hSenid Business Solutions (HBS.N0000) Q3 2026 earnings summary

Executive summary

• Achieved LKR 547.6 million in revenue for Q3 FY2026, up 27% year-over-year and 6% quarter-over-quarter, led by PeoplesHR Cloud and strong recurring revenue momentum, with recurring revenues comprising 73% of total revenue.

• Surpassed USD 5.2 million in exit ARR, marking a key milestone with 31% year-over-year and 6% quarter-over-quarter growth.

• Normalized EBITDA margin improved to 17%, a 350% year-over-year improvement and 55% quarter-over-quarter growth.

• Net profit for the quarter was LKR 35 million, marking the first profitable quarter and reversing prior losses.

• Maintained positive free cash flow with a 9% margin, reflecting improved cash generation.

Financial highlights

• Group revenue for Q3 FY2026 was LKR 547.6 million, up 27% year-over-year; nine-month revenue was LKR 1.54 billion, up 16%.

• Gross profit for the quarter rose 44% year-over-year to LKR 289.6 million.

• Basic EPS for the quarter was LKR 0.12, compared to a loss per share of LKR 0.35 last year.

• Company-level revenue for the quarter was LKR 488.6 million, up 26% year-over-year; net profit was LKR 59.96 million.

• Core recurring revenue posted a 35% year-over-year increase, with a 3-year CAGR of 36%.

Outlook and guidance

• Focus remains on strengthening growth momentum, expanding mid-market and enterprise accounts, and leveraging product enhancements globally.

• Continued investment in AI-driven product enhancements and compliance localization.

• Management expects deferred tax asset to be expensed over coming quarters, impacting future results.

• Growth in ARR is primarily driven by net new customer additions, with continued investment in sales and marketing to sustain momentum.

• Slight increases in marketing spend are expected, but cost structure will remain controlled.