Nagarro SE’s Earnings Call: Growth Amid Challenges

Nagarro SE ((DE:NA9)) has held its Q1 earnings call. Read on for the main highlights of the call.

Nagarro SE’s recent earnings call painted a mixed picture, highlighting robust revenue growth and strategic initiatives while acknowledging challenges such as currency effects and limited public sector exposure in Germany. The company’s focus on diversification and strategic partnerships emerged as key drivers for future growth.

Revenue and Growth Metrics

Nagarro reported a strong financial performance for Q1 2025, with a revenue of €247 million and an adjusted EBITDA of €30.2 million, resulting in an adjusted EBITDA margin of 12.2%. These figures underscore the company’s solid growth trajectory despite external challenges.

Deferred Revenue and Exchange Rate Impact

The earnings call revealed a significant €5.5 million in deferred revenue, coupled with negative currency effects that impacted the financial results. Specifically, a €5 million hit on adjusted EBITDA was attributed to unfavorable exchange rate fluctuations.

Industry Diversification

Nagarro’s strategy of diversifying across industries and clients proved effective, with management consulting and business information emerging as the best-performing sectors. The top five clients accounted for about 15% of the company’s revenue, showcasing a balanced client portfolio.

Strategic Initiatives

The company emphasized its focus on strategic partnerships, particularly with Japan Inc., and growth areas such as Edge AI and Edge Computing. These initiatives are expected to drive future growth and enhance Nagarro’s market position.

Supervisory Board Strengthening

Nagarro announced new additions to its Supervisory Board, including experienced leaders like Martin Enderle, Hans-Paul Burkner, and Jack Clemens. This move aims to strengthen governance and strategic oversight.

Currency and Deferred Revenue Effects

The negative impact of currency fluctuations and an increase in deferred revenue were significant factors affecting the company’s financial results, with a €5 million negative impact on EBITDA due to exchange rates.

Horizontal Tech Pressure

The horizontal tech sector continued to face pressure, which affected Nagarro’s regional performance. The company is actively addressing these challenges to stabilize its operations.

Limited Public Sector Exposure in Germany

Nagarro’s limited exposure to public sector expenditure in Germany was noted as a challenge. The company is working to increase its presence in this area to capitalize on potential opportunities.

Forward-Looking Guidance

Despite the challenges faced, Nagarro maintained its guidance for 2025, citing a stronger underlying performance than the numbers suggest. The company highlighted its strategic diversification across industries and geographies, with notable growth in Central Europe. Partnerships and acquisitions, particularly in Japan’s digital transformation and Edge AI sectors, are expected to drive further growth.

In summary, Nagarro SE’s earnings call reflected a balanced outlook, with strong revenue growth and strategic initiatives countered by challenges like currency effects and limited public sector exposure. The company’s focus on diversification and strategic partnerships positions it well for future growth, despite the hurdles faced.