Nagarro SE

Nagarro reported H1 2026 revenue of EUR 501 million, up 4.2% year over year in constant currency. Q2 constant-currency growth was 2.0%, versus 6.5% in Q1. Gross margin exceeded 32% in Q2, and adjusted EBITDA margin was 15.0% in Q2 2026, though management said FX movements helped. On cash flow, operating cash flow was EUR 29.8 million in Q2 and EUR 29.5 million for H1, total cash flow for H1 was an inflow of EUR 4.6 million, cash was EUR 131.3 million, and net leverage was 1.7x. Guidance was qualitative rather than numerical: management said collections should improve in Q3, the first 1.5 months of Q3 were “very productive,” and profitability initiatives should show results by Q4.

Manas Fuloria framed AI as an engineering problem and argued Nagarro is well positioned because it combines deep engineering, client context, and the ability to bridge strategy to execution. He emphasized that enterprise AI adoption will require dependable, safe systems in complex environments, which he sees as a strong fit for Nagarro’s capabilities. Strategically, he spent significant time on the proposed Persistent combination, calling it a compelling opportunity to create a differentiated AI-led digital engineering leader, but he also said Nagarro remains focused on clients and execution regardless of the deal outcome.

Prateek Aggarwal highlighted a solid balance sheet and cash profile: financial liabilities were EUR 310.5 million, lease liabilities EUR 67.4 million, cash EUR 131.3 million, net liabilities EUR 246.6 million, and net leverage 1.7x. He said working capital was EUR 236.2 million and total cash flow for H1 was an inflow of EUR 4.6 million versus an outflow of EUR 57.7 million a year earlier. He also noted H1 operating cash flow of EUR 29.5 million, CapEx of EUR 1 million, and financing cash outflows of EUR 22.1 million, down from EUR 95.8 million mainly because treasury share purchases and loan repayments were lower. On margins, management said the Q2 15.0% adjusted EBITDA margin was not just a one-off FX effect; there were also roughly EUR 10 million of adjustments in the quarter, including an EUR 8.1 million share-price-linked cash-settled ESOP impact.

Analysts focused on the regional divergence, asking why Germany was weaker while the U.S. accelerated, and whether pricing is changing as AI becomes more central. Management said Germany was hurt by the planned ramp-down of some SAP projects and described the weakness as temporary rather than structural, while U.S. management-consulting-related work is increasing. On pricing, Manas said clients are expecting AI productivity gains to be reflected in fixed-bid and long-term contracts, but time-and-expense pricing pressure has been limited. Another analyst asked about the Q2 margin bridge and the slowdown in organic growth; management said the pipeline remains stable, weakness is mainly in Germany and Austria, horizontal tech is weaker but a smaller part of the business, and FX/ESOP items had notable P&L effects but did not fully explain the 15% margin.