Fractal Q3: Profit Jumps 9% YoY To ₹100 Cr

In its first financial disclosure post listing, AI and advanced analytics startup Fractal reported a 8.5% jump in net profits to ₹100.1 Cr in the third quarter (Q3) of the fiscal year 2025-26 (FY26) compared to ₹92.2 Cr in the year ago quarter. 

The company attributed the improvement in bottom line to growing revenues, improving margins, strong demand in healthcare and life sciences as well as BFSI segments, and higher top line from existing customers. 

The company’s revenue from operations grew nearly 21% to ₹854.4 Cr in the quarter under review from ₹707.2 Cr in Q3 FY25. 

In line with the top line, expenses also grew 18.4% to ₹772.8 Cr in Q3 FY26 as against ₹652.8 Cr in the quarter ending December 2024. In a filing with the exchanges, the company said its gross margins improved 17 bps YoY to 47% in Q3 FY26, while adjusted EBITDA margin rose 43 bps YoY to 18%.

“We delivered a great quarter, improving across nearly every metric. Our best-in-class organic growth, gross margins, and high client retention reflect the strength of our enterprise AI capabilities and the trust our clients place in us…,” said Fractal cofounder and group CEO Srikanth Velamakanni. 

Giving a geographical breakdown of the revenue, Fractal said that the US accounted for the biggest chunk of its top line at 69%, up 26% YoY, while Europe continued 19% to its revenues, also up 26% YoY. Asia Pacific (APAC) and other regions accounted for the remaining 12%, down 6% YoY.

The AI-powered analytics company also claimed that it scaled existing client relationships. The number of customers, which generate annual revenues upwards of $20 Mn, rose 2% YoY to 6, while clients with $1 Mn annual revenue contribution shot up 8% YoY to 58.

The company also said that its revenue per billable full-time equivalent (FTE) stood at $85,000 (₹74 Lakhs) during the quarter under review, up 6% YoY. Billable FTE is an outsourcing-based billing model, where clients pay a fixed monthly rate for a dedicated employee’s time rather than per task. 

Founded in 2000, Fractal generates revenue through analytics and consulting services as well as licensing and subscriptions for its AI platforms such as Cogentiq, Iqigai and Kalaido.ai. It serves global enterprises such as Google and Wells Fargo. 

The financial results follow Fractal making a muted debut on the bourses last month. The company’s shares listed at ₹876 on the NSE, a discount of 2.7% to the issue price of ₹900. On the BSE, the stock listed flat at ₹900.

The AI analytics company’s public issue comprised a fresh issue of shares worth up to ₹1,023.5 Cr and an offer-for-sale (OFS) component of up to ₹1,810.4 Cr. 

Zooming Into Fractal’s Expenses

Employee Benefit Expenses: This was the biggest cost centre for the listed company, rising 17.3% to ₹596.1 Cr as against ₹508.2 Cr in Q3 FY25. It accounted for nearly 70% of the company’s operating revenue in the period under review. 

Other Expenses: Expenditure under this bucket shot up 24.1% to ₹111.2 Cr in Q3 FY26 compared to ₹89.6 Cr in the year ago quarter. 

ESOP Expenses: Fractal’s ESOP costs narrowed 11.4% to ₹ 18.6 Cr during the period under review from ₹21 Cr a year ago. 

Shares of the company closed Thursday’s trading session 3.7% lower at ₹757.8 on the BSE.

The post Fractal Q3: Profit Jumps 9% YoY To ₹100 Cr appeared first on Inc42 Media.