Capillary revenue up 43% to Rs 257 crore, slips to loss

Capillary Technologies posted operating revenue of Rs 256.6 crore in Q1 FY27, up 42.6% from Rs 179.9 crore a year earlier and 34% higher than the Rs 191 crore it recorded in Q4 FY26. Total income, including Rs 5.7 crore of other income, was Rs 262.3 crore.

Subscription services accounted for Rs 242.4 crore, or 94.5% of operating revenue. Installation and campaign services contributed Rs 12.2 crore. Total expenses rose 31.6% to Rs 237.5 crore. Employee benefits were the largest line at Rs 119.8 crore, up 40% and more than half of all spending, followed by software and server charges at Rs 45 crore and professional and consultancy fees at Rs 34 crore.

Adjusted EBITDA more than doubled to Rs 44 crore. The company still slipped into the red for the quarter after a Rs 33.4 crore exceptional loss related to a cyber-enabled banking fraud at its Czech Republic subsidiary. The report does not give a final net loss figure. Capillary was founded in 2008 by Aneesh Reddy, Krishna Mehra and Ajay Modani, and sells cloud-native loyalty, CRM and customer engagement software to more than 465 brands across 53 countries, including Tata Digital and Abbott Laboratories. Its shares rose 15% to Rs 571, taking market capitalisation to Rs 4,539 crore.

The signal for Indian D2C operators sits in the growth rate. A retention vendor growing 43% while most Indian retail grows in the low teens means brand budgets are moving from acquisition to the installed base. Capillary is being paid for that shift. If your media plan is still weighted to prospecting, you are on the wrong side of a bet the buy-side has already placed.

The second read is duller and more useful. Subscription is 94.5% of this business and adjusted EBITDA is now Rs 44 crore on Rs 257 crore of revenue. A vendor with that shape does not discount at renewal. Budget loyalty tooling as a fixed cost with an annual escalation, not a pilot you can drop. And note what one control failure cost here: Rs 33.4 crore, roughly three quarters of adjusted EBITDA, gone in a single line from a subsidiary bank account. If you run overseas entities or leave float sitting with agencies, treasury controls belong in the monthly P&L review, not the IT backlog.