Happiest Minds sees growth in Q3 driven Gen AI investments, sector-based verticalisation

Mid-cap IT services provider Happiest Minds Technologies reported robust growth in Q3 FY25, driven by its focus on Generative AI (Gen AI) and advanced tech initiatives. The Bengaluru-based firm recorded a net profit of ₹47.24 crore for the December quarter, down 17% from ₹57.6 crore the previous year, while total income rose 27% to ₹553.77 crore from ₹434.17 crore in the same quarter last fiscal. For context, the company's total income in Q2 FY25 was ₹548.67 crore.

The company also said that expenses increased to ₹484.83 crore from ₹354.51 crore year-on-year, primarily due to higher employee benefits and depreciation costs. 

Executive Chairman Ashok Soota highlighted four transformative initiatives launched last year, including the acquisitions of PureSoftware and Aureus, which contributed to year-on-year growth. Other initiatives include establishing a GenAI Business Unit, sector-based verticalisation, and the hiring of a Chief Growth Officer.

Happiest Minds acquired U.S.-based Pure Software in April 2024 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.

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 utilisation rate of 20–25%. At present the company has completed 60 POCs (Proof of Concepts) on Gen AI. The company also ventured markets in Africa and the Asia-Pacific (APAC) regions with the acquisition of PureSoftware and Aureus.

In an interview with TechCircle in December, Sridhar Mantha, CEO of the GenAI Business Unit, noted that initial interest in GenAI came from the education sector, but retail's customer engagement needs led to rapid growth in that area, with manufacturing and healthcare also showing significant demand. However, adoption in sectors like banking, financial services, and insurance (BFSI) has been slower due to regulatory concerns.

Most new deals in December were in BFSI, logistics, healthcare, and manufacturing. The company had 278 clients as of December 31, 2024, adding seven new clients during the quarter. Happiest Minds employs 6,630 people, with a 12-month attrition rate of 15.3%, up from 14.4% the previous quarter.

Earlier this week, Happiest Minds announced the acquisition of Gavs Technologies' Middle East business by signing definitive agreements for the 100% acquisition of InnovazIT Technologies LLC in Dubai and Gavs Technologies in Oman and Saudi Arabia. Valued at $1.7 million. The acquisition is expected to be finalised by March 15, 2025, and will cater primarily to large enterprises in the BFSI sector.

Earlier on January 15, the IT firm announced a strategic collaboration with Coca-Cola Beverages Vietnam to develop generative AI solutions to enhance organisational productivity and operational efficiency.