Persistent Systems Q2 FY26 results: Profit up 45% YoY

Key takeaway from the September quarter

Persistent Systems reported a strong September-quarter performance, led by steady demand, continued deal momentum, and an improvement in operating margins. The company said revenue rose 4.4% in constant currency and increased 4.2% quarter-on-quarter in dollar terms to $106 million. In rupee terms, revenue from operations was reported at ₹3,580.72 crore for the quarter ended September 30, 2025. The results also triggered a sharp market response, with the stock rising by nearly 6% on the BSE on Wednesday, as mentioned in the report.

Revenue growth: constant currency, dollars, and rupees

Persistent’s Q2 revenue rose 17.6% year-on-year in dollar terms, reflecting a sharp improvement versus the same period last year. In India reporting currency, the company’s revenue from operations increased 23.6% year-on-year to ₹3,580.7 crore for July to September 2025. Another figure cited in the material showed total income at ₹3,632.50 crore for Q2FY26, up 7.2% QoQ and 23.4% YoY. The mix of metrics indicates the quarter was strong across both operational revenue and overall income, and the company maintained sequential momentum.

Profitability improves as EBIT margin expands

Operating profit (EBIT) for the quarter rose 43.7% year-on-year to ₹583.7 crore, taking the EBIT margin to 16.3%. The margin was up 80 basis points sequentially, with another data point stating the margin expanded to 16.3% from 15.5% in Q1FY26. The quarter’s margin improvement was attributed to specific, quantified drivers rather than a broad-based assumption of pricing gains. Persistent also reported EBITDA of ₹734.86 crore for Q2FY26 in the financial highlights cited.

What drove the margin expansion this quarter

Management commentary in the report broke down several drivers behind the margin move. Currency tailwinds contributed around 60 basis points to margins. The conclusion of a software license purchase commitment, tied to a multi-year agreement, added another 80 basis points. Continued offshoring for a major healthcare client further improved margins by roughly 20 basis points. CFO Vinit Teredesai said the end of the software license commitment would continue to positively impact subsequent quarters and was not described as a one-off benefit. He also said the company made a provision for doubtful debts, describing it as a proactive measure based on quarterly receivables assessment.

Segment performance: BFSI led sequential growth

Industry-wise, the company reported quarter-on-quarter sales growth of 7% in BFSI, 3.8% in healthcare, and 2.2% in tech and emerging verticals. The quarter also saw contract wins across software, hi-tech and emerging industries, banking and financial services, insurance, and healthcare and life sciences. These vertical trends matter for investors tracking where incremental demand is coming from, especially at a time when clients are scrutinising discretionary spending.

Order wins and deal commentary

Persistent disclosed an order booking of $109.2 million in total contract value (TCV) and $147.9 million in annual contract value (ACV) for the quarter ended September 30, 2025. CEO Sandeep Kalra also said the last quarter’s TCV from deal wins exceeded $100 million. In his commentary, he said the market is not “dried up” and pointed to the ability to close both large and smaller deals when capabilities align with client needs and when teams stay close to customers. The company also highlighted that this was its 22nd consecutive quarter of revenue growth.

Net profit rises sharply year-on-year

Persistent posted a net profit (PAT) of ₹471.47 crore in Q2FY26, up 45.1% year-on-year from ₹325.00 crore. On a sequential basis, PAT increased 10.9% QoQ from ₹424.94 crore, as per the profitability section in the material. Profit before tax (PBT) stood at ₹616.83 crore, up 11.1% QoQ and 42.0% YoY, while tax expense was ₹145.36 crore. The reported numbers show operating leverage and margin expansion translating into faster profit growth than revenue.

AI positioning: embedded across service lines

Kalra said Persistent’s focus is on embedding AI across all service lines, which has helped customer engagement and deal conversion. He also said the company does not foresee calling out AI revenues separately anytime soon. The AI strategy was described as platform-led, backed by proprietary IPs, accelerators, and strategic partnerships. Management positioned AI as both a client-outcome tool and an internal efficiency lever, without separating it into a standalone revenue bucket.

FY27 revenue target reaffirmed

Persistent reaffirmed its $1 billion revenue target for FY27 (the 2026-27 financial year), which it said implies an 18% CAGR over FY25 to FY27. The reiteration of the target alongside a margin uptick signals management confidence in execution. However, the report’s focus stayed on what was already delivered in the quarter and the operational levers contributing to profitability.

Stock reaction and organisational update

The report said Persistent’s strong quarter pushed the share price up by nearly 6% on the BSE on Wednesday. On leadership updates, it noted that Jaideep Dhok was elevated as Chief Operating Officer - Technology during the quarter. Persistent also disclosed it has 22,690 employees in India, providing context on delivery scale.

Snapshot table: Q2FY26 highlights

What to watch in the next few quarters

A key monitorable will be whether the margin tailwinds cited for Q2 continue to play out, especially the benefit from the completed software license purchase commitment. Investors will also track how consistently the company converts its order-booking momentum into revenue, given the company’s disclosure of $109.2 million in TCV for the quarter. Management’s stance on AI remains clear: it is being embedded across offerings rather than being carved out as a separate revenue line. Persistent’s reaffirmed FY27 revenue target sets a measurable milestone, and subsequent quarters will provide more checkpoints on growth, execution, and margin sustainability.