Fractal: A Leading Data Analytics and AI Solutions Company

Fractal, recognised for its data analytics and AI solutions, has submitted its draft red herring prospectus (DRHP) to SEBI to secure up to Rs 4,900 crore through a combination of fresh issues and an offer for sale (OFS). This financial documentation indicates a notable return to profitability with a revenue increase of 26% for the fiscal year ending March 31, 2025.

Fractal’s Impressive Revenue Growth

Fractal’s revenue from operations climbed 26% to reach Rs 2,765 crore in FY25, compared to Rs 2,196 crore in FY24, as stated in its consolidated financial statements sourced from the DRHP. The majority of its revenue stems from analytical services, contributing Rs 2,701 crore in FY25, marking a 24% rise from the prior year. Additionally, subscription income saw a remarkable increase of 167%, reaching Rs 64 crore, which significantly bolstered overall top-line growth.

Geographic Revenue Breakdown

The US market continues to dominate Fractal’s revenue, contributing Rs 1,802 crore in FY25, a 33% increase from Rs 1,358 crore in FY24. This market represents 65% of the total operating revenue. Revenue from Europe grew by 12.56% to Rs 484 crore, making up 17.5% of the total revenue. In India, the contribution was Rs 232 crore, reflecting a 22% rise from the previous year, accounting for 8% of revenue. The revenue from other regions of the world increased by 13%, reaching Rs 247 crore.

Key Customer Relationships Driving Growth

Fractal’s strong customer relationships have been pivotal in driving growth. The Net Revenue Retention in the Fractal.ai segment stood at 121.3% in FY25, a rise from 110.2% in FY24, showcasing effective client retention along with expansion through upselling and cross-selling. The company’s top 10 clients in the Fractal.ai segment contributed 54% to segment revenue in FY25, with an average relationship duration of over eight years.

Cost Structure Analysis

On the expense front, employee benefit costs represented the largest expense at Rs 2,005 crore, accounting for 78% of the total and reflecting a growth of 15% over FY24. Depreciation expenses rose by 23% to Rs 102 crore. Conversely, outsourced manpower costs decreased by 3.33% to Rs 58 crore, while marketing expenses saw a significant decline of 31.58%, landing at Rs 13 crore. Legal and professional fees saw an increase of 13%, totalling Rs 52 crore.

Financial Performance Highlights

Overall, Fractal’s total expenses surged by 14.4% to Rs 2,575 crore in FY25, representing a slower rate of increase compared to revenue growth. Consequently, the company achieved profitability, reporting a net profit of Rs 221 crore, a turnaround from a loss of Rs 55 crore in FY24. On a per-unit basis, Fractal spent Rs 0.93 to generate a single rupee in FY25. The company’s ROCE and EBITDA margins were reported at 12.97% and 14.13%, respectively.

Fractal’s Asset Position

Fractal maintained current assets valued at Rs 1,625 crore, which included Rs 288 crore in cash and bank balances in FY25. According to the DRHP, TPG Fett stands as the largest external shareholder with a 25.67% stake, followed by Apax Partners-owned Quinag Bidco, which holds 18.78%. The GLM Family Trust owns 15.7% of the company’s capital structure.