InfoBeans Technologies Limited (INFOBEAN) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. Welcome, everyone, and thanks for joining this earnings call of InfoBeans Technologies Limited for this quarter ended on 31st December 2025. The results are available on the stock exchange. In case anyone does not have a copy of the same, please do write to us and we will be happy to send over to you. To take us through the results of this quarter, we have us Co-Founder, Mr. Avinash Sethi. We will be starting the call with a brief overview of the company's performance, and then we will allow the Q&A session. [Operator Instructions] I would like to remind you all that everything said on this call that reflects any outlook for the future can be considered as a forward-looking statement and must be used in conjunction with the uncertainty and risks that we face. These uncertainties and risks are included, but not limited to, what we have mentioned in the prospectus filed with the SEBI and the subsequent annual report. With this said, I turn over the call to Mr. Avinash Sethi. Over to you, Avinash.

Thank you, Surbhi. Thank you, everybody, for joining this call. We appreciate your interest in InfoBeans. Let's start. I'll quickly run through the highlights of the company, and then we'll talk about the results and then we'll open to Q&A. InfoBeans is a company that was founded in 2000. We are in 35 years now. 1,500 people globally known for AI led design and engineering work. We strive to deliver meaningful value to our customers using the best of the available software technology in the world. We're present in all the locations that you see on the map. In India, we are in 5 locations; in Europe, Frankfurt; Middle East, in Dubai; and in the U.S., Silicon Valley and New York. Next please. This is a quick road map of what we have been doing and achieved in all these years. The first 10, 12 years were more foundational. And the real growth started after 2010 onwards. That is when we went to [indiscernible] facility and [indiscernible] and then we went public in 2017, acquired a couple of companies on the way. And then we almost touched INR 400 crores in 2023. We have onboarded Phaneesh Murthy as adviser to the Board, who was the CEO of IGATE. And then just this month, we have onboarded Harmeet Bhatia as Chief Revenue Officer in the Bay Area. We also achieved the CMMI Level 5 maturity level for our project development processes. Next please. The quick numbers out here. We're the large companies in one of the USP [indiscernible]. We have about 29 large interface clients that we work with. These are either billion-dollar businesses or billion-dollar valuation businesses. 90% is a repeat business for us, so that helps prove the client trust -- a great amount of trust that client has on InfoBeans. We have done 2 successful acquisitions. There are 300 members who are with us for 5 years and plus. We're listed on both the stock markets. Financial 9 months for '25, INR 300 crores in revenue, INR 60 crores in EBITDA, INR 28 crores in PAT, INR 242 crores of cash and cash equivalents, that includes INR 76 crores of AR, accounts receivable, mostly these are good. And we've been doing a CAGR of 26% the last 5 years. Several awards and partnerships that I mentioned here, not mentioning our Salesforce platinum partner and ServiceNow premium partner. We have been receiving awards [indiscernible] for many, many years. We are also best companies for women in India and [ green ] companies to work for multiple times and recently got CMMI level 5 award as well. These are the areas that we focus on. [indiscernible] software services [indiscernible] and cloud. These are explained in design work, rapid prototyping ability, which is a special ability that we have. AI-enabled solutions around generative AI with copilot and so on. Platform solutions like Salesforce and ServiceNow consulting and an RP automation and DevOps, CICD work. These are the abilities that we offer to our customers globally. Next, please. So the key updates for the quarter. We got CMMI Level 5 appraised this quarter. 6 clients were onboarded, 2 European customers, which are large enterprises. 2 U.S.-based large enterprises and 2 U.S.-based SMEs. Onboarded Harmeet Bhatia, I just mentioned. Sponsored ServiceNow World Forum in Dallas. We are actively playing in the ServiceNow and Salesforce area. And selectively picking up conferences where we actively participate as sponsors also. Particularly in the World Standards Day and good number of customers are standard compliant companies. So we are active in that space as well. On the ESG and CSR front, we continue to do our contribution. Next please. This is the Board of Directors. Again, very highly experienced core team, which we are very proud to have the big tie up [indiscernible] leaders who are responsible for joining business [indiscernible]. [indiscernible] joining the Board. He was working as a Head of Sales for [indiscernible] in the U.S. and now he joined us. He comes in with 30 years of experience in sales, marketing and business development, specifically in the IT services. Next please. Other clients, they are with us for quite a long time. The average age for our large customer is on an average is 9 years. 90% of clients are [indiscernible] customers, and this goes a long way in terms of establishing our presence with the customers. Quick look at the numbers. December '23 versus December '24, Y-o-Y, we have grown by 6% on revenue side, 12% on EBITDA side, and about 27% on PAT side. There might be some rounding errors here. So 3% might seem like 2% but because of the rounding and the percentages are different. But you'll see details on the next slide. Yes. Here are the actual numbers and without [ SLA ]. So if you look at it, our revenue from operations has grown by INR 8 crores, from INR 89 crores to INR 97 crores. However, it is slightly lower as compared to September '24 quarter. Other income has reduced to INR 3 crores from INR 5 crores in December '23. And total revenue INR 100 crores in December '24 as compared to INR 94 crores in '23. It is slightly lower as compared to September '24. The December quarters are usually lower quarters. So in terms of the billing availability and the number of billing hours available for the month or the quarter because of Dussehra, Diwali holidays in India and then Thanksgiving and Christmas holidays in the U.S. plus a couple of customers, they don't do a 2-week shutdown towards the end of the year and like from 16th of December 31st of December, they do a shutdown. Therefore, there cannot be any billing that can be done for these customers. So because of these drop in billing hours that availability is lower and the revenue is lower. So it is usually the case that the December quarter, we will see a lower number as compared to the previous quarter. So nothing to worry in that sense. In fact, I find it extremely good that we are able to move that needle significantly from INR 89 crores to INR 97 crores between December to December quarters. EBITDA is also slightly improved. And same is the fact we have been able to improve that. Note that our previous cycle hit in October, and therefore, this quarter has the impact of increase in payable costs across the company. And despite that, we've been able to have a better margin as compared to December '23. So better utilization and the cost optimization efforts have yielded good control on the cost so far. Next please. This is a breakup. Interestingly, Europe is increasing the pie -- the size of its pie. Usually, a year ago, I would say 80% was U.S., 10% was Europe and 10% was UAE plus India. Today, both UAE and Europe are increasing their share in the pie and U.S. is slightly reduced. By segment, we have more or less 50-50 between Digital Transformation and Product Engineering. And by business InfoBeans Cloud Tech has shown a slight dip, it used to be 18% and now it is 16%, right now. Next, please. CMMI, we talked about it. Next, this is the content I was talking about, we sponsored the ServiceNow World Forum in Dallas. And here, we have [indiscernible] and [indiscernible] in U.S. putting together the show. We attended World Standards development conference, and we switch into [indiscernible], which is the standard body there. Next please. We participated in a Coding Hackathon -- we hosted a Coding Hackathon for students of high schooling, which are the largest high-school conference in [indiscernible] and had good experience as potentially we love the coding experience. Next please. We have a practice of planting the trees for birthdays of each of our team members. So our score of planting 346 trees in the last quarter. This is a [indiscernible] 31st December. We can open question and answer, and I'll ask Surbhi to coordinate [indiscernible].

[Operator Instructions] The first question comes from the line of Rajesh Chaudhry.

My question is like once your profit after tax margins are very less as compared to year-on-year. So will this trend continue? Or can we see an increase in the profit after tax margins?

I didn't get the question. I mean profit is less [indiscernible].

Profit after-tax margin, I'm talking about. It is...

Profit after tax margin, okay.

If you see the year-on-year figures and it's quite low. I understand on a sequential basis, it is on [indiscernible], but year-to-year basis.

The PAT margin, we are working hard to improve it. And if you look at the September quarter, we were doing much better. I think it is also [indiscernible] revenue. If we can -- we have any increase in revenue, all of that will go to the PAT, but more or less it will got to the PAT. So we are, I would say, running a very tight ship at this point in time where most of the cost is adding to the revenue, most of the cost is contributing to generate revenue. And anything additionally that we generate on the revenue side, we'll be able to go back to the PAT, so one way to look at it. The second way to look at it is, since we have intangible assets on the books by way of acquisitions of 2 companies, we have a significant portion of amortization that we do every year. And I think every 6 months, we publish a number of the real cash adding into the books versus the PAT. So we do have better cash accumulation over the years. And I think the best way to look at is EBITDA margins. Are we improving on EBITDA margin or not? And the target is to stay around 23%, 24% EBITDA margins. And as I said, any increase in revenue will be immediately add to the EBITDA margins. So PAT is not a very good picture of what the business is. Another factor is we have [indiscernible] which are tax [indiscernible] and certain which are not [indiscernible]. So at some point in time, some unit generates more profits [indiscernible] don't generate any profit. So it depends on which one it is generating more profit and whether it is high in tax or it is lower tax. So again, PAT [indiscernible] misleading [indiscernible]. EBITDA is a better indicator.

Okay. And the second question is like I think we onboarded 6 new clients. So what would be the revenue contributing from these new clients?

See, we are a services company. And typically, any new clients that start with us will start with a small project. And these projects -- typically when I look at all these 6 clients, we probably are looking at INR 100,000, INR 200,000 worth of work to begin work. Eventually, it increases. So this kind of a test of services and test of business when we give a small [ loan ] to begin and then it flies off quickly.

The next question comes from the line of Devansh.

It's good to see the growth in InfoBeans. Over the last few years, there has been growth. So that's very good. I just had a question. So what was the net change to our employee count this quarter? Are we -- is there been any net change? Or...

Yes. So we reduced our headcount by 40 people, 43 people, to be precise. And so we have done a bit of a cost optimization here.

Okay. The second question was on the CMMI affiliation of Level 5. How do you see that flowing down into revenue and profit growth over the next few years? If you could just explain that, it will be great.

It is difficult to put a number to it, Devansh. What happens is when you -- it's kind of a credibility enhancer. So we were growing in CMMI Level 3 but did we grow values between no certification to CMMI Level 3 certification, definitely, yes. Was it purely because of CMMI Level 3? The answer is no. Whether we are going to grow from CMMI Level 3 to CMMI Level 5 in terms of revenue only because of this, the answer is no. But does it really help? It certainly yes. So it is very difficult to put a number to. But yes, it is enhancing the credibility of your presence. So when I'm going to pitch my company to a new customer, then we're happy to see that I'm a CMMI Level 5 company, and I have at least get a chance to be heard. So that opportunity [indiscernible] better. But whether I can attribute everything to -- or attribute any number to this, it is difficult.

Okay. Perfect. Just the last question was, are we continuing to look for acquisition targets? And has there been any update? Because 2 quarters' back, we were looking to expand into AI offerings, and we partnered with the company there. But are we also looking at any acquisitions? And if you could just explain your thoughts behind the acquisition pipeline?

Yes. We do. We continue to look at acquisition opportunities. And I think we'll maintain our stance that if it is suitable and it is falling in our [indiscernible], then only we will acquire. We'll not acquire just because we have money, just because we are not growing organically or just because the market is putting a lot of pressure on us. We will not do that. But the right treatment and the right value is what we are looking at. We are very actively searching for companies in ServiceNow and Salesforce space. But yes we have not been able to close anything so far. But it is still a part of our active strategy.

Next question comes from the line of [ Shashi Bushan ].

This is Shashi Bushan. I have 2 questions. Are you able to hear?

Yes.

Yes. My first question is last quarter, you told actually, next coming quarter, like September to December, you told max margin, 1% or 2% will drop, but I can see almost 4.5% drop of actual operating profit, [ 19% to 14.5% ]. On the 2 you mentioned, I think you noted some Indian projects actually because the process is not generating margins, correct? But here, I can say almost to 4.5% operating margins. It all [indiscernible], but it won't impact something with the 2 -- max 2% to 3%. But I can see -- able to see 4.5% margins. Yes, can you elaborate?

See, there is an impact of a -- let me give you a number. There's about INR 3 crores of quarterly impact because of the [indiscernible]. Now if I were to look at the revenue, we have seen a drop of INR 3 crores from the last quarter. So had we been able to maintain a similar top line with a very little impact on the bottom line. Now I also mentioned that we reduced the headcount by about 43 people. So we would have saved some money from there as well. However, having said that, the idea is not to reduce the business size, but the idea is to improve the business size. Now we hired Harmeet as CRO and we have more sales people coming and joining us. So that will impact the margin definitely for that quarter. But if I were look at in a longer period, at least, let's say, 12 to 18 months, we'll be able to recover everything that we have spent in the financial quarters in order to grow the business. So I don't think a business can run on a quarter-to-quarter basis. The business has to [indiscernible] in the light of the investment that we are making and how it is going to create an impact in the longer run. 1 quarter, 1 client, put [ 5 client ] in a quarter can change the margins very, very quickly. But if I were to look at a pattern over the longer period, then only I will be able to do justice to our decisions and the business that I'm doing here. So I think it is difficult to put -- I mean, maintain that mathematical progression quarter-on-quarter. It is always going to be up and down. But in the longer run, if you draw a line, then you will find the trajectory going to a certain direction, which is the business -- direction of the business.

Yes. My last question, actually. I can see [indiscernible] as investor, it was very good [indiscernible]. You can say [ '21, '22 March ]. It was also actually [ 22%, 24% ] actually margins. So can we expect at least 20% margin coming 2 to 3 years, at least margins? Because nowadays, we are able to max since last 2, 3 years, 17% to 18% only, correct? But it was 21%, 22%, we can see -- yes.

Yes. We are striving for that, Shashi. We want to have our EBITDA margins cross 23%, 24%. And that is our goal. We want to achieve that number. But at the same time, as I said, we want to achieve that number in a sustainable basis. And therefore, what is our investments that are required to reach that kind of a position. We continue to do that. And that would mean that there might be pain in the short term, but it will recover in the long term. Now if I go back for time we are talking about in the year '21, '22, it was a time when there was a great demand coming in. People are working remotely. At the same time, there was a great demand of team members also. So both business was flying high as well as both on the revenue side and as well as our people side. Now what this has created is a very high-cost environment for IT industry, where the developer cost is almost doubled in just less than 2 years, I would say. Between '22 to '24, the cost has almost doubled. Now in that environment, obviously, we cannot maintain the same margin just off the bat. It has to -- I mean we are passing on the cost to the customers slowly and gradually. And the results have to be seen in the last 3 quarters, the margins have started to show improvements. Even though the revenue is not growing as fast, the margins are growing faster. So that is a good news in a sense that we are going in the right direction. Now how soon can we reach 24% and whether we'll be able to maintain that quarter-on-quarter, I think it will still take some time.

Yes. Last question actually. Only one question is pending. You told, I think I'm observing since last 2 years -- hello? Are you able to hear?

Are you able to hear me, Avinash?

Yes. Yes. I'm able to hear. Yes. If I...

Shashi, I think they have unmuted me, and I think there is some issue on the management line.

Hello, I am not able to hear anything from your side. I think you guys are muted. I can -- yes, hi Avinash.

Yes. Hi [indiscernible].

Yes, you can hear now, right? I think there was some issue in between.

Yes.

Sorry, I have 3 questions broadly. So one question is -- I mean, with -- in the U.S. now, there is talk of animal spirits in the economy are back, business confidence has gone up by 30%, 40%, like that. So how -- I mean, how is the environment now? Do you think now that in calendar '25, there will definitely be revenue growth, which will be more closer to our historical run rate? Are you now at least seeing the environment is supportive? That is question number one. Question number two is, can you give me the utilization level now of our manpower? And question number three is, can you talk about [ agineo ]? I think agineo was, I think, $1.5 million business, I think, in Q1, if I have my numbers right. So where is that business? Is that business scaling up? So if you can address these 3 questions.

Yes. Thank you, [ Rakesh ]. To talk about the animal spirits, I think it is more talk than the reality. Again, the media can always extrapolate certain situations with a lot of biases that they would have. But I think the cautious -- mode is still cautious in my mind. Our customers are definitely looking positive because [ Trump ] has always improved corporates. So the environment is definitely there. I don't think it is animal spirits anywhere to be seen at this point in time. But regardless of that, the environment is better as compared to what it was 6 months ago. So that is one. The second thing is about utilization levels. So we are at 79%. We are striving to improve it further. And the third thing is on the agineo. Agineo is doing well. I don't know if I gave you any number, and even if I have given you any number, it will be a more of annual expectations. What has happened is we've stuck another relationship with a parent of agineo, which is called Materna. Materna is a group company, which does IT services in Germany. And agineo is a subset -- is a subsidiary of Materna, which is focused only on ServiceNow. So now we have 2 level of relationships, one is with agineo only on ServiceNow work and second is with Materna for multiple IT services work. So we are exploring with them whether we can work on design services, we can work on IT services related to all the open source technologies, also on AI-related work. So multiple levels of partnerships are being stuck both at the child and the parent side. So that's a good development. And you can see the European market, which is German revenues almost double what it used to be a year ago. So yes, good progress in that front. And -- but now we are hoping that we'll be able to generate more sales from all these 3 geographies combined because we are investing heavily on the sales side or U.S., for Germany and for Middle East.

Okay. Okay. And then maybe if I can ask 1 or 2 follow-ups quickly.

Please come in the queue, I will say, Rakesh.

The next question comes from the line of Devansh Goenka.

Devansh, we've spoken. If you have somebody else, please [indiscernible].

The next question comes from the line of [ Mitesh Gandhi ].