TeamLease Services reported a flat revenue quarter in Q3 FY26 but achieved significant profitability growth, with EBITDA up 11% QoQ and PBT surging 69% sequentially. A major regulatory client transition led to a net loss of 27,000 headcount, which management confirmed was the full impact. The outlook for Q4 remains positive, expecting headcount recovery and sustained margin expansion driven by digitization and lower costs.
Q3 FY26 Financial Performance Overview
TeamLease Services experienced a flat quarter in terms of revenue for Q3 FY26. However, management highlighted strong profitability metrics. EBITDA showed growth of 11% quarter-on-quarter and 22% year-on-year. Pre-tax profit (PBT) saw a substantial sequential growth of 69%, partly aided by an interest credit on tax refunds. The company also received approximately Rs. 100 crores in income tax refunds during the quarter.
Impact of Regulatory Headwinds and Headcount Transition
A major factor impacting the quarter was a regulatory-driven transition with one large NBFC client, resulting in a net headcount reduction of approximately 27,000 associates across general staffing and Degree Apprenticeship (DA) businesses. Management confirmed that this represents the full hit from this specific client issue, and they do not expect further losses from this transition. The company is moving to reduce its core headcount to optimize costs.
Segmental Updates and Growth Drivers
General Staffing
The general staffing business closed the quarter with a headcount of about 2.82 lakhs associates. While revenue momentum is slower due to higher hiring in lower-salaried non-metros, the business added 22 new client logos. Sectorally, the BFSI segment is showing early stabilization signs, while consumer demand remains mixed. The management anticipates a positive growth in headcount in Q4.
Specialized Staffing (SS)
The specialized staffing business achieved its second consecutive quarter of net growth in headcount. The associate base grew sequentially by 2% (7% YoY). The GCC segment remains a core engine, contributing approximately 65% of net revenue, with strong demand emerging in newer technology areas like AI, data, and cyber security. The business recorded a quarter-on-quarter headcount growth of 2%.
Degree Apprenticeship (DA)
The DA segment recorded a net drop of approximately 5,600 apprentices, also driven by two regulatory-led transitions where apprentices were absorbed onto client payrolls. Despite this, the segment is maintaining its PAPM (Profit After Per Member). The management is focused on leveraging the Union Budget tailwinds, including a 6% budget allocation increase for the subsidy under NETL.
HR Services and EdTech
HR services EBITDA is expected to see marginal year-on-year improvement, despite ongoing investments in HRtech. The EdTech segment saw revenue influenced by seasonal factors but expects performance improvement in Q4 driven by leadership structuring and operational initiatives.
Capital Allocation and Future Outlook
Regarding capital allocation, the Board is expected to discuss the matter, including the tax-efficient share buyback, in the Q4 board meeting. Management expressed confidence in delivering sustainable performance for the remainder of FY26, driven by execution, diversification, and margin-accretive growth across all segments. New MD & CEO, Suparna, has joined the team for induction.
Source: BSE
