Happiest Minds eyes double-digit growth in FY26 despite challenges

IT firm saw Q4 revenue flat due to a client exit, but expects BFS and healthcare to drive growth; 20-24 key accounts identified for $20 mn-plus revenue focus

Mid-tier IT company Happiest Minds is confident of a double digit revenue growth in the ongoing financial year 2025-26 (FY26), notwithstanding a client ramp-down in the fourth quarter of previous year.

 

For the fourth quarter of FY25, the company’s operating revenue was $63 million, up 25.6 per cent on year.

 

Sequentially, revenue was flat due to a client ramp down in the manufacturing sector. Margins also tanked to 14.6 per cent from 17.5 per cent during the third quarter.

 

“We lost $1.5 million of revenues because a customer ramped up nicely in Q3 only to run into trouble in Q4. Because he had quite a bit of his revenue streams planned from, including investments, the government or with agencies which had a tie up with government. Obviously, priorities changed,” Chief Financial Officer Venkatraman N said, referring to the review of several government contracts done in the US by the department of government efficiency (DOGE).

 

 

The company expects banking financial service (BFS) and healthcare to be its growth driver this year even though macroeconomic uncertainties persist and client spend remains muted.

 

The two businesses contributed about 39 per cent to the topline, from 24 per cent last year and just 12 per cent in FY23 as the company doubled down its focus on the BFSI sector by buying PureSoftware.   

 

Arttha, the fintech platform of PureSoftware, supports more than 150 million end users, collaborates with over 10 million merchants, and operates in more than 15 markets worldwide.  

 

“We expect BFS and healthcare to be the pivots for growth as you would have seen. In the healthcare segment, we’ve been able to get a couple of pretty large sows that’s totalling almost $20 million and that again should help us. So we feel very confident about being able to deliver double digit growth this year,” Co-Chairman and Chief Executive Officer Joseph Anantharaju told Business Standard during an interaction after the company’s fourth quarter results.

 

Happiest Minds, however, does not expect drastic client ramp downs going ahead. While uncertainties remain ripe, it is hopeful the recent trade deals will lift the cloud of the industry.

 

“There is uncertainty in the manufacturing segment just because of the impact of tariffs and you know what it means from a medium or long term perspective. So there will be no immediate decisions. But I think with the tariff agreements that are being slowly hammered out, uncertainty should abate and we should see customers beginning to feel more comfortable and confident in their investment and spending,” Anantharaju added.

 

The company will also focus on large deal accounts by pushing the boundaries of its engagement with clients.

 

As part of the move, smaller accounts, with revenue of $2-3 million, would be pushed to generate about $5 million revenue while accounts yielding $5-10 million will be pushed to the $20 million category. There will be dedicated client partners to give these accounts prioritised focus.

 

It has identified 20-24 customers across six verticals out of its base of 281 which are being classified as large accounts, having revenue potential of about $20 million.

 

“It’s not the size of the account but the potential that we are looking at. Each of these customers have an outsourcing spend of at least $50-100 million,” said Anantharaju.