Firstsource Solutions (FSL) Q2 24/25 earnings summary

Executive summary

• Q2 FY25 revenue reached ₹19,326.12 million ($230M), up 25% YoY, with strong deal wins and robust pipelines across verticals.

• Operating margins remained stable at 11.1% (excluding one-off Ascensos costs), with net profit at ₹1,382.11 million and diluted EPS of ₹2.01.

• The Ascensos acquisition expanded retail and e-commerce capabilities, added multilingual and nearshore delivery, and brought 2,500 employees.

• Three large deals were signed in Q2, with 13 new logos added, the highest in two years.

• H1 FY25 revenue totaled ₹37,165 million ($445M), up 21.1% YoY.

Financial highlights

• Q2 FY25 revenue was ₹19,326.12 million ($230M), up 25% YoY; constant currency growth was 22.7% YoY.

• EBIT margin was 11.1% (excluding one-time charges); EBITDA margin at 14.9%.

• PAT margin stood at 7.2%, with net profit at ₹1,382.11 million.

• DSO improved to 65 days; OCF to EBITDA was 79%, and FCF to PAT was 101%.

• Cash balances were ₹2,024 million, and net debt was ₹6,950 million as of September 30, 2024.

Outlook and guidance

• FY25 constant currency revenue growth guidance raised to 19.5%-20.5%, including about 5% from Ascensos.

• Organic growth guidance is 14.5%-15.5% for FY25.

• Normalized EBIT margin for FY25 expected in the 11%-11.5% range, excluding one-time acquisition charges.

• Management remains cautious due to macro uncertainties but sees potential upside if conditions improve.

• The Board approved results on October 28, 2024, with an unmodified auditor opinion.