XTGLOBAL - XTGLOBAL INFOTECH LIMITED Share Price

During the Q1 FY26 Earnings Conference Call, management provided a positive outlook for XTGlobal Infotech Limited. They noted that the company is well-positioned to capitalize on sector recoveries and anticipated growth in high-potential areas such as automation, cloud services, and AI-driven solutions. Key forward-looking points included:

1. Revenue Growth: The company's revenue reached Rs.92.30 crores, a 6% increase from Rs.87.04 crores in the previous quarter and a remarkable 87.2% increase from Rs.49.30 crores a year earlier. This growth was attributed to increased demand for automation and finance outsourcing, as well as the addition of 10 new client accounts during the quarter.

2. Financial Performance: EBITDA was reported at Rs.6.61 crores, reflecting a 61.1% quarter-over-quarter increase and an 18% rise year-on-year, while margins improved by 7.2%. EBIT also saw substantial growth, rising to Rs.4.91 crores, which is more than double the last quarter.

3. Strategic Initiatives: The management emphasized strengthening their AI and intelligent automation offerings and expanding into premium consulting services. They projected long-term margin enhancement due to improved operational efficiency and disciplined hiring practices.

4. Deal Pipeline: The company highlighted a strong deal pipeline in areas such as cloud services and finance outsourcing, supporting anticipated revenue growth. They are focusing on high-margin recurring revenue streams.

5. Acquisitions: Management mentioned plans to continue pursuing acquisitions, having already integrated Network Objects as a subsidiary, which contributed to the significant revenue growth.

6. AI Integration: An appointed head for the AI practice is expected to spearhead initiatives and respond to RFPs, with potential revenue contributions anticipated in the next 12 to 18 months.

Management expressed confidence that these developments would not only enhance immediate financial performance but also position the company favorably for sustainable long-term growth in the evolving IT services landscape.

Q1 FY26 Earnings Conference Call Q&A Overview:

Question 1: "EBITDA and PAT saw a sharp jump this quarter despite modest revenue growth. Can you break down the operational factors that drove this margin expansion and whether you see it sustaining in the near term?"

Answer: Yes, the margin expansion was primarily due to significant cost control. Other expenses decreased from ¥166 lakhs to ¥122 lakhs. Additionally, ESOP expenses fell from ¥154 lakhs to ¥60 lakhs. This trend should help sustain margins in the near term as we maintain our focus on expense management.

Question 2: "What were the key differentiating factors that helped us win U.S. contracts recently, and how do you plan to leverage this success for future international government contracts?"

Answer: We shifted our focus to government contracts after successfully landing a project in Texas. By strengthening our on-site sales team and actively pursuing RFPs in the government sector, we expect to win more contracts like this in the future, enhancing our portfolio.

Question 3: "The consolidated revenue jumped 87% year-on-year. Is there any new project or acquisition driving this?"

Answer: Yes, this increase is largely due to Network Objects becoming a subsidiary, which is a U.S. company. This transition has allowed us to include its revenue in our consolidated figures, significantly impacting our top line.

Question 4: "What are the margins and profitability expectations for this new acquisition?"

Answer: The new subsidiary's profitability will directly benefit our company since 51% of its earnings will be attributed to XTGlobal. Their revenue is approximately $22 million for the last year, which enhances our financial outlook.

Question 5: "What other projects are in the pipeline to be expected?"

Answer: We have ongoing sales efforts across sectors. In the last quarter, we won 10 new clients and submitted several RFPs, including ones worth over $1 million. We believe these efforts will contribute to both top-line and bottom-line growth moving forward.

Question 6: "How would the AI practice initiative contribute to revenue growth in the next 12 to 18 months?"

Answer: We recently appointed a head for our AI practice, and we expect to see small wins in AI initiatives over the next 12 months. This aligns with our growth strategy focusing on digital transformation, particularly in AI and cloud services.

Question 7: "How have geopolitical factors, like the US H-1B policy, impacted us?"

Answer: Historically, we were more dependent on visa-related work, but now our revenue is less reliant on H-1B. This shift means that changes in immigration policy will have minimal impact on our current operations.

Question 8: "Are there plans for acquisitions in the future?"

Answer: Yes, we are constantly on the lookout for acquisitions that complement our services or expand our geographic reach. We have ongoing efforts to identify suitable companies for acquisition, ensuring they align with our growth strategy.