Persistent’s Software, Hi-Tech Revenue Grows 28.5% as It Expands AI Services

Persistent Systems’ Software, Hi-Tech and Emerging Industries revenue grew 28.5% year on year in Q2 FY27, while overall revenue rose 20.8% in constant currency to $487.6 million.

The company’s reported profit after tax (PAT) fell 25.4% to ₹3,515.1 million, or approximately $36.8 million. Earnings before interest and tax (EBIT) margin declined 130 basis points year on year to 15%.

Persistent attributed the decline in reported profit primarily to expenses related to its planned acquisition of Nagarro. Chief Financial Officer Vinit Teredesai said transaction-related costs totalled around $19 million to $20 million in Q2. The company expects approximately $50 million in one-time acquisition expenses over three to four quarters, including a further $25 million to $30 million over the coming quarters.

Operating PAT rose 5% year on year to ₹4,951.5 million, or approximately $51.8 million. The dollar figures are approximate conversions from the company’s reported rupee amounts.

Persistent’s Software Reinvention Services offering helps software companies develop AI-native products and modernise existing ones. The company said the approach had helped bring products to market around 50% faster in recent programmes. It also reported a 45% reduction in the cost of running several product lines for an unnamed client. Both figures are company-reported results.

North American revenue increased 22.5% year on year, while banking, financial services and insurance revenue rose 16.2%. Healthcare and life sciences revenue grew 12%. European revenue declined 8.5%, which CEO and Executive Director Sandeep Kalra attributed to two client-specific developments: a programme being wound down after a client was acquired by a larger strategic buyer, and the planned ramp-down of a fixed-price engagement.

Persistent reported total contract value (TCV) of $633.5 million and annual contract value (ACV) of $481 million for the quarter. New bookings accounted for $367.1 million in TCV and $262.3 million in ACV.

TCV was lower than the $1.1462 billion recorded in Q1 FY27, which included a deal worth more than $650 million with one of the company’s largest technology customers. Kalra said some deals had slipped into the quarter and that macroeconomic conditions and developments in the Middle East had slowed decision-making. “We could have done better,” he said.

Kalra said investors should also consider the company’s trailing 12-month figures. On that basis, TCV grew 36.3% year on year and ACV increased 21.9%.

Persistent’s EBIT margin fell 100 basis points sequentially. Teredesai attributed the decline to wage increases, lower utilisation and around $4 million in quarterly amortisation costs associated with third-party tools and licences for the large deal. Lower engineering expenses and favourable currency movements partly offset the pressure. Kalra said the company aspired to an EBIT margin of 16% to 17%, but stressed that this was not formal guidance.

Persistent has secured approximately 94.04% of Nagarro’s share capital and voting rights, excluding treasury shares. The acquisition remains subject to approvals in Austria and Spain and from the Reserve Bank of India. Persistent expects to close the deal in Q4 calendar 2026 or Q1 calendar 2027.