Fractal Analytics Ltd — Q4 FY26 earnings call
Summary generated by AI from the official transcript Fractal Analytics Ltd filed with BSE on 14 May 2026. Every statement cites a verbatim quote from that document — open any citation to read it. This is a record of what management said, not a recommendation. How we check these summaries
The short read
Fractal reported Q4 FY2026 revenue of INR 886 crore, up 17% year-over-year, and full-year revenue of INR 3,300 crore, up 19%. Full-year adjusted EBITDA margin came in at 17.6%, net income grew 30% to INR 287 crore, and the company ended the year with INR 2,052 crore of cash after using IPO proceeds to repay long-term debt. Management discussed vertical performance, including strong healthcare and life sciences growth and a decline in the technology, media and telecom vertical due to client-specific issues, and outlined a new three-pillar, one-platform, three-region operating structure.
Numbers mentioned
Revenue: INR 886 crore or USD 97 million (Q4 FY2026)
p. 5
“Revenue for Q4 was INR 886 crore or USD 97 million up 17% over last year.”
Srikanth Velamakanni, page 5 of the filed PDF · View the filing
Revenue: INR3,300 crore or USD 374 million (FY2026)
p. 5
“For the full year, revenue grew 19% to INR3,300 crore or USD 374 million.”
Srikanth Velamakanni, page 5 of the filed PDF · View the filing
Healthcare and life sciences growth: 66% (FY2026)
p. 5
“Vertical wise, health care and life sciences led the year at an exceptional 66% growth and is now our second largest vertical on a quarterly run rate basis.”
Srikanth Velamakanni, page 5 of the filed PDF · View the filing
TMT vertical decline: 1% (FY2026)
p. 5
“Technology, media, and telecom declined 1% on the two specific client issues I discussed last quarter.”
Srikanth Velamakanni, page 5 of the filed PDF · View the filing
TMT vertical decline: 19% (Q4 FY2026)
p. 5
“In Q4, that decline was 19%.”
Srikanth Velamakanni, page 5 of the filed PDF · View the filing
Net Promoter Score: 81 (Q4 FY2026)
p. 5
“In Q4, our net promoter score was 81, the highest we have recorded.”
Srikanth Velamakanni, page 5 of the filed PDF · View the filing
Net revenue retention: 117% for the year and 112% for Q4 (FY2026 / Q4 FY2026)
p. 5
“Net revenue retention at 117% for the year and 112% for Q4.”
Srikanth Velamakanni, page 5 of the filed PDF · View the filing
Adjusted EBITDA growth: 28% (Q4 FY2026)
p. 5
“Q4 adjusted EBITDA grew 28% on revenue growth of 17%.”
Srikanth Velamakanni, page 5 of the filed PDF · View the filing
Adjusted EBITDA margin: 22%, up 189 basis points (Q4 FY2026)
p. 5
“Q4 adjusted EBITDA reached 22% up 189 basis points over last year.”
Srikanth Velamakanni, page 5 of the filed PDF · View the filing
Adjusted EBITDA margin: 17.6% (FY2026)
p. 5
“Full year adjusted EBITDA margin was 17.6 % after expensing 4.1% on R&D.”
Srikanth Velamakanni, page 5 of the filed PDF · View the filing
Net income: INR 287 crore, or INR 357 crore excluding associate losses (FY2026)
p. 5
“Net income grew 30% for the year to INR 287 crore or 43% to INR 357 crore excluding our share of associate losses.”
Srikanth Velamakanni, page 5 of the filed PDF · View the filing
Cash balance: INR 2052 crore (as of March 31, 2026)
p. 5
“We ended the year with INR 2052 crore of cash, including IPO proceeds of INR 957 crore.”
Srikanth Velamakanni, page 5 of the filed PDF · View the filing
Q4 net income growth: 109% year-on-year to INR 116 crore (Q4 FY2026)
p. 7
“Q4 net income grew by 109% year-on-year to INR 116 crore or USD 13 million.”
Ashwath Bhat, page 7 of the filed PDF · View the filing
Clients with $1 million plus revenue: 59, up from 53 (FY2026)
p. 7
“Number of clients with $1 million plus revenue went up from 53 in the previous year to 59 in FY2026.”
Ashwath Bhat, page 7 of the filed PDF · View the filing
Cash from operations: INR 409 crore, 70% conversion of adjusted EBITDA (FY2026)
p. 7
“We generated INR 409 crore of cash from operations, which is a 70% conversion of adjusted EBITDA.”
Ashwath Bhat, page 7 of the filed PDF · View the filing
Gross margin: 48.2%, up 47 bps year-over-year (Q4 FY2026)
p. 8
“Q4 2026 gross margin expanded by 47 bps year-over-year to 48.2%.”
Ashwath Bhat, page 8 of the filed PDF · View the filing
Gross margin: 46.8%, up 93 bps year-over-year (FY2026)
p. 8
“Gross margin for the FY2026 expanded by 93 bps year-over-year to 46.8%.”
Ashwath Bhat, page 8 of the filed PDF · View the filing
R&D investment: INR 212 crore, 48% higher than previous year (FY2026)
p. 9
“In FY2026, we spent INR 212 crore on R&D investments, 48% higher than the previous year.”
Ashwath Bhat, page 9 of the filed PDF · View the filing
Fractal Alpha segment loss: INR 15 crore (FY2026)
p. 6
“Segment losses have continued to narrow from INR 26 crore in FY2025 to INR 15 crore in FY2026, even as we kept investing.”
Srikanth Velamakanni, page 6 of the filed PDF · View the filing
Diluted EPS: INR 6.73, up 106% (FY2026)
p. 10
“Diluted EPS is at INR 6.73 which is 106% higher than the same period in the previous fiscal and is at INR 7.14 without losses from the associate company.”
Ashwath Bhat, page 10 of the filed PDF · View the filing
DSO: 72 days, improved from 74 days (FY2026)
p. 10
“DSO which is an important indicator for cash flow generation has improved by two days that is from 74 days in FY2024-FY2025 to 72 days in the current fiscal year.”
Ashwath Bhat, page 10 of the filed PDF · View the filing
What management said it would do
A record of statements made on the call, in the words management used. Parakho does not forecast, endorse or assess them, and their presence here is not a view on whether they will happen.
Output/outcome/license-based revenue share — 60% of revenue · next two to three years
stated as an aspiration by Srikanth Velamakanni
p. 14
“We expect to get to 60% of our revenue to be output, outcome, or license based in the next two to three years.”
Srikanth Velamakanni, page 14 of the filed PDF · View the filing
TMT vertical performance — next few quarters
stated conditionally by Srikanth Velamakanni
p. 13
“we expect these client-specific growth issues to have worked themselves out through this year, and therefore, we expect to do better in the TMT vertical in the next few quarters.”
Srikanth Velamakanni, page 13 of the filed PDF · View the filing
License-driven revenue share — 20% of revenue · by 2030
stated as an aspiration by Srikanth Velamakanni
p. 22
“We want to take that license driven revenue from 3% to 20% by 2030, and which will be quite significant in terms of also margin expansion.”
Srikanth Velamakanni, page 22 of the filed PDF · View the filing
Profitability journey
stated firmly by Srikanth Velamakanni
p. 14
“So first thing is that we expect to continue our profitability journey.”
Srikanth Velamakanni, page 14 of the filed PDF · View the filing
Qure.ai revenue growth — coming year
stated as an aspiration by Srikanth Velamakanni
p. 19
“the expectation that Qure as a business will have phenomenal revenue growth and therefore, some of the losses that we have experienced in this fiscal year through the IPO process and after that also a couple of quarters, we have seen that Qure has been a huge drag on our overall profitability.”
Srikanth Velamakanni, page 19 of the filed PDF · View the filing
Fractal Alpha revenue contribution — FY2027
stated as an aspiration by Srikanth Velamakanni
p. 23
“I cannot tell the exact figure, but I can tell the revenue contribution will be higher than the prior year, I can tell this segment is growing faster relative to Fractal overall.”
Srikanth Velamakanni, page 23 of the filed PDF · View the filing
Revenue growth — next year
stated as an aspiration by Srikanth Velamakanni
p. 15
“We do not have specific revenue guidance at this point in time, but we expect that our historical revenue growth rates are a good indication of where we should be growing in the next year as well.”
Srikanth Velamakanni, page 15 of the filed PDF · View the filing
Q&A highlights
Management's answers to analyst questions, in Parakho's words rather than a transcript. Each row names who answered and carries the verbatim quote it was drawn from.
Srikanth explained one client moved work to a joint venture and another client contracted due to internal restructuring; he said TMT is not a low margin business and expects improvement in coming quarters.
Answered by Srikanth Velamakanni
Asked by Pritesh Thakkar: What caused the TMT vertical decline and how should investors think about TMT margins and outlook?
p. 12
“one of the client situations was where the client entered into a joint venture with another provider and in the process, reduced the work with us to almost zero.”
Srikanth Velamakanni, page 12 of the filed PDF · View the filing
Srikanth said the company aims to maximize revenue growth while maintaining a profitability threshold and is shifting engagements toward outcome, output, and license-based pricing.
Answered by Srikanth Velamakanni
Asked by Gaurav Rateria: How should investors think about the company's priority between reinvestment and profitability, and how are engagements structured commercially?
p. 14
“we expect to continue our profitability journey. We want to increase our revenue growth rate while expanding gross margins, not by sacrificing gross margins.”
Srikanth Velamakanni, page 14 of the filed PDF · View the filing
Srikanth said the output-based share is growing toward a 60% target over two to three years, and that enterprise AI adoption is expected to be robust though gradual due to enterprise implementation friction.
Answered by Srikanth Velamakanni
Asked by Aditi Patil: What share of Fractal.ai revenue comes from output-based contracts, and how will the 100x opportunity translate into growth?
p. 14
“we do not separately report this number. You could say that, that number is growing.”
Srikanth Velamakanni, page 14 of the filed PDF · View the filing
Srikanth cited three factors: a client joint venture that reduced work to near zero, a client's internal restructuring, and unrecognized revenue due to data-related delays with a large MAG7 client.
Answered by Srikanth Velamakanni
Asked by Kawaljeet Saluja: What specifically drove the sharp TMT revenue drop this quarter?
p. 17
“in this quarter, we were not able to recognize some revenue because of some data-led delays. We did not have the data in place at the right time.”
Srikanth Velamakanni, page 17 of the filed PDF · View the filing
Srikanth said the USAID funding cut had created a major headwind that has now played out, and Qure is now sitting on a strong order pipeline expected to drive better performance and reduced drag on profitability.
Answered by Srikanth Velamakanni
Asked by Dhanshree Jadhav: What is the outlook for Qure.ai given lower US healthcare spending and losses?
p. 19
“today, as of April 2026, Qure is sitting on a phenomenal order pipeline and a very, very strong order book.”
Srikanth Velamakanni, page 19 of the filed PDF · View the filing
Srikanth said growth excluding TMT would have been 27% versus reported 19%, and that output/outcome pricing carries 5-7 points higher gross margin than input-driven, with license revenue about 25-30 points higher still.
Answered by Srikanth Velamakanni
Asked by Dipesh Mehta: Can you quantify the impact of client-specific challenges on growth, and the gross margin difference between outcome/output/license revenue versus traditional business?
p. 20
“our growth rate, as you would be able to calculate, without including TMT would be 27% for the full year as opposed to the 19% that we have actually reported.”
Srikanth Velamakanni, page 20 of the filed PDF · View the filing
Srikanth said license revenue including Cogentiq is currently about 3% of Fractal's revenue, with a target to reach 20% by 2030.
Answered by Srikanth Velamakanni
Asked by Nikhil Gupta: What is Cogentiq's current share of Fractal AI revenue and the target trajectory?
p. 22
“That number is currently only about 3% of Fractal’s revenue.”
Srikanth Velamakanni, page 22 of the filed PDF · View the filing
Risks flagged
Client-specific issues in TMT vertical including a joint venture and client restructuring reduced revenue
p. 12
“Another client situation was such that the client itself was going through massive restructuring because of which they were unable to expand their business and they had to contract with us.”
Srikanth Velamakanni, page 12 of the filed PDF · View the filing
Data-related delays prevented revenue recognition with a large client
p. 17
“we were not able to recognize some revenue because of some data-led delays. We did not have the data in place at the right time.”
Srikanth Velamakanni, page 17 of the filed PDF · View the filing
Loss of USAID funding created a major headwind for Qure.ai's tuberculosis programs
p. 19
“The first action that DOGE took was to shutter an agency called USAID, which it turns out is one of the largest funders of tuberculosis programs around the world, not only directly through USAID, but through several other agencies relied on USAID.”
Srikanth Velamakanni, page 19 of the filed PDF · View the filing
CPG sector slowdown due to trade regime uncertainty
p. 18
“as soon as the Liberation Day related trade regime was announced, many of the CPG companies really froze and that created its own inflation expectations and also some overall slowdown in CPG for the first half of the last fiscal.”
Srikanth Velamakanni, page 18 of the filed PDF · View the filing
Geopolitical and macroeconomic uncertainty tempering enterprise AI excitement
p. 19
“What we are seeing is a net result of extreme excitement around enterprise AI, tempered with some of the macroeconomic related situations that exist, as we all know.”
Srikanth Velamakanni, page 19 of the filed PDF · View the filing
Certain adjusted EBITDA benefits may not repeat in future quarters
p. 9
“Some of these benefits may or may not repeat in the future.”
Ashwath Bhat, page 9 of the filed PDF · View the filing
Generated by claude-sonnet-5. Source: the transcript as filed with BSE. We link to the exchange's copy; we do not host transcripts. Parakho is a data and screening tool, not an investment adviser — nothing here is a recommendation to buy, sell or hold.