Intellect Design Arena Limited (INTELLECT.NS) Q3 FY2026 Earnings Call Transcript & Summary

Thank you for joining us today to discuss the Intellect Design Arena Limited financial results for the third quarter of the fiscal year 2025-'26 ending December 31, 2025. The investor presentation and press release has been sent to all of you and is available on our website. Our leadership team is present on the call to discuss the results. Our Chairman, Mr. Arun Jain, could not attend this call because he is in transit to attend a family [ emergency ]. Mr. Manish Maakan, Executive President, Group Chief Revenue Officer and CEO of Wholesale Banking; Mr. Rajesh Saxena, CEO of Consumer Banking; Mr. Banesh Prabhu, CEO of Intellect AI; Ms. Vasudha Subramaniam, CFO; and Mr. Vikas Misra, Chief Strategy Officer. Besides, some other senior members of the Intellect management team are also present in the call. Now I hand it over to Ms. Vasudha to take you through the results. This will be followed by the commentary on the business by Mr. Manish Maakan. This would be followed by a Q&A session, where your questions would be replied by the senior members of our management team. [Operator Instructions]. On safe harbor, I would like to remind you that anyone -- anything which we say, which refers to our outlook for the future is a forward-looking statement. This must be read in conjunction with the risk that company faces. With this, I request Vasudha to give her briefing. Over to you, Vasudha.

Thank you, Praveen. Good evening, everyone, and thank you for joining us on Intellect Design Arena's Q3 earnings call. It's a pleasure to speak with you today as we share our performance for the third quarter of the financial year. So before I get into the quarter, I would like to begin with the last 12 months performance because we believe that the LTM view best reflects the true direction and health of our business. I'm pleased to share that for the first time in our history, Intellect's LTM total income has crossed INR 3,000 crores, reaching INR 3,025 crores, representing a 23% year-on-year growth. This milestone is not just a scale maker. It is the outcome of a deliberate well-architected growth strategy that has been executed consistently over the last decade. Platform revenue for the LTM stood at INR 497 crores compared to INR 218 crores in the previous year, strong 128% year-on-year growth. License-linked revenue of INR 1,595 crores compared to INR 1,163 crores in LTM as of Q3 '25 delivered a robust 37% year-on-year growth. Our annual recurring revenue stood at INR 1,118 crores in the LTM compared to INR 700 crores a year ago, representing a strong 60 percentage year-on-year growth. EBITDA for the last 12 months stood at INR 709 crores compared to INR 534 crores in LTM as of Q3 '25, a 33% year-on-year growth. PBT for the last 12 months grew 34% over the previous period. Our cash position as of December '25 was INR 1,198 crores compared to INR 804 crore as of December '24, a 49% growth year-on-year. The strong improvement in collections also contributed meaningfully to strengthening our balance sheet and liquidity position. Beyond financial metrics, the LTM period also highlights the depth of market traction and execution capability that Intellect has built. Over the last 12 months, 53 new customers have chosen Intellect's digital stack for their transformation journeys. In parallel, we successfully enabled 82 digital transformations where global financial institutions went live on our products and platforms. This LTM performance is the foundation on which our quarterly execution rests, and it gives us strong confidence as we continue to scale responsibly and sustainably. Our performance is anchored on 3 scaled business engines, each built over successive growth cycles and now supported by an emerging fourth engine. The first and most mature engine is wholesale banking, which we initiated as a scale engine in 2015. Today, wholesale banking contributes around INR 1,400 crores to our LTM revenues. The second engine is consumer banking, which became our next growth focus from 2018 onwards. This now contributes close to INR 1,000 crores in LTM revenues. The third engine is IntellectAI, which includes wealth insurance and AI-led platforms. This engine was deliberately seeded from 2021 onwards and has already scaled to around INR 500 crores in revenue. From 2024 onwards, we have been -- we have begun building our fourth growth engine Purple fabric, our open business impact AI platform. Over the coming years, this will become a powerful multiplier for Intellect's next phase of growth. Finally, our growth over the last 12 months has been supported by deliberate investments in leadership and institutional capabilities. 27 senior leaders have joined Intellect during the last 12 months. These additions strengthen our global consulting delivery, product and go-to-market capabilities. In a key leadership move, Manish Maakan has been elevated to Executive President and Group Chief Revenue Officer, while continuing in his role as CEO of Intellect Wholesale Banking. This step brings sharp alignment across product strategy, sales execution and revenue ownership at an enterprise level. We are also pleased to announce that the Board of Directors have approved the appointment of Mr. D. Shivakumar as an additional director designated as an Independent Director based on the recommendation of the NRCC. Mr. Shivakumar is a respected business leader with extensive experience across Indian and global organizations. He is currently an operating partner at Advent International, a global private equity firm. He has previously served as Group Executive President at Aditya Birla Group, Chairperson and CEO of PepsiCo India and CEO of Emerging Markets at Nokia. As an alumnus of IIT Madras, IIM Calcutta and The Wharton School, he brings a wealth of strategic and governance insight to our Board. His appointment for a 5-year term is subject to shareholder approval by our postal ballot. Now let me turn to the financial performance for Q3. Total income for the quarter stood at INR 753 crores, reflecting a 21% year-on-year growth. License-linked revenue, which is the platform plus license plus AMC for the quarter stood at INR 391 crores, growing 34% year-on-year. On profitability, EBITDA for Q3 was INR 122 crores, translating to a margin of 16%. Profit after tax stood at INR 28 crores, impacted by a onetime gratuity provision of INR 30.84 crores on account of the new labor code and the resultant deferred tax of INR 7.8 crores. Collections for Q3 stood at INR 913 crores compared to INR 553 crores in Q3 as of full year '25, up by 65% year-on-year. eMACH continues to power composable transformation across banking domains, enabling clients to modernize at speed while maintaining control and predictability. Purple Fabric, our open business impact AI platform is increasingly embedded into live production environments. During the quarter, 14 new value discovery partners joined the Purple Fabric ecosystem, expanding our reach across AI-led underwriting risk claims collections and payments use cases. Together, these platforms are enabling clients to move beyond digitization into intelligent, explainable and outcome-driven transformation. On the market recognition, we are proud to share that Time Magazine has recognized our Chairman and Managing Director, Arun Jain, as one of the global growth architects, a rare prestigious distinction that recognizes leaders building for long-term value in a world obsessed with quarterly outcomes. In addition to this global media recognition, Intellect has received strong analyst validation this quarter. Datos Insights awarded our Transaction Limits Management solution, the gold medal for innovation and operational efficiency in their Commercial Banking & Payments Impact Awards. Euromoney named Intellect the world's Best Transaction Banking Software Provider 2025, including Best in Cash Management and Best Corporate channels. Gartner acknowledged eMACH.ai Core Banking as a visionary in the Magic Quadrant for Retail Core Banking Systems Europe. IDC MarketScape identified Intellect's Corporate Loan Life Cycle Management system as a leader in its Worldwide Vendor Assessment for 2025 and many more. Together, these recognitions reflect the depth, breadth and relevance of our platforms across core banking, treasury, risk, compliance, transaction banking, AI-led business intelligence. To summarize, Q3 represents a quarter of structural progress for Intellect. We crossed INR 3,000 crores in LTM revenue anchored on 3 scale engines and an emerging fourth. We delivered robust cash flows and balance sheet strength, and we continue to execute large-scale transformations with consistency and discipline. As we move into the final quarter of the year, we do so with confidence backed by a strong portfolio, resilient cash flows and a repeatable growth engine designed for the long term. Thank you for your continued trust and support. Over to you, Manish.

Thanks, Vasudha, for a detailed commentary. Good evening, everyone, and thanks for attending this investor call. Let me try and summarize some of the things which Vasudha talked about into 5 strategic themes, which we are focused on. I think an LTM growth of INR 3,000 crores -- crossing INR 3,000 crores in this quarter is really proud moment for all of us, and I'm sure we'll be equally proud for all of you being part of this journey. A 23% revenue growth, 33% EBITDA growth, 49% additional cash generation. I think we're ticking all the right critical parameters and clearly shows that the investment we have been putting in well orchestrated and is delivering the right results for us. Let me briefly talk about the 5 salient themes that explain how this growth algorithm works. I think the first one, which is we believe is in our technology moat, eMACH.ai. At the core of our model is, eMACH.ai, our AI-first composable platform architected for scale, reuse and continuous evolution, which is consistently being demonstrated with the wins and our ability to execute quicker and faster. I think we're proud that we have built this system with AI-first as an objective across the life cycle rather than induce it or put a bolt-on on top of it, while some of the -- my peers are doing that same thing. This composability is driving faster time to value and helping us get better rates and the platform stickiness from us. The second pillar I want to focus upon is multiple engines like what Vasudha called out are working in one flywheel and everyone is being able too, the wholesale bank, I was fortunate to initiate and lead that from 2015 has crossed INR 1,400 crores and has been a consistent growth engine. It's a mature cash-generating engine focused on long-cycle transformation programs with the largest Tier 1 banks. I think our second pillar, consumer banking, which we started in 2018 scaling up, very proudly its crossing the INR 1,000 crore mark and is becoming the powerhouse for digital and new age core banking, which banks are looking at. This has the robustness and the depth of capabilities and it's not just a framework. I think I want to call our youngest platform, wealth insurance, which is solely anchored around AI, our focus started 2021 and has also now crossed INR 500 crore LTM. All 3 of them, I repeat again, are powered by same AI-first platform backbone, Purple Fabric, allowing reuse of capability, intelligence and operating leverage across the organization. Third engine is our markets. Our revenue is better tested in the world's most demanding financial hubs with 62% of our revenue coming from advanced market and is also well distributed across the Americas, Europe, Middle East, APAC and India, avoiding any geographic concentration in any place. Success in these high-bar economies validates product maturity, regulatory robustness and delivery predictability at the same time. I think this is well set for India, APAC and Africa, which are the followers and also the faster-growing economies to be able to adapt to all of this. Our success with Tier 1 banks across multiple geographies has created a strong global brand. This result gives us the incentive against the regional volatility and it is no more a noise for us. I think the fourth dimension, which is now the next growth frontier, which we are embedding into our platform as well as looking at for scale is around mainframe to cloud migration and enterprise AI versus Purple Fabric. In this last quarter, we have signed one large global system integrator for our AI propositions taking out to the market as well as 14 value discovery partners to evangelize and help us take this to more clients across the board. On momentum, we are in advanced discussion with a global mainframe infrastructure leader to jointly transition monolithic banks to eMACH.ai-based architectures from the mainframe architecture. These are not just adjacent bits. These are natural extensions of the same platform, eMACH.ai. I think the fifth thing, which is -- in summary, is the downside protection or a risk absorption designed by Intellect. No single geography, customer or product line can materially impair our performance. Revenue is distributed across multiple buyers, regulators and decision cycle. Execution risk is reduced through platform reuse, standardization and delivery industrialization. So in closing, so this is not being opportunistic. This is all about engineered growth built from first principle and powered by AI-first platform. This is the essence of our growth by design, and that's why Intellect is a unique asset sufficiently derisked by our matured diversified portfolio, yet poised for growth through AI leadership and advanced market dominance. Thank you for listening, and I'll pass it back to Praveen for Q&A.

Thanks, Manish. Now the platform is open for the Q&A. [Operator Instructions] First, we have [ Mr. Gavil Goyal from Serena Alpha ]. I think he's not there. Next, we have Mr. Mihir Manohar from TRUST Mutual Fund.

Congratulations on crossing the INR 3,000 crore mark and INR 3,000 crore LTM number. So congratulations for that. Sir, largely wanted to understand on the cloud side. I mean there are a lot of talks that Anthropic AI Claude is getting enrolled into the U.S. BFSI side, not on the core operations, but yes, middle office, back office and also on the insurance underwriting process. If you can provide some clarity over here as to how is the -- is Anthropic Claude AI becoming a competition for us, and how to understand this?

Manish, do you want to maybe take this?

Yes. So there is obviously different LLMs continuously upgrading in the market. And I think we are -- we basically utilize for our Purple Fabric platform has the ability to optimize the right LLM that a customer needs for each use case. So we are not really -- we don't believe that they are really our competition in that sense because we orchestrate financial services, AI-first products end-to-end for our customers, and we optimize the right LLM. So LLMs will continue to improve as we sort of -- as the Purple Fabric platform is only a consumer of these LLMs. So I think we are not really concerned and we are not finding that they are actually coming and occupying a place where Purple Fabric is placed. The other thing I wanted to state is that a lot of them are focused right now in the assistant area, while we actually have digital experts, which is on the agentic side of multiple agents working together to make use cases more successful for customers. In the agentic side, we still believe our full stack, which you all are fully aware of, both what we call the knowledge garden where we vectorize data from multiple data sources. We have digital experts that work on that data, but we have the optimization hub, which is quite unique because the user continuously needs to ensure that the digital experts is using the best LLMs to achieve their objective of outcomes for the customers. And I think fundamentally, the big difference between us is not just orchestrating use cases, but orchestrating multiple use cases for our customers. And therefore, the fourth part of the Purple Fabric stack is really the governance part of Purple Fabric. And we are seeing more and more governments paying a lot of attention to ensuring that we follow an ethical AI standard, which ensures that we can actually manage to govern different digital experts in a way in which we can get the best performance from them. So to answer your question, I think there will definitely be competition. There will be definitely different people doing things. But the combination of what we bring along with our leadership in financial services products makes most of our eMACH platforms today completely AI-native and AI-first. So I hope that answers the question, yes.

Sure, sure, absolutely. I mean it is very difficult to displace CBS. That's the core of the part. Second question was on the Purple Fabric. What would be the Purple Fabric revenue for 9 months? Because for full year, we were roughly looking at INR 200 crores kind of a number. Some clarity around that will be helpful.

We're on track for what we are forecasting for the INR 200 crore number. I think we're reasonably confident of coming close to that number for the year.

Sure. Understood. Then the last question was on the SG&A side. I see SG&A Q-o-Q, some increase. So I mean, any hiring around the foreign geographies, any incremental differential hiring on foreign geographies?

I think Vasudha shared that we have been investing for distribution for the market in a planned way of what we had planned for. That's also evident in the growth we are seeing. So it's a planned capacity addition.

Sure. Yes, that's it from my side.

Next, we have [ Mr. Jitendra Agarwal from Relax Capital ].

Yes. I'm sorry, I don't have a question, but it is an observation. So if you look at your shares that were outstanding at a corporate level, right, we were -- in December 2020, we had about 13,26,64,000 shares outstanding. December '25, that number has increased to 13,93,15,000. So there's about a 5% dilution in a period of about 5 years. You look at our market cap, somewhere about INR 12,500 crores, INR 13,000 crores. That's a float of anywhere about INR 500 crores to INR 600 crores in the market just because of ESOPs. And if you actually look at the promoter shareholding, right, that has also gone down in that period by almost the same percentage. We seem to be very comfortable in terms of our cash balance. Given the way the business is doing, it seems that in the foreseeable future, also the cash generation should be good. My request or suggestion would be that instead of paying it out as dividends, can you please consider a buyback internally? That's it from me.

Next, we have Mr. Rahul Jain from Dolat Capital. Rahul?

Yes. I hope my line is okay.

Yes, please go ahead.

So yes, my question was related to the fourth pillar point that Manish articulated. If you could elaborate more, what I could understand was about building the SI ecosystem. So if you could go deeper into that thought? And secondly, on the similar line, since we have built roughly INR 1,400-odd crores of GTB business, does that mean it would -- at that scale, you may see a significant SI contribution in terms of new client onboard as well? Or we are still not at that point where we get a lot of [indiscernible]?

No, Rahul, thanks for the question. On the fourth pillar, what I'm talking about is, I think we've been talking about Purple Fabric and getting partnership development. So we have finally now executing with one of the largest global system integrator, and we're taking this out to the customer. Other than that, we have also signed 14 value discovery partners across the globe to take Purple Fabric out. That was the first piece of it where we were doing the work for last 2 quarters, which you are aware. In the last quarter, we have additionally now tied up with an infrastructure leader, which is focused on mainframes so that we can help transition mainframe loads to eMACH cloud loads. Banks are looking for solutions. That's where our composability of a solution. It's not a rip or replace. It's not just pick up the load and deploy somewhere else. We've been -- we've done multiple mainframe to cloud migrations, and we see this as a natural alliance whereby working together, we can take it forward. Your third question around wholesale banking touching INR 1,400 crores, and we're already working with -- publicly, we've shared along with Accenture in some of the implementations, and I'm continuing to grow along with our multiple other partners where the large transformations we can take along. We are doing big-scale wholesale banking transformation. We have got core lending, payments, the full corporate stack, and we've got a couple of other SI partners already working around them. We'll hopefully announce some of these partnerships also publicly.

Sure. Manish, when we say about the mainframe infrastructure player, are you referring something like the IBM of the world who would have that core infrastructure and they may also need some application to do the workload shift?

Yes. This partner supports quite a bit of mainframe infrastructure at this stage. I want to keep it there. Significantly larger.

But these are...

Yes.

Yes. So these are the SI guy or these are the mainframe guy?

They focus on mainframes support significantly.

Understood. And just last bit from my side. The growth in this quarter, in particular, was not pretty exciting. Our investment in terms of marketing and go-to-market has been pretty strong. So is it just like one-off quarter in between where we are seeing this kind of a dip? Or it's more of some kind of an economic factor that you're seeing in the market causing a slower ramp-up in particular markets? And with those thoughts, how you see current year or Q4 panning out?

No. So Rahul, the key thing is we've said we have designed for a 20% growth company on an LTM basis. Right now, we're demonstrating that. We're not from quarter-to-quarter. We had said at the beginning of the year that we have to stay above 700 -- first 3 quarters, we have stayed above INR 700 crores. Now it is about in between Q4 and Q1, how do we go above INR 800 crores revenue. That's what all of us as a leadership team are working. So that's a very nice momentum from that perspective cumulatively, if you look at. See, I don't think we are seeing pressure of signing a deal distress because I have a quarter ending. We're building a robust business. Sometimes quarters is not what we look at. The yearly is where we are committed to demonstrate performance. And I think -- and we had said measuring at an absolute level, stay above INR 700 crores and in the next 2 quarters, see how -- between Q4 and Q1, how we can go above INR 800 crores revenue. So we are all working towards that. I'm still confident of the thing.

Okay. Okay. Best of wishes for the [indiscernible].

Thanks, Rahul. Next, we have Mr. Rohit Balakrishnan from ithoughtPMS.

So sir, my question was, I think...

Rohit, are you there?

Yes, Praveen, we can hear him.

We can hear him, Praveen.

Can you guys hear me?

We are good.

Okay. So my question was, sir, I think -- so we had, I think, talked about these accelerated investments in Q3 and Q4. So if you could maybe -- I think if my memory serves right, we had talked about around INR 40 crores to INR 45 crores in Q3 and another, I think, a similar number in Q4 in terms of market investments towards both Purple Fabric and eMACH.ai. So maybe can you just call out what the number was in this quarter? And what do you think would be the number in Q4? That was one. And the second question was, so we saw license revenue come down below INR 100 crores after almost 7 quarters. I know this is very lumpy. So anything you want to call out in terms of the delay that is happening? And like are there any deals which sort of fell through this quarter or will get covered up in the next quarter? Anything you want to call out? And I have one more question, which maybe you can answer that and I'll come -- I'll ask the next question.

Rohit, I'll go reverse order. I think like I said, please don't ask which quarter, INR 100 crores more or INR 100 quarter. LTM basis consistently remain focused. We're showing good results. I think it's a proud moment to be above INR 3,000 crores from that perspective on a run rate basis. And we're driving towards -- we said we will stay above INR 700 crore mark. We've remained above INR 700 crore mark. I'm already saying that we're targeting in the next 2 quarters to cross the INR 800 crore mark. That speaks of everything of what you wanted to ask from your second question perspective. Could you repeat your first question. On the cost side. I think the cost is primarily around the 3 dimensions. Vasudha can give color to the absolute numbers. It's around Purple Fabric. It's around bit of distribution. Plus given what I'm seeing coming in the next 2 quarters, we've also invested right now on our delivery execution capability side because we need to be ready and we need to have these people not being joining the day before, 1 or 2 quarters before we make that investment on the delivery side. So these are the 3 elements of where the cost has gone.

Yes. Just to add, last quarter, we said we made an incremental investment of INR 15 crores. And similarly, this quarter also, we have made similar investments between INR 10 crores to INR 15 crores. That's an incremental investment this quarter.

Got it. And Manish, I think just from the LTM point of view, I think we had said that we'll be -- despite all these investments, we'll be at 20% kind of margins adjusted for these investments -- I mean, after these investments. So do we still hold on to that number for this financial year, FY '26?

I think look at consistent INR 700 crores, investing towards INR 800 crores. Those are very, very positive metrics. Quarter -- don't look at quarter-on-quarter. Look at the...

No, I'm asking for the entire year, not looking at this quarter as such. But I'm saying for the entire year...

Okay. Manish, let me answer. So like Manish said, it's always better to look at LTM performance. And if you look at our LTM EBITDA, LTM EBITDA has fetched us about 23.8%. So going by that, yes, we are very highly hopeful that we'll also end up in a similar number as we close this financial year.

Got it. And last question was on the U.S. expansion. So any qualitative commentary, Manish, you can give, like how are you seeing this calendar year or next financial year in terms of the growth there? We were expecting very high growth for this year as well. So maybe you can comment how U.S. has been for this year [indiscernible] and how do you expect next year?

I think I want to maybe just quantitatively share one more forward thing. I think across North America, I'm not far from start touching INR 1,000 crore revenue. It's been a good North America growth for us this year. That's why we -- across Canada and U.S., we are investing. Some parts of execution happens out of Toronto, some happens out of New York. Purple Fabric has been helping us grow significantly. Payments has -- our liquidity and CBX platform was a growth platform. Payments is where we are now making multiple breakthroughs. So we're investing over there. Corporate core is something which we have been winning over there. So if you see multiple levers are firing over there. So we're happy that with PF also, we are now expanding our distribution across multiple hubs.

And if I can just add, in Canada, we are also seeing significant growth in credit union space, both in our digital engagement platform as well as now we're just also getting some success in our loan -- lending platform. So we're able to cross-sell into the same segment.

Got it. I will join back. I have one more question, but I will join back in the queue.

Thanks, Rohit. Next, we have Mr. Vivek Kumar from Bestpals Research. It looks like Vivek is not there.

Vivek is there. [Operator Instructions]

Am I audible, sir?

Yes.

Yes, please.

Manish-ji, just if you can throw qualitative light on are you facing tailwinds or headwinds in terms of if you -- just 3 quarters back, Arun-ji was explaining about sales cycle being long. And in next 2, 3 quarters, we will convert a lot of deals. So can you like qualitative outlook on like different revenue streams that you have highlighted in your presentations like consumer GTB, GCV and A and wealth. If you can talk in terms of tailwinds and headwinds so that -- and also anyway, even given all these things, you are still confident on 20% growth on an LTM basis, right? So these...

No, I think...

You talk about tailwinds and headwinds because what are the tailwinds, which are the products which are like really having lots of tailwinds because that would give us more qualitative picture on if you can give us.

I think there are multiple products under each of this wholesale banking, consumer banking, wealth, insurance, which are now getting scale, so which is a good news for us. It's not just firing on 1 or 2 products or 1 or 2 lines of business. Clear evidence we have shared with you, INR 500 crores, INR 1,000 crores and INR 1,400 crores. So that is helping us a balanced portfolio approach, helps us to deal with any market volatility. I think that's why we're continuing to say we've designed for 20%. This balanced portfolio approach across markets and across product lines is helping us manage it. Our technology moat is the big differentiator out, which I'm most proud of with eMACH.ai. I'm able to grow the size of the deals also with this because what people see is this is a desired architecture state where everyone would want to be from the composability and the scalability and resilience perspective. And bank after bank, the largest Tier 1s consistently signing is just giving us that confidence. There's always headwinds of -- you hear noise of politics, different things. We got to deal with that. That's what we designed business for. So there's nothing right now material of headwinds or material tailwinds. I think a balanced growth is -- I'm feeling good and confident.

So we are feeling good about 20% growth on a yearly basis. I'm not talking about quarter...

That's what we have designed for. That's what we are looking at. The goal is how quickly with next quarter or the following quarter, how do I cross INR 800 crore revenue and then run it for 3, 4 quarters there and then look at INR 900 crores. This INR 100 crore consistent growth in 3 to 4 quarters, if we can drive it, I think that's the evidence.

Because 3 years back, we were very comment on quantum, central banking. So just any -- Rajesh-ji, any like any outlook on quantum as a product, central banking?

Sure. I think as you are aware that we are one of the only companies which has a core banking for central banks, right? And this comes from our legacy of RBI because we run the Central Banking for Reserve Bank of India. So as you know, if you look at the TAM, right, the TAM of this market is limited because there are only that many central banks. And these are -- there are a couple of opportunities that we are chasing with central banking, but it will always be a limited market by the design as compared to, let's say, a core banking, et cetera. But we continue to be the market leaders in this market, and we continue to be consistently rated in T1 as T1 in this space. And we are, as we speak, in a couple of opportunities with large central banks.

And small suggestion like what [ Jitendra Agarwal ] has suggested your equity dilution because now we are generating cash and you're already sitting on close to INR 1,200 crores cash, I think can please ask -- suggest Arun Jain to consider buyback because there's a lot of -- almost 1% is entering free float every year, right?

We'll record your comment...

Thanks, Vivek. Then we have next Mr. Pawan Kataria from Bullseye.

Can you hear me?

Yes.

Yes. So as Manish sir said, we saw a sharp Q3 compression in the margins, right? So can we -- so Manish sir already broke it down, but how much -- are we heading back to 20%, 25% margins for the year, given that the margins for Q3 has been odd of 15%?

Pawan, that's what Vasudha just now also confirmed that we're driving towards 20% plus margin for the full year. We have done it in LTM basis for the last 12. So for the financial year also, that's what we're driving towards. That's why the balanced investment is there. We're not going aggressive. We're not shying away from right investments when we see opportunity.

Okay, sir. And sir, another question. Sir, in the last con call, Arun sir said, we'll have -- we are striving towards 25% margins, right? So do we see that happening somewhere in FY '27?

No.

I think if you go back, study some of the peer companies, it's about getting to scale. At INR 3,000 crores, the profitability is x, at INR 4,000 crores, it moves to Y at INR 5,000 crores. So it's about -- I think we should all be looking towards consistent and more growth and right investments to balance to drive that growth. I think that's most important. We would all want to -- it's naturally going to come. The leverage keeps coming as the more license comes in.

Thanks, Pawan. Next, we have [ Mr. N.G.M. Puranik ]. No, I think it's dropped. Then next, we have [ C.A. Vansh Handa from Invest Analytics ].

So I have a question. Like I noticed the cost escalations apart from the exceptional items during quarter 3 that appears to have impacted the overall profitability. So could you help us to understand that what are the key drivers behind that increase in cost? And also, like this is not clarified in any of the presentation or management commentary. Can you help me with that?

Cost escalation.

No, the -- okay. One, if you're talking about the exceptional items, sorry, if I have got your question right, that is related to the gratuity provision, the onetime provision that we have considered in our books on account of the new labor code. And that's about INR 31 crores. And also there is a resultant deferred tax that we have considered for about INR 8 crores. So that has pulled our PAT down by close to INR 24 crores.

Yes. And just to add to -- yes.

I'm not talking about the exceptional items. But if you look before -- profit before exceptional item also, it has impacted from INR 900 million to like INR 671 million this quarter. So...

So, just to add to what Vasudha is saying and what Manish also alluded to, see, if you look at the current quarter, there has been significant investments in terms of capacity building, whether it is capacity building from a sales and marketing perspective or capacity building in anticipation of the deals we are planning to close in the current and the next quarter. So that is primarily the reason for us for cost to go up.

Next, we have Prem Doshi from ACE Equities.

Yes, sir. So I had 2 questions. One is that, in particular, for this quarter, as we have already discussed that some of the cost escalations were there and for some other reasons, the profit was muted, right? So what we are looking at what is -- are we looking to close the quarter, as you said, close the year at INR 3,000 crore plus that you have already guided for the financial year. So my question is actually for the next financial year. After we crossed the INR 3,000 crores in terms of revenue and we maintain a 20% margin, are we looking at on such a high base to continue growing at 20% for the next fiscal? Or you expect some moderation in the guidance for the next fiscal in that case?

Prem, I will stay away from guidance on next financial year. We very simply get to INR 800 crores, then we'll stay there a few quarters and then get to INR 900 crores. We're building the business INR 100 crores at a time. And right now, we feel good about what we are doing. So from a guidance, I'll stay away.

Okay. Okay. And sir, earlier, we have led up stuff that we want to position ourselves like the top AI companies such as Palantir, right? So how is the plan faring? Is the management satisfied with how the overall positioning that we are doing in the AI space? Like are you personally satisfied with how the segment for us is moving towards?

I think we had said upfront that we're going to drive towards the INR 200 crore revenue on this. So from that perspective, if you look at, are you satisfied, are you headed towards that? I think we are in the right direction. We are consistently amongst the top 3 players along with Palantir. So that's not a concern right now.

Next, we have Keshav Sureka from Niveshaay.

I think my question was already answered.

Okay. Next, we have Mr. Krish Jain from NAFA Asset Managers.

So my question is regarding Purple Fabric. So what I can see from the presentation is that your LTM revenue from operations is INR 2,919 crores. Out of that, wholesale, retail and AI business put together is around INR 2,900 crores. Am I correct in understanding that Purple Fabric in the last 12 months has contributed only INR 19 crores. And since you've reiterated that you're on track to hit INR 200 crores this financial year, I wanted to understand how is that possible in the next 3 months?

No, Purple Fabric is embedded across the businesses on wealth, insurance and everything. So we're not looking at like that. When we look at segmented Purple fabric, that's where we are saying we are good for INR 200 crores.

Okay. Got it. So next question is you mentioned Palantir and C3.ai as the main competitors for Purple Fabric. Are we still sticking to that? Or do you see any new competitors entering the space?

Manish, do you want to help me on this, please?

Yes. I mean I think Palantir and C3 AI are our fundamental main competitors, the way we see it. There will be lots of noise with small players coming and doing use cases in different areas. But when you actually look at end-to-end orchestration and enterprise level AI deployment, I think those 2 would be our primary sort of competitors when we look at orchestrating different type of use cases. And what Manish mentioned is that a lot of our existing products also have moved to AI first. So a lot of the Purple Fabric capabilities of orchestrating AI is getting embedded into everything we do. So I think, frankly, other than those 2, there are various other people we run across, but we haven't found somebody who orchestrates end-to-end use cases the way anybody other than those 2.

Okay. Got it. Just I'll squeeze in last question regarding Central 1, the acquisition that happened a few months back. So they are still reporting revenues in the digital banking segment. And they have mentioned there's a transition period as well as well as the reporting losses. So my question is, how long is this transition period? And what are the losses we are bearing in the business that we've taken off from Central 1? And how are we going to make it profitable?

We are already making profit on Central 1. It's a single-digit profit that we are making. In fact, initially, we said it's going to be margin neutral, but we are making some profits out of it.

And how long is the transition period?

What do you mean by transition period, Krish?

The transaction is completed and it's now -- yes, yes, go on.

Yes. When you say -- yes, are you talking about transition from -- to our digital engagement platform?

No, I'm taking this from Central 1's quarterly report actually. In their Q3 -- calendar year Q3, which is our Q2 of the financial year, they have reported CAD 4.5 million as noninterest income, so revenue. And they've mentioned revenue has gone down because the business is being transitioned to Intellect.

Can I answer that one?

Yes, Rajesh, please answer that. Yes.

So Krish, let me just explain this to you. So what we did was we acquired Forge business from Central 1, which was -- which is the digital business from them. That business, as Vasudha confirmed, is already giving us a single-digit margin business. Initially, we had said it would be margin neutral, but we are actually seeing a single-digit margin business. Now Central 1 is providing us some support. For example, they are -- the cloud infrastructure of -- on what this Forge business works on is still provided by Central 1 for which we are paying them a certain cost. That is what they are showing it. Otherwise, the business has completely transitioned into Intellect. I hope that helps to explain your query.

Next, we have Mr. Mr. Kushal Goenka from Mangal Keshav Financial.

Can you hear me?

Yes, yes, please go on.

Yes, yes. Sir, my question was on the gross profit margin. Like I'm not trying to analyze quarter-on-quarter, year-on-year basis, but I just want to understand that if we offer more, say, specialized products like Purple Fabric integrated to our other services, so shouldn't our gross profit margin should increase because I think so we saw around 300 basis point blip quarter-on-quarter and year-on-year also. So just wanted your thoughts on the same.

No, that is already happening. In addition to that, as Manish had mentioned in the beginning, we are also capacitizing. So we are also building capacity in anticipation of the work to be completed in the coming quarters, and that's why you are seeing some dip over there.

So ma'am, if you can just allude what exactly other item line in the gross profit then -- then, so isn't that the people...

See, it -- yes. It is...

Doesn't it come under the EBITDA margin?

No, no. See, for computing the gross margin, the costs that we consider are those which are directly attributable to the projects. okay? So -- and also people sometimes work on proof of concept and proof of delivery, and those costs are also build part of those SDE costs. And that's how you compute your gross margins.

Okay. So if I may ask in another way, so like what can be a sustainable at least a gross margin basis? I'm not going to the EBITDA part, but like 54%, I guess, this year.

Yes, if you look at our trend, maybe again in the last 12 months and then even in the previous last 12 months, it was hovering around 57%.

Yes. Okay. So we can expect at least we come back to 57% from the 54%?

Yes.

Next, we have [ Mr. Ravi Mehta ]. [ Mr. Ravi Mehta from One-Up ].

I just wanted to check, you mentioned that this quarter, there was an incremental investments of INR 15 crores. If you can help us split in which headline items it was being split, whether it was software development, SG&A? Because I'm just trying to see how the impact is playing out on EBITDA and on gross margin, just to understand how the normalized course can be.

I don't think so we need to get into that level of nitty-gritty. So anyway, the amount is not that much for a INR 15 crore value to go that level...

So is it in SG&A is what I wanted to understand. So...

Yes, predominantly in SG&A that you can see. And we also had some global events this quarter, which also contributed to the increase in SG&A cost. There were some partner commission, which got included. So the investments mostly went into SG&A and some bit of it also into product development, yes.

No, it's reflecting in SG&A. I just thought I will confirm with you.

Yes.

Then we have Mr. Dhruv Shah. Mr. Dhruv Shah from Ambika Fincap.

Am I audible?

Yes.

Manish, I have 2 questions. One is we won 8 deals this quarter, which is lowest in 8 quarters. Is there something to read into it? Or is that a seasonality? Do you want to just answer that?

No, I'm not reading too much into it.

Because it's the lowest in 8 quarters, that's why it came up because we just launched Purple Fabric and we have done a lot of investment. That's the -- that's why it popped up. That's the lowest in 8 quarters.

So it is -- from a count, it is low, but I'm right now not concerned. Like I said, Dhruv, I'm looking at crossing INR 800 crores and it's 1 or 2 quarters away.

So Manish, should we see that going forward, will we be chasing larger amount destiny deals compared to low ticket size, and that's why the deal wins will be lower going ahead?

No, it's a very good, fairly balanced mix. One thing good is happening is we're getting more of the large big deals also we're playing in there. See, with Purple Fabric, what will happen is they will start small. But suddenly, they will start showing big results in year 2, year 3 as the consumption grows. So that's a consumption-based business.

Right. Okay. And my second question is on the press release we did last week on adding 14 value discovery partners. So are these mainly SIs or are they distributors for Purple Fabric?

These are smaller midsized technology companies, which we are helping to take us forward.

Okay. Understood.

In each of the group, there are people with 300, 400 people who really are entrenched in 1 or 2 different banks. So leverage that relationship and capacity gives them an opportunity to grow, and it's in a connected field. So...

Next, we have Mr. Pranaya Jain from Banyan Tree Advisors.

Can you hear me?

Yes, yes.

So one question I had on Purple Fabric. Whenever you're going to our clients, whenever we are trying to close deals, what has been the key differentiating factor for us in terms of client adopting something that is fresh in the market? So that would be my first question. And then I have a couple of smaller questions as well.

Manish, you can help us?

Yes. So we've been having a lot of discussions with different clients. I think our key differentiation, as I said earlier, is the ability for us to be able to help the customer achieve business impact. There's been a lot of work that people have done using the ChatGPTs and assistants and copilots. But when it comes to business impact, a lot of what we can orchestrate at end-to-end journeys actually helps the customer either improve their cost and productivity or improve their revenue or their customer experience or fundamentally, a lot of our customers in certain markets in wealth and other areas also focus a lot on compliance and regulatory stuff. So what we are seeing is the ability to understand the leadership and the thought leadership in particular lines of business and actually achieve business impact for them. Clearly, that is something that in 2025, a lot of people believe has not been achieved so much, which is where our platform positions ourselves best to do. And I think we are seeing that as something that's attracting a lot of attention. We must remember that AI is still at an early stage of adoption in the agentic and the digital expert space. And therefore, adoption will take time. But actually, when we run these pilots, they can actually start seeing business impact. And we have a lot of customers we've already been doing that for because we started earlier with insurance and certain product lines here.

Got it. That's helpful. The second question that I have is, whenever we are doing large destiny deals, are they typically front-loaded in terms of revenue recognition? Or do they ramp up gradually over multiple years?

It's multiple models, Pranaya.

Okay. So there will be a mix of both mix of like front-loading and like annuity tail kind of thing as well.

Annuity based on variability.

Next, we have Mr. Krishna Agarwal from Mangal Keshav.

It is just a follow-up question regarding our competitors. Sir, as you said that you only consider Palantir and C3 as your major competitor, but I still wanted to get some light on Indian competitors. Sir, currently, in the Indian banking technology ecosystem, there are multiple players offering AI-led solution for banks such as TCS BaNCS, Aurionpro AI, NPST and Ai Compass. So sir, how does Intellect differentiate itself from these competitors in terms of depth of AI capabilities and platform maturity in the long term? And sir, additionally, how close are these players to Intellect's current level of AI-led banking technology? And what is the Intellect strategy outlook to maintain and extend its competitive edge going forward with these Indian competitors?

I think there are a lot of SI players like TCS and others like you mentioned. I think, as I said earlier, our big differentiation is our full Purple Fabric stack, which where we have invested significant amount of effort over the last 7, 8 years, going all the way back from the early models of machine learning to the large language models right now. I think that learning and experience for our product lines, I think compared to a lot of people coming and offering use cases or -- and a lot of the people are actually building SI type of work for customers to be able to do things that can help them achieve some level of AI independence. Everybody says AI right now, but nobody really has a full end-to-end platform. And I've already covered the 4 sort of stacks that make up our platform. I think that combination and the most important thing that we are seeing is when customers want to scale multiple use cases, they need to govern them. the ethical AI stack of governing our platform is fundamentally very different from what anybody else does because when you implement these use cases, that ethical AI stack gives you the ability to govern digital experts. You've got to think of this as human and digital experts working together in an operational role. In that model, the digital expert really needs to be managed on a regular basis because of the continuous changing language models, the continuous changing data that is fed into those digital experts. So think of it that governing digital experts is a very, very detailed part of the Purple Fabric stack, which not -- you won't find this in most of the other people. They are still talking about doing small use cases here and there or doing SI work. So I think that's the fundamental difference with most of the Indian players in my mind.

Next, we have Sonal Minhas from Prescient Capital.

This is Sonal Minhas. I hope I'm audible.

Yes, please go on, Sonal.

I want to continue from the question the last participant asked. Some of the players, as you mentioned, you mentioned that they don't have a full stack. And I think having attended some of these calls of these players, they also mentioned that the real ROI of AI showing its value add in productivity or similar matrices basically is something which is still at the proof-of-concept stage. So we wanted -- given the fact that you say that the Purple Fabric project has linkage to close to INR 200 crores of top line. Are there early signs for you guys where this is showing up in terms of how you build a particular client or in terms of you having better margins for some of the use cases where you've implemented Purple Fabric? Or is it early days for us right now? That's about it.

Yes. Adoption of AI is still at an early stage. Having said that, I think the opportunity for us to be able to bring productivity would mean a different way of working because we are seeing significant impact on operational work, on compliance work that we are beginning to see in our pilots and already in production for our insurance business, we've seen significant impact on the same work being done by the human through a BPO-type process versus the way we do it using AI end-to-end. So I think -- it is, therefore, important for us to keep in mind that this is early-stage adoption. The agentic actual work, which is something uniquely put together on Purple Fabric, which is why it's multiple agents coming together. Very few of our competitors have multiple agents coming together, and we refer to that as digital experts in different areas coming together. I think that piece has not taken off as fast as we believe it sort of will in the future. I think it will change fundamentally the way in which we operate or we often call it the future of work will change quite significantly. And I think we are actually experiencing the early stages of that. And some product lines where this has been AI first like the insurance and some areas in wealth and now some areas in trade and some areas in payments, I think that will actually go much faster as the adoption starts taking place. So there is obviously ROI challenges in the industry, which normally happens when you start something like this new as it happened 25 years back with the dot-com. So it will happen that we will stabilize. But fundamentally, new business models using AI will appear, and we are well positioned for that.

Got it, sir. So thanks for explaining this in detail. I also have a follow-up. I think a couple of my other colleagues were also asking the margin profile, and you were mentioning that companies have a different margin profile at INR 700 crore run rate, INR 800 crore run rate. maybe 900,000. Are there -- this is similar to, let's say, what a SaaS company does talk about in the U.S. My understanding is that. Please correct me if I'm wrong on that. Are there some companies which are into banking software, which is scaled up where we could refer to, to understand the margin profile of businesses as they scale up and as they mature? Are there some peers would you refer to in the U.S.?

I think go back and look at from India, FLEXCUBE and Oracle. So we have a combination of that as a business model as well as SaaS. So we have a dual engine firing. Look at what was FLEXCUBE's margin at $300 million, $400 million, $500 million, $600 million, you'll find a good story.

Manish, there is one more and then a lot of reraised hands. So one we can take, I think.

We can take one and then I think we can write back to you and we can reply to them.

Yes, yes. Please, the persons who are raising their hand, please write to me. We'll get back to you. And lastly, we have Sameer Dosani from ICICI.

Yes, I hope I'm audible.

Yes, yes, Sameer. Please go ahead.

I'm not sure whether it's clarified, but our original plan was to ramp up investments through the year. And obviously, it's needed for the business, so it's good. But just wanted to understand INR 225 crores of SG&A, like will we see further ramp-up from here on and then it will settle there? That is the plan? Or there are some programs, as you mentioned, and we had some marketing programs and roads, et cetera. So how to think about this SG&A for maybe next 12 to 18 months from here on?

Sameer, this quarter -- the last quarter is typically when we have more road shows and more events, large events, which happens every year. So that's from an annual cycle perspective. Rest is calibrated based on when we see opportunities as we are growing in. Like right now, you've seen U.S. is a big focus. We're driving growth in North America. So it's a very large market from a size as well as geography. But we're keeping it calibrated to ensure we don't run ahead of ourselves.

That's fine, and it's needed for the business, but our original plan was to ramp up like INR 100 crore annualized SG&A, if I'm not wrong, that we wanted to ramp up through the year. So it's that ramp-up -- step-up in terms of SG&A is already done. Is it that I should think of? And then maybe gradual investment here and there, whatever should be. That is how I should think about it?

No. So if we -- so right now, like we said beginning of year, INR 700 crores, INR 800 crores, as we stabilize at INR 800 crores, when we say INR 900 crores or INR 1,000 crores we have to add more. So it's a cycle.

Okay. So yes. So this level of investment is okay for INR 700 crores, INR 800 crores of revenues, INR 800 crores revenue.

That's right.

Okay. And obviously, Purple Fabric required software development and related expenses. So that step-up in terms of investment in software development expenses is also done, right, we should think of and year on incremental increase is what I should think of?

Yes.

Thank you, everybody, for joining today. In case any questions you have, you can just write back to us, and we'll reply accordingly. Thank you.