LTM shifts focus to short AI contracts to boost revenue growth

LTM reported a sequential constant currency revenue improvement of 1.1% in the second quarter of fiscal 2027, falling short of its promised growth uptick. Seasonality in the technology and services vertical along with Saudi Arabian joint ventures dragged sequential growth down by 60 to 70 basis points. To improve second-half performance, the company has shifted its deal mix toward artificial intelligence projects that last between six and twelve months. These AI deals allow for faster revenue conversion and higher gross margins compared to traditional IT contracts with long transition periods. Meanwhile, total order inflow fell 25% sequentially and 21% year-on-year to $1.26 billion in the second quarter, clouding near-term revenue visibility. LTM aims for a constant currency year-on-year growth of 5.3% for fiscal 2027, matching its fiscal 2026 performance, while artificial intelligence revenue grew 40% year-on-year to reach 13.4% of second-quarter revenue.

Context

Short-duration contracts in the technology sector often allow companies to book revenue much faster than multi-year digital transformation deals. However, a heavy reliance on short-term projects can create fluctuations in order inflows if new deal bookings slow down. LTM operates in a competitive IT services market where firms constantly adjust their contract strategies to balance immediate revenue with long-term stability.