Are you a client?
Sign in to view the full news archive.
Having closed-out an "exceptional" FY25 with a very strong fourth quarter performance (see here), mid-tier offshore service provider Coforge has kicked-off the current financial year in even more impressive style. Firm-wide Q126 revenue leapt by over 50% yoy at constant currency to $442.4m, delivering a sequential improvement of 8%. The rapid expansion did not come at the cost of profitability with the EBITDA margin for the three months ended 30th June improving by 61 bps to 17.5%.
As has been the case for the preceding three quarters, the most significant contribution to Coforge's Q126 growth came from the firm's $220m acquisition of Cigniti Technologies last July. We estimate that, on an organic basis, the company's top line improved yoy by north of c. 20% for the period. This rate of increase is more than five times faster than that of the better performing offshore majors that have so far published their results for the same three months.
The impact of the Cigniti buy was again most marked on its new owner's Americas business with Q1 sales in the region jumping by almost three quarters yoy (13.7% qoq) to $250m. Coforge's progress in Europe, within which the UK accounts for around half of territory revenue, was less dramatic albeit still comparatively rapid. Turnover in this geography increased by around 23% yoy to $132m.
Strong, double-digit growth was evident across every facet of Coforge's vertical industry and horizontal service portfolio in the first quarter. The most eye-catching performances came in the Travel, Transportation & Hospitality sector and from the Engineering (applications development-centric) service line. Fuelled by the recent 13-year megadeal with Sabre (see here), sales in the former almost doubled yoy to account for over 20% of firm-wide revenue. Turnover in the latter were up by 121% against the first quarter of FY25 to more than $200m.
No forward guidance was provided, but the lead indicators for the company remain very positive. Five large wins in Q126 helped to drive a 47% yoy rise in the firm's executable order book for the next twelve months. Commenting on the outlook, CEO Sadhir Singh stated the latest set of numbers "are all pointers to what we believe will be an exceptional fiscal '26". You wouldn't bet on him being wrong.
Posted by: Duncan Aitchison at 09:58
Tags:
results
offshore
IT+services