eMudhra Q1 FY26 earnings call

eMudhra commenced FY26 on a strong note, reporting a total income of INR 150.62 crores for Q1, representing a significant 58.5% year-on-year growth. This was accompanied by a 29% increase in EBITDA to INR 38 crores, maintaining a healthy margin of 25.2%. Net profit also saw substantial growth, rising 37.5% YoY to INR 25.02 crores, with a net profit margin of 16.6%. The growth was broadly contributed by key geographies including the U.S., Middle East, India, and Asia Pacific.

A key strategic move this quarter was the closing of the acquisition of Cryptas, an Austrian company with a presence across the DACH region (Germany, Austria, Switzerland). This acquisition is set to strengthen eMudhra's European footprint and provide access to an established digital trust ecosystem. Additionally, the company signed an agreement to acquire AI CyberForge, a firm specializing in secure credential management, which will expand eMudhra's portfolio in the data privacy and identity management space.

For Q1 FY26, the company provided a rough geographical revenue breakdown, with approximately INR 60 crores from the USA, INR 34-35 crores from the Middle East and Africa, and INR 55 crores from India. Asia Pacific, particularly the Philippines, contributed INR 4-6 crores. The US product business currently operates at an annual run rate of INR 80 crores (INR 18-20 crores per quarter). Management outlined initiatives to scale this, including obtaining audit certification for its US data center by August and deploying local operational staff, with significant momentum expected in 2-3 years.

eMudhra's growth strategy for the past year and current quarter demonstrates a balanced approach between organic and inorganic expansion. Last year's 50%+ growth included 18.8% from acquisitions, while Q1 FY26's 57-58% YoY growth comprised 27-28% from acquisitions, with the remainder being organic. Management expressed confidence that this balanced trend would continue for the next 2-3 years, driven by the increasing demand for cybersecurity solutions and the pursuit of suitable inorganic growth opportunities.

The Trust Services business experienced a pickup in Q1 FY26 due to a combination of factors. An improvement in volume uptake was noted, alongside a strategic advantage during a token shortage where eMudhra, as a larger purchaser, secured tokens more easily than smaller certifying authorities. Furthermore, to regain market share from competitors who offered lower prices, eMudhra increased commissions for its larger resellers from 40% to 45-55%, successfully attracting them back.

The company revised its FY26 total income guidance upwards, now expecting 'a little over INR 700 crores,' compared to the previous guidance of INR 650-700 crores. This revision incorporates the anticipated INR 75 crores contribution from Cryptas over three quarters. Despite Cryptas currently operating at a loss, which may initially temper overall margins, eMudhra aims to maintain its PAT margin at around 16-16.5% for FY26, supported by product improvements and eventual integration synergies.

While eMudhra's emSigner product is integrated with eSign and eStamping, its broader penetration into the retail and SME segments in India remains contingent on regulatory developments. Management highlighted the need for NESL to permit stamp paper usage for these purposes and for the Ministry of IT and CCA to approve mobile PKI. These approvals are crucial for unlocking significant growth potential in the Indian market beyond large enterprises and BFSI.