Saksoft Ltd

MR. VINAY MENON – MONARCH NETWORTH CAPITAL LIMITED

Page 2 of 13 Ladies and gentlemen, welcome to the Saksoft Q4 FY '25 Earnings Conference Call hosted by Monarch Networth Capital Limited.

As a reminder, all participant lines will be in listen-only mode and there will be an opportunity for you to ask questions at the end of today's presentation. Should you need assistance during the conference call, please signal an operator by pressing "*" then "0" on your touchtone phone.

Please note that this conference is being recorded.

I now hand the conference over to Mr. Vinay Menon from Monarch Networth Capital Limited. Thank you, and over to you, sir.

Thank you, Riya. Good afternoon, everyone.

On behalf of Monarch Networth Capital, it's my pleasure to host the senior management of Saksoft. We have with us Ms. Avantika Krishna - Chief Sales Officer of the Company and Mr.

Niraj Kumar Ganeriwal – CFO and COO of the Company. Mr. Aditya Krishna will not be able to join due to some personal emergency.

Now I will hand over the call to Ms. Avantika for her opening remarks. Thank you.

Thank you, Vinay. Hello, and good afternoon everyone. Welcome to our earnings call to discuss the performance of the 4th Quarter and Financial Year 2025.

Let me start off by briefing you on the key business highlights of the 4th Quarter and full year ended 2024-25, after which my colleague Niraj – COO and CFO, will brief you on the financials.

As you all might be aware, the IT sector has been facing several headwinds globally. Despite these, I am pleased to say that we managed to report a good performance during the periods under review.

During Financial Year '25, we made significant strides by making strategic investments in building AI frameworks and accelerators that help our clients accelerate innovation, enhance engineering productivity and confidently scale their AI initiatives. Our AI accelerators, including SakPilot, Quality360, SolidHub, and Sakcelerate, these accelerators enable transformation for our customers by providing a strong foundation for automation, agility, and intelligent operations across the software product engineering lifecycle.

Parallelly, we accelerated our go-to-market initiatives by onboarding high-caliber sales talent and expanding our client-partner network. These efforts have been aimed at deepening customer relationships, improving market coverage, and driving sustainable growth. We are beginning to see early traction from these initiatives.

A notable highlight of the year was the addition of a new client in the banking and financial services vertical, contributing an annual contract value of approximately USD 0.5 million. This

Page 3 of 13 win not only validates our focused approach to high-growth verticals, but also demonstrates the growing relevance of our digital solutions.

On the financial front, the Board has recommended a final dividend of INR 0.40 per share, 40% of face value of INR 1, bringing the total dividend for Financial Year '25 to INR 0.80 per share, 80% of face value, in line with our commitment to delivering shareholder value.

Now I would request my colleague Niraj to give you the financial highlights for the quarter under review.

Thank you, Avantika. And thank you, everyone, for taking the time and joining our earnings call today to discuss the results of the 4th Quarter of the Financial Year 2025 under review.

For the 4th Quarter of the Financial Year 2025, revenues were reported at approximately INR 240 crores, reflecting a robust year-on-year growth of 23.1%. The operating EBITDA for the quarter stood at INR 36 crores, which is 9.3% increase year-on-year with the EBITDA margins at 15.17%. The net profit for the quarter was around INR 30 crores, which grew 29.4% year-on- year and 11.1% quarter-on-quarter with the profit after tax margins being at 12.52%.

For the full Financial Year 2025, the revenues were reported at INR 883 crores. This represents a growth of around 15.9% year-on-year. The operating EBITDA for the year stood at INR 146 crores, which grew by 7% year-on-year and the EBITDA margins for the year were at 16.56%.

The net profit was at around INR 109 crores, which grew year-on-year by 13.1% with the PAT margins being at 12.32%.

Now coming to revenue split by geography for the current year. The Americas contributed to 42% of our total revenues, whereas Europe contributed 23% and the remaining 35% came from Asia Pacific and other regions. The on-site revenue continues to be at 45% and offshore at 55% of our total revenues.

The revenue split across verticals for the Financial Year 2025 are as follows: BFS contributed to about 30% of our revenues, emerging verticals around 46%, logistics 13%, and commerce contributed to about 11%.

Coming to some of our customer metrics, Saksoft has around 15 customers of USD $1 million plus revenues. The total employee count at the end of the quarter stood at 2,618. Out of which, 2,373 were technical, with the utilization level of the employees excluding trainees, being at 85% for the Financial Year 2025.

That concludes the updates on the quarter. And we can now open the floor for the Q&A session.

Thank you very much. We will now begin the question-and-answer session. First question is from the line of Vinay Menon from Monarch Networth Capital Limited. Please go ahead.

Page 4 of 13 Hi, sir, congratulations on a very good set of numbers. So, just one thing, sir. We have now mentioned this emerging vertical in this quarter, and we have changed the segmental data a bit.

So, can you give me some clarity? Because we did not mention this as a vertical in the earlier quarters. So, what has changed as such?

Hi, Vinay. So, nothing has really changed with regards to the segments. The focus is still the same. We have just renamed them. And so Emerging Verticals originally was Hitech, Media and Telecommunications or Hitech, Media, Utilities, HMU.

Great. That is helpful. And in terms of growth guidance, any guidance over '26? Because we are seeing some relief from tariff issues and all. So, any kind of guidance you can give for '26?

So, Vinay, it's really difficult to give guidance, but obviously we have targets. And the objective for the current year for the management team is at least to do a growth which we have done in the previous year and might be try and do better. But at a high level, we are looking at a range of Rs. 1,000 crores to Rs. 1,100 crores for the Financial Year '26.

That really helps. And in terms of verticals, what verticals will be leading this? Like what could be the main drivers from vertical side?

In terms of verticals, I think one of the focus areas, whilst Avantika did mention that the Emerging Verticals is more of a rebranding for Hitech, Media and Utilities. I think that is a vertical where we will see a lot of traction, growth and progress. That is also primarily because of the recent investments which we have done.

If you note the acquisitions which we have done on the Salesforce and on the ServiceNow area, which is around intelligent products, we do believe that a lot of work in these areas will be on the new age verticals and that's a vertical where we might see some significant growth in the coming year. Duly supported by BFS, but I think BFS and Emerging Verticals should see a better growth.

Thank you for that clarity, sir. I will join the queue.

Next question is from the line of Vikas Srivastava from RBC Financial. Please go ahead.

Good afternoon. You know what I am hearing on the call, the first question is this, that we are still growing in the range of 16%. A couple of years back, we had made a mission statement of $500 million by 31st March 2030, if I remember, which would require us to compound at about 26%, 27%, 20%, somewhere in that range percent CAGR per year to get there. We have done about $100 million this year, the last financial year.

So, what are we looking at? Is that vision? Is that target? Is that goal still in sight? Or is it something which we are not reaffirming now? And even with your current target of Rs. 1,000 crores to Rs. 1,100 crores, which you are talking about, we are still looking at 10% to 15%

Page 5 of 13 growth per year, which is nowhere close to what our vision statement was, if I may call it a target or a vision statement.

And the other thing was that, you know, that was the first question. Second question was that your stock option, which you allotted to your employees for the last two years, most of it would still be probably a little under water. How do you find stock options and retention of senior management as an instrument of compensation paying out when, at least optically right now, the stock options are not accretive to employee compensation for the last two years?

So Vikas, I will try and answer the first question and then I will hand it over to Niraj to answer your second. The first question on your vision statement of 500 million by 2030, as a Company, we are confident that we are still going to make that vision that we promised.

Yes, we have, as you know, that there are headwinds in the U.S. And that's why the guidance that Niraj has given is a basis that as we don't know what will happen in the U.S., Trump keeps changing his mind every day. So, we are all uncertain.

But I think the last one year we have really focused on our positioning. And so we have invested a lot of time in our AI accelerators, like I mentioned, but we have also invested a lot on the platform side. And that is what we are seeing over the next two years, we will definitely build our pipeline.

So, yes, we are being a bit conservative on the guidance, but that's due to the headwinds that we are seeing. And I think from a confidence level, we are seeing pipeline build. And as of now, no negative impact.

Coming to your second part of the question, because on the ESOP options, you have rightly pointed out that most of them would be under the water. But I think that's the nature of this compensation criteria. The Management Team and the senior people are very, very committed.

And other than a couple of them, the key management team and number of them have been with the Company for 10 plus years. So, they have seen cycles, and I think it's only a temporary cycle.

The team is committed and all of us are working towards that goal of US$500 million. And everyone knows that as we move forward and we are inching closer to those targets, these options will give the return which they expect. So, it is definitely not a deterrent. In fact, any new senior hire we look at, they are in fact more keen to get options because this is still considered one of the most rewarding mechanisms.

So, if I may just repeat what you said that we are still in the next five financial years at an average CAGR of anywhere between 25% to 30% is not off the table. It's still a distinctly clear possibility or a goal which the management is aimed at. That is one take away from me.

The second question was, what are we talking about in terms of EBITDA margins etc. You know, we have been investing in sales and platforms for a while now. We were, if I remember

Page 6 of 13 right, and I could be wrong at the time, said that we should be looking at about 18% in this competitive market. So, are we still saying that? Is there pressure on margins? Will the market become more competitive? Or do we need to pass on more? Those were the two questions which I had.

So, the first one, yes, just to affirm what Avantika had said and your statement that yes, we are still looking at the 500 million, the CAGR still is expected at 25%-30%, CAGR being CAGR, so one year could be lower, other year could be higher. But as a team, we are all still focusing on that number. It's not a moving target. And we are constantly looking at how we can achieve the 500 million.

On the second point, EBITDA, yes, 18%. In fact, in the current year itself, you would have seen it’s slightly come down. We are closer to 16.5%. Whilst we are growing and reinvesting, there will be a short-term drop. That's mainly because of the hiring of the salespeople, investment in accelerators, investment in the center of excellence capabilities which we are building up. But those are maybe a year or year-and-a-half phenomenon. And once they start kicking into results, it should go back to 17% to 18%. But, rightly said, for the current year, we were at around 16% plus. And for the coming year, we could be only on a similar range, if not higher.

If I may follow up with a few more questions. I did see in the investors, shareholders, there is a 2% shareholding by FPI. Is there something new in this corner? Has it been carried forward from the 2% FPI shareholding? Has it been carried forward from previous years?

They have been there. So, the FPIs have been in and out, and their shareholding has been continuous. It may not be the same. It may be some of them would have come, some of them would have gone. But the shareholding of FPI, FII has been around this percentage of slightly higher in the last 24-36 months.

And in terms of our sales team, we are doing a lot of hiring in the last two years. In terms of any attrition, have we lost people? And that was one question. And another question was on we have done a lot of small acquisitions. Are we now talking about more acquisitions in the pipeline in the near future or are we talking about organic growth? Is the emphasis more on organic growth now to meet our targets of turnover?

In terms of acquisition, Vikas, whilst we have done a good set of acquisitions, have acquired a lot of capability, and the focus will be on the organic, but historically, we have seen that the growth has come both from organic and inorganic. And if there is something which we come across as a good asset, we will be happy to acquire. But currently, the focus is more on the

Page 7 of 13 organic side, especially with the intelligent platforms, the Salesforce, the ServiceNow capabilities which we have acquired. I think that's going to be one of the push factors in the current year for us.

That's good to hear. So, one last question. In terms of all our acquisitions, have they completely been integrated into Saksoft, everything is done and dusted as far as integration is concerned, and whatever benefits from these acquisitions should be now accruing, now accruals have consolidated Saksoft?

Of course, we have a very clear plan for integration because it's a 30, 60, 90 day plan. And by the 90th day, the teams are integrated, the sales team, delivery team, support team. So, I think whatever we have acquired is fully integrated. In fact, the good thing is some of the growth which has come in this quarter is also as a result of the capability which these acquisitions have brought in, taking them to the existing set of customers. So, it's been a good integration which we feel, and it's going in the right direction.

So, therefore, what you are saying is that the synergies should show in full now going forward.

Not only the integration, but the synergies you were looking for. Absolutely. Absolutely, Vikas.

Next question is from the line of Rohit from ithought PMS. Please go ahead.

Sir and ma’am, just this question, which was just asked previously on this, your ambition to be $500 million. So, I just wanted to sort of, I am sorry, new to the Company.

So, my question was on your aspiration to be a $0.5 billion sales Company, top line Company by FY '30. So, sir and ma’am, given this is a very crowded space in terms of IT services, so what gives us that edge? What is the niche that we are sort of focusing on? I am sorry, I am new to your Company. So, maybe this question is very basic, but just wanted to get your perspective on what are the white spaces or what are the gaps or areas that you are going after where you have seen that this opportunity to scale up from $100 million to $500 million.

Sure, Rohit. So, as you are new to the Company, I will give you a little bit of history. You know, we have traditionally been focusing on domain-specific technology solutions. And the domains that we focused on were a small handset of them, like one was banking and financial, the second is Hitech, Media and Utilities, the third is logistics, and the fourth is commerce. And the last, I would say, five to six years, we were focusing on these four mainly and really building our solutions that are catered to these industries in specific.

Very recently, maybe the end of last year, we engaged a small consultancy firm and felt it was a need to transform in this very evolving industry that we are in. And AI being the front of everything, we felt it was important to also transform. Otherwise, we won't be relevant tomorrow.

So, last year we spent a lot of time, like I mentioned, we spent a lot of time and investment in AI frameworks and also AI platforms. And we have now focused our capabilities on intelligent products and intelligent platforms. So, what we mean by intelligent products is helping customers in their entire product engineering life cycle or software development life cycle, right from building new products to enhancing existing products or even sustaining these products.

And how can we leverage AI in all these three initiatives.

And the second area is intelligent platforms, where we have chosen five platforms that we want to invest in. And the acquisitions last year added two of those five. And these five are including Salesforce, ServiceNow, Databricks, Snowflake and HCL Commerce. And we are just sort of helping customers modernize, implement, customize, help them sort of optimize in these platforms. And so these are the areas that we are trying to create a niche for ourselves in a crowded market.

Yes, you are right, it is crowded. And so we see ourselves also competing with the larger players, Tier-1, Tier-2 players. But I think because of our size, we are known to be flexible. Our turnaround time is quick and our customers like us for quick turnaround time and our agility.

So, that's how we are creating a differentiation in the market.

Thank you, ma’am, for that elaborate answer. And if I caught that answer correctly to the previous participant, you mentioned that the bulk of this incremental growth that you see, that you will probably do, will be organic. Is that the right understanding?

Yes, so it will be a mix of organic and inorganic, but obviously organic has to be in the forefront.

And so today if I see the vertical that you mentioned in terms of your revenue mix, so in this quest of this next profile, do you see this mix changing or do you think this mix will only be the same and you have a lot of opportunities to go deeper into your existing clients or existing verticals?

I feel that we have a lot of room to grow in these four verticals. So, I don't see us adding on at this point in time. I think Hitech is definitely a new area for us. We started working on it and focusing on it only last year. So, the market is huge there, and that's why we don't feel that there is a need right now to add on verticals.

Thank you, ma’am, and all the best for you for this year.

Next question is from the line of Amit Jain from Monarch Networth Capital Limited. Please go ahead.

Congratulations on a good set of numbers. So, actually, I again am dealing with the previous participant's question regarding the strategy of the differentiators. So, I just want to get more clarity on when we say intelligent products, so does it mean that are we collaborating with these

Page 9 of 13 products like those companies who are manufacturing these products like Microsoft? So, when we say intelligent products, which are our clients in this case?

So, when we say intelligent products, it is independent software vendors that we are referring to, that will be our customers. And these ISVs, we call them, is selling products to the market. So, for example, a large ISV would be Salesforce or ServiceNow. Those would be enterprise ISVs.

So, intelligent products are two ISVs in space. Did I answer your question? Because the line was a little unclear. So, I am just wondering if I answered the question right.

I just want to ask that who were our clients in this case, when we mentioned about intelligent products. So, Avantika, once more, recently one of the peer companies has highlighted a major loss, one of their vendors in this case, because of that, because of the AI has become a big disruptor and the contract value has drastically come down. So, are we seeing that threat?

Because as I said, again, there are a lot of disruptors which are happening. So, how are we preparing ourselves? Because that can hit us as well. So, how are we preparing for that?

And in terms of hiring, so just if you can highlight whether are we going to, okay, you have highlighted that yes, we are hiring good space people. But on the engineering side, engineer side, are we moving up to scale, maybe going for some hiring PhDs, going to premier institutes, engineering institutes to get that domain expertise to move up in the value chain?

So, Amit, we are hiring across the value chain. And what is working well for us, especially on the engineering side and the AI side, is a lot of work we are doing is building these frameworks in-house. And we have a regular mechanism of training and upskilling our resources. So, whilst we might need hand-picked senior guys who might be required, but at the end of the day, it's more training, learning and development and upskilling our resources which will ultimately benefit us.

Niraj, just lastly, on the margin side, I can understand and appreciate that, yes, and we don't mind if the operating margins have come down a bit. But is it a new normal going forward? Do we, in our modeling, should we presume that this will be the new normal, maybe the 16%-17% band?

Maybe for a year or two, Amit, I would say that it would be a new normal because like I have said five years back when we were about $50 million and when we moved up to $100 million of revenues, we were about 12%-13% of margins which went up to 17% to 18%. So, the costs do come in early, but they don't stay along too long when the results start kicking. But I think for the next 12 to 18 months, it would be realistic to say that this is the new normal.

Page 10 of 13 Thank you so much, Niraj, and congratulations once again. Thank you, Amit. I appreciate it.

Next question is from the line of Ritika from SR Capital. Please go ahead.

Hi. So, my first question is like any light on account mining strategy?

Yes, we have, I think if you had attended our last earnings call, we were very clear that we have now divided the sales team into account farmers and hunters. So, no salesperson is doing both.

And that allows them to have a clear focus. So, account mining, there is definitely a lot of focus.

We have named strategic accounts. And for each strategic account, we have a dedicated client partner close to the customer. So, on the ground meeting the customer on a daily basis. Also a clear strategic plan for them and how do we grow. So, yes, there is a clear account mining approach and focus is given on that front.

And also our contribution has reduced in the top 5, 10 and 50. So, like, any specific reasons for that?

No, there is no specific reason. In fact, the focus has been that customers who are in the lower range, we try and bring them up. Because as a part of account mining and strategy, we do categorize the customers into A, B, C category and those in the B category which have a good potential to grow, the objective is to try and see how we can increase the revenue share from us in them, which is why you would have seen that we also had a new customer in the half a million range this time. There is no loss in the existing set of customers. It's just that we are focusing more on, I won't call it the tail, but on the next 10 set of customers whom we can mine and make it more better.

Just last question. What is the utilization for this quarter and what is the max that we can do?

So, the utilization for the quarter is around 85%. I think, expecting anything beyond that would be definitely challenging. The reason we have also been at around 85% is the attrition levels have been low and we are investing in capability and the Centers of Excellence. That could be quarters because of some efficiency, we could see 100-150 basis points higher. But I think 85%- 86% is typically the high end of the utilization for the Company of our size.

Next question is from the line of Anjali from Value Capital Limited. Please go ahead.

Sir, two questions. One is, could you highlight the reason for the increase in DSO from FY '24 to '25? And how do you expect that moving ahead?

Sorry, can you just come back on the question, please?

Page 11 of 13 So, I was asking for the reason for increase in DSO from FY '24 to FY '25, and how to expect this going ahead?

I think we have increased almost from 67 days to 74 days. I think those are short-term blips. We really don't think it will go beyond 75 to 80 days. It's also because of the texture of revenues, if you see that the contribution from the Asia Pacific and other regions is almost 35% plus. So, the payment terms in most of the APAC is anywhere between 60 to 90 days, whereas in the U.S. geography, it is 30 to 60 days. So, I think 75 to 80 is where the DSO will be there, but nothing of concern.

Thank you for that. And just another one that I see that the debt has increased despite we have cash in our balance sheet. So, what is the specific reason for these same? And are we expecting to reduce the debt? And when can we expect that?

So, the increase in debt is a short-term phenomenon because you rightly pointed out there is adequate cash on the balance sheet. The only challenge is it is spread across between the overseas geographies and India. This debt was taken for the acquisition, which we did in October of last year. But it is short term, and we strongly believe that in the next six to nine months, they should be repaid off. So, it's basically a short-term debt. That was helpful.

Next question is from the line of Harris Ahmed, an individual investor. Please go ahead.

I am just trying to understand about the Company's current operations. So, we have always mentioned that we want to increase our exposure to U.S., but our contribution remains around 42%. So, can we expect this to change going ahead?

And I had one more question. So, we were not able to add any large deals, I mean, deals above $1 million if I am not wrong. So, going forward in FY '26, can we hope for a change in this? Like any larger deals in that aspect?

Yes, yes, that's our focus. And that's the plan. In most of our engagements, we start small. So, if we started with a new customer or a new project or a new space of service, we start small, and we showcase our capability and then we have a larger deal. But now we are trying to change our approach and trying to start with larger deals because our target market would have also increased. So, yes. That's the plan. The pipeline should have more larger deals.

Thank you for the response and that answers my question.

Page 12 of 13 Next question is from the line of Miloni Mehta from Monarch Networth Capital. Please go ahead.

Thank you for the opportunity. Can you throw some light on discretionary spending across vertical and how has it been on the macro level? Also, I want to understand what percentage of our business is dependent on discretionary spending.

Not much. We are not seeing any impacts on the discretionary spend. Right now conversations are happening, pipeline is building. So, at this point in time, we are quite positive.

And overall, how has it been across the vertical? Is there any slowdown in any of the verticals?

How is the trend? Can you put some light on that?

No, no, no slowdown in all four verticals. You know, we have a healthy pipeline in all four, a lot of conversations. And the BFS and the emerging verticals, I don't see any impact, and the industry is strong and customers are speaking to us about many conversations in the roadmap.

And secondly on financial point of view, I see that there is an increase in our third-party charges.

So, moving ahead, should we consider this as the run rate or what has changed there? Can you throw some light there?

Yes, actually, when you are saying that you are seeing a spike in the third-party charges, it's actually a regrouping from the other expenses line to the third-party charges. Because these are some of we have partnered with some of the tools and licenses like HCL, the Salesforce, the Business Objects. And when there is a sale of these which happen to the customers, these are predominantly in relation to third-party licenses which are bought and sold.

So, the regrouping has been done in the right line today. Earlier it used to be a very insignificant component. But since the amount was slightly higher this year, it has been regrouped. And like you rightly said, it would be more appropriate to treat this as the basis for your forecasting going forward.

I just have one more question from the cash flow point of view. I see that we have sold some Rs. 17.5 crore of investment. So, what is this exactly?

We have not sold investment. See, what has happened is, at the group level, if you have been following, we have merged three of our subsidiaries, Dreamorbit, 360Logica, and Terafast.

These subsidiaries, which were acquired way back in 2014 and '16, they have been merged with Saksoft Limited. Now, whatever liquid funds were there, pre-merger, we had to liquidate it as a part of the process so that the transfer between the companies happens easily. So, it's just the liquid investments which were sitting in some mutual funds were liquidated and have been reinvested. They are not any third-party investments as such.

Page 13 of 13 Thank you. As there are no further questions from the participants, I now hand the conference over to management for closing comments.

We thank everyone for taking out time to participate in this call and for their interest in Saksoft.

I hope we have been able to answer your queries. In case of any other questions, please reach out to us or our Investor Relations Advisor, Valorem Advisors. Thank you for joining us.

Thank you. On behalf of Monarch Networth Capital Limited, that concludes this conference.

Thank you for joining us, and you may now disconnect your lines.