Black Box Ltd (NSE: BBOX) Q3 2025 Earnings Call dated Feb. 12, 2025
Corporate Participants:
Sanjeev Verma — President and Chief Executive Officer
Deepak Kumar Bansal — Executive Director, Global Chief Financial Officer
Analysts:
Deep Shah — Analyst
CA Garvit Goyal — Analyst
Vivek Choraria — Individual Investor
Aman Soni — Analyst
Salish Jain — Individual Investor
Lakshay Agarwal — Analyst
Presentation:
Operator
Thank you ladies and gentlemen, good day and welcome to the Q3 and Nine Months FY ’25 Earnings Conference Call of BlackBox Limited. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on-date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in listen-only mode and there will be an opportunity for you to ask question after the presentation concludes. Should you need assistance during the conference call, please signal an operator by star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr Sanjeev, Whole-Time Director and CEO of Black Box Limited. Thank you, and over to you, sir.
Sanjeev Verma — President and Chief Executive Officer
Thank you. Thank you. Good morning, everyone. Welcome to BlackBox Limited’s Q3 and nine months FY ’25 earnings call. I’m joined by Deepak Bansal, our Executive Director and Global CFO; Purvesh Parik, Head of Investor Relations and our Advisor, SGA. I trust you have reviewed our results presentations, press release and financial release, all of which are available on the exchanges and our website. Let me start by providing some context for Black position in the IT industry. Gartner projects global IT spending to reach $5.7 trillion in 2025 with IT infrastructure accounting for $600 billion to $750 billion. Our total addressable market is approximately $120 billion to $150 billion or 15% to 20% of that, presenting a significant opportunity. We are targeting 1.5% to 2% of this market to reach $2 billion in revenue by FY ’29. I’m pleased to report our highest-ever quarterly and Nine-Month PAT in FY ’25, alongside strong EBITDA performance, which Deepak will explain later. As we move into fiscal ’26, we are focused on expanding our footprint with the top 300 customers and capitalizing on the growing digital infrastructure opportunities. AI-driven models are accelerating demand, particularly from hyperscalers like Amazon, Meta, Alphabet and Microsoft, who are investing over $325 billion in data centers and cloud services this year. We are positioned to benefit from this. Recently, we secured a major data center order from one of our largest hyperscalers, including three large US sites and a INR250 crore order. Additionally, we have won significant orders across cybersecurity, network integration and airport infrastructure. We are confident that demand for digital infrastructure will remain strong across industries. While Q3 and Nine-Month FY ’25 revenue growth was impacted by a subdued order book, we remain focused on acquiring high-value customers and optimizing operational efficiencies. Our order pipeline has strengthened with a sequential increase to $465 million, approximately INR3,900 crores as of December 2024. We have secured $80 million in orders so-far this quarter and expect strong momentum to continue into quarter-four and FY ’26. For FY ’25, we have revised our revenue guidance to INR5,925,000 crores to INR6,000 crore due to delayed decision-making and our strategy to exit lower-value customers. 80% of our business comes from top 200 customers, many of whom are Fortune 500 companies. Going deeper with these customers is our priority. Notably, contract cycles have extended due to some delays, but we are confident this will improve as we move forward. For FY ’26, we anticipate revenue growth to INR6,750 crores to INR7,000 crores, driven by an expanding order book and a stronger win rate from large enterprise and high-value opportunities. This momentum should positively impact revenues from Q2 FY ’26 onwards. Despite the lower revenue guidance for FY ’25, we are on-track to meet our revised EBITDA guidance of INR525 crores to INR535 crore, reflecting a 23% to 25% increase from FY ’24. EBITDA margins of 8.9% for FY ’25 are above our previous expectation due to improved efficiency and focus on quality of revenue. For FY ’26, we expect EBITDA to range from INR605 crores to INR645 crores with a margin between 9% and 9.2%. We have also revised our FY ’25 PAT guidance to INR205 crores to INR210 crore, reflecting an exceptional impact. However, this still represents a 50% growth over FY ’24. For FY ’26, we expect PAT to grow 30% to 40% with a target of INR265 crores to INR285 crores. I will now hand over to Deepak to take you through the financial details.
Deepak Kumar Bansal — Executive Director, Global Chief Financial Officer
Thank you. Thank you, Sanjeev. Good morning, everyone. Let’s review our financial performance for quarter three and nine months ended for FY ’25. Revenue for quarter three stood at INR1,502 crores, slightly above quarter two’s INR1,497 crores, but down from INR1,655 crores in-quarter three of FY ’24. For the nine months, revenue reached INR4,422 crores compared to INR4,801 crores in the same-period last year. Subdued order book and delayed decision-making impacted revenue, but strong order growth in-quarter one of FY ’26 gives us confidence in meeting our FY ’26 targets. On the EBITDA front, we delivered strong growth. Quarter three EBITDA rose 15% year-on-year to INR134 crores, while for nine months ended EBITDA grew 25% year-on-year to INR385 crores. EBITDA margins improved significantly, up 190 basis-points year-on-year to 8.9% in-quarter three and 230 basis-points to 8.7% for Nine-Month FY ’25. Thanks to better efficiency and quality of revenue. Quarter three FY ’25 profit-after-tax reached a record INR56 crore, reflecting a 37% Y-o-Y increase. For Nine-Month FY ’25, PAT grew 49% year-on-year to INR144 crores with PAT margins improving by 120 basis-points year-on-year to 3.7% in-quarter three and 130 basis-points to 3.3% for Nine-Month FY ’25. We continue to generate strong returns on equity and returns on capital employed along with positive cash-flow. Based on our strong order pipeline, we are confident in achieving our FY ’26 guidance across all parameters. That’s all from my side. Sanjeep and I are now happy to take your questions. Thank you,
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 B&K Securities. Please go-ahead.
Deep Shah
Yeah, hi, good morning. Thanks for the opportunity and congrats on substantially improving your margins. I think this is in-line with what we have been saying for some time. Sir, so if I were to further emphasize on this, we’ve been saying that we want to touch the long-tail of clients and focus on-top 300. But what we’ve seen this quarter is that sequentially number of clients in revenue budgets of more than INR525 crore INR50 crore, they have declined. So could you help us explain this divergence that we are focusing on-top clients, but the number of clients in top brackets have come down?
Sanjeev Verma
Yes. Yes, I’ll take that. So I think we are looking at point in time. Of course, there are several clients in those buckets, which are renewed periodically and there also projects are ordered in motion. So as we move forward, we will see those changes. We’ll continue to focus on our top 300. There is a timing issues of when those contracts are renewed. For example, in the coming quarter, we are looking at a very large healthcare contract to be coming back for several years. So that will change and it could be possible within a quarter, we have several of such. So when we take a situation for nine months or a particular quarter, there could be small adjustments there. But our go-to-market strategy now with verticals and horizontals that I’ve said before, we’ll continue to focus on our top clients and ensure that we are able to increase those various buckets of INR50 crore 100 crore, INR200 crores customers going-forward.
Deep Shah
Okay, understood. So would it be fair to say that this number we should look maybe on a Y-on-Y basis or on a — on a yearly basis? That would be fair?
Sanjeev Verma
That would be fair. Okay, yes.
Deep Shah
Understood. Sir, second question is on — is on this order book. So you highlighted that you’ve won about $80 million worth of orders post the end-of-the quarter. So typically, sir, what part of our revenues flows into — I mean, there are large orders which become part of order book and then they are executed versus, say, ongoing services. Another way to ask this question would be that what would be the typical duration of this order book, $525 million, $30 million now to convert to revenues?
Sanjeev Verma
So we usually take on an annualized basis for our contract revenues and a total value of projects for our project order booking. An average cycle of a project order booking is about nine months, some are going to two years time, some 18 months, but an average between nine and 12 months’ time. So a fair view to look at order booking would be on an annualized basis. So between 60% and 65% of our revenues are covered through the order book at any point of time. We are working to make sure that as we get into larger deals to improve that coverage on any quarter from the current 60% levels to maybe 65 70 as we go-forward focus on larger deals. So in summary, we take project order values from an order book perspective when we report and we take annualized contracted value of contracts to report order book.
Deep Shah
Understood. Fair. This is helpful. Sir, one last question that now we’ve had several stores for many quarters and we are probably seeing some benefits of it in terms of our margins, efficiencies and improving. But what is the idea here that how much leaner you think the organization needs to become? How long will this continue? And what is the end goal here? How many clients do we want to service? How many employees do we want to keep? I understand we’ve been reducing employee count. So any idea here would be helpful because this severance cost is substantial, right? It’s like INR13 crores this quarter on an EBITDA of INR130 crores.
Sanjeev Verma
So I’ll take the later part of the question and then I refer to Deepak with respect to severance cost. With respect to how many clients, our focus, as I just said is to focus on larger clients and larger deals. We have a total basket of close to 1,500 odd clients and we are benchmarking that we would be wanting to serve — progressively serve clients to a level of where the potential for us for $1 million. That’s the benchmark. We are not there at this time. Focusing on-top 2000, 300 of our customers and then others, which we see at least baseline because we cannot afford to be everything to everybody. So that’s our focus. With respect to — with scale, we will gain some operational efficiency as well. So therefore, it’s not a linear investment in people as we start to scale. So we’ll see our margins gradually improve as we start to build scale. With respect to how long do we see the severance cost of short-term, I’ll defer to Deepak to respond to that.
Deepak Kumar Bansal
Yeah. Yeah. So yeah, so Deep, what is happening is that like you know that we continue to — we continue to optimize the efficiencies in the whole ecosystem and we still think that there is a little bit of scope there to improve and all those things. So it’s like a continuous process we are running right now and we are expecting that for next, let’s say, 3/4 at least, we are expecting the severance cost to continue because it’s like we think that this is over and now we have nothing to do. And then again, we put a review process and again, we see that, okay, these are the 10 people again which we can remove or which we can move India or not required or whatever it is the severance cost comes in. In this quarter, specifically or let’s say, on the last quarter, there is lot of people we have removed in Europe. And because of the Europe thing, the amount of the severance is little higher as compared to what it happens in US so we are revisiting everything in across the world. It will continue for next 3/4 more so that we continue to optimize our efficiencies and do more in less.
Deep Shah
Understood. This is helpful. Thanks, Sanjeep. Thanks, Deepak. Deepak, one last question for you and this is purely boot keeping. If I look at our guidance and I take midpoint of a guidance for simplicity, the delta in absolute rupees of increase in PAT is actually over the increase in EBITDA. I mean, this does not sound right if we assume that severance cost is going to be there only for next two quarters because this — this year we had severance costs for the full-year, plus we should have some interest cost reductions, both because of rates are expected to come down and we’ve raised INR100 crores, we raised around INR300 crores in the next year. So could you just explain how are these guidances given or is it that you’ve been extremely conservative to not miss the guidance, if you could explain that would be useful.
Deepak Kumar Bansal
We think — yeah, three things here. One is — one is that we have assumed the severance cost will continue for 3/4 in the next fiscal year. That is number-one. Number two, what we have assumed is basically we have not assumed that the interest rates will come down. We have not assumed that. And also on the growth because we are talking about a growth of close to around INR750 to INR1,000 crores type of growth on the current year revenues. So for that, obviously, the working capital will come in. And for that purposes, because we need to put upfront working capital, so there will be a little bit of interest cost on that securitization, what we will do, the receivable and all those things, that will — that will come in there. And then little bit of, let’s say, 2% increase in the tax on the profits, which will come. So and then and then we didn’t want it to be expanded more — wanted to be a little bit conservative in terms of overall numbers and that’s how if you see — if you see our EBITDA, the EBITDA is going up by close to around INR80 crores, let’s say, at the lower range of the guidance and the PAT is going up by INR60 crores. So it’s a INR20 crores type of the difference which is there, which comprises of all these things.
Deep Shah
Understood. This is very, very helpful. Thanks. Thanks, Deepak. All the best, Sanjeev and Deepak. Thank you so much.
Sanjeev Verma
Yeah. Thanks. Thanks Deep.
Operator
Thank you. Ladies and gentlemen, you may press star and one to ask a question. The next question is from the line of CA Garvit Goyal from Invest Analysis. Please go-ahead.
CA Garvit Goyal
Hi, am I audible?
Operator
Yes, sir.
CA Garvit Goyal
Good morning, sir. I have two, three questions. One is on our top-line. So over the past three to four years, our top-line growth has been muted, while profitability has improved primarily due to cost-cutting measures like reductions in employee cost and service charges. Here, I’m having two questions. One is, what are the primary challenges that are preventing us from accelerating the top-line growth? Like despite our focus is on data centers and go-to-market strategies, we have reduced our revenue guidance. And additionally, if we see data centers are not a major portion of our revenue. And even there we are citing like customer capex delays are happening. So given that the high-quality profit growth is driven by the top-line expansion rather than the cost-cutting, how do we plan to achieve like sustainable revenue growth of 75% to 30% moving forward? That is one. Secondly on — while we position ourselves as a provider of specialized IT solution company, our PAT margins are very low at 2%, 3% in comparison to even general IT companies that achieved 6% to 7% PAT margins. So is it due to intense competition that is limiting our pricing power or are there any other structural factors at play? So can you provide more insights like why our margins are relatively low and what steps we are taking to improve them, sir? So that is the one question, sir. So please, sir.
Sanjeev Verma
So I take that. I think yes, our order book and revenues have been mutated over the last several years’ time. As I had told in my earlier earnings call, I think BlackBox historically has been serving a very large bunch of customers over several thousand and we were trying to be everything to everybody. And we embarked upon initially to focus on margin growth, margin expansion because three years, four years back, when we acquired, there was no margin. So our focus was largely on margin expansion and that’s what we did. Over the last couple of years, I think we have pivoted to become a specialized global digital infrastructure player at the back of growth for data centers in AI. To that extent, we had to change our go-to-market motion to be able to go deeper than wider. We employed and engaged with Consulting to reorganize our go-to-market focus, as you’d know, to be able to do that. Our entire invested heavily in our vertical motions, bringing in a lot of top industry leaders in verticals and horizontals over the last several quarters. The effect of that investment in verticals and horizontals is starting to take shape as we speak. And as we get into our fiscal ’26, we expect the order book momentum to be able to take us to our guidance and growth overall over the next several years’ time. Large projects have certain challenges with respect to timing and therefore, there we had those challenges in this year where our revenues remain muted. We expect our current order book and pipeline, which stands robust of over $2 billion. To be able to help us increase our win rate, our win rate in our large deals has been lower with focus now in verticals across technology, financial services, hyperscalers, healthcare and so on and so forth, we expect our order booking to gain significant momentum starting from quarter-four onwards, getting into the next fiscal year. So we believe our current guidance for the next year, which allows us to grow mid double-digits in 13% and 17 odd percent, confident of being able to do that. Your second question pertaining to our PAT and stuff, so we are not comparable to a regular IT services offshore company. That’s not our model. Our model of — is largely local. We are local digital infrastructure company. So therefore, we have a larger resources onshore than offshore. We, of course use offshore appropriately to be able to expand our margin to build our service delivery wherever we can, but more importantly, our back-office and share services. Our guidance pertaining to our EBITDA margins is 10%. The industry EBITDA margins for our kind of infrastructure integrator business locally and globally is in the range of 8% to 12%. So we have — we are currently focused on taking our EBITDA margins to be in the range of 10% and then from there with scale work forward to see whether we can improve that further 10%, 11% and 12% going-forward. A PAT, of course, is an element of our cost of money, depreciation and other exceptional factors, as Deepak alluded, we have seen over the last year or more than that the interest rates to be high. As we scale-up our business and get into fiscal ’26 and fiscal ’27, we expect our — not much of our cost below the EBITDA line to increase in a linear fashion. So we will see our PAT margin inching up more towards 4%, 5%, 6% over the next three years’ time. Deepak, you want to add something on drop between EBITDA?
Deepak Kumar Bansal
Yeah. So, yeah. Yeah, two things I wanted to add. One is one is that on the PAT side of it, we are — we are mostly an onshore company. We are not offshore company like the other IT service providers from India is. We have 90% of our people on-ground. So let’s say if our majority of the business, which is two — which is three-fourth of our business comes from America. So we have the people on-the-ground. We have close to around 2,200 people on-ground in United States. So from that perspective, we are not comparable with the Indian IT service providers. We are IT — digital infrastructure provider, we are not IT service provider.
CA Garvit Goyal
Understood, sir. And sir, you mentioned a $2 billion target by FY ’29. So from the current level, we want to achieve that number, we have to grow at a CAGR of around 30%. So — but for next year in FY ’26, you are saying even backed by the orders that you are expecting in upcoming quarters, we are guiding for a growth of like, 15% 17% kind of number. So is it like the major expansion in the turnover is going-in FY ’27 and onwards?
Sanjeev Verma
So I’ll take that. So yes, I think our $2 billion aspirational goal in the — by fiscal ’29 also includes a decent portion of inorganic that we do not talk about. So we expect organically to be in the range of $1.4 billion, $1.5 billion and we expect some inorganic stuff as you move forward included in that. We expect our organic margin as you move forward from the current 15 70 levels to move to 20s and the gap between that organic growth of nearly 20% as we move forward to fiscal ’26, ’27, ’28 and beyond is also to see that we are able to be able to acquire assets that we believe are accretive for our shareholders and we will talk about them when we get ready to be able to do that.
CA Garvit Goyal
Understood, sir. And just a clarification on the order inflow, like you mentioned that one of the world’s largest hyperscaler has allocated three large sites in the US and additional to it, you have mentioned like 250 CR order from this long-term customer only. So could you clarify like whether this INR250 CR order includes those three large sites or is there any additional order value associated with these specific sites? And if so, what is the incremental order value for these three sites?
Sanjeev Verma
Yes. So the current INR250 crores quoted does not include all the new sites. The new sites — the order comes through a lag. It first comes through an allocation, then discussion and the order book. So yes, there will be more order flowing with those three new sites, two of them have not been — has not seen orders yet. So we expect order in the range of INR200 crores to INR400 crores additionally from this customer for those new sites in the coming quarters.
CA Garvit Goyal
Okay. Understood, sir. And based on our order filings, sir,
Operator
I would request
CA Garvit Goyal
Last question. Just last question. Yeah. So based on the order filings this quarter, the total value of incremental orders like in Q3 is around INR400 cr, which seems relatively small compared to our existing top-line. So in the last phone call and in the today’s con-call as well, you mentioned a strong order pipeline is there and expectations of securing the sizable orders to drive growth in the years ahead. So however, considering the current order inflow and our stated revenue growth of 13% to 15% for FY ’26. There appears to be a disconnect, like could you provide more clarity on like how the incremental orders are going to be big enough to drive this kind of growth that we are expiring to?
Sanjeev Verma
So as we actually provide overall order bank at the — on earnings call at the end of a quarter. So the overall order bank or order backlog of that we have provided for is marginally higher than our previous quarter. As we get into the quarter-four, we expect our order book to close even larger compared to what we are seeing now. So we expect our quarter-four order book to be much higher. So I think it’s not a point in time of order book that we booked in Q3. The overall order book is more — it’s EUR10 billion more than the previous quarter. As we get into our new fiscal year, we expect to open up with a larger order book compared to that will drive growth going-forward in fiscal ’26. Also, our current pipeline based on our assessment has a significant traction to be able to book billion revenue in the next fiscal year, giving us confidence for the guidance that we have given for 15% 17% organic growth in next year.
CA Garvit Goyal
Okay so thank you very much and I join back the queue.
Operator
Thank you. Ladies and gentlemen, you may press star and one to ask a question. The next question is from the line of Vivek Joraria, who is an Individual Investor. Please go-ahead.
Vivek Choraria
Hi, hi,. I’ve got two — I’ve got two questions, one slightly near-term and one long-term. I mean, can you just point out and talk to how a change in our go-to-market strategy is impacting our organization because we’ve been talking about a double-digit growth for the past six quarters, but that hasn’t come about. What gives you the confidence that now, I mean you’ve been talking about a delay in order — I mean delay in order taken and in the same that we are talking about a double-digit growth starting from next year. So are you confident enough to achieve that because we’ve been talking that for a long-time. I think it’s — I mean, do you think we start walking the talk from, say, Q1 or Q2 onwards? Because we don’t have much runway left for the margin part. So it’s why the company needs to start firing on the top-line.
Sanjeev Verma
I’ll take that, Vivek. So yes, I think from a — specifically from a renewed go-to-market this thing we started the initiative early-on in fiscal ’25 by engaging consulting. Our top stack for our sales leadership with respect to vertical leaders across financial services, technology, healthcare, consumer and other sectors were completed in the middle of the last — this fiscal year and we are in most of we also invested heavily in our horizontal practices to be able to support that, be it in connectivity or data center and workplace. We are starting to see those results with respect to pipeline building on large-value. Large-value orders engagements are of two nature. One, of course, participating in growth, that’s your build-out of infrastructure with airports or data center. And then of course, displacement-led growth, which you have to get the right to win. A combination of two will allow us to do that. Our large deal pipelines in the Q3, getting into Q4 is significantly larger. Our quality of engagements with our top customers, the top 300 is much better and deeper. I’m personally engaged in many of those conversations as well. So as I told earlier, we expect our order book to now gradually improve from where we left the first two quarters. The quarter three was slightly better, but not as much. We expect that to be much better in-quarter four, leading us into fiscal ’25 — sorry, fiscal ’26. And our ability now to not only participate and get considered, but our account management, deeper engagement will allow us to increase our win rate. Our win rate for large deals was much less compared to what we expect it to be. We expect our win rate for large deals to be in the range of 20% 25%, which is fairly low at this time and that itself will allow us to propel a significant order booking uptick, which will then convert to revenues going-forward. So I feel confident with respect to fiscal ’26, double-digit growth with the motion that we’ve had over the last six, nine months, a large deals take a little bit of a time to make sure displacement growth requires a bit of a time. And then the faster adoption of AI and build-out data center for what we have seen today also shows us larger opportunities for us to be able to participate in those. We are engaged in those conversations. So a combination of a robust pipeline, increasing our win rates, deeper engagements with respect to our conversation that we’re having with our customers, quality of revenues and the combination of that, we feel confident for our growth momentum in fiscal ’26 and beyond the way.
Vivek Choraria
Yeah. Sanjeev, just to clarify, so we — so we are basically guiding for close to 15% to 18% top-line growth or organically for the next four years and then the acquisition comes on-top of it. We’ve been barely able to grow top-line. I mean that’s quite a tall ask. I mean I hope for — I mean, I hope you guys have your plans in-place to deliver because it’s like it will be quite a task to deliver, say, 15% growth organically. I mean as I mean as we are seeing in Q4 of ’25, so when do you think we’ll start seeing those numbers on the P&L. I mean, so should Q2 be a fair expectation to see a double-digit growth on the top-line?
Sanjeev Verma
Okay. So I’ll give you two answers. One, of course, yes, so I think considering our muted results from a growth perspective in this current year, your question is valid. As we told earlier, we’ve also been working with respect to eliminating some of our non-accretive long-tail and I address that by the quality of revenues. So the answer is yes, we expect from starting from Q2 of this fiscal year to see those double-digit growth to be able to allow us to reach our guidance of overall double-digit growth in the fiscal ’26. Our order pipeline getting into quarter-four looks good. Our order pipeline, our order backlog getting into quarter one of fiscal ’26 will look better and momentum will continue. So fiscal ’26, quarter two onwards for the next several quarters, getting those double-digit, high double-digit momentum to lead us into our guidance of, 50%, 17% organic growth is what we are confident about in fiscal ’26.
Vivek Choraria
Sanjiv, just one last qualitative question. How different do you feel our company is now? I mean, with the change in the strategy and with the recent top, top-level, do you feel more confident now that we can finally scale because I mean just speak to it qualitatively. I mean, if we were able to participate, say, a $10 million order not, can we now see our company participating in much higher — and much higher orders of magnitude. Just — I mean, so if you can just speak in terms of the quality of the bench that we have now and how confident do you see?
Sanjeev Verma
Yes. I believe I’m very confident with the quality of bench that we have with respect to the leadership we’ve also added in the last two quarters specifically, 20 new sales business development hunters from industry experience that we desired and some of these have taken time to bring them some on-board. So the qualitatively, the quality of leaders in verticals in horizontals, the quality of engagement that you’re having and the size of the deals that you’re having is much better. You’ll be able to see some of those. For example, we are now engaged with the fairly large deal with the healthcare that is going to culminate for a long-term contract. We’re also seeing on the modern workplace our engagements pertaining to AI adoption and we will be talking about those in the coming quarters as well. So qualitatively, our level of engagement, the quality of engagement that we are having now with our customers, with the team that we have, overall management team, the sales management team and the sales of business developers are much better that give to provide some confidence. I’m personally engaged with the mentoring and engaging with some of these top customers and I believe bullish about the quality of people. We’ll continue to add more hiring more high-quality talent, especially in terms of sales as we get into this, we will be focusing deep-dive. We have picked-up our top 100 customers for deep-dive account management out-of-the top 300 and each of our vertical leaders are responsible to own up several of those. So if 10 of those, including myself, owner five, 10 to mentor and engage, we believe the quality of engagement is getting much better. The deal size is getting larger. We all have to focus to make sure that we are able to improve our win rates. Consideration, we have been considered, we have to make sure that we improve our win rate to be able to get to that momentum. So I feel confidently of what’s happening in FY ’26.
Vivek Choraria
Thank you. That’s it for questions.
Operator
Thank you. The next question is from the line of Aman Soni from Invest Analytics Advisory LLP. Please go-ahead.
Aman Soni
Hello. Am I audible?
Operator
Yes, sir.
Aman Soni
What are the key reasons for the delay in the settling foreign currency trade payables and receivables? And what steps has the company taken to resolve the issue with regulators and counterparties and what is the expected financial and compliance impact, including potential penalties or risk to cash-flow and working capital.
Sanjeev Verma
You are talking about you are talking about which one the you are saying about the note on the FEMA?
Aman Soni
Yes.
Sanjeev Verma
So that is that is — that is not impacting the day-to-day thing. They are more intercompany transactions. They are not third-party transactions. The — as per the FEMA regulations, all the intercompany receivables, payables or any receivable payable from overseas when you do the transactions from India need to be closed within the three years time-frame. So these are the — these are the, let’s say, some of the transactions which were not transacted within the three years time-frame. So we are working with some approvals from — from the Reserve Bank to close those transactions, but those are all intercompany transactions. So there is no impact on the on the balance sheet or on the financial affairs of the company because of that.
Aman Soni
Okay. Thank you.
Operator
Does that answer your question, sir?
Aman Soni
Yes.
Operator
Thank you. The next question is from the line of Salish Jain, who is an individual investor. Please go-ahead.
Salish Jain
Yeah, thank you for the opportunity. I have two questions. First being, in the previous fiscal year, we were on our way of closing our second 100 million customer. So have we been on an annualized basis able to make 100 million-plus revenue from both those customers in current fiscal?
Sanjeev Verma
So if I understood the question, we said, are we able to get 100 million customer in this fiscal? Is that what you said? I didn’t get numbers.
Salish Jain
What I wanted to — so from both those customers, have we been again able to make 100 million-plus revenue in this fiscal as well.
Sanjeev Verma
So yes, we have made $100 million-plus revenue from our largest customer and with this — we will make other year hasn’t ended yet and we expect to make that as well with our second-largest customer, almost $100 million. The idea for us is to get into more customers in the $100 million bracket as we move forward into fiscal ’26.
Salish Jain
Sir, how close are we in adding more customers in this $100 million-plus bracket.
Sanjeev Verma
So we expect in fiscal ’26 to add at least one more customer in the $100 million bracket.
Salish Jain
Okay. Okay. And sir, last question. Earlier we were very confident that because of our GTM strategy, FY ’25 shall be a flat year and FY ’26 is where we will reap the benefits of this new strategy. But the updated FY ’26 guidance suggests that we are targeting a lower-growth in FY ’26 despite relatively healthier macro-environment, especially in US and there has been strong capex announcement from all the hyperscalers. So I wanted to understand what changed for us. Why are we holding back-in FY ’26 despite a healthier macro-environment? Thanks.
Sanjeev Verma
So we are taking into account the revenue to be achieved in the fiscal year, the guidance for revenue. We expect our order book momentum to be significantly better and larger with the macro-environment, AI adoption and so on and so forth. But we also have to see the timing of our projects and win rate. So we expect our fiscal ’27 to gain larger momentum with respect to the order books that we’ll have. So we have to ensure that we are able to convert those order book into revenues and that requires a certain timing of those orders. As we expect to gain larger order book, larger size from our large customers, the runway to be able to convert that into revenues may not be enough for us to — and therefore, we are being a little conservative in terms of guidance, but we believe the fiscal ’27 will have much better momentum at the back of order backlog and wins that we’ll have in fiscal ’26. So that’s the reason we want to make sure that we are able to deliver from a revenue standpoint.
Salish Jain
All right. Thank you so much. That’s all from my side.
Operator
Thank you. The last question is from the line of Lakshay Agrawal from Ventures LLP. Please go-ahead.
Lakshay Agarwal
Hello, sir. Thanks for taking my question. So firstly, I just wanted to understand that in our data center segment, like we had earlier also mentioned that 20% of our revenue is coming from there and we want to move towards 25% to 30%. So I just want to understand that what service exactly we provide in the net infrastructure network development. Like I do understand that we put fibers and we put the passive infra, but if you could give some more detail on it.
Sanjeev Verma
So we expect our data center revenues in our $2 billion goal to be in the range of about 25-odd percent as we now get into the next three, four years most of. So that’s our goal. With respect to what we provide, we largely provide a connectivity infrastructure, which is the core of any data centers, which includes structured cabling, passive infrastructure, the fiber to the racks, the wireless infrastructure into the campus, we’re largely a networking connectivity provider. The networking connectivity is about 10% to maximum 15% depending upon the size of a data center build-out. Our data center build-out requires in America about $10 million ballpark average per megawatt. So depending upon what we win, if it’s a 200 megawatt build-out that possibly spent $2 billion, the total opportunity for us in providing connectivity network infrastructure is about $200 million. We are not only the sole provider, sometimes we are. So we have a significant opportunity to do that. We can also do more than that, but considering the scale, I think customers buy differently in a hyperscale environment. So our larger focus at this time is to be the best-in providing connectivity, networking, wireless, some other private LT infrastructure for a data center campus, which is a significant opportunity, which is about 10% of the total spend of the total capex spend. So that’s what we do in the large-scale hyperscale data centers in the US.
Lakshay Agarwal
Understood, sir. And secondly, like who would be our close competitors in this space? And how does the margin profile look for this segment compared to the same networking solutions which we provide for healthcare and finance and different other segments?
Sanjeev Verma
So our peer groups in that space in North-America includes the likes of DirectLine, IES, which is a public company, E2optics and some more vision networks and some more. The margin profile for connectivity compared to other — when you go larger, the overall margin profile is slightly subdued. The margin profile for data center infrastructure networking from a gross level in the range of 20% to 20%, whereas if you do a healthcare, of course, the scale will be much lower is in the range of, 25% 26%. But with respect to being accretive to operating income, I think both of the same because the cost-to-serve a large client with respect to our sales cost or other overheads is lower. So it will balance out with respect to our goal of operating margin of 10%. So both of them are equally accretive because larger volumes require little — lesser overheads to solve.
Lakshay Agarwal
Understood. And lastly on the client acquisition strategy, like is it the years of experience and the client base which we have to — which will give us the recurring revenue or do we also provide some lower pricing from which we are able to add new customers to? So what is our exact strategy on that?
Sanjeev Verma
I think you have to be competitive at-market pricing 1% or 2% would not really make a difference. Your is largely a contextual based on your experience based on the relationship we have, ability to serve globally for many of our customers. So I believe combination of long-term relationship, providing relevant technology solutions with knowledgeable and highly-skilled people and providing, of course, one of ability to serve them globally at-market cost will allow us to improve our win rate. But largely, it is our relationship and the relevance which will count to be able to win that.
Lakshay Agarwal
So sir, like when you mentioned relationship, I understand that we can get extra business from our existing customers, but to get new customers, what exactly do we offer over there?
Sanjeev Verma
Yeah. No, I believe when we talk about, one, first of all, we are focused on our bunch of customers. We have very many customers, the total addressable market within those customers for increasing share of wallet is very, very large. Not to say that we not look for newer customers. Of course, we all want to look for newer customers. And to that extent, our investments in sales motion vertical leaders are based on their ability to keep those — bring those relationships back to us, right? People have served those customers for a long period of time. So serve your existing customers, increase share of wallet. If you are providing one set of solutions, we can provide others and therefore increase share of wallet. That’s a larger focus to go deeper into an account. We have very many market customers. And with respect to hunting or getting new logos that we must want to win, our investments in newer salespeople, top-quality talent will allow us to start those conversations, which will eventually lead into building of a relationship and winning those deals.
Lakshay Agarwal
Okay, understood, sir. Thank you. Is it possible if I can squeeze one more question? So I guess I’ll just ask one question. I just wanted to understand that how does the pipeline look like in terms of numbers, if you could provide? And what is our conversion rate for the same.
Sanjeev Verma
So as I said, our current pipeline for getting into Q4 and beyond looks large. We are looking at pipeline in two-parts, a large-value deal pipeline, which is our focus and that’s what has grown over the last several quarters, which will allow us to win some of those as you move forward. Our win rate in smaller deals has been much robust at 35% 40%. Our win rate for large deals historically has been lower. So our focus now with verticals that we have brought in horizontal is to increase the win rate that I told earlier to about 20-odd percent. So that’s our focus. And if we were able to do that, which we are confident about, we should be able to deliver the organic growth that we’re talking about over the next several years.
Lakshay Agarwal
Okay, understood, sir. Thank you.
Operator
Thank you. As there are no further questions from the participants, I would now like to hand the conference over to the management for closing comments.
Sanjeev Verma
I would like to thank everyone for joining on the call. I hope we have been able to address all your queries. For any further information, kindly get-in touch with Purvesh Parik, our Head of Investor Relations or with Strategic Growth Advisors, our Investor Relations Advisors. Thank you.
Operator
On behalf of BlackBox Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.