Xtglobal Infotech Limited (XTGLOBAL) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to XT Global InfoTech Limited Q1FI27 Earnings Conference Call, hosted by Rick Capital. We have with us today from the XT Global InfoTech Limited Management, Mr. Ramarav Malapudi, CEO, President, and Director, Mr. Raghuram Kusuluri, Chief Financial Officer, Mr. Sridhar Pentela, Company Secretary and Compliance Officer. 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 and then zero on your touch-tone phone. Please note that this conference is being recorded. Before we proceed with this call, I would like to take this opportunity to remind everyone about the disclaimer related to this conference call. Today's discussion may be forward-looking in nature based on management's current beliefs and expectations. It must be viewed in conjunction with the risks that our business faces that could cause our future results, performance, or achievements to differ significantly from what may be expressed or implied by such forward-looking statements. I now hand the conference over to Mr. Aguram Khusuluri, Chief Financial Officer, for opening remarks. Thank you, and over to you, sir.

Thank you. Good evening, everyone, and thank you for joining the XT Global InfoTech Limited Q1 Financial Year 2627 earnings conference call. We appreciate your time and continued interest in the company. I first say you have had an opportunity to review our financial results, press release, and the investor presentation for the quarter ended June 30th, 2026. which have been made available through the stock exchanges and our company's website. Q1 marked the beginning of new financial year with a steady operating performance. During the quarter, we continued to broaden our client base across our finance and accounting services and IT services businesses, while also making progress in expanding our presence across of international markets. We also continue to focus on delivery capabilities and operational discipline as we develop our business across these areas. In the discussion today, I will briefly touch upon the operating environment during the quarter, followed by an update on our business developments. With that, let me begin with the broader economic and industry environment. The global technology services environment during the first quarter of financial year 27 remained measured with the businesses continuing to assess technology, spending against a backdrop of macroeconomic uncertainty, geopolitical developments, and changing priorities around technology investments. Across the IT services industry, the quarter reflected a cautious demand environment. Clients remained selective and discretionary technology spending, while decision-making cycles for certain projects continued to take longer. At the same time, enterprises continued to prioritize initiatives. Let's evaluate how emerging technologies... Thank you very much. Operational performance during the quarter, we continue to focus on broadening our client. and accounting services capabilities across multiple cities. The United States. We have entered the Irish market through our first finance and accounting outsourcing engagement. The engagement involves establishing an offshore finance support function from our India delivery centers, covering areas such as management, accounting, and accounting. In fact, please. I was focused on adding new clients. We will take you through our financial performance for the quarter and end June 30th, 2026. On a standalone basis, revenue from operations stood at 19.19 crore, representing 8% year-on-year increase. And every day, it was... For the quarter was 40. Representing a year-on-year growth of 571 BPS. And earnings before interest and tax stood at 3.08 crore, up by 75.6% year-on-year, with margins at 16%. Human profit after tax for the quarter was 1.8. After-tax margin stood at 9.5% up 474 BPSC run here during the quarter. Moving to consolidated performance, revenue increased to 93.30 crore. 26, representing a 1.1% Iranian increase and a quarter-on-quarter basis revenue increased by 4.2%. Consolidated EBITDA increased to 7.06 crore. One person. Consolidated, that means the foreign interest. 25.2% Thank you. Profit after tax margin remain broadly stable at 4.2%. Overall, the financial performance during the quarter reflects a combination of modest top-line ...frequential improvement in consolidated... Thank you. Our focus remains on maintaining this operating discipline while continuing to develop the underlying business across our service lines and the geographies. With this, I would like to conclude and work with the call.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and then one on their touchstone phone. If you wish to remove yourself from the question queue, you may press star and then two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Again, participants to register for a question. You may please press star and 1 now. Your first question comes from the line of Rishabh Sharma with BP Capital. Please go ahead.

Hello. Am I allowed?

Yes.

Thank you, Robert, sir.

Rishab, sir, you are not audible now?

Am I audible now?

This is much better. Please go ahead.

How does the management see fast evolving as the key growth engine, particularly across the international market?

This is Rama. Basically, what we are looking at, as we said, our CF program informed us we have about our steel market and Ireland Europe market that we are focusing on. We believe that next year the focus on our steel and Ireland will be high, and then we expect it to be getting into the million dollars, both local currencies, over the next year.

So, sir, how much percentage of revenue will you be expecting from?

So, the next year, what we see is that it could be depending, right now, we are about, like, less than 10%, I would say, for the next couple of years, for sure, is what would be, because given the current revenue. Total, yeah.

And, sir, are our APC areas, AI, cloud, automation, or digital transformation?

So, we see a lot of growth right now in the AI and cloud technologies, based on recently, we are getting into U.S. government projects, which we were not before. We were mainly focused on private sector until last year or the last quarter. Now, we won a couple of... You are not like a general admission into a couple of government contracts right now. So we still have to win the particular RFP thing, but we are generally into the system. So we expect to see growth in public sector as well in the U.S. at this point of time, in these technologies, modern technologies.

Any more U.S. contracts in the pipeline along with expected revenue and current quarter offline?

Yes, we do have, we recently actually is part of this quarter, but we are, we got admitted into general bidding for a couple of state sectors. So, we still have to... Participates in individual RFPs, but we see that as a growth opportunity that we would be seeing in the near future, that our revenues in U.S. will grow in that sector for these markets.

Okay, understood. Thank you, sir.

A reminder to all the participants, if you wish to ask a question, you may press star and then one. The next question comes from the line of Omkar Moreh, an individual investor. Please go ahead. Hello.

My question is, what is the applicable strategy to the relationship and increase wallet share with existing global clients?

Can you repeat that, please?

I was a little audible. What is the global strategy to deeply relationship and increase wallet share with existing global clients?

Yes. So right now until last year, right, or major revenue is coming from existing U.S. revenue. And the major clients, especially on the product revenue right now, we are about... Like on the AP products side, where about 15% to 20% of revenue is coming from directly a SaaS AP product, that is based on their volumes is naturally getting increased in that revenue, as well as we hide, yeah. So for the other clients, right, we see we actually added one client. A couple of clients just started using us, and we believe that is going to grow a lot about the next year or so. Similarly, our focus, still a few of the existing clients, we are increasing incremental revenue on them as well. And we are adding new clients, obviously.

My second question is, how does management plan to build scale in US and Europe markets, particularly following recent client addition?

For the U.S., right, we have our sales team sits in U.S., so we see, based on the public sector that I was answering the previous question, right, that is a segment that we never focused earlier. We are seeing a lot of traction in there. That revenue will be naturally risen, and this is more of a revenue in U.S., delivery in U.S., so the revenue percentage will be high. In the U.S., because earlier, whatever we did last three years, major stuff is off-shore. And Europe also, we just started, right? We just added our first client in Ireland.

If you wish to ask a question, you may press star and 1 now. Ask a question. You may press star and one on your touchtone phone. This comes from the line of Sahil Gupta, an individual investor. Please go ahead. Yes, sir, please go ahead with your question.

My question is, how does management see GCC engagement involving some initial teams building into larger long-term strategic relations with BitLine?

Yes, so we are seeing, like in GCC, one of our focus, because of our infrastructure ability and the structure that we have in place, we are targeting GCC customers in mid-market segment right now, and most of the mid-market that we are talking, they wanted to start with a few resources or a small team to begin with, and then once they understand the delivery and then their internal processes, slowly adapt to a bigger set of team. We are in the process of acquiring the GCC customers. When we say GCC, either with a small team, with three to five members, it can go up to 50 members, right? But that's one of the areas that we are focusing to address mainly in the U.S. market right now. And we see that that's an ongoing process for us.

A reminder to all the participants if you wish to register for a question, you may press star and then 1. Participants to ask a question, please press star and one now. Our next follow-up question comes from the line of Rishabh Sharma with VP Capital. Please go ahead. Rishabh, your line is unmuted. Please proceed with your question.

Sir, my question is on consolidated revenue. So, it grew only by 1.1% year on year. So, what is your outlook on this?

In fact, there is an increase, but there is a shift happened from on-site to offshore. In fact, there is an increase in client base. Suppose if you are building an on-site resource at $70, we have to build the same at $35 in India when we do offshore. So, in fact, that is the difference. Otherwise, in fact, in real terms, we are going, but when you compare that exact numbers. That is the difference, actually. So the shift is happening because of this H1 and other things. So because of a lot of these curbs and H1, we, in fact, we started long back from onside to offshore. So that is the difference.

Most of them consolidated every time. It has been improved to 7.6%. So, how sustainable is this number?

Yes, that number is true, actually, because the expense is also drastically reduced. When it comes to onsite versus offshore, the offshore margin will be higher, even though the revenue is halved, but the profit margin will definitely increase when compared to onsite versus offshore. The resources are cheaper here when compared to onsite.

That is sustainable. So, the strategic plan, which specifically calls for the improved service mix and expanding recurring revenue systems. So, which services currently offer the highest margin?

Yeah, our product and both finance and accounting services.

Give me both.

The product, we have a 25% margin, 25% out of our total revenue, 25% is product, and around 14% is coming from finance and accounting services. Those are recurring in nature. And they keep on adding resources. Suppose if you're starting with one resource for one of our clients. For finance accounts, they will keep on adding resources. Initially, they will start outsourcing that accounts payable, and they will add accounts receivable, and R to R, like that. For example, for particular clients, we started with one resource. Now, we are serving for 10. That is recurring, actually.

And to add to Raghuram's call, right, so we have our circular product, which is a conspial automation product, that once the customer signs up and starts utilizing, we usually see long-term engagements, and the profit margin is very sustainable, and that's a good way that's helping us grow the profit as well on the product side.

Are you planning on giving the dividend this quarter, this financial year?

Yeah, this year we think about, but next quarter maybe we'll consider once we declare the results, right, that's what we would.

Thank you, sir, and all the rest.

Thank you. Thank you. Participants, to ask a question, you may press star and then one. To ask a question, you may press star and then one now. No further questions from the participants. I now hand the conference over to the management for closing comments. Over to you, sir. Thank you.

Thank you all, and I would like to extend my sincere gratitude to our Board of Directors for their invaluable guidance, our employees for their continued dedication, our customers for their trust, and our shareholders for their steadfast support. Thank you, everyone.

Thank you, members of the management. On behalf of XT Global InfoTech Limited, yes, thank you, sir. On behalf of XT Global InfoTech Limited, that concludes this conference. Thank you, everyone, for joining us, and you may now disconnect your lines. Thank you. Thank you so much.