Xelpmoc Design and Tech Limited (XELPMOC.NS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Xelpmoc Design and Tech Limited Q2 and H1 FY '26 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ravi Udeshi from EY. Thank you, and over to you, sir.

Thank you, Soutiv. Good evening to all of you, and welcome you to the Q2 and H1 FY '26 Earnings Conference Call of Xelpmoc Design and Tech Limited. We have sent you the press release, the investor presentation and the same has also been uploaded on the Xelpmoc website as well as on the stock exchange. In case anyone does not have a copy of the same, please do write to us. To discuss the results and the outlook for the future, going forward, we have with us today the top management of Xelpmoc, represented by Mr. Sandipan Chattopadhyay, Managing Director and CEO; Mr. Srinivas Koora, Whole-Time Director and CFO; and Mr. Jaison Jose, Whole-Time Director. Before we start the call, I would just like to remind you that the safe harbor clause applies. With that said, I now hand over the call to Mr. Srinivas Koora. Over to you, sir.

Good evening, everyone, and welcome to Xelpmoc's earnings call for Q2 and H1 FY '26. I hope you and your family are doing well. We are still seeing challenges in the start-up sector due to volatility in the funding within the emerging technology sector. As mentioned in our previous call, we are maintaining our focus on the corporate segment, especially on products and certain in-house solutions. Our consolidated operating revenue for the quarter was recorded INR 7.6 million for Q2 FY '26 as compared to INR 16.3 million in Q2 FY '25 and INR 7.8 million in Q1 FY '26. The revenue decrease on the year-on-year basis is on account of transition from start-up segment to corporate segment and more importantly, the focus on in-house product. We are seeing interest from corporate clients for our services and the solutions what we are building. However, the conversion is expected to take some time, hence, we expect our revenues to gradually start getting traction over the next few quarters. I would like to state that we have successfully -- I would like to state that we are in process of conducting pilot project in ATC and expect it to monetize by Q3, Q4 FY '26 end. Operating EBITDA adjusted for the quarter was negative INR 16.1 million as compared to negative INR 10.2 million in Q2 FY '25 and negative INR 16.4 million in Q1 FY '26. I would like to give some context to the EBITDA loss in Q2 FY '26. Though our operating expenses have reduced, however, the decrease in revenue was due to the Fed losses. We expect our operating costs to be stable from here on. Net losses for the quarter was INR 19.3 million, partially due to INR 2.5 million of ESOP expenditure. This in comparison to a net loss of about INR 11.1 million in Q2 FY '26 and net loss of INR 18.8 million in Q1 FY '26. Regarding the change in revenue, I would like to state that 100% of our revenue was from the corporate segment. We expect that this focus on corporate segment and focus on data science will enable us to increase our revenue. Our team size is about 54, including employees, interns, consultants as compared to 52 in Q1 FY '26. Till date, we have served 65 clients. The fair value of our investment in portfolio companies stood approximately INR 703.4 million as of 30 September 2025 as compared to INR 572.7 million as on 30th September 2024. I will discuss the portfolio companies in detail now. Mihup is cutting-edge conversation AI platform designed to provide real-time assistance and analytics on the customer agent interaction. Mihup Future as a phenomena-based voice to text engine that delivers industry-leading accuracy along with prebuilt AI models tailored for multiple industries. Its hybrid architecture combining edge and cloud technology ensures secure and real-time data processing, enabling total workflow automation and mixed language understanding. Mihup currently has contracted ARR of INR 1 billion. It counts Tata Motors, Canara HSBC, Angel Broking and Pine Labs among its top clients. Recently, it signed a multimillion dollar contract with Tata Motor, which significances of greater acceptance of its products. It has also onboarded HDFC Bank as of its clients during this quarter. Coming to our next start-up. Woovly operates across 2 dynamic business verticals. First, it has a video commerce marketplace dedicated to lifestyle products. And second, it has a SaaS offering, Live2.ai, which provides interactive shoppable videos and live commerce solutions. Live2.ai has 2 core products, the shoppable social wall and social media publishing and reporting. Currently, it is achieving an impressive 3.2 million ARR in USD with 245 brands utilizing the platform and operating at an EBITDA positive status. It has notable enterprise clients, which are industry leaders such as Henkel, L'Oreal, Samsonite, Titan Group, Decathlon with many more global brands in the pipeline. Our next start-up, Snaphunt. Snaphunt is a remote talent marketplace that matches employees with the best talent across geographies. Snap is an innovative recruitment solution company. They recently launched agentzane.ai, a comprehensive digital recruiter product alongside their fully managed recruitment services for SMB and start-ups, Snap Hire, which in 2022. Revenue for July to September 2025 reached USD 109,000. Currently, they have 8.5 million job seekers and 10,000 employers on their platform, positioning them as leaders in the recruitment space. Pencil. Pencil, a Bombay-based start-up that has been at a forefront at the creator economy since its establishment in 2007. Pencil is dedicated to empowering writers by providing innovative tools that enables them to create, enhance and monetize their stories. Recently, they launched AI-generated audio supported by a grant from Google India, which is now live. Additionally, Pencil has produced samples of AI-generated books in multiple languages, including English, Marathi, Hindi and more. They have signed USD 950,000 service deals with Alphabet for a period of 36 months. Its revenue for July to September 2025 was INR 109 lakhs. Our next start-up, The Star In Me and innovative learning as a service platform dedicated to driving organizational excellence for individuals of all genders. Recently, PSM has secured new clients including Siemens and Flutter. It has recorded a revenue of INR 3 crores in H1 FY '26. The company has also enhanced its platform by introducing new features designed to elevate the coach partner experience and improve the client discovery process. It offers a unique discovery platform designed to support parents throughout their parenting journey from conception to age 16. With the help of Xelpmoc, KSP has developed a machine learning platform that analyzes over 100 data points from its users. The primary target audience consists of first-time parents aged 25 to 34, who make up 75% of platform traffic with 45% accessing it via iOS, KSP has successfully monetized its content through brand partnership and subscription revenue and has been improved monetization, thanks to long-term brand collaboration that extended its reach into the Tier 2 across the region. It recorded a revenue of INR 60 lakhs in H1 FY '26. Coming to our newest startup, Biome. Biome is a venture studio in the business of investing and mentoring start-ups. Its start-up investment includes Zoop.Money, a white label loan platform for home buyers in partnership with real estate developers and financial institutions. Zoop.Money is now in process of raising INR 8 crores from various source at a valuation of INR 80 crores, marking a 4.4x valuation uplift. Biome is also investing INR 2 crores for a 10% stake in our India's first reinforce fully resorbable implant platform to replace polymer implant in non-load-bearing orthopedic applications. As you all know, typically, Xelpmoc engages a start-up at the incorporation stage, pre-seed funding stage or pre-revenue stage. Most of our start-ups have just begun generating revenue and are still in cash burning phase. However, a few of our start-ups such as Mihup, woovly and Pencil, TSM are performing well, while others are still working to secure their next round of funding. Consequently, they are concentrating on increasing revenues and maintaining a conservative cost structure. The start-up ecosystem continues to experience a significant challenge, and we are focusing on scaling up Xelpmoc's own products and services. Our emphasis on revenue generation in the corporate sector, particularly in data science, artificial intelligence and machine learning as we aim to develop our own in-house products. At this time, we are not looking to onboard new start-ups unless we encounter exceptionally some good opportunities. We are committed to achieving EBITDA profitable as soon as possible. The new products that we are building should help us to reach there. With this, now I request to open the floor for question and answers.

[Operator Instructions] Our first question comes from the line of Abhishek Agrawal from Gemsquest.

So my question is specifically to Sandipan sir. So since we have now finally launched our product RELY, just wanted to understand the dynamics of the Agetech industry. And how are we trying to -- I also know that we've recently exhibited this product in Mumbai. So I just wanted to understand what kind of response did we get? Are there some changes that we need to make to this product to scale up or we are good to go and then we'll see a good amount of revenues and profitability going forward? Just a little color on this front. And what is the TAM and opportunity size for this kind of a product?

Yes. This is Jaison. I'm driving the RELY product. I'm happy to answer these questions for you. So Agetech as an industry, Agetech as a sector focus for us has been a planned decision that we took about 1.5 years ago. And since then we've been working very closely with operators in the space. To give you an overview as per all the estimates from all the major sources, whether it's PwC, ASLI or whether it is [indiscernible] or any of the larger publication. The aging of the grain market in India is estimated currently at close to about $15 billion. Now when I start up the $15 billion market size, this includes whether you have aging at home, which is the home health care setup or you have aging in communities, whether it is a part of senior independent living or whether it is assisted living communities. At a very conservative 5% technology spend, which is what the current situation with the market is into a very aggressive 3- to 4-year outlook of about 10% spend on tech largely propelled by IoT, EMR, EHR, fall detection so on and so forth, that's the TAM that we're looking at close to about in the range of about INR 6,800 crores or INR 7,000-odd crores going up to about INR 14,000 crores in that sense. So that's how large the TAM for technology adoption in this space, which is currently growing at a clip of almost 30% to 40% year-on-year. And this is just senior independent living as we create. Now while independent living is also propelled by, let's say, real estate and the adoption of elder-first policies by various RERA, we are also seeing that a lot of growth is actually being spearheaded by the assisted living space. So to answer your second question, after we had a fantastic exhibition of RELY at the ASLI exhibition conference annual of the industry in September, most of the inquiries and where we're seeing a lot of active engagement with customers is actually in the assisted living...

Jaison, you are not audible. Operator, can you check even Sandeep was speaking, he was not audible.

Abhishek, were you able to hear me thus far?

I just missed out on the last part.

So I'll just continue. So we are seeing a lot of -- to continue where I was, we're seeing a lot of inquiries, a lot of active conversations currently with customers that are in the assisted living space. We are also seeing that we see an opportunity for Rely also in the home health care segment, which is typically dominated by hyperlocal nursing agencies that where there is an opportunity to build a strong digital layer, a tech layer for them that allows them to comply with potential policies that the government may come up with. So that's the opportunity that we're looking at. Currently, RELY in its 2 variants currently addresses the senior independent and the senior assisted living space. In the coming quarters, we will also launch a variant, which will be for the home health care sector. Does this answer your query, Abhishek?

Sure. That does. But just a clarification on -- I mean, what kind of deal size can we actually grab -- and how are we actually looking at customers in this segment?

So deal size is essentially -- RELY essentially is SaaS for operators. very similar like, let's say, you have -- It's the -- the model is SaaS. The business model is typically if you are in the senior independent space, you have customers that would -- that either operators or the property manager of these spaces would pay you on a per apartment per month basis. And these contracts are typically long tied in, typically on a year or 2 if you look at the assisted living space, we have contract that could be tied in on a per month basis. Again, these are long contracts. So we are following the typical SaaS model. We are also offering minor customization so that customers use to that extent, very relevant for their use cases.

Sure, sure. Just on the next part of my question, we were also looking at one point of time, if I'm not wrong, correct me if I'm wrong. At one point of time, we were also looking at this legal automated market where we were trying to automate and feed independent, if I'm not wrong, independent feeding kind of a thing for legal part of the industry. So where are we in terms of that? And are we also building some kind of a product into that industry or that sort of thing?

I'll let Sandipan take that question. Sandipan?

So see, legal and again, legal focused on BFSI, so some of the applications we have done is already in the market, in the field. We are getting paid for it, the first contract or so that have come. This is, for example, for RERA reconciliation for real estate companies. And again, we think that the use case is so valid that building a product in this space is difficult. So we have built a framework, which is our Docu X-ray And that, along with the kind of setup learning that we do for a specific problem and then go for the class, that is in motion and some of the contracts have already started coming in, as Srini was mentioning as well as some of them are in POC. So yes, that Docu X-ray part we are completely going on with.

Just to add what Sandipan said, DocuXray is a framework which we are using in the real estate industry and we are also using for one of the company, again, into the accounting and finance side. So the same framework we can -- we are also planning to use in different, different industries like Sandipan said, BFSI, insurance sector, real estate and [indiscernible].

Sure. That helps. And just one last bit. What is the...

[indiscernible] questions now?

[Operator Instructions] The next question comes from the line of Raghavendra Rao, who is an investor.

My question is, is your focus only on AI because I was going through your website and where I see that you also have a lot of non-AI stuff. So I wanted to understand typically what -- going forward, what would be the split in revenue from your AI-based solutions and non-AI solutions and the start-ups. So if you put this in 3 brackets, then what would be the split in your revenues? And what kind of margins do you normally operate on?

I'll leave the margins and all. I just want to clarify something. AI is kind of a current buzzword and philosophy. The all-encompassing part is data science. And in data science is where Xelp has always been focused. So be it our start-ups, be it services projects we do, the products we build, we play to our core competency of data science. Given the current situation where there are a lot of proliferation and exp portion of tools and hardware for this kind of data science, which is known as AI/ML that is popular. That, of course, is something that we are also participating in because we can't be inert to the environment. But when we look at our work, it is data science, and that's what it's going to be of all parts. So there is a distinction between an AI project and a start-up. A start-up can use an AI component, which we supply. Now these are the main 3 categories that we are looking at. start-ups, corporates. And again, corporates can have projects and corporates can have execution or acceptance or purchase of a product or SaaS service. That's how we can look at the categorization of how the revenue streams and the focus of the company would be. The remaining parts, Srini can answer as to what we are looking at. I don't know if we have a plan for that, but I'll let him answer the financial part of it.

Yes. So basically, as Sandipan said that right now, we are not focusing much on the start-up unless and until really some good opportunities come. But all the rest of the revenue, what we are going to see is it's going to come from data science, we can see service or AI/ML or SaaS platform.

Okay. But any indication in terms of what could be the average margins in -- and what could be the numbers that you are expecting probably in the next financial year?

So right now, we are looking at to be profitable. That's the focus for next 2 quarters. And basically, we want to make Rely and this DocuXray, which we are building the framework to be successful. Once we come out of that, then we can really look at margins, et cetera. But the first thing is we are looking at reaching out to a breakeven in the next 1, 2 quarters.

[Operator Instructions] The next question comes from the line of Abhishek Agrawal from Gemsquest.

Sure. I was just trying to I was just trying to ask, sir, we've spoken about industry slowdown in start-ups and things have recently turned a little bit, and we are also now looking at launching a few products, and there are so many use cases of AI and stuff going around. So sir, are we actually looking at building some more products or are we in active discussion with people, organizations or developers to come out with some unique kind of a offering for the market apart from this Rely and DocuXray? And also, if you can just throw some light on the start-up ecosystem and our approach to this kind of a segment?

Okay. So Rely is a machine for elder care, that will have ongoing additions to the product suite as well as probably new products and as we find new niches on a need basis, products will be made. DocuXray, as I said, is a framework. And currently, we are using it in the legal tech space, in the fintech legal -- in financial legal tech space and there are other applications that we are actively pursuing from market interest. So products will form on that part, getting the framework, getting the basics correct, getting our core competencies was the first phase. Whether we will package it as a product, whether that will be ever feasible and all that we don't know in some of the spaces. In some spaces like Rely, we believe there will be products that will come on that part. Coming to the second part of your question, there has been a turnaround in terms of the existing start-ups and some of the survivors who held on are getting more and more funded. But new start-ups, I still think are facing -- I mean, quite consistently heavy headwind. And I don't see that turning the corner in the next 3 months-or-so. But post that, maybe in the new financial year, I think there could be different themes coming up, which would be going there. We will always -- as Srini said, we'll always pursue good start-ups and all those things. But again, the mode in which we used to operate, where we used to put in a lot of our own investment in terms of time, man in R&D, that we will not be doing so much in the first few instances unless the exceptions are always there. But mostly that is our theme. We will participate in start-ups, which look promising and who can actually afford the cost. We'll not only charge profit from them, but share the cost part of it and the execution policy.

[Operator Instructions] Our next question comes from the line of Om Prakash Sah from [indiscernible] Investment.

Any update on and Soultrax Studio, sir?

Sorry?

Any update on Signal and Soultrax Studio, sir?