Financial Performance for Q2 FY27 (All figures in INR)

  • Revenue: ₹85.59 crores against ₹79.45 crores in previous quarter (Q1 FY27), representing 7.7% quarter-on-quarter (QoQ) growth and 24% year-on-year (YoY) growth.
  • Normalized EBITDA: ₹17.77 crores against ₹16.87 crores in previous quarter.
  • Normalized PAT: ₹14.3 crores against ₹16.9 crores in previous quarter.
  • PAT: ₹14.29 crores against ₹14.22 crores in previous quarter.
  • EBITDA Margin: Stood at 20.8% for the quarter.
  • Cash and Cash Equivalents: ₹198 crores as of quarter end, against ₹184 crores at end of previous quarter.

This marks five consecutive quarters of QoQ growth for the company.

Strategic Business Direction

Management outlined a strategic vision to position Subex at the intersection of intelligence, decisions, and economic integrity. The company sees opportunity in providing AI-driven solutions that ensure economic integrity of autonomous decisions in telco environments, particularly as AI systems increasingly make decisions with financial consequences.

Key elements of the strategy:

  • Focus on establishing Subex as a platform-neutral integrity and decision assurance provider
  • Leverage three decades of domain expertise in telco economics
  • Address emerging challenges in satellite networks, non-terrestrial networks, and digital financial services
  • Pursue modular, independent point solutions rather than a platform approach
  • Architecture of Autonomy (AOA) approach with AI agents working with protocols like A2A, MCP

Operational Highlights

  • Managed Services: Continues to be important despite AI advancements due to cross-telco pattern recognition capabilities
  • Product Development: HyperSense implementations showing 15-20% reduction in deployment timelines through Library of Controls
  • AI SDLC: Enabling delivery of more features (14-15 features per sprint vs previous 10)
  • PEM (Partner Ecosystem Management): Modernized product receiving good market response with multiple deals

Investments and Cash Utilization

  • Minority Investments: Investments in PrivaSapien and OnGrid appreciated approximately 5x and 2x respectively relative to original investment values
  • Cash Utilization: Primarily targeted at inorganic growth opportunities; buybacks not possible due to negative retained earnings
  • ESOP: Company plans to buy shares from market for employee fund, spaced out over time subject to UPSI constraints

Market and Geographic Performance

  • Growth Context: Company growing 3-5x faster than telco industry growth of 2-3%
  • Currency Impact: INR depreciation benefit of approximately 8-10% YoY, 2-3% QoQ
  • Geographic Revenue: India contributes only 3% of revenue (increased from 2%); limited growth expected due to Jio's in-house stack strategy
  • New Logos: Typically 70% of annual revenue is recurring/backlogged; new orders contribute balance with 40-50% revenue recognition in first year

POC and Customer Engagement

  • Three technical POCs successfully completed in last quarter, meeting all exit criteria
  • Sales team working to convert these into commercial arrangements
  • AI agent squad solution seeing good market response with 90-day deal closure timeframe
  • Active conversations with multiple customers for AI agent solutions

Challenges and Outlook

  • Geopolitical Factors: Middle East situation and US elections identified as potential wildcards
  • Growth Guidance: Aspiration for high single-digit to double-digit growth with margin durability
  • Investor Engagement: Management committed to continuing investor meetings and roadshows, working on plan with UI

Corporate Participants

  • Mr. Pratik Jagtap (EY Investor Relations)
  • Mrs. Nisha Dutt (Managing Director & CEO)
  • Mr. Sumit Kumar (Chief Financial Officer)
  • Mr. Harsha Angeri (Head – Corporate Strategy and AI)
  • Mr. Ramu Akkili (Company Secretary & Compliance Officer)

Q&A Participants

Individual investors: Parth Dalal, Ajay Desai, Haider Kachwalla, Sanjyot Khare, Patrick Mathias, Abhishek Kale, Mahesh Kumar