RSI Q1 CY2026: Growth accelerates, margins expand, and the AI-first narrative gets sharper

R Systems International Limited, now presenting itself more prominently under the RSI brand, reported a strong start to calendar year 2026. For the quarter ended March 31, 2026 (Q1 CY2026), revenue rose to INR 574.8 crore, up 29.9% year on year and 3.5% quarter on quarter. Profitability expanded faster than revenue. Adjusted EBITDA (excluding RSU expense and non-recurring costs) increased to INR 115.7 crore, translating into a 20.1% margin. Adjusted net profit came in at INR 75.8 crore, with an adjusted net margin of 13.2%.

Management positioned the quarter as a continuation of deal momentum built over the last four quarters, with the company leaning further into AI-led delivery. At the same time, the quarter also carried a few moving parts, particularly around the first full-quarter consolidation of Novigo and the impact of foreign exchange movement on reported margins.

The quarter in numbers: topline growth with meaningful margin expansion

The company’s quarterly trajectory shows a clear step-up from the mid-2024 base. Revenue moved from INR 432.0 crore in Q2 2024 to INR 574.8 crore in Q1 2026, while adjusted EBITDA rose from INR 71.4 crore to INR 115.7 crore over the same period.

Adjusted EBITDA margin in Q1 2026 improved to 20.1% from 18.3% in Q4 2025 and 17.4% in Q1 2025. Management acknowledged that rupee depreciation supported EBITDA in the quarter, but also stated that even without the currency benefit, margins would have been in the 19% range. The CEO also reiterated that the company has been guiding for margins above 17%.

The bridge shown in the investor deck attributed the quarter-on-quarter adjusted EBITDA change primarily to rupee depreciation and standard operations.

On the reported P&L, gross margin declined to 36.0% in Q1 2026 from 38.9% in Q4 2025, while SG&A expenses reduced sharply to INR 91.4 crore from INR 114.3 crore. Management attributed the SG&A reduction largely to reversal of conservative receivables provisions on realization and to year-end provision true-ups made in Q4.

Interest expense increased to INR 9.6 crore versus INR 6.8 crore in Q4, driven by full-quarter impact of debenture interest. Non-recurring expense in Q1 2026 was INR 1.59 crore, described as severance payments for certain redundant overseas positions.

Operating picture: Americas-led revenue mix, lower concentration, and deliberate utilization dip

The revenue mix remains dominated by the Americas. In Q1 2026, the Americas contributed 69.3% of revenue, followed by APAC at 17.5%, Europe at 9.6%, and MEA at 3.6%. Management noted that MEA contribution is largely linked to Novigo’s presence.

Client concentration improved modestly. The top client contributed 5.8% of revenue, and the top 10 clients represented 24.0% of revenue in Q1 2026, down from 26.9% in Q4 2025. Management clarified that in dollar terms top accounts may be stable, but the percentage share fell as the overall base expanded.

Two operating metrics stood out in commentary.

First, utilization dropped to about 80.5%. Management described this as a deliberate move tied to expanded bench and center-of-excellence investments in AI and data talent. Utilization had earlier peaked around 84%, implying a 2 to 2.5 percentage point decline in the last two quarters. The intent, as stated, is to keep delivery readiness ahead of the market, particularly for AI and data programs.

Second, receivables discipline appears stable. Management cited billed DSO in the 60 to 64 day range and billed plus unbilled DSO around 74 days, based on trailing twelve months and excluding the Novigo acquisition.

Strategy and positioning: from AI claims to delivery assets and a studio model

The quarter’s messaging continued to center around AI, but with a clearer attempt to move beyond generic positioning. RSI introduced EXiQO as its AI studio, described as an execution fabric unifying business workflows, engineering agents and human decision-making, intended to deliver governed, enterprise-grade agentic AI. Management linked EXiQO to the Optima AI platform, stating that the platform includes reusable assets such as agents and prompts, and is designed to embed security, guardrails, usage policies, token optimization and compliance.

In the concall, management framed EXiQO’s problem statements in three buckets.

One, AI for accelerating the software development lifecycle, positioned as core to the company’s engineering business.

Two, AI-led legacy modernization across legacy codebases, data estates and reporting infrastructure.

Three, agentic AI for business workflows, with management citing examples such as insurance claims, KYC, revenue cycle management, and finance workflows including invoice matching.

Management stated that around 29% of revenue currently comes from AI and AI-enabled services, while also clarifying that this tracking is not yet system-driven and is not being formally reported as a segment.

The company also announced a brand refresh, expressing the new identity as AI-first. Engineered always. and highlighted an award recognition for Best Use of AI in Manufacturing for an AI-powered Factory CoPilot solution.

A key people move in the quarter was the onboarding of a Chief Revenue Officer. Farooq Ahmad joined as CRO, with management stating he will lead the sales engine, strengthen go-to-market and accelerate growth, especially in North America.

Deal momentum and Novigo integration: momentum improving, but comparability needs care

On deal momentum, the company reported trailing twelve month ACV bookings excluding renewals at USD 82.4 million in Q1 2026, up from USD 76.5 million in Q4 2025. Management described this as a positive indicator of continued wins.

Key wins cited in the presentation and transcript included custom APIs and platform enhancements for an enterprise research data environment, a unified data foundation and golden record program for a North America digital engagement company, a large-scale application modernization program for a financial services platform provider, hybrid cloud migration for a hyperscaler, and a consumer loyalty program for a global life sciences and aesthetics innovator.

Novigo remained an important topic in Q&A. Management acknowledged that Q1 2026 is the first full-quarter consolidation of Novigo, but also noted that accounting policies and revenue recognition norms were aligned with R Systems practices. As a result, management stated that earlier references to Novigo’s annual revenue at about USD 32 million would restate to about USD 21 to 22 million annually, driven by changes such as gross to net revenue recognition for certain license revenues and adjustments in fixed price accounting.

Management also indicated early evidence of cross-sell and capability leverage. They cited close to a dozen deals where teams are cross-engaged, around three Novigo clients where R Systems service delivery has been sold in, and at least one R Systems client using Novigo’s competency.

What to watch next

The Q1 CY2026 print reinforces two things. RSI is showing strong year-on-year growth with expanding adjusted margins, and it is investing into an AI-first delivery narrative that is increasingly tied to specific delivery constructs such as an AI studio, platform assets, and talent programs.

But the quarter also surfaces monitorables. Gross margin declined sequentially, utilization has been reduced by design, and part of the near-term growth discussion is complicated by Novigo accounting alignment and seasonal quarter-day differences that management highlighted.

With ACV bookings improving and client concentration gradually declining, the near-term question is whether organic growth re-accelerates as the base stabilizes and whether utilization-driven investments translate into sustained revenue conversion without putting pressure on gross margins.