The company's filings with the Securities and Exchange Commission, including its most recent annual report, quarterly reports, current reports, and other SEC filings. Any forward-looking statements made on today's call speak only as of today's date. Except as required by law, FatPipe undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
During today's call, we may also discuss certain non-GAAP financial measures. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures, where applicable, are included in today's earnings release and related materials available through the company's investor relations website and SEC filings. With that, I will turn the call over to management.
Good afternoon, everyone. This is Ragula Bhaskar, the CEO of FatPipe Inc., and with me, I have Vikrant and Kanishka. Vikrant is the one who read the safe harbor announcements. He's our VP for Corp Dev and IR. I also have with me our Chief Financial Officer, Kanishka, and Kanishka will join me on this presentation. I'm excited to have you all on this call.
A lot of exciting things happening. We had a good quarter, and besides that, we also introduced a new product called Constellation that is for network monitoring, both on the wide area and on the local area side. That is an exciting product that is gaining traction. Orders have already started coming in. We also are working towards a positive cash flow.
Last quarter, most of our cash went to buy inventory to deliver on the orders we had, and in October, we broke even as a company. So we hope to continue to be a positive cash flow company, as I promised you at the beginning of the year. With that, I would like to move to the financial numbers that you have been waiting for. This is for quarter two of this year. Kanishka, please take it away.
Thank you, Dr. Bhaskar. As a summary of the financial results from this quarter, for Q2, we had about $4.8 million of revenue, which was a 22% year-over-year growth. Net income of $1.2 million, which was an increase of one and a quarter million of net income relative to the same quarter last year. Adjusted EBITDA of $1.16 million, which is about a 60% year-over-year increase on the EBITDA side.
Gross margins continue to remain healthy at 90%, and earnings per share was $0.09 a share, which was an increase from flat last year, same quarter. Going into the first half results as a whole for Q1 and Q2 combined on the next slide, we had 25% year-over-year growth. Apologies, can the screen share move to the next slide?
Yes, we had $9.9 million of revenue, which is about 25% year-over-year growth for the six months ended September 30th, 2026, relative to the six months ended in September 30th, 2025. Net income grew 250% to $2.43 million. Adjusted EBITDA was up 34% year-over-year to $2.45 million. Gross margin, once again, remained healthy, 91% blended, and earnings per share was at $0.17 a share, which was up 240% year-over-year.
Next slide. Going to our recurring billings, our recurring billings continued to be strong year-over-year. Relative to same quarter last year, our recurring billings grew 55% year-over-year. As a reminder, recurring billings are those billings which are billed regularly, either on a monthly or annual basis, and this represents those billings that were collected in the quarter for the three months ended September 30th, 2026. With that is the summary of the financial results.
I will pass it back to Dr. Bhaskar to go over product and customer.
Thank you, Kanishka. Ladies and gentlemen, when you go to the next slide, Vikrant, I would like to talk to you about the company. As we always wanted to be and will continue to strive to be, we always want to be the number one product in our business and also provide the number one support to our customers so that we have happy customers.
The entire emphasis here is make this customer experience the best that can be in the networking business. With that goal in mind, we have always continued to do well in that arena. The customer feedback, this is one of the charts from a company called Info-Tech. I believe it is a $4 billion marketing company. As you can see, we are way ahead of Cisco, Meraki, VMware, and everybody else in the game.
That is because we actually focus on the customer. If you look at Gartner surveys, another company, if you look at independent surveys of customers, we are always rated number one over all the other majors in every single category. That will continue to be our goal. In terms of what we plan to do for the next few quarters, keep up the same production, work on creating more sales.
At the beginning of the year, our plan was to have 36 salespeople by the end of the year. We are midway there. We are at 30 salespeople net, and we plan to add six more by the end of March, which is our fiscal year. In terms of product, as I mentioned, Constellation was a very good product that we brought out.
To give you an idea of what Constellation does, we can monitor every single aspect of your network, every single device in your network, down to every single port in your switch and your fiber connection. The advantage of that is from a customer perspective, they do not have to go to multiple vendors. In a single stack, we are able to provide you cybersecurity, FatPipe, of course, our base product, and complete network analysis.
As a customer, what is the advantage? You have all the data you need, networking data, cybersecurity data, and the entire company devices inventory. In fact, including all the software you have, when the software are coming up for renewals, which software is vulnerable. We can give you a list of software that has not been updated. So essentially, it is one stop, one call, that is all.
That is our goal, to achieve network singularity, and we are headed there. That is our biggest achievement in terms of new product last quarter. We also, beginning of this in October, acquired a small software technology company, and that will continue, and we will continue to look for more companies to add. We did not raise any money to buy that company. We are doing it with our internal resources.
Again, we had to acquire quite a bit of equipment, hardware, to meet our sales obligations. We are doing that, and in October, we broke even, and we will expect to continue to break even and make positive cash flow going forward as we continue to hire people and expand our sales motions. I do not have any other things to share with you. Vikrant, are there any questions that I can answer?
If anyone wants to ask questions, please do raise your hand and ask questions. Vikrant, if you could transcribe for me or
Yes. We have some questions from our equity analysts, so I will start off by pulling in Lisa Thompson to share her question. I will enable her microphone and camera. Lisa, you should be able to speak.
Got it. All right. I am clicking buttons. All right, I am here. Thank you. Just to go back to Constellation, can you tell us a little bit more how people are charged for that? Do you have to have already bought cybersecurity, or is this something you can buy without having all the other pieces? How does this work?
Thank you, Lisa, for joining us on this call. Constellation can be bought as part of our FatPipe offering and can also be bought as an independent product. We are giving customers that option. Whichever way, if they want it on prem or if they want it in the cloud, we are happy to do it either way.
Can you buy it right away? Do you have to wait till your contract ends?
Yes.
Okay.
No, you can buy it right away. It sits quietly in the network, and it monitors the network, generates alerts, generates alarms, and generates reports for you. It is all in real time. The way we charge is by monitored devices. If you have 100 IPs, we will monitor it. We will charge you by those 100 monitored IPs.
Okay. That sounds good. Can you tell about this little software company you bought? What does that add to you?
We have a division called FatPipe Technologies, which provides software services, technology services, and this company is in the same area, so we thought it would be good to add to that market and that segment.
Okay. All right. How is this quarter looking? Is there seasonality in the business, or what should we think about the December quarter?
Yeah. Good question. Our goal is always to do 18% growth rate and 18% EBITDA, so we will work very hard to achieve that minimum basis.
All right. Then just one kind of,
Seasonality,
Go ahead.
Sorry. The seasonality can be when the holidays kick in sometimes, but this time, this time Christmas, I believe, is on Friday or Thursday, which means the next week after that would be a clean week for us to continue to close deals.
Okay. I guess my last question is kind of a big picture thing. Recently Fortinet had kind of a controversies going on about their quarter. Can you kind of compare and contrast how you're not them?
Fortinet is a massive company, so they are affected. They have a lot more wins in different parts of their business and the world. We are focused on our market. We are not hopefully going to see any of the issues that Fortinet had.
Okay, great. That is all my questions for now. Thank you.
Thank you. We are also constantly developing new products. As you can see that we introduced cybersecurity last year. We are introducing Constellation this year. Our goal is to be, like I said, the best product company out there and have a good name in the market, have a good name with customers. You cannot say that about some of the other big companies.
All right. Thank you.
Thank you.
Thank you, Lisa. I will now enable James Kisner to be able to participate as well.
Hi, James. If you have questions.
Hey there. Good afternoon. Just a couple quick ones. I guess, you want to talk about the sales force ramp and kind of what you expect there. How long is it going to take, you think, for those folks to be kind of productive? What does the ramp of a new salesperson look like at your company, you think?
Typically, a salesperson should become break-even to profitable in about three to six months. Some of them who are in the larger deals business will take about six to nine months. That is typical. If they have a great pipeline, we will work with them. If they are not able to create a pipeline, then we cut loose. Unfortunately, we have to do that.
Sink or swim, right? That is the nature of a salesperson.
Yeah. We are hiring senior salespeople who have experience, who have a Rolodex, so we expect them to come with a partner base, right? If they are not able to develop that part, convert that partner relationship into sales, then we are not the right company for them.
You have a product that can hunt pretty well too, so that should help. What about, I think it had a $7 million contract, education contract that you were expecting to start to land. Just maybe get kind of update on that, and just in general, does that contract eventually open up other public sector opportunities?
It is. It has and it is. We are very fortunate to land a big contract, and we are executing on that. That does get the word out that we can be trusted with a large contract, and we have the resources, the means, and expertise to execute. We did land a couple more deals in different parts of the country, and we are looking forward to this coming year to do the same.
Okay. That sounds great. Well, thanks for taking my questions. I appreciate it.
Thanks, James.
Thank you, James. Now I will let Derek Greenberg ask his questions.
Hi, Derek. How are you?
Good. How are you? Thanks for taking my questions. I wanted to start off just by asking about how we can think of revenue this quarter in terms of new customers versus renewals, if you had anything you could share on that.
New customers, we are adding new customers. The quarter is still young. We have 60 more days to go, and the pipeline is looking good. We are continuing to build on the pipeline. In terms of renewals, we have good renewal clip rate, and as the company base of customers increase, the renewal will be a significant, and it is already, but it will be a significant portion of our business.
Our goal is, like I said, to keep the customers happy. If I can keep you happy and you are happy with the product and you are happy with the service, there is no reason for you to walk away from us. Remember that every single customer of ours is a mission-critical customer. We run cities, counties, police, emergency services, hospitals, you name it. Big school systems. I mean, school systems with 50 and 100,000 students, right?
That requires expertise, and we have been developing that expertise over the last 25 years. So, we know how to take care of those customers, and if that network has an issue, we are on it immediately, and we try to solve it, and we have a deep expertise in getting into a customer's network and figuring it out really fast.
Good. Got it. I was curious what you're seeing at renewal in terms of attach rates for your cybersecurity offerings, if you're seeing good uptake there, if there's anything you can share.
We are seeing more faster reception to our Constellation network management and LAN management product. I think part of that is because many customers, as I said in the earlier presentations, they're with this kludgy group of four or five different cybersecurity products from four or five different vendors with three to five year cycles. Therefore, peeling away from those contracts and coming to FatPipe takes a little longer.
On the other end, Constellation is an easier install. We are not replacing any system in almost all cases, or their contracts are coming up on an annual basis, so we are able to make presentations. We have, for instance, a city in Tennessee. We have a customer who's a bank. So we are finding that it's a lot easier a sale. I also believe that that product is a very exciting product.
It has a lot of exciting features. It's like a Ragú spaghetti sauce, if you will. It's in there. The features are in there. So anytime you have a question about, "Can I monitor this?" My answer is, "Yes, we can." People like that. They can look at every nook and cranny of that network. So that, I believe, is also going to help us with our revenues going forward.
We are pushing it to our current customers. Our current customers trust us, and it's a lot easier to explain to them the value of another feature in the same product, which they buy separately, but it's a lot easier than saying, "I'm a new guy in town.
That's really helpful. One more from me, and then I'll pass it along. I was wondering if you could just talk about how some of your newer distribution and reseller partnerships are progressing, particularly TD SYNNEX and Carahsoft.
Actually, the best person to answer that is Vikrant. Vikrant has been working with TD SYNNEX and Carahsoft and Howard with our sales teams. Vikrant, I don't mean to put you on a spot, but if you can answer those questions since you're closer to the actions and you travel to all these partners.
Yeah. As Dr. Bhaskar mentioned, we've been seeing good success with our partners, including with TD SYNNEX and Carahsoft. As with every partnership, it takes a little bit of time to grow it, but in the recent quarter, we have seen more wins coming in with these partners on different proposals to government customers that are looking to purchase FatPipe solutions.
We're seeing good traction in them and continued wins, and the pipeline from these partners is growing. So we are very excited with the partnerships and continue to invest more resources to further grow the revenue and opportunities we've worked with these partners.
I think this week you trained like 72 salespeople at one of the partners. Last month, one of you traveled to the partners and made onsite presentations. We also have another partner called Jenne in Ohio, and our sales manager there has been visiting them and training them. What is nice is we get very good reception.
We are in a business where we have a good product, and our service quality is well-known, and therefore, their salespeople are looking for products that can help them sell. The most important thing is, how can you help your partner salespeople sell and achieve their quota? A lot of that involves training and providing them the resources and the pricing they need to win the business.
Yeah. Got it. That's really helpful. Well, thanks for taking my questions, guys. I appreciate it.
Thank you.
That's great. Then I will bring on Nehal Chokshi from Northland to also ask his questions.
Good afternoon, Nehal. How are you?
Good. How are you doing?
Doing well, thank you.
Great. Hey, can you go back to that billings slide?
Yes, I can.
Okay, great. Yes, looks like your recurring billings ticked up pretty significantly quarter-to-quarter here from $2.4 million- $2.9 million. Can you talk about the driver of that big quarter-to-quarter uptick?
Primarily, as we get more new business and turn up the circuit build products, we have been billing, and then the current customer billing. It's a layered approach, right? We have multiple layers of customers every year, every quarter, and as the billings on each of those customers start, we are seeing growth in the billings.
The bigger deals, we have been deploying bigger and bigger deals, or installations, and therefore, the monthly billing on those is significantly higher in terms of dollar value. Those are the reasons.
The driver of this big Q-to-Q uptick has been a ramp in some large customers?
Yes.
Yes
Also recurring revenue streams, so from renewals that are also happening. Both.
Okay. And this $7 million win
Actually, if I were to,
Is that a,
Sorry. If I were to think through it, recurring and renewals will continue to add to the baseline of the previous quarter. A lot of that is new business.
Yeah. Right. That $7 million order, how much is it contributing to that half a million quarter-over-quarter increase in recurring billings?
It has started contributing.
It is about $100,000 a month of contributions, so that will add to about $300,000 a quarter.
$300,000 a quarter. It should start contributing. Then we had other additional deals that we got bigger deals, so they are also contributing.
Okay. Is that $300,000 a quarter the full run rate of that $7 million order, or is there more still to be deployed?
At full run rate, it will be about $1.18 approximately. $118,000 a month, so that will be about $350,000 a quarter.
Got it. Okay. Can you give us some color on how bookings proceeded during the September quarter?
September quarter, Kanishka, do you happen to have those specific numbers?
Yes. The top line revenue, as reported on a GAAP basis, is largely reflective of the new bookings for the quarter, so that continued to be healthy year-over-year. It did continue to grow. I can follow up with the exact growth on the bookings, but overall, top line revenue was up 22% to $4.83 million for the quarter, and the majority of that driven by new bookings.
Okay. So product RPO would be flattish Q-to-Q from $2.2 million in the June quarter?
Yeah.
Sorry, Dr. Bhaskar, go ahead.
No, go ahead. Go ahead, Kanishka.
Kanishka, you're muted.
Sorry. Yes, I am muted. Yes, so product RPO continued to grow. However, like we mentioned, remaining performance obligation is slightly different relative to the contract receivables. Remaining performance obligations is partially, and deferred revenue are both partially related to our legacy book of customers in addition to the net new booking.
Remaining performance obligation remaining flat quarter-over-quarter has the benefit of the net new bookings from our recurring customers, but it also, as we shift over the legacy customers from the more one-time/term license billing to more recurring basis, does see a decline from that basis. So remaining performance obligation overall was relatively flat because of that.
Okay. Great. Well, fantastic acceleration in the billings here. Congratulations.
Thanks, Nehal.
Then I think last question we have in the chat comes from Rudy regarding two parts. First is, how is SATBoost coming along as far as interest from prospective customers? And then the second question is, are we still acquiring former VeloCloud customers? Dr. Bhaskar, if you'd like to answer those.
Yes. SATBoost, it hasn't taken off as fast as we wanted. We are spec'ing in. We have lot of interest. We haven't done some big deals in SATBoost, but we do have customers using satellite as a backup solution. SATBoost is the one where we can triple the bandwidth. I guess most of the customers are using satellites for backup, not speed.
So, that hasn't taken off as much. However, in terms of VeloCloud replacements, we are doing well. So, I think we did two or three bigger deals recently, and then we have a number of quotations out there for replacements whenever those contracts get over. So yes, we are replacing a significant number of VeloCloud customers.
Then, Dr. Bhaskar, if I may add on regarding SATBoost, this is more of a recent development in the past month, but we have a number of customers with 40, 50 + sites who are deploying satellite in addition to terrestrial transport. So, we have seen more reception for SATBoost recently, especially as SpaceX has continued to deploy their Starlink constellation, and customers have begun to use that for their primary transport. This is happening in the last two weeks.
Good.
I think that's it for time we have on the earnings call. Vikrant, I'll pass it back to you to close.
I think somebody raised a hand.
I think,
Did somebody raise their hand just now?
I think I see Nehal's hand up.
I'll pass it back to Vikrant.
Yeah. With that, I believe we are at the end of the Q2 FatPipe earnings call. Unless there are any final. Sorry, Dr. Bhaskar.
I see Nehal's hand up still.
No, that's an accident. Sorry about that.
Okay. In terms of the next several quarters ahead, we will continue to work as hard as we can to keep our sales momentum up, our profitability up, and start putting cash in the bank. We did refinance one of our SBA loans that we had before the IPO, so that helps us reduce our interest rate by about 1.885%.
Then we also got a credit line of $1.5 million. Sorry, folks, I have a little cough. $1.5 million from a local bank here, and so that gives us additional resources if we need to draw upon that. We will continue to buy hardware for fulfilling our sales obligations or deployments. But overall, we'll continue to keep the pace. By the end of March, we should have about 36 sales people, and the goal for the following year is about 48 sales people.
Sounds good.
With that should be the end of the FatPipe fiscal year Q2 earnings call. Thank you, everyone, for joining and learning more about the fiscal results for FatPipe and how we've been doing this quarter and going forward. We will see you again at the Q3 financial results update.
Thank you, everyone. I appreciate you taking the time to join us.
Thanks, everyone.