Fractal Analytics, a company specializing in enterprise artificial intelligence (AI), anticipates leveraging large agreements and mergers to advance to the next stage of growth. This occurs as more companies integrate AI to manage and transform their workflows.
Co-founder and CEO of the group, Srikanth Velamakkani, stated in an interview with Business Standard following the release of Q2 results for fiscal year 27 that the company has two additional growth vectors. The first is major deals and partnerships, which he believes are gaining momentum, and the second is growth through Mergers and Acquisitions (M&A). He expressed hope that M&A will ensure strong growth.
Fractal reported first quarter revenue of $100 million in the second quarter of fiscal year 27. According to the investor presentation, major deals for Fractal are defined as contracts valued over $10 million. The number of clients whose annual revenue over the last 12 months exceeds $10 million increased to eight in the second quarter, up from seven a year prior. Furthermore, the number of clients with an annual contribution exceeding $20 million grew from four to six.
Although the company will start working on small AI projects, some costing only $250,000, improved client engagement opens up numerous opportunities for AI application in other operations. Velamakkani added that because AI solves more complex problems, clients enter into multi-month and multi-year agreements, creating favorable conditions for future development. He noted that while Fractal historically lacked a strong base in large deals, they are beginning to build one, and the market is moving towards solving more complex and long-term AI problems.
The first growth vector is linked to Fractal's traditional strengths, including growth in sectors such as healthcare and banking, financial services, and insurance (BFSI). The healthcare and life sciences sector demonstrated a 79 percent growth, while BFSI grew by 30 percent. Despite strict regulation, both industries are actively adopting AI due to the presence of repetitive cognitive tasks that AI can augment, automate, and redesign. Velamakkani explained that BFSI companies in the US likely invest one-third of their technology spending in AI.
When asked about the pricing of major deals, Velamakkani explained that for small projects, unit economics are not considered, whereas for large deals, it becomes the basis for problem-solving efficiency. He acknowledged that sometimes the company might appear too expensive. Fractal's AI product business, which includes the Cogentiq AI agent platform, grew by 39 percent compared to the previous year, reaching an annual revenue run rate of 150 crore rupees. Currently, the product business accounts for 4 percent of the company's revenue. Velamakkani noted that product revenue is starting to grow steadily, indicating the realization of product potential.
