Zensar Technologies , a global technology services and solutions provider, has reported a 4.2% year-over-year revenue growth in Q2, despite facing headwinds in the Technology, Media, and Telecommunications (TMT) sector. The company's strategic focus on AI-driven solutions and operational efficiency has helped maintain strong margins and position it for future growth.

Financial Performance

Zensar reported revenues of $162.80 million for Q2, marking a 4.2% year-over-year growth in reported currency and 3.4% in constant currency. The company achieved a sequential quarter-on-quarter growth of 0.5% in reported currency.

Despite absorbing the impact of annual salary hikes and one-time bonuses, Zensar maintained strong margins:

• Gross profit improved to 31.0%, up 50 basis points quarter-on-quarter
• EBITDA reached 15.4%, up 20 basis points quarter-on-quarter

AI-Driven Growth and Innovation

Zensar launched ZenseAI, its next-generation AI platform, demonstrating the company's commitment to AI-led transformation. The platform is designed to elevate the delivery of Zensar's core value proposition of Experience, Engineering, and Engagement.

Notably, 28% of order bookings in Q2 were AI-influenced, up from 21% in the previous quarter. This increase reflects the growing importance of AI solutions in Zensar's business strategy and client engagements.

Operational Highlights

• Utilization rate reached 84.8%, up 200 basis points year-over-year
• Voluntary attrition remained low at 9.8%
• Cash including investments stood at $293.00 million
• Diluted EPS grew 16.2% to INR 7.90 per share

Sector Performance and Challenges

While most sectors showed growth, the TMT sector experienced a significant decline of 9.9% quarter-on-quarter. Manish Tandon, CEO and Managing Director of Zensar Technologies, attributed this to a shift in client spending from operational expenses to capital expenditure for AI and GPU investments.

Future Outlook

Despite challenges in the TMT sector, Zensar remains optimistic about its overall business prospects. The company's focus on AI-driven solutions, operational efficiency, and diversification across sectors positions it well for future growth.

Manish Tandon commented, "As we look ahead, we see the uncertainty in today's global market landscape as an opportunity, particularly in AI. We remain focused on delivering differentiated value through innovation, operational discipline, and deep commitment to client success."

As Zensar navigates the dynamic tech landscape, its strategic investments in AI capabilities and focus on high-growth sectors may help offset challenges in the TMT vertical, potentially driving sustainable growth in the coming quarters.

Zensar Technologies , a leading Experience, Engineering and Engagement solutions company, is pursuing a multifaceted growth strategy that includes global expansion and a strong focus on AI-driven platforms.

Global Expansion and AI-Driven Growth

Zensar Technologies is targeting growth through AI-driven platforms, including ZenseAI. The company is scaling its BFSI (Banking, Financial Services, and Insurance) and healthcare verticals while focusing on European and African markets. As part of its expansion efforts, Zensar aims to achieve utilization gains and maintain mid-teen margin sustainability as it expands its Gen AI-led digital engineering solutions.

In a significant move to strengthen its global presence, Zensar has announced plans to establish a new subsidiary in Brazil. This strategic decision marks the company's expansion into Latin America's largest economy, potentially opening up new opportunities in the region.

Brazilian Subsidiary

The Board of Directors has accorded in-principle approval for setting up the new entity in Brazil. This subsidiary will be established either directly by a Zensar Technologies subsidiary or through a joint venture partner.

Financial Approach

While specific financial details of the new subsidiary have not been disclosed, Zensar has stated that it will initially subscribe to the minimum capital necessary at face value. This approach suggests a measured expansion strategy, allowing the company to test the waters in the Brazilian market before making larger commitments.

Recent Financial Performance

The announcement comes on the heels of Zensar's Q2 financial results, which show a steady performance:

Manish Tandon, CEO and Managing Director of Zensar, commented on the company's recent performance, stating, "This quarter, we forged ahead as an organization, delivering positive performance across multiple dimensions and achieving steady revenue growth. Disciplined execution, paired with scaled AI talent and a deep commitment to crafting meaningful and lasting client experiences remains our priority."

Strategic Focus on AI

Zensar has been placing a strong emphasis on artificial intelligence, recently launching ZenseAI, a next-generation platform designed to elevate its Experience, Engineering and Engagement value proposition. This focus on AI capabilities is expected to play a crucial role in the company's global expansion, offering cutting-edge solutions to new markets.

Looking Ahead

The expansion into Brazil aligns with Zensar's global growth strategy. As the company establishes its presence in this new market, it may leverage its expertise in digital services, cloud infrastructure, and AI-driven solutions to cater to the needs of Brazilian clients.

The move into Brazil represents a significant step for Zensar Technologies, potentially opening up new avenues for growth and reinforcing its position as a global player in the IT services industry. As the subsidiary takes shape, industry observers will be keen to see how Zensar adapts its offerings to the unique demands of the Brazilian market and whether this expansion will serve as a springboard for further growth in the Latin American region.

With its focus on AI-driven platforms, vertical expansion in BFSI and healthcare, and strategic geographical growth, Zensar Technologies is positioning itself for growth and innovation in the global IT services landscape.