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 Chief Revenue Officer, and CEO of Wholesale Banking. We have Mr. Rajesh Saxena, CEO of Consumer Banking; Mr. Banesh Prabhu, CEO of Intellect AI; Ms. Vasudha Subramaniam, CFO; Mr. Vikas Misra, Chief Strategy Officer; and Mr. Deepak Dastrala, CEO of Purple Fabric. Besides, some of the other senior members of the Intellect management team, they are present in the call. I hand it over to Manish to give his comments on the results. This will be followed by the comments of Vasudha. After, we'll be in the Q&A session, where your questions will be replied by the senior members of the management team.
Once the Q&A starts, you can ask a question by clicking on the raise hand, and then we'll unmute you, and you can talk to the management. One safe harbor. I would like to remind you that anything which we say which refers to our outlook for the future is a forward-looking statement, which must be read in conjunction with the risk the company faces. With this, I request Manish to give his briefing. Over to you, Manish.
Thank you, Praveen. Good evening, everyone. Thank you for joining this Q1 FY 2027 Cascade. Our theme for this phase is growth by design. I think that's what we introduced beginning of this year and how we're doing. I'm going to focus on giving you some evidence of what growth is, and then I'm going to talk about the algorithm which makes that growth happen. Our total income has reached INR 872 crores, growing 19% year-on-year. License link revenue has grown by 17% to INR 457 crores, and we've secured 19 strategic wins and expanded our pipeline to INR 13,000 crores. The number of Destiny Deals have crossed 100 for first time, and we have converted seven during this quarter. None of these are isolated outcomes. They reflect a deliberate growth system connecting our research platforms, priority markets, customers, and execution.
Today, I will explain the algorithm behind this growth and how we are working to make it increasingly repeatable and predictable. Our unfair advantage on the platform. The two platforms which are creating the unfair advantage for our growth journey, eMACH.ai and Purple Fabric, around which we have been making most of our investments and growing live. The data points of what each one of them are is being listed over here. Our moat is not one technology. These are two different distinct technologies. It's the combination of composable banking and AI which is making the difference in the world. It is our ability to reuse proven capabilities, reduce implementation complexity, lower total cost of ownership, and bring differentiated propositions to customers with greater speed and certainty. The question is whether this differentiation is producing commercial evidence.
Our Q1 performance demonstrates that it is making a difference. We go to what's our core strategy, which connects all of this value. I think the first pivot of our strategy where we are making significant investments is AI first. How this AI first is making an impact to our lives is I look at it from two perspectives. First is external monetization. How Purple Fabric is creating standalone enterprise AI opportunities while increasing the differentiation of eMACH.ai in broader transformation decisions. We are focused in selling PF as a platform and as AI first in all our eMACH.ai stories. Each of the wins you see would have not been possible without either one of them. Financial institutions need more than access to a language model, which we hear a lot out there.
They need an AI that can work with enterprise knowledge, established workflows, governance, frameworks, security controls, and regulatory requirements. The second value we see from AI is internal transformation. We are expanding AI adoption across engineering, testing, implementation, customer support, and business operations. Our objective is to increase execution capacity, shorten delivery cycles, and support operating leverage over time. Our second growth engine is focused execution in strategic markets. North America has become one of our most important growth markets. We are parallelly pursuing our continued growth around Europe, Middle East, India, and APAC. Our third growth engine is productizing our domain expertise. Our portfolio addresses across wholesale banking, core banking, digital banking, lending, wealth, insurance, and commerce. Purpose-built propositions in each of these areas, such as Islamic banking, custody, and credit unions, allow us to address specialized opportunities with greater repeatability. This is power of true eMACH.ai.
Our fourth growth engine is strategic customer expansion. During quarter one, we secured 19 strategic wins and completed 16 transformations. Over past 12 months, we have achieved 61 wins. You would see the average of 61 over 12 and 19 in the last quarter showing that the number of wins are growing. A strategic win is only a beginning. Successful implementation creates customer value. Customer value builds trust, and trust gives us the right to expand across additional products, business units, and geography. These are our four pillars of our growth algorithm. In Q1, like I said, North America is helping us make an impact. One of Mexico's largest banks selected eMACH.ai CBX, and this is a franchise of one of the largest global banks, where the Digital Engagement Platform on the corporate banking, wholesale banking side across all lines of business was chosen.
We have six credit unions in Canada adopting a Digital Engagement Platform. This further reinforces the investment we made about a year ago in Canada. Our wins are continuing across that. It ratifies our investments and strategies consistently. Europe is where we have been winning enough before also. Another large top five bank in Europe for their investment services and asset management side, they looked at eMACH.ai CBX to make transformation over there. In Middle East, last quarter war had impacted us, but this quarter has been very large for us from a post-war for us over here. The war has also forced banks to really think through the infrastructure and actually are putting more investments to solidify and upgrade their infrastructure. We saw number of wins in Middle East from that perspective.
India homegrown market, o ne of the largest financial services company picked up Purple Fabric as a complete enterprise open business impact AI platform. We're winning AI in eMACH.ai as well as individual platform deals. We had another three custody deals, which shows as wealth is coming into India, all supporting the market strategy. We won three large deals on custody side, further expanding our market leadership in India. From an APAC perspective, we had two deals across Southeast Asia and one deal in East Africa, further expanding our individual franchises over there. It's been a very balanced portfolio across markets, winning across all five geographies where we operate out of that. Our pipeline, like I said, grew INR 13,000 crore, 15% year-on-year, and we've crossed 100+ Destiny Deals. This is giving us confidence that our investments are in the right direction.
Our results are proving that execution is backing where our investments are going. We had seven large strategic deal wins, which we had during the last year. This is statistics on our deal size band, about INR 50 crore, 29 deals. We have a varied portfolio. We're not singularly dependent upon either large, medium, or small deals. Balanced portfolio across markets, size of deals, and platforms. I think that balanced approach of what Arun has been consistently saying is, that's the arena. Arena across products, arena across markets, arena across types of deals. That's consistently making us remain consistent on that performance. The 20% promise NTM basis, we're continuing to live up to that in that ±2%-3%. That's where our journey is currently. What are the other additional markers of the success? Analysts consistently rank us number one, not across one platform.
IBSi is one of the most popular IBSi Sales League Table which collects data from everyone. This is where they showed us our leadership of in the last 12-month period, who has been number 1 in winning deals across that. This is a sales matrix. Going on to the next slide is a qualitative metric where the analysts on our capabilities are commenting upon how we ask, where we are in the leadership magic quadrant. The industry awards confirm that our assets have been used, and they made an impact, business impact. The industry rankings and customer recognitions. All these are proof points of why an eMACH.ai is being adapted and why consistently recognition and around the globe we're getting these successes. This is the other proof point of, if we look at over the last six to seven quarters, what our performance has been.
On an NTM basis, we have been from Q3 FY 2025, we've been consistently growing. This consistent growth is what we are looking at. I think we've always said, let's look at NTM basis. This is a proof point of that data being plotted to show on an NTM basis how our growth has been. Our investments are being done on the NTM basis. Our growth is around that. All proof points are around that. I think this would make each one of the investors feeling comfortable and confident that the support you extend to us is going into the right direction. Additionally, to continue building the market momentum, there's enough market events we participate in along with our sales marketing teams to ensure our brand is visible and is consistently celebrated.
These events are now also markers for me actually to close deals as well as to make those last mile customer-to-customer references. We've been very successful from them across. Again, you see it's well spread out across all markets. The balance of portfolio in all execution, you will evidence from this. To continue supporting this, we are continuing to make, again, balanced investment in senior talent leadership around AI and our go-to market capabilities and our technology capabilities of how we support and continue to extend our mode for Intellect being AI-first growth agenda. I would now request Vasudha to share the financial details.
Thank you, Manish. Good evening, everyone, for joining us. Let me take you through our financial performance for the first quarter of 2026/2027, and then provide a broader perspective on our last 12 months of performance, which in our view is the best indicator of the structural progress we are making as a business. Q1 was another quarter of healthy growth, disciplined execution, and strong cash generation.
We reported a total income of INR 872 crore, representing a 19% year-on-year growth over Q1 of 2025/2026. Our license-led revenue comprising platform license and annual maintenance revenue increased to INR 457 crore, up from INR 389 crore in the corresponding quarter last year, representing a 17% year-on-year growth. Moving to profitability, EBITDA increased to INR 194 crore compared with INR 176 crore in Q1, while PBT increased to INR 135 crore compared with INR 126 crore in the corresponding quarter last year.
Our platform-led operating model continues to provide operating leverage even as we invest for future growth. Next slide, let me now turn to what we believe is the more meaningful perspective of the last 12 months. On an LTM basis, our total income reached INR 3,299 crore compared with INR 2,690 crore in the previous corresponding period. License-linked revenue increased significantly to INR 1,734 crore compared with INR 1,324 crore a year ago. Platform revenue nearly doubled to INR 595 crore, while license revenue increased to INR 554 crore and AMC to INR 585 crore. Our LTM EBITDA increased to INR 721 crore compared with INR 646 crore in the corresponding previous period, reinforcing our ability to scale profitably while continuing to invest for long-term growth. Our LTM PBT has crossed INR 500 crore as of Q1. Another important highlight this quarter is our collection performance.
Collection for Q1 increased to INR 763 crore compared with INR 586 crore in Q1 of last year, representing a growth of approximately 30%. This reflects disciplined execution, healthy customer collections, and continued focus on our working capital management. Looking at the broader picture, LTM collections increased to INR 3,221 crore compared with INR 2,401 crore in the previous corresponding period, representing a growth of approximately 34%.
As of the end of the quarter, cash and cash equivalents stood at INR 1,269 crore compared with INR 976 crore in the corresponding period last year, representing an increase of 30%. This healthy cash position provides us with the flexibility of continuing to invest in AI, product innovation, strategic market expansion, and long-term growth opportunities while maintaining a strong and resilient balance sheet. In closing, we believe the financial performance this quarter reinforces the structural strength of our business model. Thank you.
Thank you, Vasudha. We open it for the Q&A session. Please click on raise your hand to ask a question. Once again I say, please click on raise your hand to ask a question. First we have Meet Mehta from Prasun Exponentials. Meet Mehta?
Hi. Am I audible?
Yes, you are.
Meet Mehta?
Meet, you are audible.
Yeah. The platform business saw quarter-on-quarter and how should we look at the [audio distortion]
Meet, your voice is breaking. Can you repeat the question, please?
Meet, can you come again?
Hello. Am I audible now?
Yes, you are audible now.
You can ask your question.
Meet is not audible. Maybe we can.
Praveen, Meet's audio is not audible. You can move to the next person.
We can move to the next person. Second we have Rucheeta Kadge. Rucheeta Kadge from CJW Investments. Rucheeta?
Sir. Hello. Am I audible?
Yeah, yeah.
Yes, you are.
Please go on.
Yeah. Basically I wanted to ask on the platform revenue side. We've usually seen a quarter-on-quarter growth because it's a recurring kind of business, but this quarter there has been a degrowth in that quarter-on-quarter. What led to that, and how do we see that number going ahead?
First of all, the same thing that we've been saying in every investor call, not to measure us on a quarterly basis, because last quarter was the last quarter of the financial year, previous quarter. There have been some true-up in some of our deals, so you'll see some spikes. There is nothing like a degrowth. It's still growing.
I understand on the license part of it, right? Because it's kind of a bulk revenue. I'm talking more on the platform revenue side, which is recurring in nature. Like, if you get that, it has to come incrementally, it has to get added. Which has gone down.
If you look at the quarter-on-quarter numbers, say for example, if you look at the first quarter of last year, i t was about INR 135 crore, then it was about INR 137 crore. We are still in the same line. We are about INR 140 crore this quarter. It's not significantly changed. Just that in the last quarter, we were able to get some additional revenue because of the true-up of some of the subscription deals that we had contracted, that is the reason.
Is it like some of those subscriptions have now ended and further, we'll now have to add more customers?
No, Rucheeta, it's not like that. See, many of our contracts are based upon the transactions, especially in the subscription space, where we are dependent. Take a case of Magic Submission, where it totally depends upon how many transactions or how many policies are being processed by the platform. Like Vasudha said, last quarter was the final quarter of the financial year, we did see a good spike in the transaction volumes the last quarter. Nothing to worry about. This is a consistently growing platform revenue. Last quarter was a spike, that's the reason perhaps you see an aberration.
Let's look at LTM basis. It's close to INR 600 crores. It's double of what it was 12 months ago. Consistent rate, average rate is closer to that.
We should not look at it quarter on quarter, we should look at it more annually you are saying, again.
Absolutely.
Yeah. This is not customers runoff. There are spikes. Some contracts have, if usage goes up, w e get that spike in. Over a 12-month period, if you average that out, that will give you what the average is. If you look at on a 12-month basis, it's close to INR 595 crores.
Okay. That should grow at whatever the company is growing at, right? Annually 15%, 20% of growth. That's how we should look at it?
That's where we are investing and moving towards.
Got it. On the expenses side, do we see a gradual reduction in it? Because we still see around INR 120 crore-INR 130 crore above what we were doing earlier, right? Earlier it was INR 550 crore, which we used to do quarterly. When do you see that scaling down the expense part?
Expense has increased by only about INR 14 crore from last quarter to this quarter.
Quarterly, yes. Earlier, we were at a run rate of INR 550 crore, then we increased it for AI and employee cost had gone up because of the calibration of the new company, a new segment which we took from a particular company. The Canada base. That's why I was asking, do we see that it should reduce or you see that incrementally now the addition should be lower?
Last quarter, we specifically made some investments in Purple Fabric that we called out at the beginning of the last financial year itself. We made an investment of close to about INR 72 crore. This quarter, we have not made any incremental investment. In fact, out of the increase of INR 14 crore from last quarter to this quarter, INR 7 crore is on account of ESOP cost. The remaining is anyway the BAU cost. We don't see any major increase in the cost. Of course, we do have some plans to make some investments.
Thank you.
Thank you, Rucheeta. Next we have Mr. Rahul Jain. Mr. Rahul Jain from Dolat Capital. Rahul, please unmute yourself.
Hi, thanks for the opportunity. First of all, congratulations on strong license win during this quarter. Can you just talk about how we are seeing the momentum right now? Are we seeing there is an increased demand toward license-based deal wins, or we are seeing incremental trend towards subscription-based demand coming within our customer base? That is part one of the question. Secondly, just on the cost side of it, we are seeing a cost increase quarter-on-quarter. I understand we are investing into the business, but is there a point beyond which we think the operating leverage should start playing out with this kind of a growth? Thank you.
Rahul, if you look at license as well as platform i n the revenue for that in this quarter as well as on an LTM basis, it is consistently close to each other, those numbers are. Different quarters, different models are pursued, different segments of customer, either platform or license. That balanced approach is keeping us. The intent is to grow the platform revenue. That is why if you will see on an LTM basis, it is doubled up from that perspective. The license used to be a stable revenue for us. Platform revenue is growing, and that is where we are making investments on AI to support all of this.
To respond second question, I think that Rucheeta asked the same question to most of the on cost side, INR 550 crore -INR 677 crore. Total cost this quarter is INR 677 crore versus INR 663 crore last quarter. Those costs are now inherent in the costs. If Purple Fabric investments are done, those mainly in technology business, the people cost. People cost remains constant. It doesn't come down on quarter-on-quarter. We will not come back to INR 550 crore cost base if that is the expectation which is there.
The operating leverage which Rahul is asking is, will come in that this quarter we didn't have a salary increase, although the cost of headcount increase, it remained constant. INR 7 crore went into RSU, ESOP and RSU, and remaining INR 7 crore went into additional event marketing, travel. Those are the costs it went into. There is a good news is that headcount cost, and whatever the salary increase cost is there, it got accommodated into the same cost structures. That is a very positive news from that perspective, that operating leverage can start coming now.
Sir, just to conclude from your remark, which you just mentioned. Is it safer to assume, given that we have decent growth momentum thought process, on an annual basis, we should be improving the EBITDA margin on a FY 2027 to FY 2026 basis?
Sure. You can assume that, yeah.
Thank you.
Rahul, you've seen last two quarters are above, close to an INR 850 crore mark. From an INR 700 crore mark to INR 850 crore mark, the needle has changed. I think where we need wishes is how soon we can get to the INR 900 crore mark. That's what we are driving.
Yeah. I'm sure you would achieve it soon. Thank you. Best wishes.
Thanks, Rahul. Next we have Mr. Neel Chhabra from Resight Ventures. Mr. Neel Chhabra from Resight Ventures.
Hi. Good evening, everyone. Am I audible?
Yeah. Please go on.
Largely, if we think about on a rendered basis, we are at INR 3,000 crore of revenue right now with over 6,000 employees. If you look at revenue per employee, we are roughly at INR 50 lakh. If you look at our peers like Oracle, they are doing roughly INR 1 crore per employee, or Temenos, they are at INR 1.5 crore, or even Newgen, they are at INR 2.5 crore per employee. I understand partially this is because we have a service mix in our business as well. Directionally, where do you see this moving over, let's say, next three, four years as our platform and licensing revenue increases, where this number could go like? How internally as a management you're looking at this number?
Yeah, I think it depends on the investment a company is making. We have a 1,200 people research team in the company to sustain this growth. If you cut down those 1,200 people, we can increase the margin by INR 400 crore per year. The question is, lot of time company doesn't invest sufficiently for keeping the momentum. We grew from INR 600 crore to INR 3,300 crore in last 10 years. [inaudible] revenue growth number from last 10 years is not the same percentage-wise. Obviously, operating leverage will come in.
Your question and Rahul questions are same, that operating leverage on the per headcount. Your good metrics is there, INR 50 lakh per employee. We'll move towards INR 60 lakh or INR 70 lakh or INR 80 lakh, but I think we don't measure that way. We measure what is required for strategic business. We invest that way. We are not running on this metrics of a headcount metrics or a revenue metrics. Those metrics are not part of the business agenda. Yes, to respond, this will improve definitely.
If you look at division-wise, obviously iGTB has a different kind of maturity. iGCB has a different kind of maturity. The economics would look completely different given the life cycle or the stage the business is in. If it is possible for you to just showcase, at scale. I'm sure iGTB must be doing over 40% operating margins given their scale. If you can just give a breakup, if possible, of division-wise, if management is comfortable doing that in coming quarters.
Yeah, Neel, that's a number we usually talk about during the annual thing because it won't be right to talk on a quarterly basis. Your point is very valid. Definitely, each of the businesses are different stage of maturity. Usually we do not go ahead and disclose this at a quarterly level. Definitely when we have the annual call, we will talk about it.
The last quarter we did that, gave the share of headcount.
We don't disclose it.
Headcount is not what we looked at.
Not on the headcount basis. I'm just saying maturity basis. Like iGTB is mature, and mature stage, what margin it is making. iGCB is a young growth company at what margin they are making. Purple Fabric could be completely new. They might be loss-making as well, which is completely fine given the life cycle of the business. I was just asking, how do we look at, as the business matures, what does steady state economics look like? If you can give breakup of that on annual basis only, if you can do that in coming years. That would be helpful to gauge.
Yeah. The only thing you can look at it, you're perfectly right, iGCB will be operating at a much higher margin here. Account revenue from iGCB will be much higher than the INR 50 lakh average. That'll be at least 30%-40% higher than what current numbers are. Our iGCB will be in the same range, or AI will be in the slightly middle range. That indication we can give that all the three maturity index that you are plotting is perfectly in line. Although we don't declare that number to unnecessarily make one business look smaller than the other business. It gives a feeling to the employee that, "Well, I am performing better than other."
It's not a practice we want to create that observation in our employee community, because results are seen by employee community also. That is not the appropriate metrics, but from your perspective as an investor, what I'm giving you an indicator that every mature business can go to same number at FLEXCUBE number. If that is the number you are looking for, [inaudible] will be closer to, in next two, three years, closer to the Flexcube profit margin number.
All right. Thank you so much.
Thanks, Neel. Next we have Mr. Arvind Arora from A Square Capital. Arvind, you are there? Mr. Arvind Arora?
Yeah, hello. Am I audible?
Yeah.
Yes.
Please go on.
Sir, what is our R&D budget for the current year and the next year? If you can throw some light on that. When can we expect Magic Submission in the numbers of this hard work that we are putting?
What is it? Sorry. First is simple, that we spend $20 million in R&D, Each year-on-year, dollar gives me more budget for us. We have INR 160 crore last year, it will be INR 180-
INR 180 crore.
INR 180 crore-INR 200 crore with the R&D budget for this year. Up to INR 200 crore, it can go up to INR 200 crore for this year. [Foreign language] What is the second question you asked?
What's the area of the focus on this R&D where we are spending?
We are spending in AI, eMACH.ai, the two platform, which Manish has highlighted, eMACH.ai and Purple Fabric. Purple Fabric is a core area. It's a huge potential which is there. We have filed 28 patents in Purple Fabric. This is the area where the investor, after multiple conversation, still your focus is on lag indicator. As an investor, you're not looking lead indicators. Your questions are not on the lead indicator, your questions are on the lag indicators. If somebody, Silicon Valley investor would be there, he will be looking at a lead indicator investment rather than lag indicator investment.
I shared two levers of AI. One is externally-
Yes, levers.
The second is internally.
That's where I think we are very bullish about what the potential is, Purple Fabric is going to offer for the R&D expense, which is peanut compared to the AI space where people are investing $200 million a year. We are investing $20 million a year, which is across multiple lines of business. That's our current state. AI is a core area of investment.
Understood. Sir, earlier you used to mention, our focus is on incremental INR 100 crore. Now if you look at our base, it's increased drastically. Now, how we are looking internally, still we are looking incremental INR 100 crore, or is there any shift on the target part?
No shift. Every three quarter, INR 100 crore increase.
Okay. sir, our growth would not be at a 20% at least, if we are focusing only on INR 100 crore.
Don't ask the last point question.
You right now seeing 19% LTM basis. You're seeing last six, seven quarters consistently.
23% LTM.
23% LTM. The last two quarters close to INR 850 crore operating income. Let's just state less and focus on performance.
Okay. Thank you, sir. All the best.
Thank you.
Thanks, Arvind. Next, we have Mr. Kushal Goenka from Mangal Keshav Financial Services.
Kushal, you can ask your question.
Kushal, you there?
Hello?
Kushal?
Am I audible?
Please go ahead.
Yes.
Please go on.
Sir, my question was more on the gross margin side. As per my limited understanding is that once, if you are moving up the value chain, I am extrapolating from the likes of, say, manufacturing companies. When those companies move up the value chain, the gross margin should inherently increase. If we are moving up the value chain to Purple Fabric and eMACH.ai, shouldn't our gross margins, which is around 58%-59%, should increase, and that should lead to an increase in EBITDA margins also.
I just wanted to know your thought on this and also coming, the numbers, if we see two, we did around INR 350 crore of PAT. I think so, still we are on a like-to-like basis, I think so we would cross that number this year after, say, four years. Just wanted to understand, if we are moving up the value chain, shouldn't the gross margins and then the EBITDA margins, and hence the PAT should have increased? Are the ROIC of the investments that we are doing, the R&D investment?
First of all. I think- you compared techno-
That generating a higher returns.
This is one of the first issue of Indian investor. Are you comparing tech company.
Manufacturing
manufacturing company? Definitely these margins will go up. One day it'll go up so much that you'll find excitement over there. The question is not about which metrics we are tracking. As analysts, you track all the metrics. As a business leadership here, we don't track these metrics. We look at it, market trends, forward-looking patterns, which is coming in a market. What is the right investment to be made? If we have to make the company for next 20 years' survival, 20 years is an institution which should grow year-on-year for next 20 years, our focus is that. Our focus is whether the headcount is so much, per headcount revenue, per gross margin, 56% become 58% or not. Those are very micro-focused numbers. Those numbers will automatically come if we cut down the investment. The last year was a major investment.
Rahul has asked a question, if my headcount cost remains at INR 680 crore, INR 600 crore or INR 700 crore is cost, it remains there, whatever revenue growth will come, it will come to the bottom line. You just extrapolate from that perspective as a leading indicator perspective. If INR 900 crore is a number, INR 950 crore is a number, and my cost remains INR 700 crore, it will be an INR 250 crore EBITDA.
It's not rocket science to look at it, that number, which will coming through at next two, three quarters. We don't want to drive our business towards that. Our driving is towards what is right for the customer, right for the market, and right for the sustainability and the growth. Growth by design is the point Manish has mentioned. Our focus is how many companies in India grown and crossed INR 3,000 crore revenue.
Most of the companies stuck at INR 800 crore, INR 900 crore just because the investments are not complete. This is a core strategy we, as an investor, you need to understand Intellect theory. Theory of Intellect is INR 4,000 crore, INR 1,000 crore. We mentioned about two years back or one year back, one and a half years back, that we will be INR 4,000 crore by 2028. INR 4,000 crore and INR 1,000 crore. I think we are running on those milestones, and INR 4,000 crore and INR 1,000 crore is a good number for us to look at the investment thesis.
Predictability and quality is what we are focused on, we continue to drive that.
Quarter, if you compare quarter-to-quarter, platform to this, I think all are so. Market is so variable. We don't want to get stuck in those areas of the platform. Some of the companies, when three years back you asked the question, platform revenue should be more, what happens to license revenue? We mentioned that it will be hybrid model. It will never be a total platform usage. Many questions were asked. This company has stopped giving a license revenue. This company has stopped giving. If we understand the customer behavior, we react as per design thinking to the customer behavior and act accordingly. We don't get by the patterns of trend. That's a very myopic view of driving the business, sustained business growth.
Okay. Thank you so much, that's helpful.
Thanks, Kushal. Next, we have Mr. Vivek Turaga from Best pals Research & Advisory. Mr. Vivek, you are there?
Am I audible?
Yeah, Vivek. Please go on.
Arun , you were not there in that con call. Two, three con calls back, there was a mention about tailwinds and mainframe to modernization. You are building up the capacity for it. Can you just comment on that?
I just announced also a senior leader with mainframe background we have added in the team. That's why investments are happening. We are working with cloud partners also, hyperscalers, to bring from mainframe to cloud.
Are we winning or are we confident or?
We have multiple wins we have announced where we're moving from mainframe to cloud. How do you move it at scale is what we are looking at.
Second question is, you mentioned in the first slide, Manish , that you have an unfair advantage in the last five, six years of eMACH.ai plus Purple Fabric. If you can go deeper, because of these two, how was our deal win rate or vis-a-vis the competition? If you can explain us, why should we think it is unfair advantage? I understand the technology part, but when you compare in the market, what are the kind of deals or is it like, what is that unfair advantage helping us? Is it like sales cycle becoming lesser or so? You can explain, sir.
Good question. I'll give you example of two of our young platforms, trade finance and lending. There are far more mature platforms out there who have been ahead. Like in some platforms, I am ahead of everyone else. Our win rate suddenly over there is growing because we're starting with AI first. Rather than conventional battle, we are able to demonstrate modern new technology with AI first. That's driving wins for us, and that's what you're going to continue to see. Embedding all number of CBX you are seeing, AI first in there is making that difference. eMACH.ai, just as an architecture, which is composable, hyper-scalable, plus AI first, and then Purple Fabric as a platform, which is significant in North America for my insurance as well as individual platform deals. They are dual engine right now.
You think in what way is it like only in two, three products or across the products we are finding unfair advantage with this?
Across the products we are implanting. I was giving you examples of some of my young platforms where I would have taken much longer to win the rates I am looking to win.
Okay.
The mature platforms are continuing to create an expansion because AI first is there. You saw a number of Middle East deals I have announced. My dominance over there, why is it continuing? Not just because of what I had before. It's the AI capabilities which is making that industry-specific innovations.
Okay. My third question is, this may be repetitive, but please, for the greater clarity, because Arun mentioned he will conduct some con call for investors on AI, and we couldn't do it. Whenever we speak to many institutions like Bajaj Finance or HDFC Bank or even Equitas Small Finance Bank, when we went for Analyst Day, many were mentioning that there's a lot of software that they are trying to build in-house more than before because of, people call it vibe coding, whatever. What is your view? What part of the software are they doing more in-house? Okay, I understand few people can do, not everybody can do. How are you seeing this trend that build versus buy? Are you seeing any pricing pressures because of it? It's little bit confusing.
This part is confusing because there are institutions which are still buying, but there are institutions which are saying, "No, we know. We understand our business better than the vendors. We have allocated to the technology guy, and he will make sure we build it" What are they actually trying to build? Is it like the system of record that you apply or on the top of it? If you can give any clarity on it.
This trend is happening. There are some of the adventurous banks are doing this, and these adventurous bankers comes in every now and then. When internet started, they started building their own digital platforms, and they start knowing that, "I can build digital application." After 10 years of their failure, they started going to YONO with spending INR 500 crore. Before YONO, State Bank of India was building their own internet platform. They believe that they can build, anybody can build application. I think this trend of Anthropic giving a promise or Claude giving a promise that you can build your own applications. To me, few bank will succeed, but they will be spending more money than the buying decisions. Anybody who is building their own platform will have to spend more money because they have to maintain the technology.
They have to upgrade the technology, the cost of technology upgrade in the long run. Those capacities are available in large adventurous company and in big pockets for them to spend their money. It's a last 30-year trend, all in-house development processes led to the translation to the some product companies.
You are not finding it a problem for winning deals or pricing or -
It will happen. I think this trend will happen, they will come back. They will come back after two years. After 1.5 year, they will come back. Few people will succeed, which is very good for them because they have a deep pocket to invest any money. Today, JPMorgan Chase spent for some $6 billion, $5 billion. Should they be spending $5 billion for running a bank technology?
$20 billion technology budget. $2 billion just for AI.
$20 billion. $20 billion for JPMC, why should they spend? If they buy the technology, they should not. Even their technology budget is bigger than any technology company itself. Those are the things which makes that some decision. Once you do it yourself, then obviously the cost goes up. I will also add on one more thing. If we rewind ourselves 18 months back, when new technology came, we were also very bullish, "Sir, we will just write the code overnight." We realized it's not writing the code overnight. The discipline which is required to make things deterministic, putting guardrails, guiderails.
Each one of us writes the same query on OpenAI, ChatGPT, we get different answers. Why? Even a minor search, it can't give consistently. All of us go through that. I personally went through that. Now we've invested very significantly with Purple Fabric to ensure deterministic remains there. Financial world is not probabilistic. You can do some of your surrounding applications, productivity, those things, very good. These are core infrastructures of banks.
Got it. I understand, I just wanted Sir, last question. Arun , you were explaining something. Please.
I am saying a lot of service companies are going to bank now because they say, "I will help you build the bank products." There is another trend we have heard in the market, because they are repositioning the service business to a product business. Just to bring to your notice. You will hear that thing from the service company that.
Got it. That is not. Despite this, we can continue around 15%-20% growth with all this, because this keeps happening, in your view.
We have eight markets here. Some markets will go up, some markets will come down. Now, only two markets we are not present. One is Eastern Europe, one is Latin America. Ninth and 10th market will add over the period of time. Whenever we are going to add those markets.
We will never go to Japan?
Japan is, yeah, Japan also we need to. Japan and Australia, we have to invest money. We are present there, but we have not invested money.
Those are next four markets, Japan, Australia, Eastern Europe, and Latin America. Latin America just announced a deal in Mexico, it's adjacent to U.S. We'll keep going adjacent markets to where our core markets are.
I'm sorry, it's repeating the same question. We will do a 15%-20% growth even with these trends, right?
Yeah.
Yes.
Last question, Arun . You have carved out Purple Fabric as separate entity, and then you also mentioned too, when you were doing the first Purple Fabric investor meeting, that the pace of addition of clients would be drastically different in Purple Fabric because it can be more horizontally done. Any reasoning why you carved out, and are you seeing any big traction over there? Is there any financial reason to do that, so like that?
We are working on three, four technologies in Purple Fabric. That is the right question I would have expected today in the first question, what are you doing in AI? Why we are believing we are so bullish about AI, and why do we need a separate LOB. These are the three questions which you're asking after half an hour. That is a lag indicator investor circle versus lead indicator. That is where the underlying future value of goldmine is sitting there's a tailwind for AI.
One of the important points which Manish has looked at it, multiple technologies in last nine months. We have cracked complete deterministic knowledge grid. AI accuracy in industry is less than 80%. A lot of time, AI is used for Copilots are used for only value upgrade. Cursor are used for just coding. None of them is delivering the value. Today, we have designed a technology which has got a substantial accuracy, which we'll be launching in next two months. This product has an ability to reduce three months' effort to three weeks' effort. That is under the marketing GTM we are working on. We are testing this technology within Intellect. This technology has been tested in 78 different projects at Intellect. We piloted the technology on May 15th.
Between May 15th to July 15th, we have reached 78 projects using this technology. Very early signs are, effort can come down by 60% total for the same project size. Now suddenly as an investor, you will jump on to the point, what is the headcount reduction? I'm saying the lead indicator shows that this is happening. It will take another three months for this technology to reverse engineer our processes and systems, which is designed on SDLC. How do we move SDLC to?
The AIDLC.
AIDLC. That is where many transition in the company we are working on, that new methodology will evolve. New methodology will be more participating with the customer. This technology is so magical that within two hours, I can show to the customer his spatial graph of his application, which nobody in the world has ever do it. It's beyond Anthropic, which is doing using Claude. That is where the significant potential is sitting there in AI world at Intellect.
You have carved out because we are looking at new technologies and it can fasten our, is there any other reason, or is it just that it is going to address a different-
It's a different company altogether. It's a technology company. Purple Fabric is a technology LOB. This is a product LOB.
Got it, okay. Sir, Arun , request. There's a request. That you told you will conduct a con call for investors explaining these things.
No, in the next two months, we'll do the AI con call. I think we should look at an investor meet also before the end of year. I mean, this call we can do. Probably. Let's see.
It's pending on me. We'll do it.
The last, just one small clarification. With all this, given the future outlook, we are confident of 15%-20% growth, right?
You'll continue to get the same answer.
Thank you. All the best, Arun . Thank you very much.
Thanks, Vivek. Next we have Mr. Ravi Mehta from OneUp. Ravi, please ask your question.
Yeah, hi. Thanks. Just wanted to know, if the newer deals where you are embedding your Purple Fabric with eMACH.ai, is there more customization as a new norm? How does these deals happen?
Can you repeat the question, Ravi, please?
Yeah. Since I got is that Purple Fabric is getting embedded in a lot of eMACH.ai deals. It's kind of a blended offering. In such kind of deals is more customization a new norm or how should I.
No, just think of what is business operations. The operations flow is taken care of by eMACH.ai. The intelligence flow over there is being taken care of Purple Fabric. As the intelligence flow consumption will increase, you will see magic happen. The orchestra you are asking for, it will start returning there, because the units of intelligence flow are different from license.
Okay. It's not like every deal has to be customized as per the requirements, those platforms work in sync basically.
You're right, Ravi. We don't have to customize everything. Even in Purple Fabric, we have very well-defined solutions that sit on top of our eMACH.ai platform, and they work seamlessly with that. There is no need for us to go back to the customers and undertake the customization exercise.
Sure. Also, I had a question on the internal use of Purple Fabric. What I was given to understand that a lot of internal piloting is also happening. I think you were just explaining about in the previous question about the efficiency cut down. What is your take on the internal use of Purple Fabric in terms of efficiency and cost savings? What have you experienced?
Yeah. This effort saving will be there. As of now, we are not looking for them. Again, our focus is not headcount cut, our focus is not about the immediate cost saving. Our focus is how do you deliver customer faster. If I can deliver the project early to the customer, if I can deliver six weeks before the delivery date and make the customer happy, that's the first focus for us. It will result into, I'm saying from a effort perspective, I give an indication it can have potential to save 60% of development effort.
Sure.
That will come into action maybe two quarter later, t hree quarter later, those kind of potential is there, and that risk is there for all the IT services company that if development efforts comes down by 60%. It's a bigger risk for the industry. See, I'm looking at number of quarter four go lives. Can I do them in quarter three? The realization of revenue faster, delivering it first time right, our portfolio 80%-85% comes from existing customer, can actually start cleaning out everyone else.
Yeah. I think I had a related question, which is partly getting answered, that implementation revenue has been historically close to 45% of our revenue, even we have grown to this level. If this thing pans out, then that can shrink meaningfully if the rollouts are faster and your go lives are faster and the revenue recognition is happening. Is that a fair understanding of the revenue mix changing?
Don't think of that. We are not in a time and material business that if it happens faster, our revenue could reduce or things like that. It's a fixed price work. We do quite a bit of that from an implementation, and we drive productivity with that. Like Arun said, two primary focus, deliver first time right, deliver six weeks ahead of what you have committed. That's where your focus is.
Yeah. Faster go live means faster revenue recognition also. I'm saying your license and subscription grow faster than the implementation because of the speed.
That is QED.
Sure. Okay. Just one follow-up, just a little bit number specific. Sorry for bothering this, but this quarter we had an exceptional license revenue flows, which still had kind of lower gross margins. Are there any direct spends on the tech side or AI side, which we are recognizing in the software development line item? I just want to understand that are the spends for the future, which are getting recognized here, and hence we are seeing a gross margin, which is not as good given our-
We answered this question. We answered this. Repeat the call, you will find the answer.
Sure.
Initially it is answered in this. Maybe you have not paid attention to that.
I was there. Somebody was asking about higher technology and all those things. My limited point was only higher license historically tend to flow down, but this quarter it hasn't, if I just look at. Are there any incremental spends that we are reporting software development line?
No. Simple thing is don't analyze the numbers.
You need to look at if the growth of 23% is good for you as an investor or not. This analysis is a number. This license should flow here, should flow there. We explained its INR 14 crore cost increase in this quarter. INR 7 crore is for us, ESOP. INR 7 crore is for business development and talent. Increase which happened over there.
Yeah.
See, 23% LTM basis revenue growth, 31% license linked revenue growth, which is higher margin, close to 20% gross margin growth. These are all leading indicators which says we are in a healthy, and I think the management confidence of investing and delivering those investments to deliver this, I think that's what matters, right?
Yeah, sure.
It is a few quarters between, I mean, few crores between the quarters. If you look at the LTM growth is about 19% growth in the gross margin. If you look at the current quarter's gross margin, it's 57%. Maybe if you had listened to some three, four quarters before, we had said that we would like to hover around 56%, 57% of gross margin. We are anyway within our target.
Sure. Okay, thanks.
Thanks, Ravi. Next, we have Mr. Vipulkumar Shah from Sumangal Investments.
Praveen, this would be the last question.
The last question. Mr. Vipulkumar Shah?
Yeah. Am I audible?
Yeah. Please go on.
What is the cumulative spend we have done for developing Purple Fabric till date?
Cumulative cost of the?
Sorry, come again, please.
Cumulative investment.
What is the total spend we have done for developing Purple Fabric till date?
Till date it would have been more INR 700 crore-INR 800 crore over the last eight years. Almost INR 100 crore per year we are spending.
All have been charged to P&L, sir?
Charged to P&L, yeah. Whatever the capitalization we do.
Partly into P&L, partly into development. Up to the stage of doing a feasibility study, it will be into the P&L. Once the technical feasibility is done and the roadmap is clear, it will get into development. I mean, CWIP.
It's a part of CWIP when it takes a lot of investment, yeah.
Okay. Lastly, we are going to de-merge Purple Fabric into a separate company. Right, sir?
No, sir.
No, there's nothing like that.
Are you suggesting, sir?
Yeah, I'm suggesting. Why don't you do it?
Okay. De-merge as in-
What do you mean by having a separate, this thing which you are, in your press note-
Vipul, it's a separate line of business, so then the required and desired focus can be given to this particular initiative. We've heard you in terms of a de-merger, but as of now, there are no such plans.
Okay. Thank you, sir, and all the best.
Thank you.
Thank you.
Arun, there are two more questions are there. Should we close or take the questions?
I think the two questions.
Yeah, please go ahead, Praveen, and we can take the questions. Actually you should announce three questions before, not last minute one question. That's not the right practice.
Praveen, go ahead.
Yeah. Next we have Mr. Pranaya Jain from Banyan Tree Advisors. Pranaya Jain?
Yeah. Hi, can you hear me?
Yeah, Pranay, please go on.
Thank you so much for the opportunity. Just one question on Purple Fabric. I wanted to understand the kind of things that we are doing on Purple Fabric, and some of the deals that we have announced previously. Can we cater to more non-BFSI clients, which could possibly expand our TAM for Purple Fabric?
Yeah, we are using other unit called Direct to Corporate, their iAPX and procurement space. We are expanding to other customers. We are using Purple Fabric for our banking clients.
Understood.
Already in motion, Pranay.
Got it. Okay. Yeah, that's it from my side.
Thanks, Pranay. The last we have Mr. Sandeep Nabira. Mr. Sandeep Nabira is an individual investor. Is the last question. Sandeep?
Yeah. Good evening, everyone.
Good evening.
Am I audible?
Please go on.
Yeah. Good evening, everyone, and thanks for accommodating my question. I think couple of quarters back, we announced that we have some 14, 15 strategic implementation or partners kind of consulting companies. We said we would be using their domain expertise to extend Purple Fabric in the respective domains. Has there been any progress on that? The R&D, what we talk about, are we spending to extend Purple Fabric to other domains?
Now we're using cloud partnerships and AI partnerships on Purple Fabric. The domain side is taking our eMACH.ai products forward, the consulting companies, how we can go deeper with them.
Yeah, if you're referring to the 14 value discovery agreements that we signed with some of our partners, it is still in progress. I think a lot depends upon, some of them we've already seen some success, obviously, there need to be certain solutions that we need to build using those partners and take it to the market. It's still, again, in progress.
Yeah, true. Can we expect something in the next couple of quarters that it can become a new revenue?
Yeah, definitely we can, that's what is our intent of signing with them, that's where we are seeing the movement also.
Excellent. Thank you so much. The last one, quick one, is it possible to give the breakdown of revenue from the continuing customers, existing customers, and the revenue from the new customers as a breakdown? If that would not be too much to report.
We don't disclose that.
We don't disclose that, we don't have existing customers also, you should be happy about it.
Yeah, no concern there. I just wanted to know what are the new customers we are adding. It's fine. Thank you so much. Appreciate it.
Thank you.
All the best.
Thank you, Sandeep. Thank you, everybody, for joining today. In case till you have any question, please do write to us. Accordingly, it will be replied. Thank you. Now you can log off.
Thank you.