Nagarro profit falls 40.5% to €12.7 million in third quarter
Key Facts
Nagarro said on November 13 that its net profit in the third quarter of 2026 fell 40.5% year on year to €12.7 million, compared with €21.4 million in the same period of 2025. The decline came despite revenue remaining almost flat in euros, at €255 million versus €254.6 million a year earlier, an increase of 0.2%. But revenue fell 0.2% at constant currencies, while organic revenue declined 1.6% on the same basis. The figures show a widening gap between nearly stable revenue and weaker profitability during the quarter. Adjusted earnings before interest, taxes, depreciation and amortization fell to €38.3 million from €44 million, while its margin declined to 15% from 17.3%.
Gross profit fell to €83.9 million from €84.2 million, and its margin slipped to 32.9% from 33.1% in the third quarter of 2025. Reported EBITDA fell to €32.5 million from €43.5 million. The company attributed the decline to two factors: a €5.8 million fall in adjusted earnings and a €5.2 million increase in net special-item expense. Much of the increase in special items was related to share-based payment expenses, which rose €6.4 million year on year. The share-based payment expense included in the quarter’s adjustments was €4.6 million, according to the company’s announcement.
Earnings before interest and taxes fell to €23.8 million from €34.9 million, a year-on-year decline of 31.6%. A €3.1 million reduction in income tax expense partly cushioned the effect of this decline on net profit. The comparison shows that the fall in net profit came amid weaker operating indicators, with reported EBITDA, adjusted earnings and its margin all declining. By contrast, euro-denominated revenue remained close to its level a year earlier, while the measure of organic revenue at constant currencies contracted. The company did not identify a single factor explaining every movement in profitability in its results, while distinguishing the effect of special expenses from the decline in adjusted EBITDA.
For the first nine months of 2026, revenue was €755.5 million, compared with €753.4 million in the corresponding period, up 0.3% in euros and 2.7% at constant currencies. Organic revenue rose 1.2% at constant currencies but fell 1.2% in euros. Adjusted earnings before interest, taxes, depreciation and amortization increased 2.4% to €107.3 million from €104.8 million. Its margin rose to 14.2% from 13.9% over the nine months. The broader period therefore delivered better growth in adjusted earnings than the quarter alone, while the divergence between euro and constant-currency measures persisted.
Operating cash flow in the third quarter improved to €48.2 million from €34.7 million a year earlier. Nagarro said the improvement was driven mainly by better collections from customers and lower taxes paid on dividend distributions within the group. Average days sales outstanding fell to 80 days on September 30, compared with 82 days at the end of 2025, the company said. The number of clients generating more than €1 million in revenue over the preceding twelve months rose to 186 at the end of September, from 184 at the end of June. These indicators point to improved collections and a slight expansion in the base of high-revenue clients during the quarter.
Cash and cash equivalents stood at €124.3 million on September 30, compared with €124.6 million on December 31, 2025. Loans and borrowings fell to €278 million from €310.1 million at the end of last year. The company attributed the decline mainly to the repayment of a syndicated revolving credit facility. Nagarro reported that it had 18,499 employees at the end of September and operated in 39 countries. These figures provide a picture of liquidity, debt and the scale of operations at the end of the period, while the financial results remained the focus of the quarterly announcement.
The company had set 2026 revenue guidance of between €1.00 billion and €1.06 billion, based on current exchange rates and excluding future acquisitions. It expected a gross margin of about 32% and an adjusted EBITDA margin of between 14.5% and 15.5%. It warned that geopolitical and macroeconomic conditions could affect customer decisions. The adjusted EBITDA margin in the third quarter was 15%, within the company’s annual range, while the gross margin was 32.9%. The company had listed November 13, 2026, as the publication date for its financial statement for the third quarter ended September 30; that announcement provided the results and related guidance.