Xtglobal Infotech (NSE:XTGLOBAL) Q1 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to XT Global Infotech Limited Q1 FY 'twenty seven Earnings Conference Call hosted by RIC Capital. We have with us today from the XT Global Infotech Limited management, Mr. Ramaravel Malappudi, CEO, President and Director Mr. Raghuram Kusiluri, Chief Financial Officer Mr. Sridhar Pantala, Company Secretary and Compliance Officer. 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. Please note that this conference is being recorded.

0:49 Before we proceed with this call, I would like to take this opportunity to remind everyone about the disclaimer related to this conference call. Today's discussion may be forward looking in nature based on management's current beliefs and expectations. It must be viewed in conjunction with the risks that our business faces that could cause our future results, performance or achievements to differ significantly from what may be expressed or implied by such forward looking statements. I now hand the conference over to Mr. Aguram Khusuluri, Chief Financial Officer, for opening remarks. Thank you, and over to you, sir. Yes. Thank you. Good evening everyone and thank you for joining the XTGLOBAL Infotech Limited Q1 Financial Year twenty six-twenty seven Earnings Conference Call.

1:36 We appreciate your time and continued interest in the company. I personally have had an opportunity to review our financial results, press release and the investor presentation for the quarter ended 06/30/2026, which have been made available through the stock exchanges and our company's website. Q1 marked the beginning of new financial year with a steady operating performance. During the quarter, we continued to broaden our client base across our finance and accounting services and IT services businesses, while also making progress in expanding our presence across international markets. We also continue to focus on delivery capabilities and operational discipline as we develop our business across these areas.

2:31 In the discussion today, I will briefly touch upon the operating environment during the quarter followed by an update on our business developments and financial performance. With that, let me begin with the broader economic and industry environment. The global technology services environment during the first quarter of financial year twenty seven remained measured with the businesses continuing to assess technology spending against a backdrop of macroeconomic uncertainty, geopolitical developments and changing priorities around technology investments. Across the IT services industry, the quarter reflected a cautious demand environment.

3:18 Clients remained selective on discretionary technology spending while decision making cycles for certain projects continue to take longer. At the same time, enterprises continue to prioritize initiatives that can improve productivity, optimize costs and deliver measurable business outcomes. Artificial intelligence continued to influence technology discussions during the quarter. The focus is increasingly moving beyond experimentation toward the practical deployment of AI within enterprise processes, applications and technology environment. This is creating both pressure and opportunity for IT service providers as clients evaluate how emerging technologies can be integrated into existing systems while improving efficiency.

4:12 For us, this environment places greater importance on execution quality, domain expertise, automation capabilities and ability to support clients through technology led business transformation. Our focus during the quarter remained on expanding client relationships, strengthening our service offerings and developing our presence across the selected international markets. Coming to operational performance during the quarter, we continue to focus on broadening our client relationships and developing our presence across key international markets. Our finance and accounting services practice, we added seven new engagements across Australia, The United States and Ireland during the first quarter of financial year twenty seven.

5:09 These additions provide further opportunities to extend our finance and accounting services capabilities across multiple geographies. In parallel, the IT services business added clients in India and The United States supporting the continued development of our technology services portfolio. We also entered the Irish market through our first finance and accounting outsourcing engagement. The engagement involves establishing an offshore finance support function from our India delivery centers covering areas such as management account support, accounts payable supervision, employee onboarding, HR administration and ongoing finance function support.

5:55 This represents an additional geography for our finance and accounting practice provides a base from which we can develop further relationships in the European market. Alongside business development, we continued our internal transformation initiatives to go paperless, we started Zoho implementation that has been completed 90% during the quarter covering around 13 products and modules with the remaining focus and final goal is stabilization and realization of the expected operational benefits. Overall, the quarter was focused on adding new client relationships, entering selected markets and strengthening our operating platform.

6:44 These initiatives are intended to provide a broader base for execution as we progress through financial year '27. Let me now take you through our financial performance for the quarter ended 06/30/2026. On a standalone basis, revenue from operations stood at INR19.19 crore representing 8% year on year increase and 1.8% quarter on quarter improvement. And EBITDA was INR2.82 crore compared with INR1.60 crore in Q1 financial year twenty twenty six resulting in 76.3% year on year increase. The EBITDA margin for the quarter was 14.7% compared with 9% in Q1 twenty twenty six, representing a year on year growth of five seventy one bps.

7:39 And earnings before interest and tax stood at 3.08 crore up by 75.6% year on year with margins at 16% year on year upward movement of six eighteen bps. Stand alone profit after tax for the quarter was 1.82 crore, an increase of 19.8% year on year and profit after tax margin stood at 9.5% up four seventy four bps year on year during the quarter. Moving to consolidated performance, revenue increased to INR93.30 crores compared to INR92.31 crores in Q1 twenty twenty six, representing a 1.1% year on year increase.

8:24 On a quarter on quarter basis revenue increased by 4.2% from 89.52 crore in Q4 financial year twenty twenty six. Consolidated EBITDA increased to INR7.06 crore representing 7.8% year on year increase. More significantly, earnings before interest depreciation improved by 64.2% quarter on quarter with the margin moving to 7.6% from 4.8% in Q4 twenty twenty six and seven point one percent in Q1 twenty twenty six. Consolidated earnings before an interest stood at INR6.15 crores, a 25.2% year on year growth and 2.1% quarter on quarter rise with the margin improving to 6.6%.

9:19 Consolidated profit after tax was INR3.89 crores representing a 4.3 year on year growth compared to INR3.73 crores in Q1 financial year twenty twenty six. Profit after tax margin remained broadly stable at 4.2%. Overall, the financial performance during the quarter reflects a combination of modest top line movement and improved operating profitability. The sequential improvement in consolidated EBITDA was particularly notable while the year on year comparison indicates continued progress in profitability despite the major demand in environment prevailing across the broader technology services industry. Our focus remains on maintaining this operating discipline while continuing to develop the underlying business across our service lines and the geographies.

10:13 With this, I would like to conclude and open the floor for any questions. Thank you all. Thank you very much. We will now begin the question and answer session. Your first question comes from the line of Rishab Sharma with BP Capital.

11:26 Sir, you're not audible now? Am I audible now? This is much better. Please go ahead. How does the management see past evolving as the key growth engine, particularly across the international market? This is Rama. So basically what we are looking at in the we just as we said our CFO, Graham informed us we have both our sales market and Ireland Europe market that we are focusing on. We have believe that next year the focus on our steel and Ireland will be high and then we expect it to be getting into the million dollar both local currencies over the next year.

12:19 So sir, how much percentage of revenue will you be expecting from? So the next year, what we see is that could be depending right now we are about like less than 10%, I would say, for the next couple of years for sure is what would be because given the current revenue. Total, yes. Sir. Sir, if it changes AI, cloud, automation or digital transformation, in all of this, offer the growth opportunity for XTGLOBAL? So we see a lot of growth in the right now in the AI and cloud technologies, we won based on the recently we are getting into U. S. Government projects, which we were not before. We are mainly focused on private sector until last year or the last quarter. Now we won couple of new like a general admission into couple of government contracts right now. So we still have to win the particular RFP thing, but we are generally into the system. So we expect to see growth in public sector as well in The U. S.

13:37 At this point of time in these technologies modern technologies that we talked about. Any Okay. More U. S. Contract in the pipeline along with expected revenue product Yes. Order top We do have we recently actually as part of this quarter, but we are we got admitted into general bidding a couple of state sectors. So we still have to participate in individual RFPs, but we see that as a growth opportunity that we would be seeing in the near future that our revenues in U. S. Will grow in that sector Okay. For these Understood. Thank you, sir.

14:30 Thank you. The next question comes from the line of Omkar Mure, an individual investor. Please go ahead. Hello. My question is what is Xtglobal's strategy to deploy relationship and increase wallet share with existing global clients? So can you repeat that please? I was a little audible. What is your XTGLOBAL strategy to deepen relationship and increase wallet share with existing global clients? Yes. So right now until last year, right, our major revenue is coming from existing U. S. Revenue. And the major clients, especially on the product revenue right now, we are about like on the AP products side, we're about 15% to 20% of revenues coming from directly SaaS AP product.

15:37 That is based on their volumes is naturally getting increased in that revenue as well as we hide. Yes. So for the other clients, we see we actually added one that particular client just started using us and we believe that is going to grow a lot over the next year or so. Similarly, our focus still few of the existing clients we are increasing incremental And revenue on them as we are adding new clients obviously going forward. Okay. So, sir, my second question is how does management plan to build scale in U. S. And Europe market, particularly following recent client addition?

16:27 For The U. S, right, we have our sales team 16 U. S. So we see based on the public sector that I was answering the previous question, right, that is a segment that we never focused earlier. We are seeing a lot of traction in there. That revenue will be naturally a return. And this is more of a revenue in U. S. Delivering in U. S. So the revenue percentage will be high in U. S. Because earlier, whatever we did last three years, majority of our Yes. Yes. Okay, sir. And Europe also we just started, right? We just added our first client in Ireland, which we see that we believe that it will go there as well.

17:20 Thank you, sir. You. Your next question comes from the line of Sahil Gupta, an individual investor. Please go ahead. Hello? Yes, sir. Please go ahead with your question. Question is, how does management see DCC engagement involving some initial teams building into larger long term strategic relationship with clients?

18:17 Yes. So we are seeing like in GCC, one of our focus because of our infrastructure ability and the sector that we have in place, we are targeting GCC customers in mid market segment right now. And most of the mid market that we are talking, they wanted to start with a few resources or a small team to begin with. And then once they understand the delivery and then their internal processes, slowly adapt to a bigger set of team. So we are in process of acquiring the GCC customers. When we say GCC either with a small team with three to five members, it can go up to 50 members, right? But we are that's one of the areas that we are focusing to address mainly in The U. S. Market right now.

19:03 And we see that that's ongoing process for us. Okay. Thank you. Thank you. Our next follow-up question comes from the line of Rishab Sharma with VP Capital. Please go ahead.

20:04 Arishab, your line is unmuted. Please proceed with your question. Hello. Yes, sir. Please go Sir, my question is on consolidated revenue. So it grew only by 1.1% year on year. So what is your outlook on this? Yes. In fact, there is an increase, there is a shift happened from on-site to offshore. In fact, there is an increase in client base because of the suppose if you are building an on-site resource at $70 we have to build the same at $35 in India and we do offshore. So in fact, that is the difference. Otherwise, in fact, in real terms, we are growing, but when you come back that exact numbers, that is the difference actually.

20:57 So the shift is happening because of this H1 and other things. So because of a lot of these curves and H1, we in fact, we started long back from on-site to offshore. So that is the difference in that. Also on consolidated EBITDA, that's been improved to 7.6%. So how sustainable is this number? Yes. That number is true actually because the expense is also drastically reduced. When it comes to on-site versus offshore, the offshore margin will be higher Even though there is revenue is off, but the profit margin will definitely increase when compared to on-site versus offshore. The resources are cheaper here when compared to on-site.

21:53 That is sustainable. Okay. So the strategic plan, which calls specifically calls for the improved service mix and expanding recurring revenue streams. So which services currently offer the highest margin? Yes. Our product and both finance and accounting services. Those Give two are me both the number. The product we have 25% margin, 25% out of our total revenue, 25% is product and around 14% is coming from finance and accounting services. Those are recurring in nature. And they keep on adding resources. Suppose if you are starting with one resource for one of our clients or finance account, they will keep on adding resources. Initially, they will start outsourcing that accounts payable and they will add accounts receivable and R2R like that. For example, for particular clients we started with one resource, now we are serving for 10 resources like that. So that is recurring actually.

23:04 Understood. Margins are on high side. Okay. And to add to Raghuram's call, right, so we have our circulars product, which is accounts payable automation product that once the customer signs up and starts utilizing with that we usually see it's a long term engagement and the profit margin is very sustainable and that's a good way that's helping us grow the profit as well on the product side. Are you planning on giving the dividend this quarter, this financial year? So, year, we think about but next quarter maybe we'll consider once we declare the results, right? That's what we would be looking at.

24:01 Okay, sir. Thank you, sir, and all the best. Thank you. Thank you. To ask a question, you may press star and then one now. As there are no further questions from the participants, I now hand the conference over to the management for closing comments. Over to you, sir.

24:51 Thank you. Yes. Let me so thank you all and I would like to extend my sincere gratitude to our Board of Directors for their invaluable guidance, our employees for their continued dedication, our customers for their trust and our shareholders for their steadfast support. Thank you everyone. Thank you members of the management. On behalf of XTGLOBAL Infotech Limited, thank you sir. On behalf of XTGLOBAL INFOTECH Limited, that concludes this conference. Thank you, everyone, for joining us, and you may now disconnect your lines. Thank you. Thank you so much.