• Order backlog grew 7.2% QoQ in INR terms and 1.6% in USD terms; 12-month backlog up 13.5% YoY (USD) and 24.4% (INR)
• Added 27+ new AI-focused customer projects/programs in Q4, spanning both AI for tech and AI for business initiatives
• UK/Europe business grew 11% in GBP terms and 21.8% in INR terms for FY26, with healthcare segment growing 24% in USD
• Financial services sector showed strong recovery with new large deals in North America and UK, becoming 'star of the quarter'
• Achieved 12% increase in revenue per resource for FY26 through AI-led efficiency improvements
• DSO improved to 73 days, the lowest in last 12 quarters, with strong cash collection of $125M during FY26
• Cash and cash equivalents reached INR 938 crores, up 51% YoY; operating cash flow of INR 542 crores up 35% YoY
• Declared final dividend of INR 16 per share (480% of face value) in addition to interim dividend

Mastek delivered a stable Q4 FY26 with 3.6% QoQ revenue growth and maintained 16.1% EBITDA despite macro headwinds and pricing pressures. The company completed fundamental resets across geographies, particularly in North America, with 12-month order backlog growing 13.5% YoY in USD (24.4% in INR), providing a stronger foundation entering FY27. However, management maintained cautious optimism given AI-driven pricing competition, volatile macro environment, and ongoing transition from time-and-materials to outcome-based business models.

Mastek reported Q4 FY26 revenue of $103.5M (up 1.4% QoQ) and INR 938 crores (up 3.6% QoQ). For the full year FY26, revenue was $421.2M (up 3.1% YoY) and INR 3,699 crores (up 7% YoY). Q4 EBITDA margin was 16.1%, impacted by 1.1% salary increase headwind but supported by 0.8% forex tailwind. Full year EBITDA margin was 15.8%, flat YoY despite pricing pressures. Q4 PAT was INR 106 crores (11% margin), down 0.7% sequentially due to labor code true-up impact. Full year PAT was INR 404 crores (10.7% of total income), up 7.5% YoY. Basic EPS for FY26 was 130.45 (up 7.1% YoY). The company took an exceptional charge of INR 23.7 crores in Q4 (INR 16 crore gratuity, INR 7.7 crore leave encashment) plus INR 6.4 crores in Q3 related to labor code changes, totaling INR 30 crores impact for the year. Utilization improved to 80% in Q4, up 3.3% from Q3. Headcount was 4,730, with net addition of 54 in Q4.

Management displayed cautiously optimistic sentiment, emphasizing FY26 as a year of 'fundamental resets' across North America leadership/teams, APAC client focus, and UK investments. CEO Umang Nahata repeatedly stressed the positive order backlog momentum as providing a 'stronger foundation' for FY27, with sequential improvements in North America order book for two consecutive quarters. However, he consistently tempered expectations by citing 'severe pricing competitiveness,' 'unstable macro environment,' and 'AI-led pricing pressure.' Management emphasized strategic pivot from 'AI for tech' (efficiency) to 'AI for business' (outcomes), with focus on verticalization and domain expertise. The tone suggested confidence in execution capability but realism about market uncertainties, deliberately avoiding specific growth guidance while indicating FY27 'will be a better performance than previous year.' Management highlighted contract renewals seeing 10-15% discounts (potentially higher), and emphasized shift from time-and-materials to outcome-based fixed-price models as critical strategic transition.

Mastek faces multiple significant headwinds: (1) Severe pricing pressure from AI-driven efficiency improvements, with contract renewals experiencing 10-15% or higher discounts; (2) Healthcare vertical saw QoQ decline due to timing gaps between project completions and new starts, affecting both UK and North America; (3) Middle East/APAC business facing geopolitical headwinds impacting decision-making on new orders and discretionary spend; (4) North America business required complete reset and remains flat in Q4, still in turnaround phase despite positive order book indicators; (5) Retail and manufacturing showed 2% timing dip; (6) Labor code changes resulted in exceptional charge of INR 30 crores for the year; (7) Transition from time-and-materials to outcome-based models creating revenue recognition uncertainties; (8) Project-based business model in North America (55% fixed-price) creates volatility as projects complete and ramp down; (9) Ongoing macro and geopolitical uncertainties affecting client spending patterns; (10) Competitive intensity increasing in UK public sector and overall market; (11) Active client count declining due to tail account rationalization, potentially indicating churn challenges.

Revenue Outlook: Management expects FY27 to show 'positive growth' and 'better performance than FY26' but declined to provide specific numeric guidance. Emphasized 'cautiously positive' outlook given market volatility.

Margin Outlook: Expects to maintain stable EBITDA margin at ~16.1% for FY27, balancing operational efficiency gains and AI improvements against pricing pressures and new AI capability investments

Key Targets:

• Execute 12-month order backlog of $300.4M
• Continue sequential order book growth in North America
• Shift business mix from time-and-materials to outcome-based fixed-price models
• Transition from 'AI for tech' to 'AI for business' focus
• Verticalization strategy focusing on Healthcare, Financial Services, and Retail/Manufacturing
• Headcount growth rate slower than revenue growth rate
• M&A focused on vertical domain capabilities and smaller AI investments/partnerships

The Q&A session revealed analyst focus on three key concerns: (1) timing of order backlog conversion to revenue growth, (2) sustainability of margins amid AI-driven pricing pressure, and (3) strategic positioning for AI-led business model transformation. Analysts pressed repeatedly on when FY27 growth would materialize given strong backlog, with management consistently responding with 'cautiously positive' language while declining specific guidance. Multiple questions probed the pricing pressure from contract renewals (10-15%+ discounts) and whether AI creates net positive or negative revenue impact long-term. Management emphasized the transition from 'AI for tech' (efficiency) to 'AI for business' (transformation services) as the path forward, arguing that workflow modernization and adoption services will create new revenue streams exceeding efficiency losses, though timing remains uncertain. Questions on geography-specific performance highlighted North America's slow turnaround despite two quarters of order book improvement, and Middle East geopolitical headwinds. Analysts also explored M&A strategy given strong cash position, with management indicating shift toward vertical domain acquisitions rather than horizontal capabilities. The DSO improvement to 73 days and cash generation were positively received. Overall, analysts appeared skeptical about near-term revenue acceleration given flat/modest Q4 performance despite strong backlog, while acknowledging the strategic positioning for AI transformation is sound but execution timeline uncertain.