AI Demand Powers Fractal Analytics to 92% Profit Surge
Enterprise AI demand continues to translate into real commercial success, as evidenced by Fractal Analytics’ exceptional first-quarter performance for fiscal 2027. The publicly listed AI company reported a 92% year-on-year jump in consolidated net profit to ₹72.3 crore for the quarter ended June 30, 2026, driven by robust enterprise adoption of AI-led transformation services .
Financial Performance Overview
Operating revenue rose 20% YoY to ₹912.5 crore, up from ₹760.5 crore in the same period last year, while total income increased to ₹932.1 crore . Profit before tax grew to ₹97.4 crore from ₹53 crore a year earlier . The company’s profitability improved across all key metrics, with gross margin standing at 46% and adjusted EBITDA margin expanding by 189 basis points to 17% .
However, on a sequential basis, profit declined 38% from ₹115.8 crore in the March quarter, while revenue grew nearly 3% from ₹886.3 crore .
Healthcare Leads Growth Amid TMT Weakness
The standout performer was Fractal’s Healthcare and Life Sciences (HLS) vertical, which grew at an exceptional 69% YoY, becoming the company’s second-largest industry segment . Banking, Financial Services and Insurance (BFSI) grew 36% YoY, while Consumer Packaged Goods and Retail (CPGR), the company’s largest vertical, expanded 19% YoY .
The Technology, Media, and Telecom (TMT) vertical declined 22% YoY, acting as a drag on overall growth . However, as Group CEO Srikanth Velamakanni noted: “Excluding TMT, our business grew 35% year on year, which is a better read on the underlying demand we’re seeing” .
Geographic and Client Metrics
Geographically, the Americas (nearly 70% of the business) grew 24%, while Europe expanded 25%. Asia-Pacific and other regions declined 2% .
Fractal strengthened its customer relationships significantly. The company now has 58 clients contributing over $1 million in annual revenue, up from 54 a year earlier . Net Revenue Retention stood at 117%, while the Net Promoter Score improved to 77 .
Strategic Pivot to Product-Led Growth
The company’s strategy is shifting toward product-led growth, anchored by its Cogentiq agentic AI platform. Management is targeting an increase in the mix of outcome-based and license revenue from 42% to 60% over the coming quarters . Fractal now invests 6.7% of revenue in R&D, with a stated ambition to reach 10% over time .
“Enterprises are putting real transformation budgets behind AI now, and we’re seeing it directly in the size of the deals coming to us.” — Srikanth Velamakanni, Group CEO, Fractal Analytics
Looking ahead, management expects the TMT vertical to bottom out and show healthy sequential growth starting in Q2 FY27, while Cogentiq’s pipeline of $4 million with over 10 clients is expected to become a much larger revenue contributor .
This performance reaffirms Fractal’s position as a leader in India’s deep-tech and AI ecosystem, demonstrating that enterprise AI is not just scaling rapidly but proving its profitability—setting the stage for India’s next wave of deep-tech growth.
