Fractal Analytics Ltd Q3 FY2025-26 Earnings Conference Call
•March 9, 2026
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Why It Matters
Fractal's strong revenue and margin expansion demonstrates that enterprise AI can deliver scalable, profitable growth, reinforcing investor confidence in the sector’s long‑term upside.
Key Takeaways
- •Revenue grew 21% YoY to $8.544 bn, driven by healthcare
- •Net revenue retention hit 114% in Q3, showing client expansion
- •Gross margin expanded to 47.2%, aided by output‑based contracts
- •Healthcare and life‑science segment surged 78% YoY, the fastest growth
- •Profit after tax reached INR 100 crore, despite higher associate losses
Summary
Fractal Analytics held its first earnings call since going public, reporting third‑quarter results for FY2025‑26. The company posted revenue of 8,544 million rupees, a 21% year‑over‑year increase, and highlighted robust demand from its healthcare and life‑science clients, which grew 78% YoY. Strong performance was also seen in banking and financial services (26% growth), while CPG and retail moderated to 14% amid tariff pressures, and telecom/media faced client‑specific headwinds.
Management emphasized a net revenue retention of 114% for the quarter and 115% for the nine‑month period, underscoring deepening relationships with its 127 "must‑win" clients. Gross margin rose to 47.2%—a 17‑basis‑point improvement—driven by a shift toward output‑based contracts, price increases, and productivity gains. Adjusted EBITDA reached 17.8% of revenue, and profit after tax hit INR 100 crore, despite higher losses from the QR.AI associate and reduced foreign‑exchange income.
Strategic wins were highlighted, including a Microsoft Partner of the Year award for retail and consumer goods, a preferred‑supplier status with two of the "Magnificent Seven" firms, and AI product launches such as VYA 2.0—a healthcare foundation model scoring 50+ on the OpenAI Health Bench—and PI Evolve, an autonomous machine‑learning engine ranking among the top on OpenAI’s MLE benchmark. A flagship AI deployment with PepsiCo’s smart packaging line demonstrated tangible operational gains, reinforcing Fractal’s value proposition.
The results signal Fractal’s ability to scale profitable AI services across large enterprises while maintaining high client satisfaction (NPS 77). Continued R&D investment (6‑8% of revenue) and expanding high‑value client relationships position the firm to capture a growing share of the enterprise AI market, supporting its long‑term ambition to become a centennial institution.
Original Description
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