Mphasis (526299) Q2 25/26 earnings summary

Executive summary

• Achieved highest-ever quarterly revenue and EPS in Q2 FY26, led by strong growth in insurance, TMD/TMT, and BFS verticals, with robust AI-led deal wins and a record pipeline.

• Launched NeoIP, a unified AI platform, and continued investments in AI-driven growth, resulting in significant TCV wins and expanded AI platform suite.

• H1 FY26 TCV exceeded full-year FY25, with $528M in new TCV wins for Q2 and TTM TCV at $2.03Bn.

• Client pyramid improved with notable additions in $100M+, $75M+, $50M+, $20M+, and $10M+ categories, driven by wallet share gains and new account ramp-ups.

• Notable client wins included major US-based airline, hi-tech device manufacturer, and US wireless telecom company.

Financial highlights

• Q2 FY26 revenue reached $445M, up 2% sequentially and 6% YoY in constant currency, marking the highest quarterly revenue.

• Direct business contributed 97.5% of revenue; direct revenue grew 2.2% sequentially and 7.9% YoY in constant currency.

• EBIT/operating margin stable at 15.3%; operating profit grew 4.4% sequentially and 9.5% YoY to $5,959M.

• EPS increased 10.2% YoY to 24.7; operating cash flow at $54M for the quarter.

• DSO at 89 days, up 5 days QoQ, due to increased debtors from milestone contracts and shift to fixed price contracts.

Outlook and guidance

• Focus on converting pipeline to TCV and TCV to revenue, with expected growth greater than 2x industry growth, supported by strong H1 performance and large deal ramp-ups.

• Targeting operating EBIT margin in the 14.75%-15.75% band.

• Anticipates continued strong growth in BFS and expects logistics and transportation vertical to return to sequential growth from Q3.

• Scaling AI-led propositions and expanding the NeoIP suite of agents.

• Management highlights strong positioning in AI and digital transformation, with continued investments in AI-driven platforms and services.