500M+).
Company-Specific & Strategic Commentary
- Session M Acquisition: Closed May 1, 2026; $32M ARR acquired. All contracts moved to Capillary paper; business turned profitable within two months generating ₹5-6 crores free cash. Net purchase price ₹17 crores after true-up — effectively ~$2M for $32M ARR. Strategic value: QSR/airline verticals, North America/LatAm footprint, quality talent. Payback expected within FY27.
- Kognitiv Migration with AI: First customer goes live September 1, 2026. AI-led migration platform automates code review, configuration, and middleware build. Target: complete 16-17 customer migrations by September 2027 (18-24 month cycle vs 3-5 years historically). Kognitiv revenue ~₹75 crores; migration to 70%+ gross margins expected to add ₹15-20 crores EBITDA, with total acquired book (₹390 crores) potential of ₹120-130 crores incremental EBITDA.
- aiRA AI Stack: 10,000+ customer queries creating learning loop. Priced on outcome-based model (per query). Key differentiator in new deals with 35%+ win rates. No cannibalization — aiRA expands Engage/action revenue opportunity.
- CustomerGlu Acquisition (Experiences+): Sub-₹1 crore tuck-in; SDK for low-code/no-code front-end loyalty experiences (games, scratch cards). Removes IT dependency for marketers. Usage-based pricing; being cross-sold to existing customers with aiRA and Engage+.
- Margin Expansion Levers: Three-pronged — NRR expansion at higher margins (organic GM 75%+), non-COGS costs scaling 12-15% below revenue growth, and acquisition upgrades from ~30% to 70-75% gross margins. Brierley, Persuade, Rewards migrations complete driving margin step-change.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| FY27 Revenue | ₹1,065 crores (will beat) | Management confirmed they will exceed this number but did not quantify by how much |
| FY27 EBITDA | ₹172 crores (will beat) | Same — confirmed beat without revised quantum |
| Organic Growth | 20-23% for FY27 | Q1 at 17% incl. 6% currency; 23% growth organic normalized with ~17% constant currency; Q1 aberration due to large healthcare customer not growing |
| New ACV (FY27) | At least 30-40% growth YoY | Trailing 12-month new ACV ₹92 crores; win rates 35%+; momentum across US, Europe, Asia |
| aiRA Revenue | 5-10% of total revenue in FY27 | Currently $2-2.5M ARR; adoption strong, enterprise budget cycles are gating factor |
| Session M Margins | 5-10% without upgrades; 15% in 1 year | Server cost rationalization ($6-8M savings potential) driving near-term margin; 35-40% long-term as customers migrate |
| Kognitiv Upgrades | Complete by Sep-27 | First customer live Sep-26; AI-driven platform accelerates migration timeline |
Risks & Constraints
| Risk | Context |
|---|---|
| Cyber Fraud Incident | One-time exceptional loss from banking fraud on subsidiary account; estimated ₹30-35 crores impacting reported PAT. No customer/employee data exposed. Insurance claim initiated but recovery quantum/timing unclear. Normalized PAT of ₹25 crores excludes this. |
| Large Customer Concentration | Largest customer (~US healthcare) not growing in Q1, dragging organic growth to 17% vs 23% ex-customer. NRR is 111% including, 116% excluding this customer — shows meaningful single-customer influence on reported metrics. |
| AI Disruption / Competitive Threat | Management acknowledges AI lowers coding barriers; mitigates via system-of-record positioning, brand/distribution moat, enterprise trust, analyst recognition. Enterprise AI adoption remains "abysmal" due to risk aversion. |
| Integration Execution | Session M and Kognitiv migrations carry execution risk. Session M migrations not starting until late FY27/early FY28; Kognitiv 16-17 customers targeted for 18-24 month migration — any delays would defer ₹120-130 crore EBITDA potential. |
| Red Ocean Competition | Loyalty is mature market; agencies (Epsilon, Merkle, Kobie, Bond) hold >90% of spend. Shift to software players is tailwind but competitive intensity remains high. Session M server costs at 50% of revenue indicate infrastructure inefficiency to be fixed. |
| Currency Exposure | 60% US revenue with 6% currency benefit in Q1; no formal hedging — natural hedge via USD cash balances (~50% of cash in USD). Unfavorable FX swings could impact reported INR growth. |
Q&A Highlights
Session M Integration & Migration Timeline
- Question: What percentage of Session M clients have migrated and what's the FY27 run rate? (Vinay Melan)
- Answer: Migrations won't start until end of FY27/early FY28 (2-3 year upgrade cycle typical). 3-4 of 45 customers fast-tracked voluntarily. Near-term margin gains come from server cost rationalization — Session M at 50% revenue vs Capillary's 7-9% — targeting 5-10% margins without upgrades. (Aneesh Reddy Boddu)
NRR Breakdown and Churn
- Question: Can you bifurcate NRR components and share churn? (Shaurya Yadav)
- Answer: NRR split: ~4-5% inflationary price increases and overages; ~10% upsell/cross-sell and new customer cohorts. Churn ~5%. (Anant Choubey)
Cyber Fraud Details
- Question: Was there customer/employee data exposure from the cyber incident? (Shaurya Yadav)
- Answer: No exposure to customer or employee data. It was a banking fraud on one subsidiary's bank account. Insurance claim initiated; recovery amount and timing uncertain. (Anant Choubey)
Kognitiv Migration Economics
- Question: Where are we in Kognitiv migration and what incremental margins? (Shaurya Yadav)
- Answer: First customer live September 1, 2026, serving as AI platform fine-tuning. Target: all 16-17 customers migrated by September 2027 (vs 3-5 years historically for Brierley/Persuade). Kognitiv ~₹75 crore revenue; ₹15-20 crore incremental EBITDA expected from migration. Total acquired book (₹390 crore) carries ₹120-130 crore EBITDA potential at 70%+ margins. (Aneesh Reddy Boddu)
ACV Definition and Migration Treatment
- Question: How do we treat migrated customers in new ACV? (Akshay Jogani)
- Answer: New ACV only counts new contracts (where sales team is comped). Migrated Kognitiv customers don't count as new ACV — they track through NRR in subsequent years. Upsell to existing customers counts as new ACV. (Aneesh Reddy Boddu, Anant Choubey)
Session M Purchase Price Clarification
- Question: Earlier talked about $17M, now ₹17 crores — what's the gap? (Chintan Shah)
- Answer: Enterprise value was $20M with net debt adjustment at closing. Due to business spread across Session M and MasterCard entities, final true-up on April 30 reduced value to
₹17 crores ($2M). Entities are debt-free. (Anant Choubey, Aneesh Reddy Boddu)
Agentic Commerce Impact
- Question: What happens to points/tiers when agents shop instead of humans? (Srinivasu)
- Answer: Agent buying will be rational, measuring to last penny vs human subconscious preference. Loyalty value, promotions, and personalization become more critical. Capillary's <100ms turnaround and API-first architecture positions well for agent-to-agent commerce. (Aneesh Reddy Boddu)
Market Share and Software Adoption
- Question: Can you quantify agency vs software market share? (Sankar Narayan)
- Answer: Agencies hold >90% — Epsilon ~$2B, Merkle ~$500M+, Kobie/Bond hundreds of millions. Software players (Salesforce, Oracle) hold <10% of spend. Growth driven by shift from agency to software model; CMO-led purchases favor speed of tech over agency lead times. (Aneesh Reddy Boddu)
FY27 Guidance Confidence
- Question: Will you retain guidance or revise upward? (Kumar Saurabh)
- Answer: Will definitely beat ₹1,065 crore revenue and ₹172 crore EBITDA guidance, but won't quantify by how much now. Session M expected to reach 15% EBITDA margin in 1 year and 35-40% in 2 years. (Aneesh Reddy Boddu)
Key Takeaway
Capillary delivered a strong Q1 FY27 with revenue of ₹256 crores (+43% YoY), EBITDA of ₹44 crores (+132% YoY), and normalized PAT of ₹25 crores, though reported PAT was -₹9.5 crores due to a ₹30-35 crore cyber fraud exceptional loss and one-time deferred tax liability. Organic growth was 17% YoY (23% organically excluding one large healthcare customer and 6% FX benefit), with organic EBITDA margin at 20%+ and overall Rule of 40 at 60. The Session M acquisition ($32M ARR for ~₹17 crores net) is on plan — profitable within two months, all contracts converted, and payback expected within FY27. Kognitiv migrations begin September 1 with AI-driven platform targeting completion by September 2027, unlocking ₹120-130 crore EBITDA potential from ₹390 crore acquired revenue base. aiRA AI stack reached $2-2.5M ARR with 26 customers live, targeting 5-10% of revenue in FY27, while new ACV growth of 75% YoY demonstrates strong new logo momentum. Management confirmed they will beat the ₹1,065 crore revenue and ₹172 crore EBITDA guidance for FY27, with organic growth guided at 20-23%, and remains disciplined on M&A as a customer acquisition cost substitution strategy. Key watch points: cyber fraud recovery timing, large customer growth normalization, and execution on AI-led migration platform.