Flat quarter, margins below target, AI opportunity masked by headwinds

Delivered 286.9 Cr, 21.5% YoY, -0.6% QoQ — matches results precisely

USD 30.3M sequentially, 3.5% contraction vs 1.5-2% guided — exceeded headwind

Delivered 20.4% adjusted EBITDA but NPM only 15.3% — below FY27 guidance of 21-22%

PAT down 6.8% YoY (47.1 Cr vs ~50.5 Cr prior year) despite revenue +21.5% — signals operational margin compression

12% is down from 18-20% FY26 run rate; insourcing loss USD 9M permanent; Q1 guidance execution worse than guided

Prior run rate 18-20%; now guiding 12% due to USD 9M insourcing loss at tech account and CPG one-offs. Represents 33-40% deceleration.

Q1 delivered 20.4% adjusted EBITDA vs 21-22% FY27 target. Wage hikes (-2.7%), visa/marketing costs, revenue shrinkage (-1%) cite reasons but net below guidance in month one.

80% of work AI-enabled (primary or secondary) vs 50% prior year. Primary AI 35% vs 28% prior. But explicitly margin-dilutive due to high on-site FDE model currently.

One tech customer insourcing cost USD 7-9M (USD 10M annual run rate customer). Management acknowledged change in leadership and cost mandates at client drove decision.

New organizational structure to centralize AI products, agents, partnerships. Expected to accelerate AI-led solutions but requires upfront investment (offset dollar appreciation upside).

Confirmed numbers visible in Q2 already; reasonable confidence on extensions and pipeline converting. Other upside items exist if they materialize, but 12% base case has good confidence.

Productivity gains 30-80% depending on complexity. Managed services clients capture most gains; fixed-fee project model allows Latent View to retain upside. Plan to incentivize teams to move to outcome-based contracting.

Financial services, health care, life sciences, retail/marketplaces expected strong organic growth. Inorganic in health care + data engineering space (1-2 strong opportunities in pipeline, letter of intent phase). Gap to fill depends on how year plays out.

Primary AI margin-accretive medium-term as foundry scales; currently dilutive due to high on-site FDE model. Token costs borne by client in 95% of cases (they provide stack). Not a near-term margin concern.

Project-led work 15-18% of overall mix. Q4 one-offs (INR 800k-850k) didn't roll forward. Decision Point being moved to larger program-based model. Some lumpiness expected but not large contracts anticipated Q2-Q3.

Front-end of value chain (customer, marketing, fraud, risk analytics). Strong credentials in tech/e-commerce. Retail media networks, payment ecosystems emerging. Supply chain emerging capability. Moat is domain expertise and customer relationships in specific use cases.

One tech account insourced USD 7-9M revenue annually due to leadership change and cost reduction mandate (customer investing billions in data centers). Eroded base by that amount. New opportunities in cloud/platform/finance function expected to plug gap during FY27.

21-22% guidance maintained for FY27. Dollar appreciation benefit offset by investments in Chief AI Officer, CDO, partnership functions. No intention to raise margin guidance; focus on balancing growth with profitability.

Net new Databricks revenue last year USD 5M. Work on Databricks platform USD 17.5-18M. Q1 run rate same; expected to bump to USD 8.5M from USD 7.8M in Q2. Momentum fairly strong.

Confidence based on confirmed Q2 numbers and reasonable expectation on extensions/pipeline. USD 9M insourcing loss at tech customer is drag; other upside items exist if they materialize.

Q1 delivered 20.4% adjusted EBITDA (already below guidance). Wage hikes -2.7% in Q1, additional 40-50 bps expected Q2. CFO explicitly says will not raise margin guidance; investments in Chief AI Officer and partnerships offset dollar appreciation upside.

One tech customer insourced USD 9M annual business due to leadership change and cost mandates. Management hopes new cloud/platform/finance opportunities offset but not proven. Represents ~3% of annual revenue at 12% growth guidance.

CPG practice shrunk Q1 due to one-time projects (INR 800k-850k) from Q4 not extending. Project-led work is 15-18% of mix; creates unpredictability. Management claims 25%+ QoQ recovery in Q2 but not yet materialized.

Delivered 20.4% adjusted EBITDA in Q1 vs 21-22% FY27 target (already below). Wage hikes (-2.7% in Q1, 40-50 bps more Q2), visa/marketing costs, revenue shrinkage (-1%) explain gap. AI productivity gains (30-80%) largely accruing to managed-services clients, not Latent View.

35% of work is primary AI (up from 28%), but explicitly margin-dilutive currently due to high on-site FDE (forward-deployed engineer) model. Medium-term margin accretion promised but timeline vague and foundry scaling uncertain.

Tech customer insourcing was driven by cost reduction mandates (investing billions in data center/AI infrastructure instead of external services). Macro uncertainty acknowledged. Clients may further optimize analytics spend.