InfoBeans Technologies Limited (INFOBEAN) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome, everyone, and thanks for joining this Q1 FY '27 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 it to you. To take us through the results of this quarter, we have with us 3 co-founders, Mr. Avinash Sethi, Mr. Siddharth Sethi and Mr. Mitesh Bohra. We'll 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 and 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 subsequent annual reports. With this said note, I turn over the call to Avinash. Over to you, Avinash.

Thank you, Surbhi. Thank you, all the investors for joining this call. Surbhi, if you can share the presentation. Thank you so much. So those of you who are new to the call, let me revise InfoBeans journey in a very quick few minutes. InfoBeans was founded in 2000. We are 1,800 people strong team, and we are focused on AI-led data and engineering services to our customers globally. We are present in the U.S. market, in the European market and in the Middle Eastern market. And in India, we are present in Indore, Pune, Chennai and Bengaluru. This is a quick transformation journey over the years. The first 10 years were mostly foundational. If you notice 2007, we did a revenue of INR 4 crores. In 2015, we did a revenue of INR 43 crores, almost 10x growth in 8 years. Similarly, from 2015 to 2023, we did a journey 10x in 8 years as well. 2017, we went public and acquired -- and in the process with the funds that we raised from the public, we acquired a company in 2019 -- first company in 2019 called as Philosophie Group, Inc. And in 2021, Pune-based Eternus Solutions, which is a Salesforce Platinum partner. We also did a first buyback in the same year. 2024, we onboarded Phaneesh Murthy as an adviser to the Board to ensure that we continue on our growth path and grow aggressively. We also got Opal Perry on board as an Independent Director. She came in -- she is a CTO of easyJet, which is one of the largest airlines globally. And we also did our second buyback and a bonus last year. A quick glance on the InfoBeans as a company as a whole. If you look at the first number, which is 50 large enterprise clients, this is a very important metric to emphasize on. As a DNA of InfoBeans, we have always focused on large companies trying to service them so that we can continue to expand into those accounts and increase our wallet share. We've been able to do that successfully over the last 26 years. And another metric is 94% of these customers come back to us every year for more services, more work to them. Recently, we have started calculating our revenue with an AI impact. And here, 43% of revenue comes from AI-Augmented Software Development services as of March 2026. We did 2 successful acquisitions, as I mentioned, and we did 2 buybacks in '21 and '25 -- fiscal year '21 and '25 -- '26. The financial numbers, which was the last year financial numbers. One important partnership and which is very relevant in today's time is now we are also part of Claude Partner Network. Anthropic, we have subscribed with Anthropic and became a Claude Partner. We are also training our team to become Claude-certified engineers. And we are very, very proud of 2 particular awards, Great Place to Work as well as Great Place -- Best Companies for Women in India. These are the core service offerings, AI-led engineering, it is now spread and is impacting everything that we do. Salesforce is one of the most focus areas. ServiceNow is another focus area for us on the technology side. On the business side, we are focused on BFSI and storage and virtualization as an industry vertical. AI, as I said, is now being used across all the offerings that we have. A quick glance on the team. This is the Board of Directors, all the founders out there and Opal, Mayuri and Sumer sir as our independent directors. This is a very, very experienced team. If you notice, they have been with us for decades. And Amit, Raj, Kannan, Dennis, they are managing the delivery side of it. Kanupriya is on the people side, Arpit on design. Here is the sales and client success team, which are helping us grow our geographies. Clients -- so the very, very long-standing clients like ALM, CoAdvantage, IQVIA, they've been with us for almost anywhere between 1.5 to 2 decades. And all of these names, which are under NDA, unfortunately, we can't name them, but these are very, very large companies. If you notice Fortune 200, Fortune 500 companies who are with us for a very, very long tenure. And we are very happy and proud to service them. Here's a quick snapshot, quarter 1, April to June quarter. If you notice January 26 to January 25, we have grown 33% on the revenue side. On the EBITDA, we have grown 21%. On PAT, we have grown 28%. So this is -- also notice that June '25 had an ERC component of INR 6.3 crores, which we have removed from all the numbers so that we can compare apple-to-apple. On a year -- on a quarterly basis, we have grown at 7%, 6% and 1%. A quick snapshot, similar numbers, but if you look at it, the PAT margin, PAT has grown at 28% as compared to the quarter 1 of FY '26. EBITDA has grown at 21% and the PAT margin is remaining same as 14% and EBITDA margin has gone slightly down to 23%. Here are more details on the numbers. Revenue from operations, INR 153 crores, other income, INR 4 crores and then EBITDA at INR 35 crores, PAT is INR 22 crores. Notice that we have shifted from the old tax regime to the new tax regime. And there are some tax -- deferred tax assets and expenses, which were adjusted in this particular quarter because we have changed to a new regime. Our SEZ operations in Indore has very little life left on the tax benefits. And our non-SEZ operations, which are taxed at a normal rate are higher. Therefore, it is making sense to move to the new tax regime. So there's onetime tax expenses which are being adjusted here, which is also hitting the PAT margin. But from next quarter onwards, it will come normalize. As I mentioned earlier, EBITDA is slightly down because of the investments that we are making in building AI and also investing heavily in sales capabilities across all the markets, particularly U.S., which is also yet to deliver the revenue against the expense that we're making. A quick breakup here. U.S. is at 50% and Europe has increased to 38% this quarter and UAE at 7% and rest of the world, including India, is at 5%. So it's a very important diversification that we started approaching in 2016. And in 10 years, it has resulted 100% revenue coming from U.S. to 50% today and 0% from Europe to 38% from Europe, which is quite a significant strategic outcome that we have been able to execute. A quick snapshot on the ground as to what we're doing. I can ask Mitesh to take this up. He is leading the AI initiative for us.

Thank you, Avinash. I hope I'm audible to the audience and you guys.

Yes, Mitesh.

Okay. Perfect. Perfect. Thank you. So from an AI perspective, one very important note that I want to make before I go into the details is AI is extremely pervasive, and it is -- it is everywhere. It is literally part of everything that we are trying to do now, be it our own operations from our HR, from finance to our engineering, to our delivery mechanisms and our IT. It is so pervasive. Now with that said, it is extremely important as a services company to ensure that our clients get the outcome that they need in this changing era. And one of the key moves that we made a few months ago was to start building ready-to-go accelerators. And today, you can take a look at some of these. Some of these have come live over the last 5 or 6 months of effort, and they span from engineering because we do a lot of software engineering, which now can massively be done using a lot of AI opportunities such as early warning indicators in the BFSI industry. Again, important arena for us because we want to make an impact in that industry. There is a lot of work that we continue to do there. And as the industry gets primed for AI usage, we are ready. We are ready with our accelerators. We are ready with solutions that make real impact on the ground and create real business value for them. InsaneSDD, if you joined last quarter's call, you would have heard about it. Expona, we launched a couple of quarters ago. Early warning indicator is a new one that we are going out to market with and starting to do demos for our clients. If you go to the next slide, please. The Reliability and Assurance Intelligence, this is something that we launched last quarter. We are continuing demos for our customers. Again, the fundamental concept remains the same. With AI creating so much software these days, it is important that businesses see the reliability of those creations and they see assurance of the output from those creations. That's something what Reliability and Assurance Intelligence focuses very, very heavily on. And the last one is about data intelligence. Again, we are making sure that we cover all major areas from engineering to data to specific business outcomes so that our customers have everything ready wherever they need that kind of help. And as Avinash mentioned, we became Anthropic registered partner under the Claude Partner Network, and the effort continues to now attain the next tier of partnership there and continue to train our people in making sure that we are able to build agentic enterprises for the upcoming era. There is a lot of work that we continue to see. The market is changing very rapidly. It has changed very rapidly in the last year, a couple of years, and it continues to change. What we are trying to do is making sure that we remain very attuned to everything that's happening in the market, so we don't miss the beat on it. At the same time, ensuring that everything that is out there may or may not be useful for our clients. So we are becoming very, very careful in terms of what we deploy for our clients because AI can be very costly. And therefore, we are becoming -- we are very, very cost conscious in terms of how we implement our systems for our clients. And that's one area we are seeing a lot of conversation and interest particularly from CFOs of our client organizations. That's all I have for AI updates. Back to you, Avinash.

Thank you, Mitesh. So a quick snapshot on the events that we have attended and participated actively, ServiceNow event, which is an annual event called Knowledge 26. We participated and found a very good response. We also got awarded last quarter. Hosted AgentForce, which is a Salesforce event, World Tour in Mumbai. Some of the awards that we get continuously BFSI focus, we got this award particularly because our team is now equipped with BFSI industry knowledge. We are a Claude Partner, as we mentioned, another certificate on ISO 42001. Customers are demanding that. It is on how we are using AI tools, both developed internally and from the market. This is a CSR work that we do. We run this InfoBeans Foundation for underprivileged youth to get trained to become employable. And here, the last batch was completed and 25 students got their jobs after the course, which is more than 90%. Here, we planned a tree for -- on a birthday of every team member. So we planted 412 trees on birthdays of our team members in the last quarter. We also did a drive in our Baner office campus, which was very enthusiastically taken by our team members. Market data, you are all aware of. This is where we are. We are at almost 73% public shareholding and 27% with public. Pretty much it. Thank you so much. We now open to question and answers. Surbhi -- please Surbhi and Kunal, please coordinate.

Thank you Avinash. [Operator Instructions] So first question is coming from the line of Ms. Nishita Shanklesha.

Yes. So I just wanted to understand that we've had quite a good growth in Q1, Y-o-Y growth of around 36%. So is this growth going to like stay? Or what kind of growth can we see in FY '27?

See, Nishita, thank you for joining in and asking this question. We are very hopeful that we will be able to grow and continue the momentum. But we also are very careful and wary of giving any guidance. So I cannot really pinpoint a number, but we are very positive that we are on a growth path. And if you notice last 6 quarters, we've been continue to build on that momentum.

Right. So like if you could give some kind of target 2, 3 years down the line that we have internally, that would be really great.

So we have been talking every call and every investor meet that we -- as a company, our goal is to double our sales every 3 years. And not purely with organic efforts, it is a combination of organic and inorganic efforts. So if an acquisition happens over the period, we'll be definitely be able to meet that goal. But we work towards that goal all the time.

Okay. Okay. Understood. And on the margin front, like you said...

Please come to the -- in the queue. There are so many people waiting.

Thanks Nishita. We have a question from -- there is no name. It is a serial number, but yes, please ask your question.

Go to the next one, I guess.

Then give back to Nishita.

Nishita you can proceed with your follow-up question.

Yes. So like I was asking, you mentioned that we've had a muted EBITDA margin in Q1 FY '26 -- Q1 FY '27. So what is our EBITDA margin going to look like for the whole year, FY '27?

So we usually target a 24% EBITDA margin every year, and we should be able to come back to that kind of a number. That's the goal.

Okay. Okay. So like for the overall year FY '26, we did 22% of EBITDA margin. So why was that then targeted...

It's very tricky to track and come to a number every quarter. It's very easy to do it in an Excel sheet. But while you're in a business, it is very tricky. And we have to make those investments that we have to make, whether it delivers revenue immediately or not is a different matter, right? So we are here -- you already know that we are in business for 26 years. And it's a very long journey. It cannot be a straight smooth line, right? So we always -- I think what we have to understand is where are we going as a direction? What are we doing? What are we investing in? And eventually, it will yield results. So that's where we are. As a company, we're investing heavily on the AI side, which is yet to deliver appropriate revenue to meet those expenses. We are also investing heavily in expanding in our sales team. Obviously, there's always a gap in terms of meeting that number. So I'm investing today, but 9 months or 12 months later, I'll generate revenue. So it's always that lag effect that will continue. So it's a business, right? So you can't be delivering 24% straight every quarter. That's unfair to expect.

Right, right. Okay. My next question is what sort of investments are we planning to make in AI over the next 2 years?

We're already doing it. So if you look -- notice all these accelerators that Mitesh talked about, Expona, InsaneSDD, EWSH...

Nishita, please mute yourself. We are getting some background noise.

Yes.

So all of these investments are being done. We've been investing in AI for almost 18 months now. We are also purchasing licenses and paying for tokens for people to start using it and implementing it at our client locations. We're doing a lot of prototypes with our customers. So all of these are investments that we are making.

Nishita, you have to rejoin the queue. We have another question from another participant. So [ Jayachandran, ] please unmute yourself and ask your question.

So actually, I'm interested on the conversation regarding the AI, how it's going because initially when the AI was came in, people were saying that it will be a easier to go and adapt it. But now the cost optimization for the tokenization part has been scrutinized. So people are now thinking that whether they have to go with AI or human is actually less cost. So what is the conversation going between the clients? Or what's your observation on that?

So I'll let Mitesh and Siddharth address this. Mitesh is on the AI side and Siddharth is looking on the client side. So I think both of them can answer. Over to you, Mitesh, first, Siddharth can follow.

Sure. Thank you, Jayachandran. It's a very good question, and it's a very intriguing question. One of the biggest things that we have been looking at of late is the best way to implement AI with cost optimization. And again, if you look at InfoBeans as a company and our history, we have been very fiscally conservative and responsible as a company ourselves. And that's something that has become part of our DNA in our operations. Whenever we are implementing anything for our client, one of the key factors that we always look at is -- is this cost justified? And there is always this comparison that you have to do, what would make the most sense to use AI for and where would human play a critical role in that entire orchestration or the mechanism. So that's something that we are doing from the get-go. A lot of companies that you are hearing about or the market is talking about, particularly in Silicon Valley, there's all this talk about companies now realizing the impact of AI cost. For us, it's actually been cost conscious from the get-go. So -- and that's a very interesting, very important place for a company like ours to be because as the market continues to discover that you cannot just go deploy AI and go home and sleep, there is an important piece of the right kind of orchestration that needs to happen. And without consulting, without the right kind of implementations, none of this is possible. In fact, you might probably be looking at some of these news around companies like Anthropic, OpenAI, Microsoft investing billions of dollars in setting up consulting outfits. So finally, it seems like the market is coming to terms around the crucial role that experts within the AI arena play. I'll let Siddharth take over from here.

This is it. I think you have covered pretty much everything that there is to cover. Thank you.

[Operator Instructions] We will proceed with the questions in the Q&A box. So by the time, Avinash, we can -- if you like, we can take the question. We have a participant yes. [ Sahib, ] we are allowing you to talk please unmute yourself and proceed with your question.

Sir, being an entrepreneur of a manufacturing entity myself, when I saw the rise in the employee costs, -- this can be attributable to two things. One is the rise in the remuneration of existing ones, the existing staff. One can be attributable to the rise in future earnings that we are investing into new areas and looking for new clients. So can we get a sort of a breakup that this rise in the employee expenses can be attributable to -- can be attributed more to the future rise in the earnings and the sales? And to how far are the probable increases in our sales and profit margins? If you could just clarify.

Sure. So you're right in saying that the investments are going to yield result in future. But it is very difficult to say what number would that be. The rise in cost is also because of new hiring. So we have hired a lot of developers as well, which is also leading to the cost increase, but that is directly proportional to the revenue. Things which are not proportional to the revenue or the -- there's a lag effect is the AI investment that we are making, all those accelerators that we talked about and the investment in sales because since we are very, very focused on enterprise customers, it takes time to break in and generate first purchase order from those customers. And that time is anywhere between 9 to 12 months. So a new salesperson or existing salesperson making an effort today will yield a result next year. So that's the kind of lag effect that we have in our industry, which is the IT industry and when we are focused on Fortune 500 customers is our target market. So yes, there is a lag effect. How much it will translate only time will tell.

We have next question from [ Mr. Pankaj Nawal. ]

Yes. So my question relates to the AI investment that you guys are making. This is to increase the efficiency. Do you see the headcount going down because of the increasing efficiency of the workforce -- of the team? And another question is, do you see clients asking for a discount due to AI efficiencies?

Siddharth, over to you.

Yes, so the workforce is not coming down, as you have probably seen, Pankaj, that we have actually increased the workforce size, but the skill set, the mixture of the skills that you want, that continuously changes, and it is actually changing. Even our existing team that we have, we are cross-training them, up training them on a lot of AI skills. So that is, I think, the answer. Discounts, no, customers do not come asking for discounts. They come asking for efficiency for sure, yes. But we are not in the business of providing those kinds of discounts that because of AI do this. Actually, the opposite would might be true that, oh, we are using AI, we are increasing your -- reducing your go-to-market, reducing time to deploy. And therefore, we have more skin in the game and therefore, give us an extra $1 or $2 because we have exceeded our targets. We have exceeded our quality targets using AI. So those kinds of things are in play. But discounts per se, I have not heard of at least until today.

The other thing that I would like to add here is that if a client has a budget of, let's say, INR 100 -- $100, and let's say, AI has been able to deliver that work in $70, the client will actually ask for more work. See, software is a never-ending process. It's a never-ending work because the clients always have a road map. So they budgeted a certain amount of money for a certain amount of feature set. And if it is delivered in a less amount of money and less amount of time, they will actually expand it. They'll okay, let's do more work. So that is how it is happening. They will not curtail their budget. They will actually demand more work. So I think going down on headcount is not something that we're seeing right now. On the contrary, we are actually increasing our headcount every quarter.

Thank you Pankaj. Next question is from [ Mr. Keshav Karwa. ]

I just had one question on employee headcount. Like what was the net addition on a sequential basis you have done this quarter?