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Fractal Analytics’ operating revenue rose 19.8% YoY to ₹1,559 Cr in H1 FY26 from ₹1,300 Cr in H1 FY25

The company had a tax outgo of ₹27.9 Cr during the period under review as against a tax credit of ₹22.8 Cr in H1 FY25

Fractal filed its RHP earlier this week for a ₹2,833.9 Cr IPO, a reduction of nearly 42% from the size proposed in its DRHP

AI and advanced analytics firm Fractal Analytics’ net profit for the six months ended September 30, 2025 (H1 FY26) declined 2.7% to ₹70.9 Cr from ₹72.9 Cr in the corresponding period last year, on the back of higher tax outgo during the period under review.

The company’s operating revenue rose 19.8% to ₹1,559 Cr in H1 FY26 from ₹1,300.1 Cr in the year-ago period. Including other income, total income increased 20.5% YoY to ₹1,594.3 Cr from ₹1,322.6 Cr in H1 FY25.

Meanwhile, total expenses grew 15.9% to ₹1,446.2 Cr in H1 FY26 from ₹1,248.1 Cr in H1 FY25. The company had a tax outgo of ₹27.9 Cr during the period under review as against a tax credit of ₹22.8 Cr in H1 FY25.

EBITDA for the period zoomed 41.7% to ₹185.6 Cr from ₹131 Cr during the same period last year. EBITDA margin expanded to 11.9% in H1 FY26 from 10.1% last year.

The H1 FY26 performance follows a strong turnaround in FY25, when the company returned to profitability. It posted a consolidated net profit of ₹220.6 Cr as against a loss of ₹54.7 Cr in FY24. Operating revenue grew 25.9% YoY to ₹2,765.4 Cr in FY25.

Founded in 2000, Fractal generates revenue through analytics and consulting services as well as licensing and subscriptions for its AI platforms, including Cogentiq, Iqigai and Kalaido.ai. It serves global enterprises, including Google and Wells Fargo.

Earlier this week, the company filed its RHP for ₹2,833.9 Cr IPO, a reduction of nearly 42% from the size proposed in its DRHP. The issue will open for subscription on Monday (February 9) and close on Wednesday (February 11), with anchor bidding scheduled for February 6.

The IPO comprises a fresh issue of shares worth up to ₹1,023.5 Cr and an offer-for-sale component of up to ₹1,810.4 Cr. Apax Partners and TPG Capital are among the investors who will offload shares via the OFS. The company has set a price band of ₹857-₹900 per share for the public issue.

Of the fresh proceeds, Fractal plans to deploy the largest portion towards R&D and sales and marketing for its AI incubator, Fractal Alpha. It has also earmarked the funds for debt repayment at its US subsidiary and expansion of its office infrastructure in India.

Inside Fractal’s Business Model

Fractal operates as a global AI and advanced analytics company that primarily serves large enterprises, with its business model built around embedding data science and AI into clients’ decision-making processes. Its core business revolves around helping enterprises solve complex business problems using data, machine learning and AI, and then monetising those engagements through long-term, repeat relationships rather than one-off projects.

The company earns the highest revenue, about 97-98% of its total revenue, from analytics and AI-led services, which are housed under its Fractal.ai segment. Under this, it works with client teams to design, build and deploy advanced analytics models and AI systems that influence business outcomes such as pricing, demand forecasting, marketing effectiveness, risk management or operational efficiency.

Alongside services, Fractal has steadily built a portfolio of proprietary AI platforms and products, which sit under its Fractal Alpha segment. They currently contribute a relatively small share of revenue, at around 2-3%. These products are usually deployed on top of the analytics work already being done for a client and are designed to operationalise AI at scale within the enterprise.

Revenue from this segment is generated through annual or multi-year subscriptions, licensing fees and, in some cases, usage-based pricing. While services help Fractal win and expand accounts, these platforms are meant to lock in clients over the long term and improve margins by shifting part of the revenue mix toward recurring, higher-margin software-led income.

Fractal also generates a smaller but strategic portion of revenue through training, education and community-driven platforms in the data science and AI ecosystem. These activities, while not a core profit driver, contribute course fees, enterprise training contracts and partnerships, and more importantly help strengthen Fractal’s talent pipeline and brand positioning as an AI-first company.

Breaking Down Fractal’s Expenses

Employee Benefit Expenses: This was the biggest cost for the IPO-bound company, rising 15.8% YoY to ₹1,125.2 Cr from ₹971.7 Cr in H1 FY25. It accounted for 72.2% of the company’s operating revenue in the period under review.

ESOP Expenses: Fractal’s ESOP costs narrowed 43% YoY to ₹27 Cr during the period under review from ₹41.8 Cr a year ago.

Software Licence and Maintenance: The company spent ₹31.5 Cr under this head, up 18.4% from the previous fiscal.

Legal & Professional Fees: Expenses under this head shot up almost 30% YoY to ₹33 Cr in H1 FY26 from ₹25.4 Cr spent during the same period last year.