Must-win clients
127
+14 vs Mar'25
Must-win clients (MWCs) increased from 113 in March 2025 to 127, now contributing 83% of revenue.
FRACTALANALYTICS
Other
15 Jan 2026
Fractal Analytics Ltd — Q3 FY26
Fractal delivered a strong Q3 FY26 with revenue of ₹854 crore, up 21% YoY, driven by 78% YoY growth in healthcare & life sciences and 26% in BFSI.
✓ Verified against BSE filing
2-Min Summary
Fractal delivered a strong Q3 FY26 with revenue of ₹854 crore, up 21% YoY, driven by 78% YoY growth in healthcare & life sciences and 26% in BFSI. Gross margin expanded 17 bps to 47.2%, while adjusted EBITDA margin improved 43 bps to 17.8%. PAT crossed ₹100 crore, up 10% YoY despite higher associate losses. Net revenue retention remained healthy at 114%, and must-win clients grew to 127. Management expects revenue growth to accelerate, aided by AI adoption and expansion of output-based contracts. Gross margin expansion and operating leverage should drive EBITDA margin improvement, though R&D investment (4.1% of revenue) will persist. Key risk: tariff uncertainty in CPG & retail, the largest vertical, could temper near-term growth.
Key Numbers
Net revenue retention (NRR)
114%
Flat YoY
NRR of 114% indicates strong existing client expansion, contributing 14 points of revenue growth.
Healthcare & life sciences growth
78%
+78pp YoY
Healthcare & life sciences was the fastest-growing vertical, driven by strategic investments and AI solutions.
Revenue per billable headcount
$85,000
+6% YoY (INR terms)
Revenue per billable headcount increased 6% in INR terms, reflecting productivity improvements and mix shift.
Management Guidance
Revenue growth to accelerate to historical ~30% CAGR
Management expects revenue growth to accelerate as AI adoption expands, targeting the historical 30% CAGR over 3-4 year periods.
revenueGross margin expansion to continue
Gross margins are expected to expand further driven by mix shift to output-based contracts and productivity improvements.
marginsAdjusted EBITDA margin to expand
Adjusted EBITDA margin is expected to expand as SG&A leverage improves and ESOP charges decline, while R&D investment continues.
marginsR&D investment to remain at ~4% of revenue or increase
Management plans to continue investing 4%+ of revenue in AI R&D, potentially increasing as gross margins expand.
ai_strategyKey Risks
Tariff uncertainty in CPG & retail vertical
CPG & retail, Fractal's largest vertical (36% of revenue), grew only 14% YoY due to tariff-related headwinds and macroeconomic uncertainty, which could persist.
high · management_commentaryClient concentration and churn in TMT vertical
Two client-specific issues in telecom (Australia) and technology (US) caused a 6% YoY decline in APAC and dragged TMT vertical growth. Management noted these are exceptions but churn is ~1% of revenue.
medium · analyst_questionIncreased losses from associate Qure.ai
Fractal's share of losses from Qure.ai increased to ₹19 crore (2.2% of revenue) from ₹3 crore last year, driven by US aid cuts. This weighed on PAT growth.
medium · management_commentaryCompetition from frontier model providers
Analyst raised concern about potential competition from frontier AI model providers (e.g., OpenAI, Anthropic) entering enterprise workflow automation. Management argued they are complementary, but risk remains.
medium · analyst_questionNotable Quotes
We delivered a fantastic quarter, improving on nearly every metric.
Our strategic intent is to generate at least $1 billion of impact for each of our clients.
We expect our revenues will continue to accelerate at a faster pace.