Ksolves India Limited (NSE: KSOLVES) Q4 2025 Earnings Call dated May. 03, 2025
Corporate Participants:
Unidentified Speaker
Vinay Pandit — Investor Relations
Umang Soni — Chief Financial Officer
Ratan Srivastava — Founder and Chief Executive Officer
Manish Gurnani — Chief Technology Officer
Analysts:
Unidentified Participant
Presentation:
Vinay Pandit — Investor Relations
Ladies and gentlemen, I welcome you all to the Q4 and FY25 post earnings conference call of KSOLs India Limited today on the call from the management team we have with us Chairman and Managing Director Mr. Manish Gurnani, Chief Technical Officer and Mr. Umang Soni, Chief Financial Officer. As a disclaimer I would like to inform all of you that this call may contain forward looking statements which may involve risk and uncertainties. Also a reminder that this call is being recorded. I would now request the management to detail us about the business and performance highlights for the half year ended 31 March.
For the full year ended 31 March 2025, the growth plans and vision for the coming year post which we will open the flow for Q and A over to the management team.
Umang Soni — Chief Financial Officer
Okay, thank you Vinay and good day everyone and a very warm welcome. We appreciate you taking the time to join US for quarter four and FY25 earnings call. Can we present the screen? Yeah. So I hope everyone would have got a chance to look at the earnings presentation and the praise released by now. So I will take you through the financial metrics and operational highlights for the quarter and the year gone by while our CEO Mr. Ratanj Divastava will share the business highlights and key developments. So before we jump, just a brief overview of the company.
So ksols is a CMI Level 3 certified company founded in 2012 in Noida and now we have offices across the world in US Middle east and India. In India we have three offices Indore, Pune and in Noida. So we are public listed company of more than 550+members.565 to be concise, focused on digital engineering implementation related to implementation services related to product development and customized software solutions. As a core of our offering we serve 150 plus clients across 30 plus countries and continue to maintain a strong international focus. With 78% of our revenue coming from overseas markets.
North America remains our largest overseas market followed by Europe, Australia and the rest of the world. And the domestic business continues 22% of our total revenue. And as a testament to our client trust, around 85% of our revenue comes from repeat customers. Next. So we have been blessed with partnership from Salesforce, Red Hat, Adobe, AWS and Odoo. These are the leading software companies in the world and we have been able to benefit from our partner, their partnership with these companies year after year. And now let me walk you through the financial performance for the quarter and year ended 31st March 25th with financial insights so we have achieved impressive year on year growth during the quarter with the healthy operating margin.
Our continued efforts have resulted into strong 5 year revenue CAGR of 68% and healthy 5 year net profit CAGR of 119%. We continue to deliver exceptional return ratios with RoC at 205% and RoE at 154% for the financial year 2425. So our consolidated revenue for the quarter as you can see reached 33.34 crores representing a year on year increase of 9.5%. However on a sequential basis revenue saw a bit deep by 11.6% primarily due to the holiday schedules in December and January which extended the deal closures and by this our sales funnel is now transitioning towards larger project sizes.
So we foresee huge capability in our unique and specialized big data product DFM Data Flow Manager and a strong bounce back is expected in coming quarters. Also in FY25 our top five clients contributed 40% of the revenue while top 10 accounted for 53%. This reflects our shift towards larger project engagement and deeper client relationship. Our distinguished client base includes 11 clients with revenue exceeding USD 1 billion and 7 with revenue between 200 million to USD 1 billion and this includes Fortune 500 and top 100 global banking firms. This figures highlight the strength and quality of our client base now coming to EBITDA.
Operating profit margin stood at 25.6% for quarter four. This margin reflects our strategic decision to invest in future growth which includes as you can see lateral hiring, operating expenses related to product development and extensive travels and branding efforts which have impacted our EBITDA by around say it would be up if not less expenses then EBITDA would have been up by 8 to 9% in the range of 9%. So these are essential steps we have taken to reinforce our long term foundation and continue our growth in coming quarters with EBITDA margins expected to remain in the range of 25% now coming to annual performance.
So as you can see for FY25 we delivered revenue of 137 crores representing a strong year on year growth of 27% driven by our continued signed trust and our expansion into newer geographies and verticals. PAT stood at 34.32 crores registering a year on year growth of 0.5%. This reflects stability in bottom line performance despite the scale of operational expansion we have done and over the last five years more than 10x increase in revenue and astounding 50x growth impact have been achieved which underscores our Commitment to deliver consistent and sustainable growth. Okay, so now I would also like to highlight that as on 31st March 25th the company have maintained a net positive cash position holding 10.43 crores in cash against 9 crores in working capital debt.
The working capital loan was availed during the year just to manage short term cash flow mismatches on account of overall growth in the business and another on the hedging side. Considering the macroeconomic environment, there is no material impact from currency fluctuations at this time and with our given our healthy receivable days, which is 56 days, we see no significant headwinds related to forex volatility. Having now also reached that critical scale of operations, we are well positioned to negotiate favorable terms with banks for forward hedging contracts. And it’s in the plan we are discussing with banks to manage forex to hedging and forward contracts in the coming quarters to come.
So as we always say that we have consistently emphasized our commitment to deliver value to shareholders through strong dividend payout and corporate actions that enhance the liquidity and shareholder value in line. Interim dividend of 7.50 per share post stock split adjustment was declared in paid during Q4 in March taking the total interim dividend for FY25 to rupees 15.50 per share on a spit adjusted basis which is the highest ever dividend paid. So overall in that in this last 12 months FY24 25 we have paid total dividend of 36.75 crores. Next I. I think we have covered this.
We can shift to next slide. Yeah, so this reflects our expertise in multiple nation complex technologies that allow us to cater broad spectrum of sector for industries which gives us a diverse industry mix. You can see the telecom sector remains our largest segment followed by technology and services. Additionally we serve retail, marketing, advertisement, manufacturing, edutech, BFSI real estate and healthcare. So this diverse portfolio highlights our capability to deliver solutions across emerging and established industries worldwide. And this is all about the events. So we have participated in prestigious events during the year along with aggressive engagements with clients which aims to position KSOLs as a global brand and enhance the visibility of our capabilities in complex high end technologies.
Now next coming to this. So as a part of our commitment to sustainable business practices, we have responsibly recycled obsolete electronic equipments through certified E WASTE partners. This aligns with UN SGD12 reinforcing our dedication to resource efficiency and minimizing the environmental impact. Well in FY25 we received the NASCOM Impact Award. We also got featured among the Australia’s top Salesforce consulting companies and won the Deloitte Technology Fast award. Okay, so this is regarding ESOP and this so to align key management with our long term goals, we have granted two 68,000 ESOPs to our key management representing around 1% of our current outstanding share capital.
And additionally the shares of the company have been split in the ratio of one is to two in the last quarter to enhance the liquidity of stock during the year. So these are the updates that reflect our strong operational focus and long term value creation. I will now hand over the call to our CEO and MD Mr. Ratan for deeper insight into our business and technological capabilities and key developments. Thank you for continued trust in case halls.
Ratan Srivastava — Founder and Chief Executive Officer
Good evening everyone. My name is Ratan Shivasto, CEO of KSolves. Thank you for taking the time to join today’s call.
Vinay Pandit — Investor Relations
Your voice is echoing sir. I think there are two sounds coming from us.
Ratan Srivastava — Founder and Chief Executive Officer
Give me one second. Okay. Let me know if it is okay now.
Vinay Pandit — Investor Relations
Yes, it’s fine now.
Ratan Srivastava — Founder and Chief Executive Officer
Okay, perfect. Okay, so we had an eventful quarter with some strategic shift and I want to walk you through where we stand, the decision we have made and how the position us for the future. But before that I would like to give you some updates means because some of you may be new investor and maybe first call for you, first con call. So I will give you the update that what basically we do as a case ss. So traditionally KS has followed a core IT services model where we work closely with clients on their product needs by supplying highly skilled resources in niche technology like aiml, Big Data, Salesforce and other niche technologies.
For example, if a customer need to implement Salesforce CRM for their business. So what we do basically we will manage their complete end to end implementation and accordingly we will charge for that. This model has worked well for us and our strength has always been strong demand. In fact we have consistently faced supply side challenges not demand side issues because we work on the niche technologies. Okay? And it is always in high demand and not easily available. I will give you one more example. This is the recent example. One Fortune 500 client approached us with a requirement to implement a UI path which is a called which is you can say that RPA for automation IT was a new technology area for case holes and a very niche technology means very rare remains people are available.
Okay? We quickly assess the scope and committed to the delivery and we have proposed a solution with the cost of approximately 150,000 USD. Client agreed and we took full ownership of delivery. This is a clear example of how our model works. Solution oriented, responsive and delivery focus. So that said, this quarter has been different and for the first time means this is our 20th quarter. We faced a few simultaneous challenges. First US holiday season. Definitely this is not the first, but this time it has impacted us a lot. Okay. Many of our clients were on the leave from December and they returned only by late January, which has slowed down project kickoffs.
Why and how? I will explain you the larger larger client base and bigger projects as compared to last year. As our customers base has expanded, project sizes has grown bigger projects now need approval from senior leadership. Okay, Means now it is something that whenever we go for some. Whenever we go for projects, getting approval is not easy because ticket size is larger as compared to last year. Okay. So in that case, the leadership get involved and getting approval from them. It is not easy. It takes time. Okay, I can give you several examples. We have received approval for product for a project the cost is approximately 600k and it took approximately 6 months.
Means we were chasing them continuously for 6 month multiple meetings and all. And then we got the approval, but we got the approval. But here one more thing is important. That 600k is something in the last 13 years means I can say that the biggest deal before this we have never cracked a deal in one shot. The cost is more than 120,000. Okay. So approximately five, five times. So this is a. I can say that a big success for the case and KSOL Steam and for our investors also there are. There are few more example I can give you, but I will go for the next point.
We have shifted the business approach also what we have realized that a major revenue is coming from the TNM model. TNM model is something where you supply the resources, but customer accept the resources after they taking the interview. Okay. And clearing the interview is not easy. Means the expectation is very high. Okay. When they take the interview. So we thought that it is not going to sustain in the long term because we are working in the niche technology. And right now, if you see that the supply side then finding resources on the niche technology is not easy.
So what we did that we have done multiple meetings with the internal sales team. It was also challenging for me to convince them to educate them that go to customer. Talk to your customer and convince them that this we want a complete project. We will take the responsibility of the delivery, the project, delivering the project. And they should give us the freedom to select the resources. It was tough. First challenge was that internally my sales team was not ready to adopt this. Okay. Because in last 12 years they were very habitual for the TNM model.
Means go to customer, talk to customer and they will say you that. Okay, they want five resources for the Salesforce. They have a budget of 4,000 per resource. And then we were. Then they came to. Then they were coming to talent equation team that they want five resources. And it was so many back and forth means resources were getting rejected and all. So it was big challenge. Okay? But somehow sales team got trained and they adopted it. But it took time. Okay. But now results started coming and we can see that there are so many customers means who were very rigid to hire only TNM resources.
But now they are ready to give us project on delivery basis and we are supplying the resources. Definitely there is another challenge that we need to maintain the quality and all because we are giving them guarantee. But yes, this is the part of the project success. Okay, we will do that. Okay. Third thing is the loss making proposals. Some proposals we have received. We realize that if we will do this project then it will not generate the required profit. The reason is that again they are asking resources kind of a tnm. Okay. So again sales team went to them and they tried to convince them.
Few of them we are agreed and few of them could not. Maybe after some time they will realize that it is not easy to hire a TNM resources. Okay? But yes, finally we have solved this problem. Okay. So in this quarter I found that there are multiple challenges but we have fixed most of them. Now coming to the tariff effect. Honestly speaking, tariff effect could not. Or I can say that I do not see any impact of tariff till now. Okay? Because our customers are definitely reducing that team size on site. And they are because they don’t want to stop the work.
Okay? So they are asking more resources from us. So tariff is not impacting us. Only thing what we have what impacted us that, that I have already explained you. Okay. In this PPT you will say that five pointers moving towards project based delivery. I have already explained you that how we are moving from TNM to project based delivery and it will give us a huge success in long term. Okay, second thing.
Vinay Pandit — Investor Relations
So before we move to the next section, can you shift to your laptop mic please because your voice is moving in and out.
Ratan Srivastava — Founder and Chief Executive Officer
My voice is moving in and out means for sure. Miss, I can join rejoin again if you want.
Vinay Pandit — Investor Relations
No, if you can just shift to the laptop mic sir, if you don’t mind or do you.
Ratan Srivastava — Founder and Chief Executive Officer
One second. I will stop using this. Is this okay now?
Vinay Pandit — Investor Relations
Yeah, this is much better, sir.
Ratan Srivastava — Founder and Chief Executive Officer
Okay, perfect. So now I’m coming. Can you. Can you go back to the previous slide? So I have covered the point moving towards project based delivery. Then strategic pipeline development. Before this quarter in last five years. I. I will honestly say that we could not get success to make a good pipeline. But after these strategic changes. Okay. Now I can say that we have a good pipeline also for the next few quarters. And we can see that customers are now coming to us. They are talking to us. They are discussing their projects and all. And some of them have confirmed.
But on paper they have not. So I can say that the pipeline is good. Okay. And a strong pipeline. I can see. First time I have already explained you the confidence in new sales approach. That how we have done some workshop internally to educate and to train our sales team for the new approach. I have also explained you that impact of external environment and U.S. tariffs. Okay. And increase in sales cycle. I have also covered. We can go for the next slide. This year we have recruited A Vice President, Mr. Jerry Hong. This was a big step for me because definitely he is coming with a huge experience.
He was director in Salesforce Australia for nine years. And he was also Globe global head for Infosys Architecture. Salesforce Architecture. So hiring a Jerry home was a huge challenge in Means. If I say that considering the salaries and compensation and all. But the result which I can see he was here in India for last. For three days in the last week. And he was very. He’s a very nice person. And team was very happy for first time Means team said that now we have a face who can present the Salesforce to customers. So what we.
What I was missing in every Salesforce call that we have a expertise, we have a certification, we have everything. But we don’t have a. A person who has a good reputation, good face. Who can represent, who can engage the customer. So after joining a Jerry I expect that Salesforce. The. The revenue of the Salesforce and the quality of the Salesforce project will drastically improve. Okay. And hopefully we will see the results in next few quarters. We have recruited Asim. Mr. Asim Kumar. He is on the direct. He’s a director of program and operation. He’s a pass out from the IIT Kanpur.
And he is helping us to stabilize the operations and functions. Now Nishant Agrawal is VP of engineering. And he’s highly expert in AI and ML. And he is continuously helping us. And because of him we have received a lot of good projects. Okay. And I hope that in future we are Going to do lot of things in the AIML also Mr. Darpan, he is leading the business transformation and consulting department as a head of business and he has around 13 plus year experience and he basically his major expertise is that creating a RFPS for a big proposals and government proposals or domestic or international proposals and whatever.
I have explained you that 600k project and few other projects he helped us to create a proper professional proposals. Before his joining I would. I would honestly say that my all the departments were creating the RFPs on their own way means there was not symmetry. But now we have a format and we know that how to create the professional RFPs and it is really helping us to present our proposal to big customers. Okay? So till now I have discussed with you about the services and challenges and all. But now I’m going to discuss you with my most.
I can say that my dream product, I can say, okay, where I’m putting my lot of energy, okay? This is a data flow manager product. We took approximately one year to develop this product. Whenever any one develop the product, they said that that product is unique, okay? So if I will say that my product is unique so. So it will not create any difference suddenly, okay? So I will have to explain that why my product is unique, okay? But before that I would like to tell you one thing. Whenever you start any product, the major challenge is that finding a customer, okay? So until as you don’t have any customer, you cannot say that your product is successful, okay? Or your idea is successful.
Means if someone is spending one rupees even on your idea, you can say that your idea is worth, okay? So on this product, one and a half month before we have made this product live and one customer, that customer is 13 billion dollar company. How this. How 13 billion dollar company means their revenue is approximately 13 billion dollar, okay? And we have sold them this product at the cost of 40,000 USD. Actually cost is approximately 100,000, okay? But we have given them discounted price because they were my first customer. Okay? So we have got the first customer.
And this first customer is 40, 000 US dollar. Means for one product it is a huge for me and for everyone. Even if for. For everyone in case also for. For you also, okay? Now I will tell you, okay? So one thing I have covered that we got the first customer, we got the second customer also that customer is going to be on board on 12th of May, okay? And they will take three months for trial and after that they will start using it. Now I will tell you that what is this Product. Okay. And why this is unique.
Okay. And how it will help us. So this product we have developed using Apache nifi. Apache NIFI is a part of big data in all over the world. Approximately less more than 9,000 businesses are using Apache Nifi. Apache Nifi is an open source product tool you can say that businesses are using for ETL purpose. Okay, so what problem we have realized all these 9,000 I’m saying that 9,000 honestly speaking there are more than 9,000. All these 9,000 companies are deploying the knife five flows manually. Okay? And to deploy one nine five loads. Okay, so let me tell you that NIFI flows, okay? Whenever you need to deploy nine five flows, first you need to create.
Okay? So creating is something different and deploying is something different. So we are taking charge of deploying. Okay, so what we have observed that everyone is using that flows but they are deploying the flows manually, not automatic. And when they have. When we have asked them that how you are deploying them, they said that they are doing them manually and it is taking long time. It is taking long time whenever you deploy the flows. Okay, I can I can explain you more about the flows and IFI if you will get chance to onetoone interaction I can tell you more.
Okay? But I will tell you that how we have helped to first customer they were using approximately 50 nodes and 200 flows every week week they were deploying. Okay, so how I’m going very technical, okay. But in short I’m coming to you. They were approximately investing 2.3 million dollar. Sorry 1.3 million dollar per year for flow deployment. Okay, how I can tell you if you want you can write me email or call. I can tell you but 1.3 million they were using to flow deployment. We have made it possible just 40,000. So you can assume that how much this is saving.
So now next question should be that do we have any competitor of this application? So you will be very surprised and you can search on the Google Also there is no competitor. No one is doing flow deployment through ui. One click means any person, me, you or anyone after getting three hours training, you can be the NIFI expert who will manage the flow deployment. Okay, so now your your question may be that okay, it’s okay, but how it is going to help you your in your business. So as I said that 9,000 businesses are using Nifi.
And suppose if I sell this application, this is a yearly subscription 1% just 90 businesses. However the first sale was approximately 40,000. Maybe they were huge. They were a big Business. They were using 50 nodes, I’m assuming just two nodes. Okay, so for two nodes or sorry, four nodes. Four nodes cost maybe 10,000. So 10,000 multiplied by 90. It is approximately 9 million dollar. It can be. If I will be successful then it can be. Now the competitors of this product, okay, they are very big in the, in the world of the technology, big data.
Okay? They may contact us. That is my confidence, okay, that they may contact us. Because this is something which they, they need. But if they will start developing from now, it will take one year to develop it. Okay, so that I have covered about the data flow deployment. Now what I’m going to do this. What? I’m going to sell it. What? I’m going to sell it. Okay, so can you go back to the next screen please? No, no, next. Yes, that’s all. So here you can see that Events, Data Innovation event and dgiq. This event is going to be start on this Tuesday.
One is going to be in Sweden and one is going to be in California. We are going to attend both event at the same time. Two teams is going to attend these events. We are going to present our product there. Okay. And I’m very sure that we will give the traction. Why? I’m very sure. Till now we have done 12 demos of this product including Red Hat, Airtel and IBM. All these companies took the demo. They were very happy and they were amazed that no one has this solution. Okay? So getting a positive response from all these customers.
I’m very hopeful that this application will be successful. So suppose if this application is successful, what else we will achieve? Because these 9,000 businesses are not a small business. Because big data cannot be used by small businesses. They are million dollar minimum million dollar companies. So suppose if we sell this application, we would be able to enter their home or enter their business. Okay? We can get other, other businesses also we can get more work from there. We can get implementation work. So it will be a kind of a lead generation tool. Okay? And a part of this.
All these businesses need 24 into 7 support also for these technologies. Technologies. I would request you that Google open the Google and search on the Internet. That Best NIFI support. Best NIFI development company. Best nifi support company. Best knife. The best Cassandras. Best support company. Best Casca support company. You will see either first or second or third maximum us. So we are the company who are providing 24 into 7 support at this level in India, okay. And even on the world. So any company who are using this technology, they needs 24 into 7 support also for the compliance for the insurance purpose.
So they come at this moment apply. At least 10 companies are taking our support. Okay. Recently we have cracked one deal from Dubai that that company’s bank and another one is in the pipeline. That company is another bank. Okay. So these kind of customers, these kind of businesses, we are getting through big data. So we are hoping that in big data we are going to be a big, big, big. Okay.
Vinay Pandit — Investor Relations
Sir, can we now move to Q A please?
Ratan Srivastava — Founder and Chief Executive Officer
Sir, Sorry.
Vinay Pandit — Investor Relations
Can we now move to Q A?
Ratan Srivastava — Founder and Chief Executive Officer
Yes, I’m done.
Vinay Pandit — Investor Relations
Right. Thank you. So.
Ratan Srivastava — Founder and Chief Executive Officer
One second. I will connect my headphone. Yeah.
Questions and Answers:
Vinay Pandit
So participants who wish to ask a question, we use the option of raise hand. In case you’re unable to raise hand, please send us a message on the chat and we’ll invite you to ask the question. We take the first question from Ashwin Palani. Appa. Ashwin, please go ahead.
Unidentified Participant
I’d like to congratulate the team on the.
Vinay Pandit
Ashwin, can you. Can you speak up a bit louder please?
Unidentified Participant
Okay, just give us a. Is my audio better now?
Vinay Pandit
Yes.
Unidentified Participant
All right. Hello everyone.
Umang Soni
Good evening.
Unidentified Participant
First of all I would like to congratulate the team on the success what have been achieved in the last year. And I would like to start my question with last year’s performance. So I see that the sales growth has been impressive. While in the last four quarters the operating margin see a decline. Is there a specific reason why the last four quarters see a decline when compared to the previous year’s performance? Yeah, sure. So as Umang has shown you the PPT in PPT, he has explained that approximately 2.40 crore rupees is kind of a one time or that was a important for the business.
For example, ESOP. This is one time for this year. For example Dubai. Okay. So these kind of expenses, we have added a new expenses one time. If you remove all these expenses then you will see that our profit margin is there where I always claim. Okay. So only thing is that we have added new expenses which were very important for us. Okay. And the reason, the major reason is that the sales. The decline in the sales. Okay. If. If we could have even zero percent growth, okay. Still our margin would have been a better. Okay.
But unfortunately lot of things happen in this quarter. Okay. In five years this is first time that it happened. But I don’t say that I’m not going to give any that kind of reason. That. No, it. We don’t know that why it happened. And all we. We are aware that why it happened. I have already Explained you that why it happened. I hope that the next time you will see the improvement and I have already given the guide deadline also. All right. Yeah, that makes sense. Even I was part of the last quarter presentation where you were saying like.
The minimum guidance would be like on. A conservative Note, it’ll be 30%. Yes, yes. Every year
Ratan Srivastava
if you remove all those expenses, you will see that we are above 30% E Dubai and all. Okay, so that was important for us. So then that is one time.
Unidentified Participant
Okay, yeah, yeah, that makes sense. And thanks for answering that. My follow up question would be on that. In the. During the last quarter you said that DFM would be your dream project and you are going to pitch it to a telecom giant and may know how did that go?
Ratan Srivastava
It went very well. It went very well.
Okay. Initially they were. They said that they don’t have time. They have only 30 minutes. When we started presentation, they said that okay, they can extend the time. Okay. But I as I said that see this DFM you can charge on the node basis. Okay. So how the nodes. The number of nodes. Suppose if you have a 50 nodes then per node you will have to charge 2500 means 1 lakh 25 000. So for this kind of decision it takes time. It will take time. Okay. So I’m very hopeful. Means if you will meet next to next week, I will have a better numbers.
Because in these two events I’m going to see that how it is going to attract the customer. The product is amazing. Only thing is that customer should be there who are going to use it. Okay, that can be the only problem. Otherwise it is going to be amazing.
Unidentified Participant
Okay, thank you. One last question from my end. So I hope that this product would be a successful one for you. And I see that from the presentation the top 10 companies contribute more than 50% to your revenue. And was there any new client added in the recent quarter? Or what was the percentage of new clients that was acquired in the last financial year? Okay, so percentage I do not have idea, but new client just.
We have added 600 clients. Okay. That project is started approximately one month back. Okay. And that project customer is a US based analytics and research company. Okay. So that is the one new client which is. I can say that the in one shot we have added a. A big ticket. Okay. Apart of this there are so many other things. Okay. Which I have not listed right now, but pipeline. Okay.
Umang Soni
Okay. Yeah.
Unidentified Participant
Thanks for answering my question with that. I would like to wish all the best for the team for the upcoming quarters in the financial year. Thank you.
Vinay Pandit
Thank you. We’ll take the next question from the line of Pranaya Agarwal. Pranay, you can unmute and ask.
Unidentified Participant
Yes. Thank you, Vinay. And thank you Ratanji for this opportunity. Thank you for explaining to us all the simultaneous challenges that case was faced during the quarter. And it helps us understand what is happening in the external environment and what are the specific bottlenecks and challenges that a company like KSOLs may face. So thank you for explaining that to us. Ratan sir, as long term investors we understand that there will be some quarters which are good. Some quarters which are not so good. And of course if sales have come down then margins will also be impacted.
So. But if you were to really think long term and that is always the guidance that you’ve given us that if we look at it from a three to five year perspective as a business we were confident of achieving a sales growth year on year of 30 odd percent and an operating margin around 35%. That’s been our fundamental understanding as investors. For the long term. Of course under. Given the fact that there will be a few quarters which may not achieve that threshold. But overall from a long term lens that is the understanding that we’ve had as long term investors.
So if you could just clarify that for us, sir.
Ratan Srivastava
Okay. So pr. Thank you. So if you compare last year expenses. Okay. And this year expenses we have added few expenses. If you remove those expenses we are still above 35. For example my salary. My salary. Okay. Then we have hired a. This VP Engineering. Okay. Nishant. Okay. Then Asim. Then Darpan. So these were. These are the hirings which has impacted the profit margin directly. But if you will see the impact of these hiring you will see that in the long term this is going to give us a huge benefit. It will help us to maintain the growth.
Also sales growth. Because right now we are sitting on. The. Large base means as okay. And this base is continuously increasing. So we need. Last year we means it was not required. But day by day things are means. I can say that changing. And we need more good resources, senior resources to manage all these things. So that is the reason which you can say that margin is not 35%. But if you see the. If you remove these hirings and just calculate the growth and the revenue. Sorry, revenue and the expenses. It is. It is exactly same means if you remove my salary and other VP engineering salaries and director program salaries.
And also you will see that we are doing the same thing even more than 35. But we need all these things. So to maintain the sales growth continuously to sit on the better position, we need to travel. Last year I think we only three to four people travel to out of the India. Day after tomorrow, 9 to 10 people are traveling, 5 people are traveling to Sweden and 5 people are traveling to us. This is not for fun. This is not for fun. I will, I will explain. I will tell you. This is not for the fun.
We are going to have both there. So many people will come there to to know about us, to know about our services, how we will do if one person will go there, how we will manage. So to generate the revenue. Now I learned that we will have. To. Add some expenses also. Okay. But you will see the results very soon about all these expenses.
Unidentified Participant
Yes sir. No sir. Thank you for explaining that. That has been our understanding that we are incurring these expenditure for the long term growth of our business. So a lot of these are non recurring or front ended. Whether it is participating in exhibitions in San Francisco, traveling a lot overseas, or the Dubai event that we attended or the new set of new team members that CASOS has hired at a senior leadership role. We understand that these, a lot of these expenses have gone up because keeping in mind the future growth that we anticipate in the business.
So we understand that margins in on an interim basis will be impacted. However, on the revenue guidance of 30% year on year for the next three years, which was the guidance from the management for the last 2, 3, 4 quarters. Now are we still firm on that guidance of the 30 revenue growth for the next three years?
Ratan Srivastava
Sir. See from here to 30% if you will say okay means in next four quarter consecutives. Okay, definitely I can make. Oman can. Can you correct me consecutive quarters mean 10, 10, 7, 5, 5 kind of. Okay, so I can make. But if you will compare the year on year then because our this quarter sales got down. So in that way you would not be able to see. But in next three, four quarter. If you are saying that that how much we will make then I think that it will be more than 30. Am I saying right thing?
Umang Soni
Not in the that terms, but yeah, correct. That will achieve a good growth in all the coming four quarters. But if you see on a yearly basis due to the dip in the current quarter on a percentage terms, it won’t make 30.
Ratan Srivastava
Right, right, right. So if you will sum up the next four quarter that how much we have total got the growth then it will be definitely more than 30.
Unidentified Participant
Okay. No sir, I think I’m still not Clear about this revenue growth guidance that the company.
Ratan Srivastava
Can you explain that? What I want to say.
Umang Soni
Sure. What the essence of saying is that we would be achieving a double digit growth in the next quarter as per the guidance given. Following that in the coming quarters, quarter 2, quarter 3 and quarter 4 also we would be having tremendous growth. That what we can foresee from the current forecast. And considering this, if you see 10%. 10%, 10% compounding which is what Ratan sir wants to convey, it’s going more than 30% but on a yearly basis you will see it would come around 20 to 25% something in that range. So okay. The reason particularly being this quarter is dip.
Ratan Srivastava
No.
Unidentified Participant
So Oman, thank you for that. In the press release you have stated that the guidance for FY26 is a 20% growth in revenue. Is that correct?
Umang Soni
Yeah, that is annual guidance, right.
Unidentified Participant
The annual guidance for 26 is 20% growth from the FY from the FY25 numbers. So that we understand. Our understanding was that for the next three years we have an aspiration to grow 30% every year in revenue. Is that correct? Among Correct.
Umang Soni
Correct.
Unidentified Participant
So okay, so there has been a change in the guidance. Can we say that?
Ratan Srivastava
I don’t think so. Change in the guidance because of this dip. If you will compare then you will see that we are not achieving 30%. But if you will consider that, okay, we are starting from here then you can say that okay, we are achieving for next three years.
Vinay Pandit
Consecutive three years, 30% that actually just to clarify, the current dip is Q4FY25 which falls under FY25. What he’s trying to ask you is for FY26 which starts from Q1FY26.
Ratan Srivastava
So Q then we can do that if we will start from the Q1.
Vinay Pandit
So that’s what he’s asking that Q1FY26 to Q4FY26. What do you think will be the full year growth versus FY25?
Ratan Srivastava
Already explained that.
Umang Soni
Yeah, that would be 20%. And coming on that I would say 30% was never a guidance. We always told that it is our aim that we’ll try to maintain 30% and which has now been because of this quarter’s dip, it has been revised to 20%. We can say and will surely try to achieve more than that. We are working on it.
Unidentified Participant
Okay. Okay. No, thank you for that. I wear has built a lot of trust with its employees, its customers and its stakeholders over several years. And it has a very good culture. So I wish you all the best. And I hope to maybe. I look forward to the next few interactions and best of luck to the entire team of Case. Thank you.
Umang Soni
Thank you.
Ratan Srivastava
Thank you.
Vinay Pandit
Thank you. We’ll take the next question from the line of Rushab Doshi. Rushab, you can unmute and ask.
Unidentified Participant
Yeah. Hi Ratanji. So even I had a question on the growth part only so because in the press Release you’ve mentioned 20% revenue growth and in the presentation you said an EBITDA margin of around 25%. So you know, one thing I just wanted to point out, like if the revenue in Q4 is lower, that brings your base down for FY25. So it actually makes growth much easier in FY26. So you know, my whole point of the question is that if we grow at let’s say 20% for the next entire year and our margins again drop by around 5 to 6 percentage based on your guidance, our EPS or PAT would, you know, based on my calculations would again be flat for this year.
And if we assume a 1 to 2% dilution because of the ESOP, we could see an even a negative EPS growth. So if you could just help or you know, just share something like you know if. Or would. Is my assumption correct or am I wrong somewhere?
Umang Soni
Okay, so on the same lines, like I would say that we would be growing at a much faster pace than what we have grown. And if you see because of this quarter’s dip, the percentage in percentage terms it would be lower. But overall the business is growing to be more than what we have grown from 108cr to 137cr. So that’s the whole point. Because of the PI is increasing, the percentage is getting contracted. But in a business terms we are increasing more than what we have increased in FY25.
Unidentified Participant
Also like could you mention like what would be a sustainable EBITDA margin? Because we have seen quite a significant drop from around 42% to 35% and now we are again expecting a more drop in this year.
Umang Soni
See, we are now transitioning to a more mature business model and we are adding few processes as we are getting bigger. And, and our client profile is getting such that we have to have few processes in place. And so that’s the whole point of this expenses so that it builds a longer one second.
Ratan Srivastava
See, I agree that our profit margin got dropped. Okay. But if you see that why it is dropped then we have already explained that the sales is down this, this quarter. Okay. So overall if sales would have been the same, which was last even 0% growth this question was not there. Okay? So only because of the sales, everything is down this quarter and the year on year got also affected, okay? All three quarters we have done very well, okay? Meaning when last 19 quarters we have done excellent, okay? Except this quarter, this quarter went wrong and I have explained everything that why it went wrong and it will not happen again, okay? In 20 quarters it is the 1 quarter where things are not in our favor, okay? And if it would have been the same growth, I think that we could have a different type of call today.
Okay? But unfortunately, this time is not in our favor. But this is not the case that it will happen every time. I’m very confident. I have already given the guideline after two years this time I was. I was hoping that this kind of questions we will get. I always try to avoid giving guidelines. Even I was always sure that what I’m going to do in every call investor, call customer, sorry, investor ask that what will be your approach, what you will achieve and all. But I always try to avoid. This is after two years when I have given the guidelines just to assure that things are in our control.
It happened for first time since ipo. We have launched and we are enough mature to understand that what went wrong and we can correct it, okay? Simply and we have already taken the step that how we can correct it. And you will see the result. I have given the guidelines. Then I would say that just wait for a few things, few months, okay? You will see the result, everything, okay?
Unidentified Participant
Also, like could you share the product revenue for this quarter?
Ratan Srivastava
See, this quarter we have made only $40,000 with that product. But what I am aiming because that was my first sell, okay? And it took approximately more than three to five months to convince the customer. Actually, I. I tell you one thing. I could have get a more than 40,000, but what they said that if you will raise more than 40,000, then VP will approve. It will take another two months. And I was in rush. Why I was in rush. It was not just for the sales, okay? I wanted to motivate my team that okay, we have done something where people are ready to buy it, okay? So it has given them motivation that okay, they have spent lot of time day and night they work.
So things are in the right direction. So that’s why I was in the rush. But now I’m not in the rush. Just. Just wanted to tell you one thing that we are going to attend also Gartner event. Gartner is the very. I can say that prestigious event where one ticket cost is 4500$. Only CEOs CXOs level people come there. They’re not visitors are allowed. Okay. In that event we are going to. We are hoping that we will get lot of contact. We are also going to represent there. We are also going to share this stage there.
So we are doing lot of things. You will see the result. I will say that just give us few few months. You will see the result very soon. This DFM is going to do something amazing which I think that you will be surprised. Okay.
Unidentified Participant
Correct. You know, my worry was just that the numbers which you provided the guidance, you know that was leading to a flat EPS again. So you know, that was only my.
Ratan Srivastava
Do not worry about that thing. That is. That is just a one time. Okay. So you will see the improvements very soon. We have done very good job in last 19 quarters. Okay. So this is one. This is a case of just one quarter. Okay. So I hope that we deserve one chance.
Unidentified Participant
Yeah, absolutely. So I had one accounting question also. Like in the cash flow statement there’s an increase of around 4.63 crores in non current liabilities. So you know, what is this? And also the 9 crores which we borrowed, like would that be repaid in like Q1 this year or it would continue repaid.
Ratan Srivastava
And that was not a requirement. But what we did that we thought that we should have some history also with the bank. So in case if we need any loan, it will be very easy. So that just for that thing, we took a very small loan. But about that thing, 4.5 whatever is ACR Oman can explain you the reason.
Umang Soni
That that is particularly due to leases, right of use assets and the lease liability recorded.
Unidentified Participant
Okay. I just had one last question to Manish. Like you know yesterday Cognizant management team mentioned that you know, currently 20% of the code is now being written by AI. So. And they are aspiring to go to somewhere around 50%. So could you just explain for case all currently where we stand for the services and for the products division separately.
Manish Gurnani
So. So we are also leveraging AI to generate, you know, code. Right? But understand one thing, right? This will be okay for those technologies where you know, you’re not running into complex, you know, you’re not using complex technology, right? Let’s say if you’re writing a web application, right? I can use gen AI to generate almost, let’s say 60 of the report. It will be all, you know. Okay. But for a complex technology, let’s say like NIFI for which we are building dfm. Right. Or for something, let’s bring on Big Data. Right? Or something on aiml. Right. The code generation also has to be very, you know, it will not be very accurate. There’s a separate skill set all together for that. We call it prompt engineering. But you know, it’s a separate skill altogether. Right. We are leveraging and we are training our. Our employees also to generate it. But it will not be, I would say, you know, we are not going to say that, you know, we will be generating 40% of our entire code through Gen AI. It will be. It is. It is still being used and it is being, I would say used incrementally in all divisions. But certain divisions, they will need more time because the complexity of the platform itself or the table that we use, that is. That is, you know, it is not yet possible by Gen AI to generate that level of code accurately for that. Then we do, you know, rework for that. Okay.
Unidentified Participant
Also, like how does the accounting work for the product division among like, is it a license fee kind of thing or do you amortize it over the period of the contract?
Umang Soni
No, we are amortizing over a period of contract for the revenue side. Yeah.
Unidentified Participant
Okay.
Unidentified Participant
So this 40000 is annual.
Umang Soni
Yes.
Ratan Srivastava
Okay.
Unidentified Participant
Yeah. Thanks. That’s all from my best of luck for subsequent quarters.
Ratan Srivastava
Thank you.
Umang Soni
We’ll take the next question from the line of Gaurav. Gaurav, you can unmute and ask.
Unidentified Participant
Hi Dean. Good evening. I have just one question. Do we have any other product in the pipeline apart from DFM on which you are working currently?
Ratan Srivastava
And our total focus is on the DFM. Even I am working 24 into 7 a part of the. When I’m sleeping, I’m working only on the dfm. Okay.
Umang Soni
And the connected question is how much percentage do you spend on the R D of the new products? Also like which can actually scalable and which can add on to your product.
Ratan Srivastava
Pipelines right now, Honestly speaking, we have spent a lot of money for the DFM also already. Okay. So we are not spending other. We are not spending money on other ideas or other product. We are focusing only on the DFM one time, one product. Okay. We are already getting lot of traction whenever we are showing this demo. So we are focusing only on the demo. No other ideas.
Unidentified Participant
Okay, thanks. That’s the only questions I have all the best team.
Vinay Pandit
Thank you. We’ll take the next question from the line of Dhiraj D. You can unmute and ask.
Ratan Srivastava
D. We take the next question from the line of Ishan Sengar Ishan, you can unmute and ask.
Unidentified Participant
Good evening sir. I only have one question. When. When could we expect the operating margins to come closer? Around 40% if you can give any guidance.
Umang Soni
40%. Anyone is doing 40%. 2, 3/4 back the company was consistently generating 40%. So if we could again do similar. Base was very small. Base was very small. I was not taking the salaries and all. Okay, so that’s why we were getting that. Okay, so now I don’t think that we are going to reach that number.
Unidentified Participant
So we will get around 30, 35%.
Ratan Srivastava
We will try 30. But we cannot give you the words because it is not something that we will not generate the business. We will not do the business. But at the same time as business will grow, maybe expenses will also. Okay, so maintaining the same profit margin is. I. I think that still we are. If you say that we are on the top in the comparison of other companies. Okay, but 40s. I don’t think that I can imagine now.
Umang Soni
Thank you, sir. We’ll take the last question for the day from Dheeraj Dawe. Dheeraj, you can ask.
Unidentified Participant
Yeah. Can you hear me?
Ratan Srivastava
Yeah.
Unidentified Participant
Yeah. Thanks a lot for providing me opportunity. And congratulation to. In case all two question I had Ratan and specifically Ratanji if you can give some insight. See you had been a very lenient in providing dividend. And if the circumstance. If we are seeing that we are preparing ourselves for the next phase of growth as an investor, what should we see as a dividend? Because if I see last year FY25 we had given actually almost more than what EPS has been. So shall we look at something like 75 to 80% or something? Whatever management decides in this kind of way.
But if you can communicate that that will make things better for investors as well. Any thought on that?
Ratan Srivastava
Sure. But before that I would like to add one more thing which I could not get chance to add here because this is the common investor call. If I will add it, it will go on larger platform. Okay, I will cover your question. But let me add this thing though. Last three to six months I was trying to acquire companies. Means company okay? For acquisition. I was looking for acquisition. Okay. Unfortunately I tried my best. Means I. I tried my best. But unfortunately I could not get any company okay for inorganic growth. Okay. So I thought that what can be the next.
Okay. If I will go in the same way by maintaining the 35% margin and the same growth. Okay. How I would what will I be able to sustain this base 108 crore or 1030 crore. If. If I’m not going to add anything. Okay. Then I thought that. Okay, there’s another way which I can. Which I should use. Hiring better people. Investing on the events. Changing the sales strategy. Changing the project acquisition strategy. And so that’s why you can see that it has direct impacted my operational profit margin. If I could have done some acquisition maybe then this the things were different.
Okay. But if I am choosing this way then it means inorganic growth is not possible. And if I want to maintain the organic growth due to higher speed. Okay, I’m sorry. Due to. Sorry. With higher speed and all. Then in that case I will have to spend money. And that is the reason you can see the decline in the operational profit margin. Now I have covered the this point for your question. Over to you.
Umang Soni
On dividends. Yes, we’ll continue to give dividends. But not on a fixed policy or like we’ll give it. But as and when we generate and we see any other opportunities we’ll be reducing or increasing the dividends. But yeah, dividends will continue.
Unidentified Participant
Fair enough. Appreciate that part. Second small part during the presentation you said that now you are getting into a territory whereby you are implementing projects and taking responsibility rather than just providing a manpower. And somewhere Ratanji did mention that we also give some kind of guarantee. So just wanted some idea. Is this guarantees a kind of financial guarantee or is there any kind of.
Ratan Srivastava
Thing on that guarantee means we are taking the responsibility to deliver the project on time with quality. Okay, so that is the. I mean that I wanted.
Unidentified Participant
Wish you all the best. And we see it and probably much better shape. It’s all emerge. And we all understand also happy as a stakeholder. And we appreciate your effort. Thanks a lot.
Ratan Srivastava
Thank you. Thank you.
Vinay Pandit
Thank you sir. That is the last question for the day. Would you like to give any closing comment before we end the call?
Ratan Srivastava
Yes, sure. Sure. So as I said that it was our 20th result. Last 19th result we have done continuously sales growth. This is first time we have. We have a decline. You can see the decline in the sales. And I have explained the reason that why it it has declined. And the decline in the opium. Also I have also explained the that what. What is the reason behind the decline declining the opm. Okay. Why OPM is declined profit margin is below whatever we said earlier. Reason is that earlier I was as I said that acquisition.
And also so trust me and KSOLs we are. We have already given the guidelines for the next quarter and for the year also after two years first time after two years, first time. So just give us few months. You will see the results. Very good. Things are coming together and you will see the result. I’m very much optimistic. Sorry. Positive about this. Okay. It is not something that I’m optimistic. I’m very positive about this because we are doing well. We have pipelines. We can see that how things are coming together. So just wait for a few months.
You will see the result. Sure. Thank you.
Vinay Pandit
Thank you, sir. Thank you to all the participants for joining on the call and thank you to the management team. This brings us to the end of today’s conference call. You may all disconnect now. Thank you.
Umang Soni
Thank you.
Ratan Srivastava
Thank you.