Nagarro Se

Good afternoon, everyone, and welcome to Legaro SE's Q1 2026 earnings call. Before we begin, let me briefly explain how you can submit questions. You can register to ask a question by pressing star followed by one on your telephone keypad. If you change your mind, please press star followed by two. And if you would like to submit a written question, please use the Q&A chat box that is available on the slides page. Please limit yourself to two questions initially. You may re-enter the queue. We will return to unanswered questions if time permits. With that, it is my pleasure to hand over to Michael.

Great. Thank you, Carla, and good afternoon, everyone. My name is Michael Knapp, and I'm part of the investor relations team at Nagaro. If you have not yet received a copy of our Q1 2026 earnings release, you can find it as well as a copy of our quarterly statement and today's presentation. in the investor relations section at negaro.com. Joining me today is Manas Human, our co-founder and custodian of entrepreneurship. Manas and I will be covering the results and strategic updates for the quarter. Before we begin, please note that some statements made during this call may be forward-looking and are subject to risks and uncertainties, as outlined in our financial reports. Additionally, please refer to the quarterly statement for important information regarding non-IFRS measures. With that, I'm pleased to hand you over to Manish.

Thanks, Michael. Once again, welcome, everyone, and thank you for joining us on this earnings call. My main message today is that we are seeing a positive response from clients to our fluidic intelligence approach. As I mentioned during our last earnings call, this approach is all about unlocking the intelligence that already exists across organizations, in people, teams, and departments, but often remains trapped in silos throughout the organization. Now, as our clients advance their digital transformation journeys into AI transformation journeys, existing workflows are being fundamentally rethought and redesigned for an agentic world. This is driving increased demand for partners like Nagarov who combine domain and client specific expertise with strong capabilities in AI and data. Nagarro has long been recognized for our engineering excellence and our deep understanding of client context, which remains a key reason why clients choose to work with us year after year. More recently, we have made significant investments to strengthen our CXO level consulting capabilities as we evolve towards a more advisory-led approach. This combination, strategic advisory as a front end, for AI transformation coupled with strong engineering execution in the client context, positions as well to become a leading partner in this new era. We now see ourselves no longer as a digital engineering leader, but as a leader in AI transformation and engineering. We are already seeing tangible examples of the value we can deliver to our clients with AI, a few of which I will touch on shortly. Simultaneously, we have restructured our organization to better enable our own rapid change that is along this advisory-led dimension that I've just described, but also along the growth dimension, which is essentially putting in place a classical, powerful sales and growth structure. We have cut down the number of business units from around 20 to just 10. We have created a growth-oriented incentive structure. We are enhancing regional GTM sales and account management. We are scaling partnership management. We are engaging with advisors to push into large deals. We are hiring growth leaders from tier one peers and so on. That said, we are still at an early stage in realizing the benefits of the initiatives and capabilities we are putting in place. Over time, we expect these initiatives to translate into sustainably higher growth rates. The results for 2025 demonstrated the resilience of our operating model during a period of subdued demand for IT services. Our teams delivered solid outcomes for our clients while maintaining a sharp focus on operational discipline. The results underscore the stability of our customer base and the strong confidence our long-standing clients place in us. Our underlying performance remained largely aligned with our expectations when taking into account the impact of foreign currency fluctuations during the year. If we were to use the exchange rates prevailing at the time of our initial 2025 guidance, the full year revenue would be approximately at the midpoint of our 1.02 to 1.08 billion euro range. Adjusted EBITDA excluding the 15.5 million euro unrealized products impact on intra-group loans would be approximately 153.7 million euro placing us towards the higher end of our guided adjusted EBITDA margin range of 14.5 to 15.5%. So overall the company continues to perform well in this cautious but stable demand environment. We were pleased to complete four acquisitions in 2025 with two announced later in the year, Charles Hudson and Inaho. Charles Hudson is a Massachusetts US-based technology services firm known for quality engineering for the digital commerce and retail sectors. Inaho Digital Solutions is a boutique IT services provider specialized in modernizing legacy applications and digital transformation in Japan and for Japanese clients worldwide. We are thrilled to welcome colleagues from all the acquisitions as well as their clients to the Nagarro family. We're also very happy to have our first ever CFO. I'm very pleased to introduce Prateek Agarwal who's listening in on this call as CFO and member of the management board. Prateek brings more than two decades of finance leadership experience in tech and IT services. He has held very senior roles in global listed companies in multi-country and culturally diverse operating environments. He has a wonderful track record in financial management, operational discipline, and capital markets engagement. But he will, of course, play a much larger role in subsequent earnings calls and in shaping the direction of the company. We have also been actively expanding our partnerships with leading players in AI transformation, including AWS, Databricks, OpenAI, Cursor, Carto. I'll talk more about the importance of these partnerships in a bit. We are confident that as we continue to execute our strategy, the market will eventually recognize the sustainable value that we are building here. Digging deeper into the Q1 numbers, we reported revenue that grew over 6% year-on-year in constant currency. This growth is tracking largely in line with our 2026 guidance. We remain focused on controlling what we can control, and our emphasis on operational discipline continues to yield results. Our Q1 gross margins came in at 31.2%, which is 60 basis points better than the year-ago period, as we focus on targeted initiatives for margin expansion, including the margin support program that we have spoken about, which continues to optimize resource allocation, improve utilization rates, and drive efficiencies across the organization. Our Q1 adjusted EBITDA margins were 12.6%, which improved year on year, but it's below our target for 2026, mostly due to the fewer number of working days in Q1. Please note that the EBITDA margin was 15.6%, but includes a large share-based payment benefit, which we are adjusting for. Altogether, we are maintaining the guidance we provided in March. Beyond the financial metrics, the long-term focus on delivering superior client experiences remains the primary driver of our sustained success characterized by intimate partnerships, continuous innovation with our clients and measurable outcomes. Our CSAT score was 92.7% and NPS remained healthy at 65. Accounts that generate more than 1 million euros dipped slightly to 179 as several implementation-led programs were successfully completed, with many converting into stable recurring managed services engagements. We have previously articulated our strategy of Up Across Together to capture the AI opportunity, and we are already making tangible progress along all three dimensions. We are moving up the value chain, complementing our engineering strengths with CSO-level AI advisory, where we are already seeing traction with some clients. This is now a key KPI across the company. We are expanding across regions and accounts, enabling our industry teams to capture global opportunities more effectively. And we are working together more seamlessly, simplifying our structure, strengthening cross-selling, and reducing duplication, particularly in our AI efforts. We are now streamlined, as I said, into just 10 business units, six vertical BUs and four capability BUs. Two of these capability BUs, called AI in Change and AI in Run, are fully focused on capturing the AI opportunity. Overall, this leaner, more aligned structure is going to be a key enabler of our next phase of growth. By deeply understanding a client's strategic priorities and then exceeding their expectations, we ensure that our services remain both indispensable and embedded within their long-term AI transformation roadmaps. We continue to believe that our client relationships or deep client relationships represent our most valuable long-term assets. Coming to governance, I showed you a similar slide during a Q3 call to highlight that we have taken a number of actions over the past several quarters to address industry concerns, improve corporate governance, and enhance financial reporting and transparency. I want to highlight some of the additional items we have completed on our list. We recently shared an update on our progress across leading global sustainability indices with marked year-on-year improvement across key benchmarks. back by stronger underlying governance systems and more comprehensive, transparent public disclosures. I mentioned this in Q3, EcoWatt has placed Nagara among the top 5% of participating companies globally, awarding a score of 79 on a gold medal. In addition, ISS ESG upgraded Nagara to a C-plus rating with prime status and our S&P global score rose to 52 in 2025. reflecting continued progress on the sustainability agenda. Finally, our MSCI rating improved to BBB in 2025, while our CDP rating advanced to B. Improvement across these benchmarks reflects just a more disciplined and structured approach to sustainability across our business. Also, we announced in March that a supervisory board's independent investigation into prior allegations was completed. That process was highly rigorous and comprehensive, and the conclusions are very clear. None of the allegations were substantiated, and no evidence of fraud or misconduct was found. At the same time, the process did provide valuable insight into areas where we could further strengthen our structures, processes, and documentation, and we are already addressing these areas. including enhancements to our finance, accounting, and risk functions, and a strengthened supervisory board and audit committee. And of course, again, and perhaps most exciting, we are very pleased to welcome Prateek as the new colleague, CFO, and member of the management board. Now, we view all of these items listed here as important steps in our continued evolution towards a more institutionalized governance framework, fully aligned with the expectation of global capital markets, and as a foundation for building long-term, investor confidence. Our customer diversification across industries continues to provide both growth and stability. At the same time, we are now using the consolidation of BUs to increase our focus on some specific sub-sectors and offerings while deprecating others. Simultaneously with the involvement of management consultants and new hires, We are developing improved playbooks and growth motions. We see this improved discipline of execution and improved focus on commercial excellence as a new phase in the industry, but also in Magaro's evolutionary journey. Our diversification extends to geographies as well. The US and Germany remain extremely important markets for us. The Middle East has been a nice addition to growth in the last few years. Yet, because of this diversification, we have the resilience to weather the current geopolitical challenges in the Middle East without major impact. Michael, do you want to now maybe discuss the balance sheet and cash flows?