Black Box Ltd

NSE:BBOX

Q1-2026 Earnings Call

[Operator]

Ladies and gentlemen, good day, and welcome to the Q1 FY '26 Earnings Conference Call of Black Box Limited. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Sanjeev Verma, Whole-Time Director and CEO of Black Box Limited. Thank you, and over to you, sir.

[Sanjeev Verma, executive]

Good morning, everyone. I hope you are all doing well. On behalf of Black Box Limited, I would like to welcome you to our Q1 FY '26 earnings call. I'll start with an overview of our business performance, and then our CFO, Deepak Bansal, will walk you through the financials. We have already uploaded the results presentation, and I hope you had a chance to review it. It's great to connect with all of you again. Over the past 5 years, we have transformed Black Box from a loss-making entity into a profitable cash-generating business with a strong balance sheet. With the turnaround complete, FY '26 and onwards is about accelerating growth, scaling revenues and capturing market leadership.

While the year began at a slower pace, we are seeing solid traction in key accounts and are actively engaged in multiple high-value opportunities. This quarter, we retained the order booking momentum similar to Q4 FY '25 and booked orders worth $176 million, with most of the deals, nearly 2/3, being high-value deals.

Some of the notable order wins during the quarter included a very large project in the U.S. from a leading financial services giant as well as a workplace solution engagement from one of the world's largest OTT player for their operations in Latin America. The company also secured 2 significant data center orders in the U.S., one from global hyperscaler and another from a top 10 global colocation provider.

Other key wins included a workplace solution project in the U.S. for a top-tier city transport authority, a combined connectivity infrastructure, a networking order from a prominent public service organization and a large networking deal from a reputed 200-year-old research university in the U.S. Our backlog at the end of Q1 FY '26 was at $518 million, up from $504 million at the end of FY '25. We are confident of reaching $700 million of backlog by end of this fiscal year. We're also targeting to book orders worth $1 billion in FY '26.

As mentioned by us in the previous quarter, our order book will continue to grow as we implement our new GTM with experienced leadership and business teams now in place across verticals and horizontal solutions, and this will set the stage for FY '29 target to reach $2 billion in revenues with an expanding order book. Strategically, we continue to reduce our long-tail low-value accounts, which has reduced to less than 1,000 at the end of Q1 FY '26. We expect demand for our services to remain strong with a sufficient headroom at the back of AI-led overall growth, which will require refresh, new deployment and retrofit of technology infrastructure. Backed by our solid market positioning and proven capabilities, we are confident in achieving our growth target for FY '26.

With that, I now hand over to Deepak, our CFO, for the financial updates.

[Deepak Bansal, executive]

Thank you, Sanjeev. Hello, and good morning, everyone. As you would have seen, revenue for the quarter stood at INR 1,387 crores, down 3% year-on-year, impacted on account of client-driven delays in equipment procurement due to the ongoing tariff situation, which pushed out revenue recognition and affected operating margins as well. Given the focus on getting large size of orders and our focus on high-value customers, the average lead time from order receipt to first revenue recognition is now extended to around 4 to 6 months. Hence, you will see revenue increase from our robust order bookings only post Q2 of FY '26.

There is also a small impact from the reduction of the long-tail low-value accounts. EBITDA for the quarter grew 1% to INR 116 crores compared to Q1 of last year, essentially remaining flat. While EBITDA margin improved by 30 basis points year-on-year to 8.4%, they were lower compared to Q4 of FY '25 due to lower fixed cost absorption in quarter 1. Fixed costs generally would range around INR 310 crores to INR 320 crores per quarter. Fixed cost absorption will be better in the coming quarters as revenue increases.

Our guidance of 9% to 9.2% EBITDA margin in FY '26 remains intact. Profit after tax rose 28% year-on-year to INR 47 crores from INR 37 crores in quarter 1 FY '25, with margins increasing by 80 basis points to 3.4% year-on-year, primarily driven by a reduction in exceptional expenses and lower taxes.

In summary, we delivered year-on-year growth in both EBITDA and profit after tax, highlighting our operational efficiency and margin resilience. With a strong order book, healthy cash reserves and a reinforced go-to-market strategy, we are confident of delivering on our growth ambitions for fiscal year.

I would now request the moderator to open the floor for questions.

[Operator]

[Operator Instructions] The first question is from the line of Deep Shah from B&K Securities.

[Deep Shah, analyst]

Sir, first question is on the commentary that you gave that revenue growth was impacted due to delays in clients equipment ordering. Now this is unlikely to change in the near term, right? So what gives us the confidence to stick with the guidance? Because the revenue guidance effectively implies that an 18%, 19% kind of growth is needed in the balance 9 months of the year to achieve our '26 guidance. So if you could just give some more context, that would be useful.

[Sanjeev Verma, executive]

Yes, I'll take that. So yes, in the short term, I think with some of the uncertainties still remaining on tariffs, we expect there will be some delays. Some of them are baked in because it's from a backlog perspective, it's cyclical in nature. So if it's 2 months, 3 months or 4 months' time. We expect it to ease post October, hopefully, but we're not sure. Having said that, I think currently we are looking at where we stand in terms of order backlogs and our burn rate. We expect that the burn rate would be better because we have baked in last 3, 4 months of order book that has come through that has not gone into revenue. Also, our pipeline currently, as we stand today, getting into the middle of quarter 2 is much robust. We expect our order book to continue to rise as we get into quarter 2, impacting our revenues positively for quarter 3 and quarter 4. So it's kind of a cyclical coming at the back.

To answer your second question, we expect our revenue and order book momentum to track between 15% to 20%. In fact, order book will track more than that going forward each quarter from here. So we have still remained positive with respect to our guidance, as Deepak alluded, with respect to also EBITDA and PAT and also from an order book perspective of exiting the year to $700 million. We are currently at $520-odd million. So we remained robust. The work that has gone through over the last 5, 6 months, starting our order backlog this quarter, getting into next quarter, we understand we need to track at 15%, 20-odd percent and we are positive that we'll be able to deliver that.

[Deep Shah, analyst]

Right, sir. This is useful. Second question is for Deepak. So Deepak, in our press release, we mentioned EBITDA of INR 116 crores. But if my understanding is correct, this includes INR 11 crores of ForEx gain. Is that understanding correct?

[Deepak Bansal, executive]

Yes, yes. So this -- so there are 3 types of ForEx normally in the business. One is that -- which is on a translation side of it, that passes through the OCI, which doesn't hit the P&L as such. The second type of thing is a cash flow hedge, which is when you hedge your currency for different movements. On that, it comes under the line below the EBITDA. The third type basically is when we have the inventory because we deal in multicurrencies, we deal in almost like 19 currencies in our operations overall. So on that, when we have the inventory, accounts receivable and accounts payable and the consumption pattern and the revenue pattern on that happens and primarily that happens in our product business and all those things, every quarter when you book it on a transaction level, there is a currency difference every day, which happens depending on that.

And that is, if you see consistent every year, it can be positive, it can be negative every quarter, every month and all those things. That is part of the EBITDA only because that is an operational related thing. Because of the accounting GAAP requirement, we show it as a different line item. But otherwise, it's related to the operational thing, which impacts our inventory valuation and our accounts receivable and payable when the customer pays the money or we pay to the vendor or when we consume the inventory when we sell the inventory.

[Deep Shah, analyst]

Right. But Deepak, so it's really difficult to forecast this number, right? So when you give your estimates for -- or guidance for '26 or for any year, so should we think that this guidance that you've given of 9.2% margins is exclusive of all of these impacts? Because as you said, right, that it could be positive in some year, negative in some year and it's not really in our control.

[Deepak Bansal, executive]

No. So you are right. Technically, the currency is not in our control. The planning of the inventory and the planning of the receivable and payable is in our control, and that's how we plan. So this quarter, when we saw that the currency is going in the right direction, we planned our inventory to consume in a way that we take benefit of that. So it is in our control to plan that how we are consuming from which country and which currency we are passing on that inventory to consume. And that is why it becomes more like -- because that is a real money which is coming. It is not like that, that is just an accounting thing. It is a real money which flows us with respect to the collection or with respect to the inventory consumption in terms of the margin.

So when we forecast this 9.9%, that includes some of these strategies because in the business, you apply all these strategies when you're delivering the material to the customer or anything where you will try to do all these things. When the currency is going down or something like that, then also you will do a different type of thing, you will consume the currencies. If it is -- if I have a material sitting in Switzerland warehouse, so I will sell that if the Swiss franc is doing better than the euro.

[Deep Shah, analyst]

Right. Understood. Understood. And just one more follow-up. This quarter, we saw some 40% increase in purchase of stock. So anything to call out here? Or it is just a timing difference?

[Deepak Bansal, executive]

It's a timing difference. It's a timing difference that because we have -- we continue to purchase the inventory and sell because of the tariff things on our TPS side of things, we a little bit purchased more to basically store the inventory in U.S. to reduce the impact of the tariffs because on the China goods, whatever we have purchased in Taiwan also because Taiwan, when they put the higher duty initially, we ordered the material to come in advance to consume in the next quarter and all those things. But now Taiwanese duty has again come back to the lower levels now. So as such, there's nothing -- not much impact on that. But we are planning basis what is happening right now on the uncertainty type of thing.

[Operator]

Our next question is from the line of Abhishek Kumar from JM Financial Limited.

[Abhishek Kumar, analyst]

I have a couple of questions on your outlook only. First, I just wanted to understand when you say that you expect $1 billion of order booking in FY '26, is it corresponding to the $176 million inflow that we did in Q1 that cumulatively, you expect to reach $1 billion in FY '26?

[Sanjeev Verma, executive]

That is correct. So basically, as a cumulative order booking for the year starting at $176 million, when you track $200 million, $250 million, $300 million, we get [ a cumulative $1 billion for the year. You are correct, I would say. ]

[Abhishek Kumar, analyst]

Okay. So that's very encouraging. And we have -- I mean, you have mentioned $2-plus billion pipeline. So that means a very strong win ratio for us to do that. So we have the visibility, the positioning that we have in terms of where we stand in those deals today to hit that $1 billion. What is giving us the confidence that out of $2 billion pipeline, we can...

[Sanjeev Verma, executive]

So $2 billion is a point in time. So if you consume or you burn or you pick up orders for $200 million, you have to replace it by pipeline. So the pipeline should actually grow from $2 billion to $2.1 billion, $2.2 billion, $2.5 billion. It's a point in time. It is taking into account that what will burn, which is what we will win. That doesn't mean that you have $2 billion static pipeline. If we get $250 million worth of orders, it will replace that through a pipeline. So it's an absolute number that would remain constant or move up, basically adding. So if you look at from a percentage in ratio, I think we have a significant pipeline at a given point of time, corresponding to a quarter.

So if you're looking at $250 million, you're looking at 12%. So it's a very healthy pipeline. Of course, all of them will not close in this next 9 months, some are longer lead times. But a robust pipeline, the current engagements and larger deals combined and our ability to continuously improve the pipeline through the go-to-market transformation that we are doing, we are seeing these engagements. So all put together, we believe we're confident of an absolute booking of $1 billion. Exiting $700 million of backlog, we think we need to move the backlog from the current $520 million range as we move forward to open a better backlog, so we can start the fiscal '27 on a better note.

[Abhishek Kumar, analyst]

Okay. Okay. And second, I think it's mentioned that now because we are chasing larger contracts, the lead time has increased to 4 to 6 months. I think this is the first time we have mentioned this. So does that mean now that the orders that we have won recently, the conversion or the revenue recognition will only happen in the second half. So therefore, we might have a soft Q2 as well?

[Sanjeev Verma, executive]

So we expect that Q2 to be much better than Q1. And so we already have a backlog which is delayed burn, which didn't impact all of that in Q1, although it could have been better. We expect the Q2 to be impacting. And the orders that we are booking as we speak will impact partly Q2 going back to Q3. So it will just continue to push forward. But no, we expect Q2 to be much better.

[Operator]

[Operator Instructions] Our next question is from the line of CA Garvit Goyal from Nnvest Analytics Advisory LLP.

[Garvit Goyal, analyst]

Sir, my question is on the tariff front only. I remember in last quarter, we spoke on this topic, and you mentioned that you will be having a limited impact as far as the tariffs are concerned. And you cited that most of our revenue model is based on some on-ground services. And secondly, our OEM products that too will not be affected much because these are getting purchased locally. So like what is the scenario now? Why we are saying this quarter, our revenue is getting affected because the customers are delaying the purchase on account of the tariff environment. So I'm not able to understand this thing. So can you please put some color on that?

[Sanjeev Verma, executive]

So I'll take it and maybe Deepak can allude to that. So when we said the tariff wouldn't impact us from a perspective of our margin and profitability as such because it's a pass-through for us on the product side, right? So it's not going to impact or if it costs us more, I think we need to pass that. So that's the take on the impact of tariff. But from a customer perspective, his cost of purchase is going to go up, right? And I think -- so there is a delay for larger projects, which includes some products. Of course, we are largely services led to make a decision on a certain things, they're expecting the tariff for some countries to become better. So that's on the customer side because some of them -- we are a small part of the customer overall CapEx, right?

So if they're having a delay in the overall CapEx, if they're building a data center, if they're building a large infrastructure like airports, they're ready for the -- so we are part and parcel of the larger CapEx program. So if they're delaying some decision-making, it's not because they're doing only for us. They're doing a larger CapEx. They're taking time to see when they want to spend that money or they're impacting that of the other purchases.

So there's a general delay not because of just our products, our tariffs. So 2 parts to it. The tariff will not only impact us from a P&L perspective as much since it's a pass-through. The customers considering a bit of uncertainty, somebody at 25%, somebody at 50%, somebody at 19%, it just keeps on happening over the month of July and August. So generally, the environment with respect to customer decision-making was largely impacted for overall CapEx spend perspective. Deepak, is anything else?

[Deepak Bansal, executive]

Yes, yes. So you rightly told, it's a macroeconomic type of situation there in U.S. right now. So let's say, I have an order from a customer to execute a project, but that is dependent on 2 things: one, the readiness of the site and the second is the availability of the equipment, which is required to be deployed where our role will be there. And that equipment may be a server or maybe a networking equipment or maybe cables or whatever it is, where our technicians will be deployed to install, manage and all those stuff.

Now if the customer is not getting from their supplier or from OEM or delayed the decision because of a tariff uncertainty and all those things because there was a huge uncertainty on the copper tariff in between. And because of that, the people imported the copper slabs, but not the copper wires and cables. And because of that, there was generally a shortage of the cables in U.S., which now has started coming up once the administration has come in with the clarity on that.

Because of all that, the customers told us that -- because if there is no material to install, then our technicians obviously cannot work there and all those things. And because of that, we cannot recognize the revenue. And that's what I think is the project delayed, and that's why the revenue recognition delayed. It is not like that we lost that. It is just the delay because then we will execute it now when the product availability is there and all those things. So we got -- we are engaging. We have a regular engagement with our customers. We are working with them in terms of the revised time lines on the project and all those things and can we do some change orders with them basis that and all those stuff on the background, all those things are going on.

[Garvit Goyal, analyst]

Understood. And when we say like Q2 is going to be better than Q1, and we are also maintaining our guidance. But at the other hand, tariff situation is getting worsen day by day, right?

[Deepak Bansal, executive]

I will say tariff situation is generally resolved other than India and -- because China is now extended for 3 months. Other than India, Brazil and a few countries, the tariff situation is generally resolved. The China is all stabilized now that China will continue to be at the current duty and all those things. So I think I will say that the tariff situation is now far better as compared to the earlier. People have now the -- almost like, I will say, 90% clarity in terms of what is happening. There is not much dependency in our line of business from -- or IT CapEx and all those things from India. So from that perspective, I think there is more certainty now as compared to in the past.

[Garvit Goyal, analyst]

So if India is going to face a tariff which is incrementally greater as compared to the other countries, so don't you think people will be shifting to some other countries, at least for the product part?

[Deepak Bansal, executive]

So in U.S. -- see, the import in the U.S. of the technology products which we are dependent on whether it is all the OEMs, networking equipment and all those stuff. I don't think that India plays a very contributed role in terms of going to U.S. We don't work obviously on the cell phone devices. Cell phone devices from India and U.S., by the way, the duty is 0. So from that perspective, all the dependency is on Europe, China, Taiwan, is a major dependency in U.S. for our products, what we deal upon. So from that perspective, those all things are sorted out. India duty will probably doesn't -- will not impact us. Sanjeev, do you think India duty will impact us from the networking equipment perspective?

[Sanjeev Verma, executive]

No, we don't source. I think the vehicles don't source from -- India is not a networking equipment exporter, so I don't think it will impact that.

[Garvit Goyal, analyst]

So as of today, we are saying we are pretty much confident about achieving the guidance that we are speaking about, right?

[Deepak Bansal, executive]

Yes.

[Sanjeev Verma, executive]

The answer is yes. Yes.

[Garvit Goyal, analyst]

And any kind of risk like do you see like after the quarter, you mentioned like this kind of risk occurred. So any kind of risk are you seeing right now which can stop us from achieving this guidance?

[Sanjeev Verma, executive]

So any -- all of the known risks from the past are baked in. The future risks, which we can't see, we can't see, right? So whatever we have at this time, tariff, with some delays are baked in. Our pipeline, our current order book, our current go-to-market motion remain where we are. If it gets in some other direction, which we don't know or all of us don't know, then we don't know that. But leaving that aside, considering there's no other event that we couldn't answer, our guidance are intact based on that.

[Garvit Goyal, analyst]

Understood. And you mentioned about the newer orders that we are targeting in FY '26. Can you put some more color like how much percentage of these orders are going to be from data center? And what kind of time line for these orders to be executed?

[Sanjeev Verma, executive]

So ballpark range, our data center orders should be in the range of 20%, 25% and we will track to that. We are slightly lower over the last couple of quarters on that. So that would be in that range. So if you look from a perspective of overall $1 billion, we expect over $200 million and somewhere in that range to be in that range, right? With respect to our project time lines, in general, depending when we book the projects, our average project time lines are between 6 to 9 months' time. So we will carry forward when we said we want to book that a significant amount of uptick with respect to our backlogs going forward. 80% of our business is outside of the data center. It includes networking, includes infrastructure, modern work. This also includes our technology products, that's a Black Box product business.

[Garvit Goyal, analyst]

And what is the size of orders you mentioned as an incremental order?

[Sanjeev Verma, executive]

The size of orders, I think we are focused, as we told before, for the last 2, 3 quarters, we have been saying that we have been pivoting from Black Box from a very long list of customers, it was over a couple of thousand to focus customer focused on larger deals because we believe that that's where our focus should be. We are seeing that the contribution in our quarterly order booking pertaining to larger deals over $1 million, over $5 million is much more. And as we move forward, we expect that to even go better with the deals worth $10 million or more, $20 million or more. So that's where the focus has been over the last several quarters, and we are at the right spot at this time to make a win across data center, across infrastructure, across airports, health care, in all the verticals that we operate. That's where we have been focused on long term, larger deal, multiyear annuity. So those are the focus areas. And that's where we see our company heading towards.

[Operator]

Our next question is from the line of Jatin Deshpande from Pkeday Advisors.

[Jatin Deshpande, analyst]

Can you hear me?

[Operator]

Yes, sir, you are audible. Please go ahead.

[Jatin Deshpande, analyst]

So my first question was that the data center industry is going through a boom in the U.S. The numbers aren't rising as fast. And so what is the reason for that? And also, last call, you mentioned that the marginal decrease in revenue was -- one of the reasons was that due to the rationalization of your client base. So is there any specific reason why you need to remove the long-tail clients before you add new larger clients to ensure that the revenue doesn't drop? And also, I'm assuming that tariffs have only come recently. So that is not the reason.

[Sanjeev Verma, executive]

So I'll answer the first part and try to -- the second part, I'll leave to Deepak. So I think -- yes, so I think -- so the data center, of course, you see a lot of announcements in the data center. Between the announcements of data center and the time it goes online with project, there's a huge lag, right? So I think if you see an announcement of data center for 2 gigawatts, from the announcement to the removal of the dirt by the time we have to -- we get to do our work, there is a lag out there. In the last 6 months or so or maybe 6, 9 months or so, we have reorganized our focus on the data center. We had one large hyperscaler client, which we did not produce enough in the last 6, 9 months.

Currently, we are sitting at a very large pipeline and win rate coming forward from that client. But more importantly, we are -- now have won and gotten into other large global multi-location colo provider. We're also in active engagement. So the pipeline from a win ratio perspective, the relationship from that perspective with other hyperscalers and colocation providers are much better. The closing of a deal for a hyperscaler for the work that we do is a long lead time. And once you get in and stay for a long period of time as a partner. There's also a dynamics with respect to large hyperscaler and working in collaboration with large general contractors and customers hyperscaler and multi-vendor approach, right? So we can make it a little complex.

So there is a lead time and lag time from when we start off engaging for larger projects by the time we get to contracting and by the time we start delivering revenue of -- from that order book. So that's -- there's a time lag. So where we stand today from our ability to see pipeline conversion, the line of sight is much better. And therefore, I said we expect 15%-20% continuous movement, both in order book and revenue going forward. So that's one. The second question, I'll defer it to Deepak to talk about margin. I didn't get the question exactly, but maybe Deepak...

[Deepak Bansal, executive]

Yes, yes. So I can take that. So on the long-tail customers, we have already informed everybody that our -- we deal primarily with the large Fortune 500 clients. And in every vertical, what we have announced, we want to deal with the top, let's say, 100, 200 customers. And that's where I think the biggest penetration is. We used to have more than 2,000 customers 2 years back on a long tail side of it, where the value of the deal, the engagement with the customer is a onetime engagement in the year or 2x or the value of the deal is between $10,000 to $50,000 and all those things. The cost to deliver that customer was extremely high in terms of the overheads. While the gross margin may look okay, but then the SG&A will be higher to deliver that. And that is why we took a conscious call to reduce our long-tail customers.

So that exercise is going on. You would have -- we will continue to see that now we have less than 1,000 customers, in fact, on that long tail thing because you cannot suddenly reduce everything, but we are doing a consistent effort to do that. And that's where I think the -- because last year, total impact was between $16 million to $17 million of that on the revenue. This year, we are not expecting that much of impact. This year, the total impact we are expecting in the range of primarily 6 to 7, which is already built in, in what the guidance we have given that is already built in, in that. With that, I think our streamlining on the long-tail orders will be over, let's say, on a consistent basis in the current fiscal year.

[Jatin Deshpande, analyst]

Got it. Got it. That was helpful. And sir, can you help me understand your customer on the data center side? So do you directly deal with, let's say, for example, Meta? Or are you dealing with their vendors? Like do you have any preferred vendor position with any of them.

[Sanjeev Verma, executive]

So we are a preferred -- yes, that's a good question. So we are -- we deal directly with Meta, both from a contracting perspective and from an execution perspective. We also deal with Meta's large vendors, mostly master contractors in some cases. So Meta or any other hyperscaler, for that matter, utilizes both channels. There are many sites they contract directly. There are many work that they contract directly if they're putting up a DAS network, they might contract directly. So in some sites, considering the nature of the site, the way they have contracted with the master contractor could be a [indiscernible], pretty much the way you build like an airport or a railway system, right? I mean you might give it to Siemens or somebody else, and they become the master contractor.

So they utilize both. So we have relationship with their master contractors that we work with. So these are multibillion-dollar large master contractors. We also have to work directly irrespective whether we contract sometimes with the master contractor because that's what they prefer. But the design element, the discussion element is more like a [indiscernible] to sit in the room with all because each is interconnected. So to answer to your question, we have both kinds of contracts directly relating to Meta in certain sites in certain geographies. For example, we do a large work for them in Europe. We contract directly in some sites in America, we contract directly. We also contract indirectly if that is what their preference is.

[Jatin Deshpande, analyst]

Got it. Got it. And sir, you have guided for a significant inorganic growth through FY '29. So do you have any plan on how are you going to fund this? Like are your internal accruals enough? Or do you plan to raise any debt or...

[Sanjeev Verma, executive]

So I will give it to Deepak.

[Deepak Bansal, executive]

Yes. So for the organic growth as such, because for the organic growth, we require just working capital. That working capital, we have the off-balance sheet facilities, and I think we should be able to fund it through our internal accruals and all those things. For the inorganic activities, we may have to raise the debt depending on the situation and all those things because normally, our philosophy on the inorganic acquisition is that we continue to look for or subpar performance type of companies, which we can get at the lower price where we put our capability to transform those businesses.

And then we do some type of structure in terms of deferred consideration and pay upfront, something and all those things. So right now, we are not envisaging that we will be enhancing the debt basis that. But if we find some good asset, which is a large size or something and if we need to take that in terms of achieving our targets, and we feel that, that asset is transformable and we can transform it quickly and all those things, probably it all depends on the situation on the inorganic growth, how that evolves and everything.

[Operator]

Our next question is from the line of Sucrit Patil from Eyesight Fintrade Private Limited.

[Sucrit Patil, analyst]

And my question is to Mr. Sanjeev Verma. In the last con call, I believe you had emphasized a shift from stabilization to growth, targeting approx $2 billion revenue by FY '29. So just an extension to that question. As Black Box transitions from stabilization to growth, how are you thinking about evolving your engagement model from -- with hyperscalers and large enterprises from being a systems integrator to a strategic co-innovator in areas like AI infra, edge computing or sovereign cloud. And are there plans to co-develop IP or enter joint GTM partnerships that could deepen wallet share and create annuity like revenue streams for the company?

[Sanjeev Verma, executive]

Yes. So the first part of the question, we are focused on moving from stability to hyper growth going forward. And we are on the right path to be able to do that. As I called out earlier, we expect our coming quarters to gain velocity and momentum both in order book and revenues going forward. Specifically coming to hyperscalers or -- so the world of hyperscaler is broken into 2 distinctive parts. One, of course, hyperscalers, they built their own projects largely at the core. Largely they build large mega infrastructures. And then, of course, there are various multi-tenant colo providers, which also build and support these hyperscalers largely at the edge, right, which means they build in the cities, they build various sites for them and the likes of QTS or CyrusOne or others in that space are also partner.

In fact, if you look at India, many of the colo providers now are actually a wholesale provider to Google and AWS. The model that they started earlier was different, right? So now the consumption happens. So coming back to your question from a transactional provider to a strategic one, that's exactly what we are doing at this time, engaging with these hyperscalers that we have, starting from building their core infrastructure with the connectivity and networking.

We're also doing some other work pertaining to DAS infrastructure and wireless infrastructure. The larger hyperscalers, they buy differently. We don't expect to be selling compute to them. They actually don't buy compute from anybody. They're starting to build their own compute. So that's one side. From a long-term partnership perspective, we do provide what we call Day 2 support, which is annuity in nature. So once the work is done, the work is never finished. So you need to support the work that you do. There's always some move-out changes going on. So when we -- 10% of our workforce, somewhere around 10%, 15%, will continue to remain to support the Day 2 support. And our endeavor is to be able to do that longer term.

When we come down to some of their partners, which is their colocation providers, multi-tenant, the ability to do with them is a little bit more because they do a small format. So when we work with QTS and we work with Digital Realty, we could do -- go up the value chain from there to Layer 1 and Layer 2, and we are also forming partnership with them. Over the last several quarters, with the investments that we have made in the talent that we have brought in quality, safety, project controls, high-level leadership, our engagement now, both with hyperscalers outside of our single largest client that we have, is increasing.

And our current engagement is across various multi-tenant, various hyperscalers, both from a pipeline perspective, and we expect to be able to become their core strategic partner. We'll do a project that lasts for 1, 2, 3 years' time. You cannot be a transactional vendor. Black Box is also working with many of these providers in more than one country, and we have done to expand. For example, we are focused now in Europe in some markets, specifically in Spain, U.K. and other areas is with the back of a relationship.

In summary, we are looking forward to long-term relationship. That's the reason why we are focused on larger and -- similarly, are engaging with larger enterprises as well in a similar nature. So therefore, we've decided not to be everything to everybody. That's the reason why we're moving out of the long tail. And most of our engagements are now focused on long-term contracts, either projects or long-term multiyear annuity contracts that we do for several critical infrastructure like airports. We support some of the largest airports in the U.S. So that's the initiative.

[Sucrit Patil, analyst]

Great. That was good insight. Just on an ending note, I just want to understand from you as a CEO of a company, how do you decide where to focus between U.S. hyperscalers and India's digital infra? What is the framework behind those choices from your point of view?

[Sanjeev Verma, executive]

So yes, from a size perspective, I was told before, we have -- we focus on where we believe we'll get better yield from the effort that we put. The size of the market for the U.S. is much larger. Of course, India is a growth country. So we've also pivoted to look at India as a growth market for us at this time, but still remains a small portion of the overall business. So we're looking at putting our resources where we believe that we can get volume and we can also get value. So America can provide value and volume both. India, of course, has volume coming in. So we are currently engaged with India for larger projects. We recently received and partly delivered a very large cybersecurity project.

India is going to build a lot of data center as well. Many of them are currently in the conceptualization stage. They're announcing the project like Google announced $6 billion. Between announcing and the project coming through is a long lead time. But India has an issue pertaining to value, right? It's a cost-plus country. So we remain cautious how to make our cash work better, how to make our capital allocation work better, right? And what yield can we get from that perspective.

So as a CEO of a company, as I said, we are looking to drive hyper growth, but we're looking to drive hyper growth that has margin as well. And India, of course, remains very core to our business, both from a growth perspective, but also from a delivery perspective. As you know, we're using India for our global capability center in Bangalore. So it will remain a key aspect of our overall success, both from a local business, which we are cautious about because we do not want to deplete our margins, but also from a delivery and skill standpoint that we utilize in India, we have 500 people supporting our global operations. We expect that to grow as we grow our business.

[Operator]

Sucrit, sir? Okay. As the current participant is not responding, we have the next participant, Vivek Choraria, an individual investor.

[Unknown Attendee]

Sanjeev, our Q4 order booking was in the range of $200 million, if I'm not incorrect, Q4 FY '25. And Q1, that has actually gone down from $200 million to $176 million. So can you just please explain why we're still confident of booking orders to the tune of $1 billion in the -- I mean, 12 months trailing. I mean our order booking has, in fact, gone down. So I'm not able to square the 2. And the second part of my question is we are almost through the first half of the second quarter. How has order booking been? Because I think growth is what is aiding the company. I mean we've done tremendously well on the margin front. It's the growth part, which I need a bit more color on.

[Sanjeev Verma, executive]

Yes. So I think I'll first accept your statement with respect to growth, and that's where the focus is. With respect to our confidence with forecasting, we're looking at closing an absolute number of $1 billion, starting at $175 million, $176 million that we were this quarter. We are staring at large bookings coming up that we expect to close in Q2, Q3 and Q4. Many of the engagements currently from a large ticket perspective, which is over $10 million, $20 million, some going to $50 million is in the works, and that constitute today our pipeline. So pipeline, if you go back 12 months' time, of course, we didn't report as a breakup of pipeline. It still remains $1.6 billion or something in that range, but that's made up of lots of smaller deals as well. We have cleaned that up with respect to what we believe we should be focused on.

In summary, to answer where we stand today, our expectation is to have at least 15%, 20% of growth in revenue sequentially going forward. We expect some of the quarters to be even larger from a perspective it will windfall than even the large hyperscaler deal that we expect to win going forward. Considering a size of $175 million, $250 million deal for projects that last for 9 months, 12 months or 24 months can skew the win rate much larger from a percentage perspective. So when I look at absolute volume perspective as to where we are and take the view of the next 9 months, considering we are 1.5 months down in this quarter, we are confident of where we will be in bookings this quarter and therefore, the revenue coming at the back and going forward.

Also, what I've been seeing in Q3 and Q4 with respect to the work that has happened of how many engagements are on the table discussion is going on with respect to our contracting. That gives us a positive outlook that we would be able to deliver on about $1 billion worth of absolute booking. And if we do that, we expect that we should be able to open the backlog, which is now at $520 million range. The expectation is that we should open a backlog in the range of $700-odd million going forward to set the tone for fiscal '27.

[Unknown Attendee]

I have a second question. Since we've reorganized the GTM team and with Jai Venkat coming as the Chief Revenue Officer, can you speak qualitatively as to what impact you've seen on ground? I mean we've talked about margin and stuff. But I just wanted to speak to -- I mean, as a company, you've been the CEO for a long time. Can you speak qualitatively as to what difference you're seeing on the ground as far as our deal engagement and the win rate is concerned? Are you seeing a considerable difference if we were bidding for $100 million worth of orders, is the win rate doubling? I mean, because everything now hinges on us delivering growth.

[Sanjeev Verma, executive]

Yes. No, very good question. So I'll just add up. So we do have Jai Venkat as Chief Revenue Officer for North America. We also added, I don't know if you know probably with respect to a gentleman called Sean Maguire came over 2 months back to lead data center, which is an adjacent business, which is outside of Jai's span of control. So we have very focused data center. So we have 2. So coming back to your question, the answer is yes, with -- Jai Venkat with ex-Infosys experience and his team members, which also have come from -- which is our vertical heads, there's a dramatic shift with respect to our engagements, quality of engagements. Let me call out, for example, we are -- if you look at our consumer and public sector, which is run by a lady called Joanna, I think we are currently engaged with very many airports.

We had Miami Airport, if you remember, as one of our largest customers, which is we are currently contracting to renew for several years. But we have solid engagements going on with some other large airport infrastructure. Many airport infrastructures are getting refreshed, as you know, in America. Most of them are tweaking infrastructure, not because they don't want to spend it because they were possibly made 30, 40 years ago. So we are engaged with them from quality of engagement perspective of volume.

Also from our existing customers, we are single threaded. We were selling networking in one customer, possibly workplace in some other customer. So multi-threaded horizontal approach that we have taken in connectivity, networking, workplace cyber. We are seeing multi-horizontal, therefore, increasing the share of wallet in some of the existing customers and some of the new customers. Many of these vertical heads, including the CRO and others come with deep experience, relationship and creating newer solutions that we can do. So we are now engaged with very many managed services long-term contracts that we've never had before.

Now this takes time. It has to come to a certain tenure when [indiscernible]. So qualitatively and quantitatively, the engagement quality, as we speak, we are hosting in Raleigh, very many CIOs from health care. We recently concluded a customer advisory council in Florida that we attended, Deepak also attended with me, where we came out with very good engagements, leading to $100 million worth of active customer pipeline. I'm not saying we win all of $100 million, but we'll surely make $20 million, $30 million worth of engagements from top customers, including large pharma, large life sciences.

We intend to do very many more customer advisory councils that we are doing now where we invite customers. As we speak, [ Sean ] is selling to the West Coast with respect to our data center, similar format. So the engagement quality, the conversation with our customers using multi-horizontals over the last 6, 9, 12 months' time has dramatically improved. Now this takes time to build as we're speaking and looking forward in the next 7.5 months that we have, that's where we're seeing, okay, what do we expect in quarter 2, as I called out earlier, to be better significantly.

And also some of these engagements to turn in October, November, December going forward. So yes, good change in conversations, quality of engagements, multi-country global engagements, reimagining the Black Box paradigm inside our existing customers, they had a recall of a certain kind. We had very good tenured customers, as you know. But they had a recall of a certain kind that we do network or we do connectivity infrastructure, the total story taking with our go-to-market verticalized, horizontal solutions getting -- making a grid to that. I think we are a much better place than what I would say we were about 2, 3 quarters back, Vivek.

[Unknown Attendee]

Just one last question. Sanjeev, for FY '26, Deepak in his initial remarks had sort of alluded to the margin guidance. Our lower end of the top line guidance will need us to deliver almost 1,700 quarters -- INR 1,700 crores per quarter. Should we start to see at least 10% to 15% growth from Q2 onwards and then that accelerating as we move into Q3 and Q4? I mean, so far, we've -- I mean, I'm sure you can see that we need to start walking that out. So should we start to expect quarter-on-quarter growth on the top line from Q2 and then that accelerating as we move into Q3 and Q4? Because we are at INR 1,400 crores. Our ask for the next 3 quarters is close to INR 1,700 crores if you are to meet the lower end of the top line guidance.

[Sanjeev Verma, executive]

Yes. So I think as I said before, the statements, we expect to move forward in the quarter with a minimum of 15% going to 20% or beyond to hit that number. We expect that needle to start moving in that direction starting quarter 2. And as you rightly said, to take it from there and keep the momentum of 15-odd percent or more to be able to catch up the year. And I think we are currently intending and about to track starting from quarter 2, Vivek.

[Operator]

Our next question is from the line of Nandan [ Manjunath ] Arekal from JM Financial Limited.

[Nandan Arekal, analyst]

Hello? Am I audible?

[Operator]

Yes, sir, you are audible.

[Nandan Arekal, analyst]

So I just wanted to get some clarity on the exceptional items that have been reported in this quarter. What will be the trajectory of these exceptional items going forward?

[Deepak Bansal, executive]

So on the exceptional items, because we are doing some restructuring -- continue to do some restructuring and all those things, we are expecting exceptional items in the range of around INR 40 crores to INR 50 crores for the whole year. That's what we have given the earlier guidance also last time on our earnings call.

[Nandan Arekal, analyst]

Okay. On a sustainable basis, what do you expect when would they stop?

[Deepak Bansal, executive]

I think this year, it should be the last, unless otherwise something more comes up depending on the economic situation or the macroeconomic situation, something else comes up. But otherwise, this year should be the last for this broader thing. And I don't expect that this should go to FY '27 or something in a larger way.

[Operator]

Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments. Over to you, sir.

[Sanjeev Verma, executive]

I would like to thank everyone for joining the call. I hope we have been able to address all your queries on this call. For any further information, kindly get in touch with Purvesh Parekh, our Head of Investor Relations; or Strategic Growth Advisors, our investor relations advisors. Thank you so much.

[Deepak Bansal, executive]

Thank you.

[Operator]

On behalf of Black Box Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.