California Software Q3FY26 profit jumps 393% YoY results

Key takeaway

California Software Company Limited reported a sharp year-on-year jump in Q3FY26 profitability, alongside strong revenue growth. At the same time, auditor review notes across recent periods continued to flag concerns around trade receivables and related reconciliations. Separately, the company initiated shareholder voting for capital raising and proposed an increase in authorised share capital.

Q3FY26: profit and revenue surged year-on-year

For Q3FY26, California Software reported a net profit of ₹100.80 lakh (₹1.01 crore), up 393% YoY. Revenue grew 93.8% YoY to ₹254.04 lakh (₹2.54 crore).

The quarterly update stood out for the magnitude of the YoY change, especially given the company’s recent disclosures that have carried auditor qualifications focused on receivables and reconciliations. The Q3 release also referenced auditor concerns over receivables, keeping the working-capital discussion in focus alongside the earnings print.

Auditor review notes: receivables and reconciliations remain a theme

In a separate disclosure on unaudited standalone and consolidated financial results for the quarter and nine months ended December 31, 2025, the company said the Board approved the results on February 14, 2026. The meeting started at 16:00 hrs and concluded at 18:30 hrs, and the company said the results and limited review report were available on its website.

The Independent Auditor’s Review Report highlighted multiple issues, including:

• Trade receivables of ₹2,307.39 lakh (₹23.07 crore) with no adequate provision for expected credit loss.
• A negative debtor’s turnover ratio.
• Pending balance confirmations for trade payables of ₹67.40 lakh (₹0.67 crore).
• Age-wise details of current assets and liabilities not being available.
• Current tax balance of ₹380.02 lakh (₹3.80 crore) stated as subject to reconciliation.
• No assessment of fair value or impairment of investment in a subsidiary of ₹311.38 lakh (₹3.11 crore).
• Opening balances differing from the previous year’s audited statements without explanation.
• Fixed Asset Register not provided for verification.
• Reported income not reconciled with GSTR-1 outward supplies.

The review report also stated that, subject to these matters, nothing came to the auditor’s attention to indicate material misstatements in the statements.

Q1FY26: revenue up YoY but down sequentially

For the quarter ended June 30, 2025 (Q1FY26), California Software disclosed unaudited standalone and consolidated results showing mixed movement across periods.

The company reported revenue from operations of ₹154.59 crore, down from ₹198.95 crore in the previous quarter but up from ₹107.63 crore in the same quarter last year. Net profit was ₹19.32 crore, compared with ₹29.55 crore in the previous quarter and ₹17.33 crore in the corresponding quarter of the prior year. Basic EPS for the quarter was ₹0.03.

The company also disclosed that its subsidiary Aspire Communications Private Limited contributed nil revenue during the quarter.

Q1FY26 auditor qualifications flagged receivables and payables

In the Q1FY26 disclosure, auditors K. Gopal Rao & Co. issued a qualified review report citing concerns including long outstanding trade receivables and unconfirmed payables, along with discrepancies in opening balances versus prior audited statements.

The disclosure listed items such as long outstanding trade receivables of ₹1,977.28 (the unit was stated as crore in the company’s Q1 FY26 summary), unconfirmed trade payables of ₹328.45, lack of age-wise details for current assets and liabilities, unreconciled current tax balance of ₹380.02, and the absence of a Fixed Asset Register.

The company’s Managing Director, Dr. Vasudevan Mahalingam, said the company acknowledged the challenges highlighted by auditors and was working to address them and strengthen reporting processes.

Postal ballot: shareholders asked to approve fund-raising plan

California Software said it dispatched postal ballot notices to shareholders seeking approvals for:

• Raising ₹200 crore through a Qualified Institutional Placement (QIP).
• Raising USD 100 million via Foreign Currency Convertible Bonds (FCCBs).
• Increasing authorised share capital to ₹225 crore.

The company stated the e-voting period runs from November 19 to December 18, 2025. It said the proposed funds were intended for business expansion, customer acquisition, working capital, and strategic growth opportunities.

Board meeting agenda: capital raising and authorised capital

The company also announced a board meeting scheduled for November 14, 2025 to consider multiple agenda items, including approval of unaudited financial results for the quarter and half-year ended September 30, 2025.

In that agenda, the company outlined capital initiatives including:

• A QIP of up to ₹100 crore.
• Foreign Direct Investment and/or FCCBs totalling up to USD 50 million.
• Increase in authorised share capital to ₹225 crore.

Key facts at a glance

Capital-raising process and dates

Conclusion

California Software’s Q3FY26 numbers showed a steep YoY jump in profit and revenue, but recent auditor review notes continued to focus attention on receivables, reconciliations, and supporting records. On the corporate actions side, the company has set out shareholder voting and board processes for proposed fund-raising through QIP and FCCBs, along with an authorised capital increase to ₹225 crore, with key voting dates running through mid-December 2025.