Ladies and gentlemen, good day and welcome to IRIS RegTech Solutions Limited Q4 FY 2026 earnings conference call. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need any assistance during this conference, please signal the operator by pressing star and then zero on your touch-tone telephones. Please note that this conference call is being recorded. I now hand the conference over to Ms. Asha Gupta, EY LLP Investor Relations. Thank you, and over to you, ma'am.
Thank you, Farah. Good evening to all of you. Welcome to Q4 FY 2026 earnings call of IRIS RegTech Solutions Limited. The results and presentations have already been mailed to you, and you can also view it on our company's website. In case anyone does not have the copy of press release or presentation, or you're not marked in the mail, please do write to us, and we will be happy to send you the same.
To take us through the results today and to answer your questions, we have the top management of IRIS RegTech Solutions Limited, represented by Mr. K. Balachandran, Co-founder, Whole-time Director and CEO, and Ms. Deepta Rangarajan, Co-founder and COO, along with other management team members. We will start the call with brief overview of the quarter and year gone by, which will be then followed by the Q&A session.
Before we proceed, I would like to remind you that the discussion may contain certain forward-looking statements that may involve known or unknown risks or uncertainties and other factors. It may be viewed in conjunction with our business risk that could cause future results, performance, or achievements to differ significantly from what we have expressed or implied by such forward-looking statements. Having said that, I will now hand over the call to Mr. K. Balachandran. Over to you, sir.
Good afternoon, welcome to the IRIS Q4 earnings call. As usual, we are grateful for the time you are spending with us. This time around, we advanced the call to 4:00 P.M. from our usual 5:00 P.M. slot. If that is inconvenient going forward, please let us know. From IRIS side, we have Deepta, Thomas, and I attending this call apart from our senior business leaders.
We have uploaded an investor presentation on the exchange websites today afternoon, around 1:00, in fact, we hope that some of you had the opportunity to see this as well. As usual, we have been maintaining that a business like ours is best examined through the lens of annual results, than quarterly numbers. We would like to talk more from an annual point of view on our financial and business performance.
Coming to the commentary on our performance. We are pleased to report that over the past one year, both our SupTech and RegTech businesses have further strengthened. SupTech segment has contributed materially in the growth of our revenues. In the RegTech segment, specifically for IRIS CARBON, this has been sort of a milestone year, where our foray further into the enterprise, which is also a largely non-mandatory area, has borne fruit and we have scored critical wins.
Our focus on the enterprise business, which is termed as our RegTech segment, is unequivocally to grow the annual recurring revenue. For the previous year, IRIS CARBON ARR, the annual recurring revenue, grew at 33% on the back of several wins in the disclosure management space. We also opened our account in the ESG reporting solution area, which is an additional module on IRIS CARBON.
On our BFSI automated regulatory reporting solution, IRIS iDEAL, the ARR grew at 17%, despite the fact that we faced some delay, especially in the first half of the previous financial year, in purchase decision-making at customer ends, especially in Indian market. Going back to IRIS CARBON, I would say that it's a business where we see substantial headroom for steady growth, and our efforts are focused on making this happen.
Towards this, we are now working on multiple fronts, including direct sales, partner development, marketing, and new product features. We have also been able to break into large enterprise accounts, and which gives us a lot of confidence in competing with the best in the market.
We have articulated before, we plan to spend in a measured and well-thought-out manner as we increase investments in key areas such as sales and marketing, along of course with product enhancements. On the BFSI regulatory reporting business, which is IRIS iDEAL, we are now actively exploring markets other than India, and we see potential slowly unfolding in both Africa and the Middle East.
Let me now look at the SupTech business briefly. We added three new logos in FY 26, which included the government of Qatar for tax reporting. This is an interesting and new area, and combined with our deposit insurance management segment, this opens new markets for our IRIS iFile SupTech reporting platform with new regulators.
We are also expanding this product suite to offer more end-to-end features for the regulatory customers, which includes risk-based supervision, licensing and decision management, and a few other modules as well. The idea is to expand the product suite, we are a bit of a one-stop shop as far as regulatory reporting requirements are concerned for any financial regulator and even, you know, people who are in financial and, you know, operational regulatory segments from a regulatory perspective.
Coming to our financial performance, our growth has been steady for the full year, with total revenues growing at about 23%, while the EBITDA margin came in at about 14%. We have mentioned before, our endeavor is to partially balance customer acquisition expenses in the SaaS business with profits emanating from the SupTech business so that EBITDA numbers are not severely impacted.
Post the TaxTech divestment, our balance sheet has strengthened considerably and cash right now in the books is at around INR 150-155 crores as on March 31st. While the net worth has moved to INR 200 crore from INR 76 crores as at March 31st, 2025. The book value has gone up as well to about INR 98 from INR 37. Before I close, I want to briefly touch upon a couple of global developments. We have been asked time and again by few of you about whether the AI revolution that is sweeping across the globe is an opportunity or a threat.
Our honest take at this point of time is that it is both, but for us, we feel it opens significant opportunities in the space we operate, even as customer expectations move up proportionately. We see it as being critical for us to embed AI technologies in both our product stack and in the software development process itself, and we are doing that assiduously with speed and focus.
Our investor presentation also includes a couple of slides which talks about our product initiatives on the AI side. On the whole, let me say that we are both watchful and excited. We have also been asked about the impact of the Middle East crisis on our business. It is possible that a prolonged Middle East crisis might have a possible adverse impact on the SupTech pipeline.
Having said that, so far we have not seen any indications along these lines, but it will be worth factoring this possibility if the crisis goes well beyond the Q1 of this financial year. This applies to, I think, most businesses which are operating in the Middle East area. From our point of view, we operate in Asia quite a bit as well as in Africa.
If there is fiscal constraint which governments experience at the highly elevated oil prices, it might have some impact on government regulator budgets, though we haven't seen it yet emerging. Now, we also mentioned earlier personally that our fledgling DataTech business, we have spun off into a subsidiary to give it sharper focus.
Finally, I want to say that we are pleased to, you know, mention that we have moved to a new office which is in Mumbai itself. It's in near Turbhe station. You are welcome to visit us when you get an opportunity. Thank you so much. Now we can leave the floor open for question and answers.
Thank you very much, sir. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask a question may enter star followed by one on their touch-tone telephones. If you wish to remove yourself from the question queue, you may enter star and two. Participants are requested to please use only handsets while asking a question. We will wait for a moment while the question queue assembles. To ask a question, you may enter star and one. The first question is from the line of Samarth Nagpal. Please go ahead.
Hi, am I audible?
Yes, sir. Please go ahead.
Oh, yes, you are. Yes, you are.
Thank you. Thank you for the opportunity. Sir, just a couple of queries. I'm a new shareholder, so pardon me if I ask something which I'm not aware of. After divesting our business and building a healthy cash balance, just wanted to understand what's our aspiration going to be in terms of growing the business faster. I mean, I read somewhere that we are targeting INR 500 crores of revenue. What's the roadmap for that? By when, latest can we expect that? Just some color on that.
Okay. This is something we mentioned the previous financial year, and we stick to this number. This is our aspiration, and we are, you know, setting the conditions for reaching this target. This will require little above 30% growth, I would say at this point of time over the next four to five years. Our aspiration on the SaaS business is to definitely grow this at about 35%.
We expect the SupTech business with a combination of, you know, one-time, you know, revenues plus recurring revenues, to move little, you know, at a lower rate, but, you know, there could be surprises as we go forward.
The short answer is, the target is INR 500 crores and, you know, we feel, we are getting into position, with our new products also getting accepted in the market to grow at a higher rate compared to our, you know, previous few years where we grew in the mid-20s%.
Got it, sir. Got it, sir. Sir, I saw a couple of slides on AI initiatives. To a layman, how is AI helping us? On the flip side, can it lead to any increase in the competitive intensity also for us? I mean, some color on that.
The second part of the question about competitive intensity, of course, there are theories, doing, you know, going around, saying that enterprises can, you know, create their own, software or AI native companies can come in. For us, we haven't seen that yet in the markets we operate. Our customers are getting excited about what AI can, do to their requirements.
We're getting, you know, inquiries, and we are building, offerings, as we speak. We expect, this to, you know, deepen our, you know, value proposition for our customers, and that could, help us, go deeper as well as expand into, you know, into, you know, new customers as well.
The competitive intensity so far we haven't seen, but we know, you know, one has to be very, I would say, cognizant of what is happening around us. We are making sure that we are adopting AI technologies very quickly and making this part of our stack. On the whole, we feel, you know, it's an exciting opportunity for us. AI could be an accelerant for us rather than, you know, constraining our business.
Understood, sir. Sir, on this Middle East crisis, I know we don't have a concrete answer to this, but keeping in mind that it extends, into Q2 and all that. How is the year looking for us? I mean, would we still be able to manage, maybe a lesser conservative number, but would it hamper our business significantly?
On the SaaS business path, which is enterprise-oriented business, we don't see much of an impact because our SaaS business is predominantly Europe and U.S. focused, and to some extent smaller extent India as well. We don't see much of an impact. On the SupTech side, to some extent our pipeline is linked to the Middle East, when with discussions with Middle East regulators as well.
There also it is progressing, but I wouldn't be surprised if there is some delay if this whole thing continues beyond a point. So far at this, as I mentioned in my opening remarks as well, we are not worried too much unless this really prolongs.
I would be, you know, I would start getting worried, post-June, I would say.
Understood, sir.
We need to see whether the You know, we are looking at, you know, three to four wins in the SupTech side as usual every year. This could be, you know, more or less given the situation. At this point of time, you know, it looks, you know, we have to be watchful but not unduly worried.
Understood, sir. Sir, just one final question, if I can squeeze in. On the DataTech side, I think the Peridot app, if I'm pronouncing it correctly, has a good amount of active users. What's the ambition here? Meaning in terms of catering to the MSMEs and all that, what's the ambition here, and how do we plan to scale this up?
As far as IRIS MSME is concerned, which is, now, you know, is offered or we are catering to the IRIS MSME market through IRIS Peridot app. The idea is to, you know, increase the number of users on Peridot by offering a slew of, you know, digital enablers for MSMEs, which includes invoicing, it includes government scheme mapping and also now loan facilitation.
The loan facilitation we have, you know, rolled out starting from February in a pilot basis. Now we are slowly increasing the number of lenders, and we are also reaching out to MSMEs in a calibrated fashion. The business model to some extent is linked to, you know, working as a loan aggregation platform for MSME loans.
We are, you know, we are at an early stage, but I would say that, you know, we are getting, you know, MSMEs, you know, on our platform, inquiring about loans, and there are three lenders who are already coming. This is a very initial stage, but we are, we are quite hopeful that this can scale going forward. We are, we are trying to see how to scale it in a way, which is not, which is not too onerous, in terms of our spends.
Yes, sir. Maybe in two years we can see the monetization part going up significantly and the revenue starting to trickle in, right? Is that fair to assume?
Yeah. I would be happy if it is earlier than that, let me say.
Sure.
Our internal target is a little bit earlier than that.
Sure, sir. Okay, sir. Thank you, sir, for answering all the questions and wish the team a very the very best.
Thank you so much.
Thank you. Participants, if you have any questions at this time, you may enter star followed by one on your handset. The next question is from the line of Harsh Mulchandani from Toro Wealth Management. Please go ahead.
Yes. Thank you for the opportunity. To understand that what is the plan with respect to the funds which we are owning? Are we planning for some acquisition or to develop some new product in-house or enter some new business vertical?
Of course. The first, you know, and foremost, you know, path we want to pursue very vigorously is organic growth. We are also already deploying the excess money in IRIS CARBON sales and marketing, and we want to do it, as I mentioned, in a measured and calibrated fashion. We are already seeing, you know, 30% ARR growth, and we want to up it as we go forward.
On the inorganic side, if you want to, you know, look at whether we can deploy inorganically, nothing is off the table. We'll be disciplined and there's a lot of, you know, a lot of volatility in the market. We don't know how it is shaping up in terms of, you know, AI impact on enterprise software.
We don't want to do a deal just because we have the capital. We'll be open to evaluating opportunities, particularly in adjacent fields that could enhance our RegTech footprint. Early days, we are just on a wait and watch mode even now. Things have changed quite a bit over the last six, seven months.
Got it.
In terms of product development, we are aggressively trying to, you know, enhance our stack of AI offerings. That is going on.
Okay. Okay. Out of about INR 150 odd crore, you know, entirely won't be spent on marketing, right? Any number on your mind how much would be spent on marketing, say, over the next one to two years, and how much of revenue we can expect coming from that? Some thought process how you are planning. Obviously understand the bulk of the money you are keeping as a reserve to see how things pan out and maybe in future you would decide.
On the sales and marketing side, especially for our SaaS offerings, we have said that in the previous annual report, in the conference calls as well. We are well below the SaaS benchmarks where people spend at times more than $2 for $1 of net ARR. We are at about the 1.1.2 levels. We might go a little higher than that, but we don't want to, you know, we don't want to be spending indiscriminately. We are looking at net ARR growth of around 35% or more. That will give some indication of our marketing spend.
We could spend more aggressively if we see, for example, the market really shaping up well, for example, on the ESG side or even in detailed reporting across financial reporting on latest energy reporting, et cetera. There is some sort of volatility in the market. Right now we are going with these numbers, and we would be a little more aggressive as a base growth for IRIS Carbon. We don't want to be doing this in a EBITDA negative mode. We want to make sure that main EBITDA positive and still grow the business.
There will be money left post the marketing expense, but we want to, you know, keep that with us because there could be inorganic opportunities, which might come up, and we don't want to be you know, at that point of time, you know, be left with inadequate capital. When things are anyway, you know, little volatile and uncertain with the current environment, I think it is prudent to, you know, keep some capital within IRIS.
Absolutely fair. Thank you so much for the detailed data. Thank you.
Thank you. Participants, if you have any questions at this time, you may enter star and one on your handset. The next question is from the line of Vikas Kasturi from Focus Capital. Please go ahead.
Good evening, sir. Sir, you spoke about this a growth of 30% CAGR going forward for the next few years. Could you just provide some more color on how you plan to go about achieving it? Which are the markets that you wanna focus on? Are you gonna be adding new products to your current verticals or you're gonna add more salespeople and so on? Could you just please throw more light on that?
Okay. Okay, Vikas. I would, you know, take a shot at it. Primarily, you know, if you look at the product segments that we have, we have this enterprise product segment, where we have IRIS CARBON as the, you know, flagship product, plus we have the automated reporting for banks. IRIS CARBON, right now is looking at financial reporting.
We have ventured into ESG reporting as well. Here, you know, we definitely want to make sure that we grow at a, you know, a good clip, and this could be, you know, 35% is the benchmark we have set for ourselves. It should be more internally speaking, but this is, you know, what we are, you know, externally communicating.
On top of that, we are also looking at adjacent markets in the, you know, SaaS reporting area, which we are now trying to explore, which could be, you know, in capital market-related reporting, it could be energy reporting, these are early days for that. Outside that, we have the bank reporting, bank automated regulatory reporting area, where we are very strong in the Indian markets. We are trying to expand outside.
Here it is, you know, a combination of subscription revenue and at times there's the implementation revenue plus license revenue as well. Again, we are looking at the African and Middle East markets, you know, more than other markets. Of course, we are also looking at Europe and see whether we can provide a compelling value proposition there.
This is second part. You know, in terms of geographies, we see a lot of headroom in the U.S. and European markets because the disclosure management as a category is still fairly young and, you know, when we speak to our customers, when we look at people who are doing structured data reporting, there are many prospects out there.
I f you look at how we are going to focus our efforts, we could be certainly looking at these developed markets first, then working our way, you know, downwards. As far as iFile is concerned, which is our SupTech offering, it is the regulatory reporting platform. We are expanding the product portfolio so that we are not just in data collection and associated analytics alone.
We are looking at, for example, license, licensing, restriction management, which regulators need to do. We are looking at risk-based analytics. We are also looking at, you know, case management going forward. These are modules we want to build on the existing platform so we can go deeper. We see, you know, the SupTech platform growing at a good clip.
May not be matching the fast growth revenues, but here there is, you know, there is the possibility of getting lumpy revenues as well. It is linked to, you know, the regulators' push for digitalization. We see many regulators are still at a very early stage.
When you speak to some of them, we hear that many of them want to do want to go digital very fast because they feel if they don't go digital, they'll miss the AI revolution, which is slowly, you know, taking shape in those countries as well. We remain bullish on this, and we need to see how this plays out over the next three, 4 years. Our footprint is there. We need to go deeper into existing SupTech segments.
Would you also be hiring more in these markets, these developed markets?
Hiring?
Hiring.
Hiring. Yeah, certainly, yes. We have plans to deepen our presence in sales and marketing, including, you know, on-ground hires in these markets. Clearly, yes. We have started, you know, looking at that activity now.
Got it, sir. Sir, one of the things that we saw. I've been interested in following your company for a long time. One of the things we saw was that the cloud adoption, private companies would, let's say, adopt cloud much faster than the regulators. You know, given that, you know, they tend to be a little more cautious and so on.
Would they be, would they be sort of late adopters as far as AI is concerned as well? I'm talking about the regulators. They would say that this is all financial data. You know, we have to proceed with caution and so on, right?
You can't just, like, trust AI to do everything because if there are mistakes, then who owns it? All that. It might lead to other issues. Would you say that the regulators are more cautious as far as AI adoption is concerned?
I think you are absolutely right. We have been speaking to regulators. In fact, you know, we have actually one regulator already on the cloud, which is PFRDA in India. That's a private cloud which they're using. When you talk about AI services and cloud-based architecture, there is reluctance on part of the regulators to embrace that completely.
There are multiple ways to, you know, overcome this. We are also looking at, you know, a small language model which can work, which is a structure where the data doesn't go out. The LLMs which, you know, some of the regulators can use, which could be their private or sovereign LLMs. That is a structure we are talking about.
In fact, you know, in couple of Middle East implementations, this is a subject which has been, you know, further, you know, explored. I would say that, you know, when it's public data, or annual report information which needs to be further, you know, structured and taken into regulators, you can, you know, definitely use public AI services. When it is confidential data, there could be, there could be some reluctance or there could be great reluctance by regulators to go back to, you know, generic AI services.
Got it, sir. One final question, sir. The days receivable has been trending downward. Is it because of more effort on our part to collect our money regularly? Is there something to call out there, sir?
I think it's a combination of, I think, you know, of course, enterprise part of the business has been slowly moving up. That's number one. Number two, on the SupTech side also, I think, you know, regulators have been, you know, I would say, you know, making prompt payments.
Okay.
It's a good situation.
Yeah, of course, sir.
I would say that, you know, further improvement, you know, will become progressively difficult.
Okay. Around 80 days is what we can expect, sir?
Yeah, I would say that, you know, 75, 80 days is what we would be comfortable. If the, you know, enterprise SaaS, revenues really gallop going forward, it could further improve. We need to wait for that.
Got it, sir. Thank you for your answers and wish best of luck.
Thanks, Vikas. Pleasure to have you as usual.
Thank you.
Thank you. Ladies and gentlemen, if you have any questions at this time, you may enter star and one on your handset. To ask a question, please enter star and one. Participants, if you have any questions at this time, you may enter star and one. As there are no questions from participants, I now hand the floor over to the management for closing comments.
Thank you so much. This time it has been a shorter investor call. I hope all of you are happy with the way we are progressing, and I hope we have been able to address all of your questions. Please feel free to write to us if you have further questions. We are open to interacting with you on a face-to-face basis as well as, you know, through emails. Thank you so much. Have a good day ahead. Bye.
Thank you very much. On behalf of IRIS RegTech Solutions Limited, that concludes this conference call. Thank you all for joining us, and you may now disconnect your lines. Thank you.