InfoBeans Technologies Limited (INFOBEAN) Earnings Call Transcript & Summary

Good evening, ladies and gentlemen, welcome everyone and thanks for joining this Q4 FY '26 earnings call for InfoBeans Technologies Limited. The results are available on the stock exchange. In case anyone does not have a copy of the same, please do write to us. We'll be happy to send it over to you. To take us through the results of this quarter, we have with us co-founders, Mr. Avinash Sethi and Mr. Siddharth 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. Kindly ask your question by raising your hand after the brief overview by Avinash is over and then we will address all the questions one by one. 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 the 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 the said note, I turn over the call to Mr. Avinash Sethi. Over to you Avinash.

Thank you, Surbhi. I hope the screen is visible to everybody and you can also hear me well. If not, I think the chat is enabled. You can message me and we will be able to respond. InfoBeans as a company has grown fairly well in the last quarter. Here, the headcount is now 1,790, and we have recently announced our buyback in the last few quarters. A quick snapshot of this year. The financials have crossed INR 500 crores for the first time. We are at INR 539 crores, EBITDA has increased to INR 138 crores. Again, this is first time that we have crossed INR 100 crores in EBITDA. PAT is INR 87 crores, cash and cash equivalent is INR 339 crores that includes AR of INR 108 crores. 23% CAGR since 2021, on the revenue side. One of the key important achievements of InfoBeans is that we have 50 large enterprise clients, out of them 18 are Fortune 500 clients. And we generate more than 90% of our clients come back to us for work. This year, we have generated 43% of our revenue through AI-augmented software development work. So you can say 43% of our team technically is capable of delivering software solutions using AI tools. We aim to make this 100% in the next 12 months. Next please. These are the core service offerings that we offer. Those of you who are attending the first time, these are the areas that we very aggressively focus on. Typically high AI-led transformation engineering work, making software development more efficient and more accurate. Our Salesforce and ServiceNow platforms are the 2 platforms that we are elite partners at. And we implement software solutions around Salesforce platform and ServiceNow platform. We also do support work there. We build apps on these platforms as well. On industry-wide focus, we are looking at BFSI and storage and virtualization as key focus areas. We are actively -- proactively working to expand ourselves in these industrial domains. Next please. This is a team, 3 founders here and we have Independent Directors as Opal, Mayuri, and Sumer sir. Sales team and the client success team are long-timers with InfoBeans. Key delivery folks, again, long-timers. Some of the clients that we are putting up here, not everybody that we can name, not all the clients that we can name here, but IQVIA is one of the Fortune 500 companies, CoAdvantage is a product company and the people solutions. [indiscernible] a logistics player, then there is multinational bank. This is the breakup of the client mix that we have. Fortune 500 customers, 18 of them, and our client success team work day and night to ensure that we can expand ourselves with these clients, increase our wallet share and also become critical in their journey. A large enterprises which are valued over $1 billion, 32 of them, gave a large pool for us to expand and grow into these accounts. The clients billed between $1 billion to $10 billion today are 11 of them. Top 5 clients contribute about 40% of the top line and the top 10 gives us 57%. We onboarded 24 clients at this year. This is the quarterly update. I'm very happy to share that we have grown 37% year-on-year on the revenue side, 44% on the EBITDA side, and 104% on the PAT side. So I'm pretty happy with the growth here on the USD terms, we have grown 27% Y-o-Y this quarter. Next please. I think different presentations for the similar numbers, the PAT margins have increased by 5 percentage points, EBITDA margins increased by 1 percentage point, and the revenue growth quarter-on-quarter was 6.5%. The revenue growth is a combination of existing clients and new clients. The existing clients have grown fairly well. We also added a few good customers to the kitty, which we anticipate will generate more business from them in the coming quarters. On the EBITDA side, we are constantly working to improve our margins, and you know, it's a constant effort if you notice the last 4 to 5 quarters, the PAT margins and EBITDA margins are constantly increasing, and revenue also is supporting the growth in the markets. Next please. This is the snapshot for the entire year, it's kind of a breakout year for us. We've been struggling at INR 400 crores for the last 2 years, this year we are successfully breaking out from that, and we are now at 32% year-on-year growth on the revenue side for this fiscal, and interestingly if you notice, these three green boxes, 32%, 64% and 128%; the 32% increase in revenue contributed to 128% growth in PAT, which is a ripple effect that a single-dollar revenue can show up on the PAT side. The EBITDA has grown from INR 84 crores to INR 138 crores in quite a good growth year. So all in all, a good year. In USD terms, revenue grew by 24% year-on-year. So here is the margin expansion. If you look at the EBITDA margin, EBITDA and PAT margin, all are growing fairly well. The green numbers on the right gives us the percentage point growth in absolute terms. So from 20% to 25%, there is a 5% growth in EBITDA margin and so on. So all-round growth in all the measurements of margin. Next please. This is a full year P&L for '25 and '26, how we grow. So revenue has gone well up, other income has grown as well as margins have also improved. On EBITDA side, we have grown from 20% to 26% and from the PAT side, 9% single-digit margins to 16% margin. I keep repeating, and I just want to be cautious here, that we always maintain that we are happy with 24% EBITDA margin and 14% PAT margins. We are doing better this year, which is a good sign, but would we be able to sustain this margin? The attempt is yes, we will try to, but if we are doing 24%, if we are doing 14% PAT, we are happy. This is the target that we maintain. So don't be -- don't be upset if we come back to 24%. Next please. So this is the balance sheet movement, mostly if you look at it, the profit that increased is distributed in the investments, and it's lying in either cash or trade receivables, mutual funds. Then there was a payout of dividend and the buyback of shares. And then the reductions in terms of intangible assets on account of amortization. So that's pretty much the broad movement. On the dividend side, so let me start with what we paid last year. We paid, after adjustment from bonus, we paid INR 0.25 per share. This year, the board has approved a regular dividend of INR 1 per share, which is 4x what we used to pay last year. The breakout of that INR 1 is INR 0.50 is a normal dividend, INR 0.50 is a special dividend, owing to the excellent growth that we have delivered this year. So, we have paid-up capital of about 9.7 crores -- 9.7 crore shares. So amount went up to INR 9.7 crores. This represents 11% of the profit after tax for this fiscal year. There are 2 members who get 15,000 shares -- 15,400 shares. So the Board has approved that and will be showing up. So far we have paid 830,000 shares to 175 members in the last 9 years, under the two ESOP schemes that we've initiated. I can ask Mitesh to talk about the AI that we are launching today. We actually launched it today InsaneSDD 2.0. Mitesh, you can unmute, you can speak about it.

Sure, thank you, Avinash. Hope you are able to hear me, which I'll assume everybody else is also.

Yes.

Okay, wonderful. Thank you, everyone, for joining today. Very exciting day for us. Coincidentally, results day, but also exciting 2 launches that we are looking at in this new era of AI we are all living in. Last quarter, we announced InsaneSDD, our Tesla-inspired take on spec-driven development, which is a growing framework for more agile development in the new age. What we have done in the last 2, 3 months is taken that and really built a strong foundational mechanism, where you don't just use the tool to code, but you use tools to build software. We've been an enterprise software creation business for the last 25 years, and we understand the chops it takes to actually build enterprise-grade quality. And what we have really done with InsaneSDD 2.0 is bringing that power in the hands of business users, who can imagine envisage ideas, and get to enterprise-grade code in 10x more time -- 10x less time. The benefits of SDD as a framework, better coverage, better quality, all of that remain. So that's something that we are very, very excited about. And again, we ask all of you to give it a try. This is a continuous development in progress, and we are happy to take more inputs, feedback, how customers would want to take it. We are reaching out to our customers with this, and we are really looking forward to this. Along with this, and that's why I mentioned it's a very happy day in the sense there are multiple things that have happened today. In the AI world, when a lot of software gets created by AI, one of the critical questions that businesses are always grappling with is whether the output from the AI is reliable and whether the outcome that the software produces can be assured, especially because AI is probabilistic and not deterministic. And we are trying to solve that problem. So take InsaneSDD as a way to build it rapidly and then take RAI, which is our Reliance and Assurance Intelligence layer to ensure that the output is reliable and assured for business usage. So again, very excited to do this. We have built this natively as an agent on Services-as-a-Software paradigm, works directly with LLMs such as Claude. So again, invite you to take a look at it, take a look at the demo. And if there are customers out there who are looking for a trust layer when they are deploying AI, this is definitely something that we can help with.

Thanks Mitesh. So this is the revenue breakup. The U.S. geography contributing 53% to the top line, the total revenue. Europe 35%; Middle East UAE market about 7%; India and rest of the world which is APAC is 4%. So quite a diversification from U.S. into European market, which is quite a good sign for us in the current challenging macro environment pertaining to U.S. geography benefits. So a very strong focus on AI capabilities, AI development, AI-related work. So one of our key customer success account manager, Denise, was attending AI Builder Summit in the U.S. Another summit that was related to AI and ServiceNow was attended by our team in Bengaluru. We continue to add new podcast. This is one of the candid conversations about the life at InfoBeans to attract new talent and to come out with a real picture as to how InfoBeans is operating. Another attempt that we are making is how to grow Indore as an IT destination and how to bring it onto the global map. So the key players of Indian IT Indore -- IT ecosystem in Indore, Impetus and Yash Technologies also participated in this call -- in this podcast. We continue to make efforts in making our women leadership very strong, and that's how this is the second annual batch of Shakti is a group of members where we especially groom them for a leadership. So that was celebrated on the Women's Day. Very happy to announce that we've been certified again as Great Place to Work as well as ServiceNow Partner Award for APAC region, which is a strong recognition of our ServiceNow capability by ServiceNow itself. Some other awards, Dream Companies to Work for and Excellence in Employee Engagement Award that we repeatedly get. The CSR activity that we do, InfoBeans Foundation continues to onboard new batches and sign up with a couple of colleges, so that we should -- we get students from them, who are underprivileged and we can transform them into software engineers. Next please. We plant trees on birthdays of our team members. And last quarter, 417 trees were planted. For the 2 years that we're doing, we have planted more than 3,300 trees so far. Next please. This is the market data. You must be clearly aware of this. And as of 31st of March, our share price was INR 123. And the breakup in terms of the shareholding was 27% with the public and now 73% of the Promoters. Thank you very much. So we open to question and answers and Kunal [indiscernible].

So thank you, everyone, for joining us. We'll now move into the Q&A session. [Operator Instructions] First question is coming from the line of Mr. Mehul.

Congratulations on a lot of good updates from your side, including the good quarter. I have one question on the revenue growth. So as you highlighted that there is a 94% repeat business. And also you have mentioned that 24 new clients have been added. So my question is of this -- for the FY '26 growth, how much came from existing clients versus new client additions?

We have about 7% business coming from the new clients. And I think you have to understand in the services industry, a new client has a very long tenure. And typically, when you start with a new client, the contract size are typically small. And it grows with time, it grows with the delivery and the trust that is established with the customer. So for -- even for our sales team, we offer them a 2-year earnout for getting a client. So in our mind, it is a long tenure of engagement, building that relationship with the client. So it is a very difficult metric to figure out as to what was the new business in a quarter or a year because the client is building up. But -- as an industry practice, what we have figured out is that 90% plus business coming from existing customers is a very strong sign of the trust that we established with the customer. It also gives us a great amount of strength to continue to build upon that relationship.

Right. If I can just have one more question to Mitesh, if you permit. Mitesh, I'm very impressed by what you mentioned about the InsaneSDD AI. But since I'm not in the current thick and thin of software development, I want to understand what will this InsaneSDD, what we have developed in-house, what it will do for us? Are we going to get more clients who are using AI like Claude and ChatGPT, will it help them faster enablement? Or what is it? I mean if you can just explain to a 5-year-old kid, for example.

Sure. Absolutely. Thank you so much for asking the question, Mehul. In its very fundamental aspect, InsaneSDD brings a lot of speed using the power of AI for software development. So software development traditionally being done at a certain speed, InsaneSDD fast tracks it very, very rapidly. So that's a very fundamental point. What it can do for our clients, it can bring whatever they are thinking about, however, they are responding to market situations, their competitive positioning, launching of their products, they can do a lot of that very, very fast. They can also do a lot more things that they do -- typically do in their planning cycles. So if there is an annual planning that they are doing for 5 things that they want to put out there in the market, now they could potentially look at 25 or 50 things to put out in the market in the same amount of time. So the idea here is there is a lot more that we will be able to achieve primarily because we are able to increase speed very, very massively. I hope this helps.

Thank you Mehul. So we have next question from Srinivasu.

One follow-up on this one. So...

Mehul, I think we need to...

I'd request you to let others ask questions. Please go back in the line. We are happy to answer all the questions as much as time permits.

Thank you Mehul. Srinivasu. You can unmute yourself and ask.

Congratulations for the great and consistent set of numbers you people have been delivering. And also, I really appreciate that management is proactively launching the new AI products, understanding the current need. And you have launched Expona, BeanTrail, Insane, and now RAI. So RAI is actually, I mean, you are saying that it is a UA agent and it supports Claude code, which is really interesting. Are you also supporting other LLMs like OpenAI, Gemini and -- I mean, open source models like Llama and DeepSeek as well.

Thank you for your question, Srinivasu. The RAI agent is built natively with MCP. So any LLM calls can be made behind the scenes using MCP protocol. Claude, I used simply as an example in this case.

Can I ask one more question? Or can I come back in the queue?

You can rejoin the queue. So next question is from Mr. Mihir.

Can you guide for revenue growth and margin for the next year? Would you have visibility on that front?

Mihir, unfortunately we do not give any guidance. But as I said, if you look at the last 4 quarters, the growth momentum is there, and we are growing both with the existing clients and the new clients. So that's a good sign. We are growing in all the geographies. So that's a good sign. But yes, how much, how fast, I would not be able to comment on that.

Could you give a commentary geography-wise as in how each geography is doing for your outlook for each geography?

So there was a revenue share slide that we talked about, 53% from the U.S., 35% from Germany and so on. We've been increasing our share and -- I mean, wallet share for our clients. So it is across all the geographies. But if I have to compare it, then Germany is doing far better at this point in time. U.S. is also growing and Middle East is also growing despite the war situation there. So I mean we are doing good in all the geographies.

So on the margin front, directionally, you said that you all will be investing in -- so we can't expect the same margins. So directionally, would the margins next year be lower than this year?

I mean, I'm happy with 26%. If I can get more, why not. But what I'm saying is because we are going to invest in business, I don't anticipate that. It will -- if it is 24%, we have met our target.

Another thing was, the repeat percentage is 94%, right? How much would this number be in other IT companies?

I have no idea.

Next question is from Mr. Tushar.

So my first question was on the Salesforce launching the Headless. It's a new offering, which directly integrates the UI into the API. And since we do a lot of work with the Salesforce, I wanted to understand your views on the offering by Headless and how it might impact our business? Is it -- it might offer incremental opportunities for our business or it might, maybe, have some differential impact?

I'll take that. Yes, it actually any new technology that comes into the market, it actually offers a new set of tools for people like us. And -- in this particular case, it actually does the same as well. We have seen some uptick from our existing clients who want to use that tool. And we are hopeful that it will just offer more opportunities to expand what we are trying to do.

So next question is from Mr. Hitesh.

Avinash and team, Congratulations for the good set of numbers.

Thank you, Hitesh.

My first question relates to the gift of shares we did to one public charitable trust from the promoter side. So what was the rationale behind gifting in terms of shares rather than in cash?

I think there is no such rationale as such. We didn't want to incur the capital cost, I mean, the capital gain tax on us as a burden. And the recipient was willing to consume it over a period of time. So it was a good idea to just pass on the shares in one go rather than worrying about it in future.

Does it go with any lock-in or they can sell the shares any day in the market or anything of that sort?