Summary
Happiest Minds Technologies Limited - Q3 FY 2026 Earnings Call Summary Tuesday, February 10, 2026, 11:00 AM IST
Event Participants
Executives 8 Anand Balakrishnan, Ashok Soota, Joseph Anantharaju, Praveen Kumar Darshankar, Priyanka Sharma, Ram Mohan, Sridhar Mantha, Venkatraman Narayanan
Analysts 5 Aditi Patil, Anand Sodhani, Dhanshree Jadhav, Gaurav Rateria, Vinesh Vala
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue (USD) | $65.7 million | +1.2% QoQ, +7.1% YoY in constant currency; results reflect steady execution amid selective demand. |
| Revenue (INR) | ₹588 crores | +2.4% QoQ, +10.7% YoY; 9-month revenue growth stands at 12.8% YoY. |
| EBITDA | ₹123 crores | +20.4% margin; remains within the guided 20-22% range, up from 20.2% in Q2. |
| Adjusted PAT | ₹68 crores* | +11.6% margin; adjusted for ₹22.3 crore one-time wage code charge and non-cash acquisition costs. |
| Reported PAT | ₹40.3 crores | Impacted by one-time wage code provision; down from previous quarters due to exceptional items. |
| Utilization | 82% | Increased from 80% in Q2; represents the highest utilization level in recent times. |
| Attrition (LTM) | 17.4% | Largely stable; management remains focused on talent retention in specialized AI roles. |
| DSO | 92 days | Increased from 87 days; management targeting a reduction back to 85 days via billing discipline. |
| Headcount | 6,548 count | Supported by offshore delivery model; plan to scale AI/GenAI team to 1,000 by end of FY27. |
*Calculated based on management’s “Adjusted PAT” commentary of 11.6% margin.
Geographic & Segment Commentary
- Generative AI Business Services (GBS): Revenue grew close to 50% QoQ as customers moved from pilots to production-grade deployments. The segment turned profitable this quarter, driven by 32 active GenAI and Agentic AI use cases scaling across multiple verticals.
- Product Development & Engineering Services (PDES): Remains the largest business unit, anchored by platform modernization. AI is increasingly being embedded into core engineering engagements to address client technology debt.
- Infrastructure Management & Security Services (IMSS): Benefiting from demand for AI-enabled infrastructure and cloud optimization. Growth is supported by the ELLIPSE (AIOps) and SecAiGenie (GenAI for security) platforms.
- BFSI & Healthcare: Led vertical growth this quarter; Healthcare saw strong traction in bioinformatics and medical research, while BFSI benefited from platform-led engagements in Asia and the Middle East.
Company-Specific & Strategic Commentary
- AI First, Agile Always: Launched as the 11th strategic transformation, supported by 11 programs to shift the company toward an AI-embedded delivery model. Management views AI as an opportunity to accelerate growth rather than a threat to the traditional IT services model.
- AI Services Delivery Platform: A central framework used to move healthcare and industrial initiatives from concept to production. The platform includes frameworks for agentic software development and tech debt reduction.
- Tech Debt Modernization: Utilizing “Agentic AI” (coding agents paired with humans) to modernize legacy applications for private equity firms and SaaS providers. This approach aims to deliver high productivity improvements in projects previously considered too risky or costly.
- IP-Led Sales: IP-led revenue contributed 10.4% of total sales this quarter. Strategy involves packaging reusable solutions (e.g., “Insurance in a Box”) to move toward subscription and outcome-based pricing models.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue Growth | 10%+ CC for FY26 | Maintaining the 4-year commitment of 10%+ CAGR; growth expected to accelerate in FY27. |
| EBITDA Margin | 20% - 22% | Sustained range through operating efficiencies and disciplined cost management. |
| New Trajectory | Post Q4 FY26 | Management expects to announce “significant increases” to guidance alongside Q4 results due to AI transformation. |
| AI Headcount | 1,000 by FY27 | Targeted expansion of dedicated AI/GenAI talent to meet pipeline demand. |
Risks & Constraints
| Risk | Context |
|---|---|
| Vertical Concentration | EdTech, formerly the largest vertical, continues to face challenges in the U.S. higher-ed space, though management expects stabilization in FY27. |
| Startup Exposure | The Hi-Tech vertical saw a decline due to the completion of a product build for a U.S. startup, highlighting volatility in early-stage client engagements. |
| Working Capital | DSO increased to 92 days this quarter; management must improve collections to maintain liquidity for planned strategic investments. |
Q&A Highlights
Engagement Models & AI Spend
- Question: Are GenAI spends new budgets or repivoted from old ones? (Gaurav Rateria)
- Answer: Initially, budgets were “scratched together,” but we now see 1-3 year roadmaps with well-defined budgets for agentic AI foundations (Sridhar Mantha). We are moving toward outcome-based and license-based models to capture more value (Joseph Anantharaju).
Vertical Performance (EdTech & Hi-Tech)
- Question: What is the outlook for the declining EdTech and Hi-Tech verticals? (Vinesh Vala)
- Answer: EdTech risks have mostly played out; we are pivoting to AI-led student retention solutions for universities (Joseph Anantharaju). Hi-Tech decline was due to the end of an Airport Authority of India contract and a startup project completion; we expect stabilization in Q4 (Joseph Anantharaju).
Margin Drivers & Utilization
- Question: What metrics are guiding cost control and margin protection? (Sucrit D. Patil)
- Answer: Increasing utilization to 82% and driving gross margins higher are key. We have ₹1,520 crores in liquidity and are monitoring returns on previous investments in NN (New-New) sales teams (Anand Balakrishnan/Venkatraman Narayanan).
Stake Sale Rumors
- Question: Is the Chairman exploring a stake sale given the 52-week lows? (Anand Sodhani)
- Answer: I am leading the 11 strategic AI programs personally; there is no change in my commitment to seeing this transformation through (Ashok Soota).
Key Takeaway
Happiest Minds delivered a steady Q3 FY26 with 10.7% YoY rupee revenue growth and maintained healthy EBITDA margins at 20.4%, despite a one-time wage code impact. The quarter was marked by a strategic pivot to an “AI First” delivery model, evidenced by the Generative AI business (GBS) growing 50% QoQ and achieving profitability. While traditional segments like EdTech and Hi-Tech faced headwinds from project completions and sector-wide softness, growth was bolstered by BFSI and Healthcare, alongside a record 13 new logo wins in the first half of the year. Management is aggressively investing in Agentic AI to address client technology debt and expects these investments to drive a “new trajectory” of accelerated growth beyond the current 10% guidance, with detailed upward revisions scheduled for the Q4 announcement.
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