Intellect Design Arena Ltd

NSE:INTELLECT

Q1-2026 Earnings Call

[Praveen Malik, executive]

[indiscernible] Mr. Manish Maakan, CEO of Global Wholesale Banking. Then we have Mr. Rajesh Saxena, CEO of Consumer Banking; Mr. Banesh Prabhu, CEO of Intellect AI; and Ms. Sudha Subramaniam, CFO. Besides some other senior members of the Intellect management team are also present on the call. Now I hand it over to Mr. Vasudha to take you through the result. This will be followed by the comments from Mr. Arun Jain and then we will start with a Q&A session. Where your questions will be replied by the management team. [Operator Instructions]

Safe harbor. I would like to remind you that anything which we say which refers to our outlook for the future is a forward-looking statement. This must be read in conjunction with the risk the company fees. With this request to give a briefly. Over to you, Vasudha.

[Vasudha Subramaniam, executive]

Thank you, Praveen. Good evening, everyone. A very warm welcome to all of you. I'm delighted to walk you through the financial and strategic performance of our company for the first quarter of the financial year 2025, '26. This quarter marks yet another important milestone in our journey of becoming the most comprehensive composable and intelligent financial technology provider to forward-looking institutions across the globe. On the financial performance, we had a strong start to the fiscal year.

In Q1, we delivered a total income of INR 734 crores representing a growth of 18% year-on-year. EBITDA stood at INR 176 crores, showing a 28% year-on-year growth. Profit after tax was INR 94 crores, a solid 27% increase year-on-year collection stood at INR 586 crores. Our cash and cash equivalents remained robust at INR 976 crores giving us the confidence to continue investing in growth and innovation. Our license-linked revenues comprising license platform and AMC revenue stood at INR 389 crores for the quarter. That's more than 50% of our overall revenue creating a predictable and recurring engine. And our ARR, annual recurring revenue now stands at INR 1,041 crores. This is a strong indicator of how our business is maturing towards long-term committed, high-quality engagements.

Now on the deal wins and go-lives, we won 17 new deals and went live with 15 digital transformations in Q1. Let me highlight 3 strategic wins in the U.S. with 2 global banks, marking the entry of eMACH.ai to the U.S. market. A Tier 1 Canadian multinational bank has chosen both eMACH.ai co-banking and payments for the U.S. expansion. This engagement spans their corporate and investment banking operations and sets the stage for future expansions in Europe and Asia.

This win is significant, not just in size but in strategic depth. It reinforces our relevance for Tier 1 banks operating in complex global environment. In parallel, a San Francisco-based global financial services firm, operating across 35 countries, selected eMACH.ai liquidity management. This solution will give them real-time visibility, control and compliance over global liquidity positions, a vital capability in today's volatile market. These are part of a deep growing funnel now valued at INR 11,300 crore with over INR 9,200 crores already in active opportunities.

Let me shift gears to Purple Fabric our open business impact AI platform in test 60 days since launch, Purple Fabric has conducted over 50 boot camps, engaged 5,000-plus participants through our business impact AI master classes, sparked deep strategic interest among global banks and insurers. More importantly, this platform is aligned to enterprise-wide AI deployments, not mere experience -- experiments. The market is clearly signaling that it is ready for AI that is auditable, traceable, governable and most importantly, impactful. We are building a strong pipeline of engagements that we expect to convert into high-impact AI transformations in the quarters ahead.

Let me talk about the continued validation by the global analysts. The growing adoption of eMACH.ai is also reflected in the industry analyst community. Gartner continues to rate us highly in its critical capabilities for retail core banking systems. Charters has positioned our credit lending operations as leaders in 5 different quadrants. Celent has identified our digital experience platform, DEP, as a functionality standout in its retail and SME digital banking platform across APAC, EMEA and North America.

These recognitions affirm that eMACH.ai is not just a visionary platform, it is a proven execution engine. On the leadership capital, to support our global scale up we have made some key leadership additions. Dave Thomas has joined as EVP and business head Credit Union and small market financial institutions. He brings 3 decades of experience from Central One, ATB and Accenture and will lead Canadian credit unions transition to our digital experience platform.

John Turner has joined as a President -- as the President and Business Head for Purple Fabric. Rajesh Makhija has been instrumental in shaping eMACH.ai cloud architecture and was pivotal in launching Purple Fabric has been appointed Chief Marketing Officer to lead enterprise-wide marketing. Eshmael Mpabanga has come on board as SVP and Country Manager for South Africa. And Connor has joined as Chief Marketing Officer, Wholesale Banking. Vivek Patel has joined us as EVP and Chief Growth Officer for Intellect Consumer Banking. He will lead large transformation deals in India and adjacent markets.

These appointments reflect our conviction to not just build world-class products but to support them with global talent, strong governance and high-touch customer engagements. To summarize, quarter 1 has delivered strong growth across all key metrics, top line margins, profitability and pipeline provision. eMACH.ai continues to gain traction with Tier 1 banks and analysts alike. Purple Fabric is ushering in a new era of auditable governed and business impacted focused AI adoption.

We are backed by a growing base of referenceable clients and the leadership team built for global scale. As we move into the rest of the financial year 2026, we are confident of building on this momentum. We are operating from a position of strength with conviction in our strategy, confidence in our products and clarity in our execution. Thank you again for your time, your trust and your continued partnership in our growth journey. Thank you.

[Arun Jain, executive]

And thank you Vasudha for taking us through the brief. The presentation is sent to all of you as an investor, you must have gone through the presentation deck on all the numbers. So to me, the results are in line with what we are presenting to you around -- you wanted 15% growth. I think we are in line with that, that we are growing in spite of IT industry slowing down and we have a good pipeline of INR 12,000 crores close to INR 11,000 crores pipeline. So that's a big validation of the strategy of eMACH.ai. U.S. getting 3 deals in a single quarter of digital transformation on eMACH.ai core is significant validation because that is a core concern we had and core strategy we had to enter into U.S. market with our eMACH core payments system and core payment liquidity system.

So it's a very, very significant for us that in single quarter, we get all the 3 major product core, liquidity and payments getting an entry. So it means what we have invested the money in last 6 quarters is paying off one by one, initially U.K., then Canada, then U.S. before that, was Germany and Hungary, so eMACH in advanced market is going in line with our expectation. In AI with Purple Fabric business, similar kind of deals are there in the U.S. and U.K., which is continuing our agenda to build on the top of Purple Fabric.

Obviously, as I mentioned in my comment, Purple Fabric in the last 6 months is keeping me extremely, extremely busy and excited. It's very rare in the organization history that we come out with the technology, which is compared to the best-in-class in AI, where there's a tailwind where everybody wants to acquire.

And there are 2 kind of AI businesses are there, just to make you aware. There is an AI which is data life cycle AI, which is built on data and knowledge, which is done by openai or perplexity or deep seek, they are classified by the analysts into data life cycle AI. Then there is a second class of AI, which is application life cycle AI, that's where application becomes a primary pivot around which you build AI where it translates enterprise to deliver business results. Purple Fabric is classified into application life cycle AI. There are 3 players as of now engaging Quadrant. First is talent tier, which all of you are aware of. Second is C3 and third, which is what was fabric. So we've done an independent analyst study on purple fabric, which is putting us on that bracket. That is one part of validation of Purple Fabric.

We launched Purple Fabric in Financial Times on 12th of May and then followed by next 26th of May with economic times with enterprise GPT with the enterprise knowledge garden as a basic value proposition [ before ] tax. It was surprised to see that even traditional way of newspaper and has delivered us more than 3,000 registration on the economic times, right? And there are more than 2,500 unique companies who have participated in this journey. It is keeping all of us on our toes. I think we are doing one boot camp per day almost 50 boot camps happened in less -- and sometimes there are 2 or 3 boot camps, one in London, one in the Middle East, one in India. So the pipeline is growing significantly well. Within 60 days, we were able to look at it the annual pipeline close to INR 800 crores in just 60 days of working,.

So this is a lead pipeline which need to convert into opportunity pipeline and from opportunity to close our pipeline. But that's the one index of us to major that out of 400 leads which we have generated in the 60 days is highest by any other product in last so many years that 60 days could have generated this many leads. So Purple Fabric is extremely, extremely differentiated product. It's a disruptive product and market disruptive product, and with the open business impact.

AI platform, we are disrupting and simplifying. And one of the important feedback which is there from the customers who are using it, it's simple to use, while talent is cumbersome to use. So that's where the feedback we are receiving. It's early days. We will be -- we will look at it that we'll be investing INR 100 crores. And this INR 100 crores out of INR 100 crores, INR 10 crores was invested in last quarter. So the profitability, which is there. As of now, INR 94 crores, if you add -- so it's another INR 10 crore investment, which has gone to Purple Fabric.

Next 3 quarters will be investing close to INR 120 crores, increasing from INR 30 crores in the coming quarter, between INR 120 crores to INR 30 crores in the coming quarter. And then each quarter going by an incremental amount. So that's our total number may move of the investment from INR 100 crores to INR 130 crores. And we are managing the EBITDA margins between 20% to 25% that band, what we are guiding for quite some time that sometime it can go to 25%, sometimes it comes down to 21% based on the specific license deals or specific market scenario. So that's the beauty of it, that all the AI investment is done within the same balance sheet without taking any other money. So this is like a book step AI model, which is happening in this company. First time we are otherwise anybody in the world is looking minimum of INR 150 million to INR 20 million, INR 1,000 crore to INR 2,000 crore investment, which is going to be there.

So our research team has done phenomenally good job in understanding what the enterprise needs are. and able to respond to all the companies which you have already invested in AI and they're working from the last 2 years. And when we are going and talking to them, whether they are working on Vertex, they are working on Palantir, they are able to -- Manish or Deepak or Hitesh are able to answer every question, which they have on the table and what doubts they have on the table for enterprise implementation. And that's the beauty of holistic planning from last year to this year. Before the launch, we tested out all the objection, market objection in upfront and then created a market-leading messaging to go forward on this particular launch at a global level.

So we are -- on one side, we are excited to move forward every day is a very, very busy day, keeping all of us busy. On second front, Purple Fabric is helping us out to get a more lead in e.MACH.ai because in Purple Fabric, I can consume Purple Fabric as the API on my e.MACH.ai. So e.MACH.ai, whether I'm talking about core banking, I'm talking about lending, I'm talking about wealth, I'm talking about custody capital market or I'm talking about payments, I'm talking about liquidity, I'm talking about trade finance, our trade operation or supply chain finance. In all these areas, we have built up digital experts and enhanced the capacity of existing products, which is now AI native products in a market. So in banking industry, these are the first time we are launching AI-native banking products, which is consuming AI at the right place because Purple Fabric gives them an ability to consume it at the API level.

So that's value -- the complete e.MACH.ai platform, which we launched in February, where AI was initial start in the last 2 years, now AI becomes a front-leading conversation with a customer that when they are looking for trading application, we are not saying you just buy out the trading application for system of record or system of engagement, you can take complete trade operation where we can play a 20-20 game with you, 20% help you in increasing your revenue on customer side, 20% help you in decreasing your operational cost using Purple Fabric and trade platform or payment platform or a core platform or a wealth platform.

So that's the promise we are looking at, at this point of time. So I'm willing to take as many questions as possible on the strategy and the financial numbers, I think most of you are aware and familiar. So I would love to have the questions which are related to a strategy then related to just technical financial question, which you can keep one-to-one with Vasudha willing to respond, whether on e-mail or any other.

So this time of 1 hour we can spend to make you understand where are we in the journey? If you have a question to Manish, Rajesh, Banesh, all 3 of you are here, 4 of us are here to respond to witness question. So you utilize our time effectively. It will be in an interest to you to utilize our time effectively over here. Financial numbers are able.

[Praveen Malik, executive]

Thanks, Arun. Now the forum is open for Q&A. [Operator Instructions] So first, we have Mr. Rahul Jain from Dolat Capital.

[Rahul Jain, analyst]

I hope my line is okay. Thanks for the color that you shared around the product. Just had a couple of questions. Firstly, the funnel that we talked about in terms of Purple Fabric part. And if you could see that how you -- typically this should culminate into business for us over a period of time? What are the top use cases that people are actually looking at us on this thing. So first of all, that and probably I have a follow-up.

[Arun Jain, executive]

Yes. Banesh, would you like to answer?

[Vishwanath Prabhu, executive]

Yes. So thanks, Rahul. I think -- we've been, as you know, working and you've been seeing from regular results, Purple Fabric deals that we are continuously closing out in the U.S. on the insurance side. We've got several leads now as of this point of time, we've already moved forward the large numbers that Arun mentioned. We started analyzing. We reached out to all of them.

We've had good response -- we've got already 66 -- 87 people who have already responded to us, where we are fixing continuous boot camps on and also, we are in pretty advanced stage discussion with several Tier 1s in the U.K. So to answer your question, we are moving forward with the pipeline opportunity that is significantly come after the launch of Purple Fabric in continuation to our existing business that is already making good momentum on Purple Fabric.

[Rahul Jain, analyst]

So Banesh, are you trying to say that bulk of these interests are coming from the insurance side or it's yes.-- yes, 3, 4 area.

[Vishwanath Prabhu, executive]

Yes. So it's well spread out. We have -- we have 39 in Europe. We have 16 in the U.S. and also a lot of interest in India. There are 20 of them. These are advanced stage discussions. These are where we've already moved them from interest into leads and many of them are already in opportunities. They are already 21 in opportunities right now. There are pretty advanced level discussions going on. So to answer your question, it is not only insurance, it's all of banking, it's wealth. It's several areas, including a lot of operations reimagination, lot of compliance and regulatory interest, we actually had an event on compliance and regulatory sort of events in the U.K. It was attended by over 50 people actually where it was very popular.

So I think I wouldn't say it's insurance only by far. Insurance has got a lot more momentum because we had started a lot of AI on it earlier, and it was well embedded with our products. As Arun said, a lot of this is getting attention because it's being embedded with our products and in a way in which Purple Fabric can coexist with eMACH, which is what it is -- when we say eMACH.ai, it's eMACH and .ai. The .ai is Purple Fabric embedded with our eMACH suite, and that makes us uniquely positioned to the change that's taking place in the market on all of the products, all the products are looking for AI to embed itself in it. So I think fundamentally, that's the interest we are seeing, which is quite unique from everybody else.

[Rahul Jain, analyst]

Interesting. And as Arun Ji mentioned about scaling up the budget on marketing from INR 100 crore or INR 230 crores all moving to a INR 30 crore kind of a run rate.So is there -- I don't want to get into outlook kind of a question, but more importantly, if you could gauge, since we're seeing this kind of a scale-up on spend, is it safer to assume the monetization scale up should also start later part of the year meaningfully for us to raising the spend criteria for us on marketing?

[Arun Jain, executive]

So I think Rahul, just -- first of all, you understand that opportunities are there in reimagination customer, which is enterprise GPT, then enterprise products, which is all the relationship managers, how you design the product compare to the product with enterprise knowledge garden. Then you have an enterprise operations, reimagine operations, which is completely operational, whether it's a customer onboarding operation, loan origination operation, trade operations, so we are having opportunities in that area and compliance area by the managed.

So the 4 reimagination business impact AI, all have a list of opportunities. Obviously, INR 130 crores is a number we are looking for incremental investment. We are looking around, AI should generate close to INR 200 crores revenue by end of the year, cumulatively from all the sectors where we are having insurance. We are having APX, CPX, which is area, we have wealth as the area, we have a GRC as an area. And we have a new line of business which is coming up over here.

[Manish Maakan, executive]

Yes. Thanks for that. So of course, we have seen how expansive the product has been in terms of leveraging the data garden does that also open up some kind of a consulting opportunity or we would like to play it through product only or it be consulting to this product?

[Arun Jain, executive]

Manish, would you answer the consulting approach you are taking now?

[Manish Maakan, executive]

No. Thanks, Arun. Now we're extending out consulting where we're looking at business impact created and actually we're looking at target operating models and efficiency, operational efficiencies, what AI can provide the onboarding number of senior folks next week I'll wait until then. But we'll have a shortly an announcement on the consulting side. .

[Arun Jain, executive]

Including industry consulting, not just AI consulting, but industry consulting.

[Rahul Jain, analyst]

I appreciate it. And last one from my side. It's a numerical I'm afraid. But so the platform revenue, we see has grown significantly in this quarter. If you could share the organic part and the C1 part. And is there any seasonality to the C1 run rate if we could understand that.

[Manish Maakan, executive]

Some portion came from C1. So this revenue has gone up because of Credit 1. Credit 1 was expected to grow, that's the reason mainly for that. It's sustainable.

[Rahul Jain, analyst]

So what you're essentially saying is the current run rate is what we should take as a base and there's not much seasonality from that point of view. Whatever we grow will grow from this base.

[Manish Maakan, executive]

That's right.

[Praveen Malik, executive]

Thank you so much. Next, we have Mr. Sushovan Nayak from Anand Rathi Securities. Sushovan please unmute yourself. Sushovan, you are there?

[Sushovon Nayak, analyst]

Just a quick 2 questions. One is on the working capital. This is for Vasudha ma'am. Just wanted to understand what exactly is the GeM receivable contribution? And you have a significant noncurrent receivables of almost INR 200 crores, which is there in Q4, if you could put some light on that. That was one.

And the other was what exactly has contributed to the significant change in the currency mix. These were my 2 questions versus last quarter.

[Vasudha Subramaniam, executive]

So I believe you would have picked up this noncurrent receivables from the annual report perhaps. So that is nothing contractually not due cases. So as per the accounting principles, we are supposed to reflect the contractually not due receivables under the noncurrent receivables. So that's what it is.

And the other question that you asked is on the GeM, generally, we do not report the customer-wise receivables anywhere. And so that's anyway, it's quite a significant number, and that number is also reducing gradually is what we would say. And there are plans to liquidate that completely, and that's one of the reasons like for the increasing DSO. And you would see good increments -- good improvements in the quarters to come.

[Sushovon Nayak, analyst]

I'm sorry, just -- the reason I asked this question is because in this presentation, I think you have just mentioned DSOs, including GeM and without GeM. So that was the basic reason why I just asked the question, so..

[Vasudha Subramaniam, executive]

Yes. So we would like to specifically highlight that the higher DSO is on account of GeM receivables included in that, and that's why we wanted to separate it out and show it. And in addition to that, there are other global macro reasons as to why we could not liquidate quickly, and there are some delays in the collections and so -- but anyway, our account management team is working very hard to collect it at the early as possible.

The other reason is -- there are many projects which are running on a milestone basis. So as soon as we complete the milestone is what we can raise the invoice to the customer and get it collected. There are multiple reasons for the DSO...

[Sushovon Nayak, analyst]

And on the change in the currency mix, other than the C1 acquisition, is there something else because U.K. has significantly reduced and U.S. has significantly increased from a currency mix standpoint.

[Vasudha Subramaniam, executive]

There is a significant increase in perhaps the CAD, and that is the reason you are seeing some consequential impact in U.K. and U.S. Otherwise, whatever we've been generating for GBP and USD, it's all the same in quantum, absolute numbers.

[Sushovon Nayak, analyst]

Okay. Because what I see is 29% of U.K. has -- GBP has become 14% now, while USD 33% has become 45% now.

[Vasudha Subramaniam, executive]

And the CAD would have increased.

[Sushovon Nayak, analyst]

CAD -- the CAD is from...

[Vasudha Subramaniam, executive]

CAD is separately shown 13 percentage here.

[Arun Jain, executive]

Contracts are denominated in dollars, but they are operating from different countries. So that makes the 45% USD. It's not a U.S. business. It's a USD denominated business.

[Praveen Malik, executive]

Thanks, Sushovan. Next, we have Mr. [ Keshav Sureja, ] from [indiscernible]

[Unknown Analyst]

Yes. So thanks for the port. As I can see that you have added 5 new locals in India. So from May presentation, they are our top 9 months and now I can see that there are 14 of them. So if you could talk about those deals like what kind of deals starting up from India and subsequently like in future, like -- are we expecting any more deals to come from India and any major deals that is going to happen in this geography?

[Arun Jain, executive]

Doing the deal, [indiscernible] is the right person to tell you, but these 5 deals are in the space, few deals are in the space of DTC digital commerce in the retail area and the commerce area. They are not all banking deals, which is reported from India. So these 5 deals have -- 2 or 3 deals are in banking and 2 or 3 deals are in commerce area.

[Manish Maakan, executive]

Additionally, Arun, we were showing top 10. Now we're showing top 15, we're showing how the wealth of our coverage across these markets is growing.

[Arun Jain, executive]

Yes, top 14 out of 15 months. So that's a coverage, which is [indiscernible] . So Manish, you want to highlight it?

[Manish Maakan, executive]

Yes. You will see we were showing top 10 banks out of each of these markets as we've gone deep. Now we're looking at top 15, top 20, top 30, so expanding those space and showing you how deep we are entrenched in this market. It's about now growing these accounts and growing deep in them.

[Unknown Analyst]

Sir, like how does the Indian market as a growth to your business?

[Arun Jain, executive]

Indian market is a very active market, and we are participating in [indiscernible] as the Indian market. And with Purple Fabric, it's a very, very potent market.

[Praveen Malik, executive]

Thanks Keshav. Next, we have Mr. Amar Bakht from Oman Investment. Amar? Please unmute yourself.

[Unknown Analyst]

See, these 2 new products, which has been now fully enforced and ready to provide the incremental revenue for the company. Just trying to understand this revenue model. Will it be coming at the time of implementation itself? Or there will be outcome-based revenue modeling or it is after implementation, there will be some aims to relate revenue as well, how the revenue life cycle is with this 2 purple fabric as well as this eMACH.ai. How it is going to provide the revenue in one stream or a different stream of revenue?

[Arun Jain, executive]

Manish, you would like to take it up?

[Manish Maakan, executive]

Yes, Arun, sure. No, so Purple Fabric, let's start with Purple Fabric. It's a mix of initial revenue small implementation, long tail [indiscernible] scale, minimum commitment on certain volumes and then impact business impact base. So this will bring in that trigger off a lot of variable on eMACH.ai, also we're moving to a lot more variable revenue and the consulting piece, which we are looking at launching, this will be a business impact created, how we can help a bank move from point A to point B on their revenues, on their costs, and that's where we build it thing out.

[Vishwanath Prabhu, executive]

I'll just add a little more texture to the deals on both Purple Fabric. I think the customers normally are paying in different ways. Some of them -- they're all subscription driven. Some of them are paying for the platform itself. Some of them are paying because that platform is bringing them sale. So most of them, we have a minimum subscription amount for most of our Purple Fabric implementations we have a minimum subscription amount they pay, which is the cost of us operating, running and licensing our platform to them. The balance is then driven on outcome-related of improving their either cost reductions or doing greater volumes on the platform.

And therefore, some of them we charge by AI sort of volumes or agents and some others, we charge the whole platform. And wherever it is embedded into our products, we also charge similarly for the usage of that -- of the AI element of that license.

[Unknown Analyst]

Okay. So if my understanding is correct, that means there's a part of the revenue, which is a kind of an annuity based. That means once I have a customer who got -- who take my product, the part of the revenue, either it is AMC or license-based or the platform based, it will keep on continue until the customer is using. And probably part of it is a onetime expenditure at the time of implementation itself.

And now you are also adding that there is something depending on the output based. So our customer is able to achieve certain efficiency level out of using our product there will be kind of a profit sharing or some kind of a fixed kind of things will be getting by the company. I'm just trying to understand how longevity of this, if I get a customer today, how long I will be able to monetize for that particular customer?

[Vishwanath Prabhu, executive]

So the subscription deals that we do range from 3 to 5 years and they are, like you said, an annuity with a minimum volume, which grows as the volume grows. So there is a volume pricing. There is a separate implementation cost. Very often for certain projects, we do pilots. And there's normally a charge on the pilots. And then when we implement, we start with implementing the subscription, which is normally runs, like I said, for 3 to 5 years thereafter. And on top of it, there are several change requests that keep coming on upgrading the platform along those 3 to 5 years.

[Arun Jain, executive]

So it's an annual contract. So let me just say that even cost is a pilot cost. E2 revenue is an implementation. E3 revenue is subscription based on percentage of, let's say, 30 basis points on the insurance premium paid or per transaction basis, $12 per transition or $99 per work package produced like per complaint resolution. Those are my transaction-based pricing.

This is my E3 pricing, which is based on subscription or transaction. Third is my platform licensing, which is on an annualized basis, which is also subscription base licensing, which is the A4 licensing which is based on a number of cores, my AI platform will be used, so a number of cores, the way Oracle sells a number of core based license. We have a similar policy of a number of cores for platform-based outsourcing. So therefore, different model of pricing.

Since you are the first time, I think, in Intellect so I'll tell you there's a license pricing, which is a fifth model of pricing and long-term license with AMC. AMC is this sixth revenue stream. So these are the 6 different types of revenue streams in the company.

[Unknown Analyst]

So if you implement product to one particular company, all those 6 streams will be activated over a period of time. So as and when we are adding the new customer to our new platform for this, this will compound over a period of time?

[Arun Jain, executive]

That's right. That's the value of the business like us. It may not be all the 6 for all the -- each customer. There'll be 3 for 1 customer, 2 for 1 customer. So that will vary. But it's a compounding. Compounding will happen. All the profit gets compounded. And that as why we have 18% revenue growth and 27% profit growth. So that's an important point that companies coming to that lever where profit growth is higher than the revenue growth. So it's not a linear model.

[Unknown Analyst]

And then in that particular model itself, there is a kind of a operating leverage is also built on because as the product gets matured, the expenditure towards the product will not be as bigger compared to the revenue-generating capacity of this particular product. So there's compounding from that side, there's a compounding from the margin side as well.

[Arun Jain, executive]

Exactly, exactly. And that's what I think the value of the product companies are.

[Unknown Analyst]

Just a second and probably the last one, I do not take time. Just to understand the second part of it, if there is a lumpiness in this kind of a business as well. That means in some quarters, suddenly, there is a revenue build up or in some certain quarters because what I understanding, there's a kind of an consistency and a longevity of the product is quite high. But if I look at just quarter-on-quarter, I can see a huge lumpiness in the revenue things, how it's happening just...

[Arun Jain, executive]

It's happening because this product business, each license can be as high as $7 million. $7 million license happens extra in particular quarter or not happening in a particular quarter can give the lumpiness to the business. So on an LTM basis, is a good way for you as an investor to look LTM as a metric for looking at it rather than quarterly numbers.

[Unknown Analyst]

And if I may, allow the last one, please. In respect of this U.S. as a market, I can see your main still normally for the IT companies, users is a very big market. So far, Intellect is able to manage the maximum amount of revenue outside the U.S. market. if I consider the USD denomination is a separate thing. But the business coming from the U.S. is not that big compared to other IT companies.

Now we all know that's a huge market for a product like yours. So how as a company we're approaching to build that particular pie into our business? Because probably the margin there comparatively better what we understood from other IT product-related companies.

[Arun Jain, executive]

There are not too many product companies from India who is getting revenue from U.S. as a market. Intellect will be still better than that. Margins are almost equal in U.S., Canada, Europe are similar nature. We are seeing the margin in U.K. and Europe is still better than the U.S. margins from that perspective. We have approached our strategy to go to Europe first, Canada next and U.S. next. That is our strategy road map items. So now this quarter, we are announcing this financial year opened with the 3 deals in U.S. So now we'll be expanding U.S. portfolio.

[Praveen Malik, executive]

Thank you Amar. Next, we have Mr. Mihir Manohar from Carnelian Asset Advisors.

[Mihir Manohar, analyst]

Congratulations on a good set of numbers. Sir, I wanted to understand on Palantir, C3 and Purple Fabric you mentioned that these are the 3 enterprise grade AIs. Any color or any feedback from clients from industry analysts as to how is the competitive positioning placed of Purple Fabric Vis a Vis Palantir and C3. And you know some color around as to in which areas who is strong? And how will the things eventually pan out?

[Arun Jain, executive]

Beautiful question for understanding the market. Palantir is a company which started in 2005. So it's a 20-year-old company in AI space. started from government of U.S. and for commerce for their major revenue come from government. And after 2018, they started moving out of government and start looking at the commercial sector. And they are using their old platform foundry to support it. So it means they have a legacy large foundry platform, which is built on AI technologies available in 2010, 2012.

Intellect has started investing into AI in 2016. C3 also investing around the same time. But we launched Purple Fabric as a platform only in 2025 after understanding what the pain of the implementation of AI. When you look at it, 4 elements, which are differentiating AI in Intellect is, enterprise knowledge garden, is a first value proposition, which intellect is the first time trademarks that along with data lake, you need enterprise knowledge garden. Because more of enterprise is a knowledge, which is -- which resides in the enterprise, and we have a technology to vectorize that knowledge in a garden and nurture the nongarden so that customer can use data from data lake and knowledge from garden. And this will make expertise for the organization.

So this is very, very unique, which is not provided by C3 and Palantir. Second is we don't talk about agents we believe the business impact can only happen from the experts. Agent can solve a smaller problem like execute consult, like call center problem, they can solve. But expert, if you want to look at create finance or wealth, you need experts there to solve the problem. So we have an agent orchestration system with a Socratic dialogue built into it, which creates immense value in digital expert methodology. Most of the company in the world, both of the C3 are agentic. They have announced more than agents only. We believe it's a business of experts, which is different.

The third differentiation is we allow -- it's an open technology. We allow any LLM to be used. We believe LLM costs are coming down. We should not lock down with the particular LLM. So we provide our customers a ability to benchmark LLM select appropriately. And this is not given by any of the micro players right now. So these are the 3 core differentiation besides the enterprise governance, which all 3 of us are giving: enterprise governance, entitlement -- all 3 of us are giving. The enterprise governance, we are maybe equal. But on an EKG, digital expert and LLM, we are differentiated.

[Vishwanath Prabhu, executive]

I think just to add to that, Arun, the talking to clients in Europe, and now we have a few large banks, I think the orchestration of the flow through the digital workforce and to set up a digital workforce, which is really multiple agents, multiple digital experts. I think the ability to do that easily and govern because the clients who come to us are finding they cannot scale and some of them are using the competition we're talking about. And they would like to scale.

And I think the governance part of managing multiple workforces. I think we are better positioned in some sense, and we are also more flexible and easy to consume those services compared to their models. So that's the feedback we're getting, and we're obviously learning along the way here.

[Unknown Analyst]

Sure. Understood. So is there any -- any more color around as to people are looking to replace or change their C3 and Palantir side of offering store side of offerings?

[Vishwanath Prabhu, executive]

I think they are different people are coming Sorry, go ahead Arun.

[Arun Jain, executive]

I'm saying it's just coexistence here. We are not replacing Palantir right now. I think we are too young a player to fight that battle. It's a $300 billion company Palantir. So we will be just -- even if you take a 10% market share, it will be good for us.

[Unknown Analyst]

Understood Second question was the investment, INR 100 crores to INR 130 crores. So the INR 30 crores will be incremental, right, which will be having a hit to the P&L in FY '26.

[Arun Jain, executive]

All of them will be hit to the P&L in market we cannot capitalize any of this investment, but we still manage the margins to the level of what we are looking between 20% to 25% margin, we will still manage within that margin in spite of the investments. But INR 130 crores is a hard core investment.

[Unknown Analyst]

Understood. Sure. And just last question was on the DSO. I mean on a Q-o-Q as well as Y-o-Y basis, when excluding GeM is a good jump in -- so how should we see this normalizing happening and why this chunk has been there?

[Arun Jain, executive]

It keeps on fluctuating last quarter was very good. We would be able to collect a lot of money in this quarter is bad. So just quarter-on-quarter, this is the transitional items which when the project goes live, suddenly, the large money comes in, it's a milestone-based payments. So I think now you have seen the company from last 3 years, we should not be too much worried about DSOs.

[Praveen Malik, executive]

Thank you Mihir. Then next, we have Mr. Rohit Balakrishnan from ithoughtpms. Rohit, unmute yourself and ask the question.

[Rohit Balakrishnan, analyst]

Yes. Good evening, everybody. So thank you for the opportunity. Sir, a few questions. So one was the U.S. destiny deals that we've won, one in Canada, one in U.S. So if you can share some more color in terms of where we were competing with? And I mean, how long was the engagement? And in terms of this would you feel that this is sort of a very important inflection point for you to get into -- get more deals in the U.S.? If you can share that first, and then I have 2 more questions.

[Arun Jain, executive]

Manish?

[Manish Maakan, executive]

No, thank you. No, very good question. I think it's the strength of technology, eMACH.ai architecture, what Arun has been talking about. We clearly beat number of the existing players, fair and square, you go down deep into the architecture, the purity of architecture just stands up on itself.

And then the strength of the wholesale banking, our industry align solutions and our payments platform, which is again being rated by all analysts now in the leaders class. So all of that is getting demonstrated. You had the who's who of or all the key co-banking payments and liquidity players in each of these wins. So this is a good start for us.

Liquidity, we have been -- we are market leaders. Payments also, we now are amongst the top 2 most times and the power of our core banking, what we have demonstrated in Europe, the strength of that is now very evident as we break through in the U.S.

[Rajesh Saxena, executive]

So if I can just add, Manish, I think from a core banking perspective, for us to get a Tier 1 client to get the corporate DDA deal in U.S. is a great achievement because from a U.S. perspective, regulatory requirements are very steep, especially on the DDA part, which has state requirements and Fed requirements. And without our reference site, we were able to win this deal. This just goes and shows the power of our eMACH.ai architecture as well as our relationships that we have built over the last many years with some of these Tier 1 clients.

[Rohit Balakrishnan, analyst]

Are you disclosing the size of the deals, sir, in terms of what is the size? Is it like $30 million, $40 million or less than that?

[Manish Maakan, executive]

The Canadian deal is very large. I'm not getting into numbers. This is the Phase I. There's multi-phases of it, and this will be very, very large. I just stay at that [indiscernible].

[Rohit Balakrishnan, analyst]

Sir, the second question was again, so if I -- I've been following the company for a long time and been invested for around 5 years now. So I think generally, I understand, of course, that, I mean, we have been investing much ahead of the curve for a lot of things. And I think this -- whether it is eMACH.ai or Purple Fabric, is a culmination of that.

So while you said, Arun sir, that this year also, you will be investing around INR 130 crores of which INR 10 crores has been done. But just maybe looking beyond FY '26, looking beyond FY '26, our understanding, and I think you have also mentioned it many times that generally, margins can be even upwards of 25% or could be even higher than that.

So when do you see Intellect sort of getting into that trajectory I'm not asking this quarter, next quarter. I'm just trying to understand when as we outsiders sort of should -- sort of start expecting that to happen, again, not specific quarter or any -- but just maybe I would like to hear from you like how are you viewing this? Because, of course, there are big -- these are big opportunities. So I understand what you all are trying to do, not looking at immediate quarters. But just would love to understand from you.

[Arun Jain, executive]

Yes. So I think the way we have designed the business is to keep the growth bag around 20%. We achieved 15%. We achieved to 14%, but we designed the business for 20% growth year-on-year. So that's the first principle. Second principle is we are 20% is we're pegging the business for from a design perspective, but economic condition may be different. Customer condition may be different. We may -- but margin will be close to 30% growth.

So if I look at it, 1 is to 1.5 is a difference between revenue growth and profit growth as a number. If you're looking from a 3-year perspective window, achieving INR 4,000 crores revenue and INR 1,000 crore margin is what we are looking to design the company for. So from your investment banking, PBT of INR 1,000 crores and INR 4,000 crores as a top line number in 3 years' time. is very much possible. It's not a guidance, but this is what we are striving for.

[Rohit Balakrishnan, analyst]

That is helpful. And sir, just 2 small bits. So of the pipeline that you mentioned, [ 9,000, ] which is active, would you be able to broadly share what would be U.S. of that? That was one. And second, sir, we have consolidated C1 acquisition. Has that also led to some kind of a margin drag in this quarter and in this financial year, also will that be there?

[Arun Jain, executive]

Yes. So the acquisition has obviously -- on its own, it's profitable, but not as much profitable as over other businesses. So that has a percentage margin dip maybe there from this perspective. But as an acquisition, it has given a huge amount of acceleration in Canadian market. Rajesh can brief you about this.

[Rajesh Saxena, executive]

Yes. So I think -- sorry, should I?

[Arun Jain, executive]

Yes, yes.

[Rajesh Saxena, executive]

So I think we announced this acquisition in March. And along with this acquisition, let me just summarize for the investors. We got about 170 new customers, 140 people came along with this. And I think our first quarter, our results have been better than what we expected. And both from a culture perspective, from a sales perspective and from a relationship perspective, our business is growing.

And as we get into a totally new segment of these 150-odd credit unions, we are seeing a lot of new opportunities, which are opening up. We are looking at not only -- so this acquisition is from a digital engagement platform perspective, but we are now seeing opportunities coming up in core banking opportunities coming up in lending opportunities coming up in commercial banking and payment.

So I think we are seeing this -- the acquisition is a good -- it's still early days, but as a good acquisition to really significantly improve our footsteps in Canadian market and get the client base and the cross-sell and the upsell opportunities that we are seeing those -- it is still early days good opportunities that we are seeing. So from that perspective, it's a very good acquisition.

[Rohit Balakrishnan, analyst]

I'm sorry, just a small clarification on this. So when you are now looking C1, do you look at them separately in terms of as an operation? And -- or are you like fully consolidating in terms -- I mean, the way -- I mean numbers is one thing, but just from your own lens, the reason why I'm asking is, is there -- I mean, as you take over as you sort of integrate, how do you see the margins of that business or you look at everything together and...

[Arun Jain, executive]

Rohit, look, a merger means merger. It's a culture merger, it's a people merger, it's a thinking merger, and we don't separate that.

[Rajesh Saxena, executive]

And we have done this significantly over the last quarter Rohit. So it's now of one Intellect operations.

[Manish Maakan, executive]

It's a strategic intent of -- it's given us access to 150-plus banks in the market, where we have plenty of other cross-sell opportunities. It also gives us a competence of running a large-scale cloud SaaS business, which we can extend out. So it has a lot of strategic decisions behind why we were went into this acquisition other than it brought us a certain revenue. It's the scale which we will get in the market. In Canada, we are becoming a dominant force.

[Rohit Balakrishnan, analyst]

So did this acquisition also help in crunching the deal that you...

[Manish Maakan, executive]

No, it adds up to the Canadians start feeling very comfortable. Our size of operation. Our intent is, it's like we're calling this as one of our 3 home markets. India is the home market, the U.K. is a home market. Canada is now becoming that home market. And the intent is to scale each one of these 100 million business in the near future. So it's on the right path.

[Rajesh Saxena, executive]

Yes. If I can just add to that, Manish. I think another piece -- another important piece that we got is about 140-odd Canadian employees who came along with this deal. And I think that would significantly help us as we go along in implementing these deals that we are winning. So it's like a Canadian team has now got that critical mass, right, that we can -- we should be able to implement better and that gives the confidence to the clients as they look at us for large deals.

[Praveen Malik, executive]

Next, we have Aditya Trivedi from Nepean Capital.

[Aditya Trivedi, analyst]

Yes. So the question I have is, is there a road map for expanding Purple Fabric's adoption beyond BFSI into sectors, say, like manufacturing or retail where we could see AI-driven workflow automation and procurement optimization also critical? Or is Purple Fabric's architecture and components restricted to BFSI? What I'm trying to understand is could there be an expansion in TAM for Purple Fabric?

[Arun Jain, executive]

Yes, Aditya. We are expanding already to procurement and e-commerce solutions DTC business that is already there. Besides that, we are looking some partners in other sectors to expand into pharma sector or a retail sector. So we are looking at partners in that area.

[Vishwanath Prabhu, executive]

And we have some pipeline in the non-BFSI we're already working on.

[Aditya Trivedi, analyst]

Okay. And as of now, what are the top 3 AI-driven business impact use cases being deployed using Purple Fabric?

[Arun Jain, executive]

More than 3 just yes, we have answered this question earlier. So it's the same area which we are talking about. So we have just only 5 minutes. We are running time is if you have some other question.

[Praveen Malik, executive]

Should we take another 2, 3 questions in?

[Arun Jain, executive]

Yes. So how many are waiting?

[Praveen Malik, executive]

Around 4.

[Arun Jain, executive]

Just take all 4 and let's close it on.

[Praveen Malik, executive]

And next, we have Jyoti Singh from Arihant Capital.

[Jyoti Singh, analyst]

Thank you for the opportunity, sir. So I just wanted to understand, like you discussed about the Canada thing. So what's our expectation to have a growth in that area after Capital One acquisition? And also another thing that on the license-linked revenue that our expectations, 60% over the next 2 to 3 years. So if you can update on that side, how it is moving and then new direct-to-corporate platform like GPX, CPX and APX, how are they expected to contribute to growth by '28, '29?

[Arun Jain, executive]

Let's not look at independently Canadian market will grow. Manish has mentioned its home market like $100 million market in the next few years. Similarly, APX, GPX, we cannot quantify individually for each market. So they are early start business. So the way we look at our strategy of Intellect Design Arena because Arena first GTB expanded the market share, then GCB expanded the market share.

Now AI is an expanding market share. DTC is in an incubation stage. So that will take another 3 years for contributing substantially to the Intellect. It takes 5 years for the incubation to start generating a big number. So to sustain the product company's revenue year-on-year and to create a pipeline you need those kind of investment upfront.

[Praveen Malik, executive]

Next, we have Srinivasu K from TIA.

[Srinivasu Kedarasetti, analyst]

Congratulations for the solid set of Q1 numbers. My question is, with the new AI [indiscernible] coming that you said regulatory is very tight. How Purple Fabric is guaranteeing the governance and explainability in those markets? Are you pursuing any certifications to accelerate this?

[Arun Jain, executive]

There's no certification available, but we have a full traceability of auditability and which is being -- that's why we have won the client in Europe. Europe, there is the largest wealth bank is using our Purple Fabric platform, and they have certified their own risk department has done it. So there is no formal risk department worldwide to say this is traceable.

It's about the company to do the -- this department to do it. But we have all the ethical traceability, dialoguing cushioning all are recorded for ensuring that the responses of AI is -- and we tell that -- AI agent tells whether the accuracy is 92%, 98%, 97%. So we have built up very, very solid enterprise governance module into it.

[Vishwanath Prabhu, executive]

And to add to it, the digital experts, everything they do is audit trail just like a human would do. So that is clearly available as part of the process where you are able to see how the digital expert works in collaboration with the human.

[Srinivasu Kedarasetti, analyst]

The follow-up to the previous one who asked about the projects beyond BFSI sector, what are the likely ticket sizes in those? Is it similar to mid-tier bank kind of deal? Or is it smaller?

[Arun Jain, executive]

As of now, we are just -- we are saying as a platform, it can go out. We have to look at with partners how the deals will work out, how the consulting company or the SI companies will take this platform to the non-BFSI sector is still to be valued. But for the large non-BFSI client, the deal value will not be different because its pricing is based on number of cores being consumed for the platform. So core consumed by bank and core consumer by nonbank should be similar.

[Srinivasu Kedarasetti, analyst]

So when you say system integrators, like as on Q1, how many SI partners are already selling this Purple Fabric platform? What share of this year's PF revenue will come through them?

[Arun Jain, executive]

It's too early to tell you the numbers. We have more than -- we engaged more than 5 SIs working on it right now, and it's increasing.

[Srinivasu Kedarasetti, analyst]

Okay, sir. And my last question is, out of INR 11,300 crore funnel that looks very impressive, what kind of win rates and sales cycles are you modeling to reach this INR 800 crore quarterly rate?

[Arun Jain, executive]

How much? INR 800 crores a quarterly run rate? Yes, INR 800 crores, we -- that's a good point you raised. It takes -- every 4 quarter, we increase INR 100 crores. So now we have reached INR 700 crores, INR 800 crores in next 2, 3 quarters, we should reach INR 800 crores.

[Praveen Malik, executive]

Thank you Srinivasu. Next, we have Sameer Dosani from ICIC Group.

[Sameer Dosani, analyst]

Basically, how to think about your acceptability of products, especially eMACH.ai products, which are AI powered in the U.S -- in the regulated markets like U.S., Europe, so any thoughts on that?

[Arun Jain, executive]

So what's the question?

[Sameer Dosani, analyst]

Basically, how to think about acceptability of AI-powered products because there is a lot of security concerns in regulated markets, especially industries like banks, which is very regulated. So any thoughts on how is it getting more and more accepted? Is there some security concern which is impacting you or ...

[Arun Jain, executive]

No. I think every bank in the U.S. is using AI for some reason or the other. So it's very well accepted right now. It's a question of what kind of use cases they are using. Some of the them are using for call centers, some of them using for some operational processes. So most of the banks are using it. The question is whether that initiative is scalable or not? Is it a platform-based or particular use case based.

What Intellect is offering is a platform-based scalable operation within the enterprise where every employee can use our same platform, and every manager can build their own agent and experts to deliver better value in operational process and reimagine the process. So that's the differentiation we are doing. But acceptance of AI in advanced market is already there. Everybody has put the processes in place.

[Praveen Malik, executive]

Next, we have Pravesh Kochar from FourLion Capital.

[Pravesh Kochar, analyst]

I just want to understand if you could bring together what you talk about the experts rather than the agents into sort of the procurement product that you're selling into some of the non-BFSI customers?

[Arun Jain, executive]

Yes. So in procurement area, there are a lot of digital experts, which are there in the area of vendor management, vendor qualification, vendor due diligence, we have experts which are there. The price parity agents are there and some of the documentation which is required for procurement, in terms of tender or RFPs, which is a large RFP analysis, which is there, we have a digital expert in that area in procurement space.

[Vishwanath Prabhu, executive]

Extraction comparisons, everything are done through digital agents for procurement.

[Pravesh Kochar, analyst]

And how is the knowledge garden created for these kind of use cases?

[Arun Jain, executive]

Knowledge garden is about the policies of the company or the process of the company. So whenever the comparison is done, knowledge garden is forcing all the policies, processes, best practices customer knowledge garden, talent knowledge garden is a part of the enterprise knowledge garden. So it consists of product knowledge garden, talent knowledge garden, customer knowledge garden, policies and process knowledge garden.

And whenever we are writing any use case, you need to say that whether we are complying to the policies that the company has for procurement or for any other action, whether it's a human related policies of employee. Knowledge garden is a baseline from where the -- all the knowledge emerges.

[Pravesh Kochar, analyst]

And should we think about the value creation target in the non-BFSI this procurement scenario as well at that 4x to 5x level that you talk about? Or is it different in this scenario?

[Arun Jain, executive]

What is 4x to 5x sorry?

[Pravesh Kochar, analyst]

Like the cost savings that you can have versus the traditional method that they might be using for doing this process?

[Arun Jain, executive]

It will be 20%, I think the savings, as of now, is not fully quantified. First of all, it's effectiveness, which is more counted in our customer when you're talking about it's like GeM, the Phase 1 of GeM. We identified transparency and speed at which you can do the procurement. At Stage 2, you start looking at the cost saves, which can be in the range of 8% to 15% cost save from an absolute procurement price. But that comes in the Phase 2. Phase 1 is efficacy and transparency.

[Praveen Malik, executive]

Yes, 2 are there. I think, Purani put his hand down again. There is one repeat is there in case you want to take it for Sushovan again? Purani was there, but I guess he left.

[Sushovan Nayak, analyst]

I hope my voice is audible. Sir, just one question, sir. On the Palantir thing that you had mentioned. So Palantir, as you mentioned was first into U.S. defense, got into enterprise AI and then gradually it's getting into BFSI. While the way you are doing or evolving is you have been very, very strong in BFSI and you are gradually moving towards the enterprise.

In the process -- enterprise AI is what I mean, so, which is non-BFSI. So in the process of this, do you believe or do you envisage that Palantir may cannibalize into you? And you obviously did mention that Palantir being so big, it will be very difficult for you to cannibalize into Palantir, right? So just wanted to get your thoughts on this evolution as such.

[Arun Jain, executive]

What is the exact question, whether it will be difficult competition to Palantir, obviously...

[Sushovan Nayak, analyst]

No. So the other way around is what I'm basically referring to Palantir getting into the BFSI part of the AI business, right? Because they are starting to get into that is what...

[Arun Jain, executive]

The market is too big Sushovan. We are not looking 100% market share. We are looking at 10% market share, good enough for us. We can coexist. 3-player market can coexist. 3-player market is a very good market to coexist where we can compete in and fight it out. Remaining in the top 3 in AI enterprise space is a great celebration for Intellect.

[Praveen Malik, executive]

I think Purani Ji has left. With the last one, one more is there. Tushar Verma from [indiscernible]

[Unknown Analyst]

I just need one clarity on your guidance, like you said, the AI-based revenue by end of this year will be around INR 200 crores. So is this from this new AI Purple Fabric only or it will include some other AI revenue as well? And is this INR 100 crores is for the whole year? Or it will be a per quarter figure?

[Arun Jain, executive]

No, it's a whole year. All -- everything is Purple Fabric. Every AI is Purple Fabric. There's no other thing called AI.

[Manish Maakan, executive]

Thank you Everyone.

[Praveen Malik, executive]

Thank you, everybody, for joining us today. In case you have any other questions, please write to us, and you'll be replied on the same. Thank you.