Workmates H1 revenue rises 27.5% but cash flow turns negative

Workmates Core2Cloud Solution Limited reported revenue from operations of Rs 95.21 crore for the first half of financial year 2027 (H1 FY27), up 27.5% year on year, while operating cash flow was negative Rs 4.70 crore as trade receivables rose to Rs 39.50 crore. Recurring revenue increased 43.4% and represented 87% of revenue.

How did Workmates perform in H1 FY27?

Workmates increased revenue from operations to Rs 95.21 crore in H1 FY27 from Rs 74.69 crore in H1 FY26, while profit after tax rose 32.4% to Rs 12.03 crore from Rs 9.09 crore. Total income grew 28.4% to Rs 96.22 crore, and profit before tax rose 30.8% to Rs 15.96 crore, representing a 16.8% margin.

Earnings before interest, tax, depreciation and amortisation (EBITDA) increased 24.0% to Rs 16.44 crore. The reported comparison shows that recurring revenue grew faster than total revenue, while profit after tax also increased faster than sales.

Workmates said H1 FY27 revenue was also 37.7% above H2 FY26 and equalled 66% of FY26 revenue. EBITDA margin was 17.3%, while profit after tax margin improved to 12.6% from 12.2% in H1 FY26. Basic and diluted earnings per share were Rs 9.32, compared with Rs 9.08 a year earlier.

Why did Workmates' recurring revenue mix increase?

Workmates' recurring revenue rose 43.4% to Rs 82.97 crore in H1 FY27, increasing its share of revenue to 87% from 77% in H1 FY26. This growth outpaced the 27.5% increase in overall revenue, whereas project revenue declined 27% year on year to Rs 12.24 crore, although it was 51% higher than in H2 FY26.

Monthly recurring revenue (MRR) reached Rs 15.9 crore per month by September 2026 from Rs 13.25 crore in April 2026. Workmates attributed most of that Rs 2.65 crore monthly increase to Rs 2.34 crore per month of expansion within existing clients; average MRR was Rs 13.8 crore per month in H1 FY27, versus Rs 9.67 crore in H1 FY26.

Workmates reported annualised gross revenue churn of 2.6%, within its stated ceiling of 10%, and signed Rs 30 crore of new bookings measured by total contract value in H1 FY27. Its customer count reached 337 from 316 in March 2026, including 44 enterprise customers compared with 38, while 54 new logos comprised 34 recurring customers and 20 project customers.

What caused Workmates' negative operating cash flow?

Workmates recorded negative operating cash flow of Rs 4.70 crore in H1 FY27 because working capital funded revenue growth, particularly through higher trade receivables. Trade receivables increased to Rs 39.50 crore at September 30, 2026 from Rs 28.99 crore at March 31, 2026, and debtor days rose to 64 from 62.

Cash and cash equivalents fell to Rs 43.88 crore at September 30, 2026 from Rs 53.95 crore at March 31, 2026, although Workmates remained debt-free. Net worth increased to Rs 97.71 crore from Rs 88.26 crore, and Workmates reported an annualised return on equity of 24.6% for H1 FY27.

Workmates also paid the FY2026 interim dividend of Rs 2 per share, amounting to Rs 2.58 crore, during H1 FY27. Of Rs 29.2 crore in initial public offering proceeds allocated to working capital, it had used Rs 16.58 crore by H1 FY27; management identified tighter collections as its main financial priority for the second half.

How did costs and customer exposure change at Workmates?

Workmates' gross margin declined to 33.5% in H1 FY27 from 34.3% in H1 FY26 as cloud consumption and third-party costs rose to 66.5% of revenue. Employee costs moved in the opposite direction, easing to 10.8% of revenue from 11.2%, while headcount was unchanged at 169 and billable utilisation was 84%.

Revenue per employee increased to Rs 56 lakh in H1 FY27 from Rs 44 lakh in H1 FY26. Attrition was 1.78%, compared with 1.23% in H2 FY26, and the team held 359 active Amazon Web Services (AWS) certifications at the end of the period.

Workmates derived 40.6% of revenue from banking, financial services and insurance (BFSI), compared with 34.2% in FY26, while information technology and IT-enabled services contributed 34.6%. The top 20 clients accounted for 71% of revenue, down from 73% in FY26, and 28 clients generated more than Rs 1 crore each in annualised revenue.

What is Workmates expecting in H2 FY27?

Workmates management raised its FY27 revenue outlook to Rs 202 crore from Rs 190.56 crore, within its stated full-year goal of Rs 190 crore to Rs 210 crore. The outlook assumes Rs 107 crore of H2 FY27 revenue, including Rs 95.4 crore of contracted recurring revenue, Rs 1.25 crore of new recurring business and Rs 10.35 crore of project revenue.

Workmates reported a weighted H2 pipeline of Rs 110 crore, including a cloud migration for an existing non-banking financial company customer, a cybersecurity opportunity with an existing large financial-services and insurance customer, and a migration for a mid-sized global IT services company. Management said H2 priorities include converting that pipeline, monetising six artificial intelligence accelerators in production and improving collections.

Workmates has reactivated expansion into the United States and Middle East for FY27 after an earlier pause related to geopolitical considerations and tariff uncertainty. A US subsidiary has been registered for global customer billing, while the Singapore strategy is being reassessed; international operations contributed 3.7% of H1 FY27 revenue, and intangible assets under development rose to Rs 2.66 crore from Rs 64 lakh in March 2026.

Conclusion

Workmates' H1 FY27 results combined 27.5% revenue growth, a 43.4% increase in recurring revenue and 32.4% growth in profit after tax. The shift to an 87% recurring-revenue mix and Rs 15.9 crore of September MRR underpins management's Rs 202 crore FY27 outlook, but a Rs 10.51 crore increase in receivables coincided with negative Rs 4.70 crore operating cash flow.

The next measures to watch are whether H2 FY27 collections reduce the 64 debtor days, whether the Rs 110 crore weighted pipeline converts, and whether revenue reaches the assumed Rs 107 crore for the half. Management also plans to start US and Middle East operations and monetise six AI accelerators, while Rs 95.4 crore of its H2 assumption is contracted recurring revenue.