eClerx Services (ECLERX) Q2 24/25 earnings summary

Executive summary

• Q2 FY25 operating revenue was USD 98.8 million (INR 8,318–8,447 million), up 6% sequentially and 12.8–15.4% year-on-year, with strong growth in financial markets and customer operations.

• EBITDA margin improved to 27.1%, with PAT at INR 1,402–1,402.48 million and a margin of 16.6–16.9%.

• Growth was broad-based across top clients, with North America contributing 76% of revenue and Europe remaining challenging.

• ACV of deal wins was USD 28.9 million, though higher roll-offs from short-term projects will impact Q3.

• Delivery and value proposition remain strong, with continued focus on cross-sell, upsell, and transformation services.

Financial highlights

• Operating revenue reached INR 8,318–8,447 million, up 6.4% QoQ and 15% YoY; total revenue was INR 8,447 million, up 5.2% QoQ and 14.8% YoY.

• EBITDA was INR 2,288–2,523.13 million, up 22% sequentially; PAT up 26% sequentially and 3.9% YoY.

• Analytics and automation business grew 10% sequentially to USD 19 million.

• Basic EPS for Q2 FY25 was INR 29.66, up from INR 23.13 in Q2 FY24.

• Net operating cash flow for Q2 FY25 was INR 2,048.1 million, with EBITDA conversion at 89.5%.

Outlook and guidance

• Medium- to long-term outlook remains positive, with a strong pipeline and continued focus on top quartile industry growth.

• EBITDA margin guidance for FY25 remains at 24%-28%, with sequential EBITDA growth expected.

• Q3 and Q4 will see increased G&A and depreciation costs due to new facilities, impacting margins by 50-70 basis points.

• Roll-offs from short-term projects will impact Q3, but pipeline and cross-sell opportunities remain strong.

• Management notes forward-looking statements are subject to risks and uncertainties, including integration of acquisitions and economic conditions.