This article first appeared on GuruFocus .
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Revenue:EUR501 million in H1 2026, representing 4.2% constant currency growth year-over-year.
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Revenue Growth by Quarter:Q1 2026 grew 6.5% constant currency; Q2 2026 grew 2.0% constant currency.
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Revenue by Geography (H1 2026 vs. H1 2025, constant currency):US grew 9.0%, India grew 14.7%, UAE grew 16.8%, Germany declined 3.8%, and Austria declined 5.0%.
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Gross Margin:Exceeded 32% in Q2 2026.
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Adjusted EBITDA Margin:Reached 15.0% in Q2 2026.
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Cash Position:EUR131.3 million as of June 30, 2026.
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Financial Liabilities:EUR310.5 million as of June 30, 2026.
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Lease Liabilities:EUR67.4 million as of June 30, 2026.
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Net Leverage Ratio:1.7x.
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Operating Cash Flow:EUR29.8 million in Q2 2026; EUR29.5 million for H1 2026, down from EUR42.4 million in H1 2025.
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Days Sales Outstanding:86 days at end of June 2026, up from 85 days at end of June 2025.
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Capital Expenditures:EUR1 million in H1 2026, less than 1% of 6-month revenue.
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Client Metrics:Number of clients generating more than EUR1 million in trailing 12-month revenue increased to 184, up from 179 in Q1.
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Customer Satisfaction:CSAT score of 93.2 and NPS of 70.
Release Date: August 14, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Nagarro SE ( NGRRF ) achieved an all-time high quarterly NPS of 70 and a CSAT score of 93.2, reflecting strong client satisfaction and trust.
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The company was ranked number one globally in customer satisfaction and delivery execution in the ISG Digital Engineering Services survey, earning the CX Star Performer Star of Excellence.
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Revenue grew 4.2% in constant currency in H1 2026, with strong growth in the US (9.0%), India (14.7%), and UAE (16.8%), demonstrating diversification benefits.
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Gross margin exceeded 32% in Q2 2026, and adjusted EBITDA margin reached 15.0%, supported by a healthy business mix and operational discipline.
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The number of clients generating over EUR1 million in trailing twelve-month revenue increased to 184, up from 179 in Q1, indicating a growing client base.
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The potential combination with Persistent Systems is progressing, with shareholder approval and a joint statement supporting the offer, which could create a global leader in AI-led digital engineering.
Negative Points
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Revenue growth decelerated in Q2 2026 to 2.0% constant currency, down from 6.5% in Q1, reflecting a muted demand environment for digital services.
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Revenues from Germany declined 3.8% and Austria declined 5.0% in H1 2026 due to planned project ramp-downs and temporary client cutbacks.
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Operating cash flow for H1 2026 decreased to EUR29.5 million from EUR42.4 million in H1 2025, primarily due to pending collections from some clients.
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Days sales outstanding (DSO) increased slightly to 86 days at the end of June 2026, up from 85 days a year earlier, indicating slower collections.
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The company faces pricing pressure in fixed-bid and long-term engagements as clients expect AI productivity gains to be factored in, though this is a small part of the business.
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The broader demand environment remains muted as clients continue to assess the implications of AI on digital build, impacting overall growth.
Q & A Highlights
Q: Can you provide a bridge for the Q2 margin improvement, separating the impact of non-recurring FX gains from genuine operational improvements like utilization and SG&A leverage? What underlying margin should we carry forward into H2? A: Prateek Aggarwal (CFO) explained that while there are large moving items in the P&L, such as cash-settled ESOP costs and various FX line items, the aggregate difference was not more than EUR3 million. He clarified that the 15% margin is not grossly dependent on these moving elements. While FX provided a positive impact, this was largely offset by an EUR8.1 million adjustment related to the share price increase and cash-settled calculations based on the Black Scholes model.
Q: What are the specific drivers behind the regional divergence, particularly the weakness in Germany and Austria versus the strength in the US? Can you also comment on the status of the German Mittelstand and Japan initiatives, and how AI is impacting pricing in tenders? A: Manas Fuloria (Chairperson) stated that the German results are affected by the planned ramp-down of some SAP projects, which is temporary and not structural. In contrast, management consulting-related work is increasing in the US, driven by the link between strategy and engineering execution. Progress in the German Mittelstand has been strong in SAP but slower elsewhere, and Japan is growing but takes time due to relationship building. On pricing, clients expect AI productivity gains to be factored into fixed bids, but pricing pressure is less on the time and expense side of the business.
Q: What are the drivers of the organic growth deceleration in Q2, and what is the current state of the pipeline and weaker verticals? A: Manas Fuloria (Chairperson) attributed the weakness to the German and Austrian markets, linked to a few clients with planned project ends or temporary cutbacks, which are expected to be fixed in coming quarters. The pipeline remains stable. While the horizontal tech part of the business remains weak, it is an increasingly smaller part of the business. Other segments, such as Management Consulting and Auto/Manufacturing/Industrial, are performing reasonably well.
Q: Can you elaborate on the strategic rationale and complementarities of the proposed combination with Persistent Systems? A: Manas Fuloria (Chairperson) highlighted that the combination creates a differentiated global leader in AI-led digital engineering. The strategic logic is compelling due to complementarities in geographical presence, industry footprints, and offerings. Beyond that, the combination brings together two organizations that share similar ethical values, a strong engineering heritage, and a long-term commitment to clients and associates.
Q: What were the key drivers of the cash flow performance in H1 2026, and what is the outlook for collections and DSO in Q3? A: Prateek Aggarwal (CFO) reported a total cash inflow of EUR4.6 million versus an outflow of EUR57.7 million in the prior year period. Operating cash flow for H1 was EUR29.5 million, down from EUR42.4 million, primarily due to pending collections from some clients, which management is confident of collecting in Q3. DSO increased slightly to 86 days, and the company is confident of bringing it down in Q3, noting that the first 1.5 months of Q3 have already been very productive.
Q: Can you provide more detail on the new client wins in Q2 and their significance? A: Manas Fuloria (Chairperson) highlighted several significant new clients, including an iconic global sporting event that takes place every four years, a leading US running shoe brand, a leading European insurance group, a Middle Eastern government health services department, a leading US roofing maker, a leading tiling and flooring maker from the Middle East, a leading auto company in Japan, and an iconic apparel group in Australia.
Q: What is the current status of the regulatory approvals and the timeline for the Persistent Systems takeover offer? A: Manas Fuloria (Chairperson) noted that following shareholder approval and BaFin authorization, Persistent's voluntary public takeover offer is now open. Several mandatory regulatory approvals are still awaited, and the teams are working hard to procure them. The Management Board and Supervisory Board have issued a joint reasoned statement supporting the offer and recommending that shareholders accept it.
Q: How is Nagarro positioned to capitalize on the enterprise AI transformation trend? A: Manas Fuloria (Chairperson) emphasized that enterprise AI transformations must be anchored in excellent engineering to work consistently, dependably, and safely across complex mission-critical environments. Nagarro brings deep engineering depth across data, AI, platforms, and products, combined with strong client intelligence and long-term relationships. This positions the company as the right engineering partner for clients looking to scale AI with responsible guardrails, safety, and trust.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
