R Systems Q2 CY2026 results: growth holds, margins steady at 20 percent

R Systems International Limited opened CY2026 with a clean message to investors: growth has stayed strong, and operating profitability has stayed disciplined. In Q2 CY2026, revenue rose to INR 6,017 million, about USD 63.6 million, up 30.2 percent year on year. Adjusted EBITDA came in at INR 1,207 million, with an adjusted EBITDA margin of 20.1 percent. Adjusted net profit was INR 629 million, about USD 6.6 million, up 35.4 percent year on year, translating into adjusted EPS of INR 5.3, up 35.3 percent.

The headline is not just that revenue grew quickly, but that margin did not weaken while scaling. R Systems has now delivered two consecutive quarters at 20.1 percent adjusted EBITDA margin in CY2026. The quarter also showed how reported profit can move differently from operating performance. Adjusted net profit fell sequentially versus Q1 CY2026 even though revenue and adjusted EBITDA grew, mainly because Q1 included a higher other income line due to the adoption of cash flow hedge accounting under Ind AS 109.

The quarter in numbers: revenue growth with stable operating discipline

R Systems has shown a steady revenue climb across the last eight quarters. Quarterly revenue increased from INR 4,441 million in Q3 2024 to INR 6,017 million in Q2 2026. This matters because it suggests the company is not relying on a single outlier quarter to show momentum. The step up has been gradual, and the most recent two quarters show that the margin profile has moved up from the mid to high teens toward a more durable 20 percent level.

Management commentary in the deck also hints at what is supporting this trend. The company highlights traction in agentic business operations and continued demand for modernization work. It also frames 2026 as a year where enterprises are paying more attention to the cost of running AI, and are looking for expert product engineering partners that can architect AI efficient end to end systems.

A useful way to read Q2 is through the adjusted EBITDA bridge. From Q1 to Q2, adjusted EBITDA increased from INR 1,157 million to INR 1,207 million. The bridge shows a positive INR 98 million impact from rupee depreciation and a negative INR 47 million impact from standard operations. This framing suggests currency was a meaningful contributor to the sequential change, while underlying operational factors were slightly negative within the quarter, yet not enough to derail the margin.

This table highlights a key investor point. The company improved operating margin sharply year on year, but quarterly net profit and EPS can still be volatile because below EBITDA lines and accounting effects can be meaningful.

H1 CY2026: operating leverage becomes clearer

For the six months ended June 30, 2026, R Systems reported revenue of INR 11,765 million, about USD 126.4 million, up 30.1 percent year on year. Adjusted EBITDA was INR 2,364 million, and adjusted EBITDA margin was 20.1 percent. Adjusted net profit rose to INR 1,387 million, up 54.4 percent, and adjusted EPS increased to INR 11.7, up 54.3 percent.

The half year view is where margin improvement looks more structural. In H1 2025, the adjusted EBITDA margin was 17.3 percent. In H1 2026 it rose to 20.1 percent, an improvement of 279 basis points. The bridge for H1 shows the drivers: rupee depreciation contributed INR 552 million and standard operations contributed INR 247 million to adjusted EBITDA, taking it from INR 1,566 million in H1 2025 to INR 2,364 million in H1 2026.

Operationally, the un-audited contribution analysis tables provide more texture. In Q2 2026, gross margin was INR 2,360 million, or 39.2 percent of revenue, versus 36.0 percent in Q1 2026 and 36.0 percent in Q2 2025. But SG and A expenses rose to 19.2 percent of revenue in Q2 2026 from 15.9 percent in Q1 2026, while still close to 18.7 percent in Q2 2025. The net effect kept adjusted EBITDA margin at 20.1 percent. This mix implies that gross margin expanded, but operating expenses rose too, resulting in a stable overall margin.

Two patterns stand out. First, profit growth is outpacing revenue growth on a half year basis, which is what investors typically want to see when a services business improves utilization, pricing, mix, or delivery efficiency. Second, the company is signaling that it evaluates performance through adjusted measures that exclude RSU expense and non recurring items, and that accounting changes in hedge treatment can affect other income and, therefore, quarterly comparability.

Operating indicators: broad client base, Americas weighted mix

R Systems continues to show a revenue mix tilted toward the Americas. In Q2 2026, the Americas contributed 71.5 percent of revenue, up from 69.3 percent in Q1 2026. APAC declined to 15.3 percent from 17.5 percent. Europe remained stable at 9.7 percent, and MEA stayed at 3.6 percent.

Client concentration looks contained based on the disclosed metrics. The top client was 6.0 percent of revenue in Q2 2026, up slightly from 5.8 percent in Q1 2026. The top 10 clients represented 24.4 percent, broadly steady versus 24.0 percent in Q1 2026. This distribution suggests that growth is not being driven by a single account, and the company retains a diversified revenue base.

The deck also tracks utilization and DSO across recent quarters, and notes that DSO is shown on a trailing twelve month basis and excludes the new acquisition of Novigo. Even without exact DSO values in text, the inclusion of these charts signals management focus on delivery efficiency and cash conversion, which usually become more important as companies scale.

Bookings and wins: steady ACV, enterprise AI themes

The presentation includes a key commercial metric: trailing twelve month ACV bookings excluding renewals. ACV increased from USD 74.0 million in Q2 2025 to USD 82.9 million in Q2 2026. The trend is gradual, moving to USD 76.5 million in Q4 2025 and then to USD 82.3 million in Q1 2026. For investors, this matters because bookings help explain whether revenue strength is being replenished.

The quarter’s deal narrative also aligns with the company’s positioning around AI, analytics, engineering, and modernization. The deck lists five wins that share a common structure. They are large enterprise programs focused on analytics, AI product engineering, quality engineering, platform modernization, and business transformation.

One engagement involves advanced analytics and data science for a global telecommunications and media company to convert data into actionable insights. Another is the establishment of a global capability center for a US small business lender, bringing together AI product engineering, software engineering, and digital operations services. A third win focuses on AI powered quality engineering for an insurance and financial services provider. The fourth describes a Microsoft Dynamics 365 retail transformation for a global financial services and market access provider. And the fifth is a modernization program for a US based AdTech company to upgrade a core advertising platform to a modern technology foundation without disrupting business operations.

These are not presented with contract sizes, durations, or margin profiles, so investors cannot quantify impact from the deck alone. But the pattern is important. The wins suggest the company is being pulled into programs where AI is intertwined with engineering execution, and where delivery requires both domain and platform skills.

What management is signaling about 2026

The final section of the deck is short but revealing. R Systems notes recognition as a Horizon 2 GCC Accelerator in the HFS Horizons GCC Services 2026 report. The company links this to validation of its AI first GCC model and platform led delivery, and says proprietary accelerators have been recognized as differentiators enabling GCC transformation.

The company also flags three ideas that shape its market view.

First, enterprises are beginning to focus on the cost of running AI. This supports demand for partners who can design AI efficient end to end systems, not just implement models. Second, legacy modernization remains a large total addressable market across code bases, data estates, and reporting landscapes. Third, engineering velocity is becoming a key differentiator in achieving ROI from AI initiatives.

Put together, these points explain why the financials look the way they do. When modernization and AI enabled delivery expand, customers often demand faster release cycles, quality engineering, and efficiency. That can lift gross margin if delivery is executed well, but it can also require higher SG and A investment to build capabilities and support growth. The Q2 contribution analysis, where gross margin improved but SG and A rose as a percentage of revenue, fits that profile.

Takeaways for investors

R Systems delivered a strong Q2 CY2026 on both growth and operating profitability. Revenue rose 30.2 percent year on year, and adjusted EBITDA margin held at 20.1 percent, extending the step up seen in Q1. On a half year basis, operating leverage is clearer, with adjusted EBITDA up 51.0 percent on revenue growth of 30.1 percent.

The quarter also reminds investors to separate operating momentum from accounting and below EBITDA volatility. Sequential adjusted net profit and EPS declined because Q1 other income benefited from hedge accounting effects under Ind AS 109. For those tracking the business trend, the more consistent signals are the revenue trajectory, the sustained 20 percent adjusted EBITDA margin, and the steady improvement in trailing twelve month ACV bookings excluding renewals to USD 82.9 million.

Looking ahead, the company’s messaging stays grounded in execution themes: agentic business operations gaining traction, modernization remaining a large market, and enterprises demanding engineering velocity and AI efficient architectures. If R Systems continues to pair this demand with stable utilization and strong cash conversion discipline, the 20 percent margin band begins to look less like a short term peak and more like a baseline for the next phase of growth.