R Systems Intl. Q2 FY26 Earnings Call — Analysis (NSE: RSYSTEMS)
R Systems crosses ₹600 Cr quarterly revenue mark with record adjusted EBITDA of ₹120.7 Cr (20.1% margin), led by AI-first deal wins and improving revenue per employee.
Result quality: stable — Results context unavailable. Management sentiment: optimistic.
The take
Q2FY26 Revenue ₹601.7 Cr ( +30.2% YoY ) . New guidance — adjusted ebitda margin target 18-19% . New story: AI-first deal momentum .
Results
Q2FY26 revenue ₹601.7 Cr +30.2% YoY; Adj. EBITDA ₹120.7 Cr +51.4% YoY; Adj. PAT ₹62.9 Cr +35.4% YoY; Gross margin expanded to 39.2% (+320 bps YoY). H1FY26 revenue ₹1,176.5 Cr +30.1% YoY, Adj. PAT ₹138.7 Cr +54.4% YoY.
Financial highlights
| Metric | Value | Change | Basis |
|---|---|---|---|
| Revenue | ₹601.7 Cr | +30.2% | yoy · Q2FY26 · vs Q2FY25 ₹462 Cr |
| Revenue | ₹601.7 Cr | +4.7% | qoq · Q2FY26 · vs Q1FY26 ₹574.8 Cr |
| Adjusted EBITDA | ₹120.7 Cr | +51.4% | yoy · Q2FY26 · vs Q2FY25 ₹79.7 Cr |
| Adjusted EBITDA | ₹120.7 Cr | +4.4% | qoq · Q2FY26 · vs Q1FY26 ₹115.7 Cr |
| Adjusted EBITDA margin | 20.1% | +281 bps | yoy · Q2FY26 · vs Q2FY25 17.3% |
| Adjusted EBITDA margin | 20.1% | +6 bps | qoq · Q2FY26 · vs Q1FY26 20.1% (flat, +6 bps rounded) |
| Adjusted Net Profit | ₹62.9 Cr | +35.4% | yoy · Q2FY26 · vs Q2FY25 ₹46.4 Cr |
| Adjusted Net Profit | ₹62.9 Cr | -17.1% | qoq · Q2FY26 · vs Q1FY26 ₹75.8 Cr (included one-time hedging gain) |
| Adjusted EPS | ₹5.3 | +35.3% | yoy · Q2FY26 · vs Q2FY25 |
| Adjusted EPS | ₹5.3 | -17.1% | qoq · Q2FY26 · vs Q1FY26 ₹6.4 |
| Gross Margin | 39.2% | +320 bps | yoy · Q2FY26 · vs Q2FY25 36% |
| Gross Margin | 39.2% | +320 bps | qoq · Q2FY26 · vs Q1FY26 36% |
| Billed DSO | 55-56 days | point_in_time · Q2FY26 · as of Jun-26 | |
| Billed + Unbilled DSO | ~75 days | point_in_time · Q2FY26 · as of Jun-26 | |
| Utilization | 81% | point_in_time · Q2FY26 · as of Jun-26; band 80-81% | |
| TTM ACV Bookings | $82.9 Mn | +$0.6 Mn | sequential · Q2FY26 · vs Q1FY26 $82.3 Mn |
| H1FY26 Revenue | ₹1,176.5 Cr | +30.1% | yoy · H1FY26 · vs H1FY25 ₹904.5 Cr |
| H1FY26 Adjusted EBITDA | ₹236.4 Cr | +51% | yoy · H1FY26 · vs H1FY25 ₹156.6 Cr |
| H1FY26 Adjusted Net Profit | ₹138.7 Cr | +54.4% | yoy · H1FY26 · vs H1FY25 ₹89.8 Cr |
| H1FY26 Adjusted EPS | ₹11.7 | +54.3% | yoy · H1FY26 · vs H1FY25 |
| Forward Cover | $43.32 Mio | point_in_time · Q2FY26 · as of Jun-26 at avg rate 93.27 |
Guidance
Management expects to sustain adjusted EBITDA margin in the 18–19% band and sees H1 ACV wins translating into improved H2 revenue realization; no formal revenue growth guidance given.
What management committed to
- Adjusted EBITDA margin will be sustained in the 18–19% range on a sustainable basis. — 18-19%, sustainable basis (ongoing)
- The [H1 FY26] ACV wins are expected to translate into increased revenue realization in [H2 FY26]. — H2FY26
Key themes
AI-led deal wins and margin expansion
How the narrative shifted
- AI-first deal momentum: Management positions the company's wins as AI-first, with AI-led solutioning as the differentiator driving larger, more strategic deals; all five key Q2 wins are framed as AI-accelerated.
- Margin expansion via mix and operating leverage: The shift to higher-value data/AI/cloud services and revenue per employee improvement are cited as structural margin drivers, complemented by rupee depreciation benefits that are treated as non-recurring tailwinds.
- Sales & marketing investment cycle: Management frames the SG&A increase as a deliberate ramp — hiring a CRO, brand relaunch, and expanding sales capacity — to build an AI-led pipeline and capture market share.
- GCC and agentic business operations as growth vectors: The HFS Horizon 2 GCC Accelerator recognition and the traction in agentic AI business ops are positioned as early validations of the new offerings, with potential to create annuity revenue streams.
- Macro and discretionary spending uncertainty: While acknowledging a market “dealing with a lot of uncertainty” and extended decision cycles, management argues that its AI-first position differentiates it and can counter headwinds.
- AI-led productivity gains driving revenue per employee: Flat headcount combined with 17.7% constant-currency revenue growth is attributed to AI-enabled productivity via own platforms (EXIQO, Optima AI), signaling a structural improvement in the earnings model.
Operational commentary
- AI-accelerated wins drove a larger share of TCV, including five large deals: telecom analytics & insights, small-business lending center of excellence, AI-powered offering for HNW clients of a global insurer, retail CRM transformation on Microsoft Dynamics 365 for a financial services firm, and AI-led legacy modernization of an ad-tech platform — all showcasing AI-first solutioning as the differentiator.
- EXIQO AI studio (exiqo.ai) launched and gaining market traction at conferences; proprietary Optima AI platform delivering 2x productivity and 55% reduction in turnaround time for customers.
- Recognized as a ‘Horizon 2 GCC Accelerator’ by HFS Research, validating the company’s AI-first model for enabling Global Capability Centers to become innovation hubs.
- Revenue per employee and margin per employee improving; headcount remained flat YoY while revenue grew, reflecting AI-led productivity gains.
- Sales & marketing spend increased meaningfully — appointed a Chief Revenue Officer, rebranded the company, and expanded field presence — to accelerate pipeline for AI-led growth.
- Novigo integration complete; joint agentic business operations offerings gaining initial traction in banking, insurance, and travel, though Novigo faces ongoing geopolitical headwinds in the Middle East.
- TTM ACV bookings stable at $82.9M with larger deal sizes and improving pipeline quality; conversion is expected to drive H2 revenue capture.
- Data, AI, and cloud services now represent more than 50% of revenue, up from prior years, reflecting a sustained shift in service mix.
- Biannual wage hike implemented in Q2 with impact reflected in the quarter’s margins; no significant headcount increase.
- GCC business growing, positioning the firm for larger engagements with organizations having substantial existing GCC footprints, though revenue share not disclosed separately.
Analyst Q&A
Q. Can you provide quantifiable guidance on deal wins for the upcoming quarters?
It is very difficult to say and we do not provide forward-looking guidance. Pipeline quality is improving and we will continue to report deal wins on a trailing 12-month basis.
Q. What is the outlook for organic growth in the full year and what are the puts and takes?
Nitesh Bansal stated that while no formal guidance is given, trailing 12-month numbers are positive and they feel comfortable that traction will continue. The lag effect means H1 bookings become H2 revenues, and sales & marketing investments are setting up for future ACV wins.
Q. What is the current percentage of revenue from GCC business and how are margins in that segment?
The GCC revenue share is not disclosed separately, but it continues to be a growth vector because it provides engagement with large organizations with significant GCC footprints and establishes AI differentiation.
Q. Is the recent uptick in SG&A due to additional hiring in sales, and what is driving it?
The increase is deliberate, driven by the onboarding of a Chief Revenue Officer, increased sales bandwidth, AI/domain experts in sales processes, and marketing spend around the new brand identity and EXIQO AI studio.
Q. Why does organic growth appear muted despite several positive changes in the organization?
Nitesh Bansal clarified that organic growth has been consistently positive quarter-over-quarter, and that Q2 saw ~18% YoY revenue growth without any headcount increase, indicating improved quality of engagements and revenue per employee.
Q. Are you seeing any AI-led price deflation in contract values as some IT companies have commented?
AI-based productivity is an inbuilt part of R Systems' AI-first delivery methodology; the company bids AI-led solutions that already contain expected productivity gains, so there is no deflationary pressure — revenue productivity and margins have improved.
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