Thank you for joining us today to discuss Intellect Design Arena Limited financial results for the fourth quarter of the fiscal year 2025/2026, and also for the full year 2026, ending 31st March 2026. The investor presentation and press release has been sent to you and is also available on our website. Our leadership team is present on this call to discuss the results. We have with us today Mr. Arun Jain, Chairman and Managing Director. Mr. Manish Maakan, Executive President, Group Revenue Officer and CEO of the Wholesale Banking. Mr. Rajesh Saxena, Mr. Banesh Prabhu, Ms. Vasudha Subramaniam, and Mr. Vikas Misra. Some other senior members of the management team are present on the call. I hand it over to Mr. Arun Jain for the management commentary on the results.
The commentary by the management team will be followed by Q&A, where your question would be replied by the management team. Once the Q&A starts, you can ask the question by clicking on the raise hand and unmute you so that everyone is able to listen you. One thing, however, I would like to remind you that anything which we say with reference to our outlook is a forward-looking statement, which would be read in conjunction with the risk that company faces. With this, I hand it over to Mr. Arun Jain. Arun.
Good evening, everyone. Thank you, investors, for trusting the company over the last 10 years of its journey. We embarked on this journey in 2015, we are completing 10 years' time in 2026. 2016 was the first result of full product company in set it up, this is the 10th year of this journey. I must thank each one of you that you trusted the company over this 10 year period. There are many other investors who are still with the company for 10 years. Some of them joined the journey in 2017, 2018, they have seen the vagaries of building a product company.
Any product company in the world which is having a license-linked revenue, which has a long-lasting value over the last next 20, 30 years because of the technology licenses takes this kind of a ups and downs where when you build the technology at the deploy in the market, and then you have some time to accept the technology by the customer and then getting the next technology. In this process, what we adopted in this journey was using design thinking as a core value to understand what is the customer desirability, feasibility, and viability, which I mentioned to you earlier. We added during this journey when we found that design thinking is not complete, there may be possibility of adding first principle thinking by which we are able to reduce the wastage during the technology architecture. Then we applied framework thinking, and fourth, we added system thinking.
There are four cognitive engineering technologies we use for building the entire product engineering landscape. I know as an investor you are interested more and more in financial number than philosophical number, but I'm sharing with you this thing because as a product company and coming from India, you need to have all the four kind of a cognitive thinking, translating into impact-driven products. These impact-driven products, what we are talking about is first understand the technology landscape. When is it changing? What point of time we need to invest in a new technology? When cloud was coming in 2014, we invested cloud in time. When AI was coming up in 2017, 2018, we invested. Before time in 2016 in U.S. and U.K., we invested in AI in 2016.
Way back 10 years back when we invested AI. This was based not on a what revenue we got in 2016, 2017, 2018, 2019. For first five years, we hardly got any revenue from the AI business for which we invested heavy money and a lot of questions were there. That prepared us for saying what you can do with AI and what you can't do with AI. That has helped in choosing the right strategy going forward. When the generative AI hit the market, we were ready for generative AI to take the lead, and then we created a platform which we launched last year. Last year in June, we launched Purple Fabric as a platform which is competing with the peers on functionality and the process. Especially for financial domain, it is very, very appropriate for the financial domain.
If you just go back to three years history of eMACH.ai, we launched eMACH.ai in 2024. 2023, sorry February 2023, we launched in Mumbai, along with AWS on a cloud. This is a platform where we put all our microservices. That time it was 300 microservices. Now it is 700 microservices are there on eMACH.ai cloud. We look at our strategy to be divided into six blocks. Every six months, we have. We don't look at quarter, we look at six months. We call strategic planning cycle SP 1, SP 2, SP 3, SP 4, SP 5, SP 6. Means we have completed SP 6 cycle since we launched eMACH.ai as a platform.
In cycle SP 1, we had understood that eMACH.ai will be more acceptable in advanced market. They understand the value of the architecture, that how architecture can drive their cost of ownership of the technology. That's the time when we were not entering the U.S., and we mentioned to you that we entered into U.S., Canada, Europe. Those investment we did, we got some early wins like OTP win we got in that cycle. Many other banks, we got CIBC deal and other deals in that cycle. Now this time we are. Now six cycles are completed, so this is the time when we are evaluating ourself against six cycles and planning for next six cycles. There are 12 cycles when we looked at it, when transformation is there for three years and next three years. Next three years will be monetization phase.
First three years was creating the entire infrastructure of my products which are coming together on eMACH.ai platform, my narrative, my go-to market strategies by aggregating my six marketing under Chief Revenue Officer. This is a time when we try to consolidate the power of LOB to power of Intellect. That's where it took us some time to see the value each product is bringing, each line of business is bringing, so that it becomes a multiplier impact when they come together. In this process, we could able to sign up the marquee customers. Almost we have 60 customers whose asset size is more than INR 100 billion. They are our customer, where we have a great opportunity to cross-sell on eMACH.ai.
That's the reason which I'm saying why we are bullish about future is, if they are sitting on the same eMACH platform where we are promising there is a one source of truth of data. It is much easier to sell second product and third product on the common backbone. Like Salesforce, if you sell the same product, the backbone remains common. That's how eMACH Cloud, which we are looking at, it will be relevant for you. This is part one of our FY where we'll be going deeper into large accounts. Second piece which is coming out by connecting Purple Fabric and the product, which is called eMACH.ai. Now in last 18 months, we made all our product AI-first products. AI Core Banking, AI Digital Engagement Platform, AI Lending, AI Trade Finance.
Since AI is properly built with AI-first thinking process, we are able to drive higher number of sales, higher number of pipeline. It's AI-first product, we could able to compete or overshadow our long customers in trade finance business, in lending business. Initially when we were selling only eMACH.ai as a trade, was not becoming the eMACH.ai as a wealth. When these two technology come together, that's created a kind of a moat against our key competitor in that space. We are in the final stages of few large wins in the space of eMACH.ai. First I covered products, then I covered eMACH.ai plus AI, finally I'll cover role of AI and how the AI is evolving the world, and where are we in the journey of AI.
I'll take separate time sometime later on explaining what the AI is all about and where we are looking at it. In a nutshell, for this investor conference, I would like to say that on one side, you are hearing lot of noise from the Anthropic, Claude, ChatGPT, OpenAI, and the coding, the Cursor, and the jobs it will going to replace in AI world. All the things which you are hearing as an investor are all true. It's not that these jobs will not go away. Jobs will go away from IT world, and India will be in some trouble India will face with the AI implosion. It's a completely new change.
On the other side, many banks, many financial institutions, which they implemented AI for customer services peripheral areas, they are getting the benefit of implementing customer service area where 80%-85% accuracy is allowed because they are doing support services or customer service area. That's a area where AI is giving benefit to the financial institutions. Most of the financial institutions have not able to apply AI or productionize AI in core processes or core systems and core technologies. For that, our research teams have done a phenomenal job in this space. They understood the core issue why AI in enterprise space will not work unless we solve the core systemic issue there. Intellect research team has done a deep research on it. They applied some mathematical models, some model from physics, some model from mathematics.
Using those models, we think how do you create a deterministic knowledge which is a core of any judgment or decision AI can take? For financial institution, for core processes, we need at least 95% as a minimum benchmark for making it usable for production-grade AI. I call it production-grade AI or enterprise AI. We exactly solve that issue because intelligence accuracy is equal to knowledge accuracy into reasoning accuracy into context accuracy. If knowledge accuracy is 85% right, which LLM gives me, reasoning accuracy which I create by agent is 95% right. If context accuracy is 95% right, these are best cases I'm telling. You can't get more than 95% right in context, or 95% right is reasoning by AI and 85% in knowledge. Now you multiply them, not take an average.
Take your computer or take your cell phones and multiply 85% into 95% into 95%. You will get 76.7% accuracy. 76.7% accuracy, it cannot be enterprise AI for core processes of the financial institution, and that's the problem most of the banks are facing. This problem, we have filed some 15 patents in this space in last six months. We are unique to Intellect. We solved this problem by applying physics, mathematics, and models embedded into my knowledge models and embedded into my data models and their technology models. There we are now able to achieve in many spaces close to 94%, 95% accuracy in the application. We are able to govern it well.
We have signed two large enterprise deals in AI, platform deals in India, and three or four, almost three deals outside India on platforms, and their pipeline is growing well. This is one part of the platform which I mentioned to you. Second way of going to market is I'm doing, each product is going like PF trades, Purple Fabric trade business, Purple Fabric lending business, Purple Fabric wealth business, Purple Fabric risk and governance business, Purple Fabric customer onboarding. All the pieces are being sold where the banks are ready for only applying use case basis or bank wants to make a change together. These are the two streams of revenue we are building in AI space, and both are looking very, very lucrative.
Manish will tell you all the details of how the year went by, what businesses are done, where we have done various revenues. If you have more question in AI, if you feel that it will be of interest to you, sometime in next two weeks, I'll take a one hour session where you can send the questions to us that what question you want to know, especially for investor, where we can have a some 90 minute session for all the investor to understand what the AI space is evolving and what is my personal understanding of AI is. At this point of time, I hand it over to Manish to take you through the results.
No, thank you, Arun. Good evening, everyone, and thank you for joining us. Like Arun called out, it's been a systematic design of how we will align around the industry and how we focus on growth by design. Clearly, you would have seen the numbers for the year. FY 2026 was a very strategically important year for us, which has shown in the results and our strategy. We have shown significant top-line growth and strengthened our balance sheet and continue to deepen our position as an AI-native financial technology platform company. Most importantly, the investments we have made over the last several years in composable architecture, enterprise AI, and deep financial domain specialization are now delivering the compounding scale which we really needed.
Today we operate across 62 countries, with more than 500 institutional customers, something that Arun shared that we've got more than 60 customers with very large asset size. We are primarily in the Tier 1 business as one side of our business, and on the other side of business, we work with the credit unions. We've been able to design the business model to serve the, both the segments from that perspective. We continue to maintain strong domain depth across wholesale, consumer, wealth, insurance, and AI-led enterprises. That segmentation from a product perspective and a market coverage has to really play to what we define as the arena in the Intellect Design Arena, that strategy is working. The 2,000,000 hours annual R&D, which you look at at a $50, it's like a $100 million from an American perspective.
That's the kind of courage we have had to invest in building this as our advantage is our unit costs are low. If it was an American company, that would translate that on an annual basis at least $100 million R&D. That's what's kept us edged continuously in the market. I think like Arun called out, we saw the trend early for AI, We started investing in 2016, 2017 around this. AI is evolving through multiple stages, from experimentation to data and AI, data as a platform to where we now believe we are in Wave 6, where AI-native enterprises is what will define who you are and whether or not you'll be able to take advantage of this wave.
Continuing to remain in experiments will not help, and that's where we're helping number of large institutes to actually become AI-first digital banks. Second piece of strategy, like Arun shared, the two platform approach create our unfair advantage. One is eMACH from a composability and Purple Fabric from an AI enablement. That's why eMACH.ai together helps us deliver the AI-first approach of who we are. We looked at the three dimensions of designing any of the strategy, and part one of that is designing for our products. Part two is designing the markets where we'll take this product. Third was choosing, designing a customer portfolio. This is a very structured approach, which for last 10 years we have followed, and it shows up in our results as we go forward. This framework has allowed us to scale on defined strategic focus over a multi-year cycles with greater predictability.
We call that from an initiation to how quickly we get to cycle one, where we get about an INR 500 crore. We put on slabs of INR 500 crore each from a cycle growth perspective to where you've got the market trust, to where you're preferred in the market to being a market leader, category leader. These three cycles, we have looked at it and as we go forward, we categorize also for your information, how each of our business lines have got that leadership. The wholesale banking business is now fully mature in cycle three at INR 1,500 crore plus revenue from that perspective. We started in 2016, 2017. If you look at a nine, 10 year cycle, it's brought us here. Now it's about how the next INR 500 crore can come in a faster time.
Two years later, we started on Consumer Banking and now very happy to announce Consumer Banking has also crossed INR 1,000 crore this year. Our youngest business, where we started investing on wealth capital markets and insurance, in 2022-2023, streamlined to take it forward, has also crossed INR 500 crore business. This is a repeatable pattern which proves that focus, how you go from a cycle one to cycle two to cycle three. It's not being opportunistic. It is design choices which we have taken every three years to invest forward. I think Arun mentioned that we looked at every six months as a strategic phase to define innovation, grow engines of how we will seed through any of these journeys.
This is just a snapshot of how we have invested one or two platforms every six months and take it forward to scale to support our vision and opportunity in the market around eMACH.ai and AI. Go forward. Over this period, this has not only been accepted by customers, which shows in our results of the number of customers we acquire, but also the industry analysts and industry awards. Across a three year window, we've got 56 analyst leadership. We are in a number one or a number two category and 18 industry awards where we are leaders in there. It's a consistency of our performance and vision which is evident over here across all phases. As we look forward, I think creating the moat was equally important.
If you just clearly see in the last year, we filed for close to 100 patents, and that's the differentiation. This is where our company is going to create an edge in the market. We have overall got 125 patents filed, and nine have been granted and the balance are in progress. We are creating this wedge so that the innovation we are investing upon, the disruptive technology, others cannot take advantage of doing from that. We look forward to this IP moat in our products to continue to go forward. Next. I think from designing our products, we graduate to designing a market presence, and we took a structured approach. Initially, we grew our journey through Europe, and then we went into Middle East, Asia, India.
Over the last four years, there's been very significant focus in building the Americas business, and last year has been exceptionally good growth. You see, this is what we are looking at. Americas business has grown manyfold from that perspective. Has got 27%. The good news is, while one market share has grown, we've continued to maintain a 20% - The lowest market is 13%- 27%. It's a very balanced growth across. Either market, the fluctuations doesn't hurt us right now. If one market is some geopolitical issue happening, pivot of focus last year was difficult for Europe, so we pivoted strongly to Americas and it shows in the result. We were able to manage the European revenues to where it was, but grow Americas from that perspective.
Now with a decent depth in each of the markets ranging from INR 400 crores- INR 800 crores, we are able to pivot and insulate ourselves against any unplanned incidents which happen in the market. Next. The third piece is designing our customer portfolio. We sharpen our products for the market and we choose which customers we are gonna grow up. We've strongly been a Tier 1 product market space where we have excelled in. This shows that we today have 500+ leading global, regional and challenger banks who trust on Intellect.
If you look across geographies, the top 60% or top 10%, 15% or 20%, we continue to grow that. Those are our leader brands where if the banks trust us and as they go global, it increase our distribution and our strength of each of the products. It follows that pattern, follows all the regional banks wanting to adopt and then the local banks wanting to adopt. That journey of establishing trust, we may have started with the difficult larger banks, but that established our leadership in the market. This is the proof point of our success, and we continue to grow this. You would have seen this slide evolve every year from where it was to what we are today. These are our two gemstones who have helped us reach here. Next.
I think this is also evident in our pipeline, which has now crossed INR 12,000 crore, and we've got 99 destiny deals which are available. In 2025, 2026 we had 21 destiny deals which we won, which were multi-product, multi-year programs at marketing institutions. These deals compound actually. You enter with one product with a INR 3 million-INR 5 million annual revenue, and then when you bring in the second product, it becomes ARR grows from INR 5 million-INR 7 million. That equation of cross-selling, focusing on your large accounts, you serve them well, you build trust, you deliver on time. That marketplace is very large. Individual customers are a marketplace, and based on that strategy, we are deepening our investments around our existing customer base. They are our crown jewels. This is a snapshot of high-value pursuits.
We are running across INR 50 crores, INR 30 crores-INR 50 crores, INR 20 crores-INR 30 crores, these are the 99. Very focused attempt to play in the larger size. These are the Q4 strategic wins which we have had with four large wins across Americas, two across Europe, and five across Middle East. If you see it's been two in India. In fact, all markets we have managed to show wins across, which are material deals, which have made a difference to our numbers from that perspective. Next. I think the five new design choices for the next three years where we are looking at is, like we said, I'll initially mentioned that I started off with AI-native companies, this is where Purple Fabric scaling is happening right now.
This is truly a platform-led business which shows also in our revenue that our platform-led business is growing against the conventional just licensing business. A second pattern we are seeing is there's a significant shift to move away from mainframe to cloud. This is where our eMACH.ai stack, tech stack, both its proof points of having moved multiple mainframe platforms to a cloud platform and the composability of it for last year one transformations has proved, and we're scaling up our investments behind it, and we've seen a good market traction. The wholesale banking platform was our We graduated from a transaction banking to wholesale banking. This is an ecosystem play across deposits, lending, cash, liquidity, trade, supply chain. We're continuing to expand on our moat of what a wholesale bank needs and how we can offer that as an integrated composition.
Payments is the fastest growing area across, and multiple things are happening from embedded to cross-border to real time. This is where we are making a significant difference, and there have been multiple wins in the last year. The fifth one is on financial advisory around wealth insurance. This is our youngest platform, but truly leading with AI-first for the next gen investors, and this is making a big difference. Each one of you would be also looking at AI in your worlds, and this is where we're helping, which is giving us big wins right now. Next. Vasudha, you take up from here.
Thank you. Thank you, Manish. Good evening, everyone. Happy to take you through the financial highlights for the quarter and the financial year 2025, 2026. The financial year 2025, 2026 has been a year of strong growth, improving business quality, disciplined execution, high fee collections, and sustained investment in long-term strategic initiatives. I'll move on [inaudible] . For the full year 2026, Intellect reported a total income of INR 3,161 crores, representing a 23% year-on-year growth. License linked revenue comprising platform license and AMC revenues increased to INR 1,667 crores, representing a strong 34% year-on-year growth. Breaking this down further, platform revenue increased significantly to INR 580 crores from INR 241 crores in financial year 2025, representing a 141% year-on-year growth. License revenue stood at INR 517 crore.
AMC revenue was INR 570 crore, reflecting continued strengthening of annuity and recurring revenue streams. Moving to profitability, gross margin for the year stood at INR 1,786 crore, representing a 19% year-on-year growth. EBITDA for the year was INR 703 crore, representing a 16% year-on-year growth. The non-GAAP EBITDA, which excludes the stock compensation cost, was INR 756 crore, which represents a 24% of the income for the year. PBT, before considering exceptional items, was INR 493 crore, while PAT stood at INR 369 crore for the year.
PAT, after considering exceptional items, stood at INR 345 crores. The exceptional item comprises of the gratuity provision for INR 30.84 crore and the resultant deferred tax impact of INR 7.76 crores, which we have accounted in Q3. Collections remained strong during the year at INR 3,043 crores as compared to INR 2,371 crores in financial year 2025, which represents an increase of INR 672 crores year-on-year. We closed the year with cash and cash equivalents of INR 1,257 crores, an increase of INR 236 crores over financial year 2025, from INR 1,021 crores. Intellect continues to maintain a strong balance sheet and zero debt position. Talking about our deal wins in digital transformations, 59 new customers selected Intellect for their transformation journey and 91 digital transformations went live globally during the year.
Another positive trend during financial year 2026 has been the continued strengthening of our balanced geographic revenue portfolio across developed and growth markets, which Manish talked about. Yeah. Moving to Q4, total income for the quarter stood at INR 884 crore. Platform revenue for the quarter was INR 162 crore and license revenue was INR 152 crore. Our ARR for the quarter stood at INR 1,247 crore as of Q4, up by INR 870 crore as of the same quarter last year. We achieved an EBIT of INR 221 crore for the quarter and a PBT of INR 162 crore. Collections for the quarter were INR 791 crore. Another important indicator of our operational discipline is our working capital efficiency. Our DSO for the quarter stood at 126 days as compared to 137 days for the same period last year.
We also continued to strengthen leadership capability across the organization with 23 senior leaders joining Intellect during financial year across strategic functions and markets. Go on [inaudible], y ou can move on. Let me briefly cover the important board and organization announcements for the quarter. In line with the company's dividend distribution policy, the board has recommended a final dividend of INR 4 per share along with a special dividend of INR 3 per share on equity shares of face value of INR 5 each for the financial year 2025-2026, subject to shareholder approval at the ensuing AGM. The record date for determining shareholder entitlement has been fixed as July 24, and the dividend upon approval will be paid on or before August 29, 2026. Go on [inaudible] . Move on [inaudible] . On the organization front, the year marks an important leadership transition phase for Intellect.
Mrs. Sudha Gopalakrishnan, Chief Assurance and Governance Officer, will retire from the services of the company effective 31st May upon attaining the age of superannuation. The board has placed on record its sincere appreciation for her valuable contributions during her tenure with Intellect. As part of the leadership transition, Mr. Krishna Rajaraman, currently the Chief Technology Officer, will transition into the role of Head Customer Delivery Experience effective 1st June. Mr. Vivek Gupta, currently President and Head of Consulting, will be redesignated as Chief Customer Officer effective 1st June 2026. In addition, Mr. Prashant Lalchandani has been appointed as the Chief Technology Officer of the company effective 1st June. Prashant brings over three decades of experience across product engineering, enterprise architecture, and global banking platforms, and has played a vital role in shaping Intellect AI-native engineering and eMACH.ai platform evolution.
These leadership transitions further strengthen Intellect's long-term execution capability as we continue to scale our AI-first and platform-led transformation journey globally. Move on [inaudible] . Finally, here is our investment thesis. We are leading through five key differentiators. Number one, AI-native leadership. Our Wave 6 infrastructure is live in 45+ global institutions, giving us a massive first-mover advantage. Secondly, we are a zero-debt company. Our growing cash reserves and recurring ARR engine provide a stable compounding foundation for high margin returns. With 30 years of expertise across 62 countries and 500+ clients, we possess a deep domain moat that competitors simply cannot replicate.
Our pipeline is robust, featuring 80+ active pursuits valued at over INR 20 crore each, ensuring strong revenue visibility and momentum. The synergy between eMACH.ai's composability and Purple Fabric's intelligence creates a compounding effect, moving us from linear growth to exponential platform value. As we move into FY 2027, we remain confident in the company's long-term positioning, business quality, and strategic direction. With that, can we now open the floor for questions?
Yes.
Thank you [crosstalk]
Thank you , Vasudha.
Thank you, Vasudha. The forum is open for the Q&A. In case you want to ask a question, please click raise your hand. Please click raise your hand so that we can unmute you. We have Mr. Rahul Jain from Dolat Capital. Rahul, unmute yourself. Rahul, you are there? Rahul?
Yeah. Hi, hope I'm audible.
Yeah. Yeah, Rahul. Welcome.
Yeah. Thanks for the opportunity and congratulations on very strong numbers and excellent presentation as well. Just two, three aspects I wanted to touch upon. One, you have talked about this next 18 months of monetization that we see on the eMACH.ai. On this particular offering, do we see the mix of product being on the license side of it, or it will be more on the subscription side of it? Any trend if you could identify for this product, that is question number one.
Okay. If you look at it, our implementation revenues are fairly decreasing in percentage terms and as the growth is increasing. Licensing revenues are growing faster than other. You are asking subdivision of license versus subscription. Our focus is to get to more subscription revenue, which is long-term in nature, but we are not letting go the license revenue where the large customers are there for license revenue. Forecasting that will be difficult, which number will grow faster. Our intent will be to get more subscription revenue, but outcome will determine based on the market situation.
Okay. Sure. That's clear. From a growth point of view, you know, this five key reason that we have highlighted, this clearly sets up for a growth acceleration thought process. Do you think that next year onwards, right from FY 2027 onwards, we could see our growth accelerating or we are more thinking about this from a medium-term perspective and not necessarily from an FY 2027 perspective?
We are getting a good traction. INR 12,000 crore of a pipeline we never had, and this pipeline is qualified. We always mention to you that predicting anything of this nature, of the revenue modeling on quarter-to-quarter basis are more difficult for us than projecting the trajectory of the company. Trajectory of the company moving from INR 500 crore a quarter to INR 600 crore a quarter to INR 700 crore a quarter to INR 800 crore a quarter. We are able to forecast that, okay, we will move from INR 700-INR 800 in two to three quarters or three to four quarters, and that we are able to sustain. But which revenue, which particular piece will come from which geography. We are a complex business of at least six markets and three LOBs and 10 product lines.
From investor perspective, it's a very well-balanced portfolio. From product side, there's a sufficient capacity to grow, saturation is avoided at a product level. Saturation is avoided at a market opportunity. Market risk is avoided at a market level. We are looking the whole business into two pieces. One is product on product side, market on market side. We are preventing the market risk on one dimension, and we are ensuring that we have sufficient product in the market so that we don't hit the saturation button, which many companies with a single product company button, they reach a saturation point where they become cash companies but not growing companies.
Ensuring the cash and growth both comes together is a strategy when we look at Arena model of business. We have demonstrated the last 10 years that this model works. It takes five years to get into the sustainable model when we start investing GTM money. The R&D space of Purple Fabric, we are investing between 2016- 2021, but go-to-market took 2022 onwards. You take almost five year cycle time, things are below the-
Iceberg.
Iceberg. It's not driving any numbers. Those investments, like INR 92 crore investment in AI business last year. We said INR 130 crore, we land up into a INR 92 crore investment, and we have an order book of over $50 million on AI business we booked last year and a revenue of INR 160 crore in this year. I think that's what we are able to project, Rahul, that we are saying we are growth by design and margin by design.
Yeah. Just one last aspect from my side, and then I go back into the queue. One thing we've been articulating well is that how well we are positioned in terms of the kind of an offering that we have, which are best suited for the customer. Purely from a demand side of it, you think is there an incremental traction even from a demand side of it? Most of our success or pipeline is getting encouraged because of our better qualification and our better offering and winning market share.
Manish,
It's a combination of, Rahul, you answered it yourself. Combination of all the elements over there. Better qualification, better market rate, better acceptance in the market. We continue to win big with our own existing customers. Our portfolio is designed for that perspective, so there's less anxiety in the portfolio. Year on year, we said we have a certain band we wanna operate in. I think this year we managed to demonstrate that and keep up that consistency is where I'm looking at helping contribute to us.
Right. Just to, the engine, that you talked about, we should refer it as 15%-20% from the growth point of view and 20%-25% from a margin point of view. Is that the right band to think about?
That's the same story, my brother, which I told in 16%, 17%. I have not changed that trajectory. I say we are designed, always growth at 20%. When we are running a company, we design the business for 20%. External factors are there, win rate are there. We achieve 15%, we achieve 14%, we achieve 17%. I will keep that. Why we are running Arena? We would like to see that we don't get saturated and we don't come single-digit growth engine, and that's the design part of it. How much we succeed is a factor of not factor of market, factor of some situation to happen, some elements happen, it covers up later on.
On a growth trajectory perspective from INR 600 crore trajectory to INR 3,000 crore trajectory in last 10 years, five times trajectory, I think we are not disappointed any investor over the last 10 years from INR 600 crore trajectory to INR 3,000 crore trajectory. Again, forecasting FY 2027, FY 2028, we are designing definitely for 20%. Again, design-wise, we are still looking 20%. Whether we achieve 15%, we achieve 14%, we achieve 12%, I think time will tell.
We're taking it in bite sizes. Grow by INR 100 crores over a two, three quarter. Keep driving, keep succeeding on that is now predictability showing up.
No, that is a simple metrics. It's INR 800 crore- INR 900 crores. Now the next milestone will be crossing INR 800 crore. This quarter we are INR 880 crore. If we retain INR 800 crore+ for next two, three quarters, that will be our challenge right now.
Sure, sure. Just last bit. On the investment side, last year we accelerated because of the AI offering that we wanted to take it to the customer. Any update on that in terms of do we need to continue the run rate, need to accelerate on that? On the monetization side, how we are seeing it? Thank you.
Investment will continue as well. Again, I'm saying last 10 years, we want to keep the margins between the 20%-25%, EBITDA margin between 20%-25% range. That's a trajectory we are looking at it. We would re-want to reinvest back into either creating a delivery capacity or creating a sales capacity or creating a R&D capacity. Those investments, we take a conscious call two quarters in advance. When we take a call of increasing the capacity, suddenly the margins drop happen, which gets recovered after two quarters. There's a lag between when we invest upfront, like in Q1 we invested, then there's a sudden drop in the margins in Q3 we experienced. And this has happened not 1 time. This happened multiple cycles.
If you look at the books, we have invested, and after three quarter, if you look at the same number, you will find suddenly margin goes up to 27%-28%. Then, oh, will it this be margin sustainable? Then we reinvest back that money, and that's how the trajectory moves from INR 600 crore- INR 700 crore, INR 800 crore. If we focus on margin, then I will able to manage the margin, but may not be able to manage the growth.
Thank you, and best wishes.
Okay.
Thanks, Rahul. Next, we have Mr. NGN Puranik from Enam Securities. Puranik , please unmute yourself.
Hi, Arun.
Hello, Puranik.
Brilliant quarter. Brilliant year. I think looking strong on the momentum. You are mentioning about one important thing, accuracy as a competitive advantage, in a model when it comes to selling solutions to banking industry, perhaps I would add energy, aerospace. These are all accuracy sensitive. How did you achieve this? How do you sell this accuracy to the top 60 customers you talked about?
Yeah. Very good question, Puranik. My favorite question that last 12 months amount of hours I spent in researching the AI, I would not have spent that much amount of time personally in last 10 years. It's becoming using the Indic system of knowledge systems to Western system of knowledge systems. I have to use Tattva Shastra, I have to use Vaisheshika, Nyaya Shastra. System of knowledge of Harvard, MIT published p apers on mathematics and physics to see what is the knowledge system means, the core of knowledge. How knowledge get designed, how the knowledge gets constructed. A shloka is a deterministic knowledge. Shloka knowledge.
Correct.
You can't make a knowledge change in the shloka because it's embedded w ith an e-encrypted knowledge. Shloka is the encrypted knowledge which is there. Now, that is a deterministic knowledge which is required for any institution to work on, and that I call deterministic knowledge. In physics, there is a word called probabilistic and deterministic.
Probabilistic and deterministic. Correct. Mm-hmm.
Now we need to look at providing a right solution for the industries which are focused on deterministic paradigms. The industries which are not deterministic, like healthcare is not deterministic. Banking, financial, aerospace, defense will be deterministic in nature. For that deterministic nature, then I have to apply how the classification of knowledge happens, which is Vaisheshika and Nyaya Shastra. Vaisheshika. Talks about classification of knowledge. Nyaya Shastra talks about judgment of the knowledge, how the knowledge, how do you make a judgment that this is right knowledge, this is not a right knowledge.
Beautiful. Mm-hmm.
Once the judgment is right, then only you can. You can convert it to intelligence. My advantage is I using the Western tools. Eastern philosophy to work together to make it a better knowledge accuracy.
Great combination.
This is what we are now finding. The institutions which we went in July as in September, t hey said, oh, we have a 100 people MIT team who are doing with the AI work. Now they're calling us back, t ell us how are you doing it? That time they said, n o, no. We don't need you, w e don't need your platform. We already have our own teams working, except the two financial institutions, those who are doing experiment maybe earlier. They realized that they're not able to get it. These IIT engineers or MIT.
Correct.
May not be able to get the accuracy. Because they are not in this industry.
My question is: How will you sell to these 60 customers?
They're coming. They're coming. They're coming one by one. We have submitted five RFP already out of 60.
Oh, wow.
We are working with them.
Over time, you can see at least 10, 20 of them buying for accuracy?
More than that. I think this is. We should be getting almost 30, 40 customer buying.
30, 40 customers.
our platform in next two years.
And the average-
That's our time.
Average deal size is of what range?
This is to the monetization. As of now, the pricing we are starting to be lower end of $250,000-$500,000 . Idea is to move to $3 million-$5 million, i dea is a platform sale. They're like Salesforce when they enter in India. They sell the Salesforce in $100,000, but today Bajaj pays INR 100 crore for single instance. That's how the platform sales sale happen.
You also mentioned about that you are in the final stages of large wins in e-commerce, in eMACH.ai space. What exactly is that?
Yeah, these are the core modernization space. Which is the mother of all the deals. Those are people are what we are bringing is a lowest TCO. fastest delivery. That space of mainframe to cloud is still the biggest cost is mainframe cost in America than Europe. They have to move to cloud.
Cloud.
This end-to-end delivery model in, which Manish covered is a very big opportunity for us to demonstrate our capability. We are working with Kyndryl, we are working with IBM, we are working with other AWS as a partner that how the eMACH.ai stack is most conducive to sell to these large deals. Time of these deals could be varying from 12 months- 18 months. We have made OTP, which we went live, which we won the deal 18 months, 24 months back, we won that deal, two years back. Today, both the places, eMACH.ai, is live in Hungary as well as Bulgaria. These two countries are live with eMACH.ai. We demonstrated that within 18 months we are able to put the system live with eMACH.ai, which is a good reference point, which will accelerate our journey in the going forward.
This eMACH.ai space you're talking about is also in the 60 customer category you're targeting?
This 60+ , for that the new customers are also coming. Not 16. They are all new customers.
Okay.
We don't have too many large customer in America. America is a big market from at least 70, 80 banks which has $100 billion+ assets in America alone. That market size will open up because now we are close to INR 1,000 crore in the U.S., INR 800 crore. We are touching $100 million business in the U.S. That's a good traction. You always used to ask, when are you going to the U.S.? We always said, w e'll go to America last.
Yes, sir. Mm-hmm.
Once we go last, we are ready to go to hit the market. If we would have gone earlier, which a lot of investors were anxious that, why you are not going to America in 2020, 2021? We kept on deflecting that point that we will go as per the strategy. We'll not push just because America gives more revenue. Because they penalize the vendor also if you're not working out well.
You also talked about keeping hordes of cash versus growth. That means there is an acceleration in R&D dollar?
That's definitely R&D dollar will go up. Because now we have a design R&D. Patent. Now, 100 patents we filed last year. This momentum will go up to 150 patents-200 patents in coming year.
Oh.
R&D spend will go up. Today we have a net capitalization. Is less than INR 450 crore.
Oh.
For the company which is getting a license revenue of INR 1,000 crore+ plus m y net block is INR 450 crore.
Mm-hmm. What's the multi-?
So at this point of time-
Multiplier you have in mind? R&D dollar to potential sales?
The multiple is too much, i f I can start calculating. That's it, e ach investment which we make INR 100 crore in R&D. We generate INR 1,000 crore in next 10 years. As simple as that.
I want you to sometime articulate on this power of this 127 patent. Some point in time, maybe it may be difficult for you to do it now.
Yeah.
Some point in time.
Yeah.
Lot of value sits in the patent. If you can articulate in your, the chairman's, you know, the annual report and what that means-
Okay.
What are the production patents? What are the productivity patents? What are the revenue patents? What are the defensive patents? If you can just articulate that'll be wonderful some point in time.
Beautiful. I think that's where the journey will happen after 2028. We are looking for patent monetization journey sometime in 2028 or 2029. That is the next phase of our journey. This 2025, 2026 is going on. For the three years, now we are filing the patents. We'll create closest 500- 1,000 patents in the next three years. The licensing the patents will be another revenue stream we'll start. That will be after 2029.
Thanks a lot, Arun. Thank you so much.
Thanks, Arunji. Next we have Mr. Krish Jain from Nafa Asset Managers. Krish Jain. Krish, can you identify yourself?
Hi. I hope I'm audible. Looking at the revenue ex other income, we've seen 21.5% growth this year. Could you please highlight what was the constant currency growth this year?
Could be 16%. You can say 4% or 5%. It reduced 4%, 5%. It is 16%, 17%.
Sure. 16% growth. Looking at the revenue by geo, we saw Canada, USA., you know, there's a huge jump there, INR 442 crores to be exact. That's 150% growth. We wanted to understand how much of it is attributable to the Central 1 acquisition that happened last year and how much of it is organic, inorganic growth.
Central 1 growth could be 50% of it. The rest of the 50% comes from organic.
Okay. Just final question, can we expect any M&A deals happening? You know, you've got good reserves, maybe not spending it on R&D. Maybe like something similar to Central 1 or even, you know, cash deals that can happen in the future.
Yeah. Yeah. You want to share?
No, that's not our core design for growth. If we see right, appropriate, which complements our customer strategy or a product or a market strategy, we'll look at those things. That's not our core growth engine which we are designing for.
Since you are investing in the market, we are looking for those company where an IP has been developed.
Yeah.
We want to look acquisition for those company which will give us a market access in Europe, market access in U.S., market access in Australia, where product set is 30 year old, which we can replace like Central 1. I need a Central 1 equivalent, low cost acquisition so that I can replace them with a eMACH.ai stack. Those we are open to. Since you are in the market, all of you are in the market, if you come across those companies I don't want to compete with the latest in the nature, but those acquisition will give me the customer access on eMACH.ai.
I think an important point also to share from a Central 1 perspective, while we got initial customer contracts, we cross-selling them DEP right now and bringing them onto our new platform. Within a period of 18 months, all of those contracts I would have resold and resigned them, and I'm cross-selling multiple other products to them. That was, like Arun said, an access to the market, an old technology which where we could cross-sell. It worked for us.
Oh, yeah, sure. That's I'll finish this. Congrats on a good year and all the best for the future.
Thank you.
Thanks. Thanks, Krish. Next we have Maitri Shah from Sapphire Capital. Maitri Shah.
Maitri, you may unmute yourself and start speaking.
Please unmute yourself, Maitri. Okay, looks like Maitri is not there. We have Mr. Mayank Babla. Mayank Babla from Enam AMC . Mayank?
Am I audible now?
Mayank, please unmute. Yeah. Yeah, Mayank, please go on.
Hi, thank you for taking my question. The first one is on, you know, the operating expenses. I see that, you know, software development expenses, SG&A and R&D expenses have increased by 28%, 28% and 17% respectively on a year-over-year basis. Can you give some clarity on that, please?
Some of the expenses have gone up because of C 1 acquisition, because their cut cost has gone. It's the margins are almost breakeven points on C 1. We mentioned in the beginning itself that it's a very low margin business. It was basically almost like zero margin. That's all gone into the operating margin expenses. If you take it out, then the difference will be much lower, in which SG&A definitely we increase the expenses for getting a better market accessibility on Purple Fabric. Investment on AI, we increase the expenses. These are the two major areas where we are looking the expense to be increased. R&D expenses obviously will go up. It's in proportion to the revenue. It's not necessarily that revenue has gone up.
Sure, sir. An interesting point you made on, you know, R&D expenses going up because that just essentially provides fuel for the next few years or decade. I just want to understand what will be the accounting for this R&D? How much will be capitalized out of this? And how much-
Mayank, we capitalized how much? INR 160.
INR 160. Last year, I mean, in the year 2025, 2026, we capitalized close to INR 160 crores. What has been charged up to P&L was INR 235 crores.
Okay. You mentioned that this will increase.
Whatever is related. Yeah.
Sorry.
Go on, please. Go on, please.
You mentioned that this would increase, so what is the estimate that we should take going ahead?
I think you look at that we are maintaining a investment to dollar at $20 million we keep investing. Around, if you look at the last 20 years, last 10 years, all the time our investment was INR 120 crore, INR 140 crore, INR 160 crore.
INR 190.
Now it will be close to INR 180, INR 190, INR 200. Between INR 190-INR 200 now. This is giving us a bucket for investment. In dollar terms, it still remain $20 million, but in rupee terms it goes up to INR 30 crore, INR 40 crore.
All right. Thank you so much, and best of luck.
Thanks, Mayank. Last we have, Mr. Vivek Turaga from Bestpals. Vivek, you are there? Vivek? Vivek Turaga?
Vivek, I see you already unmuted. You can start speaking.
Am I audible, sir?
Yeah. Yeah, yeah. Please go on.
Sir, my question is regarding, like, one request is please do that AI session for investors because there's a lot of confusion going on, like how Intellect per se and how, because if you see the stock prices even in U.S., irrespective of whether it's a service or a product company, they have taken a huge beating. With respect to that, how is the buy versus build dynamic changing, do you think will change?
Today everything may not be reflected in the market as of today, as of now. How do you think it will change given banks can put up their own small IT teams and do their own coding and white coding and that buy versus build dynamic? Will it change or because of the domain expertise and that vendors have accumulated like Oracle, Temenos and Intellect, this is difficult? Only very large banks can do some plug-ins, but not the core software. If you can, if you have any views on that, sir, and Arun Jain, sir.
Yeah. I mean, I think this is a good topic for all the investors to look at it, that what IT is going to make a difference to the IT industry, to Indian industry, and to global beneficiaries of the banks who can invest into IT. It's not about AI, which is a problem of the banks today. The financial institution, why a large American bank have 50,000 people on IT is not because of the banking issue or IT issue or AI issue. It's because of their multidimensional multilayered problem which they have created over the last 40 years of their growth. They created a multidimensional complexity, which is multilayered. Typical complexity when we define could have a 15 dimensional complexity and having almost eight to 10 layer of complexity. 15 into eight layers of complexity is a 120 dimensional complexity.
To me, AI can solve some pieces of it in a block way. If they want to really look at the solution, they need to look at it a zero waste architecture to start from. Yesterday there was some customer sitting, came visiting us. I think you can't solve with RFP model. You can't say product by product. I'm simplifying with AI. AI will not simplify your product. If you're AI digital bank, maybe you can do it because you're taking from the fresh lake, existing bank may be facing the problem. A lot of IT companies, we have internally start doing AI development lifecycle projects internally. We are finding because of deterministic knowledge which I was speaking to Puranik, we are able to achieve significant amount of success on accuracy.
When till the time we have been working on LLM model, I was only getting 85%, 80% accuracy for support calls and other things. Now I'm started getting 90%+ , the impact start coming in. 80%, I'm not getting the impact of the AI. That's why bank is frustrated by Copilot. It's a big failure of Copilot and banks are realizing that that is going to give me some individual productivity, individual performance gain, but zero outcome from a perspective of making a banking system become efficient or operational system becoming efficient. I see there are two patterns which I'm observing. One pattern, there will be a feeling management will ask: What is the Copilot outcome? If you spent $20 million on Copilot last year, how much is the outcome which is there?
There's a disillusionment will come in. The same hype cycle curve, it will come down and people will start questioning that AI is working or AI is not working. That's the place where some of the players will move out of that window where they are supplementing their Java resource to and bundling as a packaging, as a AI resource. Many IT service company are packaging their existing engineers as a AI engineers. That is not the way AI will be working. To me, it's a transition phase where companies are repositioning, repackaging on the cover of the person that you are a AI native engineer. AI native engineer has to think very differently. I'm personally going through the training program to AI engineer within Intellect.
We have close to around 500 AI-native engineers out of 6,500. We have a long way to go within Intellect. After three years of struggling, we are able to convert only 500 AI-native engineers. The throughput of this AI-native engineer is three times the normal engineers which are there. That's the kind of a change industry will see. If this is truly happen that 2028, 2029, Indian IT industry will face severe issues. Indian service, IT servicing and number of jobs will reduce substantially in 2028, 2029. Nobody speaks about it because it's a fearful agenda. If IT services job goes down, then entire industry of financial sector and the automobile sector also get impacted. That's what we need to prepare ourself for, that unless we change quickly the model of the way we work.
This is not a [Non-English] I'm giving. I'm just saying this is my observation. Maybe I'll be wrong. Nobody can forecast the future what will happen tomorrow. The change is happening in AI very fast, and many company will be able to do it. Routine job, redundant jobs, which is a worker job, the blue-collar worker versus the white-collar workers, I think those definitions will change in next few years.
Sir, I was more coming from buy versus build from banks. Because of using these AI tools, will it shift or it will be a short term? No, you don't see that way.
[Non-English].
Yeah, sir. I'm not from, but I can understand. I can understand, sir. Please. Yeah, sir.
[Non-English].
Okay, sir. My second question is, last con call Manish has referred to we are in advanced stages with one, I think IBM or Global Mainframe Infrastructure leader, and you said you will update on that. Any updates, sir, on that?
Yeah, we're working on this mainframe to cloud deals with them.
Okay.
Even the OTP was along with Microsoft, which we did, and we now gone live with Microsoft. Arun announced that.
We are not free to mention the name. Is it IBM, sir?
All are three, AWS, Azure, IBM-
Kyndryl.
Kyndryl.
Okay. Sir, one small request apart from your AI session is please, we are diluting around 1% of our stock every year. If you can use the cash to buyback, it would be much better for investors in terms of wealth creation. I'm not saying I don't want dividend, because free float enters the market and we. Because this sector, as you said, is having so many other issues going on, I worry it will be better for investors, both from value accretion and also, stock market. free float that if you can do a buyback, it would be more your wish. if you can consider that as an investor's request. lot of free float is getting created and dilution is happening year-on-year.
Sure.
Sir, my question before we leave. Sir, can we assume that given the- like five tailwinds that you mentioned, if I'm assuming those are the tailwinds, in the presentation that you have given, AI, AWS. Can we assume that a 20% growth is of a higher probability than the last five years because we had more headwinds in the last five years in terms of Russia war and COVID, and then you had tariff issues and all these things. Now that we have U.S. as a market opened up, a high probability of 20% growth should be higher. I'm not saying give certainty, but we are entering a phase which are more clear than the last five years.
Let's hope. Let's hope with the people like Trump sitting there.
We just delivered a year with 20%+ . Let's celebrate it.
Yeah. We'll have to do it.
Please conduct that session, sir. It will be helpful because we are not tech people.
Yeah.
Okay.
Okay.
Thank you so much.
Okay. Thanks, Vivek. Arun, we have, two more out there.
Yeah.
Can we take at least one?
At least one you can take [more time] . Don't close the window.
Wait. Should we close it?
No, close a little bit.
Take one more, Praveen.
Hmm? Hello? Yes.
Take one more question, yeah.
Okay. Next, we have Mr. Srinivasu K from TIA. Mr. Srinivasu from TIA.
Am I audible, sir?
Yeah.
Yeah. Yes, Srinivasu.
Thank you.
Please briefly ask your question.
Thank you, Arun, for explaining that accuracy gap between the 76.1% versus 95%. I can represent the expectation. Actually, that really answered most of our investor concerns. Thanks for answering that in detail. My question is about the AI revenues that we had INR 160 crores this year. What is the exit AI revenue? Can we expect it to be double next year?
We love to have it. That's what we are struggling for. Let's see what comes out. That's what we are, because our revenue will come two folds, Srinivasu. One is in the area of direct Purple Fabric and all the Intellect product, which now having AI-first product. Any product which we are selling Now, in core banking product we are selling, we are creating a knowledge layer, an intelligence layer on the core banking product. There is no single product out of Intellect now going without AI-first. If we allocate 12% of those revenues to AI's effectiveness, then those revenue also will add to the whole investment bucket. That's what we do internally, that's will not be visible to you otherwise. That's where the value of AI will be.
Okay. My next question is, given that Anthropic and OpenAI are launching here and there, agents every month, is Purple Fabric LLM-agnostic?
Yeah.
This access-
Please, yeah.
Allow other OpenAI models also, right?
All AI are LLM agnostics.
Okay.
We know that's how it will be designed. We knew that models will come through and multiple models will come. There are more than 2 million models in the world.
Thank you.
Yeah.
That's all from my end.
Okay.
Thank you, Praveen.
Thank you, Srinivasu Ji. There are a couple of people who might be interested. In case they have any questions, please do write to us. Because our time is over, so we are closing the call. Thank you for participating, everybody, and thanks on my team.
Thank you.
Log off.
Thank you.
Thank you.
Thank you, Praveen.