Fractal Analytics crossed $100 million in quarterly revenue for the first time and lifted net income 139% to INR 792 million in its fiscal second quarter, according to results released on November 3, 2026. Revenue from operations rose 20% year over year to INR 9.565 billion.
The Q2 financial handbook separates the headline earnings measure from Fractal’s adjusted one. EBITDA rose 71.4% to INR 1.557 billion, while adjusted EBITDA increased 29.6% to INR 1.549 billion. The company’s adjusted version starts with EBITDA and adjusts for items including employee stock-option expense, other income and its share of an associate’s loss. Adjusted EBITDA margin was 16.2%, compared with 15.0% a year earlier, while profit-after-tax margin reached 8.3%, up from 4.2%.
Finance costs fell to INR 53 million from INR 115 million, while depreciation and amortization rose to INR 472 million from INR 335 million. Lower finance costs helped the bottom line, while higher depreciation and amortization partly offset that benefit, adding context to the sharp net-income increase.
Healthcare Grows While TMT Contracts
Healthcare and life sciences revenue grew 79% year over year and represented 25.1% of the quarterly industry mix. Banking, financial services and insurance grew 30% and accounted for 13.6%. Consumer packaged goods and retail remained the largest vertical at 34.7% of revenue and grew 11%, while TMT grew 6% sequentially but fell 18% year over year.
In his shareholder letter, co-founder and Group CEO Srikanth Velamakanni said the group grew 33% in rupee terms excluding TMT and described 10% constant-currency growth as below the company’s ambition.
He mainly attributed the 225-basis-point gross-margin decline, to 44.0%, to investing ahead of growth in AI engineering talent. Separately, research and development investment was INR 397 million, or 6.3% of revenue.
Cogentiq and Fractal Alpha Expand
Fractal’s products, including its flagship Cogentiq agentic AI platform, reached an annual revenue run-rate of INR 1.53 billion, up 39% year over year, according to the shareholder letter.
The core Fractal.ai segment generated INR 9.361 billion of revenue, up 20.7%. Its adjusted segment-results margin was 17.7%, compared with 17.5% a year earlier; Fractal calculates the underlying measure by adding employee stock-option costs, including cash bonuses, and acquisition-retention bonuses back to segment results.
Net revenue retention in Fractal.ai, which tracks spending from an existing client cohort including expansions and contractions, improved to 115.2% from 112.2%. Six clients contributed more than $20 million annually, compared with four a year earlier.
Fractal Alpha revenue grew 39.9% to INR 340 million. Its adjusted segment loss widened to INR 104 million from INR 84 million, but the adjusted margin improved to negative 30.6% from negative 34.6%, leaving the smaller business growing alongside continued losses.
Cash Conversion Lags Accounting Profit
For the six months ended September 30, 2026, revenue reached INR 18.69 billion, up 20%, and net income reached INR 1.515 billion, up 114%. Velamakanni described the first-half revenue growth as entirely organic. Quarterly cash flow from operations was INR 793 million after an INR 1.03 billion outflow in Q1 FY27.
The unaudited financial statements recorded INR 237 million of net cash used in operating activities for the half, compared with INR 214 million a year earlier. Trade receivables absorbed INR 1.4 billion of working capital during the period, helping explain why higher accounting profit coexisted with negative operating cash flow.
Fractal ended the period with INR 17.28 billion in cash and investments and no long-term debt, according to Velamakanni’s letter. The balance sheet listed no current borrowings, compared with INR 2.86 billion at March 31, 2026.
The results leave a clear operating tension: healthcare, products and the roster of large clients are expanding, while TMT is contracting, gross margin is under pressure and first-half operating cash flow remains negative. The central issue is whether Fractal can convert its faster profit growth into cash while sustaining investment in AI engineering and products.
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