Revenue
Margin
Demand
Guidance
Tone
Event Participants
Executives
3 Nand Sardana, Nitesh Bansal, Tarun Kothari
Analysts
8 Anmol Garg, Ashish Das, Ayush Shah, Deepak Malhotra, Dhir Gada, Manish Jain, Sandeep Shah, Sonal Menas
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue | ₹601.7 crores / $63.6M | +30.2% YoY (INR), +17.7% YoY (USD), +4.7% QoQ (INR); driven by volume growth, rupee depreciation, and Novigo acquisition |
| H1 Revenue | ₹1,176.5 crores / $126.4M | +30.1% YoY over H1'25 (₹904.5 crores) |
| Adjusted EBITDA | ₹120.7 crores / $12.8M | +51.4% YoY; margin 20.1% vs 17.3% YoY (281 bps expansion); ~6 bps QoQ improvement; benefits from FX, revenue mix, operational leverage |
| H1 Adjusted EBITDA | ₹236.4 crores / $25.4M | +51.0% YoY; H1 margin 20.1% vs 17.3% |
| Adjusted Net Profit | ₹62.9 crores / $6.6M | +35.4% YoY; QoQ decline driven by ₹18 crore one-time Q1 hedge benefit and elevated SG&A spend |
| Adjusted EPS | ₹5.3 | +35.3% YoY; H1 EPS ₹11.7 (+54.3% YoY) |
| ACV Bookings (Q2) | $82.9M | vs $82.3M in Q1; large AI-led wins in telecom, BFSI, insurance, ad-tech |
| Gross Margin | 39.2% | vs 36% both QoQ and YoY; higher billable days, rupee depreciation, improved utilization |
| Utilisation | 80.5–81% | Within targeted band; previously banked AI bench investments beginning to deploy to revenue |
| DSO | ~55–56 days billed; ~75 days billed+unbilled | In line with or better than industry averages |
| Data/AI/Cloud Revenue Share | >50% of revenue | Crossed 50% and continuing to rise; project-based/discretionary, no seasonality |
Geographic & Segment Commentary
- Americas: Revenue share improved to 71.5% from 69.3% of total revenue, reflecting continued strength and larger AI-led engagements.
- APAC: Declined to 15.3% as certain larger projects concluded during the quarter; management noted this was project lifecycle-driven, not demand weakness.
- Europe: Largely stable at 9.7% of revenue.
- Middle East & Africa: Stable at 3.6%; Novigo continues to win deals in the region despite geopolitical headwinds.
- GCC Services: Strong growth vector; R Systems recognized as a Horizon 2 GCC Accelerator by HFS in the Horizons GCC Service 2026 Report for its AI-first enablement model.
- Client Concentration: Top client contribution rose to 6% (from 5.8%); top 10 clients at 24.4% (from 24%); mining existing accounts continues to deepen recurring revenue.
Company-Specific & Strategic Commentary
- AI-First Delivery & EXIQO: Launched EXIQO AI studio (Q1) which is gaining traction; management reports ~2x productivity and 55% improvement in turnaround time from Optima AI platform, supporting revenue growth without commensurate headcount increase.
- Agentic Business Operations: New offering family leveraging Novigo's enterprise landscape expertise and R Systems' AI stack; seeing green shoots in pipeline and deal conversions across banking, insurance, and transportation.
- Go-To-Market Investments: SG&A rose ₹23.8 crores QoQ to ₹115.3 crores on deliberate sales and marketing spend — new CRO, AI/domain experts embedded in sales, new brand identity, and conference participation around EXIQO.
- Novigo Integration: Fully integrated; management states organic and inorganic engines both contributing; Novigo's geo-political exposure in Middle East offset by strong deal wins across markets.
- Client Wins (Q2): Telecom analytics and data science engagement; GCC center of excellence for a small-business lender; AI-powered quality engineering for a global insurer; Microsoft Dynamics 365 CRM transformation for an exchange/market-access client; core platform modernization for a leading ad-tech company — all AI-led.
- M&A Approach: Organic plus inorganic growth thesis; management "on the lookout" for differentiated, margin-accretive capabilities, but no near-term targets disclosed.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Adjusted EBITDA Margin | 18–18.x% sustainable | Management has repeatedly guided to this band; will invest incremental surplus in AI initiatives, sales, and marketing |
| Revenue Growth | No numeric guidance | Bookings-to-revenue lag effect — H1 2026 wins expected to translate into revenue H2 2026; pipeline quality and average deal sizes improving |
| Headcount | Largely flat going forward | Revenue per employee expected to keep rising via AI-led delivery productivity |
| Constant Currency Growth | Targeting 3–4% | Management acknowledges 3–4% CC is the aspiration; dependent on client decision cycles and AI adoption velocity |
Risks & Constraints
| Risk | Context |
|---|---|
| Currency Volatility | INR ranged ₹92.6–96.5/USD during Q2; rupee depreciation aids margins but hedging MTM creates quarterly earnings volatility (Q1 had ₹18 crore OCI loss; Q2 recognized ₹9 crore realized loss) |
| Project-Based Revenue Lumpiness | Majority of revenue is discretionary transformation/innovation spend; project closures can mask organic growth; management addresses via ACV pipeline replenishment and increasing deal durations |
| Novigo Geopolitical Exposure | Middle East tensions continue to create headwinds for the acquired entity; management notes strong deal wins despite this |
| AI-Driven Pricing Deflation | Industry-wide concern over renewal contract deflation; R Systems mitigates via AI-first bid model — productivity is embedded in pricing up front (AI monetization, not deflation) |
| Client Decision Cycles | Delayed decisions in uncertain macro environment could delay achievement of 3–4% CC growth; management cites pipeline quality as mitigation |
| Effective Tax Rate | ~31% (higher than normalized 28–29%) due to non-deductibility of acquisition-related intangible amortization |
Q&A Highlights
SG&A Increase and Strategic Investments
- Question: SG&A up ~₹24 crores QoQ — additional hiring in sales, any puts and takes? (Anmol Garg, DAM Capital)
- Answer: Deliberate investment in sales and marketing — new CRO onboard, AI and domain experts embedded in sales, EXIQO AI studio launch marketing, new brand identity; management will continue this investment to convert AI differentiation into growth. (Nitesh Bansal)
Growth Outlook and Bookings-Led Visibility
- Question: Full-year growth outlook and GCC revenue percentage, and has deal duration increased? (Anmol Garg)
- Answer: No numeric guidance, but "comfortable" given TTM bookings; ACV wins are above project closures; revenue mix shifting toward data/AI/cloud with higher revenue per employee; GCC is a growth vector though percentage not disclosed; annuity portion of revenue still small, with agentic business operations expected to build sustainability. (Nitesh Bansal)
Organic Growth Concern
- Question: Given so many structural changes, why does organic growth look muted and when will it revive? (Ashish Das, Systematic Group)
- Answer: Organic growth has been consistently positive quarter-over-quarter; revenue grew ~18% YoY with no real headcount increase, demonstrating quality of wins and revenue per employee; deal size and duration increasing; market adoption of AI-first delivery should accelerate wallet share gains and higher organic growth. (Nitesh Bansal)
ACV and Novigo Contribution
- Question: Is TTM ACV flattish because of decision delays or macro, and what is Novigo's win trajectory? (Ashish Das; Sandeep Shah)
- Answer: Neither — Q2 last year had large deal wins, and this year Q2 also had large wins, so TTM is flattish but not weak; ACV growth is organic, unaffected by inorganic addition; Novigo faces Middle East geopolitical challenges but continues strong deal wins across markets. (Nitesh Bansal)
Wage Hikes and Margin Outlook
- Question: When do wage hikes hit and what is near-term margin outlook? (Ashish Das)
- Answer: Biannual wage hike cycle — first cycle implemented this quarter and already reflected in results; margin expansion came from revenue mix (higher revenue per employee) and rupee depreciation; management guides to 18–18.x% adjusted EBITDA on a sustainable basis, with surplus reinvested into AI and sales. (Nitesh Bansal)
Data/AI/Cloud Share and Seasonality
- Question: What is the data/AI/cloud revenue percentage, and is it less lumpy? (Sandeep Shah, Equirus)
- Answer: Data and cloud together have crossed 50% of revenue and continue rising; still largely project-based discretionary spend, so project lifecycles exist, but no seasonal effects. (Nitesh Bansal)
Productivity Gains and Revenue Velocity
- Question: Salary costs flat while revenue grows — any commentary on productivity? (Sonal Menas, Prescient Capital)
- Answer: Revenue growth without cost increase reflects AI-led delivery productivity; EXIQO/ Optima AI deliver ~2x productivity and 55% turnaround time gains; management sees accelerating revenue and margin velocity, though impact may take time to become a significant share of revenue. (Nitesh Bansal)
AI Deflation vs. AI Monetization
- Question: Is there deflation in contract value due to AI, and does it continue? (Ayush Shah, AlfAccurate Advisors)
- Answer: Management focuses on AI monetization, not deflation — because business is not multi-year annuity contracts, there are no renewal-based deflationary pressures; AI productivity is priced into bids at win stage, so margins continue improving while customers get efficiency. (Nitesh Bansal)
M&A Appetite
- Question: Any additional inorganic opportunities to bolster growth? (Deepak Malhotra, CapGrow Capital Advisors)
- Answer: Organic-plus-inorganic thesis remains; actively evaluating inbound opportunities, being selective on differentiated, accretive capabilities; near-term focus is maximizing Novigo synergies and accelerating AI market position. (Nitesh Bansal)
Key Takeaway
R Systems delivered a record quarter with revenue of ₹601.7 crores (+30.2% YoY), adjusted EBITDA margin of 20.1% (up 281 bps YoY), and adjusted net profit of ₹62.9 crores (+35.4% YoY), though QoQ profit dipped due to a Q1 one-time ₹18 crore hedging benefit and deliberate SG&A investment of ₹23.8 crores in sales, marketing, and AI capabilities. The company's AI-first strategy is gaining demonstrable traction — data/AI/cloud now exceeds 50% of revenue, ACV bookings reached $82.9 million in Q2 with several large AI-led wins in telecom, BFSI, insurance, and ad-tech, and headcount remained flat even as revenue grew 30%, reflecting ~2x delivery productivity gains from the EXIQO/Optima AI platform. Management reiterates a sustainable 18–18.x% adjusted EBITDA margin band and expects H1 bookings to convert into stronger H2 revenue realization. Watch items include currency volatility impact on hedging gains, Novigo's Middle East exposure, and the pace at which client decision cycles allow constant-currency growth to reach the 3–4% aspirational range.