Capillary Technologies is a loyalty plumbing company - it runs the backend that makes enterprise reward programs work, processing over a trillion dollars of commerce and roughly 10 billion transactions a year for about 1.9 billion consumers across 49 countries. Founded in 2012 and listed in India in November 2025, the company built its position by becoming the system of record for loyalty programs at some of the world's largest brands - 20 of the Fortune 500 - and then compounding its advantage with every transaction that hits its platform. The recurring approach is to win large enterprises with a cloud-native, AI-powered loyalty stack, then deepen the relationship as customers upgrade to more modules and expand into new geographies, while simultaneously buying smaller, people-heavy loyalty agencies at low multiples and migrating their clients onto Capillary's higher-margin platform. # Business segments A single engine with two reinforcing motions - an organic SaaS platform that compounds at high single digits from existing customers, and an inorganic migration flywheel that converts low-margin agency revenue into high-margin subscription revenue. ## 1. Loyalty and customer engagement SaaS: the system of record for brand-consumer relationships **Capillary sells a cloud platform that captures every customer interaction, builds a single profile, and then lets brands run personalised campaigns across channels - paid per member or per transaction, like a bank ledger for loyalty points.** - **Five product modules, one AI brain** - the platform bundles Loyalty+ (core program management), Engage+ (cross-channel messaging), Insights+ (automated analytics), Rewards+ (a global rewards catalogue), and CDP+ (a customer data platform that pulls in data from point-of-sale, e-commerce, mobile apps, social media, and wearables to build a single customer view), all orchestrated by an AI layer called aiRA. The CDP is the foundation and is not directly monetised - it feeds the modules that are. - **Paid on usage, not just a flat fee** - the core loyalty stack is priced per member or per transaction, and the newer aiRA analytics and action agents are priced on outcomes - number of questions asked, analyses run, campaigns generated - so the company grows as its customers' consumer bases and program activity grow. On top of contracted amounts, customers pay overage fees for extra platform usage, and every contract carries an annual inflationary escalator that lifts the base fee by a few percentage points without any selling effort. - **Sticky by design, with a third of growth on autopilot** - organic net revenue retention was 114% in FY26, meaning existing customers spent 14% more than the year before, driven by usage overages, inflation clauses, and upsells to higher-tier modules like Engage+, Insights+, or aiRA. About one-third of that organic growth comes from inflationary increases and metric expansion that require no effort from the company. - **Enterprise-grade reliability is the moat** - the platform runs at "five nines" (99.999%) uptime because it is the system of record for loyalty programs - every transaction hits the platform - and carries SOC 2 Type II, ISO 27001, GDPR, and CCPA certifications, with customer data kept inside tenant boundaries and personally identifiable information masked before any AI model call. The company calls its deepest asset "the deepest first-party customer graph in the industry," built on a decade of longitudinal transaction data across fashion, food and beverage, fuel, beauty, electronics, and grocery - a data set that gets richer with every new brand onboarded. - **Subscription economics with improving margins** - subscription revenue was 89.4% of the total in Q4 FY26, and the company is deliberately shrinking one-time service and campaign revenue to concentrate on recurring fees. Subscription gross margin reached 67% in FY26, and because technology, sales, and corporate costs - roughly 60% of the cost base - do not grow in line with revenue, incremental revenue from existing customers arrives at higher margins. ## 2. The M&A migration engine: buying low-margin agencies and converting them to SaaS **Capillary acquires loyalty agencies that run on people-heavy, time-and-materials models at 0.5 to 1.5 times sales, then migrates their customers onto its own platform - turning roughly 30% gross margins into roughly 65% and converting the revenue stream to recurring subscriptions.** - **A fragmented target market worth $5.6 billion** - the agency-led loyalty management market represents about 30% of an $18.2 billion total addressable market, with a mid-market segment of $10 million to $50 million revenue companies worth $2.4 billion and comprising 70 to 90 targets split across North America (45%), EMEA (33%), and APAC (22%). - **Bought cheap, migrated to a higher-margin model** - acquired businesses typically operate at approximately 30% gross margin on people-intensive models; after migration to Capillary's AI-first, configurable platform, gross margins improve to approximately 65% and the revenue profile converts to a 45-50% contribution margin, with cash payback expected in about four to five years. - **AI-led migration shrinks the integration timeline** - the company has built an AI-powered migration tool that reduces the customer move to a two-to-four-week user-acceptance-testing period, targeting 12-to-18-month full integration cycles. Almost all customers from earlier acquisitions - Persuade, Brierley, Rewards+ - have already migrated to the Capillary stack, with only two still remaining. - **Churn is expected and priced in** - about 70% of acquired revenue is retained through migration, and the inorganic net revenue retention of 94% in FY26 reflects the anticipated churn from legacy platforms not yet moved over. The company draws a clear line between "organic" business - all customers on the Capillary platform - and "inorganic" business - customers still on acquired legacy systems awaiting migration. # Group structure and partners **Capillary is the Indian-listed parent with wholly owned operating subsidiaries in Singapore and the United States, and it has grown through a string of acquisitions that are progressively being folded into the platform.** - The parent company, Capillary Technologies India Ltd, holds wholly owned subsidiaries including Capillary Pte. Ltd. (Singapore) and Capillary Technologies LLC (United States), alongside acquired entities Persuade, Brierley, Rewards+, Kognitiv (acquired May 2025), and SessionM. - SessionM, previously a wholly owned subsidiary of Mastercard since 2019, was acquired effective May 1, 2026, for a base cash consideration of USD 20 million, bringing a USD 50.5 million turnover business with over 40 logos including five Fortune 500 companies, a USD 35 million annual recurring revenue stream, and a strong presence in North American and LATAM quick-service restaurants and retail - segments that contributed roughly 70% of its revenue. - In July 2026, a recently acquired overseas step-down subsidiary suffered a cyber-enabled banking fraud using deep-fake methods, with approximately EUR 3.0 million fraudulently transferred; recovery efforts are being actively pursued, and there was no evidence of compromise of customer data, employee data, or the company's technology infrastructure - the subsidiary is covered under a cyber and crime insurance policy.