Happiest Minds Q1 net profit up by 10.5% on AI-led deal momentum

On the other hand, the Bengaluru-based firm’s total revenue grew by 14.3% from Rs 549.9 crore posted a year ago. Operating margins expanded by 2.3% quarter-on-quarter (q-o-q) to Rs 109 crore from Rs 106 crore in the previous quarter. The company has a total of 306 clients at the end of June 30 with 6 new additions made in the quarter.

“AI is the single largest opportunity for value creation in the history of the technology services industry and not as a threat to IT/Tech. Every major technology shift, right from client-server computing to cloud and digital transformation, has ultimately expanded the market for innovation and expertise. AI is no different,” said Ashok Soota, chairman & chief mentor at the company.

“We have opened FY27 with a solid performance, delivering revenues of ₹629 crore and achieving 14.3% year-on-year (y-o-y) growth. Our AI-first strategy is gaining significant traction, with strong momentum across AI and Analytics, digital engineering, platforms, and industry-focused solutions.

We have also built a strong and expanding pipeline, registering a 20% growth over the previous quarter. The quality and breadth of opportunities in our pipeline gives us confidence in our ability to deliver sustained business growth,” Joseph Anantharaju, co-chairman & CEO of the firm said in a press statement.

“We have started FY27 on a strong note, delivering healthy revenue growth and expanding margins. Year-on-year growth across our key financial metrics remained in double digits, reflecting the strength of our business. Adjusted EPS of ₹5.34 per share, up 17% y-o-y, reinforces our continued commitment to profitable growth.

Backed by a strong balance sheet and robust cash position, we remain well positioned to invest in future growth while maintaining financial discipline,” Venkatraman Narayanan, managing director at Happiest Minds said.

Anantharaju also said that while clients were keeping an eye on discretionary spend, they were willing to allocate funds to AI initiatives to optimise their business streams from productivity tools like a Copilot or Codex. The significant gains in AI-led productivity was also subsequently freeing up the budget. He added that AI token usage has become a contentious subject, and clients had worked with the company on programs to optimise token utilisation.

He also pointed to the firm’s steady margins of 17.5% which met the guidance of between 17% – 18.5% shared by the company at the beginning of FY27.

Geographically, the revenue contribution from the US market slowed down to 56.9% for the quarter compared to 58.2% in the previous quarter. Revenue from the European market also declined to 7.9% from 8.3% in the fourth-quarter FY26. Meanwhile, revenue contribution from India grew to 18.3% from 17.1% a quarter ago. For the APAC region, revenue contribution stood at 8.2% for the quarter, down from 7.6% in the last quarter.

The management shared that while they will begin sharing their Advanced AI revenue from the second quarter, the company’s revenue from its Generative AI Business Services (GBS) unit is around 5.2% of total revenue and growing at around 35% sequentially.

Anantharaju also shared that the firm is scaling its own team of Forward Deployed Engineers (FDEs) and formulating a strategy around it. “Currently, we have about 50 people who would fit the bill of an FDE,” he added. Additionally, the average productivity gains passed to customers were between 30-40% and even upto 50% in some cases.

Happiest Minds had 6,532 employees by the end of the quarter with trailing 12-month attrition at 15.4% compared with 17% in the previous quarter. Employee utilisation rate stood at 81% against 82% last quarter.

The adjusted EPS came at Rs 5.34 per share, compared to Rs 4.56 per share in the same quarter last year.