Firstsource Solutions (FSL) Q2 24/25 earnings summary

Executive summary

• Q2 FY25 revenue reached INR 19,326.12 million ($230 million), up 25% year-over-year, with strong deal wins and 13 new logos added, including major wins in Australia, New Zealand, and the US.

• Operating margins remained stable at 11.1% (excluding one-off Ascensos acquisition costs), and net profit after tax was INR 1,382.11 million, with diluted EPS of INR 1.96.

• The acquisition of Ascensos for up to GBP 42 million expanded the retail and e-commerce footprint, added multilingual capabilities, and enhanced nearshore delivery presence.

• Employee base grew by 3,667 in Q2 FY25 to 32,898, with attrition rate improving to 30.9%.

• Consolidated financial results for Q2 and H1 FY25 were audited and present a true and fair view in accordance with Ind AS 34 and SEBI regulations.

Financial highlights

• Q2 FY25 revenue was INR 19,326.12 million ($230 million), up 25% YoY and 7.1% sequentially; constant currency growth was 22.7% YoY.

• EBIT margin was 11.1% (normalized, excluding one-time charges); PAT margin was 7.2%.

• DSO improved to 65 days from 68 days in Q1; OCF to EBITDA was 79%, and FCF to PAT was 101%.

• Cash and cash equivalents at period end were INR 2,024 million; net debt was INR 6,042 million as of H1 FY25.

• Operating cash flow for H1 FY25 was INR 2,211 million, up from INR 1,558 million in H1 FY24.

Outlook and guidance

• FY25 constant currency revenue growth guidance raised to 19.5%-20.5%, including about 5% from Ascensos.

• Organic growth guidance is 14.5%-15.5% for FY25.

• Normalized EBIT margin for FY25 expected in the 11%-11.5% range, excluding one-time acquisition charges.

• Management remains cautious due to macro uncertainties but sees potential upside if conditions improve.