Persistent Systems: Sustained Growth and AI-Led Transformation Drive Strong Q2 FY26 Performance

Persistent Systems Limited has once again demonstrated its robust operational capabilities and strategic foresight, reporting its 22nd consecutive quarter of revenue growth for Q2 FY26. The company's performance underscores its strong position as an AI-led, platform-driven digital engineering and enterprise modernization partner. With a focus on innovation and disciplined execution, Persistent Systems delivered impressive financial results, reinforcing investor confidence amidst a dynamic global economic landscape.

For the second quarter of fiscal year 2026, Persistent Systems reported a revenue of $406.2 million, marking a significant 17.6$1.5 billion mark, with an annualized run rate exceeding $1.6 billion. Profitability metrics also saw substantial improvement, with the EBIT margin reaching 16.3%, a 230 basis point improvement year-on-year, and Profit After Tax (PAT) growing by a remarkable 45.1% year-on-year to ₹471.47 Crore, translating to a PAT margin of 13.2%. Earnings per share (EPS) for the quarter was ₹30.3, up 43% year-on-year.

Segmental and Geographic Performance Highlights

The company's growth was broad-based across its key industry segments and geographies. The BFSI (Banking, Financial Services, and Insurance) segment emerged as the strongest performer, registering a 30% year-on-year growth. This was followed by the Software, Hi-Tech & Emerging Industries segment, which grew by 15.5%, and Healthcare & Life Sciences, with a 6.6% increase. Management attributed the BFSI growth to significant deal wins, including consolidation deals against tier-1 competitors and ramp-ups with large Fortune 100 financial services customers.

Geographically, Europe demonstrated exceptional growth, expanding by 37.9% year-on-year, driven by large deals with hi-tech customers. North America, the largest market, grew by 15.4%, while India and the Rest of the World (ROW) grew by 19% and 19.8% respectively. The company's client metrics also showed robust expansion, with revenue from top five clients increasing by 23.4% and the number of clients exceeding $5 million annually growing from 43 to 56.

Strategic Initiatives and Operational Excellence

Persistent Systems' strategic pivot towards an AI-led, platform-driven approach is clearly yielding results. The company has structured its strategy around three core pillars: AI for Technology, AI for Business, and Enterprise Data Readiness for AI. Initiatives like SASVA, their Generative AI digital engineering platform, are streamlining software lifecycles and reducing costs, with 20 new patents filed this quarter, bringing the total to 75 for SASVA. For AI for Business, solutions like ProcessIntel are transforming domain workflows, leading to measurable cost and efficiency gains for clients in banking and healthcare.

Operational efficiency remains a cornerstone of Persistent's strategy. Despite a slight decline in utilization to 88.2%, the company effectively managed its cost structure. Wage hikes are anticipated to impact margins in the next quarter, but management expects to offset 80-100 basis points through strategic offshoring, utilization optimization, SG&A rationalization, and ESOP cost reduction. The company's commitment to talent development is evident through its Persistent University and AI Academy, which have resulted in over 23,550 external and 8,300 internal AI certifications.

Outlook and Recognitions

Looking ahead, Persistent Systems is confident in its ability to sustain growth, with an aspiration to reach $2 billion in revenue by the end of FY27. The management also guided for continued EBIT margin improvement, targeting 100 basis points in FY26 and potentially another 100 basis points in FY27, aiming for a 200-300 basis point expansion over this period. The company's operating cash flow to PAT conversion stood strong at 114.3%, reflecting robust cash generation.

Persistent Systems received significant industry recognition this quarter, including the 'Growth Honor of the Year' at Everest Group Elevate 2025, acknowledging its market-leading revenue growth. The company also secured an AA rating on the latest MSCI ESG ratings, moving up two levels, and received high ESG scores from NAC Sustainability Ratings and SES ESG Research. These accolades, along with multiple ISG Customer Experience Star Performer Awards and AI excellence awards from CII, underscore Persistent's leadership in digital engineering, AI capabilities, and commitment to sustainable practices. The recent promotion of Jaideep Dhok to Chief Operating Officer further strengthens the leadership team, bringing extensive experience to drive delivery excellence and AI strategy.

Persistent Systems' Q2 FY26 performance highlights a company that is not only delivering strong financial results but is also strategically positioning itself for future growth through AI-led innovation, operational discipline, and a focus on client and talent excellence. The company's consistent execution and clear strategic roadmap provide a compelling narrative for continued success.