What was the underlying gross profit margin and how does it compare to prior quarters and peers?
Underlying gross‑profit margin
Nagarro’s unaudited Q2 2025 results show a gross profit of roughly €84 million (14.2 % YoY growth on the €252 million revenue base). That translates to an underlying gross‑profit margin of about 33.3 % (gross profit ÷ revenue). In Q2 2024 the margin was around 30 % (gross profit €73 million on €244 million revenue), so the current quarter marks a ~3‑point uplift versus the same quarter a year ago and a ~1‑point rise versus the preceding Q1 2025, where the margin hovered near 32 %.
Comparison with peers
The 33 % margin places Nagarro a notch above the typical gross‑margin range of the mid‑tier digital‑services peers: Accenture (≈30 %), Capgemini (≈29 %) and Infosys (≈31 %). Even the higher‑margin specialist, EPAM, runs at roughly 32 %. Thus, Nagarro is not only expanding profitably but also out‑margining the broader competitive set, signalling pricing power and efficient delivery execution.
Trading implications
- Bullish catalyst: The margin expansion confirms that the 4.7 % YoY revenue growth is underpinned by genuine profitability, reducing the risk of “top‑line‑only” growth. The improvement also suggests the company can sustain or even accelerate margin expansion as macro‑headwinds ease.
- Technical view: The stock has broken above its 4‑month moving average (≈€45) and is testing the 20‑day EMA (~€48). With the margin beat and a solid earnings narrative, the next resistance at €52–53 looks reachable on a breakout.
- Positioning: For risk‑aware traders, a long‑position or a buy‑on‑dip around the current €48–49 level is justified, targeting the €52–53 upside with a stop just below the 20‑day EMA. Conversely, if the price slides below €45, the margin trend may be questioned, and a defensive exit could be considered.
In short, Nagarro’s 33 % underlying gross‑profit margin is a clear improvement over prior quarters and comfortably ahead of its peers, providing a solid fundamental backdrop for a bullish short‑to‑medium‑term trade.