Smartworks Coworking Spaces Limited delivered strong Q3FY26 results, demonstrating significant progress in its financial and operational metrics. The managed office platform reported revenue growth of 34% year-on-year to ₹4,721 million, marking its entry into a clear cash-compounding phase with improved margins, returns, and cash flows.

Financial Performance Highlights

The company's Q3FY26 performance showcased robust growth across key financial metrics. Revenue from operations reached ₹4,721 million, representing an 11% quarter-on-quarter increase alongside the strong 34% year-on-year growth.

Normalized EBITDA surged 86% year-on-year to ₹847 million, with margins expanding by 150 basis points quarter-on-quarter to 17.9%. The company achieved normalized profit before tax of ₹404 million, marking a 647% year-on-year increase and 65% quarter-on-quarter growth.

Milestone Achievement in Profitability

Smartworks achieved a significant milestone by turning Ind-AS PAT positive for the first time, reporting ₹12 million in Q3FY26. While the company has been profitable on a normalized basis for several years, this development reflects increasing alignment between operating performance and reported profitability as the portfolio matures.

Operational Scale and Occupancy Metrics

The company continued expanding its operational footprint while maintaining strong occupancy levels. Total Super Built-up Area (SBA) reached 15.3 million square feet, including leased SBA of 11.1 million square feet. The quarter saw addition of 2.6 million square feet in total SBA.

The company operates 63 total centres across 15 cities, with 55 leased centres currently operational. Seats retention rate remained strong at 93% for the quarter ended December 31, 2025.

Enterprise-Led Growth Strategy

Smartworks continued its focus on enterprise-led growth, with 90% of rental revenue contributed by enterprise clients. The 1,000+ seat cohort contributed 36% of rental revenue in Q3FY26, up from 35% in Q2FY26 and 29% in FY25. These large-format deployments come with longer tenures, with the 1,000+ seat cohort averaging 52 months total tenure and 38 months lock-in tenure.

Enhanced Capital Efficiency

Return on Capital Employed (ROCE) improved meaningfully from 14% in Q2FY26 to 21% in Q3FY26. This inflection demonstrates that incremental scale is translating into higher capital efficiency, supported by margin expansion, improving asset turnover, and disciplined capital deployment.

Strong Balance Sheet Position

Smartworks ended Q3FY26 net-debt negative at ₹(418) million, with gross debt reducing to ₹2,327 million from ₹3,446 million in Q3FY25. Cash and equivalents stood at ₹2,745 million. The company benefited from a two-notch credit rating upgrade to CARE A (Stable) from CARE BBB+ (Positive), reflecting improved financial profile and debt servicing ability.

Cash Flow Performance

Operating cash flow remained structurally healthy with OCF-to-EBITDA conversion above 1x. Normalized operating cash flow reached ₹1,009 million in Q3FY26, representing a 148% year-on-year increase. The strong cash generation reflects the enterprise-led billing cycles, stable receivables, and lower working-capital volatility.

Industry Diversification

The company maintains a diversified client base across industries, with IT, Technology & Software Development contributing 38% of Q3FY26 rental revenue, Business Consulting & Professional Services at 17%, Engineering & Manufacturing at 11%, BFSI at 8%, and others comprising 26%. This diversification reduces concentration risk while improving stability and predictability.

Smartworks Coworking Spaces Limited has reported significant improvement in its Q3 financial performance, with EBITDA reaching ₹306 million compared to ₹218 million in the same quarter of the previous year. The managed office platform also demonstrated enhanced profitability with EBITDA margin expanding to 64.75% from 62.02% year-over-year.

Updated Financial Performance

The latest quarterly results show substantial improvement in the company's profitability metrics, reflecting the structural inflection in its growth trajectory that management had previously indicated.

Operational Excellence and Market Position

The company continues to maintain its strong operational footprint across 15 cities with over 15.30 million sq. ft. of managed space. The enhanced EBITDA performance reflects improved operational efficiency and the company's focus on high-quality enterprise clients.

Enterprise-Driven Growth Strategy

The improved EBITDA margin of 64.75% demonstrates the effectiveness of Smartworks' strategy to focus on large-format enterprise contracts. Multi-city enterprise clients continue to contribute approximately 30% of rental revenue, while the 1,000+ seat client cohort represents 35% of rental revenue, enhancing the predictability of income streams.

Capital Efficiency Improvements

The strong EBITDA performance supports the company's capital-efficient growth model. With a net-debt negative balance sheet position and committed rental revenue exceeding ₹4,700 crores, Smartworks maintains financial flexibility while delivering improved returns to stakeholders.

Market Outlook

The enhanced EBITDA margin expansion from 62.02% to 64.75% year-over-year indicates the company's ability to leverage its scale for improved profitability. With secured supply visibility through FY27 and continued focus on enterprise-led demand patterns, Smartworks appears well-positioned to sustain its profitability momentum in upcoming quarters.