Hexaware Technologies Q2 Results 2025: Strong Revenue, Rising Costs and Stock Slide

Hexaware Technologies is a global IT services and digital transformation provider headquartered in India, with a strong focus on AI-powered offerings across industries such as banking, healthcare, and logistics. In CY2025, Hexaware continues to double down on AI‑first strategies and innovation-led client delivery

Financial Highlights of Q2 CY2025

Revenue Performance (USD & INR)

Hexaware posted Q2 CY2025 revenue of USD 382.1 million, up 8.6% YoY and 2.8% QoQ; in INR terms, revenue reached ₹32,607 crore, rising 11.1% YoY and 1.6% QoQConstant Currency Growth
On a constant currency basis, revenue advanced 7.5% YoY and 1.3% QoQ.

EBITDA & Margin Expansion

EBITDA in USD stood at $65.9M, growing 19.4% YoY and 6.1% QoQ. Margins improved by 156 bps YoY, reaching ~17.2

Profit After Tax & EPS Surge

PAT reached $44.3M (₹380 Cr), up 35–38% YoY, while basic EPS jumped to INR 6.25, a 37.7% YoY increase. Sequential EPS rose ~16%.

What Drove Results: Key Business Metrics

Client Wins & Large Accounts

Hexaware scaled its roster of USD 50M+ customers to four, and was ranked #1 in service delivery in Whitelane’s UK & Ireland sourcing study for 2025.

Workforce & Utilization Metrics

Headcount closed at 32,410, with LTM net addition of 540. Voluntary attrition stood at 11.1%, and IT‑utilization was 83.7%.

Cash Conversion & Liquidity

Adjusted cash conversion was strong at ~75.5%, and cash & cash equivalents totaled ₹19,248 crore as of June 30, 2025.

Blips Beneath the Surface: Rising Costs & Missed Estimates

One‑off Expense Spike (₹142 Cr)
Extraordinary expenses surged to ₹142 crore, up from ₹8.7 Cr a year ago. These included customer provisions, acquisition-related costs, impairment charges and ERP transformation costs.

Impact on Margins & Wall‑Street Sentiment

EBITDA margin compressed severely (to around 12.4% in INR terms) due to cost spike, flattening adjusted profit trends. The results fell short of consensus estimates, triggering a ~10.7% drop in Hexaware’s share price.

Management Commentary on Deal Pipeline

CEO R. Srikrishna noted delays in decision-making impacting small to mid‑sized deals, even as large consolidation deals remain in the pipeline. The full‑year outlook has been revised downward.

Market Reactions: Stock Movement & Guidance Revision

Following the earnings announcement, Hexaware shares slumped ~10.7%, closing at ~₹738.25, compared to a ~0.9% decline in benchmark Sensex. Management signaled softer growth guidance for the remainder of CY2025.

Strategic Outlook: AI‑Driven Pivot

CEO & CFO Insight

Leadership emphasized continued focus on high-margin, AI-first transformation services. CFO highlighted strong cash flow discipline and a lower effective tax rate supporting EPS resilience.

Industry Recognition & Rankings

Hexaware retained top ranks in service delivery and expanded its list of large clients—signals of strategic positioning despite near-term hiccups.

Risks & Geographical Performance

Regional Weakness

While Europe posted YoY and sequential gains, Asia-Pacific showed flat to declining performance, stamping caution on short-term prospects.

Vertical Mix: Manufacturing vs Financial Services

Manufacturing & consumer verticals weighed on growth, whereas banking and financial services continue to deliver moderate strength.

Future Expectations: What’s Next in Q3 & FY2025?

Growth momentum hinges on faster conversion of AI-led deals, margin recovery post one-off costs, and execution in newly acquired clients (e.g. SMC Squared). While hierarchy in verticals like financial services is expected to improve, manufacturing headwinds persist. Full-year margin guidance remains between 17.1–17.4%, albeit influenced by cost absorption and deal pace.

Conclusion

In Q2 CY 2025, Hexaware Technologies delivered steady revenue growth and strong PAT expansion, driven by solid EBITDA performance and added large clients. Yet beneath the surface, extraordinary expenses, margin compression, and muted guidance have dented investor confidence. The company remains focused on its AI‑first strategy, strong client delivery, and prudent cash management. However, growth now hinges on faster deal closures and cost normalization. Keep an eye on Q3 results and execution in the coming quarters.