Pelatro Ltd (NSE: PELATRO) Q3 2026 Earnings Call dated Feb. 05, 2026
Corporate Participants:
Subash Menon — Chairman, Managing Director and Founder
Sharat G Hegde — Chief Financial Officer
Analysts:
Unidentified Participant
Janhavi Patil — Analyst
Presentation:
operator
Sam sa. Sa. Sam. Foreign. Ladies and gentlemen, the conference call for Palatro will begin in the next couple of minutes. Thank you for your patience and please continue to stay online. Foreign. Ladies and gentlemen, good day and welcome to the Q3FY26 results conference call of Palatro Limited hosted by Orem Connect. 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 would now like to hand the conference over to Ms. Janhvi Patil from Orem Connect. Thank you. And over to you, ma’.
Am.
Janhavi Patil — Analyst
Good afternoon everyone and a warm welcome to all of you. I am Janhvi Patil from Orium Connect representing the investor relations team of Pilot Row Limited. On behalf of the company, I would like to thank you all for joining us for the Q3 FY26 earnings call. Before we begin, I would like to state a brief cautionary statement. Some of the statements made during today’s call may be forward looking in nature. These forward looking statements are subject to certain risks and uncertainties that will cause actual results to differ materially from those expressed or implied. These statements are based on management’s current expectations, assumptions and information available as of now.
Investors are therefore advised not to place undue reliance on these forward looking statements when making any investment decisions. The purpose of this call is to share insights into the company’s business performance and financial results under review. Now I am pleased to introduce the member of the management team present with us today. Mr. Subhash Menon, Chairman and Managing Director. Mr. Sharat Ahigde, Chief Financial Officer. With that now, I now hand over to Mr. Subhash for his opening remarks. Thank you. And over to you, sir.
Subash Menon — Chairman, Managing Director and Founder
Thanks Ranvi. Good evening to everybody and welcome to the Q3 financial year 2526 Q3 results Call of Palatro. We have uploaded a deck on our website as is our usual practice and I presume you all would have access that we will take you through that. But I must tell you that a few of those slides are repetitive as compared to Q1 and Q2 because they cover products and certain other relevant details like that which do not change from quarter to quarter. So I will go through those slides rather quickly. And if anybody is new to the call, attending for calls for the first time and need some clarification on that, please feel free to ask once we get to the Q and A session, please feel free to ask and we can go back in the deck and explain that we have had a good quarter three, as was expected, the growth has been good as compared to last year.
As you all know, we do not quite track quarter to quarter growth because in our business, honestly given the kind of long sales cycle and long implementation cycle, a quarter is a very short period of time given that we really focus on year on year growth. So if you look at what happened in the first nine months of last year and what’s happened in the first nine months of this year, you will see a significant growth. So that’s, that’s where I would like to start. And we expect our momentum to continue because we have been in a bidding and winning more customers.
Our existing customers are taking more services and products from us. So with all that, the growth momentum is continuing. If you go to slide three, you will see that the slide is about company. So currently we are now at 46 telecom networks in about 35 countries and we are collectively handling about 1.5 billion subscribers on our platform. Of course, it’s not one instance, it’s multiple instances adding up to that. You know that we are very focused on technology and There are about 11 patents at this point in time, about 480 plus employees. The most important aspect here is the 46 telecom networks that we work with.
You know, a few years ago that was, you know, less than half, I mean, two, three years ago. And this growth, you know, as it keeps increasing by a few telecom networks every year gives us better and better opportunity to be connected in a deeper manner with the telecom ecosystem. Moving to the next slide, which is the revenue model, I won’t spend time on this because this is something that you all know there’s no change in this and we don’t anticipate, we don’t expect any change. There’s repeat revenue and one time revenue. The repeat revenue is put into two buckets, divided into two buckets.
One is recurring revenue, the other one is reoccurring revenue. The reoccurring revenue, which is largely change requests, are also quite predictable. They keep happening because when they use up, when our customers use our platform, they have to keep coming back to us for change requests. The next one is one time revenue, which is perpetual license and implementation fee that also is continuing. And these revenues, the percentages go up and down depending upon which contract get recognized in which quarter. The next slide is our presence. As you can see, it’s a very busy slide. There are quite a few countries that we are in today.
35, I told you initially and those are listed there. So we’re very, very dominant in Asia, Middle east and Africa. That’s where our real presence is. Moving to slide seven. That’s where the products are listed. Actually the Enviva customer engagement platform is detailed rather the product listing is in the next slide. Here the capabilities are mentioned. I won’t spend time on this. This is a repetitive slide. We suffice to say that we employ a lot of AI ML technologies in our platform to make it very current, very relevant and very advanced for our telco customers.
The next slide has a portfolio of. Today we are divided into two divisions. One is CVM division, the other one is STEL division. This is consequent to the acquisition of the STEL software business by us about six to seven months ago. The CBM division has these products. Once again a slide that has got repeated because you know, just for the sake of completeness we are mentioning all this here but the products don’t keep changing. So these are, these are the products that we have. There are five products on the slide and a set of managed services to go along with those products.
The next slide, which is slide number nine as the. That’s the portfolio of SL divisions here there are three products. One is on the ETOP UP which includes recharge and voucher management. The other one is sales and distribution management and the last one is mobile money. Again some managed services to go over that. The next slide is a revenue bifurcation slide. Here you will see what happened in the quarter as I have stated in the past, between recurring and reoccurring we are looking at at least about 70% at all points in time. That that’s our internal target.
Again between these two buckets the percentages could change as as I stated earlier. So in this particular quarter, so when we look at the nine months now, you will see as compared to the earlier year, including this particular quarter, we had 57% of recurring revenue to 20% of reoccurring revenue. That is 77% of recurring plus reoccurring. We had some large perpetual license deals and that’s why the percentage of that third element which is one time revenue has gone up to 23%. This could very well change by the end of the year. It can change in any quarter.
So all we have to see is whether we have a healthy mix of recurring and reoccurring in the total revenue bucket revenue composition and that continues to be the case. The Growth story. I mean the next slide, which is where the customer numbers and all are seen. As you can see, every year we’ve been adding five to six on an average five to six customers. Sometimes it’s more, sometimes a little less, but that’s the average. And in the past six years we’ve gone up quite significantly from 30 networks to 46 networks. So that’s what I mean by an average of about, you know, between five and six telcos every every year.
Out of that, about 31 today are using our managed services. So when we started tracking this in 2019, only one out of 13 was doing that. Today about 60% or a little more than 60% of our customers actually. I mean almost like 65 to 66% of our customers actually take services from us as well. And that’s good for us because that means higher and higher revenue. So that’s from slide number 11. Now we move to slide number 12. This is just to show the key strengths of our platform. It is very end to end. We use a lot of technology which is patented, which is scalable.
Our largest customer on the CBM side has about 250 million subscribers on their network. Our largest customer on the SL division has 500, almost 500 million subscribers. So the products are have really scaled to hundreds of millions of subscribers. So whichever telco we go to, we are fine with that. Our strength really comes from the fact that our core strength comes from the fact that we have very deep domain expertise. We understand the telecom network extremely well and that is why we are able to bring out products which are very relevant, pertinent and of great value to the telcos.
And as we keep building new products and improving their capabilities, this particular knowledge space of this particular thing that we understand, the key strength that we have really helps us in coming out with better and better products. We have a little bit of touch at this point in time. On the fintech side we can’t really call it banking, but it’s actually the mobile money part of it for the telcos that also something that we are doing investment rationale, the product is completely end to end. So that really gives us a very strong foothold within the telco.
The scale is proven, it is massive. We have recurring and expanding revenue models so there is more and more recurring and reoccurring revenue happening. We win more customers, we go deeper into them, we get services, revenue additional, we cross sell our products. So with all that there’s a very high barrier to enter. It’s not easy at all for Competition to enter in a very quick manner. It’s a long sales cycle. They have to have references, they have to prove a variety of things, they have to have track record and then maybe they can come in and compete with us.
So it’s a high barrier for entry, there’s a large moat. And our technology is very differentiated as compared to a competition because of the fact that we do a lot of in house development of technology. We have a lot of patent, patented technology in there and they continue and we are continuing on that path to have more patents. So that, so that is also helping us differentiate. So on the whole it’s a highly differentiated platform. It’s very end to end, it’s highly scaled. Not every software vendor will have something at this scale. And our revenue model is very attractive with all of that creating a significant moat in our business.
Moving to the next section, which is actually financial overview, I will let my colleague Sharath, who’s the CFO take you through that over the next 10 minutes and then we can open the floor for questions. Over to you, Sharath. Thanks.
Questions and Answers:
Sharat G Hegde
Thank you. Good evening everyone. So the next few slides are on the financials and I’ll summarize them all quickly. So to start with, we are very happy to present another strong financial quarter. For the nine month period ended 31st December. The revenue grew 62% year on year to Rupees 99.12 crore while the EBITDA grew by 73% year on year to 22.38 crores. This supports our non linearity expectation. The EBITDA is growing at a higher scale as compared to the revenue. The EBITDA margin too has been.
operator
Could you come a little closer to the microphone? Your voice is slightly muffled.
Unidentified Participant
Okay. Is it better now?
Sharat G Hegde
Yes, a little better. Okay. Okay. So as I was saying, the EBITDA has been growing significantly as compared to revenue. And the EBITDA margin too has been expanding. So it expanded to 22.6% from 21.13% last year. The pad excluding exceptional items stood at 13.6 crores with a margin of 13.8%. I also wanted to highlight that we have already surpassed full year FY25 numbers on both revenue as well as padding which clearly demonstrates a very strong momentum in the business then coming to the quarter. So Q3FY26 performance revenue grew by 69% year on year to 38.38 crores while EBITDA grew by 119% year on year to rupees 8.57 crore and excluding the exceptional item that we have reported stood at 5 crores at 13.1%.
So that’s a quick highlight on the financial numbers. And we have a slide on slide 19 which gives certain key financial metrics which is again a comparison between past year. So all the metrics as you can see are improving as well. So this was a quick take on the financials. So maybe we can open the floor for question and answer.
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 remove yourself from the question queue, you may press Star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the line of Prasanjit Paul from Paul Asset. Please go ahead.
Unidentified Participant
Good afternoon everyone. Hope I am audible. So my first question is regarding the tax rate. We can see that your tax rate is pretty low, around 6%. So if you can help us to understand why. So and what’s the expected effective tax rate for FY26 and the company financial year 27?
Sharat G Hegde
Sure. So yeah, the effective tax rate for nine months has been around 7% while Q3 it’s around 9%. The main reason is that our subsidiary in Singapore did have a certain carry forward loss which we are taking to set up against profits that we have been earning and which effectively nullifies any tax liability there. So on a consolidated basis this is what is contributing to a lower tax rate. And the full year expectation is somewhere around 9 to 10% effective tax rate.
Unidentified Participant
Okay. And for the next year FY27, will it remain similar or like it will go back to the 20% plus?
Sharat G Hegde
No, it wouldn’t like vary too much but I mean so there is one thing that we need to be mindful. It all depends on the revenue contribution between the various entities. Like the contribution revenue or the profit contribution. I mean so if the contribution is higher from the Indian entity then the effective tax rate could be slightly higher. Whereas if it is from the subsidiary then that would have a better thing. But as I said, the variance will not be too much.
Unidentified Participant
Okay. And so my second question is given the AI and all, so we all know that the SaaS companies are worldwide are suffering from the AI threat. So how do you see this domain compared to the AI fears? So do you think that AI would be beneficiary for you or do you think that would be a threat for your business model and what you are doing to prepare for that upcoming AI threat.
Subash Menon
This is Subhash Menon, I’ll answer that question. We actually see that as a great opportunity. Let’s look at the space that we are in. We are in a space where we collect a lot of data. We have the opportunity to analyze all of that and come up with great findings, actionable intelligence and then tell our, you know, inform our customers on what they basically on what they should do and, and benefit from that. So the sector actually naturally lends itself to be AI enabled or to have a lot of AI within it or to leverage AI.
So it will be a threat if Palato as an organization does not move forward on AI. It will be an opportunity if you take this, you know, the situation forward by bringing in a lot of AI into our products. And that’s exactly what we are doing. The latter is what we are doing. So in all our products today, we have extensive AI capabilities and we are actually about to launch a very, very strong AI module or platform, whatever you want to call it, in the next one month, which is a collection of all the AI capabilities that we have launched till now onto a platform and then we are branding that particular platform.
You will hear about it. In the first week of March, we are attending a major conference in Barcelona which is mobile World Congress. That’s when we’ll announce something. So that way we are actually improving the AI capabilities of our customers when they use our products. So we believe AI is a great opportunity for us and we’ll continue to work on that.
Unidentified Participant
Don’t you think that AI will ultimately put the pricing pressure, investment more and research and ultimately that will squeeze your margin? Or do you think that no, AI can actually be a margin enabler. So what do you think? Is it a threat for margin or it can help to improve margin?
Subash Menon
You see, that really depends upon what kind of business that you are in. See, if this is about cost reduction, AI will be a threat for margin. For all cost reduction activities, AI will be a threat because AI will reduce cost in various ways. I mean, at least that is what is believed. Ours is not a cost reduction play for our customers, it is revenue growth play. So when it’s revenue growth, AI will not, I believe, will not lead to a reduction in margin or I mean there would be natural competitive situation which could have some pressure on margin at some point in time or the other and that could wax in wane.
That’s possible, but as a general trend, no, I don’t think that Will affect our margin.
Unidentified Participant
Okay, thank you. That’s all from my side.
operator
Thank you. A reminder to all participants, you may press STAR in one to ask a question. Participants, please press Star and one to ask a question. The next question comes from the line of Yash Minaria from Manerian Investments. Please go ahead. A reminder to all participants, you may press Star and one to ask a question. The next question comes from the line of Nishita from Safire Capital. Please go ahead.
Unidentified Participant
Yes, hello. Yeah, so I wanted to ask, do we have any acquisition plans for FY27? Like, is there any company which you are looking to acquire or is the growth that you guided of 25 to 30% is completely organic?
Sharat G Hegde
See, we always keep looking at acquisitions. It’s a constant process. It’s not that we plan for something now, then we stop after one stop, after five months, we restart. It’s not like that. It’s a constant process. But we will only acquire if we see something which is exactly in line with what we want to do and mean with the pricing and the product and all that, the cost of acquisition and all that. So if that means we don’t have an acquisition for the next five years, so be it. If that means there is an acquisition happening in the next five months, so beat.
So there is no specific plan for one acquisition in this year? One acquisition in the next financial year? There’s no specific plan like that. We just keep looking. If we find something which we can acquire, we would like to acquire. And. And if it. And if all the, you know, all the contours are in line with what we want, then we’ll acquire. So it may so happen. Nothing may happen in the next few years also. And something may happen in the next five months also. I don’t know. No, we. I couldn’t get you. You could.
Couldn’t get you, ma’. Am. You may have to repeat.
Unidentified Participant
So what if there is a company? What would be the factors for that company for us to acquire?
Subash Menon
Okay, so first and foremost. Okay, maybe somebody can go on mute. There’s somebody speaking in the background. First and foremost, the products should be, you know, there should be some synergy among the products with us, either with respect to just the product itself or a synergy from the customer angle, or they should have some customers whom we are interested in. So a product synergy, customer synergy, geography synergy, or something that is very, very interesting for us. That has to be there. That is the first thing. The second thing, of course, it has to be in the telecom space that’s the second thing.
I’m not prioritizing, I’m just listing. The third thing is that the valuation should be in line with our expectation. We are very concerned about roce, so we will not sacrifice ROCE while acquiring. Those are the three things.
Unidentified Participant
Got it, Got it. And my next question would be on the EBITDA margin. So you mentioned that 26 to 30 EBITDA in the next couple of years is sustainable. And currently we are at 22% of EBITDA margin. So what is going to drive the growth? And in FY26, what margins can we expect to end FY26?
Subash Menon
With. FY26 there’s only 1/4 left. So there may not be a dramatic improvement in EBITDA margin. So you should look at something similar. Only I was talking about in the next two, three years kind of growth. Now what would drive that? The non linearity in the business. So when more, more contracts come, more customers come, we won’t have to increase our cost in line with that. That is already obvious. Now if you look at the growth in revenue and the growth in EBITDA in the deck ON slide number 16, you will see that for the third quarter our year on year growth on revenue side is 69% while EBITDA grew 119%.
That’s what it is. So there will be non linearity in the business. No doubt about that.
Unidentified Participant
Okay, understood. Thank you so much.
Subash Menon
Thank you.
operator
A reminder to all participants, you may press star and one to ask a question. The next question comes from the line of Yash Minaria from Manorin Investments. Please go ahead.
Unidentified Participant
Hello.
operator
Please go ahead. Yash.
Unidentified Participant
So my question was regarding the acquisition only. So I got the answer. Okay, thank you.
operator
Participants please press time one to ask a question. The next question comes from the line of Prasanjit Paul from Paul Asset. Please go ahead.
Unidentified Participant
Yeah, thank you sir for the repeat opportunity. So my question is as I checked about the past of the company and all. So I we. I just wanted to understand from Subhas that earlier you did the company Subex and unfortunately that company failed. So what different you are doing in in this company Pilatro that it won’t end up in the fate like Subex. Rather it can evolve to a much bigger player. So if you can just share your view.
Subash Menon
Okay, so when do you think Subex failed?
Unidentified Participant
Because it actually, I mean ended up with a costly acquisition then took some foreign currency loan and then entered into debt burden and then you know, the stock price crashed and I Hope back in 2000 post 2008 crisis, it went into our debt trap.
Subash Menon
If I’m not wrong, you’re absolutely right. That was the. That was a mistake at that point in time. It was an expensive acquisition, compounded by the fact that it was supported by debt sec means which became debt only quasi debt, but really became dead. So that’s it. Now please look at my. Yeah, please look at my response. Okay, please look at my response to the earlier question on acquisitions. I said we will be focused on roce. So that will naturally ensure that we won’t go for a costly acquisition. Because when it’s a costly acquisition, your ROCE will go for a toss.
So that therein lies the answer. So we have, I personally have learned my lessons from what happened at that point in time. If you look at the acquisitions of subexperience, there were seven acquisitions. Six of them did very well because we didn’t commit any of these mistakes. Seventh one was this mistake and it went for a toss. So we will continue on the path of the initial acquisitions of subex, which were very successful and try to build palato based on that. So that’s why I’m saying we will be very, very careful about what we pay.
So ROC means what valuation, what instrument? Every aspect of that, what instrument we use, what is a quantum. All these aspects are very important for us. So the financial metrics will be extremely critical for us to acquire and the financial structure. So without that. And that will ensure that ROCE is not, you know, sacrifice so that repeat will not happen of that mistake.
Unidentified Participant
Okay, so long term, if I’m talking about long term vision over the next four, five years. So why do you or wish to see Palatro? If I’m talking about just revenue point of view. So right now it’s a small company. So for the next four or five years, why do you wish to see this company?
Subash Menon
I mean that will become a projection. So I don’t want to give a number or anything. We will have a healthy growth and a healthy margin is all I can say. You should look at the historical fact record over the couple of last couple of years, how things have been progressing and derive your own conclusion.
Unidentified Participant
Okay? Okay. Okay. And if I’m not wrong, I think the second generation is already is in the board. So may I know, like are they actively involved in day to day business or I mean it’s just question is about the succession planning. So what’s next? Because in software company key persons are very important. So it all depends on the key persons or the promoter to drive the company to make it a bigger. So what about the succession planning and. And all.
Subash Menon
The second. The next generation is not on the board. I think you’ve got that wrong. They are. When you say next generation, naturally, my two sons, they are not on the board, but they are shareholders. At this point in time, they are not active in the business. They are not active in the business. They are aware of the business. They know what’s going on, but they are not active in the business at all. At this point in time, they will. They are not part of the business and they will not be for some time. But at some point in time, at the right time, I’m sure they, they will join and there will be a proper succession planning and all that.
But right now I’m just focused on building it myself.
Unidentified Participant
Okay? Okay. Okay. Okay. Thanks a lot and wishing you all the best.
Subash Menon
Thank you.
operator
Thank you. A reminder to all participants, you may press star and one to ask a question. Ladies and gentlemen, as there are no further questions, I would now like to hand the conference over to Ms. Janhvi Patel for the closing remarks.
Sharat G Hegde
Thank you everyone for joining the call today. On behalf of the Electro Limited, we appreciate your time and participation. For any further queries, please reach out to us at Connect at the rate odium.in thank you everyone. Thank you very much.
Subash Menon
Thank you.
operator
Ladies and gentlemen, on behalf of Orem Connect, that concludes this conference call. Thank you for joining us. And you may now disconnect your lines.