BIRLASOFT LTD Q2 CONCALL: H2 FY27 RECOVERY EXPECTED, Q4 POTENTIALLY STRONGEST QUARTER, 15% EBITDA MARGIN OBJECTIVE, AI-LED TRANSFORMATION & DEAL PIPELINE IMPROVEMENT

• Management expects H2 FY27 financial performance to be better than H1 FY27, supported by revenue recovery, manufacturing growth, BFSI demand and improving execution. • Management indicated that Q4 FY27 could become the strongest quarter of the financial year, subject to successful deal closures and no unexpected client-related disruptions. • Management expects Q3 FY27 revenue to face seasonal pressure from client furloughs and fewer working days. • Management expects Q3 furloughs to remain broadly similar to the previous year. • Management expects stronger underlying BFSI growth momentum from Q4 FY27 after the seasonal Q3 impact. • Management aims to sustain EBITDA margins around 15%, supported by offshore delivery, operating efficiency and improved revenue quality. • Management clarified that the 15% EBITDA margin objective is not a guaranteed quarterly floor, as margins may fluctuate with business conditions. • Management expects the impact of recent salary increases to be absorbed gradually over the next couple of quarters. • Management expects manufacturing to maintain a directionally positive growth trajectory, supported by existing customer expansion and new opportunities. • Management expects the Energy & Utilities business to recover over approximately two to three quarters following the ramp-down of a European client programme. • Management does not anticipate additional downside from the specific European Energy & Utilities client ramp-down but does not expect an immediate recovery. • Management expects stronger deal signings during H2 FY27, although the timing of large contract closures remains uncertain. • Management acknowledged that current order bookings remain below its expectations despite a modest improvement in the sales pipeline. • Management indicated that some deals originally expected during Q2 were postponed to Q3 or Q4 rather than cancelled. • Management expects FY28 growth visibility to depend significantly on successful deal bookings during H2 FY27. • Management did not provide numerical consolidated revenue growth guidance for FY27 or FY28. • Management expects larger deals, new master service agreements and expansion within existing customer accounts to support future growth. • Management is pursuing smaller initial customer engagements that could develop into larger, longer-term transformation contracts. • Management expects AI-led modernization, ERP managed services and digital transformation to remain important growth opportunities. • Management expects increasing adoption of enterprise AI and agentic AI solutions to support customer demand for technology modernization. • Management expects its Cogito enterprise agentic AI platform to support automation and enterprise transformation opportunities. • Management expects its LynX AI-powered testing platform to improve software testing efficiency and delivery productivity. • Management expects its Sigma agentic AIOps platform to support application management and IT operations automation. • Management expects AI-driven coding and software engineering automation to improve productivity across delivery teams. • Management indicated that approximately 33% of code is now generated using agentic AI tools, compared with around 25% a few months earlier. • Management expects AI-led delivery productivity to support margins, although some efficiency gains may be shared with customers through competitive pricing. • Management expects offshore delivery to remain an important profitability driver, particularly for advanced AI and engineering engagements. • Management described advanced AI work delivered offshore as margin-accretive. • Management plans to reinvest part of its productivity and offshore delivery benefits into sales capabilities, technology platforms and service-line development. • Management expects ERP services to benefit from increasing enterprise modernization and managed services demand. • Management expects Digital & Data services to remain an important contributor to growth through cloud, data and AI transformation programmes. • Management expects utilization to remain broadly stable after reaching what it considers a best-in-class level. • Management indicated that further large utilization improvements may be limited because current levels are already high. • Management expects new sales hires to require approximately two quarters before contributing meaningfully to deal signings. • Management indicated that planned senior leadership hiring is largely complete. • Management reported that approximately 90% of its previously planned sales and capability investments had been completed, although further investment will continue. • Management expects recent sales investments to strengthen customer acquisition and deal conversion over time. • Management cautioned that a meaningful improvement in net-new bookings may not become visible immediately during Q3 FY27. • Management expects continued investment in technology infrastructure and internally developed capabilities to support long-term service differentiation. • Management did not announce a new acquisition or specific deployment plan for its surplus cash. • Management described the overall demand environment as neither materially improving nor deteriorating. • Management explicitly acknowledged that Birlasoft has not yet completed a sustainable business turnaround despite improved Q2 revenue performance. • Q2 FY27 consolidated revenue stood at ₹1,416.2 Cr, representing sequential growth of approximately 2.7% in INR terms. • Q2 revenue in USD terms stood at approximately $143.3 Mn, with sequential USD and constant currency growth of approximately 2.1%. • Q2 EBITDA stood at approximately ₹215.3 Cr, with an EBITDA margin of 15.2%. • Management maintained EBITDA margins above 15% despite salary revisions, sales investments and continued technology spending. • Q2 profit after tax stood at approximately ₹159.6 Cr. • The effective tax rate stood at approximately 29% during Q2 FY27. • Manufacturing revenue increased approximately 5.2% QoQ, making it the strongest-performing major business vertical. • BFSI revenue increased approximately 3.6% QoQ, reflecting improving demand and customer engagement. • Life Sciences & Services revenue increased approximately 2.1% QoQ, marking its second consecutive quarter of growth. • Management indicated that one programme within Life Sciences affected segment margins despite the improvement in revenue. • Energy & Utilities revenue declined because of the ramp-down of a European customer engagement. • Digital & Data services revenue increased approximately 3.4% QoQ, supported by digital transformation and technology modernization. • ERP services revenue increased approximately 2.9% QoQ, marking the second consecutive quarter of sequential growth. • Infrastructure Services performance was affected by weakness in the Energy & Utilities vertical. • Q2 total contract value of deal wins stood at approximately $116.1 Mn, representing growth of 9% YoY. • H1 FY27 deal TCV stood at approximately $285 Mn, representing growth of 15% YoY. • Management indicated that the overall level of deal signings remained unsatisfactory despite year-on-year growth in reported TCV. • The company secured an AI-led transformation engagement with a European logistics company involving cloud migration, platform modernization and automated testing. • The company secured a three-year AI-led managed services engagement with a global industrial manufacturer, supporting ERP operations and business innovation. • The company secured a digital transformation engagement with a North American medical devices manufacturer, including programme governance and AI and data capabilities. • Management did not disclose individual contract values for these major customer wins. • The company redesigned engineering workflows across more than 20 major service offerings using an AI-first approach. • The company reported achieving AWS AI Services Competency status and becoming an OpenAI Select Partner. • Management did not disclose a separate AI revenue figure or formal AI business growth guidance. • Salary revisions effective July 2026 created approximately 170 basis points of sequential EBITDA margin pressure. • Offshore delivery improvements, operating efficiencies and better revenue quality helped offset the salary increase. • Continued investment in sales teams and technology capabilities remained a source of margin pressure. • Cash collections stood at approximately $164 Mn during Q2 FY27. • Days sales outstanding improved to 51 days, representing the company's best level in approximately two years. • Cash and cash equivalents stood at approximately $300.4 Mn, indicating a substantial liquidity position. • The board recommended an interim dividend of ₹3 per share. • Management indicated that technology infrastructure investment has increased property, plant and equipment and related depreciation. • Investment in internally developed capabilities has also increased intangible assets and amortization expenses. • Sales headcount increased during the period, while support staffing was rationalized to improve organizational efficiency. • Key risks include weak net-new deal bookings, delayed customer decisions, Q3 furloughs and continued weakness in Energy & Utilities. • Additional risks include wage inflation, technology investment costs, competitive AI pricing, client concentration and higher depreciation and amortization. • Overall outlook remains cautiously positive, supported by sequential revenue recovery, strong manufacturing growth, improving ERP and Digital & Data services and expanding AI-led capabilities. • Key H2 FY27 monitorables include improvement in deal signings, Energy & Utilities recovery, Q4 revenue acceleration, sustainable EBITDA margins around 15% and stronger FY28 revenue visibility. • The supplied machine-generated transcript contains inconsistencies in certain financial descriptions. The reported EBITDA of ₹215.3 Cr and margin of 15.2% are internally consistent, but important figures should be checked against official financial disclosures.

BIRLASOFT LIMITED

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