Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
Sagility India Ltd (NSE: SAGILITY) Q4 2026 Earnings Call dated May. 12, 2026
Corporate Participants:
Siddharth Rangekar — Moderator
Ramesh Gopalan — Group CEO
Unidentified Speaker
Abhishek Kayan — Deputy Chief Financial Officer
Analysts:
Santosh Balan — Analyst
Unidentified Participant
Rohit Thorat — Analyst
Vedic Sarkar — Analyst
Rishi Junjunwala — Analyst
Vamshi Krishna — Analyst
Chirag Kacharya — Analyst
Bhavik Mehta — Analyst
Siddharth Voda — Analyst
Sameer Pardikar — Analyst
Presentation:
Siddharth Rangekar — Moderator
Good evening everyone and welcome to the Q4FY26 earnings webinar of Schedulity Limited. This is Siddharth Rangekar from CDR India and I shall be your host for today. As a reminder, all attendee lines will be in the listen only mode. 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 Mr. Srinivas Matapalli, Executive Vice President and Group Chief Financial Officer.
Before we commence, I would like to state that some statements made on today’s discussion could be forward looking in nature and may involve certain uncertainties and risks. A detailed statement in this regard is available in the quarter four and FY26 results presentation that has been uploaded to the stock exchanges. I would now like to hand over the forum to Mr. Ramesh Gopalan to begin the proceedings of this webinar. Over to you.
Ramesh Gopalan — Group CEO
Thank you, Sudharth. Good evening everyone and thank you for joining. Joining us on our Q4 and FY26 earnings call, FY26 has been an exceptional year for sagility. We delivered high growth and profitability in a very challenging environment. As we discussed with all of you on the Investor Day in March, healthcare payers are facing significant profitability pressures because of regulatory changes, lower than expected reimbursements and increasing medical utilization. In this environment of intense cost pressures, clients are more receptive to partners like Sagility who not just play a support role, but can help transform their operations and deliver better business outcomes at a lower cost.
Given our domain expertise, the breadth of our service portfolio and the trusted relationship we have with our clients, we are able to play a large part in the transformation journey through AI and tech led initiatives. We saw steady growth through the year and a Better than expected Q3 and Q4 which are the peak seasons for us. On account of AEP and open enrollment, we saw higher volumes across all of our practice areas and equally important, our execution was very strong. To put the impact of AEP and open enrollment in context, our seasonal revenues accounted for 6% of FY26 revenues versus 3% in FY25 with an equal split across Q3 and Q4.
Our strategy of expanding white spaces within existing accounts continues to serve us well. Our top five grew year on year by 11.7% in FY26. Our focus on mid and small market is also beginning to show results. We added 17 new clients in FY26 and some of them were sizable regional plants and blues, which sets us up well for growth in the coming years. As we mentioned on the investor day, our synchronic suite of solutions which are outcome focused and transformational managed service deals are getting the attention of many of our clients and prospects.
The addition of Broadpath has further strengthened our ability to support seasonal and member facing operations, particularly during peak enrollment cycles. Overall, this reinforces our position as a healthcare focused operations partner that combines domain expertise, technology and execution at scale. Let me now build on that with our performance for the quarter and for the year. We can move to the next slide, please Q4 marked a strong and disciplined close to FY26, building on the momentum we saw through the year.
For the quarter, revenue stood at 20,243 million rupees or 222.1 million US dollars, representing 29.1% year on year growth in rupee terms and 22.2% in constant currency. Our organic year on year growth excluding broadbath was also strong at 25.8% in rupee terms and 19.4% in constant currency terms, reflecting sustained demand across our payer and provider operations and continued expansion with existing clients. On profitability, Q4 adjusted EBITDA was 5,036 million rupees or $55.2 million, with margins of 24.9%.
Adjusted PAT for Q4 came at 3,069 million rupees or $33.6 million at margins of 15.2%. Now looking at the full year, the full year revenues were 71,929 million rupees or $814 million, up 29.1% year on year in INR terms and 23.6% in constant currency. Organic growth excluding broadband was 20.1% in INR terms and 15% in constant currency. For the full year, adjusted ebitda stood at 18,200 million rupees or 206 million dollars, translating to a 25.3% margin of and exceeding the guidance provided at the end of Q3, underscoring our ability to scale while sustaining resilient margins.
The expected 110bps margin decline versus FY25 primarily reflects the full year impact of the Broadpath acquisition. Adjusted PAT rose to 11,306 million rupees or $127.9 million up 39.5% year on year with a 15.7% margin. Adjusted pack margin expanded by 110bps versus FY25 driven by strong EBITDA performance, higher forex gains and lower finance costs. Commercially, Q4 was another very strong quarter. We signed $30.7 million of potential steady state ACV supported by expansions and new sows across 18 existing clients and and two clients added in Q1 to Q3.
I’d also like to highlight the strong external validation we received during the quarter with multiple leader recognitions from Nelson Hall, Everest Group and ISG and the Augmented Intelligence Award for Smart Tech Nurse Assist, which collectively reinforce a differentiated position in intelligent healthcare operations. I’m also happy to announce that the Board has recommended a final dividend of 0.1 rupees or 10 paise per share subject to approval of shareholders.
Unidentified Speaker
Next slide please.
Ramesh Gopalan — Group CEO
In FY 26 payers contributed 89.7% of revenues while providers contributed 10.3%. The reduction in provider share reflects impact of the acquisition of Broadpath which are a predominantly payer focused revenue mix. Employee strength stood at 46,860 as of the end of Q4 driven by headcount reduction post OE season. The slight uptick in attrition in FY26 is attributed to higher seasonality compared to the previous year if you move to the next slide so this slide summarizes all of the annual KPIs that we report every year.
The notable point here is our top three concentration has fallen below 60% and the other key point is the number of clients contributing to over 20 million as you can see has grown to 9 which is 4 in FY23. So more than doubled since FY23. If you move to the next slide, let me like always give you some of the recent market trends. CMS finalized the Medicare Advantage rate increases and if you remember the same time when we announced the Q3 results, they had announced a preliminary almost flat rate for CY27 but now that stance increased to 2.48%.
So this gives a slightly more favorable environment for Medicare Advantage plans. But having said that they are still under tremendous cost pressures because of increased medical utilization. So what it means for sagility is proposals that focus on cost takeout in administrative functions and also helping improve Star ratings are looked upon very favorably by our MA plan clients. The second thing is the House bill to extend or enhance the ACA subsidies. So this was another thing we spoke about in the previous quarters, but with this bill, assuming it passes both houses, it gives a more stable market or stable premium for membership in the ACA marketplace and keeps the market at a steady level getting into FY27.
However, as we’ve mentioned to you before, our exposure to the ACA market is limited, but it still underscores the importance of cost takeout and ALA initiatives in the ACA segment. The next one is on State Medicaid expansion. As you know, the Medicaid segment has been impacted by the Big Beautiful bill as well, and some of the incentives for expansion at the state level has been eliminated. So there is likely to be a moderation in the Medicaid growth. Again, this is a segment that we’ve said we have very low exposure to, but once again this is another pressure from a membership and cost point of view, which means some of these plans also have tremendous pressures to take out cost in their functions.
Lastly, CMS launched what’s called Access model which is advancing chronic care with effective scalable solutions. What this means is CMS wants to incentivize outcome based chronic care management with tech enabled care as central to the model. While this is specifically targeted at original Medicare, it closely aligns with what we’ve been trying to help Medicare Advantage plans with which is to use technology to do risk stratification and enable care as well as tech enabled member support and member engagement activities.
Moving on to the next slide this quarter we also launched a brand evolution. This is not just a cosmetic change, it’s a reflection of how we are going to market as a healthcare first tech and AI led operations partner on outcomes. The brand promise is agility delivers value in healthcare operations with deep domain expertise, technology and AI led transformation and trusted collaboration. So this promise defines how sagility shows up for client in an era where healthcare operations must fundamentally transform.
It rests on three core attributes Deep Domain Expertise. We are a dedicated specialist in US healthcare operations with more than 26 years of accumulated knowledge across end to end medical, pharmacy and dental business segments combining the depth of a niche expert with the breadth of a global enterprise. The second pillar is tech and AI led transformation. This is technology deployed to solve specific healthcare problems with compliance and clinical safety as non negotiable guardrails. Healthcare AI must be explainable, must be auditable and must be regulator ready.
The third and the most important pillar, which is trusted collaboration, which is agility Work side by side with clients, building transparency and shared accountability into every engagement. The company’s emphasis on we listened, we acted, we delivered captures a discipline of incorporating client feedback directly into operational improvements. This promise defines how Sagility delivers value, but to scale it across markets, buyers and deal cycles, it must be consistently experienced, not just articulated.
Moving on to the next slide we recently had our Client Summit. We do this every year and we had over 80 client attendees. The key takeaway from this event is the level of engagement and partnership we are seeing with our clients. We brought together senior client leaders to collaborate on key industry challenges, including medical cost pressures, member experience and the use of AI in operations. Through this process we worked with clients to co develop solutions and we are now moving into early pilots on selected initiatives.
This reinforces our approach of not just building solutions independently, but building them in partnership with our clients. With that, I’ll hand it over to Aymar to walk us through the financials and then I’ll come back for closing comments. What do you imar
Abhishek Kayan — Deputy Chief Financial Officer
Thank you Ramesh Good evening everyone. I have recently joined Sagility as a group CFO and I must say that I’m truly excited to be here at a time when the company is delivering such strong results. Next slide I’m pleased to present an overview of Sagility’s financial results for the fourth quarter and the fiscal year 2026. In quarter four, Sagility delivered strong revenue growth and solid profitability. This performance is supported by consistent underlying revenue momentum for the full year. FY26 performance came in ahead of the guidance we had shared during our last earnings call, driven by strong operating execution, disciplined cost management and a better than expected open enrollment season.
I’ll move to Cash Flows as Ramesh has already given you a view of revenue. Adjusted EBITDA and adjusted pat. Our operating cash flow conversion for the quarter was healthy at 104.6%, driven primarily by an improvement in working capital and lower tax outflow in this quarter as compared to quarter three. At quarter end DSO stood at 87 days, comprising of 54 days of trade receivables and 33 days of unbilled revenue. While this is slightly higher than the 86 days reported in Q3, the increase is primarily due to an accounting reclassification.
Moving from build unbilled to financial liabilities. This had an impact of approximately four days, but importantly this reclassification had no impact on working capital. On this slide, I’ll highlight the seasonality in our business with a stronger second half. As you would notice, our revenue sharply increases in quarter three over quarter two and remains steady in quarter four. This increase in quarter three and quarter four is largely on account of additional seasonal revenues from open enrollment and AEP.
As highlighted by Ramesh earlier, we had around 50 million of recurring seasonal revenues in H2. You’ll also notice that our headcount has come down in this quarter as our open enrollment season concludes. The adjusted EBITDA for quarter four was 24.9% in this quarter. We recorded a one time employee bonus as part of our transition in our salary hike cycle from a calendar year basis to a financial year basis. This one time item this one time item impacted the adjusted EBITDA by approximately 1.7% in quarter four.
This slide highlights our robust growth trajectory and our steady margin profile. Our three year CAGR on revenue is 16.2% in constant currency terms. Adjusted EBITDA grew by about 17.7% and adjusted pad expanded at a significantly faster pace of 31.7% over the last three years. These growth rates are in dollar terms and includes the impact of acquisitions. This strong bottom line outperformance was driven by three key pillars operational efficiencies, reducing finance costs and higher other income including forex.
Overall, this reflects our ability to consistently scale revenues while sustaining margins. Moving to other financial indicators, our adjusted EPS continues to grow faster than revenues and our adjusted ROCE continues to be steady at greater than 50%. Cash conversion in FY26 is lower compared to previous year and this is a result of higher tax overflow, lower non cash expenses and higher non cash income. Let me explain the few major Factors here. In FY25 we had received tax refunds in India for previous periods which reduced the overall tax outflow for FY25.
Secondly, we also had a large SAR expense which is non cash in nature and in FY26 we also had higher unrealized forex gains under our reported ebitda. Finally, on debt, we are on track to repay our current debt completely by end of FY27. This slide is a little busy but will give you an overview of our quarter’s performance compared to quarter three and quarter four of previous year. And you also have the full year numbers compared to previous year. Just keep this on for a few seconds for you to observe the numbers.
We can move on to the next slide. On this slide we present the adjustments to ebitda. Our adjustments on EBITDA include adjustment made for M and a stock appreciation rights and other income and forex gains. While our adjustments on adjusted PAT includes adjustments made for EBITDA as well as adjustment made towards intangible amortization and exceptional items that we have booked for this quarter for one time impact coming out of the new labor code. Going forward. This is a view of our debt repayment plan and earn notes and intangible amortization.
We give this every quarter you the changes that you see for FY27 is mainly on account of forex changes. Next slide on balance sheet. Our balance sheet continues to be very healthy and at the end of Q4 our cash position is 9038 million which enables us to continue to invest in AI capabilities and domain and also continue to explore inorganic opportunities. On cash flow. We have already talked on a little bit on one of items in my earlier earlier in my presentation and going forward I think we are very confident of sustaining these healthy cash flows.
With that I conclude my presentation handing back to Ramesh for his closing remarks.
Ramesh Gopalan — Group CEO
Thanks. Thanks Amar. As the numbers have shown, our FY26 performance was exceptional. Like I said, the industry continues to evolve with cost and regulatory pressures and clients are looking to partner to partners who can collaborate with them on their AI and tech led transformation journey. Not just as advisors or implementers of technology, but someone who can take accountability for business outcomes. Our domain expertise, our investment in tech and AI under deep client relationships make us the right partner for our clients.
We are carrying the momentum of a great FY26 into FY27. While deal timings may be a little unpredictable, we are confident of growing in the low double digits in constant currency. For FY27. Our guidance for adjusted EBITDA margin is between 24 and 25% and if the FX stays in the current ranges, it’s more likely to track towards the upper end of this range. With that, happy to take questions and hand it over back to Siddharth.
Questions and Answers:
Siddharth Rangekar
Thank you. Participants who wish to ask questions kindly click the raise hand icon at the bottom center of your screen. We will wait for the questions to assemble. I repeat, participants who wish to ask a question are requested to click the raise hand icon at the bottom center of your screen. We take the first question from the line of Santosh Balan.
Unidentified Speaker
We can’t hear.
Santosh Balan
Hello.
Siddharth Rangekar
Yes, please go ahead.
Santosh Balan
Yeah, congratulations for the good set of number. I just want to know, will there be any impact due to the AI in the future? Evening
Ramesh Gopalan
Yeah, we discussed a lot about AI and its impact on the Investor Day. The broad answer to your question is, yes, we believe AI is something that’s going to generate a lot of efficiency for our clients. Efficiency in the sense of increased productivity, lowering costs both in their administrative functions, and also helping improve member and provider experience. So while the productivity gains will reduce some part of our revenues, we believe that AI will also help us gain more market share as we look to implementing AI as part of our overall transformation of our client operations and take accountability for business outcomes.
So that’s broadly our position on AI. We’ve grown, as we said, we’ve grown at 15% in constant currency organically, and we still believe that we can continue to grow in double digits.
Unidentified Participant
So how far we have adapted to this AI in our company organization?
Ramesh Gopalan
Yeah, we’ve discussed that in the previous quarters. We’ve invested heavily in tech and AI. There are a number of use cases that we’ve piloted. We are working with several clients on some of these initiatives. But yes, we have implemented a number of use cases in various parts of healthcare operations.
Santosh Balan
So
Ramesh Gopalan
Thank you.
Santosh Balan
Okay. Thank you, sir.
Siddharth Rangekar
Thank you. We take the next question from the line of Rohit Thorat from Axis. Rohit, your line has been unmuted.
Rohit Thorat
Yeah. Hi. Thank you for the opportunity and congratulations on a good set of numbers. My first question is regarding capital allocation policy. You have mentioned that you plan to extinguish the debt by end of FY27. Also, you have also increased the cash and cash equivalents on your balance sheet by significant amount in FY, like at the end of FY26 versus at the end of FY25. So are there any plans to increase dividend payments in FY27? Or payout would remain in the same range as of now.
Ramesh Gopalan
So let me answer the question and Emma can add to that. That’s a good question. Right. So the debt repayment is something that we had even previously spoken about. And we plan to repay whatever is left in the debt in FY27. So that’s one outflow. Second is we want to keep some funds for M and A activities. As we’ve said in the past, we are constantly looking for opportunities that will help improve our capabilities, both on the technology and transformational side, as well as give us access to more clients.
So any such opportunities. That are out there, we want to take advantage of that opportunity and we want to keep some funds for. For our ma. Beyond that, yes, as we will, we will look at the dividend going forward. And though there is no firm commitment at this point in time, we’ll. We’ll take a Look at what can be provided in the form of dividends.
Rohit Thorat
Okay. And on the M and A side, are you looking at acquisitions to strengthen your provider business or you would also look for any potential acquisition in payer segment as well if they help you expand your presence further among mid market clients. Like what would be the priority?
Ramesh Gopalan
See, we are looking at acquisitions on both payers and providers, right? So obviously a number of things we look at before deciding if a candidate is the right one for us at this point in time. I mean, we’ve discussed in the past the areas that we focus on both in payers and providers. So anything that can give us a deeper domain differentiation in any of those areas or anything that can give us a technology capability in those practice areas are the acquisitions that we’re looking at. So that’s from a capability point of view.
Secondly, something like a broad path which gives us access to a large set of clients is another kind of acquisition that we would be interested in. So those are the two broad types of acquisitions we’ll do. But we look for those kinds of acquisitions both in the payer and the provider sets.
Rohit Thorat
Yeah. Thank you. Thank you for answering my questions.
Siddharth Rangekar
Thank you. Before we move to the next participants who request interested participants to kindly raise their questions by clicking on the raise hand icon at the bottom center of your screen, we take to the next question from the line of Vedic Sarkar from Unify. Vedic, your line has been unmuted. Vedic, your line has been unmuted. You may speak.
Vedic Sarkar
Sorry, I didn’t notice that. Ramesh. Hi, good evening and congrats on a fantastic year of execution. Overall, my wishes to you and the entire team. A couple of questions. We make note of the Q4ACV number that you shared with us, but could you help us with the cumulative ACV number also that we’re sitting with at the end of the year? I’m given to understand that the significant part of your book that runs on an ARR basis, right? I mean there’s a annuity like component built into that. So if you just help us call out what that number is looking at and that multiplied into the pricing hike that you guys just talked about, you know what does it set us up for a base case revenue growth for FY27.
This is without considering fresh organic opportunities that will open up for the rest of the year. So if you just help me with that part of the math, please.
Ramesh Gopalan
Yeah. So Vedic, nice to hear from you. Good question. Right. So the math isn’t as simple as just adding up the ACVs. But to answer that question, if you go back, we’ve reported ACV wins in each of the quarters roughly in similar ranges in the 30s. So if you add them all up, it’ll probably add to somewhere around 130 or odd million. So these are ACVs, potential ACVs of the deals that we’ve closed, both with existing and new clients. Obviously the timing of revenue generation of those deals will vary.
So one is the ramp cycles that some of those deals go through. So the initial months of revenue may be different from the steady state ACV values that we quote. And secondly also the part of the ACV would have been realized in FY26 itself. So the incremental revenues in FY27 is over and above what has already been registered in FY26. And the rest of the revenues have to come from pipeline that gets converted in the first few quarters of FY27. So, so it’s that. So all of that is cumulative additions to that.
We’ll have to also factor in any volume adjustments. Right. Volumes in existing books of businesses could grow, could reduce depending on membership changes and other changes that are happening. Then there are other kinds of revenue reductions that we’ve spoken about, AI and automation related reductions that we’ve spoken about in the past. Then there’s the geographic mix. If the same part of work moves from a higher revenue geography to a lower revenue geography, there is a reduction in revenue.
So all of this math has to add up to the final revenues that we kind of guide for FY27. Does that make sense?
Vedic Sarkar
Yeah, no, I obviously understand the qualitative aspect of it. Ramesh, if you could just slice it by just one factor. For instance, the 814 that we’ve reported this year in USD. What’s the annuity component of that? So, so a there is one annuity component. Secondly, you know, of the 120 that we won in ACVs, obviously we’ve delivered a lot of that in 26 itself. So I’m just trying to understand that, you know, what’s the basic run rate without organic accretion in 27? I mean in, in other words, I could just ask you, you know, what Your guidance for 27 is, which I eventually will, but I’m just trying to understand what the base has already prepared us for.
And I mean on, on, on top of that, I mean that was my next question. On top of that, what does the pipeline look like? So I leave it to Ramesh, whichever you want to answer. Yeah.
Ramesh Gopalan
So look, the 814 million. There is a steady state component and there is a seasonal component. Like we said, about 6% of our revenues were seasonal. And those seasonal components will reoccur in FY27 as well. So that’s one way to split it. So if I were to simplify your overall question and if you ask me what is it that is locked going into FY27, I mean, at least, look, there are always surprises in terms of volumes, right? So I can’t say with certainty what it is, but typically when we give a guidance about, I would say seven.
I mean, if I were to hazard a guess, about 7 to 8% of growth will already be factored in basis the previous wins and the rest of the growth has to come during the year.
Vedic Sarkar
Got it, got it. So, so, which then reminds me with the last part of the question, you know, what’s, what’s the qualitative, I mean, sentiment you’re witnessing in conversations today in terms of how large your bid pipeline is? If you could just give us a sense of, you know, how that’s moved over the last couple of quarters, you know, what, what kind of growth rates are you building in just from conversations that you’re having today? Yeah,
Ramesh Gopalan
So, so typically, look, we’ve, we’ve been reporting only on the, on the deal wins, right? But if you look at the pipeline roughly from a TCV perspective, we’ll have a pipeline of close to 575 million worth of pipeline. So these are all proposals that we’ve submitted to clients and qualitatively, if you were to ask me on the quality of conversations, we are now, like I said, getting into more managed service deal kind of conversations in which the timing of the deals could, like I said, could be a little unpredictable because these are larger conversations, these are more transformative conversations where you are committing to cost take out over a number of years and also expanding the scope of work by including both upstream downstream processes.
So the discussions take a longer time, but given the cost pressures that most of our clients are under, there’s a lot more interest in engaging in those conversations. So we are very bullish on the kind of conversations we are having. Except that some of these conversations could take longer than a traditional RFP based, effort based deal.
Vedic Sarkar
Right, got it. Last question, Ramesh. So I mean given the industry itself is growing at 7, 8% and you know, we are growing double that rate and of course there’s the lever of pricing in our own tech initiatives, what would a number closer than, I mean, less than last year’s but higher than par which is about 78% and dollar growth rate be a fair assumption for the coming year.
Ramesh Gopalan
My guidance was low double digits. Right. So I mean at this point in time we are giving a number that we believe we can definitely meet and every quarter when we do the earnings call we will kind of guide you if we see a upswing to those numbers
Vedic Sarkar
And on the margins. I mean FX was a tailwind but assuming none of that comes through in FY27, 25 is a dependable number.
Ramesh Gopalan
Yeah, 24 to 25 is what we are guiding and if FX being the way it is we believe we can come closer to the upper end of that range.
Siddharth Rangekar
Would request you to rejoin the queue as we have some participants. Thank you. Thanks.
Ramesh Gopalan
Thanks.
Siddharth Rangekar
We take the next question from the line of Rishi Junjunwala from iifl. Rishi, your line is unmuted.
Rishi Junjunwala
Thanks for the opportunity. So a couple of questions from my side. So one on, on margins Just wanted to understand firstly did we mention initially there was a change in the wage high quarter and it played out in this quarter and as a result the margins would have been higher what that number would be. And secondly just wanted to understand given that we are ending the year at 25.3 we are looking at, you know if we were to assume that the currency remains at current levels we are looking at almost 7, 8% depreciation and still we are talking about margins not expanding beyond last year.
So what are the headwinds and tailwinds to the margin assumptions that we are looking for? FY27.
Ramesh Gopalan
Emma, do you want to take that?
Abhishek Kayan
Sorry, yeah, one second. Just, just let me.
Ramesh Gopalan
So let me give you a high level view. See the, the, the hype cycle. I think we discussed this in the past. I don’t know whether we officially gave you the impact of that. As you know when we started a agility India our fiscal match the calendar year it was Jan through December but when we became a public company we changed the fiscal through to April through March. So the last hike cycle was effective 1-1-2025. But we didn’t do a increment on 1-1-2026. We’re going to make it effective 4-1-2026. So to overcome those three months where we effectively didn’t give a hike this is the one time bonus that Mr.
Was talking about. And, and, and that’s the, the, the one time call out that he’s making.
Rishi Junjunwala
Sorry. And yeah the question on full year. FY27.
Ramesh Gopalan
Yeah, FY27 Rishi, that’s, that’s a good, good question. Right. So there are couple of things, right? One, obviously look, the, the, the forex depreciation, the, the, the amount of depreciation is an unknown, right? But the fact that rupee depreciation is key for at least compensating for part of the wage increases is a known phenomena. The hike that will give effective April 1, a part of that has to be absorbed by any currency depreciation. Secondly, the geographic mix is also changing. We are starting to see more revenues delivered from, from our U.
S. Geography, which also has an impact on the weighted average margin. Right. So, so, so those are the two big things. And beyond that, any sort of price differences, price reductions and so on will also have an impact. The positives is we continue to try and generate efficiency in our operations. The more technology we deploy, we try and make sure that we, we compensate for any cost commitments or cost reductions or price reductions that we give clients. So that’s one factor. And secondly, yes, if the exchange depreciates by more than what we need to compensate for hikes and so on, it’ll improve our margin.
So it’s a sum total of all those functions. So given where we are today and taking into account the mix and all of these factors, we think we will be in the 24 to 25% range. But if things change, we will definitely update our guidance.
Abhishek Kayan
Sorry, did
Ramesh Gopalan
You want to add to that?
Abhishek Kayan
I echo. I mean basically we will get a upside from forex even at the current levels. And if it continues to sustain at these levels, yes, as we said, we’ll hit somewhere near the top end of our guidance. And as Ramesh also pointed out, this Forex depreciation is what also allows us to compensate our employees with higher wages, etc. So that’s a lever for us to offset it in addition to the cost efficiencies that we generate internally. So yes, I mean if it sustains, we are confident of hitting somewhere near the top end of our guidance.
Rishi Junjunwala
Fair enough. And just the second question. I see we have created an esop pool for 3.3% of equity and a large chunk of that is performance based where the vesting period is two years in your stock compensation schedule. I do not see any material change for the next two to three years. So just wanted to understand how would this, you know, esop vesting or granting will play out. And you know, how do we see that given that those will be, you know, large chunk of those will be at face value, how will that, you know, hit the P and L over the next two, three years.
Ramesh Gopalan
So we’ve just announced this scheme and it has to go out for shareholder approval. Trishy. So we’ll give you a better view into those in the next earnings call. But just to correct, the grants will be made every year and the vesting is over a three year period, not two years. The exercise post vesting. The exercise period is two years, but the vesting itself is over three years. Yes, as you mentioned, a large part of that will be performance based both at the company level and the individual level.
But the exact number of units to be granted in FY27 and the impact of that on the P and L is something that we’ll come back to you in the next earnings call.
Rishi Junjunwala
Understood. All right, thank you so much.
Siddharth Rangekar
Thank you. Rishi. We take the next question from the line of Vamshi Krishna from Kotak. Your line has been unmuted.
Vamshi Krishna
Hey. Hi. Actually, really strong quarter. Ramesh. Congrats on that. So, just wanted to understand, on the beat itself, given that There was almost 7 million dollar beat in a single quarter, were there any one off engagements which contributed to this or something which came up in quarter.
Ramesh Gopalan
Sorry, I didn’t get that question, Mr. Talking about revenue enrichments or cost. Yeah, so.
Vamshi Krishna
So? So compared to your guidance of 22 and a half percent, you were at around 23.7%, which is
Ramesh Gopalan
Okay. Yeah. So. So like we said, we had a better than expected Q3 and Q4. Right. So, so typically our seasonal revenues are roughly 3% of our annual revenues, but this year they were more like 6% part of it. In Q3 we explained because broadband’s significant peak happens in Q3, whereas in Q4 we had additional seasonal revenues on the sigility side, especially on the clinical side of the business, which we had some visibility to getting into Q4, but it was higher than what we had anticipated. So that explains the the difference between what we gave as guidance and what we actually achieved.
Abhishek Kayan
Yeah. Just to add on to Ramesh’s point, we had guided to about five and a half percent of our full year revenues. As surge revenues, that has moved to around 6% of full year revenues and that gives us uplift in quarter four.
Vamshi Krishna
Perfect. Understood that. And second is on your client pyramid itself now that you have more than double your clients in a $20 million bucket. But still, I see the average client size in the 3 to 10 range, it’s around 27 million versus your top three clients which are maybe more than four times of that number. So incrementally, since you have a reasonable set of clients where you have a minimum threshold of or say you must have proven your expertise. So will your incremental eff be focused more on mining these set of accounts or you will be looking to add more accounts?
Ramesh Gopalan
In a way both. Right. Our traditional growth continues to come from existing clients. Right. And as we keep adding newer clients, we may start with a smaller deal size, but we have the confidence of continuing to grow those relationships. So to your point, a lot of these clients in the 5 to 20 million range or just over 20 million range are still clients where we see a huge opportunity. I mean they may not go to the four times that you are talking about of the top five, but they definitely many of them have the potential to double or more than double.
So large part of our effort goes into continuing to mine those relationships and trying to grow them faster than the top five and which is already shown in the results. Right. So our top five grew at 11.9% whereas at a company level we grew at 15%. So some of these non top five grow much faster than the top five. But equally important is we want to create more breadth in terms of our client portfolio. So we’ll continue to look for opportunities in the mid and small market space. And a lot of the transformational solutions that we are talking about today we believe has a lot of applicability in that segment where we can help them take out a large part of the costs.
Vamshi Krishna
Perfect. And then my last question is on the provider segment. So the revenues here have actually stabilized on an absolute basis for the last four quarters. Can you just shed some light as to what’s happening in this business and what’s the outlook? And just one say AI impact, will this be relatively higher compared to your payer business or how do you see that?
Ramesh Gopalan
No, we don’t think AI impact will be significantly higher in provider versus payer. I think like, you know, large part of what we do is on the revenue cycle and I mean we get both effort based as well as contingency based pricing on the provider side. And so we are in the process of using AI to improve the efficiencies of a large part of what we do in the revenue cycle side. So we believe that that business will also grow and we’ll take it offline. But that business has grown in FY26 over 25. So when you said stable, I’m not sure if you implied it didn’t grow.
It did grow compared to FY25. But we are looking at larger engagements even on the provider side. So we are in conversations at least on a couple of opportunities where we are committing to to give clients or prospects a significant cost takeout opportunity if you were to do pretty much the end to end RCM for them. So we are fully confident of continuing to grow the provider business as well.
Vamshi Krishna
Correct. I was just referring to 1Q to 4Q where it was 20 to 21 million dollars, but nonetheless point taken that it has grown on a yoy basis. Those one questions. Thank you.
Siddharth Rangekar
Thank you. We take the next question from the line of Chirag Kacharya from Motila Loswal. Your line has been unmuted. Chirag.
Chirag Kacharya
Yeah, hello. Am I audible?
Siddharth Rangekar
Yes, please go ahead.
Chirag Kacharya
Yeah. So what was the annual beach hike during the year across different set of employees? That is question number one. And second, you mentioned you change the quarter of wage hike. If I hear it properly then will this pattern continue in FY27 as well? And third, what is effective tax rates one can tax rate one can expect for FY27. Yeah, there’s three questions.
Ramesh Gopalan
I’ll answer the second. Mr. Will answer the first and third. So no, once we move into the April through March increment cycle, then it’ll stabilize. So this is a one time thing just for Q4 of FY26 a catch up. But starting April it’ll be regular increment cycles every April.
Abhishek Kayan
Yeah. A couple of other questions that you asked. Obviously the hike will depend on the different geographies and you know, obviously given the difference between the US versus India, we give the normal hikes, but this particular one time was a quarterly one time payout. As we transition from a calendar year to a full year basis from a tax perspective, we expect broadly the same level of ETR to continue around 24 to 25% for both 25 and 26. Sorry, 26 and 27.
Chirag Kacharya
Thank you.
Siddharth Rangekar
Does that answer your question?
Chirag Kacharya
Yes.
Siddharth Rangekar
All right. Do you have other questions?
Chirag Kacharya
Thank
Siddharth Rangekar
You. We move to the next caller. The next question is from the line of Sameer Pardikar from Ilara Capital. Sameer, your line has been unmuted. Sameer, your line has been unmuted. You may. Samir, please go ahead. Sameer, we are not able to hear you. We move to the next participant and take the question from the line of Bhavik Mehta from JP Morgan. While we request Sameer to rejoin Bhavik, your line has been unmuted.
Bhavik Mehta
Hi, thank you. So a couple of questions. Firstly, if I look at the Revenue guide at low double digit versus 15% organically you did in 26. So is. Is this a conservative guide given how the macro is and you know, you might want to wait and watch how the macro was before maybe increasing the guidance over the course of the year. That’s the first question.
Ramesh Gopalan
Yes. Like I said, we’re guiding today. Basis the visibility we have, like I said, some of the deals, while they’re different and more transformational, some of the timings of those deals could be a little variable. And that’s why basis the visibility we have, we are guiding to low double digits. But we’ll have better visibility as we go through the year. And basis that we will re. Guide on the. On. On both the top line and the. And the margin numbers.
Bhavik Mehta
Okay, got it. The second question is on margins. Again, if I look at the band 24 to 25, the midpoint and implies like you know, decrease versus what you ended up doing in FY26. So just wanted to understand what are the puts and takes or the headwinds you’re building in for next year.
Ramesh Gopalan
I think we covered that. Right. So Emma, do you want to restate some of the factors? Yeah. Yeah.
Abhishek Kayan
So first is, I mean from a forex perspective, we did say that if it persists at the current levels, we are reasonably confident of hitting the top end of our guidance. Two, obviously, you know, there is that aspect of employee wage increases that we do give which is funded from the effects that we get. Three, we are also looking at a more onshore kind of a revenues. So even if you see this year the share of our US revenues went up which is traditionally slightly lower margins than our offshore business.
So all of this combined to ensure that, you know, we are right now in this 24 to 25. And as I said, if you’re able to continue at this FX rate, we should be at the top end of our guidance, which does definitely denotes a lower deletion than what you implant in your.
Bhavik Mehta
Okay, got it. Thank you.
Siddharth Rangekar
Thank you. We move next to the line of Samir Padar. Samir, your line has been unmuted. You may speak. Yes, Sameer, please go ahead. There is an issue at his line. I go to the line of Rishi Junjunwala for a follow up. Rishi, your line has been unmuted.
Rishi Junjunwala
Sorry, I don’t have a follow up. Thank you.
Siddharth Rangekar
My apologies. We move next to the question from Siddharth Voda. Your line has been unmuted.
Siddharth Voda
Yeah, hi. Am I audible?
Siddharth Rangekar
Yes. Yes.
Siddharth Voda
Yeah. Hi. Ramesh. Ramesh, just A clarification from my end. You’re saying that increasingly there is more revenues and the engagements are on site. So any change in nature or complexities, what how is the overall deals evolving? At the same time, if there is a shift to on site, there should be a natural lever to your growth rates versus a normal year. So how should we think about that? While you are saying that your visibility currently is on the lower double digit side.
Ramesh Gopalan
So. Yeah, so when we say onshore, it’s not on site. Right. So I mean unlike other businesses, we don’t deploy people to client offices or client locations. Right. So this is delivering for a client from the US geography because of whatever restrictions the client may have or because of regulatory reasons that the work cannot move offshore. Right. So that’s the kind of business, for example broadband, most of broadband delivery is onshore. Right. While our attempt is to move any new business that we get there to offshore.
Like I said, depending on regulatory reasons or client preferences, some of the work may have to be done onshore. Similarly, on payment integrity, some part of our delivery happens onshore. So growth in those businesses will have a larger onshore component compared to offshore. Having said that, like I’ve explained in the past, things do tend to move from onshore to offshore as well. Right. So while some of the newer clients may want to start onshore over a period of time, they may also be open to moving that work offshore.
But at this point in time, if you look at some of the opportunities in the pipeline and where the growth is going to come from, the rate of growth may be slightly higher in onshore geographies compared to our offshore geographies. So that was the comment around margins. But to your other point, yeah, like I said, we will revise the guidance as we go along depending on the visibility that we have.
Siddharth Voda
Just a follow up to that, given the complexities and maybe more hiring new or so if not, yeah, on site is how has the historical revenue share or the headcount share been on site, nearshore and in India or in offshore locations? And do you see that changing going forward with advent of AI or things the way they are changing going forward? Forward?
Ramesh Gopalan
No. Right. For, for, like I said, for clients who’ve already worked with us or who are used to the, to the outsourcing model, given the cost pressures that they are under, if a work can be delivered in a, in a lower cost geography, they would prefer that. Right. So. So it’s not a question of there is a shift in perception or, or there’s a shift in work from from offshore to onshore. Right. So I’m not saying that. But as we get newer clients in the mid market space, the newer clients may want who are not accustomed to the offshore model, they may want to start more onshore.
And there are other kinds of businesses like Medicaid and others where the onshore component because of regulatory reasons could be higher than the offshore component. So those are the main reasons. It’s not that existing clients are moving work from offshore to onshore because given the the pricing pressures today, if existing clients can move more work from their in house to partners like us, they would rather do it offshore than onshore.
Siddharth Voda
So you will say your headcounts and revenue ratios between on site offshore will remain in line with your historical trends
Ramesh Gopalan
With the revenue mix slightly increasing towards onshore. That’s what Emma was saying. One of the saying
Siddharth Voda
In terms of three years kind of a scenario actually how we look at the business. Nothing
Ramesh Gopalan
Significantly different. Yes,
Siddharth Voda
Nothing different. Yeah, sure. Got it. That’s it from mine. Thank you sir.
Siddharth Rangekar
Thank you. Thank you. We go to the line of Sameer Padikar from Elara Capital. Sameer, your line has been unmuted.
Ramesh Gopalan
I don’t think it’s working.
Siddharth Rangekar
Yes. Am
Sameer Pardikar
I audible now?
Ramesh Gopalan
Yes, yes,
Siddharth Rangekar
Please go ahead.
Sameer Pardikar
Yeah, sorry for that. Sir. My question is basically on growth. If I hear it correctly, we are the growth for us last year organic was around 59% and we are guiding for a lower double digit growth on a at a consolidated level. That means possibly organic growth could be even lower than that. So despite such a strong numbers coming in, any reason for some lower growth for this year? Is it because of the AI compression which you talked about in earlier call about 1 or 2% going to a little higher to 3 to 4%.
Is it impact of the some AI compression we are looking at or what is the reason for it?
Ramesh Gopalan
So first let me clarify right. As we get into FY27, everything is organic. The last acquisition we did was in January of 2025. So in FY27 there is organic unless we do any new acquisitions. So the guidance of low double digits that we are giving is for organic growth. So any inorganic components that we add during the year will be over on top of that guidance. Right. So. So I hope that is clear. Right. So it’s not that I’m giving an overall growth number and the organic number is going to be lower.
Guidance is for organic growth.
Sameer Pardikar
Yeah, yeah. So my question was basically the. Do we see some compression because of AI?
Ramesh Gopalan
No, the compression is historically been there. And like I’ve said. Right, so. So for example, the. The compression is going to be slightly higher than last year. Right. So we’ve traditionally said it’s about 1 to 1.5% but we are predicting the compression to be more like 2% in FY27. Not significantly higher, but definitely higher than the past. And those numbers will gradually inch up is the belief that we have. And we’ll see how it plays out. Right. But even historically, whatever numbers we’ve grown at, it is net of all of those compressions because of not just technology or AI but also like I said, in our business there is geography shifts.
So when work shifts from a higher revenue geography to a lower revenue geography, there is revenue compression. So there are a lot of volume changes and so on. So there are a lot of reasons why there could be revenue compression. But purely if you look at technology, like I said, it’s been historically at at the 11 1/2% level. But we think it’ll be more like a 2% plus this year.
Sameer Pardikar
And second part is when we have a unusually higher attrition for the quarter. We typically have a moderation of this quarter from quarter four to subsequent quarters any. So I did not get that why the attrition was a little higher this quarter versus the historical numbers.
Ramesh Gopalan
It’s the same reason why we also said we we have a better actual revenue than what we guided. Right. So so we said we had higher seasonal revenue in Q4 than what we anticipated. And so that higher seasonal revenue, the fact that seasonal once that revenue goes away, the corresponding head count also goes away. Right. So the, the higher attrition in Q4 was a result of the higher seasonality in in Q4.
Sameer Pardikar
Okay. And and we have observed unusual the higher other expenses were very high in FY26. So any maybe highlight for that number inching up in FY 26am
Ramesh Gopalan
I want to take
Sameer Pardikar
Yeah
Abhishek Kayan
A lot of it is account of higher IT costs and you know, investment that we did in it from a AI and transformation kind of a perspective. We also have rationalized some of our centers in you know, a couple of our geographies which has led to a little bit of write off of assets. So those two would have contributed to a little bit higher cost. The first one being the more primary reason.
Sameer Pardikar
So we do expect this number to little moderate in next year.
Abhishek Kayan
We’ll continue to do our investments in AI and transformation as I said. So we would expect that number to be continue to be reasonably high.
Sameer Pardikar
Okay, sure. Thank you so much.
Siddharth Rangekar
Thank you. We move to the next question from the line of Vamshi Krishna, your line has been unmuted.
Vamshi Krishna
Hi, thanks for the follow up. So, Ramesh, just since you said there were higher than expected quote, seasonal revenues during this quarter as well as last quarter, so how do you how should we think about the quarterly seasonality that will play out in one Q? So should we expect a slightly steeper
Ramesh Gopalan
So broadly vamshi? Like I said, while it’s seasonal, we expect this seasonality to occur every year. Right. So because of the broad path acquisition and also some of the more seasonal work that we’ve got, what traditionally used to be more like a 5347 H2 to H1 split is becoming more like a 54.5% to 45%. I think that’s the way we think it’ll continue into the future as well.
Vamshi Krishna
Perfect. That answers my question. Thank you.
Siddharth Rangekar
Thank you. That concludes the webinar for today. Thank you, members of the management. On behalf of Sagility Limited, we would like to request all of the participants to log off now. Thank you.