Coforge Navigates Q3 FY26 with Robust Order Book and Strategic Cloud Leadership

Coforge, a global digital services and solutions provider, has announced its financial results for the third quarter of fiscal year 2026 (Q3 FY26), ending December 31, 2025. The company demonstrated a resilient performance, marked by significant top-line growth and a robust increase in its order book, despite facing certain one-off exceptional items that impacted reported profitability. The consolidated revenue for Q3 FY26 stood at INR 4,188.1 crore, reflecting a strong 28.5% year-on-year growth in INR terms and 21.5% on a constant currency basis. This consistent revenue expansion underscores Coforge's ability to capture market opportunities and deliver value to its clients.

The quarter's performance was characterized by strong operational metrics, even as the reported Profit After Tax (PAT) saw a quarter-on-quarter decline. The PAT for Q3 FY26 was INR 250.2 crore, a decrease of 33.4% QoQ. This was primarily attributed to exceptional items totaling INR 147.6 crore, which included the impact of the New Wage Code (INR 117.9 crore), legal expenses related to an acquisition (INR 13.5 crore), and a cyber security issue (INR 16.2 crore). Excluding these exceptional items, PAT would have shown a significant 71.2% YoY increase, indicating healthy underlying business performance. The Earnings Before Interest and Taxes (EBIT) margin for the quarter was 13.4%, experiencing a 60 basis points QoQ decline, while the Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) margin was 17.4%, down 84 basis points QoQ. Despite these margin pressures, the company's Free Cash Flow (FCF) conversion remained strong, with FCF to PAT (excluding exceptional items) at an impressive 110%.

Coforge's strategic focus on expanding its service offerings and client base continued to yield positive results. The service offering mix for Q3 FY26 saw Engineering contributing 44.4% of revenue, followed by Data and Integration at 22.2%, Cloud and Infrastructure Management (CIMS) at 17.7%, Business Process Management (BPM) at 7.9%, and Intelligent Automation at 7.8%. Geographically, the Americas remained the largest contributor at 56.8%, with EMEA at 28.5% and Rest of World at 14.7%. The company's efforts to diversify its client portfolio were evident, with the contribution from Top 10 clients decreasing to 30.7% in Q3 FY26 from 42.4% in FY18, signaling a de-risked operating profile. The number of clients generating over $10 million in revenue increased from 31 in Q3 FY25 to 36 in Q3 FY26, highlighting success in nurturing larger accounts.

In a testament to its strong capabilities, Coforge was recently recognized as a Leader in the ISG Provider Lens® 2025 Multi Public Cloud Services report for both the United States and United Kingdom regions. This recognition specifically highlights Coforge's leadership in 'Consulting and Transformation Services' and 'Managed Services' within the midmarket segment. The report acknowledged Coforge's strong performance in AI-native cloud operations, platform engineering, and industry-specific transformation capabilities. Shashank Rajmane, Principal Analyst, ISG for US region, noted Coforge's rapid growth in public cloud services by combining vertical IP with AI-native cloudOps, delivering outcome-tied transformations across AWS, Azure, and Google Cloud. Meenakshi Srivastava, Lead Analyst at ISG for UK region, emphasized Coforge's ability to deliver secure, optimized cloud transformations that accelerate business value and ensure measurable ROI across various sectors.

Coforge's commitment to talent management also stood out in a challenging industry environment. The company reported an LTM attrition rate of 10.9%, which continues to be among the lowest in the IT services industry. Furthermore, Coforge achieved a net addition of 445 resources during the quarter, a significant accomplishment at a time when many industry peers are experiencing layoffs. This focus on talent retention and acquisition is crucial for sustaining growth and delivering high-quality services. The company's strategic initiatives, including building on its cloud, data, and AI capabilities with an engineering-led approach and leveraging its EvolveOps.AI platform, are geared towards enabling autonomous cloud operations and strengthening operational resilience. These efforts are designed to deliver measurable improvements in MTTR, cost efficiency, and financial governance through an integrated FinOps-as-a-Service model.

Overall, Coforge's Q3 FY26 performance reflects a company with strong underlying business momentum, strategic clarity, and a disciplined approach to operations and talent management. Despite the temporary impact of exceptional items on reported PAT, the robust order book, consistent revenue growth, and industry recognition for its advanced cloud and AI capabilities position Coforge favorably for continued success in the evolving digital services landscape. The company's focus on de-risking its operating profile through client diversification and its commitment to innovation in AI-native solutions underscore its forward-looking strategy and potential for sustained value creation.