Nagarro SE ((DE:NA9)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Nagarro SE’s recent earnings call painted a mixed picture for investors. The company showcased impressive revenue performance, client expansion, and operational efficiency. However, these positives were tempered by challenges such as currency impacts and adjustments in financial guidance, resulting in a balanced outlook for the future.
Revenue and Growth Performance
Nagarro reported a robust Q2 2025 revenue of EUR 252 million, with an adjusted EBITDA of EUR 30.5 million. The company also achieved a gross margin increase to 33.2% from 30.0% a year ago, driven by productivity gains. This performance underscores Nagarro’s ability to maintain growth despite external pressures.
Client Base Expansion
The company saw an increase in the number of clients generating over EUR 1 million, reflecting strong client loyalty and satisfaction. The Net Promoter Score (NPS) for the quarter stood at a commendable 66, indicating high levels of client satisfaction and potential for future growth.
Operational Efficiency
Nagarro demonstrated excellent operational efficiency, with significant improvements noted despite currency challenges. Days sales outstanding improved from 88 days to 85 days, showcasing the company’s effective management of its receivables.
AI and Digital Transformation
There was an encouraging uptick in activities related to data, cloud, and AI. Clients are increasingly comfortable with AI, which is opening new business opportunities for Nagarro, positioning it well for future technological advancements.
Regional and Industrial Growth
Central Europe experienced strong growth at 9%, with notable expansion in the automotive and industrial sectors. Additionally, Nagarro gained significant traction in the Middle East with new public and private sector clients.
Currency Impact on Financial Performance
The weakening of the dollar against the euro led to a revaluation loss of EUR 18.0 million in the first half of the year, significantly impacting the adjusted EBITDA. This currency fluctuation remains a challenge for the company’s financial performance.
Guidance Adjustment
Due to current demand trends and cost trajectory, Nagarro adjusted its revenue guidance for 2025 to the lower end of its initial forecast. The adjusted EBITDA margin guidance was also revised down to 13.5%-14.5% from the previous 14.5%-15.5%, reflecting a more cautious outlook.
Decline in Horizontal Tech Revenue
Nagarro continued to see a decline in Horizontal Tech revenue, aligning with its strategic decision to move away from this segment over the past decade. This shift is part of the company’s long-term strategy to focus on more promising areas.
Cash Flow Challenges
The company faced cash flow challenges, with a cash outflow of EUR 74 million for the six-month period ended June 30, 2025, compared to an inflow of EUR 8.8 million for the same period last year. This highlights the need for careful financial management in the coming quarters.
Forward-Looking Guidance
Nagarro SE provided detailed guidance for the remainder of 2025, with expectations set at the lower end of its initial revenue guidance. The company is focusing on strategic initiatives and partnerships in Japan, the German Mittelstand, and Edge AI and IoT as future growth drivers. Efforts are also being made to strengthen corporate governance and mitigate currency impacts.
In summary, Nagarro SE’s earnings call reflected a balanced sentiment, with strong operational and client performance offset by currency challenges and revised financial guidance. The company remains focused on strategic growth areas and improving operational efficiencies to navigate the current economic landscape.