hSenid Business Solutions (HBS.N0000) Q2 2026 earnings summary

Executive summary

• Q2 FY2026 revenue reached LKR 516.9 million, up 23% year-over-year and 9-10% quarter-over-quarter, with recurring revenues at 72% of total.

• ARR surpassed USD 4.9 million, up 34% year-over-year and 9% quarter-over-quarter, with new deal closures of USD 381,931–382,000, 76% from PBS/PeoplesHR Cloud.

• Normalized EBITDA margin improved to 11% (from ~2% in Q1), and adjusted free cash flow margin was positive at 5%.

• Net loss for the quarter was LKR 25.9–26 million, mainly due to one-off restructuring expenses, but significantly improved from prior year.

• Over 1,700 customers in 40+ countries, with 1 million+ global users and churn at 5–5.5%.

Financial highlights

• Subscription/recurring revenue grew 34% year-over-year and 8% quarter-over-quarter, accounting for 72% of total revenue.

• Gross profit margin improved to 46% in Q2 FY26; gross profit rose 30% year-over-year to LKR 239.8 million.

• Net loss margin at -5% in Q2 FY26, with EPS at LKR -0.09.

• Adjusted free cash flow remained positive for the third consecutive quarter.

• Cash reserves at ~$1.8 million, with group cash and bank balances at LKR 336 million.

Outlook and guidance

• Profitability expected at PAT level in Q3 FY2026, with sustainable positive operating cash flows projected.

• Targeting ARR growth of 30%-35% annually and free cash flow margin of 5%-10%, aiming to exceed the SaaS 'rule of 40'.

• Strategic focus on accelerating deal closures in Southeast Asia and leveraging product innovation, including AI-powered features.