R Systems International Limited (NSE: RSYSTEMS) Q3 2026 Earnings Call dated Feb. 11, 2026
Corporate Participants:
Kumar Gaurav — Assistant VP of Finance & Accounts
Nitesh Bansal — CEO, MD & Director
Nand Sardana — Chief Financial Officer
Analysts:
Vinay Menon — Analyst
Anmol Garg — Analyst
Sandeep Shah — Analyst
Vinay Menon — Analyst
Sonal Minhas — Analyst
Nikhil — Analyst
Deepak Malhotra — Analyst
Presentation:
operator
Sa. Ladies and gentlemen, good morning and welcome to the R Systems Q4 CY25 earnings conference call. As a reminder, all participant lines will remain 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 the conference call, please signal the operator by pressing Star then zero on your touchstone telephone. Please note that this conference is being recorded. I will now hand the conference over to Mr. Kumar for opening remarks. Thank you. And over to you sir.
Kumar Gaurav — Assistant VP of Finance & Accounts
Thank you, Rayan. I welcome all participants to our system quarter four and year 25 earning conference call. Since our system follows calendar year as is financial year, October to December, quarter is quarter four for us. We have today with us Nitesh Bansal, Managing Director and COR System Nasala CFOR System. We have shared the investor presentation earlier today as well as uploaded on company and stock exchange websites. Hope all of you have received that. We will start the call with opening remark on the performance of the company by Nitesh followed by the financial overview by Nan.
Thereafter we will have a closure statement by Nitesh. Subsequently we will open up for a Q and A session. Before I hand over, let me read out the customary disclaimer statement on behalf of the company. Investors are cautioned that this presentation contains certain forward looking statements that involve risks and uncertainties. The company undertakes no obligation publicly to update or revise any such statement. These statements may undertake revision because of new information, future event or otherwise actual results. Performance achievement could differ from those expressed or implied in such forward looking statements. Now I pass it to Nitish for his opening comment.
Thank you. Over to you sir.
Nitesh Bansal — CEO, MD & Director
Thank you Kumar. And good morning everyone. Thanks for joining the earnings call. It’s always a pleasure to interact and I do look forward to these calls every quarter. So I’ll be starting at slide number four for those of you who have these slides and are referring to it and talking about the financial performance for Q4 2025. That’s a quarter ended December 25. We reported a revenue of 555.1 crore rupees or $62.5 million in Q4. This is a year over year growth of 23.6% or a quarter over quarter growth of 11.3%. The adjusted EBITDA stood at 101.7 crore rupees or $11.5 million which is 18.3% in percentage terms.
This represents a year over year growth of 27% and a quarter quarter over quarter growth of 20.5% in adjusted EBITDA the adjusted net profit corresponding to this is 60.4 crore rupees or $6.8 million which is a net profit percent of 10.9% which again is a year over year growth of 27.4% and quarter on quarter of 39.2%. The adjusted EPS, basic EPS on this net profit basis is INR 5.1 per share which is again a year over year growth of 27.3% and quarter over quarter of 39.2%. Basically reflecting the net profit growth. The reason calling it adjusted is it’s adjusted for RSU expenses which are and some non recurring costs that that are exceptional items and have been, you know, these are non recurring and exceptional items net of tax.
Essentially. If you look at the eight quarter chart, the eight quarter trend, basically over the last eight quarters from Q1.24 to Q4 25, we’ve gone from 416 crores to 555 crores in revenue or 60 crores to 101 crores in EBITDA. And I think it’s a milestone of crossing 100 crores in EBITDA anyway and percentage terms as well, we’ve gone from about 14.5% to 18.3% EBITDA. If you look at the bridge, how the EBITDA quarter over quarter from Q3 to Q4 has been made, we have obviously gained through the volume growth as well as some help from rupee depreciation.
But then we have also lost based on lower billing days in Q4, some amount of standard operating expenses or standard operations relating to salaries and other increments and some additional AR provisions that have been made. And that’s how we’ve gone from 84.4 crores to 101.7 crores in EBITDA. Moving on, looking at the full year performance for CY25 because we are a calendar year company, so this is also our full year. We closed the year at a total revenue of 1,958.2 crore rupees or $224.8 million which is a year over year growth of 12.4%. The adjusted EBITDA stood at 3,400, sorry, 342.7 crore rupees or $39.3 million which is 17.5% of revenue as adjusted EBITDA and year over year growth of 17.8%.
The net profit stood at 193.6 crore rupees or 22.2 million dollars which is a 9.9% of revenue and year over year growth of 24.6%. And the EPS? The full year EPS stood at 16.4 rupees per share which is a year over year growth of 24.5%. If we look at a five year trend going from CY21 to CY25 we basically come from being 1,155 crore rupees to crore rupees in revenue grown from about 14% to 17.5% in EBITDA which is basically translates to one hundred and sixty one crores to about 342 crore rupees in EBITDA. The bridge if we look at just vis a vis cy 24 there has been you know, EBITDA contribution through volumes through rupee depreciation but then we’ve lost some amount because of standard operations which is you know salaries, wage hikes etc and the AR provisions taking us from 291crores to 342crore rupees in overall EBITDA absolute terms.
We look at some of the other key balance sheet data items. Equity attributable to shareholders stood at 791.6 crore rupees. Cash and bank balances stood at 272.6 crore rupees. Arkansas and unbilled stood at 526.8 crore rupees. And our average DSO for the build DSO is about 56 days which is more or less consistent as we have continued to see it over quarter over quarter. Going over to slide number six for those of you who are referring to the slides, this is just a quick side by side comparison of margin and EPS analysis Q4.24 versus Q4.25.
Our revenue has gone from 449 to 555 crores 23.6% growth. EBITDA has gone from 80.1 to 101.7 crores which is 27% growth reflecting a 49 basis points increase in EBITDA percentage net profits gone from 47.4 to 60.4 crores which is again 27.4% growth reflecting a 32 basis points increase in net profit. And EPS has gone from 4 rupees to 5.1 rupees per share which is a 27.3% growth in adjusted basic EPS. If we look at on an annual basis We’ve gone from 17 41.7 crores to 19 58.2 crores which is 12.4% growth in revenue 291 crores to 342.7 crores in adjusted EBITDA which is a 17.8% growth year over year or 79 basis points growth.
Net profit has gone from 155.4 crores to 193.6 crores which is a 24.6% growth or 96 basis points growth in net profit. And adjusted basic EPS has gone from 13.1 rupees to 16.4 rupees per share which is a 24.5% growth in EPS. This adjusted net profit Adjusted Basic EPS excludes RSU expenses and non recurring and exceptional items net of tax. Quickly looking at some of the operating metrics. Well we have continued to report revenue by geography. It remains largely the same. The mix remains the same except that you know, post novigo acquisition we do have a little bit of Middle east and Africa which has gotten added to the portfolio and since the acquisition only happened or closed middle of the quarter by middle of November, hence it’s a very minuscule impact.
But broadly speaking, bulk of our revenue still comes from America is about 73% of revenue, 17% from APAC, 9 from Europe and 1% from Middle east and Africa. From a client concentration perspective, our top 10 clients have grown from 22.7 to 25.2% while the company has also grown 12.5%. As we’ve seen, that means that we have been able to grow some of our top 10 clients meaningfully expanding our footprint with them. Our top five clients have shown similar growth of about 2%. Our top three clients have grown as well and the top client has also shown a small amount of growth from 5.6 to 6.2%.
So overall healthy performance across top 10, but broadly speaking also across top 50 clients that we have continued to put focus on and continue to grow with high utilization is currently at about 80.6 or just below 81%. This is at our desirable level of utilization. We had talked about it earlier when we had hit about 83.5 to 84%, that it was way too high and that we will be consciously making investments, especially in form of effort towards building our AI platforms and building the whole service offering around AI and data and cloud. So we’ve been consistently doing that and managing the utilization effectively making those investments.
This is, this is a level of utilization that we’ll continue to try and continue to maintain because it gives us both the flexibility of rapid, rapid growth or staffing when we need as well as enough investments to build for the new things that we want to build for our DSO remains pretty much constant 56, 57 days or thereabouts, build build plus unbilled about 74 days which has also largely similar across the quarter. So no major change over there. We’ve had some key wins, I mean we always report some key wins, but the five key wins that we are reporting this time are very diverse.
All five different kind of, kind of wins. Obviously, as you would have noticed over the last two or three quarters, the element of AI led wins has continued to go up. We are seeing more and more wins happen because of the differentiation we bring through our Optima AI platform and the AI introduction in the in the solution and the offering. The first one we’re talking about is a global SaaS platform which serves a subscription driven business. This is actually in the marketing and SaaS marketing space or platform subscriptions and platform marketing where they’ve asked us to modernize the core platform to accelerate customer onboarding, enabling the company to advance its transformation from just a SaaS solution to a fully AI powered platform.
So this allows them to provide intent and advanced notifications and a bunch of those value added features to their customers in real time using AI. The second one is where we’re working with a children’s entertainment company who makes games, toys and various forms of engagement for children to modernize their entire B2B commerce system. Salesforce is the prime platform and we are essentially involved in end to end transformation of sales processes, streamlining order management, building robust data foundations and overall elevating the customer experience. Moving on in the telecommunications sector, a leading tier 1 telecom provider in Europe has, you know, asked us to create their cloud, native readiness and elevate security capabilities.
As you know security is becoming a very important domain and this obviously cuts across core engineering cloud as well as enhancing operational agility and future ready digital infrastructure. With our new newly expanded capabilities in Middle east, we’ve actually won a deal with Saudi, a Saudi mining company which is where we are implementing a next generation data platform. And this is a data platform that actually it’s on one of the latest technologies bringing together multiple storage, processing, analytics, governance and a lot of real time insights and those kind of elements which will enable smarter decision making and also create the kind of semantic layer on which then AI modeling can be done and a lot of advanced features can be built.
Last but not the least, a leading food service distributor in Singapore has partnered with us to implement Microsoft Dynamics 365 Business Central. This will allow them to streamline and digitize their end to end business operations and improve their Financial visibility, tighter process controls and enhance operational excellence across the enterprise. Moving on, something that you know we have been working on and you know a lot of, there has been a lot of questions around it that we haven’t been reporting any additional indicators or parameters. You know we, we are reporting trailing twelve month ACV booking number for the last four quarters and you know just as a, as a thing and this is, this is for you know, bookings excluding any renewals.
So this is just you know either net new or existing new so NN type of bookings. And we are you know in the process of basically making sure that we are able to kind of do this consistently across but these are the numbers basically on, on an average, you know between 74 to 75 million dollars last quarter about 76 and a half million dollars of ACV on a trailing 12 month basis was booked. Coming to awards and recognitions, you know this has been a very important part of also what we do. Working with partners and getting recognized by the partners in VAR and shapes.
Last full year has been a great year of both growth in terms of numbers as well as growth in terms of partnerships capabilities and winning accolades. So on a partnership front we have achieved the competence status with AWS on all six of their competencies. Lambda Delivery, Redshift, Cloud formation, API Gateway, E2C for Windows Server and database migrations as well as being the specialist certified partner solution partner for all five competence areas with Microsoft which includes digital and app innovation, data and AI with Azure infrastructure, security and biz apps. Not only that, we were also rated as a leader in the Everest Group software product engineering services for mid market metrics.
So this is basically our swim lane. We are a software product engineering platform engineering service provider for the mid markets and we have been rated as a leader in that space by Everest Group. We had also made a separate press release about it. I’m sure you know that would have been noticed. Apart from that we were also rated as major contenders y Everest Group in their ISV and Internet specific peak metrics as well as Healthcare provider Digital services peak metrics. We also won a few awards including of course getting recertified as great places to work but one of the best tech brands of 25 and Dombey’s WOW Workplace Award for 2025.
And we have not just renewed all our certifications but we have also gained the high trust certification which is extremely coveted and a bit for difficult certification to get important for providing services to healthcare providers and healthcare players in the US. With this I would invite Nanji to talk through the financials and then I’ll take up the last two slides. Thank you Niteshi.
Nand Sardana — Chief Financial Officer
Good morning to all. Thank you everybody for attending the call. Those who are referring to presentation, these are Q4 and year 25 numbers and the last two slides of the presentation. The venue for the quarter was Rupees 555 crores or 62.5 million dollars as against Rupees 498 crores I.e. uSD 57.2 million last quarter and Rupees 449 crore or USD 53.2 million in the same quarter last year. This is year on year growth of 23.6%. The gross margin was 38.9% compared to 35.5% last quarter and 37.9% same quarter last year. The improvement in margin is the result of volume growth.
SGN expenses has increased from rupees 92.8 crore in quarter three to 114.3 crore this quarter. This is due to conservative AR provision, year end provisions and increased investment in sales adjusted 18.3% compared to 16.9% last quarter. Net profit after tax was Rupees 36.4 crore or US$4million which is impacted by increased cost due to past services cost post notification of new Labor Code. Now let me touch upon yearly numbers. The venue for the year was 1958 crores or US dollar 224.8 million compared to Rupees 1741 crores or USG 208.1 million last year. The revenue grew 12.54% year on year getting down to gross margin.
It was 36.9% in this year compared to 35.9% last year. The improvement is the result of volume growth with discipline execution. SGA expenses have increased by rupees 45 crore in percentage term. The SGNA were about 19.4% this year compared to 19.2% last year. The adjusted EBITDA before RSU cost is 342 crores or US dollar 39.3 million compared to rupees 291 crore or US dollar 34.8 million last year. As a percentage of revenue EBITDA was 17.5% compared to 16 point last year. Our performance in CY25 reflects strengthening the quality of our revenue driven by discipline in execution.
Sustained operational reor as supported by rupee depreciation. RSU cost under management incentive plan is rupee 25.2 crores. EBITDA net of RSU expense is 16.2% Coming to the depreciation, the total expense was rupees 66.4 crores compared to 65.4 crore last year. This includes 24.9 crore for intangible capitalized on account of velocity and skillware acquisition and 1.9 crore for intangible capitalized on account of newly acquired novigo. Non recurring income for the year was rupees 14.5 crore I.e. uSD 1.7 million compared to non recurring expense of rupees 2 crore last year. This year non recurring income includes sale of building of rupees 43 crore as offset by exceptional expense due to notification of labor code rupees 24.9 crore among other items.
Interest expense is rupees 14.1 crore this year compared to 8.4 crore last year. This is mainly due to interest on short term borrowings, office lease capitalized under India’s 116 and interest on debenture taken for novigo acquisition. Other income in 2025 were rupees 3.7 crore compared to 6.2 crore last year. This year we had an exchange loss of 3.4 crore compared to exchange loss of 1 crore last year. Further, the other income comprise of interest income of Rupees 4.5 crore this year compared to 3.7 crore last year. During the year the average rate for USD was 87.11 and Euro was 98.41 as against last year average rate of USD of 83.667 and Euro of 90.52.
These are the two main currencies for us. As at year end we have total power cover of $42.8 million with average rate of 89.16 and Euro cover of around 400,000 with average rate of 98.67. These all have been marked to market as per the closing date of 31st December. The tax expense was 68.9 crore this year as against 60.3 crore last year. Effective test percentage is 27% as against 31% during last year. This year we moved to new regime having 25% marginal rate. However due to amortization intangibles like customer contract and non compete on valuation scale versus acquisition and permanent differences which are not tax deductible.
The effective test comes to around 27% profit. Actor tax was rupees 186 crore or 21.3 million dollar compared to rupees 131.2 crore or 15.7 million dollar last year. Adjusted profit after tax I.e. rSU expense non recurring exceptional item net of tax are rupees 194 crore or 22.2 million dollar as against rupees 155 crore or 18.6 million dollar last year. That is 24.6% year on year increase. Basic EPS for the year was rupees 50 points 15.7 compared to rupees 11.1 last year. Adjusted EPS was 16.4 as against 13 point last year. That is 24.5% year on year increase.
I think with that let me hand over to Niteshi for remaining slides.
Nitesh Bansal — CEO, MD & Director
Thank you. So after talking about the numbers, let me talk about the markets a little bit. And one important thing that I wanted to really bring out is last full year everybody has been talking about AI and how AI is impacting business and how we are leveraging AI. And as we have talked about in the last few calls as well that we have been, you know, very actively leveraging AI in both delivering our services to the customers as well as positioning ourselves, differentiating and winning new business. And hence, you know, we have been very AI forward in that sense.
What we have seen, you know, why last year was probably the year of experimentation. This year is going to be a lot more focused on actual implementations. And what we are seeing is that there are probably four segments in the market which are actively offering or bringing out or becoming active markets for us to go after of which two have been our prime markets for forever. And those are basically what we call the pre chat, GPD software and SaaS vendors. These are the traditional product and platform vendor, platform tech companies that we have been servicing.
And the kind of needs that they have is they now want to build AI on the edges or they want to integrate AI acquisitions into their core or they want to create platformizations with data lake or build AI agents on top, et cetera because their products were built in the past, they were not AI native products. But now they want to integrate AI and this has been core to us. You know we have been building AI capabilities and integrating them on their platforms. So this, this business is, is going to be our mainstay and we’ll continue.
This is, this is a about $120 billion TAM growing at 7, 9% CAGR. Then there were the vertical SaaS companies which is our, which is our specialty. We work with a lot of vertical SaaS companies who want to create deep industry modes by specialized data models, by creating rich integration ecosystems and fine tuned data models to offer more context sensitive AI outcomes. We are building those vertical AI products from scratch for some of these domains, for some of these vertical SaaS companies, whether it’s in legal, healthcare, retail, logistics, you name it, this remains our mainstay.
However, there are newer areas opening up or markets opening up because of AI and because it’s a level playing field. So one of the new ones is of course companies that didn’t exist before the AI era. So these are the AI native product companies who are the startups or scale up companies today and they want to build new AI native products with complete audio video integration or agentic support or automated whatever processes, automated platforms for processes etc. And we are using our Optima AI accelerators and agent frameworks to accelerate those initially building prototypes and then getting into those multi agent orchestration etc build out.
So that’s definitely a new market, new TAM that’s opening up for us. Second one is a legacy TAM but which was not open to us earlier, which is the large enterprises which are enterprises which worked largely based on their systems of records and that was really their, their, their main investment. And those are opening to us because AI has created the level playing field and they want either integrations with their SAP, Salesforce, CRPs etc in a very AI manner. They want to leverage the data which is logged inside those systems of records. And they also have a lot of technical debt, a lot of old legacy systems which need to be modernized which is very difficult to modernize earlier.
But now with AI it’s become faster. So that’s a net new TAM that also gets opened up now which we can run after. And then we use AI in all the three kinds of offerings, right? We build AI features and use cases, we use AI in building those features and use cases. So through our Optima AI engine as well as we use agentic AI and build agentic AI for business. So that’s how we have been playing in the market and solidifying our position. I’m coming towards my last slide, just summing up, looking ahead type of things from a revenue perspective.
Like I said earlier, while 25 was the year of experimentation, 2026 is going to be the year where companies will start embedding AI into their productive use cases. When they do that, as they do that, we believe we’ll see larger sized AI projects, we’ll see more productive AI projects. Productive meaning projects that go into production and that will definitely influence our pipeline. Second, with the Novigo acquisition and its enterprise playbook, we believe it will help us accelerate the agentic implementations, especially going beyond tech Companies to the enterprises, which has been the basic reason why we acquired Novigo.
And we definitely see that playing out some of the trends that we believe will continue to shape 2026. Of course, AI remains the main discussion point, but companies that have been on this journey, on this bandwagon for some time, they’re realizing tools fatigue. So because they’ve bought and tried multiple tools and hence the discussion is moving squarely into the service providers, service providers arena to talk about outcomes. Right? Because tools, just by using tools, buying tools, they’re not seeing how the promise of AI will be fulfilled. Hence they need expert support from people like us.
Modernization and tech debt reduction will continue to become topics of interest as well as accelerating engineering velocity. And these are the two vectors that will, we believe, continue to show promise. So companies like us who can help customers modernize or reduce tech debt or actually deliver an increased or accelerated engineering velocity will tend to gain. GCCs continue to be very active ecosystem. They are rapidly trying to adopt AI because they want to become the AI center of excellence for their enterprises. And they know they cannot do all by themselves, hence require expertise and enablement from partners like us.
So all in all, we believe that it’s going to be an exciting year ahead and with a lot of AI led discussions and programs that will come to fore and that will help us play to our benefits and play to our differentiation, that is it. From my side, I think at this point we’ll open up for Q and A.
operator
Thank you. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use their handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We take the first question from the line of Vinay Ravindranath Menon from Monarch Capital. Please go ahead.
Vinay Menon — Analyst
Hi sir. Congratulations on a great set of numbers. A few questions from my side. One is, you know, like this from Novigo and what?
operator
I do apologize to interrupt you. Your audio is not clear.
Nitesh Bansal — CEO, MD & Director
Yeah.
Vinay Menon — Analyst
Hello.
operator
Yes, please proceed. One second. I do apologize, your audio is not clear.
Vinay Menon — Analyst
Hello?
Nitesh Bansal — CEO, MD & Director
We are not able to follow you.
Vinay Menon — Analyst
Okay, okay, I’ll get back.
operator
Thank you. We take the next question from the line of Anmol Garg from Dam Capital Advisors. Please go ahead.
Anmol Garg — Analyst
Yeah, hi, thanks for the opportunity and congratulations. Good set of numbers. I have a couple of questions. Firstly, good to see that we have started to report acv but in that just wanted to understand how much percentage approximate would be the renewals for us. So that we can make sense from this as well.
Nitesh Bansal — CEO, MD & Director
So anmol like I said, it does not have any renewals. We have removed renewals or rather, you know, we don’t capture renewals in in the same manner. So this is all new wins, whether with new clients or existing clients.
Anmol Garg — Analyst
Yes sir. I’m asking that in a total order book or in our general business how much? Because it’s a. Since it’s a short cycle deal business. So how much would be a typical. How much business gets renewed every year versus the net?
Nitesh Bansal — CEO, MD & Director
It’s very difficult to say. These are not numbers that have been historically captured. We have talked about it many times before also that while we do not get long term contracts but our business is very sticky because we are doing product and platform development for clients and when clients start working with us on a particular platform, they will continue the team and they will continue to have some more additions to the teams, etc. From time to time till the product is you know, obviously in the build cycle or getting refreshed or new. So those will all go in as renewals and will not reflect over here because that’s just ongoing business for us.
Right. And this is what we end up either opening new logos or selling selling new deals. Understood?
Nitesh Bansal — CEO, MD & Director
Understood.
Anmol Garg — Analyst
Secondly, wanted to understand that. To see. A margin inch up in this quarter. So as Movigo gets further fully integrated into our business, how much Synergy benefit on the margins can we expect going forward? And within that, if you can also indicate for this quarter how much was the incremental revenue of Movigo.
Nitesh Bansal — CEO, MD & Director
So you know, from a margin perspective, when we had, when we had put out the announcement for Novigo, right. We had talked about that Novigo is, is a better operating margin or better EBITDA than our system standalone. So to that effect, you know, we do expect that, you know they will have, they will have a bump up effect on our margin. Right. And you know, we’ll, we’ll have to see how the year plays out. But typically as a combined company, we had said that we’ll have, we’ll see probably between 90 basis points to a percent increase right.
In the overall EBITDA of the company. And this is something we had put out when we did the acquisition. So we stay over there same way I think for the revenue question. Also while you know, as a policy we have, you know, we’ve always maintained that we don’t post acquisition we don’t count the revenue separately because we start working in an integrated manner from day one. But if you look back at what we had already shared at the time of acquisition, Novigo is approximately 264 crore rupees type of revenue company. So you can obviously do the math.
Anmol Garg — Analyst
Okay. Okay. So this, this quarter would be a full quarter integration of Novigo or Novigo.
Nitesh Bansal — CEO, MD & Director
Deal got got through or basically got registered only middle of November.
Anmol Garg — Analyst
Okay. Okay. And one last question from my end. So in one of the deals we have highlighted a win with global SaaS platform to modernize their core platform. So just wanted to understand is it with a larger, is it a larger ISV and is it a net new client for us?
Nitesh Bansal — CEO, MD & Director
So while this one happens to be a net new client and a new deal of course. So whatever deal wins, we report are always new deals. Sometimes they can be with existing clients with an entirely new deal. And yeah, I mean they are, they are a very, very successful marketing SaaS company. Typically SaaS companies, you know, they, they are not, these are not one of those enterprise level, you know, multi billion dollar kind of companies. Typical successful SaaS companies will be a few hundred million dollars of ARR. And this one will probably be in, in a similar range.
Anmol Garg — Analyst
Okay. Okay, understood. Sure. Sir, thanks for answering my question.
Nitesh Bansal — CEO, MD & Director
Thanks.
operator
Thank you. We take the next question from the line of Sandeep Shah from Aquarius Securities Private Limited. Please go ahead.
Sandeep Shah — Analyst
Yeah, thanks. Thanks for the opportunity and congrats to the management for a third consecutive quarter of a good show, especially on the organic growth as well as margins. Sir, the first question, as you also highlighted in your initial remarks, last two weeks, lot of announcements coming from the AI centric platform vendors or the software vendors. So what we understand the AI centric software vendors can actually be a risk on the software development life cycle. So my question is a, they can be a direct competitor to us. Second, they can be a competitor to our customers who are a SaaS players.
So in this scenario you believe the risk on the growth has gone up or the opportunity size has gone up.
Nitesh Bansal — CEO, MD & Director
Sandeep, the answer is actually it’s more opportunity than risk. But you know, there is obviously risk cannot be denied because what happens is if you look at, you know, and especially because recent announcement was by Anthropic. So if we just take them as an example, right, or any company like that, they’ll release models and those models will promise that they can automate a certain nature of work entirely by itself. However, the reality is usually slightly different. While the model will bring a lot of core competence, but somebody will have to actually put that model to work in an enterprise context, in a business context.
So for us it will look like that the total quantum of work has reduced, but it actually gives rise to a new kind of work. Because this is now an AI integration work, which is obviously a little more premium. It requires implementation and integration of a different nature. Plus it Requires an ongoing AIOps MLOps type of a discipline to be put in place. Because it’s not that AI once implemented, is, is never going to go off the rails. Right. The biggest fear that any enterprise has in utilizing AI in productive manner is we don’t know when it goes off the rails.
Right. So somebody needs to continue to monitor it, somebody needs to put the guardrails and continue to refine it. Right? So it’s a very different kind of engagement. It requires a human in the loop to be successful. So what happens is the nature of work shifts, right? And the more of these models come out, the more companies want to implement it and the more, and that’s why I was talking about this net new TAM of, you know, just new AI models getting implemented and, and AI native use cases coming into, coming into play. Right. So definitely traditional work shrinks, but a new kind of work stands up.
So that’s, that’s the way I look at it.
Sandeep Shah — Analyst
Okay. And so do we track a matrix where percentage of revenue for us coming through AI LED offerings or Optima AI usage?
Nitesh Bansal — CEO, MD & Director
We, we track Optima AI usage internally because that’s our adoption metric. And you know, we, we are currently tracking Almost, you know, 40% of our work getting or using Optima, even if it is for validation, even if it is, you know, for testing or whatever else. Almost 80% of our people use Optima AI internally. And we are beginning to track, you know, AI based revenues as well, which is revenues which are coming from directly delivering AI use cases or where we are using AI to deliver the work. Right. And that currently, you know, is trending towards about, you know, 27, 28% getting up to 30% of our work.
So it’s, it’s a fairly fast growing significant percentage that we are seeing and we are quite, you know, bullish on that. This number will, will continue to increase because AI is not going away.
Sandeep Shah — Analyst
Okay, thanks, thanks. This is helpful and good to see a slide on the annual contract value excluding renewals. So if I look at it, the Q4 LTM ACV is roughly 34% of the revenue in CY25, which could have been 20 25% a year earlier, which could be at the end of CY24. So does Q matrix gives a confidence that the organic growth could be better entering CY26 versus CY25. And second, the Q4 matrix on ACV includes Novigo or doesn’t include Novigo.
Nitesh Bansal — CEO, MD & Director
So one, it does not include novigo because you know, like I said, novigo was just last few, last few weeks and we don’t have that data yet or at least it’s not tracked robustly on the first part on the analysis. And if you are, you know, much ahead of us or me in calculating those things and you know, I would come back to you and understand a bit of that calculation. But broadly speaking, you know, if just by general correlation, good ACV wins, means we have, you know, good work to deliver in upcoming quarters. I mean, I’ll just keep it as simple as that.
Sandeep Shah — Analyst
Okay, thanks. We’ll come in the follow up. All the best.
Nitesh Bansal — CEO, MD & Director
Sure. Thanks.
operator
Thank you. We take the next question from the line of Vinay Ravindranath Menon from Monarch Capital. Please go ahead.
Vinay Menon — Analyst
Yeah, I hope I’m audible now.
Nitesh Bansal — CEO, MD & Director
Much better. Thanks Vinay.
Vinay Menon — Analyst
Yeah, yeah, just congratulations on the inside on gator numbers. Couple of questions on my side. So last year in our annual report we had mentioned that we had done about 120 plus AI projects, you know, like in our total. So this year what would that number be if we have it with us.
Nitesh Bansal — CEO, MD & Director
Actually in number of projects? We stopped counting Vinay for a simple reason that now it was, you know, literally every project has some AI going in there. So we actually like earlier Sandeep was asking, we’ve actually started looking at actual revenue percentage in terms of how much revenue is getting influenced by it. We’ll obviously get more robust in that metric. But right now like I was saying, you know, anywhere between 28 to 30% of our revenue is either directly delivering AI mandates or using AI to deliver our mandates. Okay, okay.
Vinay Menon — Analyst
And another thing just to understand that you know, like you must have obviously read all the reports which is coming out last few weeks. So a lot has been said about, you know, like a lot of routine were being taken off just to understand that, you know, because we do mostly discretionary work. So is it a lesser threat to us compared to a larger player because we work with a leaner team? So does that give us a benefit over the larger players?
Nitesh Bansal — CEO, MD & Director
It does. You know I, with, with due caution I would certainly say yes it does. And I think it was one of the discussion topics during our last earnings call as well, where, you know, the work we do is discretionary and new build in nature or advanced feature enhancements, etc. In nature. It is not routine. It is not really, you know, either business service or maintenance of code or those kind of things, which is what will obviously get significantly impacted both positively from a business perspective that things will happen faster and automatically. But from a service provider perspective, it would not require as many people to do that.
And what we are seeing is that it actually opens up new opportunities for us because where companies are working with large service providers who’ve got hundreds of people doing that, they want somebody else as a challenger to come in and see if it can be done in an agentic manner or in a totally AI first manner with significantly lesser number of people. And we are seeing those, we are actually, you know, actively in, in, you know, consultation or bid cycles for a few of those.
Vinay Menon — Analyst
Okay, and last, last question from my side that, you know, obviously we had a, you know, employee addition because of novigo acquisition, but for this year going ahead, are we looking at, you know, kind of optimizing productivity because of AI and maybe looking at a higher revenue per employee kind of 26.
Nitesh Bansal — CEO, MD & Director
See directionally, Vinay, that that eventually may happen, but it will take time to reflect. Our people addition this year is not just because of novigo. If you’re looking at the people addition numbers, like I said, novigo numbers have just come in. We have actually had organic growth which required people to be added and we have actually grown in our total headcount right throughout the year. And we don’t see that really, you know, significantly like reducing because like I said, we don’t have business which will get taken over by AI in a manner that have to reduce workforce.
Just that for every new project, if earlier I needed 10 people, now I may need only six. Right. But it is still an addition. Right. So I will add and hopefully as people begin to see the differentiated delivery which is happening in some cases already, and we would like that we are able to differentiate both our delivery and billing to our customers. But look, you know, this whole change in revenue, productivity, etc. Is going to take time to reflect because, you know, it is a, it is a constant tussle with the customer. Right? Customer wants productivity to themselves and we want to take benefit of productivity to ourselves.
And then, you know, we have to be able to find, find a path where we get some, they get some and, and, and we are all happy.
Vinay Menon — Analyst
Oh, thanks so much.
Nitesh Bansal — CEO, MD & Director
Thanks.
Vinay Menon — Analyst
Congrats.
operator
Thank you. We take the next question from the line of Sonal from Prescient Capital. Please go ahead.
Sonal Minhas — Analyst
Hi Nitesh. Hi Nancy. Good morning. I hope I’m audible.
Nitesh Bansal — CEO, MD & Director
Yeah, correct.
Sonal Minhas — Analyst
Okay, just wanted to understand the AI productivity part a little bit more. So assuming, let’s say if a project that you were doing for a client used to take 100 hours, this 100 being a rounded number, the same task based on your projections or current basically estimate with the use of AI tools and some bit of automation and coding. Is there a ballpark estimate on what is the time that you take now or plan or think would take in the next one year for the same project? Just trying to understand from a man hours perspective.
Nitesh Bansal — CEO, MD & Director
Yeah, I mean just, just as you use 100R as a, as a ballpark or as a benchmark. So whatever used to take 100, what will it take now? See the thing is we have been obviously doing many, many of these across the year last year. And because we have our platform optimy I we also gather statistics as we work through so through different life cycle stages of the software development we are seeing different levels of productivity. And you know, so it could be anywhere between 25 to 40% in the early stages, which is from requirements all the way to you know, project assignments and all comes to maybe about 20 in build.
20, 25% but goes up to 40, 45% in testing. If we were doing the end to end life cycle expecting about 30% productivity, 30, 35% is, is what we would definitely kind of go in with. So in your estimate from 100 it will probably be 65, maybe 70 hours. Right. So that’s the kind of productivity gain. Now how much of it we we keep or pass on? We obviously engage in a different manner with these kind of kind of projects and, and the people are also trained differently and hence they are billed on a different kind of a rate basis.
If even if it is time material, most of the times we do it as fixed price or we try to do it as fixed price.
Sonal Minhas — Analyst
That’s what I was about to ask because most of these would then end up being fixed price because they’re productivity led. So is there like a ballpark on directionally your fixed price projects are moving up and then margins are moving up and should we see that going further in next year or year after that?
Nitesh Bansal — CEO, MD & Director
So answer to first part. Is my fixed price moving up? It is moving up directionally. Is it noticeable enough to make a, make a reporting change? Not yet, but maybe in future. And newer models are evolving as well where customers will say Maybe not fixed price, but time material with a premium or with a tool usage, cost, etc. So models are still evolving to your second part of question. Will it continue to grow? Margins help Margins look, quality of my revenue is improving. Right. However, there is a significant amount of investment needed to continue to sustain this.
The amount of investment that we have made in training, in tools, in building our own whatever, you know, hiring or renting and then buying your GPU servers, making people trained and building our own platform, etc. That all has to come out of the margins. Right? So, so right now, as I’ve said in previous quarters also, we are deploying all of that as investments and continuing to build that capability, hire the right kind of talent, put all the trainings in place and so that we sustain our margins, we are able to give maybe minor growth only and we don’t dip on margins while we are making all these investments.
And it’s very important because this is a time when everybody is running the race. We have to stay ahead and make those investments.
Sonal Minhas — Analyst
Understand that, sir. So also trying to get a sense on these four quadrants that you mentioned on the AI native journeys, you’ve been fairly strong on software products build out as a service to your clients. On the technology side, these, these companies typically fall in the vertical software companies domain. If I may just generalize it this way. Or. From these four boxes, which, where are we heavy in terms of our revenue share? If you hear me, just try to understand that.
Nitesh Bansal — CEO, MD & Director
Actually, you know, these four boxes are. Now that you asked the question, I’m also scratching my head how to correlate the two. Because these four boxes are currently built or you know, divided based on where they are in their AI adoption or where they are in their AI. Okay, but broadly speaking, if you say, you know, the left two boxes, in fact three boxes are purely tech and the last box is enterprise. I mean those are more vertical companies. The other three are tech companies. Where the, the vertical SaaS you can classify as vertical or platform basically.
Right, because there are vertical SaaS companies. Otherwise they are, they are product and platform companies. But yeah, we hadn’t thought of it that way. We were looking at a market from an AI adoption. AI, you know, who’s, who’s there in that AI curve AI journey.
Sonal Minhas — Analyst
No, this is because it helps bridging the two from a revenue mixpie and the future four categories. Thanks for joining, sir. I’ll fall back in with you. Thank you.
Nitesh Bansal — CEO, MD & Director
Sure.
operator
Thank you. We take the next question from the line of Nikhil from Kizuna Wealth. Please go ahead.
Nikhil — Analyst
Yes sir. Thank you for giving me the opportunity and congratulations to Vegas. Good set of numbers. So one thing in the investor presentation that you have mentioned is in the Trend Shaping in 2026, the tools predict is giving more rise to outcome, the outcome discussion. So are we seeing the early trend or early adoption from the seed base to outcome based billings or and how does, how is it going to impact our billing rates going forward?
Nitesh Bansal — CEO, MD & Director
So let me clarify, when I, when I say tools fatigue raising, giving rise to outcome discussions, I’m not referring to pricing mechanisms. What I’m referring to is for companies, for our clients, basically client companies, a lot of those who had bought those tools and I think Vinay had asked that question of Sandeep had asked that question saying, you know, what, what, what, what happens when you know, a lot of these tool companies are tech companies are coming out with newer products on AI, right? A lot of our customers have bought those products and they, they thought that they’ll just use the tool and it will do the, do the job right.
So they have tried using the tools, they bought more tools, they’ve spent more money, trained more people and that’s the tool fatigue which is setting in. And hence now they’re coming to us saying look, these tools don’t give us the outcomes. Can you do something, do you do something different so that we get the outcomes? Outcome meaning the benefit of AI. Right now the pricing or the commercial mechanism may be entirely different, right? They will engage with us for building something, for automating something or for running a business process or doing a net new tech setup that can change many things.
But this particular statement here is about clients feeling that the tools don’t deliver the outcomes. We need people and experts from companies like our systems and others to help us drive those outcomes.
Nikhil — Analyst
So sir, can you just give us your outlook on the pricing, the commercial side of this outcome based pricing that is going on and is the trend picking up right now based on the outcome based pricing and basically what impact would that have on our billing rates? I would just like to understand that because this can have a deflationary impact on the pricing.
Nitesh Bansal — CEO, MD & Director
I don’t think so. I mean, see, simple thing is customers have always shied away from outcome based pricing. So they don’t want outcome based pricing in fact, you know, to the extent possible because they want to. They want most customers have budgeting processes and they have capital request that somebody has to sign up to saying how much you’re going to spend. The biggest problem they face with outcome based pricing is they don’t know what is the size of the size of the project or capital that they are putting in, hence what to write in the capital request.
Now having said that, let’s assume and currently I’m not seeing too much of outcome based pricing enthusiasts how, you know, in, in, in my client set. But when it does, you know, personally my calculation on my understanding does not point to outcome based pricing being a reason for any sort of deflation or lesser earning on the part of service provider because obviously, you know, service providers like us would want to maximize our revenues as well and where we go towards outcome basis because it helps us maximize their avenues. So Nikhil, I’m, I’m in the camp that, you know, one, there are very few customers today who want outcome based or who will go towards it.
More and more customers want certainty so they want certainty of output, some sort of, you know, commitment or assurance from service providers like us that we will be able to deliver those, those benefits or those, Prof. Those, what you call it, efficiencies back to them. And for that they’re willing to pay a certain price, right? Either fixed price, time, material or a combination or some sort of a, you know, reward fee, etc. At the end. But pure outcome is very difficult right now.
Nikhil — Analyst
Okay, so that’s it from us. Thank you and all the way.
Nitesh Bansal — CEO, MD & Director
Thank you.
operator
Thank you. We take the next question from the line of Sandeep Shah from Aquarius Securities Private Limited. Please go ahead.
Sandeep Shah — Analyst
Yeah, thanks. Thanks for the opportunity. Sir. On the margin, we have done excellently well in the last two years. And if I look at the adjusted EBITDA margin in the Q4 has been at 18.3 versus full year at 17 and a half. So is it fair to assume if currency stays where it is, this next year margin could be flat or even better than what we have done in the full year of CY25 because your Q4 margin is higher than CY25 margin by 80 bits.
Nitesh Bansal — CEO, MD & Director
Sandeep will, if the currency remains where it is and does not give us a negative surprise, we hope to definitely be able to keep it flat. Right. And, and then depending on the investments that we’re making and how soon we are, we are able to monetize some of those. You know, we’ll, we’ll either stay flat or slightly up or we’ll see. Our aim was to remain in that high 16s and 70s. Now with Noviga acquisition, we have a slight bump up over there which is why we, we think now, you know, 17ish something will certainly be possible.
Sandeep Shah — Analyst
Okay. Okay. And just a question, any update on a chief sales officer which we were looking out earlier?
Nitesh Bansal — CEO, MD & Director
Yeah, we have been, you know, reactive in, in that space and you know, without saying too much, you know, hopefully some update sometime soon, we, we have been very close to close to getting somebody on board. For some reason it didn’t work out last quarter with somebody. But then you know we have, we are actively on that, on that place.
Sandeep Shah — Analyst
Okay. Okay. And last question to none. Sir, if I look at the cash flow statement, the organic capex being as big as 44cr versus last two years being 12 to 20cr per annum in last two years. So what has led to this bigger CAPEX in CY25?
Nand Sardana — Chief Financial Officer
So Sandeep, you know we have grown this year. We have added people and also, you know, as you know we have set up the experience center, we have acquired new facility in Pune, Chennai. So all these put together, you know, have led to that.
Sandeep Shah — Analyst
Okay. And sir, how to model this on an organic basis in the coming years?
Nand Sardana — Chief Financial Officer
You mean how to model means what’s the.
Sandeep Shah — Analyst
Yeah, so this looks like slightly expansionary capex rather than maintenance capex. So my senses in Cy 26 we can come back to maintenance capex as well.
Nand Sardana — Chief Financial Officer
Well, that will depend how much we grow. So I think it’s a good problem to have like to grow further. Yes.
Sandeep Shah — Analyst
Okay, thanks.
operator
Thank you. We take the next question from the line of Deepak Malhotra from Cap Grow Capital Advisors. Please go ahead.
Nand Sardana — Chief Financial Officer
That will be the last question. We already did. She is in the US already very late. So that will be the last question.
Deepak Malhotra — Analyst
Hi Nitesh, first of all, congratulations on good results and thank you for accommodating me and including my question. I think you rightly picked up that AI is the focal point of discussion and that’s what we have done all along on the call. Now you mentioned about the tool based fatigue entering in the arena and AI’s use of earlier being just a productivity tool now is undergoing a significant change. And now my question is you refer to that basically the role of companies like yours will be changing. So what I want to understand what is that what AI cannot easily replicate in terms of your advisory role or your domain specific expertise or what kind of transformation you could really undertake, you know, when you’re undertaking these projects.
So how really we are really going to create that opportunity and the value there. Thank you.
Nitesh Bansal — CEO, MD & Director
Right, thank you for that question. And while there can be a fairly long answer to this, but you already touched upon the key points over there. And there are three fundamental things that I would point to. Number one is AI as a tool needs to be made enterprise ready, which basically means enterprises would require its particular guardrails, acceptable use policies, security frameworks, compliances, all of those things to be set up for them to feel safe in using a tool. I mean, which is what they’ve been doing for ages for anything that that is brought in.
You know, how, how is the data residency, who’s got access to what, what is accessing, cloud versus what’s on prem etc etc. So there is one expertise in being able to do that, set it right for purpose. Second important thing is that we all know that AI requires data to be fed to AI in order for results to come out. And we also know that, you know, data is almost never clean and never ready for AI. So you put more dirty data into AI, more noise, you introduce more noise, you will get more hallucination. And almost 70 to 80% of all AI that we do or anybody does is data centric.
So whether it is pre processing, post processing, developing a domain specific language or creating a linguistic form or whatever else, there’s a whole lot of work that happens in that space which is data science, machine learning and genai like variety of disciplines. So that’s the second one where also some amount of domain expertise may come in. Sometimes it may not be required. Third, very important thing is, which I was mentioning earlier in some of the, some of the responses that, you know, when, when you start using AI and start moving it to scale, there is, there is a significant chance that we’ll go off rails because as AI consumes more, and let’s say there is some unsupervised learning happening over there, there is a data or model evolution happening taking place, there would be new false positives, new hallucinations getting, you know, induced, which need to be constantly corrected, which need to be.
So data needs to be corrected, the inferences need to be corrected, new guardrails need to be set up, etc. Etc. And that entire discipline comes in. So essentially now we know this because we do this for a living, because we do this across over 100 customers, et cetera, et cetera, for any client company to set it up by themselves. Well, nothing is impossible in this world. All sorts of knowledge is available and expertise is available, but that’s where they’re looking for someone who’s got a proven track record having done this, been there, and that’s where we come into play.
So that’s like short Answer to a question that of course, you know, we can go into a lot of detail, but I hope that that helps.
Deepak Malhotra — Analyst
Yes. Just to follow further on the billing rates, I mean the whole model so far has been built on where you have a predictable billing rate. You are driving the efficiency gains and that’s what is getting paid for. And you’re doing the normal, I mean for a layman like me, services, whether it is your application maintenance, you’re doing testing, you’re supporting, as you mentioned, your integration work or whatever routine development work you are undertaking. But then at some stage, if it’s going to compete with basically the business model itself, then how does it really going to affect the revenues as such in terms of the winning rates?
Nitesh Bansal — CEO, MD & Director
Well, Deepak, I wouldn’t say it’s competing with business model. It’s like in our world of tech services, broadly speaking, or platform product engineering services, there have been new service constructs that come to life every now and then at some point of time. Everything used to be built from scratch using basic Java or dotnet or whatever language, C, C, etc. Then came obviously APIs and then came the fabric and then came cloud. And people are using lots of pre built stuff to now assemble stuff. And those are all new constructs as we play into them and we evolve the models accordingly.
Same way for AI where AI tools make the work easier, it requires it, like I was saying earlier, it actually creates a different kind of an engagement where the people are required to carry out that work are differently trained. We call them AI ninjas. People who are able to, you know, who are really ambidextrous and they’re able to use all sorts of tools and they’re kind of assembling things very quickly. They haven’t, they have a knack for understanding where what kind of guardrails would be needed and they’re leveraging tools to deliver. Right. So there is a value of the tool.
Now if it’s my Optima AI tool, then there is a value that tool is bringing. If, if client has a tool or they’re buying a third party tool, if somebody is buying a Devin, which is commercially available agents to do this work. We also use Devins because where our customers have bought them, they’re paying for that. Right. So it’s a combination of tools plus people and people who are differently capable, differentiated capabilities of the people to finally carry out the work. So it is a different engagement model. And as we all do, we have to evolve and shift towards those kind of models.
Deepak Malhotra — Analyst
Okay, one final question I have. With regards to your marketing and sales function, you already mentioned that you are going to strengthen your team there. How much advantage so far we are taking of the Blackstone ecosystem and does it reflect in any of the like top five new wins you mentioned about or otherwise? If you would like to throw some light on that. Thank you so much.
Nitesh Bansal — CEO, MD & Director
Nitin. Blackstone has been a fairly attractive ecosystem for us because we do get access to a lot of portfolio companies. But like I’ve observed many times in the past mentioned this, we get access because yeah, we are part of the portfolio but then beyond that we have to do the entire sales cycle. Anybody will only buy when they have a need and we can uniquely serve the need and it all matches. What has actually helped us more is by selling into that ecosystem we have learned how to sell into private equities in general and hence now we have over a dozen private equities whose portcos we serve and this is becoming a significant part of our business reflecting almost close to 20% of our revenues now coming from private equity portcourse and we will continue to grow on that.
The five wins we talked about, actually none of them are Blackstone. Portco’s in this list. But every quarter we have at least one or two new Portco wins that we add to our roster either within Blackstone or other private equities. But it’s a constant addition.
Deepak Malhotra — Analyst
Yeah. Excellent work, Great show. Thank you and wish you all the very best.
Nitesh Bansal — CEO, MD & Director
Thanks.
operator
Thank you. Ladies and gentlemen, we take that as the last question and conclude the question and answer session. I now have the conference over to Mr. Nitesh Bansal for his closing comments.
Nitesh Bansal — CEO, MD & Director
Well, thank you Ryan and thank you everyone for joining and asking those questions. Both you know, encouraging as well as, you know, providing insights into what you, you are looking at and looking for. But like I said earlier, I, you know, I enjoy being in these calls and look forward to, you know, seeing you again next time. Thank you so much.
operator
Thank you on behalf of our systems. That concludes this conference call. Thank you for joining us and you may now disconnect your lines.
Nand Sardana — Chief Financial Officer
Thank you.