Digitide exits low-margin work as AI-led revenue doubles in Q2FY27

Digitide Solutions Limited doubled AI-led revenue sequentially to Rs 30.5 crore in Q2FY27, while contract repricing and exits from low-margin business reduced revenue 2.0% to Rs 759.6 crore and lifted EBITDA margin by 45 basis points to 10.4%. The company also put one operating model in place and reorganised sales and leadership functions.

Why did Digitide exit low-margin business?

Digitide exited low-margin business and repriced contracts to improve revenue quality, cash generation and working capital, management said for the quarter ended September 30, 2026. Revenue consequently declined to Rs 759.6 crore in Q2FY27 from Rs 775.1 crore in Q1FY27, as the company applied what it described as a disciplined approach to deal selection.

Management said the portfolio actions formed part of four priorities set at the start of FY27: a unified operating model, leadership strengthening, improvement in revenue quality and margins, and development of selected growth engines. Chief Financial Officer Harigovind Krishnasamy said the company ended Q2FY27 with net cash of Rs 76 crore after the contract repricing and business exits.

The company did not quantify how much of the Rs 15.5 crore sequential revenue reduction came from repricing or exits. However, earnings before interest, tax, depreciation and amortisation, or EBITDA, increased to Rs 78.8 crore in Q2FY27 from Rs 76.9 crore in Q1FY27, while the EBITDA margin rose to 10.4% from 9.9%.

How did Digitide's Q2FY27 financial performance change?

Digitide reported higher sequential EBITDA and reported profit after tax, or PAT, despite lower Q2FY27 revenue. EBITDA rose 2.5% sequentially to Rs 78.8 crore, while reported PAT increased 204.0% to Rs 8.9 crore from Rs 2.9 crore in Q1FY27; management said the Q2 PAT contained no exceptional items.

The year-on-year comparison was mixed. Q2FY27 revenue was 0.6% below Rs 764.2 crore in Q2FY26, and EBITDA was 7.5% below Rs 85.2 crore, leaving the EBITDA margin 78 basis points below the prior-year 11.1%. Reported PAT nevertheless increased from Rs 2.8 crore and the PAT margin rose to 1.2% from 0.4%.

For H1FY27, revenue grew 2.3% year on year to Rs 1,534.7 crore, but EBITDA declined 7.2% to Rs 155.7 crore and margin fell 104 basis points to 10.1%. Reported H1FY27 PAT was Rs 11.9 crore, 4.8% below Rs 12.5 crore in H1FY26, showing that the Q2 improvement did not reverse the half-year earnings comparison.

Which Digitide businesses are changing the revenue mix?

Digitide's Tech & Digital and international businesses expanded in Q2FY27, while business process management, or BPM, and domestic revenue declined. Tech & Digital revenue increased 2.6% sequentially and 6.6% year on year to Rs 243.6 crore, raising its share of revenue to 32.1% from 30.6% in Q1FY27.

BPM, the larger segment, reported revenue of Rs 516.1 crore, down 4.0% sequentially from Rs 537.7 crore, and its revenue share declined to 67.9% from 69.4%. Over H1FY27, BPM revenue decreased 1.9% year on year to Rs 1,053.8 crore, whereas Tech & Digital revenue grew 13.0% to Rs 480.9 crore.

International revenue grew 9.2% sequentially and 13.5% year on year to Rs 322.8 crore, accounting for 42.5% of Q2FY27 revenue. Domestic revenue fell 8.9% both sequentially and year on year to Rs 436.8 crore, reducing its share to 57.5% from 61.9% in Q1FY27.

AI-led revenue reached Rs 30.5 crore in Q2FY27, double the Q1FY27 amount and equal to 4.1% of total revenue, compared with 1.9% in the preceding quarter. Digitide said its artificial intelligence offering spans AI-infused BPM, AI-enabled platforms, and Data, AI and Cloud-led professional services, but did not provide revenue for each layer.

What operational changes has Digitide made?

Digitide has established one enterprise and one operating model, with a leadership reset across business units, sales and corporate functions in place by Q2FY27. Management connected the restructuring to the September 2026 portfolio decisions and to its objective of increasing the contribution from Tech & Digital, international and AI-led work.

The company created dedicated India and international sales teams to strengthen its go-to-market approach. Total contract value, or TCV, bookings rose 95% sequentially to about Rs 400 crore in Q2FY27, supported by 34 key logo wins; TCV is booked contract value rather than revenue recognised during the quarter.

Digitide also signed strategic alliances with AWS and Anthropic, which management said strengthen its AI-led proposition. The company is scaling its global capability centre, or GCC, offering through a Build-Operate-Transfer model, although the announcement gave no revenue target, client count or transfer schedule for this activity.

Management said its H2FY27 priorities are to convert approximately Rs 400 crore of Q2 bookings into revenue, improve collections and working capital, and continue moving the revenue mix toward Tech & Digital, international and AI-led businesses. These plans follow the Q2FY27 margin expansion to 10.4% and the reported Rs 76 crore net-cash position.

Conclusion

Digitide's Q2FY27 release describes an operating and portfolio reset rather than only a quarterly profit movement. Revenue fell 2.0% to Rs 759.6 crore as the company repriced contracts and exited low-margin work, while EBITDA margin rose 45 basis points to 10.4%, AI-led revenue doubled to Rs 30.5 crore, and Tech & Digital and international businesses gained revenue share.

The next disclosed test is H2FY27 execution on management's plan to turn about Rs 400 crore of TCV bookings and 34 key logo additions into recognised revenue. Management has also identified collections, working capital and the continuing shift toward Tech & Digital, international, AI-led and GCC activity as matters to watch after Q2FY27.