Good morning and good afternoon, everyone. This is Omar Maher from EFG Hermes. I'd like to welcome everyone to Presight's 1Q 2025 Results conference call. The call will begin with a discussion of the key highlights of the quarter, and this will be followed by a session. I will now hand the floor over to Roger Tejwani, Senior Director of Investor Relations at Presight. Thank you very much, sir.
Thank you, Omar. Good afternoon, ladies and gentlemen, and thank you for joining us on today's call covering Presight's first quarter 2025 results, hosted by Thomas Pramotedham, who's our Group CEO, and Ram Meyoor, Group CFO. As usual, Thomas will give an update on strategic highlights during the period. Ram will then cover our financial performance, followed by the outlook. We will then open the floor for Q&A. For your reference, the presentation we're about to run through is available on our website, www.presight.ai, and please note that the contents of this call may contain forward-looking statements, which should be considered in conjunction with the disclaimer included in the presentation. I'll now hand over to Thomas.
All right, good afternoon, everyone. Thanks for joining us. This has been an exciting quarter. Before I start, I think in the last few calls we've talked about it and the different strategies we've put in place and the questions you've asked, you know, I think this quarter, as we take you through the operational highlights, it's a convergence of the strategies that we've shared with you over the past seven, eight quarters, and each of them firing its piston and bringing the results. We're happy to take questions later, but let me start. The strong momentum we saw in the final quarter has really accelerated in 2025. You know, in terms of new orders, we secured AED 1.4 billion, which contributed to a backlog of AED 3.87 billion by the end of March, a 29% increase since last December.
In our domestic market, we want new orders from existing and new clients. Internationally, we have reported a new smart city project in Kazakhstan, and signing a smart city letter of engagement in Albania. In terms of new agreements and partnerships, we have signed a memorandum of understanding with an Edge company, Beacon Red. This will help us enhance our safe and smart city initiatives within Latin America and unlocking further new markets for us. AIQ continues to lead innovation in the global energy sector, entering on the back of its recent launch of Energy AI, a collaboration agreement with Colombia's Ecopetrol, to explore the deployment of cutting-edge AI solutions across Ecopetrol's operations.
In the product section, we have launched new AI solutions, including Presight Synergy, an end-to-end data and AI platform that mitigates operational inefficiencies caused by fragmented AI tools and siloed data systems, as well as Presight LifeSaver, a groundbreaking end-to-end emergency and crisis management platform that is already deployed by the Abu Dhabi National Emergency Crisis and Disaster Management Authority. We've also formally launched our Presight AI startup. We'll go a bit in detail later, but in partnership with Microsoft and the Mohamed bin Zayed University of Artificial Intelligence, this brings along direct access to venture capital funding and is designed to be one of the world's most powerful and unique AI accelerator programs.
As we continue our journey as a key AI and digital transformation partner across the UAE federal government and state-owned enterprises, playing a critical role in helping the UAE leverage applied intelligence to enable AI governance, strengthen national safety and security, and enhance decision-making, we look forward to supporting Abu Dhabi's government in its recently announced digital strategy, which aims to position the UAE as the world's first AI-native government by 2027. Unpacking the operational highlights, let me first go into the details of the domestic and international contracts. In the UAE, we signed a multi-year agreement with the UAE Accounting Authority to deliver a video analytics and assessment platform and a new contract with the Emirates Nuclear Energy Corporation to deliver the first Presight Connect, the sovereign agentic AI platform as part of the enterprise suite.
In the same quarter, AIQ commenced the deployment of Energy AI, the world's first of its kind agentic AI energy AI solution across ADNOC's upstream value chain as part of an AED 340 million contract signed in Q4 2024. Over the next three years, AIQ will complete the rollout of Energy AI to all ADNOC upstream assets, comprising more than 28 producing fields, including some of the world's largest and least carbon-intensive oil fields, reinforcing ADNOC's mission to become the world's most AI-enabled energy company. Internationally, we signed an AED 119 million six-year agreement with the capital city of Astana to develop an AI-powered ecosystem to optimize urban management and mobility, increase public safety, enhancing livability sustainably and safety among the citizens of Astana. The smart city project gives us a strategic approach to international expansion, which often commences as part of a sovereign-led in-country transformation program.
We've reported many often that Presight first partners with digital ministries and state-owned enterprises in the host country. In the case of Kazakhstan, we have a joint venture with Samruk-Kazyna, the sovereign fund of Kazakhstan, in order to support the country's SOEs' digital transformation initiatives. As part of the digital transformation, as it scales, we ensure that local consent forms a key part of this journey. In Kazakhstan, for example, we expect local companies to be responsible for 60% of the total smart city project, therefore ensuring local stakeholder participation in country value creation, as well as for us a decentralized delivery mechanism that allows us to take, in the long run, a better advantage of the lower cost in-country. Additionally, we are going to expand our physical presence on the ground, developing key pools of local talent to support the projects.
In Kazakhstan, we are going from one person in 2020 to a 45-strong team currently creating a platform for us to service the other economies in Central Asia. Outside of Kazakhstan, moving to the Balkans, we signed a letter of engagement with the Albania city to develop an AI-powered smart city project covering all 20 key cities in Albania. It's going to be built on the same best practice smart city design principles and the lesson we learned from deploying AI infrastructure across Abu Dhabi and the UAE. The engagement will include an AI smart city and traffic management system, an advanced controls center, which will utilize cutting-edge AI to drive public service operations, emergency response, and infrastructure.
We expect this to deliver significant community-wide impact through the digitization of urban infrastructure, improving traffic management, optimizing public services and healthcare services, and at the same time elevating Albania as one of Europe's leading adopters of AI and smart nation infrastructure. On this note, Albania is also the gateway for us to get into the Balkans. If some of you have followed the Bloomberg interviews that we did yesterday, we are planning to make Albania a regional HQ to continue to develop the business in the region. Moving ahead, new agreements and partnerships have been signed. The agreement and MoU with Beacon Red, the security solutions entity of Edge, which is one of the world's largest and leading advanced technology defense group based out of the Emirates, is to collaborate on smart and safe city initiatives in strategic markets, especially in Brazil and Latin America.
The agreement is expected to strengthen the national security system by combining our AI-driven platforms and Beacon Red cybersecurity expertise to enhance threat detection, especially in the areas of safeguarding national infrastructure and advancing smart city initiatives by integrating AI technologies that will improve urban planning, public safety, and crisis management. From AIQ, a new partnership with Schlumberger to accelerate autonomous energy operations using Schlumberger's Agora's edge AI and IoT solutions. It enables energy companies to reduce costs, improve efficiency, and enhance safety. AIQ and SLB will develop a framework to accelerate the deployment of edge AI workflows, including AIQ's RoboWell, which is our flagship product for the autonomous well control solutions, and SLB's suite of AI applications to accelerate the integration of AI in upstream and downstream operations. Coming to the products, during the first quarter, we launched Presight Synergy, a next-generation enterprise-grade data and AI platform, and LifeSaver.
We'll describe that a little bit more in the next slides. Presight Synergy brings about the applied intelligence to the unified data management and AI analytics, and business intelligence. It provides governance into one cohesive ecosystem that is built on existing infrastructure. This has been the bread and butter of Presight as we bring our products together. It's built on a modern and modular architecture, including the library of 150 pre-built machine learning models, and connects seamlessly to leading open-source large language models, enabling enterprises to create, to refine, and deploy industry-specific applications with less complexity and higher impact, and thereby maximizing overheads and accelerating innovation through AI-driven intelligence across the workflows.
The platform is industry-agnostic and can be deployed on-premise to maintain data sovereignty or in the cloud for greater scalability, with real-time compliance monitoring, bias detection in AI models, and transparent audit trails, ensuring enterprises can trust AI-driven decisions. Based on market insights, we expect that the deployment of Synergy will cost less than 30% of the nearest comparable platforms for total cost of ownership. It should drive 50% more development and production timeline because of the built-in capabilities. The low-code, no-code environment, we expect that it should use less than 30% of the infrastructure and therefore drive a more efficient deployment of the AI and data-centered platform. Moving on to LifeSaver. This is a groundbreaking end-to-end emergency crisis management platform. It combines AI, big data analytics, and real-time insights to a single unified platform that addresses the full emergency system.
This is the same platform that's already deployed by the National Emergency Crisis and Disaster Management Authority in Abu Dhabi, overcoming fragmented communications between first responder agencies and inefficient use of resources by transforming the data they have to enable meaningful and immediate decisions. The outcome is often measured in life saves, time to respond, and crisis averted. It's built on a multi-cloud infrastructure. It integrates devices like drones, IoT, real-time feeds to create situation awareness with unmatched clarity and depth. For example, using AI to access emergency severity and automatically dispatching the nearest available response team, recommending the best hospitals or real-time availability, and electronically tracking patient care from the scene to the hospital, as well as simulating potential scenarios to stay ahead of unfolding emergencies.
Last quarter, we discussed the planned launch of the AI, the Presight AI Accelerator, a unique UAE-based program designed to empower market-ready AI businesses with access to cutting-edge resources from the UAE, as well as the ability to commercialize opportunities within the UAE and globally through Presight. Presight signed a memorandum of understanding with Microsoft as a key partner. Microsoft will contribute its expertise in technical enablement, mentorship, go-to-market expertise, as well as access to $150,000 worth of compute resources for every one of the businesses selected. Besides direct access to further venture fund capital, Presight Accelerator is unique because, one, we attract AI startups and businesses who want to be a part of UAE's ambition to become a world-leading AI hub. Second, for Presight, it drives value-accretive opportunities.
It allows us to build a portfolio of leading AI solutions, integrating these innovations into our ecosystem and that of our partners. In the same breath, we have also announced a strategic collaboration on this accelerator program with the MBZUAI in Abu Dhabi. The partnership will focus on not just startup sourcing, but on technical advisory and talent access, bringing about two of Abu Dhabi's flagship AI institutions to create a multiplier effect in broadening the UAE's AI ambition. Right with that, I'll hand over to Ram to walk you through the financial performance for the quarter.
Okay, thank you, Thomas, and good afternoon, everyone. Before I unpack our first quarter performance, I wanted to reflect briefly on our post-IPO journey. The quarter ending March 2025 marked the second anniversary of Presight AI Holding's listing on the Abu Dhabi Stock Exchange.
This slide highlights the company's financial performance during that period, demonstrating strong growth not only organically as we execute on our strategy to become the region's largest exporter of digital services and responsible AI, but also through value-accretive acquisitions such as AIQ. Thomas mentioned at the outset that the strong momentum in Q4 2024 accelerated during the first quarter of 2025, and this can be clearly seen in the financial performance. We saw record growth in revenues, EBITDA, profit after tax, using a like-for-like corporate tax rate of 9%. Organically, revenue growth in Q1 was approximately twice the peak rate of growth in Q4 2023, and EBITDA growth was 2.5 times the previous high point in Q1 2024.
From this year onwards, in line with many other companies in the UAE, we are applying a higher rate of tax to our financial results compared to the 9% tax rate in 2024. Despite that, our profit after tax, whether on a consolidated or a post-minority interest or pure organic basis, showed a year-on-year growth even against a high base. Post-tax profit in the comparable quarter of the prior year had grown by 32.5%. Our international expansion strategy continues to bear fruit, with revenues from markets outside of the UAE growing fivefold year- on- year, and that's excluding any contribution from the smart city engagements in Kazakhstan and Albania that Thomas mentioned. These are expected to start contributing from Q2 2025 onwards.
Our balance sheet liquidity remained in great shape, zero debt, almost AED 2 billion of cash, and our operating cash flow saw a positive year-on-year swing of AED 165 million, reflecting our continued focus on proactively managing working capital. As we already have mentioned, our order book increased by AED 1.4 billion, and the strong growth in order book translated to a 29% increase in backlog since 2024 to over AED 3.89 billion, which represents a very strong platform of which to generate future revenues and cash flow growth. Now, turning now to the first quarter headline financials, the group revenue, we saw a record quarter of growth with revenues up 115.1% year-on-year to AED 563.9 million. This reflected a good execution on existing contracts, several of which were renewed at the end of the year 2024, as well as accelerated software deployment internationally and continued momentum in AIQ.
Organic revenue was also at record levels, approximately twice the previous peak of growth. As mentioned, this was achieved before any contribution from our recent engagements in Kazakhstan and Albania, which have a combined project value of about $310 million. AIQ contributed about 30% to the group revenue. Group earnings before interest, tax, depreciation, and amortization. Group EBITDA increased by 71.9% to AED 141 million, with the exceptional top-line growth driving a record growth in EBITDA. Organic EBITDA also grew strongly, approximately 2.5 times the previous peak rate of growth, despite our ongoing investment in internal capabilities to meet planned future demand. AIQ contributed 27.4% to the group EBITDA. From a margin perspective, group EBITDA margin was 25%, which is lower than last year due to continued investments in growth, international expansion, and Q1 deployment mix at AIQ.
Organic operating expenses were up by one-third, approximately, as we continued to build our world-class talent pool and applied intelligence R&D programs. Organic EBITDA margin was, however, 310 basis points ahead of organic margin for the full year 2024, and that was driven by favorable deployment mix, with the organic gross margin in the first quarter up 3.5% compared to the full year 2024 organic gross margin. Now, group profit before tax. Group profit before tax increased 33.4% year-on-year to AED 141 million, almost twice the level of growth achieved in FY 2024. Organic pre-tax profit grew high single-digit year-on-year, resuming the positive trajectory witnessed during the first half of 2024, and despite a very high base in Q1 2024, pre-tax profit growth of 45.8%. AIQ contributed about 19.4% to the group profit before tax.
From a margin perspective, group pre-tax margin was down year-on-year, incorporating lower interest income and AIQ amortization not in the prior year base, but the organic pre-tax margin was both ahead of the group and almost 2% higher than the organic margin for the full year 2024. Now, looking at the profit after tax, based on management's assessment of the global anti-base erosion rules and UAE's recent domestic minimum top-up tax rules, Presight is now applying a higher rate of tax on its financial results for the first quarter of 2025 relative to the comparable quarter of the prior year. Group profit after tax, applying the 9% tax rate applicable in the comparable quarter of the prior year, increased by 33.6% year-on-year, the highest level of quarterly growth to date. Group profit after tax, applying the 15% tax rate from January 2025, increased 25.1% year-on-year.
Organic profit after tax resumed its growth trajectory well ahead of the previous three quarters, and despite the high base, with Q1 2024 profit after tax growth of 32.5% year-on-year, AIQ contributed 19.4% to the group profit after tax. Now, from a margin perspective, group post-tax margin was 21.3% or 22.7%, applying a 9% corporate tax rate. The organic post-tax margin was in line with what was achieved in FY 2024, despite an additional 6% rate of tax in the current quarter. Now, looking at some key performance indicators that we usually track, one such metric is the revenue quality. The proportion of revenue from multi-year contracts continued to increase and now comprises almost all of our revenue base, which is significant. Multi-year contracts provide a strong foundation for future revenue and cash flow growth.
80% of the revenues in the first quarter came from backlog, lower than the 98.5% in the comparable quarter of the prior year. This is due to a stronger order book in the current quarter compared to Q1 2024. Looking at the geographical split of the business, we continue to see good growth from international markets, with the proportion of international revenues in the current quarter well ahead of the same quarter last year, excluding any revenues from recent smart city engagements in Kazakhstan and Albania. This year, we expect the proportion of international revenue to increase between 35%-40% of the total. Now, before closing remarks, I want to reiterate our expectations for 2025 and beyond.
At this stage, we continue to anticipate compound annual growth rate over the next three years to be as follows: group revenue growth of 19%-25%, group EBITDA growth of 16%-21%, group post-tax profit growth of 6%-11%, applying an increase in the rate of corporation tax from 9% up to 15%. With that, now I'll hand it back to Thomas for some closing remarks before we open the line for Q&A. Thank you.
Thanks, Ram. I hope you have seen that it's been a really strong quarter, both operationally and financially. For Presight, we progressed strongly in this journey as a key AI and digital transformation partner across the UAE's federal government and state-owned enterprises. We continue to support the Abu Dhabi government's recently announced digital strategy, aiming to make the Emirates the world's first AI-native government.
Further out, we continue to make progress in expanding our offering, supporting governments and enterprises across high-growth markets in the Middle East, Central Asia, and Africa region, deploying digital transformation solutions that help to optimize public services, drive economic diversification, and enhance national resilience. Looking ahead, our national international strategy will continue to form a key part of our growth trajectory over the coming years as we scope opportunities across the U.S., Saudi Arabia, Latin America, Southeast, and Central Asia as part of the broader mission, positioning Presight as the region's largest exporter of digital technology and responsible AI. We thank you for your time, and we will now open for Q&A.
Thank you very much for the presentation, Thomas, Ram, and Roger. We'll now move to Q&A.
If you would like to ask any questions, you can either use the raised hand function to ask the question verbally, or you can put your question in writing to Slido. We'll take our first question from Emoli Shah. Emoli, if you can unmute. All right. Meanwhile, we'll move to the second question from Aaron Armstrong. Please go ahead.
Thank you, sir. Yes. Hi. Good afternoon. Thank you very much for taking the question, and congratulations on a very strong set of numbers. Just two questions for me, please. One is on the outlook for the rest of the year. It looks like the order book growth is very strong. Q1 revenue recognition is very strong.
It looks as though the kind of the run rate of kind of revenue and earnings you could deliver for 2025 could be a little bit ahead of the midterm guidance. Any thoughts you have around that, and would you consider guiding to a faster growth rate in 2025? That's question one. Question two, just if you could give any more details on the order book growth, please. Obviously, again, very strong quarter- on- quarter. Is that mainly driven by smart city contracts, or are they not included in that number? If you can give any kind of breakdown, is it a handful of a few large contracts, or are there smaller contracts within there? Is the domestic international mix similar? Any additional color you could give on the order book growth, please?
Thanks, Aaron, and good to hear you. Yes, we had a very strong Q1, building up off the very strong Q4 2024. As we see today, however, it's just the first quarter of the year. What's pleasing is the tremendous growth and the strength in the organic business, as well as the composition of the international business. Yes, we are cognizant of the fact that we start this year with a tremendous amount of momentum behind our backs. However, we are also conscious that this is the first quarter of the year, and we are typically guiding to a three-year medium-term guidance. We are assessing the outlook constantly, and we will be reverting back to you guys if there is an update at the right time. Please stand by.
All right. I think that's the second question.
The second question about the order book, yes, the AED 1.44 billion orders is largely composed of two-thirds of that is international, out of which the Kazakh Astana Smart City project contributed was almost $200 million. That forms a significant bit. There was also a significant order bookings here in the domestic market, both at AIQ and at Presight. That forms the composition of the AED 1.44 billion of orders.
Yeah, that's excellent. Thank you. Maybe one follow-up, if I may, please, just on the growth rate of AIQ's revenue. YIY Q1 2025 versus Q1 2024. I s AIQ growing?
We did not consolidate Q1 2024, Aaron, as a part of our financials, so there's no base to compare to as such.
In general, we are very pleased with the way AIQ has been developing, and we have been incorporating that into our overall operations and financials as well. They have, as you may recall, recently won a $340 million contract for deploying an agentic AI platform with ADNOC upstream operations. We are very pleased to know that they continue to deploy. They've made a lot of progress on that front. There is quite a bit of runway to be had as we look forward in the outer years to deploy the similar platform for ADNOC's downstream operations as well. The outlook for AIQ is pretty strong as well, and we are very pleased with the way they have come along so far.
Thanks.
Would you expect AIQ revenue, now that it's kind of included in the base, to grow at a similar rate as the Presight core business, kind of in line with your three-year guidance number? Or do you think that'll be growing at a faster rate and contributing more growth over time?
It will be. Our growth rates are our growth rates as we guided is top-line revenue is about 19%-25%. We expect the AIQ's overall growth rates to be falling towards the higher end of that guidance.
Excellent. Thanks very much.
Thank you. The next question comes from Yevgeny. Please go ahead.
Hi. Am I audible? Yes, you are. Great. Thank you, Jim, for the presentation and the opportunity to ask questions. I have two, please. First, can you please give more color on the material organic growth acceleration in Q1 to around 50%?
If you can maybe decompose it into the impact of any projects delayed from Q3 and Q4, and from new projects. Overall, given that strong Q1, is it fair to assume that the quarterly pattern in 2025 might change from 2024? Potentially, we might see this year a lower weight of Q3 and Q4 in particular. My second question, please. Sorry, sorry. Please go ahead.
We will go one by one, if you do not mind, Yevgeny. Again, good to hear from you. Yes, the Q1 are at a very strong organic growth. Essentially, if you notice, there is a bit of a catch-up from since our Q3 of last year. We had a very strong Q4, but then we caught up with a bit of these timing issues that happened in Q3 last year.
That momentum continued a little bit into Q4, into Q1 of 2025 as well. There was also an accelerated deployment of a software platform internationally, which is a point-in-time revenue recognition. You drop the software platform, and once a customer accepts, you are able to take the revenue as per our IFRS guidance. That kind of spiked and enabled the revenue growth for Q1 2025 as compared to Q1 2024. Basically, if you remove that and then you look at a comparative, the Q1 revenue growth year-on-year roughly falls towards the higher end of the guidance that we have given between 19%-25%. You can get a sense of the international deployment from that. Your next question was about the linearity.
Yes, as I was responding to Aaron earlier, we are assessing the strong performance in Q1, and we will revisit the guidance at the appropriate time. There is also a little bit of a conscious effort to improve the linearity across the next three quarters as well, but at the same time, to be able to meet or exceed our guidance. You should see some amount of improvement as compared to last year in terms of the proportions of the quarters' contribution to the revenue and the financials as the linearity improves with more revenue being pulled into Q2 and Q3 and avoid the big peaks that we saw last year in Q4 so that we are able to model the business better and also provide a more consistent growth pattern into the outer years.
Just one point to add to that, Yevgeny.
The international business over the last two years, as we win and deploy, and now we win more and we start deploying, the seasonality of the revenue recognition starts to overlap. There's that overlap that we forecast, and we estimate that will smoothen out the linearity of the quarter-to-quarter earnings. Last year, we had a real hockey stick at Q4, and some international revenue pushed out. Now we will start to see some normalization across the midterm guidance period. You had a second graph.
Yeah. Thank you. My second question is on AIQ, where revenue was very strong, but net margin remains volatile, aggregate around 14% in Q1 compared to 40% plus last year.
Are there any structural changes in project mix at AIQ towards higher share of infra, or is it business as usual, and we should see margin recovery towards 40% in the next quarters?
I would say there are no fundamentally structural changes as such. It's predominantly business as usual. Very much so, like Presight, it depends on the type of revenue that is being recognized. In Q1, there was predominantly driven by deployments of the existing generation of what they call generation one to three products, which are the AIQ suite of upstream operations, like products such as RoboWell and AR360. There is more of deployment revenue. These deployment revenues tend to have a margin profile which is similar to a system integration margin. That is why some of the gross margins are suppressed for this quarter.
That said, it is very important to note that as we go through the year, there will be a lot more software composition coming into the picture like it was in 2024, so that would improve the overall margin mix for the revenues. It should show a very equitable growth year- on- year, very much like Presight.
Another lens to understand AIQ's business, Gen 1 to Gen 3 business, RoboWell, Foresight, these are automation, AI-driven deployment down to the well. There is always some physical devices and software. When we innovated with Energy AI, that is a software play. Of course, there is compute needed to structure it. You will see the two blend. While it is not a change in structure in AIQ, the energy large language model is by and large a software-centric revenue type.
Gen 1 to Gen 3, where we continue to deploy and exceed the deployment, will take a lower margin profile because it's a bit more of a system integration piece. I think that's the space to watch. It should normalize across the year.
Thank you, Thomas and Ram. Thank you. Very helpful. Thank you.
Thank you.
Thank you.
Thank you. We have a few questions in the Q&A box, so we'll take them one by one. First one is, your international strategy seems to be delivering impressive growth. How big can the international piece become, and what is your go-to market strategy, and how do you mitigate the risks inherent in some of these emerging markets?
Two parts to that question. The international strategy has been put in place since we shared with many of the community. When we listed, it was 99% Abu Dhabi.
Last year, we finished 23%. We expect to get to about 40% international and domestic split. It is coming from the emerging markets in the global south territories that we're at. The markets that we are after, it's rich in opportunities and somewhat risky. That is governed really by the strategy we've taken in the go-to market. I've described earlier, very often when we work on the international market, it's always framed up with a G to G arrangement with UAE before Presight comes in and creates a direct arrangement with a government-related entity or state-owned enterprise. From there, projects are scoped, and financially viable projects are determined whether the country has the budget to pay for it or they take a financing arrangement with Abu Dhabi or a financing arrangement with any of the international financiers.
Most of the time, the currency risk, the financial risk is protected because of this G to G arrangement, as well as sovereign financial arrangements and contracting mechanisms put in place. The markets will continue to grow. As we established Kazakhstan as a regional HQ, it will now serve the growth in Uzbekistan, in Kyrgyzstan, as well as the work that we're doing in Azerbaijan. Looking at the Balkans, we expect soon to announce another Balkan region smart city project as we implement Albania. This is the pattern that we're taking. We see that trajectory because it's in a market that has much fewer competitors for large tech. It's tricky to get into. Because we have been doing it for the last two years, we do it on the back of UAE's trade missions. That has given us the protection we need to confidently deploy.
Once we win the project like Kazakhstan, we're able to decentralize our delivery into lower-cost components, but at the same time, build an ecosystem in the region to deliver even more projects.
Thank you, Thomas. That's clear. The next question says, the Abu Dhabi government recently announced its digital strategy 2025-2027. Can you give us a bit more color on that and what it might mean for Presight?
The ambition to become not just an AI-enabled government, but AI-native, has the government now pushed out chief AI officers across all federal agencies. Presight is working very closely with each one of them, particularly the Department of Government Enablement. You read quite recently an announcement from the Prime Minister's Office about creating AI curriculum across all schools. They have also named specifically that Presight, among others, like the MBZUAI , are the key components.
In that space, Presight plays the role of a digital platform for big data analytics and AI use cases. You'll see such pattern happen across. We have also recently been appointed as part of the MRRT's HR Council, as their base big data analytics and AI platform. There are about 245 use cases across the government that are being deployed as part of the AED 13.6 billion budget. We are a strategic partner already with the ones with the public safety agencies, the UAE Accounting Authority, and we continue to expand that. You'll see the reports. When you see an announcement from a ministry, a federal ministry, very often their AI strategy will bring about a platform that is needed to support the AI use cases. This is where Presight plays a part.
Thank you.
The next question from the Q&A box as well says, Presight has a cash-rich balance sheet and no debt. Should we expect more M&A? If so, what does good M&A look like to you? How does the recent launch of your accelerator play into your thinking on capital allocation?
Two parts to that. The ambition to grow enterprise value and to drive M&A has two parts. One for inorganic growth, like the acquisition of AIQ last year, has been accretive energy. It is now about 25% of the total revenue. The AI accelerator is our funnel for us to get access to innovative IPs that are affordable and accretive to the sector. Let me put some color to that that I have also announced. The AI accelerator received 105 applications across 27 countries. We have closed it.
From the 105, we'll pick 10 where we aim to accelerate in a six-month period. It will be two batches of 10 per year. In the 10 companies that we see, the first three months is strategy, go-to-market with them. The second three months that they will be with us, they will be deployed onto any one of our projects across the markets that we're in. That allows us to test the technology, the synergy with the Presight platform, and also client satisfaction. From there, we can more confidently find solutions and innovation that is, one, accretive to us in the sectors we're focused in, but also proven.
Alongside, I have also given hints that we will set up a venture capital fund right next to the accelerator, allowing us to take smaller ticket size between AED 500,000-2 million in each of these innovative AI companies that are starting up. We keep a strong balance sheet to be able to take big acquisitions where we need to. At the same time, we diversify a wider catchment area through the accelerator program and the VC fund that will allow us to really examine the innovation that is coming out of this very fast-paced generative AI ecosystem. Very often, some of these are overpriced if you do not test it. This is what we are doing around our M&A and driving IP acquisition into the group.
Thank you.
Once again, as a reminder, if you have any questions, you can either use the raise hand function to ask the question verbally, or you can put it in the Q&A box through Slido. The next question says it's in the Q&A box as well. Sorry. Let's take the question from Harry Walton first. Harry, please go ahead.
Hi. Thanks. Okay.
Yes.
Great. Thank you. Sorry, I was a bit late to join the call, so I apologize if I've asked something that's already been explained. I just wanted to understand what the impact of what the AIQ was like for the first quarter, like how much growth was there for the AIQ business if you look on a sort of performer basis.
It was consolidated. You mean the revenue. The first quarter revenue grew consolidated basis 115%.
If you take out AIQ and do a like-to-like for last year, that means it's about 50%.
It's about 50%. Yeah. I just mean just for AIQ, if you look at AIQ on AIQ, like-for-like.
I wouldn't be able to comment on that specifically because we didn't consolidate AIQ's growth from Q1 2024.
Yeah. Yeah. No, I understand. I understand you didn't consolidate it.
If you can normalize it, I think this will be, again, I would say somewhere in the guidance ranges that we have given you, maybe slightly north of that, which is, I guess, north of 25% is probably something you can model in. To be very specific, we started consolidating AIQ into our financials only from June of last year.
June. Yeah. Yeah. Yeah. No, no. Thanks. Okay.
A big part of it is we're still very confident.
When we did the acquisition, we said it will be our second largest revenue sector. We see the trend as Presight organic business growth, and AIQ's energy business is folded into it. We see that the energy sector contribution from AIQ will be about 25%-28%, 29% of the total revenue. That's the pattern that we can see trending forward.
Got it. Okay. In terms of net income or profit before tax, just because of the changing tax rates, excluding AIQ, what was the growth rate in PBT ex AIQ?
Excluding AIQ, the organic growth rate was high single digits.
Okay. We should understand the margin contraction there is just from more international business, which is quite heavy in the infrastructure component.
Just doing it just on the organic side, yes, one of the margin compression is a very conscious decision we have made to invest internally to develop R&D to focus on international expansion, which underpins our growth. Also, if you compare to last year, a couple of things, there is also an interest income difference. There was a much higher interest income that was there last year, which is not this year. Also, the fact that this year, we also have some amortization costs, which comes after the EBITDA before the PBT. That is a significant amortization that is as a result of the AIQ's consolidation. That is also included. That kind of erodes the PBT percentages a bit more.
Right. That is like you have absorbed some of the intangible a ssets, and so there is amortization.
Amortization and also the lower interest income year- on- year.
Obviously, we had a much higher cash balance. There was also slightly higher interest rates that contributed to a higher interest income last quarter, vis-à-vis this year.
Okay. Would you say the kind of run rates that we're seeing in the first quarter, if I get rid of AIQ, that would be largely consistent with how you think about the remainder of the year in terms of growth rates, profitability, or is it not? I think usually the first quarter is quite a small, it's a smaller contribution to your full year. T
hat is correct. That is correct. That is one of the reasons also we want to kind of wait before we make any guidance in reference to the questions earlier in the call.
Yes, I think just to give you some guidelines in terms of how we think this is likely to be, we expect our EBITDA margins to continue to be between the 25%-30% range comfortably. We are guiding to a PAT growth of about 6%-11%. That we upgraded in Q1 earlier in February. That 6%-11% includes a tax rate of 15%. As compared to last year's tax rates, it will imply a growth rate of, I would say, about 11%-16%, at a 9% tax rate. Just to give you a sense of like-to-like to last year. That EBITDA margin, 25%-30%, would help us to get to this kind of PAT range going forward into the medium term.
Got it. Okay. My last question just relates to that tax.
Apologies again if you mentioned this already. Has it been confirmed that that's the tax amount that you'll pay? I think it relates to MNEs, right, with a certain level of, well, certain size. I'm not sure if you guys get counted as that.
The MNEs that qualify for this base-to-erosion tax, DMTT, actually is at a much higher level at the parent level. At that parent level, we are fairly sure that they will clear the EUR 750 million threshold.
Okay. You're pretty sure it'll be 15%?
Yeah.
Yeah. Unfortunately and unfortunately, yes.
T here could be minor adjustments for allowances of reductions. Predominantly, we want to be, we just want to take it upfront and then model it into our forecast.
Got it. Thank you very much.
Thank you.
Thank you.
Thank you. Next question is from the Q&A box.
It's on geopolitics. It says, "Do you envisage any adverse impact from tariff changes in the U.S. or from additional restrictions on chip exports from the U.S.?"
The short answer to that is no. I don't believe that we will be affected by it. No. I think the region is quite protected in that space too. On chips infrastructure, Presight's the application tier company. Just like how we've addressed the release of DeepSeek and the different models available, we are platform agnostic. We can run on any infrastructure, any chipset. Most of the time, it's also related to where the clients are deploying. Most of our platforms are national sovereign platforms that are deployed in-country. That doesn't impact us.
The extension of what UAE has done and invested in infrastructure, and the increased interaction between UAE leadership and the U.S. leadership, gives us confidence that that relationship is definitely in a much better place. Of course, we're all aware that the U.S. leadership will be in-country, in region, in two weeks' time. Those are pointing to a positive outlook for the region. We're fortunate to be part of the UAE's ecosystem. I think we can quite safely say that we're protected from that, at least definitely in the short term, before any other crazy changes happen. Thank you. Just a last reminder, in case anyone has any final questions before we wrap up, either verbally or in the Slido for the Q&A box or even chat if you're unable to use the Q&A box.
We'll pause for a moment in case there are any final questions.
All right. No more questions. I guess back to you, Thomas, in case you have any concluding remarks.
No, I think thank you, everyone, for the questions. It's been really an exciting quarter and journey. We've shared with many of you before. It's not the quarters that we're looking at. It's really the eight quarters, nine quarters that have gone through. We believe now that we're seeing each of the individual strategies that are put in place from greater domestic dominance, growth, international markets coming in, acquisitions, so acquired assets like AIQ being accretive to us, and then the investment into R&D technology, including the accelerator program.
I think we're going to see a pattern as we move into the quarter that we can actually report progress on each one of these tracks, be it the international countries that we get to or just new contracts we're going to win. We've spoken about this before, but I think this quarter has been most apparent that each one of these strategies is accretive to the total contribution of the performance of the quarter. We look forward to reporting in this manner. We look forward to having equally strong quarters moving ahead. Thank you for your time today.
Thank you very much for the Presight management team and everyone for your participation. This concludes the call. Have a nice day. Thank you.
Thank you.