Happiest Minds delivers robust Q2 growth with 12.7% QoQ and 28.2% YoY increase in revenue

In a remarkable financial showing for Q2 FY2025, Happiest Minds Technologies Limited announced impressive results, bolstered by strong growth in digital and AI-driven services. The Bengaluru-based IT solutions provider reported a quarterly revenue surge of 12.7% compared to the previous quarter and an impressive 28.2% year-over-year (YoY) in constant currency. The company’s operating revenue reached $62.4 million, marking a notable 27% YoY increase, indicative of its expanding influence in the global digital transformation landscape.

Ashok Soota, Executive Chairman of Happiest Minds, emphasized that this quarter’s performance marks the company’s best growth results in the last two years. He attributed this achievement to strategic acquisitions and structural enhancements within the company. According to Soota, the company has been actively driving transformational changes, including the acquisition of PureSoftware and Aureus, along with the formation of a dedicated Generative AI (GenAI) Business Unit. These moves, he indicated, are positioning Happiest Minds as a key player in next-generation IT solutions.

Key Financial Highlights

The company’s financial metrics reflected robust growth across all major indicators. For Q2 FY2025, Happiest Minds reported a total income of ₹54,867 lakhs, an increase of 12.1% quarter-on-quarter (QoQ) and 27.9% YoY. Earnings before interest, taxes, depreciation, and amortization (EBITDA) rose to ₹11,882 lakhs, representing a 13.4% YoY increase and making up 21.7% of total income. Despite this growth, the company saw a 3% QoQ and 15.3% YoY decline in profit after tax (PAT), which amounted to ₹4,951 lakhs. The company noted that these dips were mainly due to acquisition-related non-cash charges and financing costs​.

Venkatraman Narayanan, Managing Director and Chief Financial Officer, highlighted the company’s ability to balance growth and profitability even amid increased investments in AI and talent. Narayanan pointed out that the company’s operating margins align closely with its strategic goals, particularly with a 28.2% revenue growth in constant currency and an EBITDA margin of 22.7%. He noted that these figures fall within the company’s guidance range of 30-35% for revenue growth and 20-22% for EBITDA margins, underscoring the management’s focus on sustainable long-term growth.

Strategic Initiatives Drive Expansion

Happiest Minds’ performance in Q2 was significantly bolstered by a series of strategic initiatives. The company has expanded its market reach by setting up six new industry-specific groups, each led by a specialized manager. This shift, aimed at deepening industry expertise and fostering closer customer engagement, is expected to yield stronger revenue growth in the coming quarters. Additionally, the company’s decision to invest in a GenAI Business Unit showcases its forward-looking approach as it capitalizes on emerging AI and automation opportunities.

In alignment with its digital-first approach, Happiest Minds achieved significant wins in key sectors. Highlights from Q2 included contracts with a U.S.-based semiconductor company, a North American health-tech company, and a major energy-sector player utilizing Happiest Minds’ IoT and AI capabilities. In the healthcare industry, the company secured a project to revamp reporting systems for a client’s operations on a Microsoft technology stack, demonstrating its expanding capabilities in digital engineering and automation.

Employee Growth and Recognition

Employee engagement and satisfaction remain high on Happiest Minds’ agenda, with the company employing 6,580 individuals as of September 2024. Although the trailing 12-month attrition rate rose slightly to 14.4%, the company maintains a utilization rate of 76.3%. Happiest Minds was recognized as one of the “Top 100 India’s Best Workplaces for Women 2024,” reinforcing its commitment to a positive workplace culture.

Happiest Minds also continues to earn accolades in industry evaluations, securing placements in leadership zones for digital engineering and software platform engineering by Zinnov Zones, and as a “Major Contender” in Everest Group’s cybersecurity services assessment.

Dividend Announcement and Future Outlook

The Board of Directors announced an interim dividend of ₹2.5 per equity share for FY2024-25, pending shareholder approval. This dividend is reflective of the company’s robust financial health and commitment to returning value to its investors.

Looking forward, the management expressed optimism about sustained growth as the company fully integrates its recent acquisitions and further builds its GenAI and cybersecurity capabilities. Soota noted that the digital transformation landscape offers vast opportunities, and Happiest Minds is strategically positioned to capture this potential. With its continued focus on AI, data security, and industry-specific solutions, Happiest Minds aims to solidify its standing as a leader in digital transformation services across key sectors, including healthcare, finance, retail, and energy.