Fractal Analytics Ltd Management Discussions

Key Performance Indicators

Unit

FY23

FY24

FY25

FY26

Financial Measures

S. No. Our Group

1. Revenue from operations

INR million

19,854

21,963

27,654

32,997

2. Growth in revenue from operations from

%

NA

10.6%

25.9%

19.3%

previous Fiscal

3. Cash flow from operations

INR million

-306

1,595

3,970

4,090

4. Profit/ (Loss) for the year

INR million

1,944

-547

2,206

2,868

5. PAT Margin

%

9.8%

-2.5%

8.0%

8.7%

6. Adjusted PAT

INR million

540

-45

3,478

4,356

7. Adjusted PAT Margin

%

2.7%

-0.2%

12.6%

13.2%

8. EBITDA

INR million

4,368

972

3,980

4,899

9. EBITDA Margin

%

22.0%

4.4%

14.4%

14.8%

10. Adjusted EBITDA

INR million

1,343

2,321

4,821

5,812

11. Adjusted EBITDA Margin

%

6.8%

10.6%

17.4%

17.6%

Fractal.ai segment

12. Revenue from operations

INR million

19,691

21,615

27,037

32,190

13. Growth in revenue from operations from

%

NA

9.8%

25.1%

19.1%

previous Fiscal

14. Revenue in Fractal.ai segment by industry

CPGR (Consumer Packaged Goods and

INR million

8,047

9,038

10,615

11,924

Retail)

TMT (Technology, Media, & Telecom)

INR million

5,563

5,867

8,087

8,035

HLS (Healthcare and Life Sciences)

INR million

2,188

3,013

3,745

6,215

BFSI(Banking, Financial Services and

INR million

2,842

2,325

2,980

3,924

Insurance)

Others

INR million

1,051

1,372

1,610

2,092

15. Revenue in Fractal.ai by industry, as a % of

revenue

CPGR (Consumer Packaged Goods and

%

40.9%

41.9%

39.3%

37.0%

Retail)

TMT (Technology, Media, & Telecom)

%

28.3%

27.1%

29.9%

25.0%

HLS (Healthcare and Life Sciences)

%

11.1%

13.9%

13.8%

19.3%

BFSI(Banking, Financial Services and

%

14.4%

10.8%

11.0%

12.2%

Insurance)

Others

%

5.3%

6.3%

6.0%

6.5%

16. Revenue in Fractal.ai segment by geography

Americas

INR million

13,221

13,791

17,988

21,665

Europe

INR million

3,333

4,291

4,792

6,412

APAC and others

INR million

3,137

3,533

4,257

4,113

17. Revenue in Fractal.ai by geography, as a % of

revenue

Americas

%

67.2%

63.8%

66.5%

67.3%

Europe

%

16.9%

19.9%

17.7%

19.9%

APAC and others

%

15.9%

16.3%

15.8%

12.8%

Key Performance Indicators

Unit

FY23

FY24

FY25

FY26

Financial Measures

S. No. Our Group

18. Segment results - Fractal.ai segment

INR million

-315

1,233

3,788

5,409

19. Segment results - Fractal.ai segment, as a % of

%

-1.6%

5.7%

14.0%

16.8%

revenue from operations - Fractal.ai segment

20. Adjusted segment results - Fractal.ai segment

INR million

2,115

2,769

5,084

6,114

21. Adjusted segment results Margin - Fractal.ai

%

10.7%

12.8%

18.8%

19.0%

segment

Fractal Alpha segment

22. Revenue from operations

INR million

190

365

644

908

23. Growth in revenue from operations from

%

NA

92.1%

76.4%

41.0%

previous Fiscal

24. Segment results - Fractal Alpha segment

INR million

-616

-494

-283

-170

25. Segment results - Fractal Alpha segment, as

%

-324.2%

-135.3%

-43.9%

-18.7%

a % of revenue from operations - Fractal Alpha

segment

26. Adjusted segment results - Fractal Alpha

INR million

-539

-443

-257

-146

segment

27. Adjusted segment results Margin - Fractal

%

-283.7%

-121.4%

-39.9%

-16.1%

Alpha segment

Operational KPI

Our Group

28. Total Employees

Number

4,221

4,639

5,254

5,868

Fractal.ai segment

29. Net Revenue Retention

%

151.0%

110.2%

121.3%

117.4%

30. Clients by annual revenue contribution

>US$20 million

Number

1

2

5

6

>US$10 million

Number

5

5

6

9

>US$5 million

Number

10

11

15

19

>US$1 million

Number

45

48

53

59

31. Client concentration

Top 10

INR million

10,064

11,809

14,537

16,885

Top 10

%

51.1%

54.6%

53.8%

52.5%

Top 20

INR million

13,194

15,114

18,831

22,678

Top 20

%

67.0%

69.9%

69.6%

70.5%

32. Net Promoter Score

Score

73

77

77

78

Year

FY26

FY25

Growth (%)

Revenue

32,997

27,654

19.3%

Year

FY26

FY25

NRR

117.4%

121.3%

Year

FY26

FY25

NPS

78

77

Intersegment

Year

Fractal.ai

Fractal Alpha

elimination

Total (Group)

FY26

32,190

908

(101)

32,997

FY25

27,037

644

(27)

27,654

Geography

FY26

FY25

FY26 %

FY25 %

America

21,665

17,988

67.3%

66.5%

APAC & Others

4,113

4,257

12.8%

15.8%

Europe & UK

6,412

4,792

19.9%

17.7%

Revenue

32,190

27,037

100.0%

100.0%

Industry

FY26

FY25

CPGR (Consumer products goods and retail)

37.0%

39.3%

BFSI (Banking, financial services and Insurance)

12.2%

11.0%

HLS (Healthcare and life sciences)

19.3%

13.8%

TMT (Technology, Media & Telecom)

25.0%

29.9%

Others

6.5%

6.0%

Total

100.0%

100.0%

Clients by annual revenue contribution

FY26

FY25

>US$20 million

6

5

>US$10 million

9

6

>US$5 million

19

15

>US$1 million

59

53

FY26

FY25

R&D %

6.4%

5.2%

Year ended

March 31, 2026

March 31, 2025

Particulars

Amount

% Revenue

Amount

% Revenue

YoY %

Income

Revenue from operations

32,997

100.0%

27,654

100.0%

19.3%

Other Income

629

1.9%

508

1.8%

23.8%

Year ended

March 31, 2026

March 31, 2025

Particulars

Amount

% Revenue

Amount

% Revenue

YoY %

Total Income

33,626

101.9%

28,162

101.8%

19.4%

Expenses

Employee benefit expense

22,914

69.4%

20,048

72.5%

14.3%

Employee stock option expense

634

1.9%

798

2.9%

-20.6%

Finance costs

474

1.4%

577

2.1%

-17.9%

Depreciation and amortisation expense

1,358

4.1%

1,023

3.7%

32.7%

Other expenses

4,366

13.2%

3,309

12.0%

31.9%

Total Expenses

29,746

90.1%

25,755

93.1%

15.5%

Profit before share of loss of an associate, exceptional items and tax expense

3,880

11.8%

2,407

8.7%

61.2%

Share of (loss) of an associate

(703)

-2.1%

(297)

-1.1%

136.7%

Profit before exceptional items and tax

3,177

9.6%

2,110

7.6%

50.6%

expense

Exceptional items (net)

(110)

-0.3%

270

1.0%

-140.7%

Profit before tax expense

3,067

9.3%

2,380

8.6%

28.9%

Tax expense

199

0.6%

174

0.6%

14.4%

Profit for the year

2,868

8.7%

2,206

8.0%

30.0%

Particulars

March 31, 2026

March 31, 2025

Investments in mutual funds

8,741

5,614

Deposits with banks*

9,712

243

Cash and bank balances

2,067

2,649

Total

20,520

8,506

Standalone

Consolidated

Particulars

FY26

FY25

FY26

FY25

Days Sales Outstanding (DSO)⁽¹⁾

-

-

72

75

Current Ratio (times)

6.7

5.8

3.0

2.8

Debt equity ratio (times)⁽²⁾

-

-

0.1

0.2

Return on capital employed (%)⁽³⁾

8.1%

9.6%

10.3%

14.7%

EBITDA Margin (%)

17.9%

16.7%

14.8%

14.4%

Net Profit Margin (%)

9.9%

9.2%

8.7%

8.0%

Return on Net Worth (%)⁽³⁾

5.7%

6.7%

9.1%

12.6%

Revenue growth (%)

30%

24%

19.3%

25.9%

Basic EPS (Rs)⁽⁴⁾

11.62

8.58

18.20

14.49

Risk Category

Key Risk Points

Mitigation Strategies

Cyber Security Risk

Fractal faces cybersecurity risks from data breaches across its own environment, client environments, and connected third parties. The growing use of hybrid and remote work, combined with extensive reliance on third-party cloud and SaaS platforms, significantly widens the potential attack surface. Despite having ISO 27001- and SOC 2-aligned security frameworks in place, no control environment can guarantee protection against every emerging threat.

Fractals senior management periodically reviews the Companys risk register to confirm that cybersecurity risks are being managed effectively and that appropriate countermeasures are in place to reduce residual risk. The Company follows a systematic approach to establishing and maintaining enterprise security policies and standards aligned with ISO 27001:2022 and SOC 2 Type 2 frameworks, with security controls across prevention, detection, response and recovery aligned with the NIST framework. Fractal maintains a layered network security architecture that includes perimeter

firewalls enforcing a Default Deny policy, content filtering

solutions to manage and control network traffic, and web

application and intrusion-prevention controls.

Technology (AI) Disruption Risk

The pace of innovation in artificial intelligence and generative AI is accelerating rapidly. Failure to continually refresh Fractals solutions in line with evolving client needs and industry standards could erode its competitive differentiation and win rates. The growing adoption of GenAI and software-development agents may enable clients to build capabilities in-house, reducing third-party spend on outsourced AI services. New solutions may not achieve the intended market adoption, potentially leading to write-downs and earnings volatility. The increasing automation of routine and basic development tasks through AI may reduce the

Fractal pursues a targeted acquisition strategy to acquire AI and other critical technical capabilities that strengthen its competitive position. The Company continuously monitors client technology landscapes and adoption trends to anticipate the changes required to its own offerings and stay ahead of market demands. Fractal follows a defined investment and research strategy specifically focused on AI solutions development with a tiered approach of today, tomorrow and day after ensuring it is prepared for long term changes that might come at expedited pace as well. Additionally, the Company tracks market developments in AI adoption across industries and geographies to inform its strategic direction and ensure offerings remain aligned with emerging client needs.

person-hours required for certain projects, affecting

revenue from those engagements.

Responsible AI Risk

Fractal is committed to ensuring that the AI systems it develops and deploys operate with appropriate ethical safeguards to maximize positive outcomes for users and clients. The Companys operations involve the use of artificial intelligence and machine learning, including AI developed by third parties, and the processing of clients proprietary data which may include personal or identifying information. This use carries inherent social, ethical and operational risks. AI algorithms and technologies that inform or augment decisions for Fractals clients could, if flawed, produce biased outputs or unintended discriminatory outcomes that harm end users or create legal exposure for clients.

Fractal continuously monitors and tests model outputs for group disparities using fairness metrics to identify potential bias in AI systems. The Company enforces bias-correction standards during model training to ensure that AI models operate fairly across different demographic groups and use cases. This proactive approach to responsible AI governance helps mitigate the risk of discriminatory outcomes and ensures alignment with evolving regulatory and client expectations around ethical AI deployment.

Risk Category

Key Risk Points

Mitigation Strategies

Data Protection & Privacy Risk

Non-compliance with data privacy laws, including Fractals responsibilities as a data controller or processor, and the leakage or misuse of confidential and proprietary information could expose the Company to significant regulatory and contractual risk. Fractals operations involve the collection, use, storage, sharing, retention, safeguarding and transmission of clients proprietary data, which may include personal or identifying information. The Company is subject to data privacy regulations across multiple jurisdictions, including the United States, United Kingdom,

Fractal maintains a standard data privacy policy applicable to all stakeholders and affiliates, giving data subjects a clear understanding of its data privacy practices and their rights. A designated Data Protection Officer oversees data privacy compliance at the organizational level and reports to the CFO and the Board, ensuring executive-level accountability for privacy governance. This structure ensures that privacy considerations are integrated into all operational decisions and that the Company maintains compliance with complex, multi- jurisdictional regulatory requirements.

European Union and India. A breach of data privacy regulations could result in reputational damage, loss of key accounts, regulatory penalties and contractual liabilities.

Macro-Economic Environment Risk

Changes in political or economic conditions in the countries where Fractal operates, including political instability, trade tensions, changes in government, and unpredictable policy shifts, could adversely affect the Companys business. Fractals high dependency on the United States increases its vulnerability to segment-specific disruptions, such as regulatory change or reduced outsourcing demand due to rising costs, which could directly impact revenue, scalability and operations. Anti-outsourcing regulations in the United States, such as the proposed HIRE Act which aims to discourage offshoring by imposing taxes or restrictions on companies that move jobs overseas, could materially affect Fractals business and financial performance. Immigration policy changes, as countries shift from globalization toward localization, could affect the Companys operating model and talent deployment strategies. New tariffs on technology exports, together with reciprocal tariffs imposed by trading partners, could reduce demand for Fractals services as clients face tighter budgets and broader economic pressure. Similar localization trends are emerging across the global technology sector, with countries increasingly promoting domestic software development and data hosting and reducing reliance on foreign technology providers.

Fractal monitors political and legislative developments in the United States and other material regions of operation, including initiatives such as the HIRE Act, through dedicated legal and compliance teams and external advisors. The Company develops response strategies for any high-impact legislative changes to ensure business continuity and compliance with evolving regulations. Fractal actively engages with industry bodies, trade associations and policymakers to stay ahead of upcoming legislative developments and contribute to policy discussions that could affect the outsourcing and technology services sectors.

Revenue Concentration Fractals revenue is concentrated among certain

Fractal is proactively expanding its client base through

Risk

clients, geographies and industry sectors, which creates significant business risk. A significant volume of business is concentrated among a limited number of clients, with a significant portion of revenue derived from the Companys top accounts.

targeted marketing, strategic partnerships and entry into new industry sectors, thereby reducing dependency on a limited number of major clients and industry verticals. The Company is executing growth strategies focused on regions outside the Americas to balance its geographic revenue mix and reduce

The Company derives a majority of its revenue

regional concentration risk. These initiatives aim to create a

from the Americas region, creating geographic

more diversified revenue base that is resilient to sector-specific

concentration risk. Additionally, consumer goods

downturns or geographic disruptions.

and retail represents a significant contributing

industry vertical to the Companys revenue, creating

sector-specific exposure. Loss of any major client or

sector contraction could significantly impact overall

revenue and profitability.

Succession Planning

The absence of a prepared successor for a key

Fractal has identified potential successors for its Key

Risk

leadership role, or inadequate succession planning

Managerial Personnel, as disclosed in its regulatory filings,

generally, could disrupt the Companys operations

ensuring continuity planning at the senior leadership level.

and strategy execution. The loss or unavailability of

This proactive succession planning approach ensures that

key managerial personnel or senior leaders could

the Company has identified individuals with the necessary

disrupt strategy execution, client relationships and

skills and experience to step into critical roles and maintain

growth initiatives. Leadership transitions typically

operational continuity during leadership transitions.

require a long lead time, and competition for

niche AI, GenAI, data and cloud talent can make backfilling critical roles significantly more difficult, increasing transition risk. Mergers, consolidations, dissolutions and entry into new markets require timely succession planning within subsidiaries and integration leadership to avoid capability gaps and operational disruption.

Risk Category

Key Risk Points

Mitigation Strategies

Environmental, Social & Governance (ESG) Risk

Ineffective ESG risk management could impact the creation and management of long-term value for stakeholders and the Companys reputation. Fractals clients increasingly expect strong ESG performance, including demonstrated commitment to recognized ratings such as CDP, EcoVadis and the Science Based Targets initiative (SBTi). An inability to meet publicly stated climate change or net-zero targets, whether near-term or long- term commitments, could affect the Companys reputation and stakeholder trust, potentially impacting client relationships and investor confidence.

A Board-level CSR and ESG Committee monitors ESG performance in conjunction with the Risk Management Committee, focusing on client-mandated and Fractal-material ESG risks and commitments, including climate and workplace health and safety. Fractal maintains a detailed roadmap to achieve its decarbonization and net-zero targets, providing a clear pathway for achieving these commitments. The Company conducts ESG training to build awareness across the organization and its vendors regarding ESG practices and expectations. Additionally, Fractal participates in recognized ESG ratings and disclosure frameworks, including CDP, EcoVadis and SBTi, and monitors progress against its net-zero and other decarbonization commitments on an ongoing basis.

Talent Risk

Attrition of experienced and talented employees can affect organizational knowledge and client relationships, while delays in deploying, or the unavailability of, talent with relevant skills including

Fractal leverages AI-based hiring tools to improve recruitment efficiency and outcomes, enabling the Company to identify and attract top talent more effectively. The Company has implemented mechanisms to identify attrition risk among

GenAI and analytics can affect service delivery and operational performance. Elevated attrition puts revenue at risk and can affect the Companys ability to meet growth commitments, given the disruption to service and the extended learning curve associated with onboarding new hires. Years of accumulated client context, stakeholder relationships and organizational knowledge are difficult to replicate when experienced employees leave. An increase in people costs could meaningfully affect the Companys margin profile and financial performance.

high-potential and high-performing employees, allowing for proactive retention strategies and career development initiatives. Fractal invests in ongoing training and certification programs in AI, GenAI, data engineering and cloud technologies to close skill gaps, enhance employee capabilities and improve retention by providing clear career development pathways.

Delivery & Contractual Risk

Fractal faces delivery risk relating to the timeliness and quality of its work, the risk of non-compliance with client contractual terms, and pressure from clients for more favorable terms, including onerous liability provisions. Delivery failures could lead to client dissatisfaction, contract termination, financial penalties and a significant negative impact on business growth and market reputation. Non- compliance with client contractual terms including obligations relating to background verification, data privacy, information security, and non-compete and non-solicitation provisions could result in financial obligations, penalties, loss of contracts and reputational damage. Defects, delays or missed milestones may trigger client recourse, including indemnity claims, required rework or contract termination. Many of the Companys key client contracts run for multi-year terms with renewal options, making consistent delivery critical to revenue continuity.

Fractal maintains an operational risk register across all projects to systematically identify and document risks, including those related to data breaches and control gaps, enabling early identification and mitigation of potential issues. Fractal conducts thorough background verification for all employees, covering identity, criminal history, employment experience and educational qualifications, to mitigate insider risk and ensure compliance with client contract requirements. The Company closely monitors third-party service levels to mitigate disruption from external providers and ensure that outsourced services meet contractual obligations and quality standards.

Business Continuity Planning Risk

Natural calamities, disasters, pandemics or unexpected events such as cyber-attacks could impact the continuity of Fractals business operations and financial performance. Fractals global footprint of leased and co-working facilities, together with significant export exposure including to the United States, increases its sensitivity to natural disasters, pandemics and geopolitical developments in the regions where it operates.

Fractal maintains a comprehensive Business Continuity Plan, aligned with ISO 27001 standards, comprising a resilience framework, strategic planning, defined organizational roles and responsibilities, regular testing and training, and a phased recovery strategy. This comprehensive approach ensures that the Company can respond effectively to unexpected disruptions and maintain critical operations while recovering from adverse events.