Fractal Analytics reported a 92% year-on-year (YoY) jump in first-quarter profit, at Rs 72.3 crore, driven by strong demand for enterprise AI services and healthy margin expansion.
The company posted operational revenues of Rs 912.5 crore in the June quarter, up 20% on-year. In Q4, Fractal's revenue stood at Rs 886.3 crore and net profit at Rs 115.8 crore. Its Ebitda (earnings before interest, tax, depreciation, and amortisation) margin expanded to 16% in the quarter, up from 12.5% in the year before.
“Revenue growth was led by the company’s healthcare and life sciences (HLS) industry, which clocked 69% growth on-year,” the company said in a statement.
Banking, financial services, and insurance (BFSI) grew 36%, while Fractal’s largest vertical, consumer packaged goods and retail (CPGR), grew 19% YoY. However, the Tech, Media, and Telecom vertical (TMT) declined 22% YoY.
During the post-earnings call, the management noted that the TMT vertical had bottomed out and the company expects healthy sequential growth from it the next quarter, driven primarily by new projects from existing clients. “Excluding TMT, our business grew 35% year-on-year, which is a better read on the underlying demand we're seeing,” they said.
Fractal’s largest market, the Americas, which constitutes nearly 70% of its business, grew 24% in the quarter. Europe grew 25%, while Asia-Pacific and other regions declined 2%.
“Enterprises are putting real transformation budgets behind AI now and we're seeing it in the size of the deals coming to us,” Srikanth Velamakanni, group CEO and executive vice chairman, said in a statement.
On the call, the management said the company won one of the largest deals in Fractal's history in the quarter, to build the AI foundations for a large healthcare player and modernise their data estate using AI.
“A year ago, AI was just an experimentation budget spent in pockets. Today, it is the core budget. That's what we work with and that's what Fractal was built for,” the management explained.
Fractal said it now has 58 clients contributing over $1 million in annual revenue each in Q1, up from 54 a year earlier, reflecting increased enterprise adoption of AI-led transformation services.
