Mastek Limited, founded in 1982, is a global IT services company headquartered in Ahmedabad, India. Specializing in digital transformation, Data & AI, Oracle, and Salesforce solutions, Mastek delivers trust, value, and velocity to clients across healthcare, government, and private sectors. With a strong presence in the U.K., U.S., and AMEA, Mastek drives innovation and operational efficiency for its 120+ active customers.
In this article we are going to discuss the summary of the management commentary that was delivered on Q4FY25 performance.
Key Financial Highlights
| Metric | FY’25 Performance | Q4 FY’25 Highlights | Comments |
|---|---|---|---|
| Revenue Growth (YoY) | +13.1% | U.K.: +17.2% YoY, +9.4% QoQ North America: +16% YoY, -8% QoQ | Strong U.K. growth offset by U.S. slowdown. |
| Net Profit Growth (YoY) | +20.9% | Q4 Net Profit: -14.4% YoY | Decline due to one-time costs and margin pressures. |
| EBITDA Margin | Target: 17–19% (currently lower) | Q4 EBITDA: -1.4% YoY | Impacted by higher on-site costs, subcontractors, and lower U.S. revenue. |
| Cash & Equivalents | INR 622 Cr (vs. INR 473 Cr in FY’24) | – | Strong liquidity position. |
| Order Backlog (12-month) | +1.7% YoY (reported) +7–8% YoY (adjusted for $15M delayed deal) | – | Healthy pipeline, but some deal delays in U.S. |
| Dividend | INR 16/share (Final) Total: 460% for FY’25 | – |
Segment-wise Performance (Q4 FY’25)
| Segment | Growth (YoY) | Key Drivers |
|---|---|---|
| U.K. & Europe | +17.2% | Healthcare (100%+ growth), Data & AI, secured government contracts. |
| North America | +16% (YoY), -8% (QoQ) | Oracle (+50% YoY), but macro slowdown impacted deal flow. |
| AMEA (APAC & Middle East) | – | Focus on profitable growth; EBITDA improved QoQ. |
Business Highlights
U.K. & Europe:
- revenue for The U.K. on a year-on-year basis grew by more than 17.2%, and grew by 9.4% quarter-on-quarter.
- Healthcare continues to be the most high-growth sector for us in the U.K.
- we had more than 100% growth year-over-year in the last fiscal in our health care business.
- the business here is not just in the Digital services and Oracle, but the company is also seeing a lot of Data & AI-led businesses happening in the private sector. And it continues to see strong positive momentum as it goes forward into the next year.
- government services in UK – This year, as planned, the company has almost renewed all the large backlog of business that it had to renew, which gives it a very healthy runway for the next 2 years and also gives it the momentum to aggressively go out and hunt for much more net new growth business in the coming year.
North America
- Had a year-on-year growth of around 16%, and Q-o-Q numbers have dropped by 8%.
- Oracle continues to be a strong driver for the North America business. Oracle business grew more than 50% this year compared to the previous year.
- The Company is also working very closely with 120-plus active customers in North America and is working with them in developing their Data, AI and Digital road map.
- Macro uncertainties led to delayed deals and insourcing by clients.
AMEA (Asia-Pacific, Middle East, and Africa)
- Healthcare continues to be the top focused vertical in the geography.
- Company’s healthcare business, which was largely Oracle-driven earlier in the geography, has now expanded to other service lines and seeing traction across all capabilities, Salesforce, Data, AI and Oracle within the healthcare space.
Reasons for EBITDA De-growth Despite Revenue Growth
Despite reporting 13.1% YoY revenue growth for FY’25 and strong performance in the U.K., Mastek’s EBITDA declined by 1.4% YoY in Q4. Here are the key reasons:
1. Higher On-Site & Subcontractor Costs
- U.K. Business Shift: Growth came from Data & AI projects, which require more on-site, high-cost resources (e.g., security-cleared personnel for government contracts).
- Subcontractor Dependence: Added 70–80 subcontractors in Q4, increasing costs temporarily until internal capabilities scale.
2. Lower Margin Contracts
- Renewed U.K. Government Deals: Secured long-term contracts but at lower gross margins due to competitive pricing and cost-efficiency demands.
- Newer Capabilities (Data/AI): Initial-phase projects in Data & AI have lower margins until offshoring and efficiency gains kick in.
3. One-Time Costs from Restructuring
- Workforce Reset: Reduced headcount but incurred severance costs.
- Leadership/Org Changes: Streamlining operations (e.g., U.S. consolidation) led to short-term expenses.
4. U.S. Macro Slowdown
- Revenue Dip (QoQ -8%): Clients delayed deals due to budget cuts and insourcing, impacting profitability.
- Public Sector Weakness: Salesforce projects (especially government-funded) faced spending pauses.
5. Investments in AI & Innovation
- ADOPT.AI Platform: Extended to Salesforce/Digital, requiring upfront investment (though expected to boost margins long-term).
- 100+ AI Use Cases: POC development costs weighed on near-term margins.
Outlook for FY’26
U.K. and Europe: Continued Robust Growth
- Core Strength: Mastek expects its U.K. and Europe markets to maintain strong growth momentum, describing the region as “firing on all cylinders.”
- Secured Government Services (SGS): The company has a healthy order backlog, with large contracts renewed for a two-year runway. Mastek is now targeting new projects and departments within the SGS sector, with bids already in progress, expected to enhance growth trajectory in FY’26.
- Healthcare Momentum: The U.K. healthcare sector, particularly the NHS, continues to drive exceptional growth (over 100% year-on-year in FY’25). Mastek anticipates sustained high growth in FY’26, driven by policy-driven programs like NHS prevention and collections, which leverage Data & AI solutions.
- Data & AI Focus: Data & AI will remain a key technology focus, with Mastek expecting growth in these areas across all sectors and geographies, supported by its expanding capabilities and customer collaborations.
U.S.: Strategic Reset Amid Uncertainty
- Current Challenges: The U.S. business is navigating macroeconomic uncertainties, with clients facing budget cuts and in-sourcing pressures, particularly in the public sector.
- Strategic Reset: Mastek is restructuring its U.S. operations by consolidating its acquired businesses into a unified North America unit, refining its leadership team, and redesigning its go-to-market strategy. The focus is shifting toward high-growth areas like Data & AI.
- Customer Engagement: The company is fostering closer ties with its 120+ active U.S. customers, co-developing innovation-led programs to ensure long-term value and sustainability.
- Timeline: These changes will take time to fully materialize, with Mastek expecting gradual improvements in performance as it navigates the macro environment and aligns with customer needs.
AMEA (APAC and Middle East): Profitable Growth in Healthcare
- Strategic Priority: Mastek is focused on driving profitable growth in the AMEA region, with healthcare as the top vertical.
- Service Expansion: While previously Oracle-driven, the healthcare business is now expanding into Salesforce and Data & AI service lines, enhancing growth potential.
- Financial Performance: The region has already shown significant EBITDA improvement in Q4 FY’25, with expectations of continued profitability gains in FY’26.
Operational Efficiency as a Key Mantra
Structural Changes: Mastek has implemented fundamental changes, including organizational simplification, cost management, and resource optimization, to drive robust and profitable growth.
AI Integration: The company is leveraging its ADOPT.AI platform, initially launched for Oracle services in Q3 FY’25, now extended to Salesforce and Digital services. This platform enables 30-50% efficiency gains in fixed-bid projects, enhancing delivery speed and cost-effectiveness.
AI Use Cases: Mastek has developed over 100 AI-led use cases in collaboration with clients, currently in proof-of-concept (POC) stages. Successful execution of these POCs is expected to drive significant value for clients and boost Mastek’s business uptake.
Short-Term Pain: While these changes may cause short-term challenges, such as one-time costs or margin pressures, Mastek anticipates positive impacts starting in FY’26, with a goal to achieve EBITDA margins of 17-19% by year-end.