IRIS Business Services Limited (NSE: IRIS, BSE: 540735) posted a strong operational recovery in the quarter ended September 30, 2025, led by sequential acceleration in both revenue and profitability. The global regulatory technology solutions provider reported total revenue of ₹3,110 lakh in Q2FY26, marking an 18% increase from the previous quarter. EBITDA jumped by 86% to ₹269 lakh, while profit after tax surged to ₹184 lakh from ₹37 lakh in Q1FY26, aided by operational efficiencies and easing expense pressures in the SaaS vertical.
On a year-on-year basis, the revenue rose 13%, although profitability remained lower compared to the same period last year due to higher employee and marketing expenses linked to the company’s product-led scaling efforts. A one-time exceptional gain of ₹13,598 lakh from the sale of the TaxTech business to Sovos, a US-based compliance software provider, further strengthened the company’s liquidity profile, with cash and investments rising to ₹16,966 lakh.
Chief Executive Officer K. Balachandran highlighted that the company is now actively focused on scaling Annual Recurring Revenue (ARR) from its flagship IRIS Carbon platform, which saw a 14% increase in net ARR during the first half of FY26, compared to levels at the end of March 2025. He added that with enhanced capital availability, IRIS Business Services is in a position to deepen its investment in product development and international sales expansion.
How are the SupTech and RegTech segments contributing to IRIS’s growth roadmap?
SupTech, which involves supervisory technology solutions for regulators and central banks, continues to be IRIS Business Services’ largest business line, contributing 61% of revenue in the first half of FY26. SupTech revenue rose 13% year-on-year in H1FY26, driven by new regulatory reporting implementations across Africa and the Middle East.
A key milestone in Q2FY26 was the award of a project by the General Tax Authority in Qatar. This marked IRIS Business Services’ first SupTech win with a national tax regulator, expanding its domain footprint and reinforcing its global relevance in digital regulatory architecture. Other long-standing clients include regulators in India, South Africa, the UAE, Malaysia, Jordan, and Mauritius.
The RegTech vertical, which includes the IRIS Carbon and IRIS iDEAL platforms, generated ₹1,825 lakh in revenue in H1FY26. While revenue from this segment was flat compared to the previous year, the segment’s ARR grew 14%, indicating steady momentum in enterprise SaaS subscriptions. IRIS Carbon is used by enterprises globally for disclosure management, ESG reporting, and compliance filing across regulatory frameworks such as EDGAR (U.S.), ESEF (EU), CSRD, and GRI.
Deepta Rangarajan, Co-Founder and Director of IRIS Business Services, stated that the firm is increasingly focusing on integrating deeper with the CFO function, where IRIS Carbon is helping streamline disclosures and create collaborative workflows across finance teams. The company is also investing in strengthening its RegTech leadership team and global partnerships to unlock new growth channels.
How do IRIS Business Services’ segment-level metrics and geographic revenue shifts across Q2FY26 and H1FY26 indicate where the next phase of growth is likely to emerge?
For the half year ended September 2025, IRIS Business Services posted total revenues of ₹5,749 lakh, a 10% year-on-year increase. Recurring revenues climbed to ₹3,102 lakh, up 17% from H1FY25, reflecting the growing share of SaaS subscription income from IRIS Carbon. The EBITDA margin recovered to 9% in Q2FY26 after dipping to 5% in Q1FY26 due to upfront marketing and sales investments.
Segment-wise, SupTech revenue increased to ₹3,285 lakh in H1FY26 from ₹2,902 lakh a year ago, while EBITDA from the segment improved to ₹948 lakh from ₹727 lakh. RegTech revenue stood at ₹1,825 lakh, compared to ₹1,960 lakh in H1FY25. However, the segment posted an EBITDA loss of ₹21 lakh due to continued SaaS expansion costs. The DataTech vertical, including MSME-focused platforms like IRIS Peridot, remained in early stages with revenue of ₹89 lakh and an EBITDA loss of ₹49 lakh.
Regionally, Africa accounted for 43% of total revenue in H1FY26, up from 41% in the same period last year, maintaining its position as the single largest geography for IRIS Business Services. India contributed 18%, Europe 15%, MENA 9%, Asia-Pacific 9%, and the Americas 7%. These trends underscore the firm’s continued strength in emerging markets while it gradually expands in developed markets through enterprise SaaS products.
How does the balance sheet transformation after the TaxTech divestment reshape IRIS Business Services’ capital allocation flexibility and long-term growth runway?
The divestment of the company’s GST Application Service Provider (ASP) business to Sovos during Q2FY26 led to an exceptional income of ₹13,598 lakh and materially enhanced the balance sheet. As of September 30, 2025, total equity stood at ₹18,911 lakh, more than doubling from ₹7,610 lakh at the end of FY25. Cash and investments rose to ₹16,966 lakh, providing significant room for reinvestment into product engineering, customer acquisition, and geographic expansion.
The sale is part of a broader strategy to transition away from commoditized transactional businesses and toward high-value, recurring revenue platforms. Management has guided that the capital raised will be allocated toward advancing IRIS Carbon’s roadmap, expanding the global salesforce, onboarding new RegTech clients in North America and Europe, and strengthening delivery capabilities for SupTech clients in Africa and the Middle East.
The strategic exit from TaxTech also simplifies IRIS Business Services’ operating model, allowing it to concentrate efforts across two core domains: digital compliance platforms for regulators and AI-powered reporting tools for enterprises and financial institutions.
How are institutional trackers viewing IRIS Business Services’ product strategy, regional risk exposure, and capital deployment potential post-Q2FY26?
Shares of IRIS Business Services have historically seen low liquidity, but the company has recently garnered attention from boutique research outfits and small-cap investors focused on India’s digital public infrastructure sector. With the TaxTech exit unlocking balance sheet strength and the SupTech–RegTech model maturing, institutional sentiment is cautiously optimistic, especially around the firm’s execution capability in SaaS markets.
Analysts covering the stock are closely watching the company’s ability to accelerate IRIS Carbon’s ARR growth beyond 20% without a proportional rise in customer acquisition costs. Profitability in the RegTech segment remains a key milestone, and some institutional trackers expect IRIS Business Services to hit positive EBITDA in this unit by FY27.
Other metrics under scrutiny include the company’s ability to convert pilot deployments into large-scale SupTech rollouts across jurisdictions, sustain Africa–MENA revenue contribution while expanding in EU–US, and operationalize the IRIS MSME DataTech platform with viable revenue streams.
Given the strong cash position, there is also speculation that IRIS Business Services may pursue targeted acquisitions or strategic partnerships to accelerate global footprint expansion, especially in niche areas like ESG compliance or cloud-native financial reporting tools.
What are the key takeaways from IRIS Business Services’ Q2FY26 performance and strategy update?
- IRIS Business Services Limited reported 18 percent sequential revenue growth in Q2FY26, rising to ₹3,110 lakh, with EBITDA improving 86 percent to ₹269 lakh quarter-on-quarter.
- Profit after tax surged to ₹184 lakh in Q2FY26 from ₹37 lakh in Q1FY26, supported by improved operational leverage and reduced finance costs.
- A one-time exceptional income of ₹13,598 lakh from the sale of the TaxTech (GST ASP) business to Sovos significantly boosted liquidity, with total cash, cash equivalents, and investments reaching ₹16,966 lakh.
- SupTech revenue grew 13 percent year-on-year in H1FY26, with key wins in the Middle East including a strategic contract with the General Tax Authority of Qatar, IRIS’s first SupTech engagement with a tax regulator.
- IRIS Carbon’s Annual Recurring Revenue grew 14 percent in H1FY26 compared to March 2025, signaling early SaaS traction despite flat RegTech revenue.
- RegTech EBITDA turned negative due to increased investment in global sales and product-led growth, while SupTech continued to deliver strong margins.
- Segmentally, SupTech contributed 61 percent of revenue in H1FY26, with Africa remaining the dominant geography at 43 percent, followed by India at 18 percent and Europe at 15 percent.
- The post-divestment balance sheet shows total equity of ₹18,911 lakh, more than doubling from FY25 levels, positioning the company for long-term reinvestment in product development and global sales expansion.
- Institutional sentiment is cautiously positive, with analysts watching ARR acceleration in IRIS Carbon, RegTech margin inflection, and execution of SupTech scale-outs across multiple geographies.
- With the TaxTech business now exited, IRIS Business Services is focusing on becoming a global SaaS-first compliance infrastructure provider spanning RegTech, SupTech, and DataTech verticals.
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