Sagility Ltd Q1 FY27 Earnings Call: Reiterates Low Double-Digit Organic Growth Guidance, ACV Reaches $35.3M in Q1

Sagility Ltd held its Q1 FY27 earnings call on July 21, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Headline Financial Performance

• Revenue of Rs.19,635M ($207.8M) in Q1 FY 2026-2027 — 27.6% YoY growth (15.2% constant currency); organic ex-CareSeed growth was 27.3% in INR and 14.9% in CC.
• Adjusted EBITDA of Rs.4,716M ($49.9M) at 24.0% margin — up 27.9% YoY; adjusted PAT of Rs.2,697M ($28.6M) at 13.7% margin, up 35.1% YoY.
• Steady-state organic revenue grew 5.1% QoQ to $207.3M — sequential decline in reported revenue was due to the end of seasonal AEP/Open Enrollment volumes from Q4 FY 2025-2026.
• Operating cash flow of Rs.3,161M (70% EBITDA-to-cash conversion) — DSO improved to 80 days from 87 days in Q4 FY 2025-2026.
• TTM (ending June 2026) revenue of Rs.76,174M — adjusted EBITDA of Rs.19,228M (25.2% margin), adjusted PAT of Rs.12,006M.
• Net debt of Rs.1,110M (0.06x net debt/EBITDA) — cash of Rs.9,674M; management expects to fully repay outstanding debt during FY 2026-2027.
• Adjusted ROCE remained above 50% — adjusted EPS growth outpaced revenue growth.

Deal Wins, Client Metrics, and Market Reach

• New business ACV of $35.3M signed in Q1 FY 2026-2027 — across 18 existing clients and 1 new logo; growth is broad-based across 15-20 clients per quarter with no pricing increases.
• Top clients continue to increase share — additional services are being sold to existing clients beyond volume; managed service deals take 3-6 months to close.
• CareSeed acquisition (closed June 2026) added 26 net new client groups — CY2025 revenue of $5.1M, 95% recurring, 31.4% EBITDA margin; strengthens HEDIS/quality capabilities for Medicare Advantage.
• BroadPath contributed ~$13.5-13.6M in revenue in Q1 FY 2026-2027 — cross-sell pipeline has 6-7 active opportunities.
• Sagility has exposure to 7 of the top 10 US national insurers — seeking to penetrate the remaining 3 through non-traditional areas such as clinical and payment integrity (as of Q1 FY 2026-2027).

Wage Impact, Margin Bridge, and Headcount Trends

• Q1 FY 2026-2027 margin headwinds totalled 190bps — 40bps from statutory minimum wage revisions, 50bps from annual salary increases, 100bps from normalized open enrollment volumes; offset by >100bps favorable FX.
• For FY 2026-2027, management estimates ~120bps additional EBITDA impact from the statutory minimum wage revisions in Karnataka and Telangana — 65-70% of headcount is in these two states; the impact is recurring and includes direct adjustments plus cascading effects on higher-tier employees.
• Full mitigation of the minimum wage impact is expected to take 12-18 months — via expansion into lower-wage states and operational efficiency; partial mitigation within the year is possible.
• Headcount of 47,307 as of Q1 FY 2026-2027 — quarterly voluntary attrition improved to 28.6% from 38.1% in Q4 FY 2025-2026, but marginally higher than Q1 FY 2025-2026.
• One-time exceptional item of Rs.151M recorded — related to gratuity and compensated absences.
• Hedges taken in FY 2025-2026 at lower values will affect reported EBITDA and EPS but not adjusted EBITDA.

AI Adoption, Deflation, and Delivery Impact

• Everest Group research (50 payer decision-makers) found "70% claim AI adoption, but only 10% report measurable improvement" — 70% identify domain-led intelligent operations as a priority.
• Management expects AI-led deflation to increase from 100-150bps to 200bps over the near future (period unspecified) — quarterly tracking is not done.
• Internal AI initiatives target support functions — aiming to reduce training time from 6 weeks to 4 weeks (current as of Q1 FY 2026-2027), rather than reducing headcount.
• Per Everest research, only marginal improvements from AI have been reported as of Q1 FY 2026-2027 — clients expect AI to reduce operating costs, but measurable gains remain limited.
• Client insourcing from offshore locations is unlikely under current cost pressure — it would increase costs; the shift from onshore to offshore is margin accretive.

Acquisitions, Cross-Sell, and Revenue Seasonality

• Two acquisitions completed in the last 5 quarters (since Q1 FY 2025-2026) — future M&A focused on capabilities in clinical services, provider RCM, and healthcare technology, rather than client acquisition.
• Through BroadPath and CareSeed, the company added over 55 mid-market clients — cross-sell in BroadPath has 6-7 active opportunities; CareSeed's platform is mid-market focused, limiting cross-sell to large clients.
• Seasonal revenue rose from ~$20M in Q3+Q4 FY 2024-2025 to ~$50M in FY 2025-2026 — increasing from ~3% to ~6% of total revenue, driven by BroadPath and new seasonal clinical work.
• Management expects seasonal revenue at ~6% of total revenue for FY 2026-2027 — exact Q3/Q4 intensity will be known after Q2 FY 2026-2027.
• New ESOP pool of 3% of equity announced — impact on bottom line to be disclosed after board meeting and grants, with recognition over a period aligned with market practice (period unspecified).

Guidance, Outlook, and Key Risks

• Management reiterated FY 2026-2027 guidance of low double-digit organic revenue growth in CC — with EBITDA margin of 24-25%, despite the ~120bps minimum wage headwind.
• Greater visibility into full-year FY 2026-2027 outlook expected by end of Q2 FY 2026-2027 — when the OE and AEP season begins; management expects to provide a more precise outlook then.
• If the final minimum wage outcome is lower than anticipated — management could achieve the upper end of the margin range or higher.
• No general slowdown in payer spending observed as of Q1 FY 2026-2027 — despite peer hints of tightening, cost pressures continue to mount.
• Management is seeking acquisitions in clinical services, provider RCM, and healthcare technology — valuations for RCM targets were high, but they continue to look.