Intense Technologies Limited (532326) Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Q4 FY '25 Results Conference Call of Intense Technologies Limited hosted by Kirin Advisors Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Sakhi Panjiyara from Kirin Advisors. Thank you, and over to you, ma'am.

Good afternoon, and very welcome to today's call. Thank you. On behalf of Kirin Advisors, I welcome you all to the conference call of Intense Technologies Limited. From management team, we have Mr. C. K. Shastri, Chairman and Managing Director; Ms. Anisha Shastri, Whole-Time Director; Mr. Jayant Dwarkanath, Whole-Time Director; Mr. Nitin Sarda, Chief Financial Officer; Mr. [ Lokesh Datta ], Finance team; Ms. Pratyusha, Company Secretary. Now I hand over the call to Mr. C. K. Shastri, Chairman and Managing Director. Over to you, sir.

Good afternoon, and welcome to Intense earnings call for FY '24-'25. I'm pleased to inform you that we have had encouraging results in the year gone by. We did a -- on a consolidated basis, we did a INR 153.7 crores compared to last year of INR 116 crores. That's a 32% increase in the top line. And on the EBITDA side, we have been -- there is -- we have given an EBITDA of INR 25.53 crores, which is again an increase of 12%. PAT has not increased significantly. PAT and EBITDA was not in line with the top line growth primarily because of the investments which we have done in sales and marketing and a couple of Managed Services deals, which we had to take in where some portion of hardware was also involved. Well, we are -- the team -- we have strengthened the revenue earning teams that is Sales. We have strengthened the delivery organization. There's a lot of leadership which has joined the team. And we are on the path for growth. And what I would do is I would hand over the -- hand over further details to be provided by operations to Anisha Shastri. Thank you.

Thank you so much, Mr. Shastri. Good afternoon, everyone. It's my pleasure to welcome you to Intense Technology Limited's Q4 and Full Year FY Earnings Call. Thank you so much for taking the time to join us. FY '25 has been a transformational year for Intense Technologies, one that reflects the strength of our platforms, the depth of our domain expertise and the consistent execution of our long-term vision. For those of you who do not know us, we are an AI-first platform services company, and our platforms predominantly focus on the communications, data and process automation verticals. Our platforms are used by some of the largest banks, insurance companies and PSUs to deliver mission-critical services to their customers. We've strengthened our presence in our core sectors like BFSI, telecom, government. We're also trying to expand our reach to new geographies. Our focus remains to build -- on building practical scalable solutions that can solve complex business problems. This is extremely essential in today's fast-evolving technology environment. Key highlights for the year have been our strategic pivot from a purely tech-driven organization. We used to be a very, very tech-focused organization, and now we have pivoted to a sales-led platform-first company. This transition has already begun, and it has been delivering results. We -- at the beginning of the year, we committed to our investors that we were looking to target a INR 150 crore top line, and we have achieved that. We are now at INR 153 crores plus, right, with a notable uptick on enterprise engagement and a strong emphasis on value-driven conversations. We continue to remain sharply focused on growth while improving internal efficiency. Our DSO has also reduced by 25%, driving stronger operating leverage. I'd request you all to please look at us as a year-on-year script and not on a quarterly basis. The nature of our business does not give us quarter-on-quarter predictability, but we aim -- we continue to remain focused on ensuring that we achieve our targets that we set for ourselves on an annual basis. On the innovation front, we have always been very strong on the communications front. And in the BFSI industry, most marquee customers and leaders in the BFSI industry will know us for our strong enterprise designer offering. We have now expanded on our communications offering to not just be an enterprise communication designer, but to cover centralized communications across the entire organization. So today, we not only -- with the help of our flagship designer, we not only help create hyper-personalized communications for their customers, we also help them decide on who should receive what message, on what channel, in what language, so that they can engage better with their customers at what time. And then we send out the last mile communication, whether it's an SMS or an e-mail or a voice bot or IVR, whatever it might be. So we are essentially -- we've moved -- we've transitioned from being an enterprise designer company to an end-to-end centralized communications hub organization. We've received a patent grant for our rule-based data ingestion engine, a robust, scalable framework that enables real-time high-volume data processing, especially the industries that we serve, volumes in India are phenomenally high, right? And so scale is not even an option for our platform. So all our platforms have been tried and tested to billions of transactions on a daily basis. This directly enhances our AI-first positioning and is already creating a differentiation across our implementations across. We also earned continued recognition from global analyst firms and industry bodies. We were featured in IDC's MarketScape as a major player in the intelligent customer communications management space in automated document generation. We were named Luminary by Celent. We were recognized as a Challenger by Omdia in their Universe report. We have been consistently rated #1 on Gartner Peer Insights by our own customers in anonymous surveys. All of these endorsements really validate the growing relevance of our UniServe NXT platform and the impact that we are making across our core verticals. What's especially encouraging is the increasing volume and the quality of digital transformation mandates that we are executing. For instance, our work for one of India's largest banks enabled them to communicate -- consolidate communications across 250-plus systems in the background. And that provided them centralized governance, significant operating cost savings in terms of communications and ensure 100% regulatory compliance. They saved almost 3-digit crores in a single year. Similarly, we've executed a lot of contracts this year for -- Managed Services contracts for PSUs as well, enabling them to provide exceptional citizen services to their citizens in their respective states. All of these were built on our low-code automation platform, right? So this really gives you a sense of how our platforms are continuing to remain relevant and aspirational as the years go by, despite the AI wave. In fact, we are doing a great job in ensuring that all our platforms are optimally utilizing AI, whether generative or agentic, et cetera, to ensure that we provide our customers a superior experience, and they are able to provide their customers a superior experience using our platforms. From a sales perspective, we saw a stellar increase of 32% on our top line. All investments that we've made across the year, largely, we've tried to optimize on our delivery spend by leveraging AI even for internal efficiency, and we've taken all of that money back into strengthening our sales and marketing backbone. In this last Q4 itself, we've added 2 insurance logos and multiple PSU and government logos as well. I will now hand it over to Nitin, our CFO, to give you a detailed update on the financials. Thank you.

Thank you so much, Anisha. Good afternoon, ladies and gentlemen. Thank you for taking out your precious time to join here as on Q4 earnings call for Intense Technologies Limited. At the organization level, you have seen that our operating revenues have increased from INR 114 crores last financial year to INR 150 crores for this financial year. The composition of the total revenue from our core segments has contributed about 63% of our revenue and while the green shoots segments introduced as part of the Project Butterfly has contributed 37% for this financial year. This is also a milestone year in terms of our top line in context that we had surpassed INR 100 crores last year for the very first time and this year, we have also clocked INR 150 crores. So this growth in revenue has demonstrated the ability of scale up from our core segments and from our Green Shoot segments as well. From a green shoots segment standpoint, data quality and AI-driven solutions have contributed INR 8 crores during the financial year. Managed Services from our Government segment, which continues to be a -- which forms part of our Managed Services engagement has contributed about INR 33 crores during the current year, and we expect this to continue going forward as well. Professional Services has contributed about INR 14 crores during the financial year and Professional Services segment will remain a significant play for the U.S. market to gain foothold and thereby increase our offerings in that market. We believe that as we progress in our journey as part of Project Butterfly, we'll be able to unlock more value from more mature markets such as the U.S., where we could see great growth in revenue and also decent margins from that market. Also, as part of this financial year FY '25, we were able to renew most of our long-term multiyear contracts for Managed Services engagements and Professional Services engagements. However, one of our major contracts is still in discussions, outcome of which will be known in first week of June 2025. That's on the revenue part of our business. From a cost standpoint, employee cost forms a major cost on the income statement. For the year, we have spent about INR 63 crores as against INR 58 crores last year, which reflects an 8% increase in year-on-year. Employee strength stand at 482 as of March 2025 as against 517 in March 2024 last year. During this year, we have taken some measures to optimize our overall employee cost and redeployed those costs in Sales and Product teams to fortify the engine growth of the organization. Today, as of March 2025, we have a Sales team of about 19 members. Also, as part of an update, we have inaugurated new sales office in Mumbai, where most of our customer offices are based, and we believe this will significantly improve our customer experience and faster turnaround sales for the business. That's the update from the cost standpoint. We will now open the forum for questions.

[Operator Instructions] The first question is from the line of [ Aditi Roy ] from [ Patel Advisors Private Limited ].

My question is, can you elaborate on the 20 new logos that acquired and how many were from India versus international markets?

So, in terms of the number of logos from domestic versus international, it's about 15 logos domestically. About 6 or 7 of those are from the Insurance vertical and the others are from the Government vertical. And as part of our Green Shoot, one offering that we've also added is providing last-mile delivery of communications, so SMS, e-mail, WhatsApp, et cetera. So a few logos are also with respect to transmission communications.

The next question is from the line of Shrey Gandhi from C.R. Kothari Stock Broking.

My first question is regarding the international logos. Have we added any international logos in this quarter?

We've added 1 international logo in this quarter and the rest in the previous quarters. Overall, about 5 international logos in total.

So this newly added is from U.S. or any other country?

U.S.

U.S. And how are we seeing...

U.S. and it is for our low-code platform offering.

Okay. And how are you seeing the demand in the U.S.? Like is there any threat of recession in the country being an impact on our business?

See, the threat of recession, we are looking at it as an opportunity for us because any threat of recession means they have to cut down on their costs and what better than to kind of outsource that to India. We don't really do any work with the U.S. government to have any impact on that front with whatever President Trump's measures are. We don't -- we won't really be impacted by that directly. Our focus right now on the U.S. market is to see how we can build some referenceability. It's very important in order to really bolster growth in the U.S., first, you need to have local referenceability. So our focus right now, whether small or big deals is just to go and pick up business over there so that we can build local referenceability and then grow from there.

Okay. And are margin accretive, the U.S. logos compared to our domestic logos right now?

It's definitely higher than Indian margins, but I do not have exact numbers at this point. I can share it with you offline.

Okay. Okay. And one more question regarding the margin, the reason -- what was the reason for the margin decline? Was this again, the onboarding of senior [ operations ] or something else in this quarter?

See -- Nitin here. See, margins definitely are lower compared to last year on a percentage basis, but have increased on an absolute number on a YTD basis. This is partly due to the change in offerings where we have taken a lot of Managed Services contract, which also includes setting up of IT infrastructure, which brings in -- as a percentage would not bring in as much as margin as our Software and Services business. So those particular segment of revenue becomes a drag on our overall margin. Secondly, whatever cost optimization in terms of the employee cost that we spoke about, we are redeploying that to strengthen our Sales team. And we have also hired certain domain specialists in BFSI segment here in India and in U.S. to -- which helps us to solutionize our platforms better for the BFI (sic) [ BFSI ] segment. And also third point being, see, we are making significant investments in U.S., and we have onboarded a consultant there who is an ex-PwC partner, who has deeper connects in banks and insurance industry and also stationed one of our employee with almost close to 2 decades of experience in sales and account management, who is helping who is working very closely in the U.S. market. So as a U.S. market, we understand the cost is -- comes at a very steep price. So until that particular market overall starts to reap that benefit in terms of higher sales, we're going to see that margin. That is also one of the factors that we have seen downward on the margin side.

I think also just to add to what Nitin said, fundamentally, in our Green Shoot, there were 2 sets of offerings that we added, consciously knowing that these would probably be overall lesser margin percentage, but eventually contribute largely to the absolute margin terms. When we opened up Government as a vertical -- see, Government is all an L1 business. And in Government, everything is end-to-end services. I can't only provide software. I have to manage the whole thing from deploying the software on hardware, providing them servers, providing them operational support, et cetera. It's a full-blown exercise versus in -- typically in the private sector, all we do is we provide our software and then the bank or the insurance company takes care of their own hardware deployment, et cetera. So that's one piece. The second piece is the transmission services that we've added, it -- we consciously added this because it makes us a one-stop shop communication provider for an enterprise, right? They don't need to go anywhere else to any -- for anything that they want communications. It kind of -- it helps us improve our stickiness with organizations. But as you know, that is a commoditized business and that comes at a low margin. But it works in our favor because it improves that stickiness, overall stickiness for us with our customers. So these are 2 large reasons why the margin percentage per se has come down, but absolute margins have gone up.

Okay. How do we see that going in FY '26? Are we looking to maintain this level or going back to the original levels kind of thing?

So at this point of time, what we foresee is that the margins will remain stressed at least for Q1 and Q2 -- H1 of the next financial year because we would go on to -- we have seen great tractions for the investment that we are doing in our Sales team and the composition of revenue that we are accruing in our books. So with that, having said that, we are also consciously optimizing costs, bringing in automations in our operational delivery so that those costs can be deployed in the growth engine of the organization.

The next question is from the line of Rishikesh from RoboCapital.

So last 3 years, our revenues have almost doubled. But if I have to see our EBITDA and PAT numbers have been flat. So how are we looking to address this? Do we expect the PAT to catch up with this revenue growth? And when should we expect a profitability number of, say, INR 30 crores, INR 35 crores, INR 40 crores?

Thank you so much for your question. You're right. You're right in terms of we have seen that uptick in revenue, but have not seen a corresponding uptick in our margins. See, over the last 2 years, we have consciously been investing in Sales and Marketing. Earlier, we never really had a strong -- we barely had a Sales team, let alone have a strong Sales team. It was practically a one-man army in the past, managed by Mr. Shastri. But now we've actively decided to invest in growth and scale. If you followed us in the previous earnings call, we introduced our new Chief Revenue Officer, who comes from Oracle SAP pedigree, who has run large sales organizations and large sales numbers for those organizations in the past. We strengthened his team by adding multiple sales folks. So let me assure you that whatever additional capital we are deploying in terms of investment is all towards growth. And we were anticipating a slump in our profit margin percentages per se for a few quarters, which may also continue for another couple of quarters, but we definitely see these investments paying off in the long term. I think it's basically a reward for investing in growth versus the risk of not investing in growth kind of a decision that we took.

Okay. So I understand that for a couple of quarters, we might see similar margins. So what should we see or if you could indicate what should be the sustainable sort of EBITDA margins going ahead after a couple of quarters, if you could give a sustainable sort of idea for us?

So for all our mature businesses, we can definitely see a 20% plus margin EBITDA. And for Green Shoots that we have added, some of those are contributing good margins already. Like, for example, Data AI services, these things are high-margin businesses, so they contribute well versus Transmission Services, Government contracted -- you know that when there is -- when the economy is down, the government definitely continues to spend. So it's important to also solicit that business. So for that business, it might be a little lower than this. But overall, that's what we would be targeting.

Okay. So we are broadly targeting a 90% kind of EBITDA margin. And could you provide any visibility sort of do we see this later part of FY '26? Or are we targeting more like in FY '27?

We would hopefully start seeing it from the later part of FY '26.

Okay. Got it. And lastly, what sort of revenue growth are we looking at for next 2 to 3 years?

So from a revenue growth standpoint, like we have done in the past, we continue to commit to 20% to 25% revenue growth. But having said that, we don't really want to put that as an aspiration because if at all some of our segments we see a great traction and it can -- probably we don't really want to, from a mindset standpoint, put that limited to 25%. That's how we look at it from a revenue growth standpoint.

The next question is from the line of [ Narayan Das ], an Individual Investor.

Hello, am I audible?

Yes sir, you're audible.

First of all, congratulations on great set of numbers, achieving INR 150 crores revenue guidance that you gave. So congratulations for that. Well, Anisha, my first question will be regarding that what is your current business strategy? And how are we planning to proceed in this financial year? Particularly, I want to hear the target set by you guys. And also talking about the Project Butterfly, has that [ handled ]? And any updates on that Project Butterfly, which we [indiscernible]?

Sure. Thank you for your question. Our strategy continues to remain the same that we set forth for ourselves in Project Butterfly. See, the focus of Project Butterfly was threefold. First is how do we increase our wallet share from our existing customers because we work with some of the largest banks and insurance companies in the country, but we don't -- we would earlier not really clock enough revenue from each of those logos. So our first thing was how do we focus on increasing our wallet share from our existing customers. The second was how do we increase on our dollar revenue. We didn't have any presence in the U.S. And this year, small, but we've added 5 logos to our credit in the U.S. This will only help, kind of bolster growth in the future. So our focus is to see how from -- currently, our international revenues are maybe at about 12% to 15% contributing overall to our overall revenue profile. How do we increase that to about 25% of our overall business? That will be one of our focus areas. And the third is how do we also increase on the number of customers. We'll focus also on India because we have a strong hold on India. We are a recognized name in our spaces. So it will be -- it's important for us to continue to focus on India as a market. But the international market focus is just so that we can add higher margin business overall. We all know that ultimately, the dollar revenues tend to contribute better to the bottom line. So these -- largely these 3 things. It's the same as what we set forth for ourselves in Butterfly in the past as well.

Okay. Fair enough. Well, what I recently saw the proposal of a new subsidiary. So what will be the business of this new subsidiary? And is any current operation being transferred to the new subsidiary? And when should we expect the numbers flowing from it?

So basically, what we wanted to do was since -- say, for example, Managed Services and Government, like we mentioned, there is a component of infrastructure associated with it and then software. And that is kind of dragging down the overall margin profile down. So our idea was even internally to bring in the focus within the organization to know how much we can budget for delivery functions, ops functions, et cetera. We're taking this conscious decision to move some of this Government business into a subsidiary, which will anyway reflect in our consolidated numbers, but it will just give us that stronger segment-wise focus internally as an organization.

Also to add to it, see, Government business has its own nuances in terms of the performance bank guarantees and also the liabilities and the exposure. So we also wanted to limit the exposures and the liabilities and also the financing part of it independently. That was one of the other reasons that we created a subsidiary whereby to take up more government-related engagements from that particular entity.

And when should we expect the revenue flowing from that subsidiary that it will be seen in current financial year or it will be in the later half of this financial year? What are your guidelines regarding that?

From a revenue standpoint, maybe in the later part of the financial year '26 because all of the engagements that we have already signed up will continue to be done through our holding company, which is Intense India. But for the new engagements, it also depends on a lot on the criteria that the government has set up and the RFPs. So whichever suits -- brings in suitability of our [ bating ] process, we'll take up that. But yes, we should see -- overall, to sum up, we should see that somewhere in Q2 or Q3 of the financial year.

Well, that sounds great. My next question is regarding that we have receivables of more than some INR 67-odd crores, and that is a sort of trend which is increasing since past few quarters. Will they get -- when will they get realized? The first question is that. And secondly, that we are also on a cash position of INR 25-odd crores. So if I take receivables too, then it is a sum of around INR 92 crores and also depreciation, which is a noncash expenditure, that comes to INR 7 crores. So we are at around a cash position of which is around INR 100 crores. So that is a very huge position. How do you plan to utilize that?

From a trade receivable standpoint, what we have seen in the current financial year, certain receivables from our Managed Services contract from Q3 have gotten delayed. However, these were realized in Q1 of May 2025. So our receivable position as of March 2025 stands at around INR 67 crores on a consolidated basis, and we have realized close to INR 11 crores from therein, which got delayed, like I said, from Q3. So we have been able to replenish our cash and also collect the receivables -- overdue receivables. From a liquidity standpoint, yes, the company has a very robust liquidity position and the [ automatic ] that we just did close to INR 100 crores of overall position, that definitely gives us confidence to make investments like what we are doing already in our Sales and Product teams. That's the strategy that we have at this point of time. [Audio Gap]

Courage to take on large projects without worrying on the financial bandwidth and other things.

Okay. Well, if you may allow, I have one last question. Well, the cash conversion cycle and working capital days have also increased. How are you planning to improve that? Because as I remember that in order to reduce or improve our cash conversion cycle and working capital days, you guys tried and mentioned -- you guys mentioned in previous conference calls that we are trying to switch to transaction-based model. And based on warrant numbers, I do not think that it is going in our favor currently because I've seen the financials; it sort of seems like we are bleeding on the -- we are increasing our revenues on the verge of margin bleeding. So how are we planning to improve our conversion cycle? Because definitely, there is an increase in the sales number. That is very good. But when and how is that going to improve our realization of margins and also improve our cash conversion cycle?

Sure. So to -- this is a multilayered question. So let me response on the receivable standpoint or from the business model standpoint, as you have mentioned that we are trying to actively gun for a transaction-based billing and revenue as opposed to licensing plus AMC model. See, the whole industry is geared up in that sense towards license and AMC. So we'll continue our existing contracts and probably try to migrate wherever we have a choice, and it's a win-win relationship with our customers as well. That's one part of it. Having said that, we have been able to -- like as part of our Green Shoots segments, we have initiated a transmission business, which is per transaction, which also includes the transmission of messages through e-mail, WhatsApp and SMS. And also, we have deployed one of our [indiscernible] platform reach where we are also able to bill our customers for the software part of it, where we are not charging them the license and AMC. Having said that, this is just a Green Shoot segment. A at this point of time, as of March 2025, comprises very small percentage of our total revenue. So if at all, as we progress, if we see -- we are seeing great traction in that respect. So if at all, we see a greater percentage of revenue realizing from that particular segment, we should be able to have better receivable cycles there. Coming to the second part of the question, how are we going to improve our working capital cash conversion cycle? See, we -- for this current March '25, cash conversion, working capital cycle stands about INR 150 crores. And as I've mentioned, that is because of this certain receivables that were there in Q3 from a Managed Services contract got delayed, which we have already realized as of mid of May 2025. Our total debtors' position as of March '25 was about INR 67 crores, which have already realized to the extent of INR 12 crores . The debtors from by March 2025 is about INR 55 crores. And it is expected -- we expected to realize further few more customer collections in the next 2 to 3 weeks, which will bring down the overall outstanding dues. So we are making very calibrated decisions in terms of the kind of Managed Services contract that we onboard.

And what happens, sir, in enterprise business, the number of base credit, which the large enterprises demand is also very high. There are large customers like Vodafone has negotiated pays even Oracle in 120 days. So you can imagine the pressure it puts on the overall system, on the DSO.

Internally, in terms of process, what we have done is we've tied up all sales, obviously tied up all sales incentives to being paid upon collections. So it's in the salesperson's interest as well to ensure that the money is collected. Otherwise, they don't make their sales bonuses. Yes. So we've added those levels of process checks internally as well.

Fair enough. You guys are mentioning Green Shoot segment. Well, in simplified terms, can you please explain me that apart from our core CCM that you guys are mentioning Green Shoot segments, what exactly are we doing in those segments?

So first, if I were to look at the communication space itself, earlier, we were only a CCM designer company. Today, we have everything from a CCM designer to AI-powered marketing information to last mile transmission services where we send out the e-mail, WhatsApp, voice bot, whatever it may be, right? So the second and third pieces have been added in the last year to make us one centralized communication offering for any bank or insurance company or the government for that matter, for any of their communication needs. So that's one piece of our Green Shoots. The second is we have our own proprietary low-code app development platform. There are multiple business models around how you can market a low-code platform. But given the industry dynamics and given the competitive landscape as well, we took a conscious decision of being able to deliver Managed Services using our low-code platform. So that gives us enhanced efficiency [ into ] our delivery capability. It gives the customer faster change management, quick visibility into their entire -- just their project road map, et cetera, all of that, while using the benefits of AI. So earlier, we didn't do this in the past. And now that we also do that, so that's the second offering. And the third is we have talent availability within the organization which we could be deploying for other projects, outsourced projects, et cetera, where we could make -- where we could build our talent for that. So contingent workforce and outsourced engineering services, testing services, et cetera. So that's the third. And then the final piece is the data piece where we help banks, insurance companies, et cetera, improve on the quality of their data that they have internally so that they are able to power their AI and BI kind of initiatives better because for any AI project, data is paramount. What you train it with is based on that is what the AI tool will -- or the AI agent will give you the relevant output. Today -- garbage in, garbage out. So we focus on the data quality, data management, data remediation, data standardization, cleansing, these pieces and duplication. And we have platforms of our own as well that we use for there as well as these customers already have platforms from other third parties like Informatica or Databricks, then we use those as well to deliver. So these are the 4 different Green Shoots.

I hope and I really wish that you have great set of numbers and good business in the coming financial year.

Thank you very much.

The next question is from the line of Shrey Gandhi from C.R. Kothari Stock Broking.

My question is regarding the patent which you have been granted recently. Can you explain the scope of the patent and how it is going to benefit our overall businesses? Is there any incremental revenue or something new business which we can tap in using this patent?

Okay. This is one of our proprietary -- so in one of our data platforms for our Communications business, for our Low-code business, Managed Services business, for our Data business as well, wherever, data ingestion is a key part of the overall project where we are able to handle data from multiple source systems and really modify that data to be meaningful to that particular engagement, whether it's communications or whether it is using it for some other application that is being built out. So this patent that we have received is around our data ingestion capabilities and our ability to add rules, conditions, et cetera, to be able to appropriately modify this data in real time.