Datamatics Q4 FY26: Record EBITDA Margin, AI Product Push, and a Mixed Segment Picture

Datamatics ended FY26 with a strong revenue year and a sharp step-up in operating profitability. Consolidated revenue from operations for FY26 rose to 1,987.2 crore, up 15.3% year on year. Q4 FY26 revenue from operations was 519.3 crore, up 4.4% year on year and 1.8% sequentially.

The most striking feature of the year was the profitability expansion. FY26 EBITDA grew to 371.6 crore, up 62.1% year on year, and the EBITDA margin expanded to 18.7%. In Q4 FY26, EBITDA margin rose to 21.3%. Management attributed the margin improvement to operational efficiencies, disciplined cost management, and synergy benefits from acquisitions.

Net profit after non-controlling interest, however, did not move in tandem with the operating improvement. FY26 PAT after NCI declined to 194.2 crore from 205.0 crore in FY25, and Q4 FY26 PAT after NCI was 44.2 crore, slightly below 44.9 crore in Q4 FY25. Management repeatedly highlighted that PAT was adversely impacted by exceptional items, including the impact of labour code changes and fair value changes of contingent consideration payable for acquisitions. They stated that adjusted PAT after NCI would have been about 253 crore for FY26 and 72.9 crore for Q4 FY26, excluding these one-time impacts.

Segment performance: Digital Operations leads, Experiences faces pressure

Datamatics reports three operating segments: Digital Operations, Digital Technologies, and Digital Experiences. In FY26, Digital Operations dominated the revenue mix, contributing 1,101.4 crore, or about 55% of consolidated revenue from operations. It also delivered margin strength, with FY26 EBIT margin at 18.7% and Q4 FY26 EBIT margin at 23.2%.

Management said Digital Operations growth was led by digital content, with margins improving due to process efficiencies and platform-driven automation. They also stated that this segment is expected to lead their AI transformation efforts.

Digital Technologies, on the other hand, saw revenue decline for the year. FY26 revenue was 626.5 crore, down 4.5% year on year. Management attributed the softness to scheduled project completions, while emphasizing that margins remained in double digits in Q4 and that the pipeline remains steady. They said they anticipate revenue improvement in this segment in the current year.

Digital Experiences remained the weak spot. FY26 revenue declined 8% year on year to 259.2 crore, and Q4 FY26 revenue was 60.4 crore, down 15.8% year on year. Management reiterated a factor they had mentioned earlier: certain customers shifting work to captive centers. They said new contracts have been signed and will ramp up in FY27, which should stabilize and improve performance.

AI products and platform monetization: TruAI and FINATO as key themes

The company’s strategic narrative is heavily anchored on AI, including GenAI and agentic AI. In the investor presentation, Datamatics highlighted an AI-powered product suite including TruAI, TruCap+, TruBot, TruDiscovery, FINATO, and TruBI. The company stated it has delivered 70 plus AI projects and that over 40 customers are using GenAI-powered TruBot, TruCap+, and TruBI.

On the earnings call, management provided more color on one of the flagship product initiatives: TruAI Underwriting. Rahul Kanodia described underwriting as the core of insurance and highlighted the complexity of analysing financial statements and medical statements. He stated that TruAI Underwriting is designed to automate the underwriting process and that its monetization model is recurring, with ongoing license fees plus associated services.

Management claimed initial traction, stating that they have already signed three or four customers and that the product is being pursued both in India and the US. They also stated that the initial focus is on health insurance, followed by expansion into P&C and life.

FINATO is another platform the company is positioning as an agentic AI opportunity. Management said FINATO has been reengineered into an agentic AI platform and that there is traction with large opportunities. However, they also disclosed that while the earlier version has a customer base, the new agentic AI version had not yet signed customers at the time of the call. They expressed an expectation of sign-ups in the next quarter.

The company also emphasized continued collaboration with hyperscalers including Microsoft, Google, and Salesforce. Management stated that they have some large Salesforce-related deals in the pipeline and that Dextara, the acquired Salesforce-focused business, has contributed to a recent Salesforce-led CRM transformation win with a leading US logistics enterprise.

Capital allocation, balance sheet, and corporate actions

Datamatics ended FY26 with a strong liquidity position. Net cash and investments net of debt stood at 639.2 crore as of March 31, 2026. Billed DSO was 63 days.

When asked about the cash pile, management said the primary agenda remains growth and M&A, but stressed caution in acquisitions. The board also recommended a final dividend of 5 per equity share for FY26.

Separately, the company announced a scheme of amalgamation involving two wholly owned subsidiaries, Dextara Digital Private Limited and Datamatics Cloud Solutions Private Limited, into Datamatics Global Services Limited. The stated rationale was to integrate complementary capabilities across AI and cloud-based CRM platforms including Salesforce solutions, to strengthen market position and enable cross-selling. The appointed date for the scheme is April 1, 2026, subject to approvals.

Takeaways

Datamatics delivered a strong FY26 in operating terms, with record EBITDA margins and meaningful EBIT growth. The segment picture, however, is uneven: Digital Operations is scaling rapidly and posting strong margins, Digital Technologies needs a rebound after project completions, and Digital Experiences faces structural client shifts to captive centers.

Management’s forward view is measured. They guided to around 8% organic revenue growth for the next year and indicated EBITDA margins could improve by 50 to 100 basis points, while noting that investments in AI platforms are expensed and can influence reported margins. The near-term execution test will be whether the company can convert early product traction in TruAI Underwriting into scaled recurring revenue and whether FINATO’s agentic AI version starts signing customers as indicated.