Summary of earnings call for Intellect Design Arena Ltd published on 01 Aug, 2025

Intellect Design Arena Limited
Q1 FY26
Call date · July 25, 2025

1 · Management Commentary

Key Positives

• Strong start to FY26 with total income of ₹734 Cr, up 18% YoY; EBITDA at ₹176 Cr (+28% YoY); PAT at ₹94 Cr (+27% YoY).
• License-linked revenues (LLR) at ₹389 Cr, now over 50% of total revenue; ARR stands at ₹1,041 Cr.
• Robust cash and equivalents of ₹976 Cr; collections at ₹586 Cr.
• 17 new deal wins and 15 digital transformation go-lives in Q1, including three strategic US deals marking eMACH.ai’s entry into the US.
• Purple Fabric AI platform launched, generating 400+ leads and a pipeline of nearly ₹800 Cr in 60 days.
• Deep funnel of ₹11,300 Cr, with ₹9,200 Cr in active opportunities.
• Recognition from Gartner, Chartis, and Celent for product leadership.
• Key leadership hires to support global scale-up.

Key Negatives

• Higher DSO due to GeM receivables and milestone-based project invoicing; management expects improvement in coming quarters.
• Margin dilution from Central1 acquisition, though acquisition is profitable.
• Revenue lumpiness persists due to large license deals.

Forward Guidance

• Capex: Planned investment in Purple Fabric increased from ₹100 Cr to ₹130 Cr for FY26; ₹10 Cr already invested in Q1, with ₹20–30 Cr more over next three quarters.
• New products/segments: Purple Fabric AI platform scaling globally; expansion into non-BFSI sectors (procurement, retail, pharma) underway.
• Expected client wins/losses: Strong pipeline in US, Canada, India, and Europe; focus on Tier 1 banks and cross-sell in Canada post-Central1.
• Revenue/margin outlook: AI revenue expected to reach ₹200 Cr in FY26; EBITDA margin guided at 22–25% (may fluctuate with license deals); long-term aspiration for ₹4,000 Cr revenue and ₹1,000 Cr PBT in three years.
• Strategic initiatives: Consulting services to be launched; focus on embedding AI across all products; expansion of DTC (Digital Technology for Commerce) in incubation.

2 · Q&A Highlights

Q 1 (Composite): How is the Purple Fabric pipeline converting to business, and what are the main enterprise use cases?
A (Management):
• 400+ leads generated; 87 leads responded, 21 in advanced discussions; use cases span insurance, banking, wealth, compliance, and operations reimagination; embedded within eMACH.ai suite for differentiated AI adoption.

Q 2 (Composite): Will increased AI investment (₹130 Cr) drive meaningful monetisation and what is the expected AI revenue?
A (Management):
• AI revenue expected to reach ₹200 Cr in FY26 across insurance, APX, CPX, Wealth, GRC, and new lines; investment fully expensed in P&L, with margins managed at 20–25%.

Q 3 (Composite): What is the revenue model for Purple Fabric and eMACH.ai—subscription, outcome-based, or other?
A (Management):
• Multiple streams: pilot fees, implementation, subscription/transaction-based, platform licensing (core-based), license pricing, and AMC; contracts typically 3–5 years with annuity and volume-based growth.

Q 4 (Composite): What is the impact of Central1 acquisition on margins and Canadian market strategy?
A (Management):
• Central1 is profitable but at lower margins; strategic for Canadian market scale, 170 new customers, 140 employees added; now treated as a home market with cross-sell opportunities.

Q 5 (Composite): How does Purple Fabric compare to Palantir and C3.ai, and what are its differentiators?
A (Management):
• Differentiators: Enterprise Knowledge Garden (EKG), digital experts (not just agents), open LLM architecture; strong governance; feedback from clients highlights scalability and flexibility.

Q 6 (Composite): What is the outlook for DSO, GeM receivables, and currency mix changes?
A (Management):
• Higher DSO due to GeM and milestone billing; GeM receivables reducing; currency mix shift due to increased CAD share post-Central1.

Q 7 (Composite): Is Purple Fabric expanding beyond BFSI, and what is the TAM?
A (Management):
• Expansion into procurement, e-commerce, pharma, and retail underway; pipeline in non-BFSI sectors being developed with SI partners.

Q 8 (Composite): What is the expected revenue run-rate and sales cycle for the ₹11,300 Cr funnel?
A (Management):
• Revenue run-rate expected to reach ₹800 Cr per quarter in next 2–3 quarters; typically, every four quarters add ₹100 Cr to run-rate.

3 · Other Key Numbers

• Total income: ₹734 Cr (Q1 FY26)
• EBITDA: ₹176 Cr
• Profit after tax: ₹94 Cr
• Collections: ₹586 Cr
• Cash and cash equivalents: ₹976 Cr
• License-linked revenues (LLR): ₹389 Cr (over 50% of revenue)
• Annual Recurring Revenue (ARR): ₹1,041 Cr
• Purple Fabric pipeline: nearly ₹800 Cr in 60 days; 400+ leads generated
• Overall funnel: ₹11,300 Cr; active opportunities: ₹9,200 Cr
• New deals: 17 won; 15 go-lives in Q1
• Central1 acquisition: ~170 new customers, 140 employees added
• Currency mix: USD 45%, GBP 14%, CAD 13% (as per Q&A)
• AI investment: ₹10 Cr in Q1; total planned ₹130 Cr for FY26
• AI revenue guidance: ₹200 Cr for FY26 (all from Purple Fabric)
• EBITDA margin guidance: 22–25%
• Long-term aspiration: ₹4,000 Cr revenue and ₹1,000 Cr PBT in three years
• Subscription deals: typically 3–5 years
• Win rate/sales cycle: ~₹100 Cr increase in quarterly run-rate every 4 quarters
• Number of SI partners for Purple Fabric: more than five (exact number not disclosed)
• DSO: Not disclosed (higher due to GeM; expected to improve)
• Size of Canadian/US deals: Not disclosed (Canadian deal described as “very large”; no specific numbers)

Note: This is an AI generated summary of the earnings call. There may be inaccuracies in the summary. Please refer to the original transcript before making investment decisions.