Fractal Analytics eyes higher margins in coming quarters on increasing AI adoption

New Delhi, Mar 6 (PTI) Pune-based AI firm Fractal Analytics expects greater use of AI by companies to become more efficient and bring down operational costs at a time when the Middle East crisis is likely to impact the global economic growth, a top official of the company said on Friday.

Fractal Analytics, Co-Founder and Group CEO Srikanth Velamkanni, told PTI that the company had healthy margins of 47 per cent during the third quarter ended December 31, 2025 and is expected to grow in the coming quarters with more AI deals and a reduction in operational costs.

"The Middle East wars and other kinds of things that are happening right now... are things that clearly bring down the overall economic growth of the world. But then the significant acceleration with AI is more than offsetting that. As economic situations are uncertain, companies want to use more AI to make sure that they are more efficient as a company," he said.

Velamkanni said that the present geopolitical situation has some trade-related headwinds in the early part of the year as well, especially in the manufacturing industry, which had some impact on its consumer packaged goods business.

Fractal Analytics has posted an 8.5 per cent growth in consolidated profit after tax at Rs 100 crore in the third quarter ended December 31, 2025.

The company had reported a profit after tax of Rs 92.2 crore in the same period a year ago, the company said.

The consolidated revenue from operations of Fractal Analytics increased by about 21 per cent to Rs 854 crore during the reported quarter, from Rs 707 crore in the December 2024 quarter.

Velamkanni said the net income of Fractal Analytics would have been better, but it was mitigated by an increase in losses of one of its associate company Qure.ai.

"Qure.ai, our healthcare AI associate company. They have had a tough few months after the Trump administration eliminated USAID as part of the DOGE programme. "USAID was a significant funder of TB programmes worldwide, which affected Qure.ai. Their losses have increased because of this. Otherwise, our profit would have been even more impressive. However, over the next few months, we expect that situation to improve," Velamkanni said.

Fractal Analytics during the December 2025 quarter recorded growth in business both in the US and Europe, but revenue was impacted in the Asia Pacific.

"For this quarter, both the US business as well as the Europe business grew by 26 per cent year over year, whereas our APAC business, in which India is also a part, has actually shrunk by a few points.

“This is somewhat unusual because it is related to one client-related de-growth that we experienced. One client has decreased their spend with us, which is why you are seeing that happen. Otherwise, everything is expanding. Our global markets are continuing to see a lot of growth," he said.

He said for the nine months of the current fiscal year, European business has grown by 37 per cent year over year. Fractal Analytics, chief financial officer, Aswath Bhat, said that the company tends to work with these large clients, with most of them based out of the Americas and Western Europe.

"We were working with 127 of must-win clients as of December 2025 versus 113 as of March 2025. There has been a significant expansion in the number of must-win clients we are working with.

“The geographic distribution of our revenue is almost 69 per cent in America, then 12 per cent in APAC, and the rest in Europe. We do not have a strategy specifically to expand with Indian clients. However, we want to work with these large global clients as we continue to scale with them," he said. PTI PRS DRR