E2E Networks Limited (E2E) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good evening, and welcome to the E2E Networks Limited Q2F527 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 and then zero on your touchtone phone. I now hand the conference over to Ms. Vanessa Fernandez from Investor Relations Team at AdFactors TR. Thank you, and over to you, Vanessa.

Thank you, Myril. Good evening, everyone. On behalf of E2E Networks Limited, I would like to welcome you all to the earnings conference call for the second quarter of FI 2027. Today on the call, we have the touch from the management, Mr. Taranduwa, Managing Director of E2E Networks, and Mr. Nitin Jain, Chief Financial Officer of E2E Networks. We will begin the call with brief opening remarks from the management, followed by a Q&A session. All participant lines will be in listen-only mode during the management's remarks, and the floor will be open for questions thereafter. Please note that certain statements made during this call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties that could cause actual results or projections to differ materially from those statements. E2E Networks will hold no responsibility for any actions taken based on such statements and undertakes no obligation to publicly update these forward-looking statements. I now hand over the call to Mr. Tarun Dua for his opening remarks. Over to you, Tarun.

Hi, everyone. Thanks for joining us today in our second quarter earnings call for FY27. This has been another strong quarter for E2 Networks, where we have continued executing similar to the previous quarter, and this is still like day zero of AI for us, as far as we can see, and I would like to kind of like give a brief update on in the previous quarter. So, like, we signed, like, a nearly 1,000 crore deal with, like, a sovereign AI company for the Blackpool cluster, which lasts us until, like, June 2029. So, this is something that improves the long-term revenue visibility and validates E2's ability to transition the deployed capacity from a ASU model to a longer-term commitment.

So, apart

from this, this quarter, we have really focused on increasing the talent density within E2E in all areas of execution. So, we have like a new chief revenue officer. We have also added like a team to the founder's office. We also have, like, a field CTO to kind of, like, help our customers understand our solutions better. And all of this brings, like, a lot of net new experience from the industry in, like, various facets of the industry. So, essentially, like, that's the management and leadership team, where, like, it primes us for the next phase of growth. Now, apart from the inside talent within E2E, like, we have also concerned our strategic advisory team, so, which now, where we would like to welcome Mr. Anandamoy Roy as a strategic So, Roy has been, like, a part of the tech ecosystem of India for a very, very long time, and essentially, like, he brings, like, a lot of deep-rooted knowledge of how AI is being applied into the new ecosystem that is getting built, and his experience and perspectives, like, would be really valuable in helping us identify, like, very many opportunities. And this will help shape our long-term growth strategy as well. Now, we continue to invest very rapidly into our sovereign AI platforms, both on the side of Keeve and on the side of Jarvis. And, like, what I believe is that, like, the platform is the key to our future growth. So, we're essentially, like, that allows us to operate as a full stack layer, where we kind of, like, manage all parts of the sovereign AI multiple layers for our customers. And that allows them to use our GPU platform with confidence for not just training, but also inference and the upcoming identificed workload. And this, of course, requires some part of our GPUs to be used by our own teams rather than being completely pulled out to end customers. And this is something that allows us to kind of, like, go forward in the future with boldness. So now, finally, about, like, the future growth, like, we have always maintained that, like, we will continue to be both aggressive as well as potential in terms of our KPEX deployment. Now, we do not, like, give a speculative KPEX guidance, and what we prefer to kind of, like, inform everyone in the office, then we have, like, sufficiently certified and solidified our deployment plan. So that's when we talk about, like, yeah, this is the potential KPEX deployment upgrade that we are working on. So, like, once it rectifies, that's when we talk about it. Now, I would like to hand over the conversation to our CFO, Mr. Nitin. He can talk about, like, the, some of the recent financial related updates for the last quarter. Over to you, Nitin.

Thank you, Tarun. Good evening, everyone, and thank you for joining us today. I will walk you through our financial performance for the second quarter and first half of FY2027. Q2 FY2027 has been another strong quarter for E2E Networks. Revenue for the quarter stands at $2 to $38 million, which is up by 411% year-on-year and 43% quarter-on-quarter. EBITDA stood at $17-15 million, up 45% quarter-on-quarter, with margin expanding to 76.6%, EBITDA margin expanded by 141 basis-wise, compared to Q1 FY27. Profit before tax clocked at $971 million compared to $586 million in Q1, an increase of 66%. Pat stood at $727 million compared to $439 million in Q1, with pat margin improving to 32.5% from 28%. Diluted EPS stands at 3.48 compared to 2.1 in Q1. The performance is given by contribution from the Blackwell GPU, better utilization, and higher average utilization across the GPU. H1 FY27, revenue is 3805 million, which is up by 376% year-on-year. EBITDA stands at 2894 million at 96%, which is 2.3 times for the full-year FY26 EBITDA. PBT stands at $15.58 million compared to a loss of $2.22 million in H-120 F-536, and PAT stands at $116 million compared to a loss of $163 million in H-120 F-536. Now I would hand it over back to the moderator for the question-answer session.

Thank you. We will now begin the question-answer session. Anyone who wishes to ask a question may press star and 1 on your touch-tone phone. If you wish to remove yourself from the question queue, you may press star and two. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. Participants are requested to kindly restrict their questions to one main question and a follow-up to maintain equal opportunity.

We have the first question from Lion of Keshav.

The question is to please go ahead with your question.

So, congratulations on the great quarter, like, two questions, like, are we expected to live, basically go live with our next B200 that were planned originally, and then we can expect the revenue to be started from that?

Yes, so the next slot of B200, which we have already announced, is expected to go live this quarter.

So, hopefully soon, and like when it goes live, obviously, we'll keep everybody informed. Can you hear us, Keshav? As zero response, we move on to the next question.

We have the next question from the line of Bharat Gulati from Daladan Brocha. Please go ahead. Yeah, hi, Tarun.

Hi, hi, Tarun, sir. Thank you for the opportunity. Okay. Just a question on the 1,000 crore contract. In the current 75 crore MRR, how much would be the contribution of the 1,000 crore contract? And you mentioned that the B200 has been multi-year contracted for the order. So, is this the existing B200 or is it going to be both the batches of B200?

This is the existing B200, which was converted from, say, as you go to, like, a multi-year contract. Now, exact contribution would vary based on the usage, but, like, obviously, it's easy to calculate, like, close enough by looking at the 1,000 crore number and the time period.

So, has the entire, I mean, is the MRR completely based on the 1,000 crore contract right now, or is there some incremental MRR still to come?

See, like, I don't know how to answer that question. Like, so, basically, like, you are asking a question about, like, a future that I cannot predict.

Got that, got that. Okay. And just on the gross margin, sir, we've been calling out that 85% gross margins is where we'll be, but we've significantly beaten that this quarter. So how sustainable is this 88% margin? And just on the operating costs also, I understand we've made some investment in people, but where do we see absolute operating costs moving going forward? You know, it's 18 crores for this quarter. So if you can just throw some light on.

I'm not sure about, like, the 85% number, like, basically, like, see, overall, like, we are looking at this as a 70% to, like, 70% plus kind of, like, in a bigger margin as well. So, essentially, that's what we feel is the medium-term and the long-term.

Got it, got it, sir. And just if I can squeeze in one last question, in terms of guidance, any exit guidance in terms of MRR you want to give for this year?

We don't give any guidance. We always look back at what we have done rather than giving it.

Got it, sir, got it. Thank you. That's it for myself.

Thank you, Mr. Buraki. Thanks, Buraki. We have the next question on the line of Keshav from Nivishai. Please go ahead.

So, when should we expect the increase in GPU pricing to show up in the revenue? I mean, from the past six months, we have seen globally that the GPU's prices have been increased. So, when should we expect that to be reflected in the MRR? I mean, when the contract gets renewed.

See, as a company, obviously, we have multiple goals, which have to draw a balance between like basically like quarter and quarter performance and also our long term. Now, from the point of view of long term, like we want to obviously have like a very good relationship with all And which also means that we honor our commitment to our customers, whether contracted or whether verbal. So in terms of like what they expect from us. And second part is that like we are heavily investing into our platform. Now, on our platform, of course, like the increase in talent density, both on the engineering and non-engineering side help. And apart from that, like, obviously, a big part of, like, build-out of our platform also requires that, like, we be able to use our own GPUs for our own product development and not just be, like, a plain seller of all the capacity that we have. So, obviously, we want to heavily invest into R&D for helping in build out of our platform. And any kind of R&D effort today, obviously, involves necessarily using GPUs. So, that's also an investment into the future. Now, that being said, again, we don't want to ever give a future guidance, even if it is, whether it is far into the future or whether it is for the next quarter, but as we kind of go forward, obviously, for uncontracted capacity or short-term contracted capacity, we obviously expect the earnings to grow from the same assets that we have.

Got it. And one just last question, like, do I see the, you know, inference demand to be going on platform and, you know, maybe it started contributing to E2E revenue?

Sorry, you're talking about what's the contribution of, like, inference?

Inference, inference, yeah.

See, we look at the whole set of services as an overall whole, rather than like looking functionally at like, oh, revenue is coming from inference or training or storage or CPU running agent. And so, we would continue to look at like the overall picture as opposed to kind of like breaking down things into numbers because quarter-on-quarter all the numbers are subject to like potentially massive changes. So, any percentage we quote like we want to make sure that like that is something which is actually tractable and which is not like very ephemeral Right in time, that doesn't really help in terms of building an improved analysis around E2E.

Got it. Thank you. I will come back with you. Yeah.

Thanks. Thank you. We have the next question on the line of Harsha from Seven Rivers Holding. Please go ahead. Yeah. Hi, Harsha. Please go ahead.

Hi. Hi, Tarunji. Sir, my first question is on the second tranche of V200. I'm just going through the balance sheet and couldn't spot any advances that we might have faced. So, is there any delay out there? And I want to understand, what would be the rate at which these would be deployed? I believe the deployment is already committed. So, would it be at a similar rate at which we have deployed the 1,000 crore first tranche B100 or would it be higher or lower if you can, you know, give some indication here?

See, certainly, our goal would be to make a somewhat higher amount of money. But like I said, let's see, the long-term strategy of the company is not dependent on, like, oh, can we make, like, a few cents more or a few percentage points more from same set of GPUs. The long-term strategy is to kind of, like, make money by building more technology, and then the resulting growth is, like, a result of our advances in technology and customer adoption of our technology. So, like, we start looking at it from the other side, where we say that, like, the asset growth is a result of, kind of, like, growth of success of our technology rather than the other way off. I hope I am able to point you in the right direction over here.

Yeah, yeah, to an extent.

Essentially what I'm saying is that, like, let's not simply look at, like, the numbers, oh, in terms of, like, looking at GPUs as, like, a car-like asset, like, oh, can you make, like, somewhat more rental from the GPU? Like, essentially, GPUs are a means to an end. Essentially, the idea over here is to get, like, one, of course, the domestic market to adopt our technology, and second, of course, to get our technology adopted, like, at a global scale. So the idea is not to kind of, like, run after short-term high hourly numbers on the GCU. The numbers, like, would be a result of, like, when our technology gets more adoption and not the other way around.

Sure, sure. And, sir, in Q2, how much revenue came from India AI mission? And are we expecting any renewals from those contracts to be happening at better spot rates going forward?

See, we continue to

engage with NDII mission, where, like, essentially the goal is to kind of, like, build relationships with various types of customers who will potentially continue to work with us beyond the limit of NDII mission as well. And regarding, like, numbers in the previous quarter related to NDII mission, I guess, like, Nitin can give, like, a better approximate answer about, like, what sort of revenue we earned from NDII mission-related services.

Yeah, so for the quarter, the revenue from NDII customer is roughly around 13% to 15%.

Okay, and slap in for FY28 and FY29. Just a follow-up, just a follow-up to previous ones. So for FY28 and FY29, how does the allotment visibility look for maybe next slot of B300s or Vera Rubin?

See, hard to predict the future, right? Basically, we will take the future as it comes.

Sure, I mean, can we take 2000 GPUs per annum as a base case for next three years?

See, we never make any forward-looking predictions. So, essentially, let's wait for us to kind of like clarify our plans and then inform like everyone at the same time that like what's the plan going forward with regards to the increased effects and deployments, et cetera.

Sure, thank you. Thank you. We have the next question from Vainabh Bhavya Gandhi from Bajaj Alternative Investments. Please go ahead. Yeah, hi, hi. Hi, Taranji.

I'm out of the way. Yes, we are out of the way.

Yeah, yeah. First question is regarding what sort of debt levels you are comfortable with and anything on the 1,500 crore enabling resolution for the fundraise that you've taken. And the second question is regarding what is the international revenue mix and what is the contracted revenue as a percentage of overall revenue? Yeah, those are the two questions.

See, I think, like, from a capital deployment perspective, like, obviously, we'll keep everyone informed in case, like, there is any future equity risk. So, regarding debt, like, basically, like, I think it's also a function of, like, our own ability to repay the debt more than anything else. So, there is no mental limit of, like, what can be the debt. Of course, there are, like, always provenance from lenders with regard to, like, what you can do at a given point of time or not. Now, there was another question related to, can you repeat the third question that you have? Sure, sure, sure.

If you can. Yeah, yeah. Perfect. But at what levels you'll be comfortable as a business?

We are very comfortable with debt as long as we have the ability to repay. So we have like a upper limit defined for ourselves that, okay, we can't go beyond this on debt or anything like that. So as long as we are comfortable with debt. Right.

Right. I was asking you about the international revenue mix and how much is the contracted revenue in the overall revenue by, yeah, that's a point.

Can I let Nitin answer the number of similar questions?

Yeah, that is one more question regarding the asset light model, if at all you are evaluating and if you can highlight what is your view on that before we go to Nitin, yeah.

Basically, this is a massive amount of AI build-out. Now, in an AI build-out play, essentially, we are not able to any kind of capital deployment that can essentially help us advance our technology adoption forward.

Sure, sure, sure.

Okay, and if you can, Nitin can answer the balance question, yeah.

So, in terms of the international revenue, which range from roughly around 20 to 25% of the revenue for the quarter, is coming from the international customer.

And contracted revenue as a percentage of the overall revenue?

I think mix of long-term versus a short-term. Currently, our size is small to sharing a point-in-time information, and these numbers would change dramatically.

And that also applies to the international numbers. So, like, on percentage numbers we are looking at in the previous quarter, like, for quarter-on-quarter numbers, like, essentially are not, like, really trackable metrics. Like, they are subject to, like, wild things is what I would, like, assume.

Got it. But just as a 100, if 100 is the total revenue, what would be the contracted revenue that you'll be targeting just to get a flavor of annuity?

There is no specific target in our mind. I think it's a more of a tactical question which needs to be answered in multiple steps, which we kind of keep changing. So, like, there are, like, there's so many considerations over there, like, so where you can't, like, really say that, yeah, like, whether, like, you will target, like, a particular percentage of the contracted revenue. So, that's not a fixed number in our mind today. Got it.

Thank you so much, and wish you all the best for the future. Thank you.

Thank you, Vishal Gandhi. We have the next question from the line of Tushar Donde from Sanghi Family Office. Please go ahead.

Hello. Hi, team. Congratulations on a good execution. Two questions. I guess first question was answered partially. That was on the pricing. The other half of the second question, first question was of the utilization. What sort of utilization levels we are in, and what sort of utilizations we plan to target? That's first. And second one was on the TIR platform that we have. I wanted to understand how is the customer engagement we are having in the TR platform, and what sort of competitive intensity are we seeing in this particular space? Like, are the global cloud operators having similar offerings, and we compete with them, or we have a good product offering which is easily adaptable to the customer?

Okay, so that's a lot of questions. So, I only remember the last one. So, from a platform perspective, I would like to think that basically like whatever we are building over here in India is like world class and can be globally adopted. That's what I would like to think. Now, the proof of the flooding lies in eating. So basically, like the platform, obviously, the success of the platform shows up over a period of time, like over the medium term. So very, very hard to kind of like say that, oh, this is like better than X, Y or Z today. It's a moving target. So, as the field of AI advances very rapidly, like, we need to build up our own pace of, like, keeping up with the latest, latest technology, and key complementing, like, whatever is the latest thinking in terms of, like, how our customers are going to use AI. And I think that is what leads to the eventual platform as a product success. So I think like the jury for that should be held till like, I think like the medium term. That's what I would like to think. Again, from a utilization standpoint, like I think it's a point in time number shouldn't really matter. Like, what really matters is that, like, at an aggregate level, what's the realization on the entire set of assets, rather than, like, slicing and dicing and looking at, like, okay, this asset produced X, this asset produced Y, and so on. So, like, the sources of revenue within, like, an overall platform can widely vary between one customer to another customer. So, some customer will pay for X, some customer will value Y more, they would pay for Y. So, essentially, like, what I believe is that, like, utilization, while it is a good metric to track assets which can produce very consistent sets of average revenue, in case of a technology product, I think the variation is too high to say that, like, utilization is the right metric. So, somewhere we feel that, like, the better metric over there is the overall realization across the entire fleet, rather than looking at, like, the utilization metrics in terms of either the hours, GPU hours utilized across the fleet, or what number of GPUs were, like, idle, and so on. Like, I mean, sure, we are using, like, our GPUs for, like, a lot of what is not immediate revenue requirement, but

that was required for, like, building up our product. I hope I'm able to get this across.

Yes, yes, yes.

Thank you. We have our next question from the line of Hitesh from research. Please go ahead. Hello. Yes, Hitesh, you can go ahead.

Thank you for the opportunity. Sir, I have two questions. So, sir, how do you see E2B evolving in next 18 months in terms of product offering and service offering? And the second question is, are you seeing any demand from global system integrators who are looking after our products for inference because their clients must be demanding for enterprise AI transformation, they must be demanding the GPU services, right?

Okay, so one way to answer that question is that, like, look, we are very small, so we do see, like, all sorts of customers, but, like, today it's not really possible to slice and dice the set of customers we have, because, again, this is, like, very, very point in time over a very small base of the GPUs that we have. So, like, are we talking to GSI? I'm pretty sure that, like, that's, like, a part of, like, our overall sales coverage, where, like, there would be members of our team obviously sticking to GSI. So, what can we say about E2E in over 18 months? I think that's a long period of time. So, basically, like, I think, like, the strategy is flexible in terms of that, like, keep building technology that people want to adopt and keep pushing the envelope in terms of, like, efficiency of our technologies, which lowers the overall cost of ownership for our end customers and kind of, like, keep building things that people value. So, that's the overall strategy over there. And keep having, like, a great team that can kind of, like, implement the strategy. So, that's as simple as that.

And may I just put just a follow-up? So, recently, you have launched a couple of instance-based products, like Blaze, Endpoint, and Jarvis Lab also. So, are you seeing any traction?

I wouldn't say launched as much as, like, basically, like, the release, like, top release. Like, obviously, the official launch might be, like, a few weeks or so away. So, yeah, like, basically, like, that's the general direction we are taking. We are kind of like building a lot of cool things that our customers can adopt and help us learn about what they want to do with their tech that we are building. And as we start seeing substantial adoption that can show up in the volume, we'll start talking more about it.

Okay, thank you.

Thank you. We have the next question. I have Neil Manat from EcoCapital. Please go ahead. Yeah, hi, sir. Hello.

Yeah, please go. Hello. Yeah, am I audible? Yes, yes, you're audible. Please go. Yes, hi, sir. So, my first question is with respect to the current Indian competitive landscape. I mean, we've got one player that has scaled up to 90,000 GPUs, and we've got another very recent entrant that has got, I think, 8,000 Watt B300. So I mean, and this is related to our statements with respect to our platform. So I mean, how do we differentiate from these players when they have already scaled up to these levels? I mean, when do we see a similar kind of scaling up, since we keep pressing about our platform in that sense?

Sure, Neelji. So, let's take a step back. So, I think, like, the overall total addressable market for AI infrastructure alone at a global level, like, we are literally talking about, like, like, over, like, the medium term, like, maybe anywhere close to, like, a trillion dollars of AI infrastructure addressable market. Okay. Now, AI is today like a truly global business. So the GPUs are chasing wherever there is power and wherever there is like availability of like ready to release like what you call land power shell. So essentially, what we are looking at today is like a global marketplace. In the global marketplace, like I think like millions of GPUs are getting deployed like every year. So when we talk about the entire set of GPUs being deployed in India, like, it doesn't change the fundamental equation for us, in terms of what we are doing. So there is no, what you call like, direct competition between like, basically like, any two, three, four, five players, which could be there and like one particular market segment. Essentially, we are looking at like a very large global market where everyone who is a player in this market needs to find their own niche. They need to find their own set of customers where they learn from those customers and then double down on their learning to build technology that can be used by customers similar to the customers they have, or maybe even expand into like your customer business or industry. So, essentially, in a long-term AI super cycle build-out, all of us will need to figure out, like, what we want to do. Now, we have a reasonably mapped out agile strategy around building technology and getting the adoption and learning from our customers and working with them to kind of, like, give them what they need. And, uh, we hope to be able to continue to do that. Like, so there are, uh, there is only like limited set of people solving problems in AI, like even globally. And of course, more and more people are coming in and solving more and more problems. Uh, but it still leaves like a significant set of problems to be solved by us, like, which can be adopted by our customers. And I suppose that, like, that will give us the ability to continue to grow, like, year after year or at least for the medium to long term. So that's what we think about, like, basically the competitive intensity in this space. So, we are in the midst of one of the largest build-outs. There are more than like 150 or 200 or 250-odd players in the world who are pursuing this market. I think there is enough for everyone.

So, sir, I'll just rephrase my question here. I mean, in a similar context, when we're serving Indian customers and Indian players serving Indian customers, if price is same and they are running ahead of us in terms of addressing demand, I mean, how then our platform differentiates from their platform?

Okay, like I said, we don't look at this as like a Indian TAM alone. We are looking at like us as a global player operating in a global market. So essentially, there are enough and more customers for everyone in the market today. So I think like this may be a question for like far into the future that okay, like there is not enough demand. How are you fairing? How are you going to kind of like try and beat your competitors? So like, I think like for next couple of years, like probably this is not even a question. So like everyone is trying to figure out AI, everyone is trying to build technology of AI. Everyone wants their technology to be adopted by others. So, like, we are one amongst, like, many, many, many players in AI who are trying to push the envelope. So, and the market is large enough. Like, any particular niche you take in a trillion-dollar market is, like, a niche which is worth, like, maybe 10 or 20 or maybe 50 billion dollars. So, I think, like, we feel very, very comfortable in this market. Like, it's a vast blue ocean. There is no red ocean today that, like, we need to worry about competition today. So, we are ready to... Just a follow-up on the... Sorry to interrupt you, Mr. Dean.

He's going to go ahead. Just a follow-up on the previous participant's question. With respect to, sir, are we exploring off-balance sheet funding for any of our GPU CAPEX?

See, essentially, we continue to operate in an ecosystem that exists today. And in this ecosystem, everything exists. And we have a diverse and diverse. So we are super happy to explore any and everything with regard to what we are doing on tech, what we are doing in terms of funding for the reviews, What we are doing in terms of distribution. So, like, we are open to everything. So, kind of, like, keep pushing our strategy of, like, getting over technology adoption over a bit of time.

And if I can just...

Sorry to interrupt, Sunil. Sorry to interrupt, Sunil. We have other members also in line. The question is kind of come up with a follow-up question in the queue. We have the next question from Lionel Pratip from Bandhan. Please go ahead.

Hi, sir. Hi, Puthi. Hi, hi. I just wanted to check, see, we have two platforms, right? Public platforms, the Teer and Jarvis Labs. So at the back end, are the engineering capabilities shared or there is duplication over there? And the second is obviously, you know, you will move from developer workloads to production workloads, etc. So how does the handover happen between Jarvis to Teer or at the front end, is there separate go-to-market strategies? How does that work? See, both are opinionated platforms on solving problems for their own set of customers. There is obviously going to be overlap in terms of some of the techs that get built on both the platforms, and there is going to be some overlap in terms of customers as well. But, eventually, both the teams are sufficiently different from each other in terms of, like, where they want to kind of, like, take the final technology product and the final technology journey. I wouldn't even say, like, it's a, somewhere that journey is stopping. So, essentially, it's a journey to undertake by both the teams. And they both have, so there is enough and more to build in, like, a massive $1,000,000 AM market. So I think, like, there is no upper limit to the amount of technology you can pay. Understood. And how do you ensure that both don't

compete at the front end in terms of pricing, right?

I just answered this question. This is, like, a multi-million GPUs per year kind of a marketplace. Like, I think there is enough and more for, like, everyone not to step on each other's tools. Okay. Thanks, thanks. This is the only question I had. Thanks, sir. Thank you.

Thank you. We have the next question from the line of Hardik Goyal from Union MF. Please go ahead. Yeah, hi. Hi, Hardik.

Hi, sir. Hi, Taran.

Thanks for this opportunity, and congrats on a good set of results.

Sir, you are not committed on utilization, but the 1000 crore contract that we got for our B200, does that completely exhaust our capacity of the current B200, or do we still have some ideal capacity on that end? And secondly, sir, how is the current supply chain scenario on the GPU procurement, and how are GPU players compared to the peers in that scenario?

Thank you. See, like, again, like, I'll start with the last question, right? So, there is no peer comparison, right? So, we have our own tech journey to undertake. So, we are not focused on, like, basically, like, any peers in that sense. Now, from a very specific question in terms of like whether the current flexible capacity is 100% utilized, the flagship flexible capacity is fully utilized in the particular contract that was mentioned. And, yeah, was there a third question? Sorry.

Okay, so on this, are we still facing some backlog in the orders from NVIDIA?

See, it's an organic cycle. Basically, like, you plan ahead, like, and you predict your, basically, like, very agilely, you kind of, like, react to the market and predict for the near future, like, what you want to deploy. And as those plans certify, like, obviously, like, we would keep everyone informed. So, like, I don't see, like, any fundamental supply chain challenges that are unvermountable for us, like, in the near or medium term.

Last question. There is a new GPU launched by AMD. So, is our system compatible to use that GPU in the future in our case or situation?

From a software point of view, like, obviously, the software that we are building, we would like it to be compatible with anything that is out there. But more specifically, for that to happen, like, obviously, we'll have to engage with, like, any and every chip maker, which usually we do. So, in the sense that, like, there are a lot of people building chips these days, and we obviously like to keep our eyes and ears open to what is happening, and engage technically to understand, like, everything that is out there. And, obviously, if there is, like, a support requirement from our customers or our software to support something, then, like, we are obviously very, very willing and able to build that support.

Perfect. That answers my question.

Thank you, sir, and all the rest. Thank you. Thank you. We have the next question from the line of Sonal Sharma from CARPRA Investments. Please, go ahead. Yeah, hi. Hi, Sonal.

Ms. Sonal, can you hear us?

Hello. Hello.

Yes, we can hear you.

Yeah, first of all, congratulations, Steve, for the exceptional results. My question was on the growth story. So, on the deployment part, you had mentioned 1024 plus B200 plan GPs, right?

Right.

So, like, can we know the timeline and the funding that is...

This quarter we expect the deployment to go through.

Sorry?

This quarter we expect the deployment to go through for the 1024.

Okay, okay. Okay, and any visibility on B300 or better, okay?

Like, so, we will obviously kind of, like, keep everyone informed as of the plans for Vera Ruben and B3 and R45.

Okay. Okay. Okay. Thank you.

Thank you. We have the next question from the line of Nicholas. He from Toro Wealth Managers. Please go ahead.

Yeah. Hi. Hi, Tarun. Good evening, and congratulations on a good set of numbers. I had just two questions. Since we keep mentioning our long-term strategy to sell GPU as a part of technology platform rather than just raw compute, I just want to understand how does probably our economics change when probably the transition happens with a customer, maybe a live customer, like how does the realization change, how does the gross margin change, and probably the ROCs on the GPU capex change?

See, I think that's a question that would get answered over a period of time. So I don't think there is like a answer to that today. But like, essentially, if you look at like, any kind of technology play, like when you build layers of technology, and you get the adoption from the business, and obviously long term value gets unlocked for those customers who adopt that technology by reducing their own TCO or building And that essentially results in, like, surpluses, like, up and down the ecosystem. So, like, hard to put, like, say, numbers to that today, but, like, that's where the adoption of tech is, like, a medium-to-long-term strategy. So, that's where we are today.

Understood. So, is it fair to understand, as we speak, currently, probably most of our revenues is primarily the GPU raw compute, like what we are giving it to our customers?

The majority of our GPUs, like, today run on top of our platform. So, like, there is very, very little bare metal that we can do today.

Understood.

Understood. Thank you so much. I'll come back in the queue.

Here's the next question of the line of Varun Gandhi from Finn Avenue. Growth, please go ahead. Hi, Varun.

Hi, Tarun. Good to catch up again. Tarun, I noticed you guys attended a lot of conferences, a lot of trade shows this quarter, and these two quarters particularly. Anything fruitful that you could share, any client feedback, any conversation that helps you improve your product, What helps you gain some sense of, you know, from a technology standpoint, how competitive are you? Anything that you could share?

Okay, so, see, essentially, like, it's a, I don't know, like, there are many worlds. So, basically, I think, like, even while we were, like, in the heart of Silicon Valley I think like a couple of blocks away, like the conversation was not about AI at all. So now moving from like any one place with one set of people working on tech versus another set of people working on completely different, say, sectors. Like, there is a lot of what you call gap in terms of, like, how people perceive and look at how they are going to deploy and how they are going to use the technology. So I think, like, the magic happens when you are able to bridge the gap between, say, the thinking of a customer in a particular sector with how you can apply the technology that you know. So, see, technology does not, like, really solve the problem. It's the people who have to solve the problem. So, technology is more like, okay, we are going to run a training. Now, does training solve, like, a real world problem? Probably no. So, for someone in a fintech or a finance sector or an insurance sector or a molecular research sector, like, you have to bridge the gap in terms of, like, what AI can do as a technology and how do you bridge the gap between the objectives of a customer who wants to deploy that technology and kind of, like, do stuff. So that's where I think you break the gap with the help of industry solutions, where you say that, look, we know this part very well, and you know this part very well. How can we collaborate together and co-design a solution that works for you? And that also helps us learn something about a particular domain and how technology can be applied to that particular domain. And I think it's the constant process of being engaged in the ecosystem where both the hands-on technologists and decision-makers frequent. So that's the overall idea behind being...

So, has any of it flown into the business yet?

Or is it still evolving? It's a decision process. So, like any point-in-time learning are like exactly what they are, like point-in-time learning. And as and when we apply those learnings, like obviously we try and publish those case studies. So, but that's a look back rather than saying that, oh, we are predicting that this is what is going to work. So, I think that's a longer journey than you could predict, like, but just by talking to people. So, yes, of course, there are very many experts who know better than us in terms of, like, how they see, how they perceive the future. But then I think, like, somewhere in a very large world, in a very large stand, you have to be, Having the humility of, like, saying that, like, we don't know, like, what is going to work, but be agile enough to say that, like, yeah, like, let's make it work together, like, whatever is going to work.

Got you. My second question is related to L&T. So, they recently acquired 10,000 B300s, and I understand you cannot comment on L&T and their business strategy, But then we as partners could use their ideal capacity if they have or, you know, spin up some sort of partnership whereby you use your platform and the capacity provided by the GP capacity provided by L&T. Any sense, any ideation, anything there?

We have a completely arm's length relationship with L&T. They are a valued partner where we work together with them for servicing many of the customers. That being said, similar type of relationship we are building with many other partners as well. So, essentially, we are always open to all possibilities of working with all our partners. Now, these things happen when they happen, and when they happen, we'll obviously keep everyone informed, but in the ecosystem, there are very many players, and basically, all possibilities of working together with all the players continue to remain open.

So, it's safe to conclude that you guys are open to such an arrangement, and if possible, you might get... Understood. That answers my question. Thank you very much.

Great.

Great.

Thank you. Ladies and gentlemen, we will now be taking the last question in the interest of time. I now invite our next speaker, Kausal Sharma from Equinox Capital. Please go ahead. Hi, sir.

Very good.

Yes, your audience. Please go ahead.

Congratulations on a good set of numbers. Just want to understand your procurement mechanism of the GPUs, Like, how many months or a period do we require to place any advance order for the GPUs to get it went live? And, sir, if we do we require to pay any advance against that, and if yes, so what percentage of CapEx is it?

All these answers are, like, subject to change based on market conditions. So, like, we find that, like, this order to deployment cycle can vary between three to six months, typically. And, like, whether an advance needs to be paid depends on, like, the vendor. So, whether they have a requirement of, like, selecting the advance at that point of time. So, probably depends on their order book in some way. So, like, everything is, like, kind of, like, subject to massive changes, like, week on week or month on month about all the questions that you have asked.

Currently, sir, there is too much shortage of the GPUs and new GPUs are coming. So don't you think that we need to pay any advance as of current scenario demand and supply?

Like, I am not sure how to answer that.

Okay, sir, got it.

Thank you very much for answering the question.

Thank you. We have the next question from the line of Bharat Gulati from Dalalan Brocha. Please go ahead. Hi, thank you for the follow.

Thank you for the follow. Very appreciated. Just on the margins again, I understand that you spoke about maintaining 70% plus EBITDA, but in terms of what our revenues are right now and what gross margins you've done for this quarter, in the medium term, is this gross margin sustainable of 88%? And if you can just help us understand what has helped us achieve this 88% gross margin in this quarter also?

All of these numbers are, like, moving targets. So, essentially, like, these are, like, not, like, really quarter-on-quarter targets that, like, basically, like, you can, so, I'm pretty sure that, like, if in a particular quarter we do, like, a lot of kickbacks at an inopportune time, like, so how these numbers change at that point of time, Or, like, if you build something to test in advance, and it's not yet lined. So, I guess, like, so many sectors are there.

But, Tarun, sir, would it be fair that at full utilization, this gross margin is not being operated at?

What we have been saying, that, like, look, this is, like, a 70% plus kind of a EBITDA kind of a business. So, I don't see any change in that overall target for the build.

Understood. And, sir, just on the next Blackwell that we are planning to install, do we already have any contracts set for that, or are we planning to get into a long-term contract for that as we've done for this batch? Just trying to understand how do we plan to use that.

We have not decided anything around the next lot of the 200.

Understood. Really appreciate you taking the question again.

Yeah, thanks. Thank you. Ladies and gentlemen, due to time constraints, that was the last question for today. We understand that several questions may have remained unanswered, and we encourage participants to reach out to the company through its investor communication channels, including email for any further queries. I now hand the conference over to Mr. Tarun Dua for his closing comments.

Okay. First of all, I would like to thank everyone who has patiently joined us all and patiently listened to us talk about how we think. And we do welcome all investor queries to either to our investor relations team at AdFactor, or you could reach out to us via the email ID, investors at the rate, e2enetworks.com. And we are super happy to engage with all of you to try and build a better understanding of how we feel and how we think about this business. And we hope that you have a great festival season, including Diwali season, coming up ahead. And once again, thank you, all of you, for joining us here today.

Good night, all. Thank you.

On behalf of E2E Networks Limited, that concludes this conference. Thank you for joining us and even now disconnect your lines.