/** blogpostTitle: Workmates FY26 review: recurring-led growth, margin dip, and a bigger FY27 ask */

Workmates FY26 review: recurring-led growth, margin dip, and a bigger FY27 ask

Workmates Core2Cloud Solution Limited closed FY25-26 with revenue of 143 crore, up 33.6% year on year, and profit after tax of 15.92 crore, up 16%. It was also the company’s first investor presentation and earnings call after listing on the BSE SME platform, and management used the forum to frame Workmates as a cloud services firm positioned at the intersection of cloud, cybersecurity, and AI.

The company’s business model is built on two engines. One-time transformation work like migrations and implementations brings near-term revenue and, more importantly, creates an entry point for multi-year managed services and cloud operations. Over time, the managed services layer is meant to stack and compound, provided churn stays low and customers expand their spend across security, data, and AI services.

FY26 performance: strong growth, but margins softened

A key feature of FY25-26 was the revenue mix. Workmates reported 118 crore of recurring revenue, or 82.5% of total revenue, and 25 crore from project implementation billing, or 17.5%. Project billing grew faster, but the recurring base remained the dominant contributor. Management also highlighted a higher monthly run-rate by year-end. The deck disclosed an exit monthly recurring revenue (MRR) of 10 crore per month at the close of FY26, while FY27 opened at about 13.5 crore per month, described as a 35% step-up.

Profitability, however, moved down year on year. In FY25-26, gross margin was 32.79% versus 33.89% in FY24-25. EBITDA margin was 16.21% versus 17.7%, and PAT margin was 11.07% versus 12.99%. Management attributed the compression to a combination of deliberate business decisions and investments made ahead of growth.

Two revenue impacts were explicitly quantified. First, the company did not accept a Dubai contract due to payment exposure, which management said reduced FY25-26 revenue by about 4 crore. Second, certain gaming clients were discontinued after a government circular, which management said had a revenue impact of about 3.5 crore in FY25-26. Separately, the company increased headcount from 129 to 168, a net addition of 39 employees, and stated this increased costs by about 6 crore in FY26 to support future growth.

FY25-26 financial snapshot (as disclosed)

Customer depth and operating execution: visible improvements

Workmates ended FY25-26 with a higher customer count and a larger enterprise footprint. Total customers increased from 288 to 316, and enterprise customers rose from 34 to 38. The company added 85 new logos during the year. At the same time, revenue concentration remains meaningful: the top 20 accounts contributed 73% of revenue.

Operationally, the deck listed several execution metrics that improved sharply. Billable utilization increased from 72% to 84%. Escalations reduced by 45%, and mean time to resolution (MTTR) improved from 4.5 hours to 1.2 hours. The company attributed part of this to AI-driven automation and improvements in delivery governance, as well as faster deployment through infrastructure-as-code and CI/CD.

From a working capital perspective, Workmates disclosed that debtor days reduced from 72 days in FY24-25 to 62 days in FY25-26, indicating faster collections and better cash conversion.

Strategic investments: security, GenAI, enterprise sales, and people

The presentation outlined key areas of investment during FY25-26, including cybersecurity expansion, development of GenAI use cases and implementation capability, and enterprise sales initiatives such as a key account program. It also highlighted talent and capability development via leadership hiring and certifications.

On the earnings call, management expanded on its AI direction. It described building accelerators for both “AI for IT” and “AI for business.” Management referenced an internal platform called IntelliOps and stated that over 60% of customers have been onboarded onto it. When asked whether Workmates is building products, management said it has created templates and accelerators that are reusable, but it is not yet calling them full products due to the lifecycle rigor required for product development. It noted that publishing such offerings on a marketplace could be considered in the future.

The AI narrative is also tied closely to AWS. Management stated it uses AWS services such as Bedrock as an orchestration layer to integrate different models depending on customer use cases.

FY27: higher ambition, with a clear visibility base

For FY26-27, the company stated a revenue goal of 210 crore, implying 45% plus growth over FY25-26. It also shared a “current outlook” of about 190 crore based on contracted business and visibility. The deck quantified H1 FY27 outlook at 91.56 crore and H2 FY27 estimate at 99 crore, for a full-year outlook of 190.56 crore.

Management described the contracted recurring base as strong and stated that 40 crore per quarter is locked via recurring contracts. The deck also disclosed an FY27 entry position of 159 crore of assured recurring revenue and an entry MRR of 13.25 crore per month, described as about 35% higher than the FY26 exit MRR.

The difference between the stated goal of 210 crore and the current outlook of about 190.56 crore was presented as a gap of about 19.4 crore that needs to be closed through incremental new business. Management cited several pipeline opportunities, including a migration and transformation deal involving an enterprise agentic AI platform provider, GenAI and data analytics work for a manufacturing company, an AI-led transformation deal for a large insurance company, and cloud migration work in fintech.

On profitability expectations, the CFO stated that the company is targeting PAT of about 24 to 25 crore on 210 crore of revenue, and discussed a margin recovery plan built on improving service mix toward AI and security, raising utilization toward 88%, and achieving operating leverage as new hires reach full productivity.

What to track from here

Workmates’ FY26 disclosures present a clear picture of a recurring-heavy cloud services business scaling in India, with strong execution metrics and improving working capital efficiency. The margin decline in FY26 was acknowledged and was tied to identifiable revenue foregone and deliberate headcount investment.

The FY27 setup is ambitious but not entirely open-ended. Management has provided a base of contracted recurring revenue, monthly run-rate indicators, and a quantified gap to its stated 210 crore goal. For investors, the key question is whether the company can convert pipeline into incremental wins while restoring margins through mix and productivity, particularly as it pushes into AI and security services.

Separately, international expansion remains cautious. UK and US expansion was stated to be on hold due to geopolitical considerations, and Singapore go-to-market is being recalibrated. A US billing entity is being planned primarily to support global customer billing, and management clarified that the FY27 target does not include US or UK revenues. That makes global upside possible, but not essential, to the near-term guidance.