R Systems Q2 CY2026: Strong revenue growth, 20% adjusted EBITDA, and a clear AI-first push

R Systems International reported a strong June quarter for calendar year 2026, with revenue rising to Rs 601.7 crore in Q2 CY2026. The company highlighted 30.2% year on year growth in rupee terms and 17.7% growth in dollar terms, reflecting continued momentum in its AI, data, and cloud-led portfolio and steady demand from its largest geography, the Americas.

Profitability improved meaningfully on an adjusted basis. Adjusted EBITDA came in at Rs 120.7 crore, translating to a 20.1% margin, up from 17.3% in Q2 CY2025. Adjusted net profit was Rs 62.9 crore, up 35.4% year on year, with adjusted EPS at Rs 5.3.

The quarter in numbers: growth and margin expansion

Management attributed the quarter’s margin profile to operating leverage, a better revenue mix, improved utilization, and currency tailwinds. The adjusted EBITDA bridge in the presentation specifically called out rupee depreciation as a contributor to the quarter on quarter increase in adjusted EBITDA.

At the gross margin level, the contribution analysis showed a sharp improvement. Q2 CY2026 gross margin rose to 39.2% versus 36.0% in both Q1 CY2026 and Q2 CY2025. The CFO linked this to higher billable days, rupee depreciation, and improved utilization.

Adjusted net profit performance needs more context. While year on year growth was healthy, quarter on quarter adjusted net profit declined from Rs 75.8 crore in Q1 CY2026 to Rs 62.9 crore in Q2 CY2026. Management explained this was driven largely by the impact of the company’s adoption of cash flow hedge accounting under Ind AS 109 from January 1, 2026, which had lifted other income in Q1 by about Rs 18.0 crore. In Q2, other income turned negative, including a realized loss of about Rs 9 crore on settlement of forward contracts.

H1 CY2026: stronger operating leverage, higher profitability

For the first half of CY2026, R Systems reported revenue of Rs 1,176.5 crore, up 30.1% year on year. Adjusted EBITDA rose 51.0% year on year to Rs 236.4 crore, sustaining a 20.1% margin. Adjusted net profit for H1 CY2026 was Rs 138.7 crore, up 54.4% year on year, and adjusted EPS was Rs 11.7.

The EBITDA bridge for H1 CY2026 again highlighted rupee depreciation and standard operations as drivers of adjusted EBITDA expansion versus H1 CY2025. Management also noted that while currency tailwinds helped, the company is seeing early signs of improvement from a revenue mix shift and AI-led delivery, visible in better revenue productivity.

A key operational point discussed on the call was that the company has not seen a meaningful increase in headcount year on year, while revenue has grown, implying productivity improvements. Management linked this to AI-led delivery practices, and referenced its EXIQO AI Studio and Optima AI platform as enabling higher productivity and faster turnaround.

Operating metrics: Americas grows, utilization stabilizes, DSO steady

On the operating dashboard, the company’s revenue mix remained dominated by the Americas, which increased to 71.5% in Q2 CY2026 from 69.3% in Q1 CY2026. APAC declined to 15.3% from 17.5%, which management attributed to the completion of some larger projects that were running in the prior quarter. Europe remained stable at about 9.7%, and MEA stayed at 3.6%.

Client concentration moved up modestly. The top client accounted for 6.0% of revenue in Q2 CY2026 versus 5.8% in Q1 CY2026. The top 10 clients represented 24.4% versus 24.0% in Q1 CY2026. Management framed this as a result of mining and growing existing accounts, while noting that concentration remains manageable.

Operational efficiency indicators were broadly steady. Management said utilization moved toward its preferred operating band of 80% to 81%, reflecting that the company is beginning to monetize bench investments made for AI initiatives over prior quarters. DSO remained in its usual band, with billed DSO around 55 to 56 days and billed plus unbilled around 75 days on a trailing twelve month basis excluding the Novigo acquisition.

Deal wins and bookings: AI-led engagements and stable ACV momentum

The presentation and call emphasized that deal wins are increasingly AI oriented, spanning analytics, AI product engineering, AI-powered quality engineering, and modernization programs. The quarter’s key wins included:

A telecom and media engagement focused on advanced analytics and intelligence solutions, a Global Capability Center setup for a US small business lender spanning AI product engineering and digital operations, an insurance initiative using AI-powered quality engineering, a Microsoft Dynamics 365 retail transformation for a financial services client, and an AdTech platform modernization engagement using AI-powered software engineering.

Bookings were tracked through trailing twelve month ACV bookings excluding renewals. TTM ACV moved to $82.9 million in Q2 CY2026 from$82.3 million in Q1 CY2026. Management said the pipeline quality and average deal size have improved, but reiterated that the company does not provide formal guidance on future quarters.

Management also made an important qualitative disclosure on portfolio mix. Data, AI, and cloud services taken together were stated to have crossed 50% of revenues and continue to rise. At the same time, management clarified that much of this work remains transformation and innovation led and is still project based in nature. It is not seasonal, but it is not annuity maintenance revenue either, meaning deal conversion and project closures remain a natural feature of the model.

Costs, SG&A investments, and the margin framework

One of the most discussed topics on the call was the rise in SG&A. In the contribution analysis, SG&A increased to Rs 115.3 crore in Q2 CY2026 from Rs 91.4 crore in Q1 CY2026. The CFO said this was mainly due to higher sales and marketing spend, and that Q1 also had one-time accounts receivable reversals.

The CEO reinforced that this is a deliberate investment cycle. Management cited the onboarding of a Chief Revenue Officer, the need to embed AI and domain experts earlier in the sales process, and increased marketing activity following the company’s brand identity refresh and the launch of EXIQO as its AI studio.

On wage costs, management said the company follows biannual wage hike cycles and confirmed that a wage hike was implemented in this quarter, with the impact already reflected in Q2 CY2026 results.

On the medium-term margin framework, management stated it continues to stay focused on sustaining adjusted EBITDA in the 18% to 19% range on a sustainable basis. Management also acknowledged that part of the recent margin improvement has come from rupee depreciation, which is outside the company’s control.

What to watch next

R Systems enters the second half of CY2026 with a narrative centered on AI-first delivery, GCC enablement, and modernization. The company also referenced recognition as a Horizon 2 GCC Accelerator in HFS Horizons GCC Services 2026, positioning it as validation of its AI-first GCC model and proprietary accelerators.

The core debate for investors will likely be around conversion of bookings into steady constant-currency growth, especially as management itself referenced decision-cycle delays in some cases and the natural lag between wins and revenue realization. The other moving part remains forex and hedge accounting mechanics, which had a visible impact on other income and quarter on quarter profit movements.

R Systems delivered a strong Q2 CY2026 on revenue and adjusted operating margins while investing in go-to-market capacity to expand its AI-led opportunity set. The near-term financial profile may remain sensitive to currency and investment timing, but the company is clearly positioning itself for a higher-value, AI-heavy services mix over time.