Black Box Ltd (NSE: BBOX) Q1 2026 Earnings Call dated Aug. 14, 2025
Corporate Participants:
Unidentified Speaker
Sanjeev Verma — Chief Executive Officer and Whole Time Director
Deepak Bansal — Executive Director and Chief Financial Officer Global
Analysts:
Unidentified Participant
Deep Shah — Analyst
Abhishek Kumar — Analyst
CA Garvit Goel — Analyst
Jatin Deshpande — Analyst
Sukrit depattal — Analyst
Vivek Chararia — Analyst
Nandan Majanath Arekal — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to the Q1FY26 earnings conference call of Black Box Limited. This conference call may contain forward looking statements about the company which are based on the beliefs, opinions and expectations of the companies as on date of this call. These statements are not the guarantees of future performance and involve risk and uncertainties that are difficult to predict. 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 this conference call, please signal an operator by pressing Star then zero on your touchstone phone.
Please note that this conference is being recorded. I now hand the conference over to Mr. Sanjeev Verma, whole time director and CEO of Black Box Limited. Thank you. And over to you sir.
Sanjeev Verma — Chief Executive Officer and Whole Time Director
Good morning everyone. I hope you’re all doing well. On behalf of Black Box Limited, I would like to welcome you to our Q1FY26. On this call I’ll start with an overview of our business performance and then our CFO Deepak Bansal will walk you through the financials. We have already uploaded the result presentation and I hope you had a chance to review it. It’s great to connect with all of you again. Over the past five years we have transformed Black Box from a loss making entity into a profitable cash generating business with a strong balance sheet.
With the turnaround complete, FY26 and onwards is about accelerating growth, scaling revenues and capturing market leadership. While the year began at a slower pace, we are seeing solid traction in key accounts and are actively engaged in multiple high value opportunities. This quarter we retained the order booking Momentum similar to Q4FY25 and booked orders worth $176 million with most of the deals nearly 2/3 being high value deals. Some of the notable order wins during the quarter included a very large project in the US from a leading financial services giant as well as a workplace solution engagement from one of the world’s largest OTT player.
For their operations in Latin America. The company also secured two significant data center orders in the US one from Global Hyperscaler and another from a top 10 global colocation provider. Other key wins included a workplace solution project in the US from a top tier city Transport Authority, a combined connectivity infrastructure, a networking order from a prominent public service organization and a large networking deal from a reputed 200-year-old research university in the U.S. our backlog at the end of Q1 FY26 was at $518 million, up from 504 million at the end of FY25. We are confident of reaching $700 million of backlog by end of the fiscal year.
We’re also targeting to book orders worth $1 billion in FY26. As mentioned by us in the previous quarter, our order book will continue to grow as we implement our new GTN with experienced leadership and business teams now in place across verticals and horizontal solutions and this will set the stage for FY29 target to reach 2 billion in revenues with an expanding order book. Strategically, we continue to reduce our long tail low value accounts which has reduced to less than 1000 at the end of Q1 FY26. We expect demand for our services to remain strong with a sufficient headroom at the back of AI led overall growth which will require the fresh new deployment and retrofit of technology infrastructure.
Backed by our solid market positioning and proven capabilities, we’re confident in achieving our growth target for FY26. With that, I now hand over to Deepak, our CFO for the financial updates.
Deepak Bansal — Executive Director and Chief Financial Officer Global
Thank you Sanjeev hello and good morning everyone. As you would have seen, revenue for the quarter stood at INR 1387 crore down 3% year on year impacted on account of client driven delays in equipment procurement due to the ongoing tariff situation which pushed out revenue recognition and affected operating margins as well. Given the focus on getting large size of orders and our focus on high value customers, the average lead time from order receipt to first revenue recognition is now extended to around 4 to 6 months. Hence you will see revenue increase from our robust order bookings only post Q2 of FY26.
There is also a small impact from the reduction of the long tail low value accounts. EBITDA for the quarter grew 1% to INR 116 crore compared to Q1 of last year, essentially remaining flat while EBITDA margin improved by 30 basis points year on year to 8.4%. They were lower compared to Q4 of FY25 due to lower fixed cost absorption in quarter one. Fixed cost generally would range around 310 to 320 crores per quarter. Fixed cost absorption will be better in the coming quarters and as revenue increases. Our guidance of 9 to 9.2% EBITDA margin in FY26 remains intact.
Profit after tax rose 28% year on year to INR 47 crore from 37 crores in quarter 1 FY25 with margins increasing by 80 basis point to 3.4% year on year primarily driven by reduction in exceptional expenses and lower taxes. In summary, we delivered year on year growth in both EBITDA and Profit after tax highlighting our operational efficiency and margin resilience. With a strong order book, healthy cash reserves and a reinforced go to market strategy, we are confident of delivering on our growth ambitions for fiscal year. I would now request the moderator to open the floor for questions.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press Star and 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. The first question is from the line of Deep Shah from BNK Securities. Please go ahead.
Deep Shah
Yeah, hi, good morning. Thanks for the opportunity. So first question is on the commentary that you gave that revenue growth was impacted due to delays in clients equipment ordering. Now this is unlikely to change in the near term, right? So what gives us the confidence to stick with our guidance? Because the revenue guidance effectively implies that an 18 19% kind of growth is needed in the balance nine months of the year to achieve our 26 guidance. So if you could just give some more context that would be useful.
Sanjeev Verma
Yeah, I’ll take that. So yes, in the short term I think with some of the unfairness certainty still remaining on tariffs, we expect there will be some delays. Some of them are big deals because from a backlog perspective it’s cyclical in nature. If it’s two months, if not three months or four months time, we expect it to ease post October hopefully, but we’re not sure. Having said that, I think currently we’re looking at where we stand in terms of order backlogs and our burn rate. We expect that the burn rate would be better because we baked in last three, four months of order book that has come through that has not gone into revenues.
Also our pipeline currently as we stand today getting into the middle of quarter two is much robust. We expect our order book to continue to rise as we get into quarter 2, impacting our revenues positively for quarter 3 and quarter 4. So it’s a kind of a cyclical coming at the back. To answer your second question, we expect our revenue outlook momentum to track between 15% to 20%. In fact audible will track more than that going forward each quarter from here. So we have still remained positive with respect to our guidance as Deepak alluded with respect to also EBITDA and PAC and also from an order book perspective of exiting the year closer to 700, we are currently at 520 odd.
So we remain robust. The work that has gone through the last 5, 6, 1 starting our order backlog this quarter, getting into next quarter, we understand we need to track at least 1520 odd percent and we will positive that we’ll be able to deliver that.
Deep Shah
Right sir, this, this is useful. Second question is for Deepak. So Deepak, in our press release we mentioned EBITDA of 116 crores. But if my understanding is correct, this includes 11 crores of forage D. Is that understanding correct?
Deepak Bansal
Yeah, so, so this. So, so there are, there are three type of forex normally in the business. One is. One is that which is on a translation side of it that passes through the oci which, which doesn’t hit the P and L asset. The second type of thing is a cash flow hedge which is when you hedge your, when you hedge your currency for different moments on that it it below the ebitda. The third type basically is when we have the inventory because we deal in multi currencies, we deal in almost like 19 currencies in our operations overall.
So on that when we have the inventory accounts receivable and accounts payable and the consumption pattern and the revenue pattern on that happens and primarily that happens in our product business and all those things every quarter when you book it on a transaction level there is a, there is a currency difference every, every day which happens depending on that. And that is if you see consistent every year it can be positive, it can be negative every quarter every month. And all those things that is part of the EBITDA only because that is an operational related thing because of the accounting gap requirement.
We show it as a different line item but otherwise it’s related to the operational thing which impacts our inventory valuation and our accounts receivable and payable when the customer pays the money or we pay to the vendor or when we consum the inventory when we sell the inventory.
Deep Shah
Right, right. But deeper. So it’s, it’s really difficult to forecast this number. Right. So when you give your estimates for or guidance for 26 or, or for any year. So should we think that this guidance that we’ve given of 9.2% margins is exclusive of all of these impacts because as you as you said, right that it would be positive in some negative in.
Deepak Bansal
In some year.
Deep Shah
And it’s. It’s not really in a control.
Deepak Bansal
No. So you are right. Technically the currency is not in our control. The planning of the inventory and the planning of the receivable and payable is in our control. And that’s how we plan. So this quarter when we saw that the currency is going in the right direction, we planned our inventory to consume in a way that we take benefit of that. So it is in our control to plan that how we are consuming from which country and which currency we are passing on that inventory to consume. And that is why. That is why it becomes.
It becomes more like. More like. Because that is a real money which is coming. It is not like that. That. That is a. That is just an accounting thing. It is. It is a real money which flows us with respect to the collection or with respect to the inventory consumption in terms of the margin. So. So when we. When we forecast. When we forecast this 9.9% that includes some of these. Some of these strategies because. Because in the business you need. You. You apply all these strategies when you. When you are. When you are delivering the material to the customer or anything where you will try to do all these things when the currency is going down or something like that, then also you will do a different type of thing.
You will consume the currencies. If it is. If it is a. If I have a material sitting in Switzerland warehouse, so I will sell that if the. If the Swiss franc is doing better than the euro.
Deep Shah
Right? Understood. Understood. And just one more follow up. This quarter we saw some 40% increase in purchase of stock. So anything to call out here or it is just timing difference?
Deepak Bansal
It’s a timing difference. It’s a timing difference that. Because we continue to purchase the inventory and sell. So because of the tariff things on our TPS side of things, we little bit purchased more to basically store the inventory in US to reduce the impact of the tariff because on the. On the China goods, whatever we have purchased. And Taiwan also because Taiwan when they put the higher duty initially we ordered the material to come in advance to consume in the next quarter and all those things. But now Taiwanese duty has again come back to the lower levels now.
So. So as such there’s nothing. Not much impact on that. But you know, we are planning basis what is happening right now on uncertainty type of thing.
Deep Shah
Understood. This is super useful. All the best. Thank you.
operator
Thank you. Our next question is from the line of Abhishek Kumar from GM Financial Limited. Please go ahead.
Abhishek Kumar
Yeah, hi, good morning and thanks for the opportunity. I have a couple of questions on your outlook only First I just wanted to understand when you say that you expect 1 billion dollar of order booking in FY26, is it corresponding to the 176 million dollar inflow that we did in Q1 that cumulatively you expect to reach 1 billion dollars in FY26?
Sanjeev Verma
That is correct. So basically as a cumulative order booking for the year starting at 176, when you track 200, 250, 300, going to accumulate even $1 billion for the year. You’re correct. I guess it.
Abhishek Kumar
Okay.
Sanjeev Verma
Okay.
Abhishek Kumar
So that’s, that’s very encouraging. And we have, I mean you have mentioned 2 billion dollar plus pipeline. So that means, you know, very strong win ratio for us to do that. So we have the visibility, the position positioning that we have in terms of, you know, where we stand in those deals today. To hit that below, what is giving us the confidence that out of $2 billion pipeline we can.
Sanjeev Verma
$2 billion is a point in time. So if you consume or you burn or you pick up orders for $200 million, you have to replace it by pipeline. So the pipeline should actually grow from 2 to 2.1, 2.2, 2.5. It’s a point in time. It is taking into account that what will burn, which is what will win. That doesn’t mean that you have 2 billion static pipeline. After you get $250 million worth of orders, it should replace that through a pipeline. So it’s absolute number that should remain constant or move up basically adding. So if you look at from a percentage win ratio, I think we have a significant pipeline at a given point of time corresponding to a quarter.
So if you’re looking at $250 million, we are looking at 12%. So it’s a very healthy pipeline. Of course all of them will not close in this next nine months. Some are longer lead times. But a robust pipeline, the current engagements on larger deals combined and ability to continuously improve the pipeline through the go to market transformation that we are doing. We are seeing these engagements all put together. We believe we’re confident of an absolute booking of a billion dollar exiting 700 million of backlog. We think we need to move the backlog from the current 520 range as we move forward to open a better backlog so that we start the fiscal 27.
They better not.
Abhishek Kumar
Okay, okay. And second, I think it’s mentioned that now because we are, we are chasing Larger contracts, the lead time has increased to four to six months. I think this is, this is the first time we have mentioned this. So does that mean now that you know the orders that we have won recently, the conversion or the revenue recognition will only happen in the second half. So therefore we might have a soft Q2 as well.
Sanjeev Verma
So we expect that Q2 to be much better than Q1 and so we already have a backlog which is delayed burn. So which didn’t impact all of that in Q1, although it could have been better the Q2 to be impacting and the orders that we are booking as we speak will impact partly Q2 going back to Q3. So it will just continue to push forward. But no, we expect Q2 to be much better.
Abhishek Kumar
Understood, Understood. I have. Okay, I’ll come back in the queue. I had another question. I just slipped my mind. I’ll come back in. Thank you so much and all the best.
Sanjeev Verma
No problem.
operator
Thank you. A reminder to all participants, anyone who wishes to ask a question may press star and one on their touch tone telephone. Our next question is from the line of CA Garvit Goel from Envest Analytics Advisory llp. Please go ahead.
CA Garvit Goel
Hi, good morning. I’m audible.
operator
Yes sir, you’re audible. Please go ahead.
CA Garvit Goel
My question is on the tariff front only. I remember in last quarter we spoke on this topic and you mentioned that you will be having a limited impact as far as the tariffs are concerned and you cited that most of our revenue model is based on some on ground services and secondly our OEM products that too will not be affected much because these are getting purchased locally. So like what is the scenario now why we are saying in this quarter our revenue is getting affected because the customers are delaying the purchase on account of the tariff environment.
So I’m not able to understand this thing. So can you please put some color on that?
Sanjeev Verma
So I’ll take it and maybe can allude that. So when we said the tariffs wouldn’t impact us from a perspective of our margin and profitability assets because it’s a pass through for us from product side. Right. So I think so it’s not going to impact or if it costs us more, I think we need to pass that. So that’s a take on the impact of tariffs. But from a customer perspective his cost of purchases is going to go up. Right. And I think so there is a delay for larger projects which includes some products. Of course we are largely services led to make a decision on a certain things.
They’re expecting the tariff for some countries to become better. So that’s on the customer side because some of them, we are a small part of the customer overall CapEx. So they are having a delay in the overall CapEx if they’re building a data center, if they’re building a large infrastructure like airports. So we are part and parcel of the larger CAPEX program. So if they are delaying some decision making, it’s not because they’re delaying only for us. They’re dealing with larger capex. They’re taking time to see whether they want to spend that money or they’re impacting some of the other purchases.
So there’s a general delay not because of just our products, our tariffs. So two parts to this. The tariff is not only impact us from a PNL perspective as much since it’s a part of through the customers considering a bit of uncertainty with somebody at 25%, somebody at 50%, somebody at 19% just clipped and happening over the month of July and August. Generally the environment with respect to customer decision making was largely impacted for overall capex spend perspective. Deepak, is there anything else?
Deepak Bansal
Yeah, so. Well, you rightly told it’s a macroeconomic type of situation there in US right now. So. So let’s say I have an order from a customer to execute a project, but that is dependent on two things. When the readiness of the site and the second is the availability of the equipment which is required to be deployed where, where our role will be there. And that equipment may be a server or maybe a networking equipment or maybe a cables or whatever it is where our technicians will be deployed to, to install, manage and all those stuff now if, now, now if the customer is not getting from their supplier or from OEM or delayed the decision because of a tariff uncertainty and all those things because there was a huge uncertainty on the copper tariff in between.
And because of that the people, the people imported the copper slabs but not the copper wires and cables. And because of that there was a, there was generally a shortage of the cables in us which now has started coming up once the administration is coming with the clarity on that because of all that the customers told us that because if there is no material to install then our technicians obviously cannot work there and all those things. And because of that we cannot recognize the revenue and that’s what I think is the project delayed and that’s where the revenue recognition delayed.
It is not like that we lost that. It is just the delayed because then we will execute it now when the product availability is there and all those things. So we are engaging, we have a regular engagement with our customers. We are working with them in terms of the revised timelines on the project and all those things and can we do some change orders with them basis that and all those stuff on the background. All those things are going on.
CA Garvit Goel
Understood. And when we say like Q2 is going to be better than Q1 and we are also maintaining our guidance. But at the other hand tariff situation is getting worse day by day. Right.
Deepak Bansal
So I will say, I will say tariff situation is generally, generally resolved other than other than India and because China is now extended for three months other than India, Brazil and few countries the tariff situation is generally resolved. The China is all stabilized now that China will continue to be at the current duty and all those things. So, so I think I will say that the tariff situation is now far better as compared to the earlier people have. People have now the like. I will say 90% clarity in terms of what is happening. There is not much dependency in our line of business from our IT Capex and all those things from India.
So from that perspective I think there is a more certainty now as compared to in the past.
CA Garvit Goel
So if India is going to face a tariff which is incrementally greater as compared to the other countries. So don’t you think people will be shifting to some other countries at least for the products part.
Deepak Bansal
So in US see the import in the US of the, of the technology products which, which we are dependent on whether, whether it is, whether it is of the, all the OEMs, networking equipment and all those stuff. I don’t think that India plays a very contributed role in terms of going to US we don’t work obviously on the cell phone devices and cell phone in US by the way the duty is zero. So from that perspective all the dependency is on is on Europe, China, Taiwan is a major dependency in US for our products what we deal upon.
So from that perspective those all things are sorted out. India duty will probably will not impact us. Sanjeev, do you think India duty will impact us from the networking equipment perspective?
Sanjeev Verma
No, we don’t source. I think the Americans don’t source from India is not a network equipment exporter. So I don’t think it looked like that.
CA Garvit Goel
So as of today we are saying we are pretty much confident about achieving the guidance that we are speaking about, right?
Sanjeev Verma
Yes, yes. Yes.
CA Garvit Goel
And any, any kind of risk like do you see like after the quarter you may mentioned like this kind of risk occurred. So any kind of risk are you seeing right now which can stop us from from achieving this guidance.
Sanjeev Verma
So any all of the known risks from the past are baked in the future. Risks which we can’t see. We can’t see. Right. So but whatever we have at this time we tariff with some delays are baked in pipeline. Our government order book. I can’t go to market notion where we are. If it gets up in some other direction which we don’t know or all of us don’t know, then we don’t know that. But leaving that aside, considering there’s no other event that we couldn’t answer as I did very close on that.
CA Garvit Goel
And you mentioned about the newer orders that we are targeting in FY26. Can you put some more color like how much percentage of these orders are going to be from data center and what kind of timelines for these orders to be executed.
Sanjeev Verma
So ballpark range datacent orders within the range of 20, 25% and we’ll track that we are slightly lower over the last couple of quarters on that. So that would be in that range. So if you look from a perspective of overall $1 billion, we expect over $200 million somewhere in that range to be in that range. With respect to our project timelines in general, depending when we book the projects, our average project timelines are looking six to nine months time. So we will carry forward when we said we want to book that a significant amount of uptick with respect to our backlogs going forward.
80% of our business is outside of the data center. It includes networking, includes infrastructure, modern workplace, also includes our technology products. That’s a black book product business.
CA Garvit Goel
And what is the size of orders you mentioned as an incremental order?
Sanjeev Verma
The size of orders. I think we are focused as we told before, for the last two, three quarters we have been saying that we have been pivoting from black box on a very long list of customers. It was a couple of thousand to focus customer focus on larger deals because we believe that that’s where our focus would be. We are seeing that the contribution in quarterly order booking pertaining to larger deals, over 1 million, over 5 million is much more. And as we move forward we expect that to go better whether deals with 10 million or more, 20 million or more.
So that’s where the focus has been over the last several quarters and we are at the right spot at this time to make a win across data center, across infrastructure, across airports, health care, in all the vertical that we operate. That’s where we have been focused on long term, larger deal, multi year annuity. So those are the focus areas and that’s where we see our company heading towards.
CA Garvit Goel
Got it. Thank you very much. Thank you.
operator
Thank you. A reminder to all participants, anyone who wishes to ask a question may press star and one on their touch tone telephone. Our next question is from the line of Jatin Deshpande from PKD Advisors. Please go ahead.
Jatin Deshpande
Hi sir, Good morning, can you hear me?
operator
Yes sir, you are debated. Please go ahead.
Jatin Deshpande
Yeah, so my first question was that that the data center industry is going through a boom in the US the numbers aren’t rising as fast and so what is the reason for that? And also last call you mentioned that the marginal decrease in revenue was one of the reason. Was that due to rationalization of your client base? So is there any specific reason why you need to remove the long tail clients before you add new larger clients to ensure that the revenue doesn’t drop? And also I’m assuming that tariffs has only come recently. So that is not the reason.
Sanjeev Verma
So I’ll answer the first part and try to part. So I think yeah, so I think so the data center of course you see a lot of announcements in the data center between the announcements of data center and with the time it goes online with project with a huge lag. Right? So I think if you see an announcement of a Data center for 2 gigawatts from the announcement to the removal of the dirt, by the time we get to do our work, there is a lag out there. In the last six months or so, almost six, nine months or so we have reorganized our focus on the data center.
We had one large hyperscaler client which we did not produce enough in the last six, nine months. Currently we are sitting at a very large pipeline and win rate coming forward from that client. But more importantly we are now have won and gotten into other large global multi location cola provider. We’re also in active engagement. So the pipeline from a win ratio perspective, the relationship from that perspective with other hyperscalers and coolerson providers are much better. The closing of a deal for a hyperscaler for the work that we do is a long lead time and once you get it you stay for a long period of time as a partner.
There’s also a dynamics with respect to Lyle hyperscaler as working in collaboration with large general contractors end customers in this case hyperscaler and multi vendor approach. So we can make it little complex. So there is a lead time and lag time from when we start off engaging for larger projects. By the time we get to contracting and by the time we start Delivering revenue from that order book. So that’s a time lag. So where we stand today from our ability to see pipeline conversion, the line of sight is much better. And therefore I said we expect 15, 20% continuous movement book in order book and revenue going forwards.
So that’s one. The second question undefinitive to people we talk about margin. I didn’t get the question exactly, but maybe, yeah.
Deepak Bansal
So I can take that. So on the long tail customers, we have already informed everybody that we deal primarily with the large Fortune 500 clients. And in every vertical what we have announced, we want to deal with the top, let’s say 100, 200 customers. And that’s where I think the biggest penetration is. We used to have more than 2,000 customers two years back on a long tail side of it, where the, where the value of the deal, the engagement with the customer is a one time engagement in the year or two times or the value of the deal is between $10,000 to $50,000 and all those things, the cost to deliver that customer was extremely high in terms of the overheads.
While the gross margin may look okay, but then the SG&A will be higher to deliver that. And that is why we took a conscious call to reduce our long tail customers. So that exercise is going on. Continue to see that now we have less than thousand customers in fact on that, on that long tail thing because you cannot suddenly reduce everything. But we are doing a consistent effort to do that. And that’s where I think there because last year total impact was between 16 to 17 million dollars of that on the revenue this year we are not expecting that that much of impact this year.
The total impact we are expecting in the range of primarily 6 to 7 which is already built in, in what the, what the guidance we have given that is already built in, in that, with that I think our, our streamlining on the long tail orders will be, will be over, let’s say on a consistent basis in the current fiscal year.
Jatin Deshpande
Got it, got it. That was helpful. And sir, can you help me understand your customer on the data center side? So do you directly deal with let’s say for example Meta or are you dealing with their vendors? Like do you have any preferred vendor position in with any of them?
Sanjeev Verma
We are a preferred. Yeah, that’s a good question. So we are, we deal directly with Meta both from a contracting perspective and from engine perspective. We also deal with Meta’s large vendors, mostly master contractors in the, in some cases. So Meta or any other hyperscaler for that matter. Utilizes both channels. There are many sites they contact directly. The many work that they contact directly, they’re putting up a dash network divide, contact, lease in some site. Considering the nature of the site, the way they have contracted, the master contractor could be a Bechtel or a turner, could be a lock, stock and barrel.
Pretty much the way you build like an airport or a railway system, right? I mean you might give it to Siemens or somebody else and they become the master contractor. So they utilize both. So we have relationship with their master contractors that we work with. So these are multi billion dollar large master contractors. We also have to work directly, irrespective of the contract, sometimes with the master contractor because that’s what they prefer. But the design element, the discussion element is more like a type A sit in the room with all because each is interconnected. So to answer to your question, we have both kinds of contracts directly relating to meta in certain site in certain geographies.
For example, we do a large work for them. In Europe we contract directly. In some sites in America we contact directly. We also contract indirectly if that is what their preference is.
Jatin Deshpande
Thank you. And sir, you have guided for a significant inorganic growth through FY29. So do you have any plan on how you. Are you going to fund this? Like are your internal accruals enough or do you plan to raise any debt or.
Sanjeev Verma
I will give it to people.
Deepak Bansal
Yeah. So. So, you know, for the organic growth as such. Because for the organic growth we require just a working capital that that working capital. We have the off balance sheet facilities and I think we should be able to fund it through our internal accruals and all those things. For the inorganic activities we may. We may have to raise the debt depending on the situation and all those. Normally our philosophy on the inorganic acquisition is that we continue to look for suboptimal or subpar performance type of companies which we can get at the lower price where we put our capability to transform those businesses and then we do some type of structure in terms of deferred consideration and pay upfront something and all those things.
So right now we are not envisaging that we will be enhancing the debt of basis that. But if we find some good asset which is a large size or something, and if we need to take that in terms of achieving our. Achieving our targets and we feel that that asset is a transformable and we can transform it quickly and all those things. Probably it all depends on the situation, on the. On the inorganic growth, how that evolves and everything.
Jatin Deshpande
Got it. Thank you. So.
operator
Thank You May I remind all participants, anyone who wishes to ask a question may press star and one on their Touchstone telephone. Our next question is from the line of Sukrit depattal from Eyesight Finrad Private Limited. Please go ahead.
Sukrit depattal
Good morning to the entire Black Box team and my question is to Mr. Sanjeev Verma. In the last con call I believe you had emphasized a shift from stabilization to growth targeting approach 2 billion revenue by FY29. So just an extension to that question. As Black box transitions from stabilization to growth, how are you thinking about evolving your engagement model from a with hyperscalers and large enterprises from being a systems integrator to a strategic core innovator in areas like AI infra edge computing or sovereign cloud? And are there plans to co develop IP or enter joint GTM partnerships that could deepen wallet share and create annuity like revenue stream for the company? Yeah.
Thank you.
Sanjeev Verma
Yes, the first part of the question. We are focused on moving from stability to hyper growth going forward and we are on the right path to be able to do that. As I called out earlier, we expect our coming quarters to gain velocity and momentum both in order book and revenues going forward. Specifically coming to hyperscalers. So the world of hyperscaler is broken into two distinctive parts. One of course hyperscaler that built their own project largely at the core. Largely they build large mega infrastructures. And then of course there are various multi tenant COLO providers which also build and support these hyperscalers largely at the edge.
Right. Which means they build in the in the cities, they build various sites for them and the likes of qts of Cyrus one or others in that space also partner. In fact if you look at India, many of the COLA providers now are actually a wholesale provider to Google and aws. The model that they started earlier was different. Right. So now the consumption happens. So coming back to your question from a transactional provider to a strategic one, that’s exactly what we are doing at this time. Engaging with the hyperscalers that we have. Starting from building their core infrastructure, we do connectivity and networking.
We’re also doing some other work pertaining to DAS infrastructure and wireless infrastructure. The larger killers, they buy differently. We don’t expect to be selling compute to them. They actually don’t buy compute to anybody. They’re starting to build their own compute. So that’s one side from a long term partnership perspective we do provide what we call day two support which is annuity in nature. So once the work is done, the work is never finished. So you need to support the work that you do. There’s always some move act changes going on. So once we 10% of our workforce, somewhere around 10 15% will continue to remain to support the day to support and our endeavor is to be able to do that longer term.
When we come down to some of their partners which is their location providers, multi tenant, the ability to do with them is a little bit more because they do a small format. So we work with qts and we work with real realty. We could do go up the value chain from layer 0, layer 1, layer 2 and we are also forming partnership with them over the last several quarters with the investment that we have made in the talent that we have brought in quality safety, pocket control, high level leadership. Our engagement now both with hyperscalers outside of our single largest client that we have is increasing and our current engagements is across various multi team and various hyperscalers both from a pipeline perspective and we expect to be able to become their core strategic partner.
We’ll do a project that lasts for 1, 2, 3 years time. You cannot be a transactional vendor. Magbul is also working with many of these providers in more than one country and we intend to expand. For example, we focus now in Europe in some markets, specifically in Spain, UK and other areas is at the back of our relationship. In summary we are looking forward to long term relationship. That’s the reason why we have focused on larger and similar similarly are engaging with larger enterprises as well in a similar nature. So therefore we decided not to be everything to everybody.
That’s the reason why we’re moving out of the long tail and most of our engagements are now focused on long term contracts, either projects or long term multi year annuity contracts that we do for several critical infrastructure like airports. We support some of the largest airports in the US So that’s the initiated things.
Sukrit depattal
Great, that was good insight. Just on a ending note, I just want to understand from you as a, as a, as a CEO of a company, how do you decide where to focus between US hyperscalers and India’s digital infra, what is the framework behind those choices from your point of view?
Sanjeev Verma
So yes from a size perspective I was told before we have we focus on where we believe we’ll get better yield from the effort that we put. Besides the market for the US is much larger. Of course India is a growth country so we’ve also pivoted to look at India as a growth market for us this time but still remains a small portion of the overall business. So we’re Looking at putting our resources where we believe that we can get volume and we can also get value. So America can provide value and volume both. India, of course, has volume coming in.
So we are currently engaged with India for larger projects. We recently received and partly delivered a very large cybersecurity project. India is going to build a lot of data centers as well. Many of them are currently in the conceptualization stage. They are announcing the project. Google announced. The $6 billion. Between announcing and the project coming through is a long lead time. But India has an issue pertaining to a value. It’s a cost plus country. So we causes how to make our cash work better, how to make our capital allocation work better. Right. And what yield can we get from that perspective? So the CEO of a company, as I said, we are looking to drive hyper growth, but we’re looking to drive hyper growth that has margin as well.
And India, of course, remains very core to our business, both from a growth perspective, but also from a delivery perspective. As you know, we’re using India for our global capability center in Bangalore. So it will remain a key aspect of our overall success. Both from a local business, which we are cautious about because we do not want to dilute our margins, but also from a delivery and skill standpoint that we utilize in India. We have 500 people supporting our global operations. We expect that to grow as we grow our business.
operator
Okay. As the current participant is not responding, we have the next participant, Vivek Chararia, an individual investor. Please go ahead.
Vivek Chararia
Hi. Hi, Sanjeev. Thank you for the opportunity. So, Sanjeev, our Q4 order booking was in the range of $200 million. If I’m not incorrect before FY25 and Q1, that that has actually gone down from 200 to $176 million. So, Joe, so can you just please explain why we still confident of Putin orders to the tune of $1 billion in the 12 months trailing? I mean, our order putting has in fact gone down, so I’m not able to square the two. And the second part of my question is we are almost through the first half of the second quarter.
How has order booking been? Because I think growth is what is ailing the company. I mean, we’ve done tremendously well on the margin front. It’s the growth part which I need a bit more color on.
Sanjeev Verma
Thank you. Yes, I think I’ll first accept your CP with respect to growth. And that’s where the focus is with respect to our confidence. This is forecasting. We’ve been looking at closing an absolute number of billion dollar starting at 175, 176 that we were this quarter. We are staring at large bookings coming up that we expect to close in Q2, Q3 and Q4. Many of the engagements currently from a large ticket perspective, which is over $10 million, $20 million, some going to $50 million is in the works and that constitutes today our pipeline. This pipeline, if you go back 12 months time, of course we didn’t report kind of breakout pipeline.
It still remained $1.6 billion or something in that range, but made up of lots of smaller deals as well. We have cleaned that up with respect to what we believe we should be focused on. In summary, to answer where we stand today, I expect taste is to have at least 50, 20% of growth in revenue sequentially going forward. We expect some of the quarters to be even larger from a perspective it will fall than within a large hyperscaler deal that we expect to win going forward. Considering a size of 175, $250 million deal for projects that last for 9 months, 12 months or 24 months can skew the win rate much larger from a percentage perspective.
So when I look at absolute volume perspective as to where we are and take the view of the next nine months, considering we are 1.5 months down in this quarter, we are confident of where we will be in bookings this quarter and therefore the revenue coming at the back and going forward. Also what I’m seeing in Q3 and Q4 with respect to the work that has happened of how many engagements are on the table, discussion is going on with respect to our contracting that gives us a positive outlook that we would be able to deliver on or about a billion dollar worth of absolute booking.
And if we do that, we expect that we should be able to open the backlog which is now at 520 range. The expectation is that we should open a backlog in the range of 700 odd million going forward to set the tone for fiscal producers.
Vivek Chararia
I have a second question. Since we reorganized the GTM team and with Jev and to come in as the Chief Revenue office, can you speak qualitatively as to what impact you’ve seen on round? I mean we’ve talked about margin and stuff, but I just want you to speak to, I mean as a company, you’ve been the CEO for a long time. Can you speak qualitatively as to what difference you’ve seen on the ground as far as deal engagement and the wingate distance and are you seeing a considerable difference if we were bidding for 100 million worth of orders is the win rate doubling? I mean can because everything now hinges on us delivering growth.
Sanjeev Verma
Yeah, no, very good question. So I’ll just add up so we do have the chief revenue officer for North America. We also added another few books of respect to a gentleman called Sean McGuire came over two months back to lead our data center which is a adjacent business which is outside of there’s span of control. So it’s very focused data centers. We have two. So coming back to your question the answer is yes. There’s Ankat with X enforce’s experience and his team members which also have come from which is our vertical heads. There’s a dramatic shift with respect to our engagements.
Quality of engagements Let me call out for example we are if you look at consumer and sector which is run by a lady called Jenna. I think we are currently engaged with very many airports. We had Miami Airport if you remember as one of our largest customers which is we are currently contracting to renew for several years but we have solid engagement going on with some other large airport infrastructure. Many airport infrastructures are getting refreshed as you know in America most of them are creaking infrastructure not because they don’t want to spend it because they were possibly made 30, 40 years ago.
So we are engaged with them from quality of engagement perspective of volume. Also from our existing customers we were single threaded. We were selling networking in one customer, possibly workplace in some other customer. So multi threaded horizontal approach that we have taken connectivity, networking, workplace, cyber. We are seeing multi horizontal therefore including a set of volume in some of the existing customers and some of the new customers. Many of these vertical heads including the CRO and others come with deep experience relationship and creating newer solutions that we can do. So we are now engaged with very many managed services long term contracts that we’ve never had before.
Now this takes time. It has to come to a certain tenure when that so qualitatively and quantitatively the engagement quality. As we speak we are hosting in rally very many CIOs from healthcare. We recently concluded a customer advisory council in Florida that attended Deepaka with me where we came out with very good engagements leading to over $100 million worth of active customer pipeline. I’m not saying we will win all of 100 million but we’ll surely make 20 $30 million worth of engagement from top customers including large pharma, life sciences. We intend to do very many more customer advisory councils that we are doing now where we invite customers as we speak Son is heading to the west coast with respect to our data center similar format.
So the engagement quality, the conversation with our customers using multi horizontals over the last 6, 912 months time has dramatically improved. Now this takes time to build as we’re speaking and looking forward in the next seven and a half months that we have. I know that’s where we’re seeing. Okay, what do we expect in quarter two as I called out earlier to be better significantly and also some of these engagements to turn in October, November, December going forward. So yes, good change in conversations, quality of engagements, multi country global engagements, imagining the black box paradigm inside our existing customers.
They had a recall of a certain kind. We had a very good tenured customer as you know but they had a recall of a certain kind that we do network or we do connectivity infrastructure the total story taking with our go to market verticalized horizontal solutions making a grid to that I think we are much better place than what I would say we were about 2, 3/4 graduation.
Vivek Chararia
Just one last question Sanjeev for FY26 BPAT in his initial remarks had sort of alluded to the margin guidance.
Deepak Bansal
Our lower end of the top line.
Vivek Chararia
Guidance will need us to deliver almost 1700 crores per quarter. Should we start to see at least 10 to 15% growth from Q2 onwards and then that accelerating as we move into Q3 and Q4? I mean so far we’ve, I mean I’m sure you can see that we need to start working the talk. So should we start to expect quarter.
Sanjeev Verma
On quarter growth on the top line.
Vivek Chararia
From Q2 and then that’s accelerating as.
Sanjeev Verma
You move into Q3 and Q4 because.
Vivek Chararia
We are at 1400 cores. Our ask for the next three quarters is close to 1700 crores if you are to meet the lower end of the top line guidance.
Sanjeev Verma
Thank you. Yeah, so I think as I said before the statements we expect to move forward in a quarter with a minimum of 15% going to 20 or beyond to hit that number. We expect that we needle to start moving in that direction starting quarter two and as you rightly said to take it from there and keep the momentum at 59% or more be able to catch up. We are currently intending and cover to track starting from quarter two.
Vivek Chararia
Best of luck Sanjeev.
Sanjeev Verma
Thank you.
operator
Thank you. Our next question is from the line of Nandan Majanath Arekal from JM Financial Ltd. Please go ahead.
Nandan Majanath Arekal
Hello.
Sanjeev Verma
Am I audible?
Nandan Majanath Arekal
Yes sir.
Sanjeev Verma
You’re. Yeah. Thanks for the opportunity.
Nandan Majanath Arekal
So I was. I just want to get some clarity on the exceptional items that have been reported in this quarter. What will be the trajectory of these. Exceptional items going forward?
Deepak Bansal
So on the exceptional items, because we are doing some restructuring, continue to do some restructuring and all those things, we are expecting exceptional items in the range of around 40 to 50 crore for the whole year. That’s what we have given the earlier guidance. Also last time on our, on our earnings call. Okay, on a sustainable basis, what do.
Nandan Majanath Arekal
You expect this, when would they stop?
Deepak Bansal
I think this year, this year it should be, it should be the, it should be the last unless otherwise something more comes up. Depending on the, depending on the economic situation or the macroeconomic situation, something else comes up. But otherwise this year should be the last for these broader things. And I don’t expect that this should go to FY27 or something in a larger way.
Nandan Majanath Arekal
Thanks.
operator
Thank you ladies and gentlemen. That was the last question for today. I now hand the conference over to the management for closing comments. Over to you sir.
Sanjeev Verma
I’d like to thank everyone for joining the call. I hope we have been able to address all your queries on this call. For any further information kindly get in touch with Purvesh Parekh, our head of Investor Relations. Our Strategy Growth Advisors, our investor. Listen Advisors, thank you so much.
operator
Thank you on behalf of Black Box Limited. That concludes this conference. Thank you for joining us. And you may now disconnect your lines.