IRIS Business Services Ltd (NSE: IRIS) Q4 2025 Earnings Call dated May. 15, 2025
Corporate Participants:
Siddhesh Chawan — Investor Relations
K Balachandran — Co-founder and Chief Financial Officer
Vineet Kandoi — Head, Accounts & Finance
Anuradha RK — Business Head, IRIS CARBON
Unidentified Speaker
Deepta Rangarajan — Co-founder and Chief Operating Officer
Analysts:
Unidentified Participant
Manan Poladia — Analyst
Rohit — Analyst
Sakshi Garg — Analyst
Mitesh Mehta — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to IRIS Business Services Limited Q4 and FY25 earnings conference call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during 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. Siddheshawan from EY LLP. Thank you. And over to you sir.
Siddhesh Chawan — Investor Relations
Good evening to all of you. Welcome to Q4FY25 earnings call of Iris Business Services Ltd. The results and presentations have already been mailed to you and you can also view it on the company’s website. In case anyone does not have the copy of the press release or presentation or you are not marked in the mail, please do write to us and we will be happy to send you the same.
To take us through the results today and to answer your questions, we have the top management of iris Business Services Limited represented by Mr. K. Balachandran, Co Founder, World Time Director and CFO Ms. Dipta Rangarajan, Co Founder and WorldTime Director and Mr. P.K. x Thomas, World Time Director and CTO. We will start the call with a brief overview of the quarter a year gone past and then it will be followed by the Q and A session.
Before we proceed with the call, I would like to remind you that the discussion may contain forward looking statements that may involve known or unknown risks, uncertainties and other factors. It must be viewed in conjunction with our business risk that could cause future results, performance or achievements to differ significantly from what we expressed or implied by such forward looking statements.
Having said that, I will now hand over the call to Mr. K. Balachandran. Over to you sir.
K Balachandran — Co-founder and Chief Financial Officer
Thanks Desh. I hope all of you can hear me. Good evening and welcome to the UNIX call of iris. We are grateful for the time you are spending with. From Iress, we have, as Sudesh mentioned, we have Deepta, Thomas and I attending the call apart from all our senior business leaders. We upload the investor presentation on the Exchange website and some of you would have seen this, I’m pretty sure, and we also have sent a press release to the shareholders.
Now let me just step back and set a bit of background before we go into details. As all of you are aware, over the years since its IPO in 2017, IRESS has steadily built its business across its verticals. We have added marquee clients, expanded our offerings and gone deeper into existing accounts. In fact, over the past three years we have seen growth accelerating compared to the first four years since the ipo. On an average you can see that our top line has grown at about 27 28% in the past three years compared with about 18% growth in the previous four years. Obviously all of you know that the soup Tech segment have given a big boost to our revenues in the recent past while in the Regtech segment we have made a significant move which we have talked about in the previous calls as well by expanding our offerings deeply into the reporting supply chain of enterprises for both financial and now non financial reporting as well
In fact in the previous financial year that just closed, we have started seeing indication of our pivot into this area. This is a business where we are gearing up to scale substantially going forward. There’s a lot of action on the sales, marketing and product fronts as we prepare to move on to the next level. We are confident of making solid progress over the next few years to capture market share in this market which is at an early stage of growth. At the same time I want to state that we will spend money in a measured and well thought out calibrated manner. From our point of view this is not a sprint, but it’s not a marathon either. I think it is somewhere in between. We are definitely ramping up in a deliberate, well thought out manner.
Now let me come back to the current year where we are going to talk about our results and of course answer your questions. In the current year of course we have done quite well on the key business and financial parameters and as we have mentioned in the past, our businesses, we recommend our businesses examine or analyze from an annual basis rather than looking at quarterly movements because that’s the nature of the business. Of course we can talk about quarterly numbers, but to understand the business trajectory it is always recommended that we look at from an annual basis.Now to delve into some of these financial details, I request Vineet Kandoy to come in now. Vineet handles our financing accounts along with me. And he has been with us for so many years. Aside from the IPO days, we have been working together. And he worked closely with me and Deepta as well. So over to you Vineet.
Vineet Kandoi — Head, Accounts & Finance
Good evening everyone and thank you Balu. I will now quickly run through some of the highlights of our financial performance. I am pleased to report that FY25 has been a year of good financial performance which positions us well for sustained growth in the years ahead. For the full year our total income grew by 25% yoy to 128.51 cross. EBITDA increased by 36% yoy to 21.54 cr. PAT rose by 51% yui to 13.25 cr. This growth was driven by continued expansion of our recurring revenue stream, strong traction in the international markets and careful cost management despite increased investment in technology and talent.
In terms of quarterly performance, revenue came in at 35.4, a 6% increase for Q3 and 16% YoY growth. EBITDA was 5.85 cr, improving 3% Q on Q maintaining a healthy margin Profile Pad stood at 2.88 Cr lower sequentially reflecting higher operating expenses while Q on Q growth was more moderate. It follows a high base from Q3 and reflects investments in product development and team expansion, both of which are crucial for our long term trajectory. In terms of segment performance, Suptech led the growth with a 34% year on year increase driven by new wins and ongoing implementations across regulators. Tax tech grew by 20% aided by traction in the Indian tax compliance ecosystem and early work on the Malaysian e invoicing mandate. RegTech posted a 12% growth with new customers onboarded in Europe and US under Iris Carbon.
In terms of geographic mix, Africa contributed 35% of the top line for full year led by our work with the South African Reserve bank under subtech segment. The US and Europe remain strong market for regtech products with decent ARR growth. Our Indian business remains stable primarily under the tax tech platform. In summary, FY25 was a year of steady top line growth, strong EBITDA performance and focused investment that align with our long term strategy. We also ended the year with a healthy cash position backed by a decent cash flow from operations.
That was a quick overview of the overall results and now I hand it over to Balu so that we can probably start the Q and A session.
K Balachandran — Co-founder and Chief Financial Officer
Thanks Vineet. So that is a quick rundown of what we had done in the last quarter and last one year perhaps. Do you want to get people to ask questions?
Siddhesh Chawan — Investor Relations
Sure sir.
Questions and Answers:
Operator
Yes, I should Begin the Q and A session.
K Balachandran
Yeah, we could, we could. We are all ready.
Operator
Thank you. 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 withdraw yourself from the question queue, you may press star and two participants are requested to use handset 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 Rahel from mapl. Please go ahead.
Unidentified Participant
Yeah, hi, I’m Oliver.
Operator
Oh, yes sir.
Unidentified Participant
Yeah. Good evening and thank you for the opportunity. I’m new to the business so had some basic questions starting with the regtech segment. So we have been speaking about a lot of mandates, e.g. fERC, ESG Europe, ESE UK, ESE Australian Alpha. So how many of these are done with or fully implemented and how much is left? How much opportunity is left in the rest and what are the guidelines that you can provide in the region? Maybe I can ask Anu to talk about this. Anu handles the business for Iris Carbon and she is crude into what’s happening across different geographies.
K Balachandran
Anu, would you like to answer question?
Anuradha RK
Sure. Thanks for the question.
Siddhesh Chawan
No one is audible.
Anuradha RK
Hello, can you hear me? Yeah. Okay, so thanks for the question. I think you are trying to understand mandates such as FERC, ECEP, HC, etc. So these are regulatory reporting requirements which has been there for a couple of years now. So from an overall product perspective, we are fully 100% ready because customers have been using this product and the mandates for a couple of years now. So we are fully ready in customers and this is a compliance reporting product. There is no case anywhere partially ready. So fully ready product and being used by customers.
Unidentified Speaker
So Ryan, this is Servo. I am leading the sales for Iris Carbon and really good question. I’ll just add to what Anu mentioned. Since you’re new to the business, I’ll give you a little bit of context of how it is. So broad level, think of it as.Three broad buckets. The first is what you can call the XBRL mandates. The second is what we would call a disclosure management reporting in general. And then the third is esg. The first part that we talk about, the XBRL mandate is where you know the mandates you called out fall. So SEC in the us, FERC in the US you’ve got the ESEF in Europe, so on and so forth. These are under the first category. All these mandates have been around over a period of time. For example, the SEC had rolled it out way long back, probably somewhere around 2014. The ESEF or the European mandates for reporting in XBRL have been rolled out somewhere around 2021. The FERC is also somewhere around 2021. So these are mandates that have been out where the regulator is asking for information to be submitted in the XBRL or ixbrl format. That is one product line or one business.
Now comes the second one which is disclosure management or reporting. That is moving one step back in the value chain where we are helping author the overall quarterly yearly monthly reports, not just financial reports. The product also helps companies prepare internal non financial reports. So that is a very broad category which is not necessarily applicable to people who have to report in a mandate only. For example, we have a multi billion dollar customer based out of the US which is not listed. However, they have still chosen to use our product for disclosure management for their internal monthly and quarterly reports. So this is the second category. So this is a large playing field that we are going after for global companies.
Then the third one is what you called out the ESG or sustainability mandate. Now this is playing out as we speak in a phased out manner. Globally, different countries are rolling out their mandates at different times. There is a lot of legislative approval required and in some cases it is taking time for the mandate to be rolled out. Having said that, because a lot of our customers and prospects feel that this would help drive more visibility within their organizations and to their investors, they are voluntarily reporting information on sustainability. So this kind of helps us position ourselves, especially to those companies who need to do a sustainability reporting. One, in authoring the report and two, in collecting the data and preparing the report and finally of course authoring. So that is where we have another opportunity.
And as we speak, it is an ongoing thing that is going to go country by country regulator by regulator and it’s a long term play. I’ll pause. I hope I answered question Rahul. That gave you clarity on the business.
Unidentified Participant
Yeah, it helps. So basically where I was coming from is I wanted to understand the opportunity and I know these mandates were applied a long time but I believe there were some updates along the way. For example for FERC phase one launch, but I couldn’t find out if phase two was implemented. And similarly esg, we were expecting that this year the mandate would come in and that would be huge for us. So I just wanted more thoughts on that.
K Balachandran
First of all, Rahul, I think you’re not new to the business. You know a lot more than most people will. So congratulations there and I think you’re spot on. Ferc, it’s a phased rollout. The first phase has been rolled out. You are absolutely right. The second phase is up in discussion. Like I said, it is being run through the legislative procedure within the energy companies in the us so that is happening. Timelines. I don’t want to comment, I don’t want to get ahead of, you know, myself. There is a lot of, I would say external factors, political factors that are playing out as we speak globally. So I will not comment on when that will happen. However, we do expect that there will be some regulation that can come in. Let us see how that plays out.
The same thing applies to esg. Like I said, each country has their own. Even within the eu, if there is a mandate that is being rolled out, that is a set of guidelines that EU is rolling out for all the countries within eu. However, each country needs to roll out their own specifications of what needs to be reported. So this is like I said, a long term game. We’ll have to wait and see which country positions, how and when they roll it out. But the good news is if you go out and do a little, I’m sure you’ve done your research. There are a lot of companies that are doing voluntary reporting.
So for example Apple, if you see they’ve been doing it for many years, they’re moving towards a sustainable product and sustainable a lot of things. Right. So in the same way there are many such companies, not just one. So that gives us an opportunity to grow while the mandate is not yet out.
Operator
Sorry to interrupt, Mr. Rail, could you please come back in the queue? Thank you. The next question is from the line of Shabbat from Value Investments. Please go ahead.
Unidentified Participant
Hello? Are you able to hear me?
K Balachandran
Yeah, we can hear you.
Unidentified Participant
Okay. I just had the question on the operating expense. I mean, I know that compared to Q3 or I mean compared to year on year growth. Right? So the operating margin is down. So what is included in the other expenses that went up? Could you please explain that? And also what is the sustainable pattern EBITDA margin Going forward,
K Balachandran
I think the EBITDA margin on a year to year basis, I think there is a small increase. I think it’s about 17% versus 15, 15% or 15.8 versus 17%. In other expenses, of course, outside of salaries, we have partner payments, we have SGA expenses and we have, we have other general expenses which come in. So of course we have been spending more in terms of both states and marketing. And in the subtech area, there is also higher partner expenses that we incur because we are getting more revenues. So that would perhaps explain the increase in other expenses which is going up from a year to year basis is going up by about 25% from 35.78 crores to 44.89 crores. So this, you know, these expenses, you know, I would say would not go out of control, but they will grow at a steady pace because we need to definitely spend money on sales and marketing, that’s for sure. And also various expenses in certain markets related to partner payments. Not all markets. Certain markets. That depends on the nature of mandates we get. For example, so if you look at the Indian market, for example, if you look at some of the business we do in the subtext space, we recently did something with PFRDA where we went and implemented a platform and record speed that records speed. So there is no partner payments we make because we don’t have any partners down the line. It could vary, but some cases we do have. So that is also one of the factors, I would think. I would say.
Unidentified Participant
Yeah. Okay, thank you. I mean, it was partly audible. I mean, one position is there is some disturbance like every few seconds when you speak on the call. Even on the previous call that you had set up. Right. People were complaining about a lot of disturbance even in this call. We can clear it. If you could clear that for the next call, that would be definitely helpful with a good microphone or something. I will definitely go through the call log. I mean, I can read the call again, you know,
K Balachandran
If you can hear me now, maybe. Should I, you know, once again because. Yeah, briefly. Okay. My mouth, you know, so maybe it could be better for you. More audible.
Unidentified Participant
Yeah, yeah, it’s audible.
K Balachandran
Yeah. So I was saying that other expenses, you know, have gone up by 25%. If you look at from a annual perspective from 33.78 crores to 44.89 crores overall, our EBITDA also has gone up. So actually our EBITDA margin has moved up to 16.8% from 15.4. The other expenses include 1. A key part is partner payments. We do have certain partners in our businesses, especially on the subtext side. So as the revenues go up based on the market we operate, there are partner payments and that moves up. Now outside that there are expenses related to sales and marketing where we have traveling expenses and we have some of the event expenses, all gets added into the other expenses area. So in a way it is linked to both business development and execution, especially on the super tech side. That’s how I would explain this. And is it going to go out of sync? No, it will grow at pretty much maybe at a, you know, as we grow into a higher revenue number, it will grow at a lower level. But initially we would need to spend especially on sales and marketing area.
Unidentified Participant
Okay, yes. I mean when we compare year on year it looks dull because last year your operating margin was like 21% in the Q4, but in all other quarters I can see it is between 13 to 16%. So maybe last year there was any scenario where you had less expenses that could be the reason why you had.
K Balachandran
That’s a good point. Actually there’s one more, one more factor there. In last Q4 we did get some license payments. So license payments suddenly, you know, gives a boost to the top without having a commensurate hit on the expenses. So there are certain variations quarter to quarter based on the timing of some other software license revenues that we get, not license expenses, license revenues that we get. We had a couple of streams of license revenues coming in. Q4, FY24.
Unidentified Participant
Okay, got it. Thank you. My second question is so from four years, almost like from last four years we have grown close to 20% CAGR. So what would be the guidance for the next year that is FY26 and going forward and which segment is contributing more growth in the company?
K Balachandran
We don’t give explicit guidance, which you have been saying in the past as well. Of course if you look at the current pie, the subtech is maybe contributing up to 49%. Having said that, I did mention my opening remarks that if you look at the last three years, we are doing it about 28% on an average year on year on growth. So I would hope that this is the new normal for the company or in that range. And this is what we try to achieve going forward. And if you look at the medium to long term, we certainly see our SaaS business doing really well and the share of the pie of the SaaS business proportionately increasing as we go forward. That’s what I would like to say at this point of time.
Unidentified Participant
The only reason why I asked that question is because when I compared to your peers or the competitors like NPFP and other. So they are growing at a very fast pace. So since you are also coming into a rec tech now, I was expecting if you could provide any at least a range guidance like in percentage, like you don’t have to mention exact numbers but that would be helpful for our projections for next year.
K Balachandran
Yeah, we have not been doing that, but we hear you. So we’ll discuss internally. Okay. We’ve not been doing that because our business has a couple of verticals as well. It is a mix of both regulators who are, you know, who are offering, who are, you know, where the business is more RFP driven and of course the SaaS business. So to make an overall company, you know, guidance, etc. Is difficult and as a policy we have not been doing that. So we have been saying that, you know, the trajectory is visible to you and this is the way, these are demand drivers and you know, and you know, one has to make an estimate.
Unidentified Participant
Okay. Yeah, we look forward to it. Okay. So NPFC is your direct competitor in few segments at least.
K Balachandran
Tell me again which company?
Unidentified Participant
Npfc
K Balachandran
Not in the segment we operate. Of course there are other segments which includes, you know, anti money laundering and you know, fraud detection where we don’t operate. But in the regulatory reporting area, which is more to do with financial and risk reporting, we haven’t come across them.
Unidentified Participant
Thank you so much for all the answers. I’ll call back in the queue if I have any.
Operator
Thank you. The next question is from the line of Manan Puladia from MKP Securities. Please go ahead.
Manan Poladia
Hello sir. Am I audible?
K Balachandran
Yes, you are. You are. Please go ahead, Manan.
Manan Poladia
So my first question is, since at the start of the call you mentioned something about us doing investments in order to grow our new line of business years, would you be able to perhaps give an absolute number of sorts about how much money we’re investing where it’s not like linked to a particular line of revenue yet and we’re trying to grow the business. If you could just exchange the delta and maybe employee benefit expenses or other expenses in that specific sales push that we’re doing.
K Balachandran
You mean the state related, you know, initiatives that we are doing. Is that, is that the question that you have?
Manan Poladia
Yes, yes, yes.
K Balachandran
Okay. So the state initiative that we have embarked upon is still at a pre revenue stage and right now we are getting the basic pieces in place in terms of our offerings so that we can start working with the states and make this platform available to the MSME community here. My sense is little too premature. Talk about the spends. Of course there will be some spend. That we’ll do in the current year. And I would say that you know, some of it will get capitalized because we are building the software. Of course the community building will be of course expensed out. So my guess is, you know, you know, it won’t be that substantial that you know, one needs to start getting, you know, getting penciling it out in your projections.
Manan Poladia
Right. So my second question is more of a bookkeeping end. It’s two parts. One, we have a cash balance I believe about 30, 35 crores or something of that sort. One how do we intend to use that and what is the idea strategic? Like is it strategic investments or do we intend to do other acquisitions or something of that sort? My second question on the bookkeeping side again is how do we treat our software while we are developing it? Like how do we think about capitalizing software cost versus expensing out through the pnl?
K Balachandran
Okay, so maybe you know, do you want to take the second question first on the capitalization part?
Vineet Kandoi
Yeah. So whenever we build new products from. Whenever we build new products from which we expect to generate revenue, this is a policy to capitalize those products. And also if we are going for in existing product, but there is a new revenue stream or a mandate which is kicking in and we are developing some modules in that we go on capitalizing those expenses. Otherwise all the expenses, all the product development expenses are expensed out in the same year. So just to give you an example, like Malaysian invoicing which came in earlier this year, we utilized some of the product development expenses which we to develop the module for invoicing mandate in Malaysia.
K Balachandran
Coming to the first question is talked about our cash balance. In fact, if you add the mutual fund investments that we have made, it’s little above 50 crores. It is not 30 odd crores, it’s about 50 crores. So we want to, as I mentioned in my first set of remarks, we want to make sure that we are very frugal and we calibrate our expenses and we want to do our spends most related to our SaaS business where we want to scale it up over the next three to five years in a substantial way. So towards that we’ll be spending money. But at the same time, if you look at this particular business, our sales marketing spend to the revenue, that ratio is still quite low. We want to bring it up, we’ll be spending but overall from a company’s perspective, since we are getting revenues from the subtech side and we’ll continue to get good revenues, robust revenue growth from that business, we should not see any significant drawdown. In terms of our overall margins, that’s what we’d say. But the money that we have, we raised about 20 crores through private placement plus we have generated enough cash through accruals during the last one to two years. So both together that the cash balance reflects about 53 crores or so that we spend in a very thoughtful manner. We would spend and we are in the process, of course we have plans and we are fine tuning these plans and we would do this in a, you know, in an iterative manner as we go along this path. That’s what I would say.
Manan Poladia
Thank you and I wish you the very best, sir.
K Balachandran
Thank you so much. Mana
Operator
The next question is from the line of Rohit, an individual investor. Please go ahead.
Rohit
Thank you for the opportunity. My first question is on the Qatar deal. Could you give us a understanding of the size of the deal in comparison to South Africa or is it more along the lines of our other collect these that we used to win in the past?
K Balachandran
So this is more along the lines of the central bank deals that we have won with, you know, I mean in other geographies not, you know, not with the blockbuster South African reserve bank deal. So I would say, you know it would be, you know it would be, you know, definitely on the lower side by a fair margin as well as the Qatar deal is concerned, of course we’ll implement it much faster as well. The South African deal, South African deposit insurance platform that we are building, the implementation will go on for three plus years which is not the case here.
Rohit
So how far along are we on the South African deal And given the large size and that segment being a treadmill segment, will we be able to sort of maintain our growth rate once that deal tapers off?
K Balachandran
This is again a very good question. This is a question we have been asking ourselves as well. So our sense is South African business, we still need to execute a fair bit there. So I would say maybe about 35% is still left to be executed. And we have, you know, we are working on a number of other deals which are in the pipeline as well. So if you look at from look from one to two year perspective, we don’t see that weakening our growth in this segment. And what should I say anyway, if you look at the ARR of the company that has already gone up, we are at about 75 crores of ARR roughly. So as a percentage recognition revenues will also go up as we move forward and.there are other deals in the subtext segment which we are chasing. Of course these are those kind of deals will take time and there is a decision period involved but that should make up as we go along. Even in the South African business, this whole deposit insurance platform has many levels of requirement. It is not that. It is, we hope that it is just not an open and shut case once the the current deliverables are done. So let me, you know, let me stop at this point.
Rohit
That was helpful. And then my last question is on the initial commentary you made. See historically we’ve always been been informed that mandate will drive our ARR growth in the regtech segment. And we saw jumps when the FERC and the ESAF mandate had come in. Now it seems like we are going to be mandate independent from the commentary at least. So it will be helpful to understand more details on the confidence in terms of the three buckets that server was talking about. And I also was wondering, I mean again this is taking off from the answer you gave Valu sir is do we expect a meaningful maintenance component from the South African deal which will add to the ARR of the company?
K Balachandran
There’s certainly be an ARR component to the South African platform that we are building. Of course that will be there, that will come once the whole thing goes live. And of course that component from a proportionate point of view will be less than the overall deal size for obvious reasons. So of course any typical platform that we build has a AMC component which kicks in. For example the PFRDA which went live, it has an AMC component which has kicked in. So that kind of mechanics will continue to serve us in good steady. Coming back to the question on our ARR being driven not only by mandates. Maybe I’ll ask Deepka to chip in.So hi Rohit, thank you so much for the question. So yeah, you’re right. I think in the past when we have spoken, especially from the regtech segment, we have always said and it is true that when there is a mandate there is normally a tailwind of growth. So when Sarho was explaining that we’ve got three say sub products or modules or call it what you will, there is an xbrl, there is a disclosure management and a sustainability set of solutions. So clearly when there is a mandate what happens is there is a pressure, a driving imperative for enterprises to immediately kind of there is an external deadline of pressure. So we have historically seen tailwinds. So what we were looking at, even in the ESG spaces there was to be an ESG reporting mandate rolling out from this year, and that was going to provide us added tailwinds of growth as well. But because like Silvo said kind of, I think, you know, slow down kind of U.S. elections, you know, a little bit of like stalling on the ESG side. It certainly doesn’t give us those statements. So now when we go to the other two segments on the positive side, what I would say is when you take a look at the non mandate which is you know the disclosure management and the general sustainability report which companies are anyway kind of doing there, it while it does not have to do with the mandate and our sales, what do I call it, our sales engine or our sales machinery has to work differently.
And that is if you remember from the conference calls or these earnings calls of a couple, you know, six months ago or so. I think we talked about the fact that we are consciously rewiring ourselves also to go after deeper into the CFO’s organization. More value add, therefore kind of up the value chain, higher price. But the sales, the sales, you know, the sales rhythm of the sales mechanism works differently. So why we might not see those kinds of tailwinds. We believe that the, the value of the deals in these non mandate ones will certainly be richer. We will go deeper and we’re already seeing early signs of that.
So for example in the early disclosure management deal we are seeing kind of customers are willing to pay more, are seeing a kind of greater value in the solution, are leveraging it. We start with let’s say one report type or one company and it expands to other report types, other subsidiaries etc. But it is unlike the place where there is a mandate which will, which will give us a tailwind. So we keep ourselves prepared for both. You know, when there is a mandate, whenever like let’s say there’s an ESG mandate or any other kind of mandate. We’ll definitely keep ourselves prepared. But nonetheless I think this was a part of a conscious plan as well to anyhow deeper and also go outside of mandates into a deeper value added space. Not sure if I answered well enough, Rohit.
Rohit
Yeah, thank you. That was helpful. Can I ask a follow up or I think I’ll get back into the queue. Thank you. Thank you for the time.
Operator
Thank you. The next question is on the line of Shakshi Garg from Nivesh Securities. Please go ahead.
Sakshi Garg
Hello. Am I auditing?
Operator
Oh yes ma’ am. You are sure you are.
Sakshi Garg
My question is what are the five year plans of the company? Are we joining? Are we jumping into any new segment, any capex, any acquisitions we are planning to do in next coming for five years.
K Balachandran
If you look at the next five years, you know, I won’t be able to answer that question. You know, all kind of options will be on the table, including acquisitions. But this is something, you know, definitely not baked into our current operating plan. That’s what I would say. Does that answer your question, Sakshi?
Sakshi Garg
I think companies, companies because the company from the last five years I have seen a company stack record companies doing greater, coming with the new numbers, jumping to new segments like a new type of technologies, data technology, rack technology. So I think company should jump into a new segment and should find opportunities in new sectors and new technologies as well.
K Balachandran
Understood. So you are saying that we should actively go and look for new segments and maybe write on new technologies so that we can drive our revenues. That’s what you are recommending. Okay, we hear you. Very good point. In fact, I should just point out that state initiative that we are doing is a fresh segment where we feel there can be a significant opportunity for us as and as we develop the whole ecosystem. So that is definitely the. Of course. But we hear you in terms of in the rectech space itself whether we should start looking out for new segments. But within the management we feel the Runway with the existing business is still quite substantial and we should run after that.
Sakshi Garg
Thank you.
K Balachandran
Thank you.
Operator
Yes, Shakshi, does that answer your questions?
Sakshi Garg
Yeah.
Operator
Okay, thank you. The next question is from the line of Vikas Kasuri from Focus Capital. Please go ahead.
Unidentified Participant
Good evening, sir. Am I audible?
K Balachandran
Yes, you are, Vikas.
Unidentified Participant
Yeah, yeah. Thank you. Sir, could you just speak about some of the investments that we are making towards the future growth of the company. So for example, I remember three, four years ago Mr. Swaminathan used to say that we didn’t have funds to add more people in America and so on. Right. So where are we on some of those initiatives with respect to adding people, especially salespeople in some of the key geographies? That is number one, Number two is sir, on the tax and especially on Iris gst, is there a, what is the business model there? So I think it is to give the E filing free and then make money on other value added services. So could you just speak about where we are in that journey on the tax side? So these are my two questions.
K Balachandran
Maybe on the tax check side we’ll answer that. First I’ll request Gautam Handi, who handles the business to give his views on that. Hi, good evening. So the tax check E invoicing that you mentioned, We actually are running the E invoicing platform for gstn. So that’s a government E invoicing platform which is a compliance requirement and that’s offered for free and value added services can be offered on top but that is not the core offering of the tax tech business. So that is one which is anyways been mandated by the government. The core offering of the tax tech segment is a suite of SaaS platform being sold to enterprises and taxpayers to enable their entire GST compliance, GST filings, returns filing, doing the monthly reconciliation, ebay bill and E invoicing which is charged on a subscription based model depending on the number of tax IDs and the volume of transactions that these companies perform on a monthly basis. That’s the core GST tax compliance.
So last year we also expanded into a newer territory geography which is the Malaysia E invoice mandate. We launched our platform and working with end companies through partners and within India we’re looking at expanding beyond compliance, going beyond the mandate, reaching out to the CFO with accounts payable automation and downstream litigation management and insights and reporting solutions. So yeah, your point is partially right that the IRP system which we offer on behalf of the government, we can’t charge for it because it’s on behalf of the government but our core offering is for taxpayers, companies across all sizes to whom we charge the fees.
Unidentified Participant
Great. So just a follow up question on that. So why is the. Why do we have ebitda? Margin is negative. So are we doing some investment in that line of business?
Vineet Kandoi
Yes. So last year we did some heavy investments in terms of building, building out some new products. Two products which I would like to call out is. One is an accounts payable automation product. So we would like to now start cross selling to our existing customers to go upstream and automate their entire accounts payable cycle which then connects to the core compliance. So this year we hope that we will start and these will be slight outside of the mandate product. So we wanted to build in greater stickiness with this customer. So investments in building products is what has led to the negative margins for this year. And also there’s another product on CFO dashboards which we have invested to build insights for the tax and the CFO of a company to take decisions.
Unidentified Participant
Thank you sir. First question on our sales and marketing ramp up especially for. So let me quickly answer that. Of course our liquidity position improved substantially from the middle of FY25 onwards from where I would say July onwards. And we have been of course cognizant of spending more on sales and marketing. We started doing that, we are doing that initially by focusing on getting the engine right in terms of marketing and the sales engine which is initially operating out of India in terms of contacts and getting the discovery calls going and taking the customer through the journey towards a closure. So some of the points which you talked about I think will definitely kick in and this is something which the team is actively working on at this point of time. How to put the key pieces in play which has some of the resources assets on ground as well.
Unidentified Participant
Got it. Thank you very much.
K Balachandran
Maybe supplement a little bit.
Unidentified Speaker
Yeah, thanks. I’ll just add to what Balu said. I think we have been in the phase of recruitment now more actively than ever before in the geographies in North America and more importantly Europe. I think like you said, the foundation is the most important part, getting the process and playbook in place. Because when you bring in a person who’s sitting remote or further away, you want to make sure that you’re giving them enough tools and ammunition to go out and be able to sell for you. Hence we need to first get our act together over here and then bring those people on board. Important thing is we are to answer your question, we are doing that more actively now than ever.
Unidentified Participant
Thank you. Thank you very much for answering the questions.
Operator
Thank you. Ladies and gentlemen, please limit your questions to two per participants. The next question is from the line of Siddharth Shah, an individual investor. Please go ahead.
Unidentified Participant
Hi. Thanks for taking my question. Maybe to follow up on Rohit’s earlier question, given there may be less mandate driven growth, are we seeing disclosure management as kind of the key product that would drive growth forward? Given it’s more high touch, it could be private or public companies. It’s kind of, it’s mentioned a single source of truth, so maybe connected to a lot of the underlying ERP systems that accompany and aggregating data. Is that how you all are looking at this product going forward?
Deepta Rangarajan
Correct, Siddharth. So you know, we still see also Runway for XBRTL modules as and when mandates kick in, e.g. eSG reporting mandates, etc. But we see disclosure management certainly as a high touch, more value and deeper driver of growth. So you probably know this Sidharth. I think many times in the past, we’ve talked about Workiva.Which is kind of a very well known name in the space of disclosure management. US based company, $700 million in revenue and still growing. And this entire space of disclosure management, if you just take a look at kind of research reports, you know, for example Gartner or G2 et cetera, the space itself is growing because it solves for a problem which is ubiquitous in large enterprises mid market across the world. So more complexity, more reporting, single source of truth, deeper connections with ERP system. So certainly you know we see this as kind of like a key, a key driver within that there are like you know, flavors and add on modules. For example sustainability reporting is another form of reporting as well. It’s just that over there there’s an overlay or a jump off point for chief sustainability officer, for example, you know, to be able to drive their reporting journey and like Sergio mentioned, their data collection, etc. Etc.
So yeah, we, this as a, you know we see this as a pretty significant deep. But having said that I think like we always have maintained in the past both on the softech side and on the regtech side we certainly see mandate led opportunities as and when they come to also give us tailwinds in new markets and new opportunities and that boost.
Unidentified Participant
That’s very helpful, thank you. And you know just a quick follow up was I think you know, from what I understand our R and D has been very efficient especially on xbrl because we use kind of Windows as the underlying product and built on that versus Workiva that did it from scratch. Is that same kind of cost efficiency being used for the disclosure management product as well?
Deepta Rangarajan
Not bad. So thanks Sidharth. So one is by the way Windows is the disclosure management product, the XBRL module. So so sometime by the way we invite you and all of you to come and take a look at our products as well. It would be wonderful to take a look at it in detail and see what it is that we do. We’re really, really happy to walk you through it too. But our disclosure management product is Microsoft Office based and that kind of gives a greater degree of comfort or a greater edge in the sense of it’s the tools that CFOs are most comfortable with and most familiar with. And yeah, we’re using that as a bit of a competitive edge or a competitive advantage when we are talking to India pitching our solution over others.
Unidentified Participant
Understood, thanks so much for answering that.
Deepta Rangarajan
Sorry, just one more thing. The R and D and the cost efficiency for us is also in part because we are India centric we are headquartered here as opposed to workiva a bulk of everything. We naturally already have kind of a, you know, cost advantage on the R and D side.
Unidentified Participant
Got that? Thank you so much.
Operator
The next question is from the line of Irend Thakkar, an individual investor. Please go ahead.
Unidentified Participant
Am I audible?
Operator
Yes sir, you are.
Unidentified Participant
First question is AI is expected to ease regulation compliance for medium small companies and if then how will this impact our business?
Deepta Rangarajan
Maybe I can just, I can just start off and then I can Thomas in so see I think this question on AI is a like a recurring question on how we see it either benefiting us or being a threat. We actually see AI helping us on two fronts. You know, one is just greater efficiency within our own firm and the second is something that we can leverage in our solutions for faster or better or smoother customer experience. So Hiren, when you’re saying that can it help the smaller and mid sized firm, I’ll actually pass this on to Thomas who will talk about one of the solutions that we are just in the process of rolling out which will exactly help the smaller mid sized firms leveraging AI.
Unidentified Speaker
Good evening. Actually with AI we recently launched a product which actually can do auto type. So like your regular way of actually filing returns like assigned or assigned PDF files. We can actually pick up those PDF files, slice and dice it and actually find out the right set of taxonomies and map it to the right set of taxonomies and can file an XBR XVR and output. So we started with a test drive where actually we had using this tool we are giving it to a set of people who actually can do upload a PDF file, get it, autotact, validate it and then do the filing. So that is actually just out. So we will be actually commercially lodging it later. But we are using it also. We use lot of AI in our development process also. Whether like be it for documentation process, be it for creating, automation, testing, etc. Be you outreach tracing for a lot of our software we do that actually.
Deepta Rangarajan
So just to add to what Thomas said, you know, because you spoke about the mid market segment. So on our side of the business, some of our, some of the markets where we go into these are called business registries like how we have NCAA in India and business registry mandates normally apply for big companies to very very small companies. So we believe automated analyzation of reports would be very useful for the small companies in the business registry market. And so once we’re able to successfully establish. That this is working. We can actually take this out and roll this out across every marketplace in the business registry mandate. So we also have a couple of other examples of the use of AI. Like for example, I think we’ve spoken in the past as well on the GSC side for litigation management.
Operator
Ma’ am, sorry to interrupt. Can you please come closer to the mic and speak?
Deepta Rangarajan
Sorry, I’m so sorry. Can you hear me now?
Operator
Yes ma’ am. Clear.
Deepta Rangarajan
I’m so sorry. Yeah, I’ll speak a little slower Also. We have also talked in the past of the use of AI in a couple of like for example in our GST business where we used it to support our litigation management system where you can automatically read the litigation or the GSTN notice, craft an appropriate first response. So we have spoken about this. So while there are a couple of these examples, what we also are looking at doing, planning at doing is creating a small cell or identifying a first pool of resources so we can have a sharper team within the company to drive AI initiat across the firm. So I hope that answers.
Unidentified Participant
Yeah and my second question is what kind of monetization we have done with deal with Karnataka GO and Telangana government and can we get any major contracts ending? Details of the any major contracts are ending this year. Can we disclose to the shareholder contract again to the shareholders?
Deepta Rangarajan
So Hiren, I’ll take the first question first which is on Karnataka, Telangana and Goa we have signed these three MOUs with three state governments. But like Balu already mentioned at the beginning, this business of ours which is the MSME or the data tech business is a pre revenue business. So at this point in time we do not see, you know, we do not see these as from a kind of a revenue perspective. We do not see it as contributing to revenues in the coming year in any significant or meaningful way. However, we believe it has large potential in the long run. And therefore at this point, you know, it is more about, it is more about creating the right set of products, ensuring that there is kind of the, you know, the value proposition established for the different stakeholders.
In fact, over the next couple of months we will actually be rolling out some of the products in the market with some of the state governments. So we, you know, we, you will be seeing that basically. But we do not expect these to contribute in a significant way at this point. But we see this as our in the longer term really kind of kicking in and adding more value. I’ll just pass this to Balu to add a little more.
K Balachandran
No, I’ll just say that we may be able to give you a better update or more useful update in the next conference call, which will happen after six months where. Some of these products would have been launched in the market. We will know the use base of MSMEs and once you have a sufficiently large use base, you have a critical mass, then the monetization will start happening from there on. So we will get a much better idea. But the basic trust is to work with the states in partnership, offer platforms which bring in substantial value to the MSMEs operating in those states, get them on board, build a community and using that community then start offering, then enable products such as lending products on the platform so that we start the monetization of whatever we are doing at this point of time. So this is something work in process. We should be able to give you maybe a better update in the second call after the first half is over.
Unidentified Participant
Sir, I just also ask because first point we said we are getting 35% the revenue in some particular segment from the South Africa. So I just wanted to is there any major contracts ending this year that are not renewing for next year?
K Balachandran
We didn’t say 35%. We said overall our revenue from Africa is about 35% of which of course South Africa component is very very very significant in that the contracts we announced one contract this year so far which is Qatar Central bank and a few are being. We are chasing a few other subta contracts as we speak but that is part of the business process itself. So that’s what I would like to say at this point of time.
Vineet Kandoi
I’ll just quickly add one more thing. The nature of these contracts in this business is as regulators complete one part they then understand what else is coming up and what needs to be done that is when they might re engage in a new contract. So it’s an ongoing process. Even if one comes to an end there is a good chance or possibility that they might have more work that needs to be done. So let’s not stop that. If there is a contract that ends, it’s the end of the world. No, with the same regulator things continue to move on. It’s a long term engagement to solve their problems at large.
Unidentified Participant
Understood sir, thanks a lot.
Operator
Thank you. The next question is a follow up question. It’s from the line of rail. Esani from mapl, please go ahead.
Unidentified Participant
Yeah, thank you for the opportunity. Again I have actually asked several questions but to quickly take over a few. In FY24 we were very bullish on the soup tech segment and said that we have bid for multiple RFPs and even said that next quarter we will. Have an announcement. But in terms of the order wins, there is only one that recently from the Qatar Bank. So if you can explain what happened here because historically I believe our very segment has been 55 to 60%.
K Balachandran
So the RFPs, you know, have been, you know, postponed. That’s what I would say. And a few since have not been taken. But we did win PFRDA the previous year and by end of the financial year we won Katha Central bank as well. So it is not that, you know, the previous year was a washout. We did win two substantial RFPs. And the fear all in the are in the pipeline as well. But there is a certain decision period involved and we don’t have too much control over when the decisions are made. For example, we had bid with one of the Middle east regulators and I think the rfp, the bid had gone in maybe in September, but even now it hasn’t moved even into the evaluation process. So there are institutions like that which happens.
Unidentified Participant
So sir, if you can maybe share how many RFPs are ongoing right now where we are participating?
K Balachandran
We can’t give a number at this point of time, but I would say, you know, a good handful of RFPs. We are, you know, it’s in play. Let me, let me put it like that.
Unidentified Participant
Okay. So next coming to the cross selling opportunity, I wanted to understand we have 6,000 plus customers. So what issues are we facing to push more of our products to these customers? For example the disclosure management module or the tax check product, particularly the value added products in the tax check segment. Because we launched all these products a while back and it seems that they haven’t scaled up as much. So if you can explain what issues are we facing here.
Vineet Kandoi
I think great question, Rahel. There is ample opportunity for us to go and cross sell. We are already in motion and play. In fact, we’ve already cross sold disclosure management to multiple existing customers along with new logos. So that is in play. What is important to understand because there is no mandate, the urgency is not always going to be there. Is it a large enough problem for them to go after and solve? That is something that we need to sit down and discuss with the client. So we need to understand what is their buying process, what is the urgency and how big of a problem it is. There are conversations that are going on with multiple existing customers and we have to slice and dice because 6000 is a large number. So we need to prioritize whom do we go after first based on geography, based on revenue, based on multiple factors. It is already in play, but. Good question.
Unidentified Participant
Understood. So maybe on the urgency part, I. Assumption that particularly for the DM module, the current potential customers were doing it more of manually and this service would have been of great help to them. So while I understand there is no mandate around it yet, but maybe to better understand the urgency and talk about it,
Vineet Kandoi
I think very, very good question. Again, I think the way companies buy software is something they need to understand. Typically what happens is they need to allocate budget for a SOFTW as a part of their financial year planning. So in many cases they might be able to get an approval out of turn if the amount is not too large. In some cases they need to go especially larger, bigger organizations, they may have to go through certain approval processes, get it added to that budget and they will eventually buy. But that urgency will be filled in once they have the budget approved as well. So they have a problem, there is pain, they are solving for it. But it may take time is what I mean when I say there may not be so much of an urgency at that point in time.
Part of our sales cycle is understanding how big of a pain it is, what value we can add and deliver and then see if there is already an urgency or if there is some form we can create some urgency. In some cases, for example, giving an incentive for them to sign up sooner is a possible way of creating urgency. In some cases they may be using another vendor and the contract is up for renewal and they may want to look at us and choose us as an alternate option is another case of creating an urgency. So there are multiple scenarios we need to understand and the software buying process within the organization. Definitely a good play, definitely a big enough opportunity for us. We need to continue focusing and go case by case only.
Unidentified Participant
So just in continuation of this question in Q4FY24 you yourself explain that a leading indicator of the non mandate business growing would be the growth in the pipeline of customers as we find more pain points. So maybe you could explain what more pain points you have found compared to large science and how has this pipeline grown?
Vineet Kandoi
Actually I think in the interest of time I don’t want to get into too many pain points right now. What I can say is the pipeline has been growing, growing significantly both with existing customers to cross sell. Along with that we’ve run a marketing motion where we are reaching out to, you know, creating more awareness, creating having those conversations with new prospects and identifying where we can sell more. I’d love to maybe take it offline if you’re interested to know pain points and how to solve for them Rahel, but I think for the audience we have today and the time limit. I’ll skip the pain points for now. And just I would request you to please come back in the queue. The next question is from the line of Rohit, an individual investor. Please go ahead.
Rohit
Thank you. Just to follow up on my previous question, so I mean in the three buckets that we talked about in terms of xBRL and the ESG and then the Disclosure Management, could you help us understand the sales cycle for each and the, I mean not the exact pricing but the difference in the quantum of pricing for each of the product when we sell and if, let’s say it goes as a solution, then what happens in terms of pricing?
Unidentified Speaker
Rohit, always a pleasure hearing your questions. Very interesting questions. You’re going to ask me to tell my secret sauce out here in the public domain. I’m not going to do that right now. What I can say is there is a significant difference between what we have traditionally priced towards what we are doing for disclosure management. We see there is traction and a lot of demand for the disclosure management as a product as well as we are able to demonstrate value and hence charge more compared to what we have traditionally done. I am not going to give any more details than that. Maybe you and I can catch up for a cup of coffee and then we can talk a little bit.
Rohit
Thank you. I mean that gives me a sense of what you’re trying to say. So this is very helpful. Thank you so much for the call.
Deepta Rangarajan
Sure. Rohit. In summary for everyone, the disclosure management solves certainly a pain point in the CFO’s office. The XBRDL is a compliance requirement. You know, both need to be met. But this one actually definitely comes at a multiple, multiple value of the XBRL module.
Operator
Does that answer your question?
Rohit
No. No, that’s it. Yeah, that’s it for me. Thank you so much.
Deepta Rangarajan
Thank you.
Operator
Thank you. The next question is from the line of Mitesh Mehta from Long Term Investment Group. Please go ahead.
Mitesh Mehta
Hello. Am I audible?
K Balachandran
Yeah, yeah.
Mitesh Mehta
Thank you for taking my question. Most of my questions are being answered but one question I have regarding Tech Stack, like what is when are we expecting the tech tech segment to turn around and what are the further planning for same?
Vineet Kandoi
So I think the last year we have we put in the hard work of building the products and that’s why we went into red. So I am extremely positive and confident about turning around tax tech this year because those products will now be out in the market and should be driving our top line.
Mitesh Mehta
Okay. And like are we planning to expand to other geography as well in tech stack segment? Yes. So India and Malaysia.
Unidentified Speaker
Yes, absolutely. So Malaysia was our first foray internationally and we continue to push and gain market share both in India, Malaysia. We’ll be looking. We are also seeing opportunities coming up in Singapore and UAE for which we would be building those platforms, looking for future growth.
Mitesh Mehta
Okay, that’s it for myself. Thank you.
Operator
Thank you ladies and gentlemen. That was the last question for today’s conference call. I now hand the conference over to the management for closing comments.
K Balachandran
Thank you once again. Thanks for coming in good numbers and asking your questions. We always find it very instructive to listen to your questions and we always go back and look at it more deeply. We do get nuggets of information that we can use going forward as well. So thanks once again. So as per our normal practice, we typically hold our conference calls after every six months and that will continue this year as well. So we could meet on our results conference call in the second half of the year after our Q2 results are published. So have a good evening and thank you so much once again.
Operator
Thank you on behalf of iris Business Services Ltd. That concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.