Lenskart profits surge; AI pressure on Freshworks

Eyewear retailer Lenskart posted a whopping 74-fold profit and strong revenue growth for the December quarter. This and more in today's ETtech Top 5.

Also in the letter:
■ Tax heat on VCs, PE funds
■ Fractal Analytics IPO: day 3
■ RBI Innovation Hub team expands

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Peyush Bansal, CEO, Lenskart

Eyewear retailer Lenskart delivered a sharp jump in profit and significant revenue growth during the quarter ending December.

Financials:

• Net profit: Surged to Rs 133 crore, compared with Rs 1.85 crore a year earlier.
• Revenue: Rs 2,308 crore, up 38% from Rs 1,669 crore in the same period last year.
• Expenses: Rs 2,163 crore, compared with Rs 1,980 crore in Q2FY26 and Rs 1,690 crore in the year-ago period.

Tell me more: Revenue growth was driven mainly by higher volumes and new customer additions, with India growing 40.4% YoY and international markets climbing 33% YoY.

This was the company's second earnings report after its November 10, 2025, listing.

Management speak: On the post-earnings call, founder and CEO Peyush Bansal said the company’s thesis on operating leverage translating incremental revenue into stronger profit growth is now reflected in the results.

“In Q2, we said we are entering a compounding phase. Q3 validates that decisively. This is not cost-cutting. This is structural operating leverage. The compounding has begun,” Bansal said.

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Dennis Woodside, CEO, Freshworks

Software-as-a-service (SaaS) company Freshworks reported a profit of $39.7 million in the October-December period, reversing a $23.8 million loss in the same quarter last year, as increasing adoption of its artificial intelligence (AI) offerings boosted margins.

• Revenue rose to $222.7 million, up from $194.6 million in the same period the previous year.
• Despite the turnaround, Freshworks' stock plummeted to a new low of $8.66 amid worries that AI might pose a threat to conventional SaaS companies.

Financials (2025):

• Full-year revenue: $838.8 million, up 16% over 2024.
• Income from operations: $13.2 million (1.6% EBITDA margin), flipping from a 19.2% operating loss last year.
• Annual recurring revenue: $907 million, up 18% year-on-year
• Cash, cash equivalents and marketable securities: $843.7 million

AI plans: “AI is not just a feature in our products, it’s a standalone revenue line delivering measurable value to our customers, which ended 2025 with over $25 million in ARR and remains on path to reach $100 million in ARR by 20268,” Freshworks CEO Dennis Woodside told analysts.

The plunge: Freshworks, which listed in 2021 at a $10 billion valuation, now trades at a market capitalisation of approximately $2.1 billion, a nearly 80% decline from its IPO.

Anand Subbaraman, CEO, Icertis

SoftBank-backed Icertis is in early discussions for a sale that could value the AI-led contract management software firm at as much as $5 billion, Bloomberg reported, citing people familiar with the matter.

Deal details:

• Icertis is working with Goldman Sachs on the potential sale.
• Buyout firms, the report added, are showing preliminary interest.

Context:

• In October 2021, SoftBank acquired an $80 million stake in Icertis from Eight Roads Ventures, backed by Fidelity, in a deal valued at approximately $5 billion.
• That represented a notable increase from six months earlier, when the company secured an $80 million Series F round from B Capital at a $2.8 billion valuation.

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India's tax department has increased scrutiny on overseas investors after the Supreme Court denied tax benefits to US firm Tiger Global.

What's happening?

• In the past two weeks, the Income Tax department has issued notices to at least seven foreign venture capital and private equity firms.
• Officials are requesting detailed information to evaluate the ‘substance’ of their entities in Mauritius and Singapore, popular jurisdictions for investing in India.
• Some notices make direct reference to the Tiger Global ruling.

Tax officers in Mumbai and Bengaluru are reviewing cases where assessment deadlines expire by March 31, 2026. The focus is on investors who sold stakes in Indian companies but did not pay tax on gains, citing India’s tax treaties with Mauritius and Singapore.

Quote, unquote: “The nature and breadth of these inquiries indicate an intent to apply principles from the Tiger Global ruling across various Mauritius holding and fund structures. It remains to be seen whether anti-avoidance principles might be invoked alongside cases escalated to the GAAR panel,” said Parul Jain, head, international tax practice, Nishith Desai Associates.

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Srikanth Velamakanni, CEO, Fractal Analytics

India's first pure-play artificial intelligence (AI) company Fractal Analytics' Rs 2,834-crore initial public offering (IPO) was fully subscribed on the final day of bookbuilding. However, the issue managed to sail through only after receiving tepid response from public market investors in the first two days.

Subscription numbers:

• Qualified institutional bidders (QIBs): 4.2X
• ⁠Retail investors: 1X
• ⁠Employees: 0.6X
• ⁠Overall: 2.7X

Tell me more:

• Fractal Analytics raised Rs 1,248.2 crore from anchor investors ahead of its IPO.
• It also reduced the overall IPO size by about 42% from its earlier plan of Rs 4,900 crore.

Valuation drop:

• At the IPO price band of Rs 857–900 per share, Fractal is valued at around Rs 15,473 crore ($1.71 billion) on a post-money basis at the upper end of the band.
• The company was last valued at approximately Rs 20,978 crore ($2.44 billion) in July 2025, when it raised $170 million.

For context: The IPO comes amid strong global interest in AI-driven business models, even as valuations in the technology sector face close scrutiny. The company priced its IPO at about a 26% discount to its last private-market valuation.

Also Read: Private funds assess AI better than public investors: Fractal Analytics CEO on discounted IPO pricing

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The Reserve Bank Innovation Hub (RBIH), a wholly owned subsidiary of the RBI, has expanded its C-suite by roping in senior executives from the private sector to strengthen its technology and product capabilities.

New ranks:

• Abhishek Poddar, who previously led digital payments and financial services at Walmart, has joined as the chief product officer.
• Majiruddin Shaikh was recently appointed chief technology officer. He earlier led technology functions for Thoughtworks in India and the Middle East.
• Devraj Sanyal, formerly with Goldman Sachs and Thomson Reuters, is now the chief AI and data science officer.

Tell me more: Led by CEO Sahil Kini, cofounder of fintech startup Setu, RBIH is beefing up its team to focus on two critical missions: credit infrastructure and fraud prevention.

The hub is developing the Unified Lending Interface (ULI), a centralised platform for lending activities, similar to what UPI achieved for payments.