Hexaware Technologies (HEXT) Q2 25/26 earnings summary

Executive summary

• Q2CY25 revenue reached $382.1M, up 8.6% YoY and 2.8% QoQ, with constant currency growth at 7.5% YoY and 1.3% QoQ.

• EBITDA margin improved to 17.2%-17.3%, up over 150 bps YoY, with net profit margin at 11.6% and basic EPS at INR 6.25, up 37.7% YoY.

• SMC acquisition completed for up to $120M, providing immediate EPS accretion and strategic entry into the GCC setup market.

• Strong cash and cash equivalents position at INR 19,248M as of June 30, 2025.

• Recognized as the #1 IT service provider in the U.K. and Ireland by Whitelane Research for 2025.

Financial highlights

• Year-on-year revenue growth of 8.6%, with five out of six verticals contributing positively.

• EBITDA was $66M, up 19.4% YoY; adjusted EBITDA margin at 18.1%.

• Net profit was $44M, up 38.3% YoY; reported profit margin improved to 11.6%.

• DSO (billed + unbilled) at 73 days in Q2CY25, supporting strong cash conversion (OCF/EBITDA at 75.5%-76%).

• Dividend of ₹5.75 per share declared and paid in April 2025.

Outlook and guidance

• Growth expectations for the year have been revised downward due to macro-driven delays, but the long-term $3B revenue ambition for 2029 remains unchanged.

• Q3 is expected to show better growth than Q2, with Q4 performance dependent on deal closures.

• Full-year reported EBITDA margin guidance maintained at 17.1%-17.4%, with ETR for the year expected at 24%-24.5%.

• ERP costs are tapering and expected to phase out by year-end; restructuring benefits from workforce reduction expected from Q4 or Q1 next year.

• Continued investments in AI and digital transformation to drive future growth.