hSenid Business Solutions (HBS.N0000) Q1 2026 earnings summary

Executive summary

• Q1 FY2026 revenue reached LKR 471.8 million, with 72% from recurring sources and subscription revenue up 36% YoY; ARR grew 27% YoY to $4.5 million, with 91% of new deals from PeoplesHR Cloud.

• Net loss for the quarter was LKR 35.7 million, but normalized EBITDA margin improved to 2% from -10% YoY, and free cash flow remained positive for the second consecutive quarter.

• All IPO funds were fully utilized for market expansion and product development as of June 30, 2025.

• Over 1,700 customers in 40+ countries, with 1M+ global users and churn at 5%.

• New deal bookings totaled USD 441,000, up 34% YoY, with 91% from PeoplesHR Cloud.

Financial highlights

• Total revenue grew 1% YoY in LKR and 2% in USD constant currency; subscription revenue up 32%–36% YoY; professional services revenue declined.

• Gross profit margin improved to 46% in Q1 FY26 from 43% in Q1 FY25, with gross profit up 10% YoY.

• Net loss narrowed to LKR 35.7 million from LKR 60.4 million YoY; basic EPS improved to (0.13) from (0.22).

• Free cash flow margin remained positive at 1%, and net cash from operating activities was LKR 121.5 million.

• Market capitalization at quarter end was LKR 3.3 billion; net asset value per share was LKR 3.61.

Outlook and guidance

• Consistent profitability expected once ARR reaches $4.9–$5 million, targeted by end of next quarter.

• Focus on expanding ARR base, recurring revenue, and margin improvements, with AI integration and cloud migration ongoing.

• Sales closures and demand generation expected to improve in the next two to three quarters, especially in Southeast Asia.

• Targeting 30% ARR growth and 10% free cash flow margin to achieve the SaaS industry 'rule of 40' and higher valuation multiples.

• Focus on expanding late-stage sales pipeline and reinforcing sales teams in key markets.