Sagility India Ltd (NSE: SAGILITY) Q1 2026 Earnings Call dated Jul. 30, 2025
Corporate Participants:
Unidentified Speaker
Ramesh Gopalan — Managing Director & Group CEO
Sarvabhouman Srinivasan — Group Chief Financial Officer
Analysts:
Unidentified Participant
Abhishek Kumar — Analyst
Manik Taneja — Analyst
Rishi Jhunjhunwala — Analyst
Ruchi Mukhija — Analyst
Bhavik Mehta — Analyst
Chirag Kachhadiya — Analyst
Mohit Motwani — Analyst
Fawaaz Sheriff — Analyst
Harshit Sachdeva — Analyst
Seema Nayak — Analyst
• Raj Vyas — Analyst
Presentation:
operator
Welcome to the Quarter 1 FY26 Earnings Webinar of Segility India Limited this is Sadh Ranganekar from CDR India and I shall be your host for today. As a reminder, all attendee lines will be in the listen only mode and there shall be an opportunity for you to ask questions after the presentation concludes. Please note that this webinar is being recorded to introduce the management we have with us today. Mr. Ramesh Gopalan, Managing Director and Group CEO and Mr. Sarvabuman Srinivasan, Group Chief Financial Officer. Before we begin, I would like to state that some of the statements made on today’s discussion could be forward looking in nature and may involve certain risks and uncertainties.
A detailed statement in this regard is available in the Quarter 1 FY26 results presentation that has been uploaded to the Exchanges. I would now like to hand over the forum to Mr. Ramesh Gopalan to begin the proceedings of this webinar. Over to you sir.
Ramesh Gopalan — Managing Director & Group CEO
Thank you. Good evening everyone and thank you for joining us today. We’ve entered FY26 with continued momentum in our operations. The performance this quarter reflects a differentiated position as a healthcare focused solutions and service provider across both our payer and provider businesses. This momentum is broad based across different client relationships and service lines. Let me give you a sense of the environment under which we are operating. Our payer and provider clients continue to navigate heightened cost pressures as they contend with regulatory evolution. Policy changes in addition resource shortages and new compliance and administrative requirements that these policy changes necessitate add to their challenges.
Against this backdrop, Sagility is well positioned as a partner in bringing about better efficiency in their health care operations. As you are aware, we operate in the non discretionary services space, supporting clients in their core operations. Over the past 25 years or so we built our business around healthcare domain expertise and over time increasingly incorporating technology, be it analytics, automation and now AI in order to manage a range of processes for our clients. This has helped us win and retain clients over decades. I want to specifically talk about two clients today, both of whom have reached milestones in the last few months.
The first one is our oldest payer. We just completed 25 years with them. What started as a journey in operational excellence has now matured into a very collaborative innovation led engagement where we jointly work on the future state of some of the core healthcare services. The other client is a decades old client we just celebrated the ten year partnership with. They are a technology and services provider to workers compensation insurers. While we started providing basic transactional support 10 years ago, today we’ve used all of our transformational capabilities not only to reduce cost of operations, but we’ve also jointly introduced newer services to their insurance clients.
These are of course just two examples and have many more such examples. But essentially we are very proud to have a very strong and enduring relationship with our clients built on trust and performance over the years so that when they need a partner in the revolution in the transformation journey, they look at us as a partner who can help us get there. So with that, let me quickly jump into the financials for this quarter. Q1 FY26 began on a very strong note with consolidated revenues of 15,003,389 million, or approximately $180.4 million, reflecting a year on year growth of 25.8% in INR terms and 23.1% in constant currency.
So this is of course inclusive of broadband. So if you just look at the organic numbers that those numbers are also strong, registering 17.9% in INR terms and 15.4% in constant currency. And if you look at the growth itself, it was pretty broad based with both our payer and provider businesses contributing. The Pay vertical grew 24.7% year on year, accounting for 88.4% of our total revenue mix. And the provider vertical delivered another strong performance, expanding 34.5% year on year and contributing 11.6% to overall revenues. On the profitability front, we we delivered an adjusted EBITDA of 3,687 million rupees, or $43.2 million, representing a year on year increase of 26.5%.
This translates to an adjusted EBITDA margin of 24%, underscoring the impact of our focused cost management and delivery efficiencies. It’s important to note that our adjusted EBITDA excludes other income and forex gains. Net profitability also stayed strong. Our adjusted profit after tax for the quarter stood at 1,997 million rupees, a solid 38% increase year on year, supported by strong operating margins and declining finance cost. The continued optimization of our capital structure and disciplined execution is directly benefiting our bottom line. Srini will cover more about this in this section. So now let me switch over to our new wins.
As of June 30th, 2025 we have 77 active clients and during the quarter we won new business from 18 of our existing clients. That’s almost 25% of our client base through a mix of expansions and new sows and we also onboarded four new clients. The total potential annual contract value won from both new and existing clients stands at approximately $32 million. Amongst these four new clients, one is a 12 billion USD regional blues plan, another is a 5 billion USD health system specializing in cancer, diabetes and other life threatening illnesses. A third is a pharmacy benefit manager and fourth is a technology TPA firm that owns a proprietary claims platform from the existing clients.
Some of the notable wins are we are setting up a GCC for a client on a bot model, so this is for work that they don’t do with us on an outsourced basis. We’ve also been engaged to do consulting for clients claims operations. We are optimizing not only their operations but we are also helping them optimize their claims platform performance. We also have multiple other opportunities. Like I said, it’s broad based across the different service verticals like claims, payment integrity, clinical RCM and other administrative processes. In panel, several cross sell discussions are in progress with broadband.
We’ve already submitted four proposals and we’ve also won one cross sell opportunity. This is for a very large national payer who is currently a broadband client. Finally, cost pressures at most of our clients is opening up additional opportunities for us. Clients are increasingly interested in proposals that are very bold in terms of cost, takeout opportunities and in wanting us to take out costs they’re giving us more opportunities to help us transform their operations. So these are likely to be larger deals going forward. In terms of workforce, we closed the quarter with a headcount of 39,917 employees.
This consists of operations specialists, clinicians and technologists across five countries with deep domain understanding and continually engaged in helping creating beneficial outcomes for our clients. Annualized attrition was stable at 26.6% in line with the trend that we saw last year. We also remain committed to building a future ready healthcare workforce with a sharp focus on engagement, capability and retention. Employee engagement remains a critical pillar of our operating ethos, especially as we scale globally. Our investments in training, particularly within technology and healthcare domain flexible delivery models and remote engagement platforms are ensuring that we retain and grow the right talent pool.
I’d also like to talk to you about a couple of recognitions in the marketplace. One comes from Avasanth who is a key industry analyst in our sector Sagility was named both as a leader in the healthcare payer business transformation as well as in the clinical and care Management Business Transformation 2025. We also won the Most Preferred Workplace FY26 award by Marksman Daily. So these are the KPI slides. I won’t read out each of the numbers. I’ll just pause for a couple of seconds for you to take a look at. So this is the slide I want to spend a little bit of time over the last few months, many of you have asked us what the changes in the environment mean to our business.
And so today we wanted to take this opportunity to talk about some of the broad changes happening in the healthcare environment in the US and the impact it has directly not only on our clients, but also on our business. So first, let’s talk about the one big beautiful bill. This has significant changes, especially in the Medicaid area, right? So we believe that there is likely to be reduction in the Medicaid membership and the funding cuts are expected to impact Medicaid businesses both in terms of revenue and margins. Providers also will face challenges because of the reduction in patient volumes and a rise in uncompensated care.
However, our exposure to the Medicaid business is very low. It’s in the mid single digits, which means we don’t anticipate too much of an impact because of the drop in memberships. And these drop in memberships are likely to play out over the next several years. Like I’ve always mentioned before, some of these pressures on revenues and margins will also force our clients to look at more ways of optimizing on the cost front, and that will in turn increase the outsourcing by payers and providers to manage their cost. The next topic is the Medicare utilization rates.
This is something that we spoke about Last year in CY24. This played out in a number of our large clients, but it also continues to play out to some extent in CY25 too. This again will strain payer margins. Even though CMS has announced a 5.03% increase in Medicare Advantage payments for CY26. But again, this also represents an opportunity for us as our clients look to improve efficiencies and lower cost of operations. We are well positioned to partner with them in this journey. We also think this will give us strong tailwinds for higher outsourcing in the clinical area, which we’ve spoken to you in the past.
Third is tariffs. This has been mentioned over the last few months. However, the impact while there is going to be an impact to providers because of increased cost of imported medical equipment and pharmaceuticals, it’s likely unlikely to have any direct impact on the work that we do for our clients. So we don’t see tariffs as something that impacts our business. Lastly is the growing adoption of generative and agentic AI. This also has been something that we’ve spoken to you in the past. We are witnessing a growing adoption of these technologies. However, the adoption has been gradual, but it’s becoming increasingly clear that process exposure and domain expertise are the key differentiators to help drive meaningful business outcomes.
We’ve always said that our deep healthcare expertise and our continued investment in building new AI use cases, accelerated with acquisition of Birch AI in 2024, directly impacts the operational work that we do for clients. And it positions us to be the one stop partner of choice when they look at options to transform their operations to deliver better business outcomes. So with that, what we also thought we will do is take this opportunity to talk to you a little more about the use cases in AI that we’ve been building. So currently We’ve deployed about 18 AI based use cases for eight of our existing clients.
We’re also working on 15 additional use cases that are directly relevant to the work that we do for clients. And like I’ve mentioned to you in the past, all of our AI use cases are very relevant to the operational work that we do for our clients and we in fact implement them in the operations that operational work that we do for our clients. Some examples Nurse assist. This is AI based clinical reviews. This enables automated understanding and application of medical necessity guidelines across unstructured medical records. We’ve also built an appeals assist both for payers and the providers.
For payers, it’s an AI driven real time decision support system. It not only classifies appeals, it extracts information from the appeal letters, it helps in decision making and the end result of all of that is improved star rating performance for our clients. For providers, it’s the other end of the spectrum. It analyzes the clinical denials, it checks the medical records, it determines whether it makes a valid case for appealing those denies. And if that’s the case, it also helps generate these appeal letters. The third use case is around contract validation. As you know, the contracts between payers and providers are very complex.
We’re using AI to not only extract some of the key contract terms, but also normalize them across the contracts. The fourth, in a lot of our provider and member engagement work that we do for clients, we are using AI not only for doing audit and analytics, but we are also using it for automating some of the lower threshold engagements which do not require a human contact. So this is across all of the channels in which providers and members communicate with our payer clients. So these are all use cases that we do for our clients. But what we’ve also simultaneously started doing is building AI based use cases for our internal operations.
As you know, we have a workforce of close to 40,000 employees. We hire people in the hundreds every month. We train them on client processes before we deploy them in operations. Today we are using AgentIQ AI collaborators to enhance not only our recruitment but also our training outcomes. So essentially the goal is to have a much more efficient operational process, but also help us lower cost in the future and to serve our clients better. So before I hand over to Srini, I want to emphasize some of the points that we’ve gone over. We remain sharply focused on execution.
We’ve increased the technology and consulting capabilities that we take to clients. That has helped us drive higher wallet share and like we’ve said, it’s also helped us expand into the relatively underpenetrated mid market segment. As before, we will selectively continue to leverage acquisitions both for building capabilities as well as for getting market access. Looking ahead, we expect to sustain growth in the low to mid teens in constant currency. So this is something that we’ve told you in the past. We continue to maintain the low to mid teens growth in constant currency organically and with broad pass.
We are confident of achieving 20% plus growth. For FY26. Our adjusted EBITDA we had guided to a 23 to 24% in the last call. But given the strong performance in Q1 we think we will achieve a 24% plus EBITDA in FY26. We continue to generate healthy cash flows to reimburse into capability building and digital transformation. And as a company we’re very excited for the opportunities that lay ahead of us. With that I will hand over the session to Srini and I’ll be back to take calls at the end. Thank you. Over to you Srini.
Sarvabhouman Srinivasan — Group Chief Financial Officer
Thank you Ramesh. Good evening everyone. Like Ramesh shared these numbers. Our performance on revenue, EBITDA and adjusted pat has been fantastic on a YOY basis and we have consistently we have been consistent and we have met our guidance numbers that we had given in the past. Also the cash conversion has been on expected lines and what is happening to see is we have reduced our DSO by just by one day so bringing it down from 76 days to 75 days. So this has been A steady good start for this fiscal year and we hope to continue this momentum and we are very confident of the guidance that Ramesh just said.
Next slide please. This is just a quick snapshot of the quarterwise performance and what is interesting to see here is the impact of seasonality that we have in our business. If you look at the sequential quarter that is a decline and that has been consistent between the previous year and the current year. We are not too concerned or worried about the drop in the margins because if you look at our YOY performance in the next slide you will appreciate how we track our business and how we are working to the to our targets. We can move on.
This is what I just said. If you focus on the YUI performance, it’s been stable on a quarter quarterly per Q1 compared to the previous Q1 on pretty much on all parameters and a very healthy margin percentages we can move on. I would want to just stay focused on this slide. The right way to look at our business is the full year performance and the trailing twelve months. If you notice the trailing twelve month basis as well. We have featured a pretty good growth on all the metrics which is revenue, EBITDA and Pat and we have grown stably and steadily and this is the right way to measure our business.
We have time and again said in the past that our business has seasonality. Our H2 will is slightly more pronounced than the first half of the year and so there are no surprises for us and it has been pretty much panning out the same way as we had anticipated. Like Ramesh gave the guidance, we are quite confident of reaching the low teens to mid teens on the organic basis and with broadband including we will be not worth of 20% in terms of growth and sustaining the profitability at 24% that is the adjusted EBITDA 24%. We can move on to Nishi some financial indicators, all of them pretty much on healthy lines.
Good cash conversion. I would just this cash conversion despite we had repaid about 125 crores almost 14 and a half million dollars of debt to the parent company in Q1 of this year and all of these have been planned and we had shared these details to all of you earlier as well. So no real call outs here. Just to reaffirm that our from an operational performance our ROCE has been above 50%. We can move on to next. This is again the tabular form of the entire P and L that we have provided and you will notice the YOY on revenue is about 25.8%, adjusted EBITDA 26.5% and adjusted PAT at 38%.
So the right way to start, the right way to measure fragility is not just QOQ but yui as we have seasonality. Just reiterating the fact that this is not a concern for us and it’s been on expected lines. We can move on. These are the adjustments to the adjusted ebitda, to the reported EBITDA and to the pat. The first graph on the top is the adjustments to the adjusted EBITDA. The first adjustment A that you see for 155 million rupees is an account of the earnouts that we have made, we have provided for for the acquisitions that we have done in the past which is dci, Burch and Broadband.
The adjustment B is the share based, the provision for the share based payment awards which is basically the stock appreciation rights provided to the key employees which are directly settled by the parent company’s agility bb. This is a non cash expense for the company and hence it’s been treated as part of adjustments and in the past also we have provided how these numbers would pan out for the future period. So it’s in line. No surprises, no nothing to really call out. The second part of the adjustments are the about two adjustments adjusted for tax percentage and the third one is on account of amortization of the intangibles that got created when facility as a business got carved out from ags.
And we have explained this also in the past and so this is not an account of our performance and hence being adjusted. We can move on. This was a. There was a request from some of the investor community to share the go forward positions especially on account of the intangibles to be broken between what has got created when the carve out happened. So the last two lines you would see intangibles A is on account of the carve out and B is the intangibles that we had created when we acquired companies like the Birch, DCI and Broadband.
You would notice that there has been a reduction to the debt and we anticipate to repay 235 crores of rupees in FY26 and the rest would get cleared in the next fiscal year. We can move on a very healthy balance sheet. Nothing really to call out from a perspective. Just that again reiterating the fact that we repaid debt despite repaying that good cash submission and a solid balance sheet. Yes Ramesh, we generated healthy cash flows in Q1 in line with what we had anticipated our operating cash flow to the reported ebitda is about 90% and free cash to the reported EBITDA is at 81%.
So pretty much in line with the previous year’s performance. So nothing really to call out. It’s just that again, great effort by the team and good operational performance coupled with solid governance has helped us reach here. That’s it from my end. Thank you and back to you, Ramesh, and happy to take any questions.
Questions and Answers:
operator
Thank you, Srini. Participants who wish to ask a question can kindly click the raise hand icon at the bottom center of your screen. We shall wait for a moment for the question queue to assemble. The first question comes from the line of Abhishek Kumar from JM Financial.
Your line has been unmuted. Request you to go ahead.
Abhishek Kumar
Yes, hi, good evening and thanks for taking my question. Congratulations on a good organic growth despite all the uncertainties. Now my first question is on your outlook. You know we did, you know, 14 plus growth on an organic basis. You still reiterated low to mid teens. You know our business looks very predictable. You know you are tracking above the upper end of your low to mid teens outlook. You know, just conservatism on your part or you think there are few things that you need to win during the year to achieve or to maintain this 15 + growth.
Ramesh Gopalan
Abhishek, good question. Right. So it’s not, I mean is the 15% growth already in the back? No, but we are reasonable, reasonably confident that the low to mid teens will happen given the state of our pipeline and given what we know about the seasonality to our business. Right. So yeah, beyond that obviously there could be positive surprises, the growth could be higher, there could be negative surprises. But broadly sitting where we are, we are reasonably confident of this range which is the low to mid teenage and with broad paths like we said, 20% plus is something that we are reasonably confident about.
Abhishek Kumar
Second question is on the risk slide that you have put out, very useful especially couple on two, three of these risks. The mitigation that you have talked about is higher outsourcing. So two part question one on the rising Medicare late, I think this is already started pinching some of the insurers. So in response to that have you seen you know some discussions around higher outsourcing already? And that’s question number one. Question number two is in your top accounts. You know how has been the or what is the current level of pen outsourcing compared to the overall market? Overall market for payer we understand is maybe early 20s to mid 20s but compared to that, you know, what is the outsourcing penetration for your top accounts? Because essentially that will determine how much more they can outsource.
Ramesh Gopalan
So Abhishek, these questions have been asked and answered in the past also relative outsourcing, right? So broadly, look, the top national players are the ones who outsource much more than the broader market, right? So we’ve always told you in the past as well that the mid and the lower end of the market is, is under. Penetrated from, from an outsourcing point of view. Right. The beyond that the industry numbers in the low 20s is, is what industry analysts talk about. Any other numbers that I give is, is highly, what should I say, speculative in the sense I don’t have a firm basis to say client is outsourcing, percentage is X or Y.
But broadly, we think that the top national players would have somewhere in the, in the 40s in terms of the current outsourcing. The question is not if, I mean, what is the limit? Because there’s, obviously there are risk issues because of which clients still want to retain some part of the operations in house. But like I’ve mentioned in the past, with cost pressures mounting, payers are more and more open to looking at ways to reduce cost. And it’s not just the labor arbitrage that clients are looking at. Clients are also looking at a more holistic solution in terms of partners who can not only run these operations seamlessly, but people who can also bring transformation and reduce cost of operations beyond labor arbitrage.
So that’s one reason why we are very bullish, because in this current environment, the cost pressures are severe. We spoke about Medicare Advantage, but even outside of that, across healthcare, both payers and providers, there’s an enormous cost pressure. And so all of the clients are looking at ways to lower cost and that is forcing them to relook at some of even the traditional work that they’ve outsourced where they’ve retained some part of it in house. Is there someone who can take the whole thing and run it more efficiently for them? So there are lots of newer models that clients are exploring.
And so we are very bullish that given, like I said, not only do we have a stellar operational performance over the years, but all of the investments that we’ve made in transformation is positioning us well in, in being the right partner for not only running those operations, but also effectively taking costs out.
Abhishek Kumar
Maybe on Medicare cost already impacting increasing discussions around outsourcing.
Ramesh Gopalan
Yeah, all the clients, like I said, this is just not, I mean Medicare was a topic spoken about. And this Medicare utilization we’ve spoken last year also, right. The Medicare utilization is not a new phenomenon in 25. A couple of our large clients were impacted by it in 24 and that trend continues to play through in 25. And we’ve seen those clients giving us more and more work. As you’ve seen, even in FY25, our top three, top five, top ten clients grew in double digits. And a lot of that growth is essentially playing out to the same team that I just spoke about.
Abhishek Kumar
Thank you so much and all the best.
Ramesh Gopalan
Thank you.
operator
We take the next question from Manik Taneja of Access Capital. Your line has been unmuted. Manik, thank you for the opportunity and.
Manik Taneja
Ramesh, congratulations for the steady performance and good to see some incremental disclosures. I actually wanted to just pick your brains with regards to the typical seasonality that we have in our business. Given some of these industry specific trends that you spoke about, do you think this drives some impact to the seasonality patterns as customers take longer to decide on some parts of their portfolio? And you also mentioned that some of these pressures are driving some profitability pressures. Some of these changes are driving profitability pressures. While you raise your while you confident about your state EBITDA margin outlook for the year, do you think over the medium term this could pose some risk to our current margin profile?
Ramesh Gopalan
Good. So Manik, let me take your questions one by one. Right? The first part, the seasonality, like we’ve spoken in the past, it’s not driven by buying cycles, but it’s more driven by the open enrollment season. Right? So that’s the season when people get the opportunity to switch plans or renew their plans. And so there is a renewed effort by all of our clients to attract newer clients and support incoming new members. So the volume of transaction goes up in that period and so that cycle is unlikely to change. So with the acquisition of broadband, like we’ve mentioned in the past, broadband is also into the into Medicare Advantage sales.
Right? So that peak season is likely to be in the Q3 of our fiscal year, which is the October through December timeframe. And then we have the other seasonality of Q4. So Q3 and Q4 being the seasonally high quarters for us, will continue even into the future. So I don’t think that is likely to change. On your second question, that’s a good question. Right. So the pricing pressures, like I’ve mentioned in the previous calls, the pricing pressures are increasing because like you said, as the client’s Profitability pressure increases. They want us to do more for less.
And so that’s not something that is new to us. That’s been going on for some time. The reason we are confident that we can still sustain these margins is because the way to generate efficiencies for our clients is just not by reducing our labor price. So it’s more of how do we bring some of the transformational capabilities to play and how do we generate efficiencies. Like I’ve mentioned in the past, when you generate efficiencies through transformation, you always have an opportunity to retain a part of those efficiencies which can go a long way in retaining the margins.
Manik Taneja
Sure, that’s helpful and vamish. If I can ask one more with regard to client interest from delivery location standpoint, if you could just talk about how are you seeing the interest from between India and Philippines from a local standpoint over the course of last 12 months?
Ramesh Gopalan
So broadly this discussion on let’s explore new geographies. That’s not as we’re not seeing it as much as before because now the focus has shifted more to how can you transform, how can you eliminate interactions, how can you eliminate transactions overall and how can you bring about those efficiencies. But from a pure labor point of view, India and Philippines continue to be the lower cost geographies. The one change that we are seeing is people are more interested in exploring India as a geography for even the engagement transactions, especially the voice based transactions. Previously as you know, all of that used to be done in the Philippines and clients who wanted this new show, we used to do it out of Jamaica and Colombia, but now clients are interested in exploring India also there are newer technologies like Sanus and so on which harmonizes accent and, and things like that.
And so India is, is likely to benefit from, from some of those technologies. So but overall I would still say India and Philippines will continue to be the, the geographies where we see most of the work moving when it comes to offshore locations.
Manik Taneja
Sure. Thank you. Appreciate the responses. I’ll come back. Get back.
operator
Thank you. Thank you. Manik. We take the next question from Rishi Dundhunwala from IIFL Capital. Your line has been unmuted. Rishi.
Rishi Jhunjhunwala
Yes. Thanks for the opportunity. So you know we have while our peer growth has been fairly decent, what we have also seen is a pretty strong growth on the provider side. It’s been growing at 35% plus year on year. Can you explain some of the drivers of that and what is the medium term strategy to expand this part of the business. Yeah.
Ramesh Gopalan
So Rishi, one thing I want to call out is, I mean you’re broadly right, but the revenue split between payers and providers also will vary by quarters because for example, in the seasonally high quarters of Q3 and Q4, the seasonality is mainly on the payer business. So the proportion of payer revenues will be higher than providers in those quarters, whereas it’ll be the other way. I mean, the proportions will be different in Q1 and Q2, but broadly on an annual basis. You’re right. Our provider business has been growing a little faster than the payer business.
I wouldn’t put that to any specific reason. One, like I’ve said in the past, it’s a slightly, it’s a much smaller base to grow from. And two, we have some very strong relationships even on the provider side. Right. So unlike many other competitors who work with smaller provider clients, we have some really sizable provider clients who continue to grow with us. We are also actively looking at expanding our portfolio of services, but I can’t say that that has started to to generate higher growth in the provider yet. But we are hoping that we can continue this momentum on provider and even try and see if we can accelerate by expanding our service portfolio.
Rishi Jhunjhunwala
Got it, sir. And second question is, in the past you have said that look at our growth on a 1h over 1h and 2h over 2h basis rather than quarterly yoy. Of course QoQ, there is clear seasonality, but even on a yoy basis, at times 1Q 2Q could have those aberrations. Last two years we had seen 1Q having an extended decline versus what you have delivered this year. It could probably be a function of you actually doing better or accelerated growth. But do we expect that to spillover in 2Q in terms of relatively lower growth? So again, you know, on a one inch basis, how do we, how do we look at growth then?
Ramesh Gopalan
Look, it’s a tough thing to at this point to say exactly where Q1 will be with respect to Q2 will be with respect to Q1. But to your point, yes, we ideally would want people to look at H1 versus H1 year on year. But if you were to take us H1 in FY26 over H1 of FY25, I still think we will fall in the low to mid teens kind of a number. So there is momentum starting the year. Like I said, the pipeline, both from new clients and existing client continues to be healthy. I don’t see why there should be a drop in Q2.
But broadly, if you look at H1 versus H1, we will still be in that broad low to mid teens from an organic point of view.
Rishi Jhunjhunwala
Okay, sir, thank you so much. All the best.
Ramesh Gopalan
Thanks, Rishi.
operator
Thank you, Rishi. We take the next question from the line of Ruchi Mukeeja from ICICI Securities. Your line has been unmuted. Ruchi,
Ruchi Mukhija
thank you for the opportunity and congratulations, Ramesh, on the steady performance in the deal wins you announced gcc. When could you talk more about how this came to us? And do you see more such deals in the market? And if you could also talk about the scope and the tenure of this deal that we have. Sure.
Ramesh Gopalan
Ruchi. Right. It is existing client of ours. Right. So while we are setting up, like I said, while we are helping them set up a gcc, it isn’t to move any of the work that we currently do for them. So these are work with clients that they have who have restrictions in terms of giving it to third parties. And so they want to take the advantage of lower cost geographies in delivering some of the work that they are currently doing onshore. So the deal construct is a little fluid. They have a right to, like I said, it’s a build, operate, transfer model.
They have a right to take it back over a period of time. It could be anywhere between two to four years. So we are helping them in the whole process. We’re helping them set up their centers, we’re helping them hire, we’re helping them train, we’re helping them run the business before handing it over back to them. But then the size, the maximum scale it will reach before they move it in house and the time frame at which they’ll move it in house, that’s a little fluid. Contractually. Right. They could do it, like I said, anywhere between two to four years.
Ruchi Mukhija
Thank you. Appreciate that. All the best.
Ramesh Gopalan
Thanks. Thanks, Ruchy.
operator
Thank you, Ruchi. We take the next question from the line of Bhavik Mehta from JP Morgan. Your line has been unmuted. You may go ahead.
Bhavik Mehta
Hey. Thank you. Just one question. Over the last three months or so, given what’s happening with their market, both from a funding perspective, from macro perspective, have you seen any change in pace of deal conversions or revenue ramp up?
Ramesh Gopalan
Sorry, Bhavik, if I understood your question, you’re asking the deal flow, have you seen any change? Right. We haven’t. Right. So in fact, like I said, because of the pressures on margins, people are more keen to look at ways to reduce cost. And so we don’t see any negative impact on deal cycles or deal flows. Obviously the core operational deals being complex, they typically take three to six months from start to finish. But that’s been the case even in the past. But otherwise we are not seeing any delays or any disruption to the deal cycles.
operator
And also in terms of conversion of deals to revenues, is that phase also broadly unchanged?
Ramesh Gopalan
Sorry, I didn’t get that.
Bhavik Mehta
The conversion from deals to revenues, the. Revenue ramp up of the deals, what.
Ramesh Gopalan
You have, that also remains unchanged? Yeah, some of our deals, I mean most of our deals have a, have a ramp up cycle because as I mentioned in the past, we don’t keep bench. So so we have to hire and staff up for the, for the new deals and so, so that takes a while to ramp up to full capacity. But yeah, so, so there’s, there’s no change to those, to those timelines.
Bhavik Mehta
Okay, thank you.
operator
Thank you. We take the next question from the line of Chirag Kacharia from Ashika stockbroking. Your line has been unmuted. You may go ahead.
Chirag Kachhadiya
Hello? Yes, so question on the static part 2 or can you speak a little louder? Very feeble. It’s proper now. Hello? Yeah, so Ramesh, I have a question on the static part as somewhere the intent of U S government is to upon outsourcing and so in this environment how we strategizing our play to remain, you know, strong bit in the value chain in the US Market and also. The conversation with. Your top client, this is what, like what the situation one year or two year down the line, is it more consolidation amongst our peer group or are we going to remain resilient and you know, we gain more market share from the competitor.
Ramesh Gopalan
I, I’m not sure I understood you completely but, but let it try to answer because the, the, the consolidation. Are you talking about consolidation of vendors? Are you talking about consolidation?
Chirag Kachhadiya
I’m talking about the consolidation of vendors.
Ramesh Gopalan
Yeah, vendors. Yeah, yeah, the consolidation of vendors is happening. Right. So I, I might have spoken about this in the past also. Especially with some of our larger clients when they realize that they have a long tail in the, in the vendor list, they want to consolidate into a few vendors. That doesn’t mean like I’ve said, big national payers are not going to work with just one vendor. They’ll definitely have three or four vendors across their different areas. For every major process they are most likely to have at least a couple. But having said that, sometimes they have many more than, than a few.
Right. So, and so consolidation of work from the long Tail into these chosen few vendors is something that most of the large clients are looking at. And we’ve gained wallet share on that basis even in the last few years. In terms of the other question, in terms of the overall market environment, like I said, healthcare costs is a big concern and that continues to remain a big concern. So overall healthcare costs are growing. The pressure on our clients is continuing to increase. Margins are highly strained. Utilization. With an aging population, utilization rates are only likely to go up.
So essentially the cost pressures are not going to go away. Obviously they are likely to be higher in some quarters, some years than other years for our clients. But the overall trend in terms of increasing cost pressures, that is unlikely to go away. And so, and so ability to not only deliver lower cost, but do similar or exceptional service at lower cost and using all of the transformation capabilities is going to be a very significant task in the future.
Chirag Kachhadiya
Yeah. In continuing to this pricing and all in future, let’s say we command the relatively higher market share in coming years.
So at that time we have a pricing power because ultimately it’s outsourcing service. Right. So we think that if the scope of price increase will pretty incoming years.
Ramesh Gopalan
Like I said, I don’t think, at least for the, for the, for the national players, it is not going to be that they’re going to have one vendor who can, who can start to call the shots. Right. So there will always be multiple vendors. While I wouldn’t say as service providers we’ll have the leverage to increase prices. But what I can say is the more transformation we can do, the more we can help our clients take out costs.
We can also start to see some upside in terms of retaining to Manik’s questions. Like I mentioned, retaining some part of those efficiencies for ourselves. Right. But the, but the ask at this point is how can you reduce my cost? Not working with vendors who want to increase their prices.
Chirag Kachhadiya
And one final question on headcount. So three, four years down the line, let’s say, let’s say we double our revenue. So headcount will remain in same range or slightly higher than what?
Ramesh Gopalan
So with the transformational work, the growth will start to become non linear at some point.
But broadly will headcount increase if my revenues increase, will it increase at the same proportion? Unlikely, because a lot of the deals where we are signing with clients today, not too many of them are on a pure FTE model. Even on a transaction model, if I can deliver those transactions with fewer humans, the clients want a portion of those savings. But the clients are not concerned about how many people I have to deliver those transactions. So as we start to increase the level of transformation in the work that we do, the relationship between revenue and headcount will start to diminish.
And so it is likely to become more nonlinear as we go forward.
Chirag Kachhadiya
Thank you so much. All the very best. Thank you.
operator
Thank you. We take the next question from Mohit Motwani from Tara Capital. Your line has been unmuted. Mohit.
Mohit Motwani
For the opportunity. I had a question on broadband you mentioned about you are in discussion first crossword proposals with broadband clients. And I think you mentioned you have already crossover to one client. So just want to understand are these new areas of work which was not getting outsourced previously or you know, you are trying to replace some existing vendors which were there, you know, doing the work for them?
Ramesh Gopalan
Yeah, so we’ve discussed this in the sense, Let me reiterate, right. Broadcast client base is other than a couple of clients which are national payers, bulk of the clients are in the mid and the small market segment range.
Right. So and like I’ve said in the past, the penetration of outsourcing in that, in that bucket is very, very small. So most of the times when you are having these cross sell conversations with clients, we are typically not talking about replacing existing vendor. It’s almost, almost always work being done in house which we are trying to get them to outsource. So there is that initial hurdle that we need to cross in terms of do I really want to outsource or not. But like I keep saying, the cost pressures are increasing across the board. It’s just not the national players who are facing cost pressures.
The cost pressures are even higher for the mid market and the smaller clients. And so even though they may not have done that in the past, the propensity to start to listen to some of these proposals has increased. And that’s what makes us bullish that some of these cross sell conversations will result in revenues in the future
Mohit Motwani
and your guidance of adjusted ebitda margin at 24%. So does it bake in any improvements in margins of broadband? I understand it’s just been I think three to four, four months history. It’s a few months since we closed the acquisition.
But any operational initiatives that you have already undertaken to, you know, optimize cost on the broadband side and any improvement that we should expect in the future quarters.
Ramesh Gopalan
Yeah, so. So like, like I mentioned in the past, there are multiple initiatives at play. Right. So. So on the, on the core operations front, yes. While there might Be some efficiency. The focus is more on how do I cross sell and how do I increase the revenue base. And if some of these cross sell broadbands, for the most part, other than a very small component which was done offshore, almost 3/4 or more of that revenue came from onshore.
Right. If some of these cross sell are for delivery from a different offshore geographies, then by that very nature the margins will improve. But also what we’ve started doing is to look at the sgna so more most mostly on the GNA side and we have started to see what kind of synergies we can get in the, in the GNA cost. Right. So vendor contracts, personnel, we’ve started to look at all of those. And so optimizing the GNA spend will also give a boost to the EBITDA of broadband. So broadly we are expecting, like I guided in the past, we are expecting broadband, EBITDAs, EBITDA margin to improve from high, single, low double digits to mid double digits over the next couple of years.
Mohit Motwani
Thank you so much for those answers and all the best for future. Thank you.
operator
Thank you. Mohit. We take the next question from the line of Fawaz Sharif from White Whale Capital. Your line has been unmuted.
Fawaaz Sheriff
Hi, thank you for taking my question. I wanted to ask how is revenues recognized in your business? Is it contract based or time based? And if so, can you give me a split as to how it’s been recognized this quarter?
Ramesh Gopalan
Sorry, we may not have spoken with you in the past, but our business, we do core operations work for clients. Right. So this is not a contract or a project, it is regular operations. It’s a recurring revenue model for us. Right. So so all of the revenue is recognized based on the work that is delivered during the month.
Okay. And so it’s 100% is towards transactional, if I’m right. Yes. Yes. Okay, got it. Thank you. So I mean, okay, 100%, almost 100%. Right. So we might do some time and material based work, especially on the transformation side. If it is, if the client is separately paying us for some of those transformational initiatives, we might build them on a, on a project basis. But that given the overall revenue of saginity, I would say that’s, that’s more like a small single digit number. So on a transactional basis.
Fawaaz Sheriff
So it’s outcome based, if I’m not wrong.
So if the hospital or the vendor does well, we do well. My understanding right over there,
Ramesh Gopalan
no, not all of our revenues are outcome based. Most of our revenues are effort based. Right. So even if it’s a transaction based billing, it is the number of transactions that I process. Right. So that’s the predominant way. There are some outcome based billing models, but not when you talk of outcome, not that if my client overall does well, I do well. Right. So it’s outcome on the specific process. For example, if I’m working for a provider trying to collect age receivables, I’ll get paid based on the cash that I, that I collect for my client.
Right. So it’s very specific to the outcome of that process. Similarly, if I’m doing payment, payment integrity work, I get paid based on the recoveries that I make on the, on, on, on the claims that are paid. Right. So again it’s, it’s linked to the outcome of that specific process
Fawaaz Sheriff
. All right, thank you for answering.
operator
Thank you. We take the next question from Harshit Sasteva from Columbus Capital. Your line has been unmuted. Harshit.
Harshit Sachdeva
Hi, thank you for great set of numbers. Just wanted to get clarity on any margin levers and client expansion. What does the outlook look for the rest of the year and deal pipelines and on margins especially, how do you. Look to improve margins and any levers. That you can pull. You might have talked about it in the past. So thank you.
Ramesh Gopalan
Yeah. So Harshit, I think like we guided, right. So we had guided a 23 to 24% EBITDA and we are saying we are likely to do slightly better than that 24% plus EBITDA numbers. Right. Our margin levels are essentially in our kind of business, the margin levels are essentially the efficiencies that we generate. Efficiencies can be through technology efficiencies can be through operational efficiencies. Reducing redundancies, better manpower utilization, all of those are levers for us and all of that in a way that we have to generate consistently on a year, on year basis because most of the geographies where we operate there is a cost inflation and our contracts are longer term contracts where there is no price inflation.
So given that it’s part of our system to generate efficiencies on a year on year basis. So those levers are pretty much the same except that the technology level is essentially now opened up to give us a much larger array of opportunities to improve efficiencies. And that’s what we’ve been talking about. Right. Clients realize that clients want us to use those opportunities to reduce the cost for them. So rather than a cola, most of the contracts now ask us to reduce price on a go Forward basis and the lever to do that is basically using technology.
Harshit Sachdeva
And the second part of my question. Was any what does the client pipeline. Look like and more expansion during the year? I mean onboarding new clients or strategies for that?
Ramesh Gopalan
Well, like I said, pipeline looks healthy. Our historical growth has been a mix of growth from existing clients as well as new logos. In a given year, most of the growth will come from existing logos because new logos, like I said, one, the deal cycles three to six months and two, the ramp up times that required. So any new wins that I generate in a year is unlikely to give me a large revenue in the same year. And so most of this revenue will get pushed out to the subsequent year. So any growth that you see in a given year is basically the logos that I’ve onboarded the previous year and the continued growth that I, that I see from my existing clients.
And like I mentioned in the opening statement, we won new deals or additional work from 18 of our 77 clients. And that’s been the historical trend. So we’ll continue to pursue a number of opportunities with our existing clients and that is the healthy pipeline that gives us the confidence to say that we will still continue to deliver low to mid teens for the full year.
Harshit Sachdeva
Thank you so much.
Ramesh Gopalan
Thank you. Thank you.
operator
Thank you. We take the next question to the line of Seema Nayak from ICICI Securities. Your line has been unmuted. Seema. Seema, you may go ahead.
Seema Nayak
Hello. Am I audible? Yes. Yes. Yeah, thanks for taking my question. My question is regarding intangible asset amortization. It is the highest in last four quarters. So is it led by broad path and how do we see that going forward? And my second question is regarding provider segment growth. This segment has been growing 35% plus for the past three quarters. So are we pivoting more towards provider led growth? Yeah, those are my questions.
Ramesh Gopalan
Srini, you want to take the.
Sarvabhouman Srinivasan
Yeah. On the intangible amortization, Sima, it has always been the. We had created intangibles when the business had got carved out. So it had two components. So it’s not probably the highest. In FY24 we had the highest number where one of the intangibles had got completed. So what you see now is the intangibles on amortization with respect to the business that got carved out plus the new businesses that we had acquired and where we had created intangibles. We have shown the split of those in the forward looking slides as well. And the rest is just an exchange rate adjustment when we convert because the intangibles that got created in the United States is for the business that was for towards customer relationships.
It was a 16 year deal. That 140 crores of number that you see on the forward looking table is just adjusted for the exchange. So otherwise there are no yo yos to the intangibles like you see. So if you still have any questions, you can connect with me separately. I can explain that to you.
Ramesh Gopalan
On the provider Seema we discussed, right. So the provider is only 10% of our overall revenues. So the growth numbers on that is also a result of the smaller base that we have. Right. Are we aggressively looking to grow the provider business? Yes, we are aggressively looking to grow the provider business. Like I’ve mentioned, our broad providers footprint is with large providers, not just health systems, but also ancillary providers. But broadly what we deliver to them is the extended revenue cycle operations as a portfolio. But what we are also trying to see is are there other capabilities that we have on the payer side that can be leveraged from the provider side.
So our attempt is to try and grow our portfolio of services on the provider side which will, if we do successfully, will also further accelerate the growth on the provider side. But today to your question, the growth is higher because of the smaller base and because of the fact, like I said, just like on the payer side, we have some very large relationships on the provider side which continue to grow for us.
Seema Nayak
Thanks and all the best.
Ramesh Gopalan
Thank you.
operator
Thank you. We take the next question from the line of Raj Vyas of TM Investment Technologies. Your line has been unmuted. Raj. Yeah.
• Raj Vyas
Am I audible?
Ramesh Gopalan
Yes, please go ahead.
• Raj Vyas
Congratulations on a good set of numbers. My questions is basically a general type. So with the anticipated increase of outsourcing opportunities, what are the major operational changes as we as a company are addressing currently and looking at the current macroeconomic changes and with respect to inflation and other changes as well. So are we looking on with the newer geographies and verticals that should typically help expand the market for agility in the near term. Okay, okay, so let me try and answer the question on the operational front. Yes. So today a lot of, like I said, a lot of effort goes into transformation of these operations using all of the technologies available, including AI.
So like some of the examples that I gave in terms of nurse assist, appeals assist and so on, there is always a human in the loop. But AI is doing a lot of the work that previously humans used to do. Right. So it is, it means a different set of Training it means a different set of working for our associates, which is something that we are rewiring and training the whole organization. And secondly, like I said, we are also introducing AI in some of our internal operations. Just as an example, I said we hire hundreds of people every month.
We train people for six to eight weeks and typically even today it’s either an instructor led training or if it is even self training, it is more linear. Right. So everybody goes through the same modules. What we are also trying to attempt with Agent TKI and so on is how do I personalize this training based on the capabilities of each of the individuals that we hire so the training doesn’t have to be cookie cut for all of the all of the people that we hire. How do we also tailor the kind of people that we hire for a specific client and for a specific process? Right.
Ability. All of the tools available today, Agent AI and so on gives us that opportunity to personalize to a high degree. So that’s going to change the way we hire, we train and we deploy people into operations. So to your question on operationally, how we are adapting to the new environment, a lot of those changes are in play as we speak to your broader question on macro and markets. I’ve spoken about this in the past. So today in fact our performance stands out compared to a large part of the market is because of our differentiated positioning in healthcare.
So we like the vertical where we operate, we like the space we are in and so we are going to continue to play in the healthcare vertical. In the healthcare, the work that we do for payers and providers, is there more work that we can do that than we currently do? I already spoke to you about providers. We are constantly looking at expanding our service portfolio and so that’s something that we look at within the larger healthcare ecosystem. Are there other entities that we can service? That is also something that we are keen to explore.
While payers and providers is 100% of our revenues today, can we expand that to a different segment within healthcare is also something that we look at. But broadly where we’ll operate at least for the for the foreseeable future will be in the larger healthcare space and not in any other vertical. Last question from my side. The slide in the starting highlighted that there is no tangible impact from the tariff thing. But are there any active risk assessment we are looking or so that we try to mitigate the risk or in case impact in the future.
So I don’t know how to answer the question right. So I’m saying there’s no direct impact. So we’ve done our analysis and we don’t see tariffs impacting us Tariffs on the way the tariffs are structured today and the goods on which tariffs are imposed, we don’t see it impacting us. If as situation changes and, and if the rules of the game change, we will continue to assess and see how it impacts us and. And we will let you know in the subsequent calls. Okay, Understood. Thank you for answering my questions.
• Raj Vyas
Thank you.
operator
Thank you. We take the last question of the day from the line of Manik Taneja of Access Capital. You’ve been unmuted. Manik.
Manik Taneja
Yeah, hi. Thank you once again for the follow up opportunity. Ramesh, I just wanted to check with you on this adjusted EBITDA margin outlook that you have provided earlier. Our adjusted EBITDA margin was inclusive of other income in this quarter’s presentation. You basically excluded the other income out of it. So just wanted to. Wanted to confirm the outlook of 24% plus is X of other income with the way we are reporting now.
Ramesh Gopalan
Yes, that is correct. But we started excluding other income from the last quarter also. Right? Srini?
Sarvabhouman Srinivasan
Just correct. Correct. Ramesh. This was a request from the investor community not to include. So that’s the reason why we have shown all the quarterly. We have included a slide showing the last 9/4 performance as well.
Manik Taneja
Sure. And if you could just also help us with the contribution of Broadpath in the current quarter, if you can call.
Ramesh Gopalan
It out in terms of organic and inorganic numbers. Manik.
Manik Taneja
Sure, I understood that. Thank you. Yeah.
operator
Thank you. That was the last question for the day. Thank you members of the management, on behalf of Sagility India Ltd. That concludes our webinar for the day and you may log off the event. Thank you everyone.
Ramesh Gopalan
Thank you. Thank you everyone.
Sarvabhouman Srinivasan
Thank you all. Goodbye.