Happiest Minds sees growth in H2 driven by $2mn Gen AI investment

Bengaluru-based digital solutions provider Happiest Minds Technologies anticipates a boost in growth in the second half of the year, largely driven by its recent $2 million investment in generative AI (Gen AI) initiatives. The company is further optimistic about the upcoming quarters, with an increase in business volume and a robust pipeline indicating strong demand for generative AI solutions.

Happiest Minds’ generative AI revenue reached $1.9–2 million in the first half of the financial year 2025 (FY25). The company’s generative AI division employs a dedicated team of 120–130 professionals, currently operating at a utilization rate of 20–25%. At present the company has completed 60 POCs (Proof of Concepts) on Gen AI.

The company is exploring markets in Africa and the Asia-Pacific (APAC) regions with the acquisition of PureSoftware and Aureus.
“We will rely on Pure Storage and Aureus to drive our growth in the Rest of the World regions for the next couple of quarters,” said Joseph Anantharaju, co-founder and executive vice chairman, in an interview with TechCircle in September.

Happiest Minds acquired US-based Pure Software in April for $94.5 million to strengthen its domain capabilities in banking, financial services, insurance (BFSI), and healthcare. A month later, the company announced the acquisition of Aureus for $8.5 million for product and digital engineering services. In April, Happiest Minds also acquired a 100% equity interest in Macmillan Learning India, a wholly owned subsidiary of the Macmillan Group, USA.

In Q2 FY25, Happiest Minds Technologies reported a 12.3% increase in dollar revenue, with EBITDA margins at 17.6% and a profit after tax of ₹49.52 crore.

Anantharaju also mentioned that 3-4 generative AI proof of concepts (PoCs) have already been implemented, and the key now is to transition these PoCs into full-scale implementations. “We carved out this business unit to ensure focus, responsibility, and accountability. This way, we can make the necessary investments while holding the unit accountable for its revenue generation.”

Overall, the IT firm posted a 3% sequential fall in its net profit to Rs 50 crore in the quarter that ended on Sept. 30, 2024. In the June quarter, the company had logged a net profit of Rs 51 crore. The company's revenue during the second quarter rose 12% sequentially to Rs 522 crore from Rs 464 crore in the previous quarter.

 The company has set a revenue growth target of 30-35% for FY25, with management noting the focused efforts needed to achieve this goal. Happiest Minds’ H1 EBITDA margin of 22.7% also surpassed its guidance range of 20-22%, indicating strong operational performance in the first half of the year.

“Happiest Minds has delivered our best growth results in the last two years with 12.7% quarter-on-quarter growth and 28.2% year-on-year growth. The transformational changes we initiated this year are all gaining momentum,” said Ashok Soota, Executive Chairman of the company.

Large and mid-sized Indian IT services companies are seeing strong digital transformation contracts, driven by investments in generative AI, despite cautious spending trends. Gartner analysts have updated IT spending projections for Q2 2024, noting a positive trend in IT company performance, particularly in banking and financial services. 

However, concerns about the macroeconomic landscape and geopolitical issues remain. Phil Fersht, CEO of Horses for Sources, emphasized that service providers focusing on AI capabilities are likely to find new growth opportunities in the coming quarters.