Excelsoft Technologies Limited Q3 FY26 Earnings Call Summary

Summary

Excelsoft Technologies Limited - Q3 FY26 Earnings Call Summary Monday, February 09, 2026 11:00 AM IST

Event Participants

Executives 3 Dhananjaya Sudhanva (Chairman & Managing Director), Prashanth H M (Head - Strategy), Subramaniam Ravi (Chief Financial Officer)

Analysts 4 Deepak Poddar (Sapphire Capital), Praful Rai (Arjav Partners), Pulavarthi Sai Kiran (Pulavarthi Advisor), Sarang (Courser Park Advisors)

Financials & KPIs

Geographic & Segment Commentary

• EdTech Services: Contributed 65.7% of Q3 revenue, growing 58% YoY as clients invest in system integrations and cloud transitions. The vertical continues to be a primary driver alongside a recovering learning design division.
• Assessment & Proctoring: Accounted for 21% of Q3 revenue and 26.4% for 9M FY26. Management highlighted landmark wins including the Civil Services Commission of the Philippines and VTCT UK (300,000 annual exams).
• Geographic Markets: North America dominates at 72.2% of revenue, though Europe and UK are accelerating. The company is actively hiring localized sales teams in the US, UK, Middle East, and Singapore to diversify geographic concentration.

Company-Specific & Strategic Commentary

• AI Infrastructure: Investing in a private GPU farm and data center to build a fully AI-enabled infrastructure. This “edge” approach ensures data security outside public clouds for high-stakes testing.
• Strategic Partnerships: Signed a joint R&D agreement with AQA (UK) for AI-based automated marking. The partnership targets several million answer scripts through an e-marking platform starting Q1 FY27.
• M&A Pipeline: Actively evaluating targets in the US and UK for geographic expansion. Completed due diligence on one US-based firm and currently negotiating valuations.
• Client Retention: Maintained an average 11-year tenure for top-10 customers. These clients contribute 80% of revenue, providing highly predictable cash flows for cross-selling.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

AI Capabilities & Competition

• Question: How does your AI capability differentiate you from competitors? (Pulavarthi Sai Kiran)
• Answer: Unlike IT services facing headwinds, Excelsoft’s products are AI-native. Use cases include anti-cheating proctoring, 98.6% accuracy in handwritten text extraction (e-marking), and AI-item authoring that prevents question repetition (Dhananjaya Sudhanva/Prashanth H M).

M&A Strategy & One-offs

• Question: Can you quantify the one-off impact on margins this quarter? (Praful Rai)
• Answer: Legal and professional fees for M&A due diligence totaled ₹2.9 crores. Without this one-off, EBITDA margins would have been 32%, consistent with prior periods (Prashanth H M).

AQA Deal Potential

• Question: What is the opportunity size for the AQA partnership? (Deepak Poddar)
• Answer: While specific numbers are confidential, the deal covers several million answer scripts for hand-written digital conversion and AI auto-marking. Revenue begins next quarter and will build over years (Dhananjaya Sudhanva).

Growth Outlook

• Question: Can the company sustain 25-30% CAGR growth? (Sana)
• Answer: We are not providing formal guidance yet, but strategy has shifted from solution-providing to platform-led recurring revenue, which historically outpaces previous growth trends (Prashanth H M).

Key Takeaway

Excelsoft Technologies delivered a solid Q3 FY26 with revenue growing 29.5% YoY to ₹71.0 crores, primarily led by a 58% surge in EdTech services. While reported EBITDA margins contracted to 27.7%, this was skewed by ₹2.9 crores in one-time M&A diligence fees; normalized margins remained healthy at 32%. Strategically, the firm is pivoting toward a platform-led recurring revenue model, bolstered by high-profile wins like the Philippines Civil Services and the AQA partnership in the UK. With a robust cash reserve of ₹421 crores post-IPO and the launch of six AI-driven products scheduled for March 2026, the company is positioning itself to capture the global shift toward digital, high-stakes assessments. Management remains focused on geographic diversification to reduce North American concentration and expects a typically strong Q4 to round out the fiscal year.