Alldigi Tech Limited (ALLDIGI) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to AllDigitech Q2FI27 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Natarajan Lakshmanan. Thank you, and over to you, sir.

Thank you very much. Good morning, everyone. Thank you for joining AllDigitech's Q2 FY27 earnings call. I'd like to start by thanking all the shareholders for the trust, confidence, and the continued support that you give to AllDigitech. It keeps us motivated to continue to perform. Today, I'm joined by our CFO, Mr. Manish Agarwal. We'll begin with an overview of our business performance, operation highlights, and strategic priorities, followed by a detailed review of our financial performance. We'll then be happy to take your questions. I'm pleased to report another quarter of strong financial performance with steady revenue growth, significant improvement in profitability, healthy cash generation, and meaningful progress on our strategic priorities. Beyond the financial results, we continue to strengthen our international business, improve our revenue mix, expand our sales capabilities, and accelerate our technology-led transformation. I'll take you through some of the key highlights. On the financial performance, for the first half of FY27, we reported revenue of 303.6 crores, growing 4.2% year-on-year, while EBITDA increased by 20.8% to 87.7 crores. Our EBITDA margin improved to 28.9% for the H1 of FY27, compared with 24.9% in the corresponding period last year. For Q2, revenue stood at 153.3 crores, growing 4% year-on-year and 2% quarter-on-quarter. Ibiza grew approximately 29% year-on-year to 46.3 crores, with margins expanding to 30.2%. FAT increased by approximately 51% year-on-year. Our cash position remains healthy at 127.2 crores as of September 26, while collections for the first half increased by 4.3% year-on-year to 316.9 crores. One of the key highlights has been improving quality of our revenue. International business now contributes approximately 70% of our consolidated revenue, compared with around 64% last year. While revenue growth remains moderate, our profitability continues to grow significantly faster than revenue, reflecting operating leverage and improved business mix and disciplined cost management. Manish will take you through the details, financials, shortly. On the business performance, I start with our tech and digital business. Our tech and digital business continued its growth momentum, delivering 12.9% year-on-year revenue growth in Q2, with segment margin improving to 43.9%. For the first half, C&D revenue grew 12.4% year-on-year to 82.3 crores. We continue to strengthen our position in the HR and payroll managed services market. During Q2, we processed 51.1 lakh employee records, taking the total for the first half to 101.3 lakh records. We have also added 16.1 crore in new annual contract value during H1 to new customer acquisitions and expansion of services within existing accounts. Our key service delivery metrics, including payroll accuracy, on-time delivery, and query around turnaround times, continue to improve year-on-year. On the BPM segment, the segment delivered stable performance with Q2 revenue at 111.6 crores, growing approximately 1% year on year. For the first half, BPM revenue stood at 221.3 crores, growing 1.4% year on year. International BPM continues to be a key growth driver, growing 12.6% year on year in Q2 and now contributing approximately 83% of the BPM revenue. Compared with 75% of the corresponding quarter last year. During H1, we secured 66.5 crores in new ACV across new customers and existing customers. Our service delivery performance continues to remain strong, supported by the initiatives we've taken to improve productivity and embed AI into existing customer operations. At the same time, we continue to take deliberate actions to improve the profitability of our domestic BPM portfolio, including exiting structurally low-margin businesses. Our focus remains on profitable and sustainable growth rather than pursuing revenue at expense of margins. Coming to the growth engine, an important priority during the first half has been strengthening our sales organization and go-to-market capabilities. We've appointed a new chief business officer for the BPM business. We've expanded our international sales team, and we now have experienced sales leaders from the BPM industry leading the U.S. sales team. And there is an established SME sales team and an enterprise sales team within the tech and digital. We've also expanded our sales capability on the BPM side into Southeast Asia. We also have incorporated a dedicated practice team to spend on solutioning, pre-sales, and product capabilities. During Q2, we secured new business with an annual contract value of 37.2 crore, growing 86% year-on-year. For H1, our new business ACV reached 82.6 crores, more than doubling compared to the last year. This includes 66.5 crore from BPM and 16.1 crore from Tech and Digital. Our immediate priority is converting these wins into revenue over the coming quarters. Moving on to AI and technology-led transformation. Across BPM, we are now moving beyond the traditional delivery, embedding AI across all of our BPM delivery to improve productivity, quality, and customer outcomes. On tech and digital, we continue to invest in our AI and automation strategy led by technology. Our products, our internal operations, and our end employees of the customers, all of them enjoy the benefits of AI. Moving on to the product strategy, we have, in the month of May 2026, we launched BuzzFeed 2.0, and recently, in October, we've launched two more products, AllDG 360 and AllDG 360 Analytics. Just to clarify, in the last meeting, I have called this as ANOX and Meridian. We've now changed the name to reflect the company, family group name as such, and so going forward, we'll refer these products as AllDG360 and AllDG360 Analytics. On AldiG 360, this is an entire HCM suit, including payroll, and it has the capabilities in terms of managing. Co-HR, employee self-service, time and maintenance, leave, payroll, performance, onboarding, health desk, reimbursement, and alumni workflows. And this is a SaaS-based platform that's capable of managing the SMB customers as well as the enterprise customers, and this is something which we are offering as a technology-only outsourcing as well. On AltG 360, this is a complete AI analytics which sits on top of our existing solutions, and this is capable of being available as an individual standalone module where a customer can continue to use their existing HRIS and use this analytics on top of it. The analytics covers headcounts and movements, attrition, payroll cost, pay variance, compliance, attendance, leave trend, overtime, diversity, and custom dashboards. So this is a combination of a custom dashboard that you commonly see in the market and also brings in the AI capability where you can go ahead and modify it according to the needs you have. Moving on, in terms of international growth opportunities, our international expansion remains an important strategic priority. In the U.S., we are focused on expanding our presence across customer experience, financial services collections, healthcare, RCM, insurance, asset verticals. We see opportunities to deepen existing customer relationships while pursuing new business through our stent and sales organization and partner ecosystem. As I mentioned, in Southeast Asia, we are expanding our sales, and we are already seeing initial offshoots in terms of results with good ACD booking that has come in in Q2 and a good projection that we have in the H2, Q3, and Q4. In terms of people, service delivery, and organization, alongside our commercial and technology investments, we continue to focus on building a high-performing organization. Our service delivery performance remains strong across both the business segments, and we continue to invest in operational excellence, customer satisfaction, and employee engagement. We are encouraged by the positive employee feedback that we receive, and we also continue to encourage employee participation in our CSR activities. We believe that attracting, developing, and retaining the right talent will remain critical as we scale our international operations and technology capabilities. In terms of the priorities for H2, first is to accelerate revenue by converting our sales pipeline into new business wins. Second, sustain profitability improvements to operational efficiencies, automation, and disciplined portfolio management. Third one would be to expand our international business and strengthen our presence in key growth markets. Fourth one is to accelerate AI adoption and scale our technology and product capabilities. Fifth one is to continue strengthening our existing customer relationships, service delivery capabilities, while looking at new relationships that we have established with the new customers. Our strategy remains focused on deepening client relationships, expanding our global reach, driving efficiency through technology and AI, building a future-ready, high-performing organization. Our platforms are progressing towards scale, sales channels expanded, and execution discipline impact. We believe we are well positioned to capitalize on the opportunities ahead. I'm also pleased to announce that the board of directors of the company have approved a proposal to buy back shares of up to 4.8 lakh equity shares at 1,000 rupees per share, representing a 48 crore in share conservation, subject to applicable approvals. The decision is consistent with our dividend distribution policy to reward shareholders. Given our strong financial position, healthy cash innovation, and debt-free balance sheet, the board considers buyback an appropriate means of returning surplus capital to shareholders. Our commitment to international expansion, technology-led transformation, product development, and profitable growth remains unchanged. We believe this balances shareholder returns with long-term investment needs. To conclude, we are encouraged by our performance in the first half. More importantly, we are building the foundations for the next phase of AllDG's evolution. With that, I'll now hand over to our CFO, Manish Agarwal, who will take you through the detailed financial performance of the quarter. Thank you.

Thanks, Matt. Greetings, everyone, and thank you for your continued interest in AllDG Tech. Now, let me take you through our financial performance for the second quarter and the first half of financial year 2027. Revenue from operations for quarter to finish year 2027 stood at 153.3 crores, representing a growth of 4% year-on-year and 2% sequentially. For the first half of 2027, revenue was 163.6 crores, an increase of 4.2 year-on-year basis. While head-line growth continued to be moderate, Okay, the underlying revenue mix continue to improve. With healthy growth in international BPM and tech and digital, partly offset with our plan reduction in low-margin domestic business. Importantly, international revenue grew 15.1% year-on-year in quarter two and accounted for approximately 70% of total revenue. Now, let me cover the performance of our two business classmates. In the DPM segment, Q2 revenue stood at 111.6 crore, going 1% year-on-year and 1.8% sequentially. International BPM revenue grew strongly by 12.6% year-on-year basis and now represents approximately 83% of BPM revenue. This growth was partly offset by a 33% year-on-year decline in domestic BPM revenue, reflecting our deliberate strategies of existing or resizing low-margin and engagements. For the first half, VPN revenue stood at 221.3% growth, representing growth of 1.4% year-on-year, with international markets continuing to be integral driver of the growth. Now, let me come to the tech and digital segment. In the tech and digital segment, QT revenue was 41.7 crore, an increase of 12.9% year-on-year basis and 2.7% sequential. For the first half, tech and digital revenue grew 12.4% on year-on-year basis to 82.3 crore. We processed 101.3 lakh employee records during the first half of 2027, reflecting continued operational momentum and growing the scale of our payroll and HR services platform. In C2 alone, employee record process increased 7.2% year-on-year basis to 51.1 lakh. Now, moving to profitability. At Q2, it did a historic 46.3% growth, growing 28.5% year-on-year basis and 12% sequentially. It did a margin extended to 30.2% compared to 24.4% in Q2 last year and 27.5% in the trading quarter. For the first half, EBITDA increased 20.8% year-on-year basis to 87.7 crores, with EBITDA margin improving to 28.9% from 24.9% in the first half of 2016. The improvement in profitability was driven by a better revenue mix, the reduction of low margin domestic BPM work, operating efficiencies, and continued cost discipline. While quarterly margin may be influenced by business mix, currency movements, and the timing of the client ramp, the structural driver of the margin improvements remain intact. In the BPM segment, quarter-to-segment margin stood at 17.5 crores, with the segment margin improving to 15.6%, compared to 11.6% in Q2 last quarter, and 11.9% in the Q3 quarter. For the first half, BPM segment margin was 30.5 crore, with a margin of approximately 13.8%. The improvement reflects the rising share of international revenue, portfolio actions in the domestic BPM, rising initiatives, and operating efficiencies. In the tech and digital, quarter two segment margin was 18.3 crore, representing a strong segment margin of 43.9%. For the first half, segment profit stood at 35.7 crores, with the segment margin remaining healthy at approximately 43.4%. This performance was supported by higher volumes, a favorable international mix, and operating leverage from our technology platform. Now, coming to the bottom line, Paid for quarter-to-2027 stood at 26.6 crores, increasing by 50.9% year-on-year basis, and 46.7% sequentially. The Paid margin expanded to 17.3%, compared to 12% in the quarter-to-to of last year, and 12.1% in the quarter-to-1 of 2027. For the first half, Fed increased 37.5% on a year-on-year basis to 44.7 crore, compared to 32.5 crore in H1 of financial year 2026. Fed margin improved to 14.7% from 11.2% in the corresponding period last year, an expansion of approximately 350 basis points. Coming to the cash generation, the cash generation in the organization remains healthy. Operating cash flow further towards 37.1 crores, translating to an OCF to EBITDA conversion of approximately 80%. For the first start, operating cash flow increased 31.3% on a year-on-year basis to 70.2 crores, with conversion remaining healthy around the same 50% of EBITDA. DRC improved by three days on year-on-year basis, reflecting our continued focus on collections, receivable aging, and the working capital discipline. Cash and liquid funds stood at 127.2% at the end of September 2026. The sequential reduction largely reflects the business paid during the quarter, while the underlying business continues to generate healthy cash flows. Now, to conclude, quarter two was a... Quarter of profitable growth. Although reported revenue continue to reflect the planned reduction in the BPM, domestic BPM business, international BPM and the tech and digital deliver healthy growth. The improvement in revenue quality, operating efficiency, and business mix resulted in EBITDA growth significantly faster than the revenue, alongside strong fat growth and healthy cash conversion. With that, I conclude the initial highlight and hand the session back to the moderator for the session and answer session.

Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use answers while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Harsh Kundini from INOS Alpha. Please go ahead.

Yeah, thanks for this, and congratulations to Matt and team for an excellent set of numbers. Just a couple of small questions. So, employee cost in this quarter, just wanted to understand the divergence between the headcount and employee cost, because this quarter we have seen a sharp reduction in employee cost. Um, by about 7% sequentially. Whereas, uh, employee headcount has not, uh, you know, gone down by a commensurate number. So just wanted to understand, uh, uh, you know, the divergence between the two.

Yeah, thank you, Harsh. Manish here. I'll take this question. Yes, you are right. Our, you know, employee cost reflects a reduction of about five CR on a quarter basis, while the headline, you know, decrease in the employee count is not to that extent. There are a couple of reasons of this, you know. One is the operating efficiency by, you know, by the replacement cost of the resources that we are hiring. We have been very, very clear as to what rate we need to hire the new resources. That is leading to the saving, while you don't see the growth in the headcount. Now, the second is the location mix that is also playing a factor here, wherein we have significantly optimized our resources in Manila location, which is a high-cost territory for us, while in India, you know, the resources continue to be saved. The third key aspect is also the retireal benefits. As we continue to optimize the resources and continue to revalue our retireal benefits, there has been some two-up benefit on account of that as well. And fourth, as we continue to optimize our resources, we will see the full impact of the reduction in the resources happening in the quarter three, because that reduction also started in the mid of, you know, quarter two, and by exit, we have reduced quite a lot of resources in that way. So you will see the full impact of the reduction coming in the quarter three.

Understood. This is helpful. So just wanted to understand how should we, you know, just understand the headcount and employee costs going forward in the next few quarters.

Yeah, so this is the right question, and we continue to leverage the operating benefits that we have, and we continue to see right resource deployment for our accounts. As Nat highlighted, we are deprioritizing our domestic business and focusing growth on the international business. We will continue to see reduction in the headcount as we progress, and our ratio of employee cost to revenue should continue to drop as we move forward. That is what we are expecting.

This is helpful. Thanks for this. Second question is, in the BPM business, you know, we were doing some form of, you know, rationalization in the domestic business. So is that initiative done or there's some portion of rationalization left even now?

I'll take that question, Hush. This is Matt here. So this is an ongoing exercise, Hush. As of now, we have taken a decision with a couple of large clients that we have, and this is something we should continue to know. But as we see, the percentage of domestic BPM revenue is coming down, and it's a strategic decision not to expand here into newer clients, but we'll continue to hold our existing clients as long as that is something which is profitable from a margin perspective. So, to give you a very simple, short answer, this will be a continuous exercise as we move forward until we completely eliminate the BBM domestic business out of our books, but it's not an intentional strategy to completely exit as long as they remain profitable.

Thanks, this is helpful. Just one follow-up out here. What would be the margin in international business? Or the other way to put it is that how much of uptick can we see in BPM margins because of this exit of the domestic business?

Yeah, so first I can answer. I think we will continue to see upliftment in the overall BPM business as we progress and do away with this domestic business. Now, how much is going to be the quantum that depends upon various sectors as to what is going to be the timing of reduction in the domestic business? Because this is an exercise that we have been continuously doing. But on a headline number basis, the margin should continue to improve in the VPN. That is what guidance we have.

Got it. Thanks. Thanks, Nat, and thanks, Manish, for this. All the best. Thanks, Josh. Thank you.

Thank you. The next question is from the line of Raghu Ram from Urenda Ventures. Please go ahead.

Yeah. Good morning, everybody. Can you hear me?

Yeah. Yes, Raghu.

Okay. Very, very informative. Investor presentation. I think you've added a number of data points, which is very helpful to understand how the business is really evolving and growing. So if you can just help us, I just will take off from where Harsh left in terms of focus, obviously, on the CXM business. You have brought in a number of case studies where you have given more details about what we do, how we impact the outcomes of each customer. If you can just please help us with what is the growth going forward looking like and from each of these large customers' bases. That will also help us in understanding how the international business, I can clearly see that the international business is growing like what Manish also put. It's nearly growing 13-14% year-on-year. So the headline numbers of saying 4.1% growth is maybe a bit misleading. So, if you can please help us understand how this 14-15% kind of growth that BPM is already displaying, how that will go forward in the next three to four months.

Sorry to interrupt, Raghuram, sir. Sorry to interrupt. The management line has been disconnected. Give me a moment while I have the management back line again.

Yeah, yeah, please.

Thank you for your patience. We have the management line back in the conference, so please go ahead.

Thanks, Raghu. I think we lost you when we were talking about your question.

Yeah, I will just reiterate the key points. I was just saying that the international business, if you can please give us some more color on it, one can see that it has grown much faster than the 4.1% that is the headline number. It has grown maybe more than 13-14% year on year. You have also given us a lot more detail and color on the kind of customer-wise. The outcomes that AllDG helps and how deep you are incorporated into each customer. If you can help us understand how this is looking over the next three to four quarters, that would be a very, very useful way to understand the evolution of AllDG.

Sure, Babu. Thank you. I'll take that question. This is Nat here. Thank you very much. From a strategic perspective, our concentration on the BPM business is to expand into the international forum. And our sales teams are also strengthened according to that. While U.S. is always a presence, now we've revamped the team, and we have people from a BPM background who come into leadership positions. We've added more sales executives from a U.S. perspective, and we've also forayed into Southeast Asia with dedicated sales resources. So, strategically, we are looking towards moving more in terms of the international revenue while bringing in a little bit of the Asia mix as well. In terms of the business as such, we are moving towards a business where it is completely embedded with technology, while traditionally it has been a manpower-based back office or a contact center kind of a business. Now we are moving towards how we can bring in technology into all aspects of it. While we've been using technology and AI for the past few quarters, it has been predominantly at a partner AI solution that we've brought in to use on a ready-made basis. But now the case studies that you see on the investor tech, these are deeper, you know, that we are getting into operations on how we can make it more efficient, reduce the manual efforts, and also bring in. So AI helps us from a cost perspective, a customer experience perspective, and operational efficiency and accuracy. So we are doing this at an account level one by one. I'm... Again, as a domain perspective, we said we'll be looking at international collections, we'll be looking at healthcare RCM, and we'll be looking at insurance BPO. And now we've added a new service, which is the assisted captive or build update transfer, as it is called. So we started with one of our clients, and it is already in progress. As we speak today, it's a relationship of 1,000 FTEs. This is expected to grow at least by another two or three X times. So that's a new service line that we've added, and we're bringing in AI here as well in terms of our recruitment, training, and while we do this, this is something which will reflect into the operations of the BPM. There are inside our operations also, in terms of why these are customer facing, inside our operations in terms of the hiring, training timelines, continuous training, quality monitoring, all of these things have been infused by technology. So if I have to sum it up, we are looking at the technology-led services that give benefit to all the stakeholders, including AltG, my end customer, my client, and AltG as well. So, moving forward, we will expand into international business, but that will be a technology-based service assisted by the humans. So, that's the strategy.

Very, very helpful, Matt. So this will result in what kind of an acceleration of the growth? Is that something that we have some kind of an understanding at the moment, or is it too early to maybe expand on that?

See, the technological embedding and AI infusion is not going to immediately help us in terms of growth percentage. However, it puts us on par with competition in terms of the market. So when we go into a potential client today or an existing client, we are on par with competition in terms of where we stand in terms of adoption of technology and all of the features that are available using technology. The growth will continue to depend on the sales, which, again, is an initiative that we've taken in terms of strengthening our sales team. So the growth is more related towards how much more we sell, but the technological and the strategical change in terms of how we operate puts us attractive and on par with the competition in the market.

Okay. So, just a last follow-up question on that. So, you guys have also announced significant ACVs both on the EXM and CXM businesses. So, that is clearly pointing to a very significantly higher number than what it was last year. So, from that perspective, how does the remaining part of this financial year and early part of next year look like?

Yeah, you're right. It's a good observation, Raghu. Yes, our sales has been much higher compared to the previous years. In terms of revenue projection, you know, there are multiple factors that come into picture. While we've booked, and this is a contract that is assured with us, the revenue coming in will depend on the implementation and the go-live, and there are factors that depend on the client. So, it will be not appropriate to give you guidance in terms of what the next few quarters will look like, but our endeavor is to look at how quickly we can bring in this revenue so it looks positive. In terms of how we can start. And traditionally, what we've seen is the BPM, you know, once it starts, the revenue starts, you know, coming in Twitter, we should be able to complete the overall ramp up within about three to four months. But the T&D sector is a little different. You know, it takes a longer incubation time because, you know, there are multiple other factors and technology that the client is using is also coming into picture. So to give you a short or a simple answer, this is something which depends on the client and how quickly that we can start the implementation and close the implementation. Traditionally, what we have seen is the acceleration time is much faster for the BPM side, and the T&D side typically takes a little longer. But these are revenues that will definitely come into our company. So it's a matter of whether it is another two or three quarters or four quarters.

Thanks, Nat. Very creditable performance by your team. Many congratulations and all the best going forward.

Thank you, Raghuram.

Thank you. The next question is from the line of Madhurati from Counter Cyclical Investments. Please go ahead.

So, thank you for the opportunity. So, firstly, I wanted to understand on our payroll processing business, the tech and digital. So, if I look at the payroll process between FI21 to FI26, we've almost doubled from 95 lakhs to 1.9 crores. But our revenue per employee has declined from 105 rupees to 81 rupees. And in the same time, Our international revenue has grown, I think, by two or three times between the same period. So how much further price cutting or price erosion can we expect in this market? And if you can help us understand on the competitive intensity for when we are pitching to the new clients currently?

Sure, Madhul. Thanks for the question. See, payroll as a business, when you look at it in terms of an individual transaction pricing, that depends on multiple combinations in terms of what's the service and the technology that we use. And also, you know, payroll from a customer's perspective, once, you know, they've been, it's a sticky business, they'll tend to stick with us for a longer period of time. And when you look at a longer period of time, there are efficiencies that we develop, partly because of the operational efficiencies and partly because of the improvement and the technological interventions that we bring in. So in certain cases, once we are there and there is an efficiency that we've built, there is a gain share that the client expects. So the price point tends to go down. So from a market perspective, we always keep ourselves competitive within the market range. And that is where we keep working on our technology front and bringing from a market perspective how competitive we are. Price point also, while there are certain services that we sell at a premium, but if it is a plain vanilla Fero, depending on the client complexity, the price will be within the market range.

What did you do? Would it be fair to assume that this would be closer to that because of these efficiencies, clients are asking us to pass on some of the benefits to them.

Yes, see, there is always a game share, Madhu, when you look at an efficiency, you know, this is not a, you know, it's a very transparent operation when it comes to the payroll processing from a client perspective. So, the client teams are actively involved, they are aware of our efforts, and they are aware of our technology, and also once, you know, the operation stabilizes, you know, it becomes a simple, straightforward process in most of the cases. So, in those cases, there are certain efficiencies that they expect in terms of transaction pricing. But at the same time, there are more opportunities in terms of the other services. Now, with our latest products, we can start pouring into the HCM part while we always had HCM. Now, HCM in terms of a SaaS platform, the analytics platform. So, constantly, the business endeavor would be to look at how we can sell more services Rather than looking at, you know, trying to maintain the price point or increase the price point of the existing transaction business.

Understood. So we've been trying to add on new modules or we have been trying to improve our product, I think, or add new modules or increase some features in our product. I think since the time I'm tracking your business and also I think in AGM we mentioned that we've done partnership with other SaaS companies like Workday and Tax Panel. So, how should we look at revenue per client or revenue extraction per client by AllDigi going forward? And a sub-question would be, sir, there has been, I think, talks about integration of national pension scheme to the payroll and HR platform. So, how does this opportunity translate to AllDigi, if you can help us understand?

Sure. I'll start with a question on the platform, Madhuso, on the, sorry, on the partnerships. So, you spoke about birthday and tax banner. So, tax banner is already live. However, you know, we got a bit late in terms of the previous financial year. So, you know, it was just early lukewarm response that we had last year. But this year, you know, we should be able to capitalize on it. Given that, you know, I have close to about, you know, more than, you know, 10 to 12 lakh employees in India, we will try and target in terms of how many employees can use, you know, tax planner in terms of the IT returns that they can file. So I don't have a guidance specifically in terms of what is the revenue, but as such, you know, it is a complementary services that we add, which is non-computing with that. So it enhances the product attraction, and also we give a discount to the employees if they choose AldiG as a channel partner in terms of approaching TaxPanner. So we'll be able to comment on what would be the revenues that we'll see after the Q4 of this year on the TaxPanner part. But currently, we are looking at international incomes that they have if there are employees who fall into that category that they can declare using TaxPanner. So we're constantly looking at how many more services that complement our services that we can add using TaxPanner, but it is an established partnership that we have, which is already live as of last year on TaxPanner. On birthday, we already have the silver certification. We are currently undergoing the design badge. So the design badge is something which should be completed by the middle of November. Once we do that, Again, there are two aspects in terms of revenue that we need to look at from a Workday certification. One is any of my existing clients or a newer client in the market who is using Workday as an HRIS, we become very attractive in terms of competitiveness because we already have a certified connection that we can use, which means it is going to reduce my onboarding time and also it is going to increase my efficiency. In terms of onboarding cost. One of the alternative revenue streams that we can look at is in case if there are customers who have worked here as an HRIS, but for any reason they choose to use another payroll platform, but they're only looking at basically the connector building as a service, that's something which we can look at. Currently, we haven't entered into a sales initiative on that particular aspect. We'll wait for the certification to get over. I have about four clients who are with me currently, who are in the pipeline to get Workday connectors implemented. Based on that success rate, we looked at if we can foray into only doing the connections part as well. Currently, Workday is more a complementary service that I have, which makes me more competitive in the market, And also, it reduces the cost, which will be on a game-share basis between the customer and all Digitech. So that's from the platforms.

Perfect. Sir, just with all these initiatives, what would be the fair assumption of growing our tech and digital business maybe over the next three years? And sir, on the NPS integration with these HR payroll and payroll processing platforms, sir, do we think that can this become like a 401k account in the US or how should I look at this integration? Or is it just in the ideation stage right now, and it might be time before something actually translates to a revenue for us?

Okay. So, see, in terms of the growth rate, if you ask for the next three years term, again, we should look at an early double-digit growth specifically as a TNDSS segment. That's the guidance or the strategy that we are working towards. All of the initiatives that we've taken from building our products, the partnership ecosystem, the sales engine, the marketing aspects is something which is directed towards that. In terms of your NPS integration, it's too early to say how the response is going to be. The 401k, you know, comparison to U.S. would not be an Apple-to-Apple comparison because that has been a very long existing process, and it is at a different scale. So, if you ask me, 401k benefit is an entire industry and a service by itself in the U.S. Maybe NPS can go there, but it is too early to comment. We'll have to see the fine print in terms of how this needs to be implemented and what is going to be the adoption from an Indian employee's perspective.

Got it, sir. Sir, just one question, rather bookkeeping question, sir. If I look at our ROU asset, they have increased from, I think, 50-60 crores to closer to 140-150 crores right now, sir. So, I understand that we have taken new offices. So, what kind of lease liability payments do we expect on an annual basis for FY27 and FY28, if you can help me understand?

Yeah, so I think we are not expecting, you know, that this can increase in the lease payments as we move forward, because, you know, because why the ROUs have increased is because we have replaced the old office with the new office, basically, right, and the new office comes with the larger date of commitment, and therefore you see the RU access of the library is increasing, But from the overall lease payment perspective, we see, you know, at par what we have been doing so far.

So, we paid close to 35 crores in FY26. Is that a fair base to take for FY27 as well?

I think that would be the fair base. It can actually be a little down as we continue to optimize in terms of resources, etc. However, having said this, it all depends as to what is the kind of new business that we get and how much new leads we may have to take if we have to extend quite, you know, highly. But the current guidance, this is the current leads that we have. I think we're going to be in the range now.

Sir, thank you so much and all the best.

Thank you.

Thank you. Ladies and gentlemen, anyone who wishes to ask a question may press star and 1 on the touchstone telephone. As there are no further questions from the participants, The next question is from the line of Simran Thakkar from Bees Capital Limited. Please go ahead.

Thank you for taking the question. So my question is on those standalone receivables, which rose around 46% in six months.

Sorry, we cannot hear you clearly.

Ma'am, could you please repeat your question? Yeah, sure. Am I audible now? Okay, so my question goes like this. On the standalone receivables, which rose to close to 46% in six months, so could you please throw some light on this particular thing?

Yeah, so our receivables continue to be, you know, improving because if you see our DSOs have also, you know, reduced as compared to last quarter. As we continue to exercise, you know, receiving money on time and continue to review our contract as to how we can make the overall DSOs reduced from that perspective. Any changes, for example, at a stand volume basis may also be a matter of timing, but at the overall level, we continue to reduce our DSOs and the retrieval as we progress.

I also wanted to understand the segment results which are totaling to 35.8 crores, while our reported EBITDA is around 46 crores. Am I missing on something over here, not able to connect through the bridge?

Can you come in, please?

Yeah, sure. So, segment results, both the tech digital and your BPM, consolidates to 35.8 crore, adds up to 35.8 crore, while our reported bidder comes to 46.3 crore. So, what's the bridge over here? Is it something unallocated corporate costs or some additional?

The segment margins are not the EBITDA. The segment margins are basically the margins that are reported PBT minus finance cost and depreciation or other things or unrelated costs. So I don't think there is a clear comparison that you can drive between the EBITDA and the reported margin, which is basically the aspect that we do.

I understand so. Right. Sir, last question on the ACV and revenue that you mentioned of 37.2 odd crores,

which are probably led by the

two large deal wins. So, could you just detail out what are the deals like and how long are the contracts? When does the revenue start coming onto the P&L? And what would be the margins like? Thank you.

So, I'll take that question. 37.2 is a combination of my BPM and Tech and Digital. On the Tech and Digital, I have one deal, which is basically a euro client that we look at, which is about close to 7 crores. This is a multi-year contract, which is on auto-renewal because T&D, and T&D typically works that way. It doesn't have periods that we look at. And here, it's the segment margins that we follow. So typically, we'll be looking at somewhere about a 60% plus gross margin on this deal. And on the other deal, you know, that's about close to... Thank you. Yeah, so the other one is about 16.8 crores, you know, which is basically the BOT model that we looked at. From a BOT model, the current, you know, contractual timeline that we have is about two quarters, but, you know, as I said, you know, this has a potential to grow because their ultimate aim is to look at about four times the current commitment that they've given to us. As we speak, constantly we are in touch with them, and the numbers are increasing on a day-by-day basis. So this is the period you can consider to be less than a year, but this is huge numbers to the tune of about 3,000 to 4,000 FTEs that we are talking about.

I understand, though. Sure. Thank you so much for the...

Thank you. Thank you, Simran.

Thank you. We have the next follow-up question from the line of Raghuram from Yorinda Ventures. Please go ahead.

Nat, I just wanted to clarify on the question that the previous person also had. There is a significant increase in the trade receivables, if you look at even from a consolidated number-wise. It was at about 69 crores at the end of March, whereas it has nearly gone up about 80 crores at the end of September. One can clearly see that this is a result of the business acceleration. Because you have very clearly mentioned that the number of days receivable has also commensurately gone down from 77 to 74. So if you can help us with what kind of a run rate did we exit Q2 with, that will help us reconcile this increase in trade receivables.

Yes. See, the trade receivable here, what you see are the billed receivables, basically, right? And it is also a factor of the accrual, wherein, you know, while you have delivered the services, you are not supposed to bill because there are contractual obligations and the milestones then you can bill. So, the data also reflects, you know, the higher unbuild in the quarter 4 versus the quarter 2 that we have now, because we have been, you know, completing those projects and getting that built. So, I think that is the last part. Otherwise, from the operational perspective, our retrievals are fully under control, and, in fact, our DFO days are going to decrease further. Here we progress.

Yeah, Manish, I was coming from that perspective only. Clearly, the receivable days are, we are not doubting any of those kind of things, but I was just coming from more a perspective of... What kind of a business or run rate growth has the business seen in the last couple of months of the quarter? Because if that is the case, then obviously your business, the DSO days would have been anywhere lower. But because the business has accelerated in the last one or two months of the quarter, then obviously the trade receivables will be slightly higher. That was what, that was the... Think from where I was coming. So it's fine. Maybe we will have a, this is typically a lead indicator of a business which is accelerating.

Yes, Raghu, you are absolutely right. Both the factors are in play. One, you know, the acceleration in the business. Of course, that leads to, you know, higher receivers. The second point is also what I talked about. We've been, you know, converting what were unbuilt to the built, and therefore, you know, more receivers, and we continue to receive those money as we progress. Because the way we report Raghu our DSOs is built plus unbuilt together.

I understand. I understand. No, very helpful, Manish. Thank you so much. I just wanted to clarify on that. That's all. Sure. Thank you. Thank you.

Thank you. As there are no further questions from the participants, I now hand the conference over to Mr. Natarajan Lakshman for closing comments.

Thank you, everyone, for your time and participation today. We are encouraged by our Q2 performance and the progress we've made across our key business and strategic priorities. With continued investments in our core business, international sales capability, AI, and technology platform, we believe we are well positioned to capture future growth opportunities. Our focus remains on delivering sustainable growth, strong operational performance, and long-term value for our shareholders. I'd like to thank our customers for their continued trust, our employees for their commitment, and our shareholders for their continued support. Thank you once again. We look forward to interacting with you again next time. Thank you.

Thank you.

Thank you.

On behalf of all DT Tech Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.