Nagarro SE

Nagarro reported H1 2026 revenue of EUR 501 million, up 4.2% constant currency year over year. Q2 gross margin exceeded 32% and adjusted EBITDA margin was 15.0%, though management said the margin benefited from FX movements. On the balance sheet, financial liabilities were EUR 310.5 million, lease liabilities were EUR 67.4 million, cash was EUR 131.3 million, net liabilities were EUR 246.6 million, and net leverage was 1.7x. For H1, operating cash flow was EUR 29.5 million, total cash flow was an inflow of EUR 4.6 million, CapEx was EUR 1 million, and DSO increased from 85 days to 86 days. Management did not give formal next-quarter or full-year revenue/EPS guidance, but said the first 1.5 months of Q3 had been very productive, collections from some clients are expected in Q3, and they expect to see results from profitability initiatives by Q4.

Manas Fuloria framed AI as a core strategic opportunity, arguing that enterprise AI success depends on strong engineering, trust, and execution across complex environments. He said Nagarro’s mix of engineering depth, client context, and consulting-to-execution capability positions it well as clients try to scale AI responsibly. His tone was upbeat and confident, while also stressing that the business remains focused on delivery regardless of the pending Persistent combination.

Prateek Aggarwal highlighted a solid cash position of EUR 131.3 million, financial liabilities of EUR 310.5 million, lease liabilities of EUR 67.4 million, and net leverage of 1.7x. He said H1 operating cash flow was EUR 29.5 million, total cash flow was an inflow of EUR 4.6 million, and CapEx was just EUR 1 million, under 1% of 6-month revenue, reflecting the asset-light model. He also pointed to working capital of EUR 236.2 million and said DSO rose slightly to 86 days, which he expects to bring down in Q3; financing outflows fell to EUR 22.1 million from EUR 95.8 million a year ago due mainly to lower treasury share purchases and bank loan repayments.

Analysts pressed on Germany versus U.S. performance, pricing in AI-related deals, the margin bridge, and the slowdown in organic growth. Management said Germany weakness was tied to the planned ramp-down of some SAP projects and specific client changes, while U.S. growth was helped by rising management consulting work tied to clients moving faster on AI. On pricing, Fuloria said fixed-bid and long-term contracts are increasingly factoring in AI productivity gains, but time-and-expense business has seen less pressure. On margins, Aggarwal said FX and cash-settled ESOP marks affected the P&L, but the aggregate impact was not the main driver of the 15% margin.