Mphasis (526299) Q1 25/26 earnings summary

Executive summary

• Achieved record quarterly TCV wins of $760 million, with 68% of deals AI-led and four large deals closed, three over $100 million and one over $50 million.

• Growth momentum sustained in BFS, Insurance, and TMT verticals, each delivering over 20% year-over-year growth in direct business.

• AI-led transformation and platform strategy are central, with proprietary platforms like NeoZeta, NeoCrux, and NeoSaBa driving client wins and pipeline growth.

• Margins remained stable despite market volatility and elongated decision cycles.

• Net profit for the quarter was ₹4,417 million, up 9.2% year-over-year; EPS at ₹23.22, up 8.5% YoY.

Financial highlights

• Q1 FY26 revenue was $437 million, up 1% sequentially and 6.5% year-over-year in constant currency; direct business contributed 97% of total revenue.

• Operating margin stable at 15.3%; EBIT margin at 15.3% and operating profit grew 0.7% sequentially and 11.2% year-over-year.

• EPS for the quarter was ₹23.22, up from ₹21.40 in Q1 FY25.

• Operating cash flow was $24 million, impacted by delayed collections and annual incentive payouts; normalized cash flow estimated at $46 million.

• Board approved a final dividend of ₹57 per equity share for FY25.

Outlook and guidance

• Targeting 2x industry growth for FY26, supported by strong Q1 performance and robust deal pipeline.

• EBIT margin guidance maintained at 14.75% to 15.75%.

• Expecting continued strong revenue and TCV conversion, with large deal ramp-ups in coming quarters.

• Continued focus on AI-led propositions and investments across the value chain.

• Management highlighted a strong start to the year, with record TCV wins and a focus on AI-led solutions.