Hexaware’s ₹142 Cr Expense Spike Takes the Sheen Off Q2 Growth

Hexaware Technologies posted modest growth in the second quarter of calendar year 2025. However, a sharp rise in one-off costs and slower-than-expected deal momentum weighed heavily on margins.

The company reported Q2 revenue of ₹3,260 crore ($382.1 million), marking a sequential growth of 1.6% in INR and 2.8% in USD. In constant currency terms, revenue rose only 1.3% QoQ. Year-on-year, revenue was up 11.1% in INR and 8.6% in USD. That said, the tepid quarter-on-quarter increase has raised concerns about growth saturation.

EBITDA fell sharply to ₹404 crore from ₹527.8 crore in the previous quarter and ₹431 crore in the same period last year. 

Margins also took a hit, dropping to 12.4% from 16.5% in Q1 and 14.7% in Q2 last year. The company attributed the decline to a steep jump in other expenses, which rose to ₹142 crore from just ₹8.7 crore a year ago.

These expenses included ₹78.2 crore in provisions for customers, ₹39.4 crore impairment related to a previous acquisition, ₹12 crore in ERP transformation costs, and ₹12.8 crore in acquisition-related costs. 

“In a difficult global macro environment, we had a solid quarter of execution on revenue, profitability and bookings. More importantly, we continue to invest to make a rapid pivot to lead our customers into an AI-powered future,” R. Srikrishna, CEO of Hexaware Technologies, said.

Deal conversions remained a concern. According to the company, while large consolidation deals are still under discussion, delays in decision-making have dampened the outlook for the rest of the year. Small and mid-sized deals are progressing, but not at the pace the company had earlier anticipated.

This comes in sharp contrast to Hexaware’s performance in the first quarter of the year, where the company reported revenue of $371.5 million—a 12.4% YoY jump—and maintained stable margins. At the time, it attributed growth to AI-led transformation deals and a robust client pipeline.

Back then, Vikash Jain, CFO, had said, “Despite the economic uncertainty, we have not only sustained our growth trajectory but also expanded our margins by 117 basis points YoY and 41 bps QoQ.”

The slowdown in Q2 suggests that deal conversion challenges and rising costs may take a toll on future performance than previously anticipated. Even though the company added another $50 million+ client this quarter—bringing the total to four—and continues to rank highly in delivery metrics, near-term growth will likely hinge on faster deal closures and margin recovery.

Hexaware ended Q2CY25 with a headcount of 32,410 and an IT utilisation rate of 83.7%. Voluntary attrition in IT remained stable at 11.1%. Cash and cash equivalents stood at ₹19,248 crore as of June 30, 2025.

Unless large AI and transformation deals begin to materialise more rapidly, Hexaware’s full-year targets may come under pressure in the second half.