Intense Technologies Limited — Q3 FY25 earnings call

Call held 14 Feb 2025

Management summary

Intense Technologies reported robust 9M FY25 growth with revenue up 37.34% to INR 114.47 crore and PAT up 7.65% to INR 13.6 crore. The company is making significant investments in sales, marketing, and talent, which impacted Q3 margins due to accelerated H1 revenue recognition and increased costs. Management is confident these strategic investments will drive future growth, targeting an 18-20% PAT margin over time, despite the long sales cycles in some segments.

Highlights

  • 9M FY25 revenue increased by 37.34% to INR 114.47 crore from INR 83.35 crore in 9M FY24.

  • 9M FY25 EBITDA increased by 17.79%.

  • 9M FY25 PAT increased by 7.65% to INR 13.6 crore from INR 12 crore in 9M FY24.

  • Strong cash position of INR 64 crores as of December 2024, invested in treasury functions and fixed deposits.

  • Added 3 new logos in the communications offering space, including one life insurance customer, contributing to recurring billing.

Concerns

  • Q3 margins were squeezed due to accelerated revenue recognition in H1 for Managed Services contracts and increased investments.

  • Increased investments in sales teams, professional consultancy, and office relocation led to higher costs, impacting short-term profitability.

  • Long sales cycle (6-9 months) for the CCM segment means benefits of current investments will materialize later (Q2/Q3 next FY).

  • Receivables from government contracts and Nigeria take time to collect, contributing to 140 net working capital days.

Key financials

4 periods

Headline

  • Cash Balance
    ₹64 Cr
  • Trade Receivables
    ₹55 Cr
  • Depreciation & Amortization (current FY)
    ₹3.57 Cr

9M

  • Employee Costs
    ₹47 Cr
  • Professional Consultancy
    ₹11.9 Cr

9M FY24

  • Revenue
    ₹83.35 Cr
  • PAT
    ₹12 Cr
  • EPS
    ₹5.38

9M FY25

  • Revenue
    ₹114.47 Cr
    YoY +37.3%
  • EBITDA Growth
    17.8%
    YoY +17.8%
  • PAT
    ₹13.6 Cr
    YoY +7.6%
  • EPS
    ₹5.79

What they filed

Q1 FY27: revenue down 13.2%, net profit down 217.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue38 27 27 23 24 −36%22 −20%22 −19%20 −13%
EBITDA6 2 1 0 1 −88%1 −49%1 −56%-2 −991%
Net profit5 2 1 -1 1 −85%0 −92%-21 −3980%-2 −217%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Core Revenues (CCM reach and CPaaS)
    58% Share of Revenue
  • Green Shoot Segment
    42% Share of Revenue
  • Managed Services (9M FY25)
    ₹27 Cr Revenue
  • Managed Services (9M FY24)
    ₹11 Cr Revenue
  • Professional Services (9M FY25)
    ₹10 Cr Revenue
  • Professional Services (9M FY24)
    ₹3 Cr Revenue
  • Data Services (9M FY24)
    ₹6.7 Cr Revenue
  • CCM Reach and Low-Code Platform (9M FY25)
    ₹70 Cr Revenue
  • CCM Reach and Low-Code Platform (9M FY24)
    ₹67 Cr Revenue

Order book

medium confidence

Composition

  • New Logos (Communications Offering) (client type) 3 count

Pipeline

deal pipeline tcv

Healthy pipeline for American and U.K. sales revenues for next year.

The company is actively working to add more logos and expand international engagements, particularly in the US and UK markets, leveraging new sales hires and partnerships.

Source: Prepared remarks

Capital allocation

high confidence
  • Liquidity Cash ₹64 Cr Strong cash position of INR 64 crores, which has been invested in treasury functions and fixed deposits and mutual funds.
    The revenue has grown by INR 31 crore for the 9 months and PAT has grown by INR 0.97 crore and we have strong cash position of INR 64 crores which has been invested in treasury functions and fixed deposits and mutual funds.

Guidance & targets

Profitability

  • PAT Margin Profitability · over time · Medium confidence 18-20%
    we remain striving to deliver at least as a target of 18% to 20% PAT is what we aspire to do.

    — Nitin Sarda

Overall Performance

  • FY26 Top Line and Bottom Line Overall Performance · FY26 · High confidence Lot better than FY25
    Can you say with full confidence that FY '26 will be lot better than FY '25, both in terms of top line and bottom line? Yes, yes, absolutely. Absolutely.

    — Anisha Shastri

What to watch in Q4 FY25

Realization of benefits from sales & marketing investments

Q2/Q3 next financial year
Current Investments made, sales team expanded to 30 people.
Target Improved revenue growth and pipeline conversion.

Why it matters

These investments are a 'conscious choice' impacting current margins, and their success is key to future growth.

we will see the benefit of this investments because CCM as a segment has a long sales cycle and the benefit probably will take like 9 months of -- probably from the time we identify a lead to materializing into our customer, we will see that benefit coming from wherein Q2, Q3 of next financial year.

Risks & concerns

  • Q3 Margin Compression

    high

    Q3 margins were squeezed due to accelerated revenue recognition in H1 for Managed Services contracts and increased investments in sales, development, and office infrastructure.

    Management acknowledged

  • Long Sales Cycle for CCM Segment

    medium

    The CCM segment has a long sales cycle (6-9 months), meaning the benefits of current investments will take time to materialize (Q2/Q3 next FY).

    Management acknowledged

  • Receivables Collection from Government Contracts

    medium

    Receivables from government contracts and Nigeria take time to collect, contributing to 140 net working capital days, though management is positive on collection.

    Management acknowledged

Q&A highlights

7 direct, 1 evasive
Q3 Margin Compression and Future Growth Outlook Direct
Predominantly, like we have mentioned in your opening remarks, there has been a drop in revenue because of the accelerated deliveries on the Managed Services contracts, which where we have these recognized revenues in H1 of the year. And add to it certain investments that we've been making bunch of investments that we've been making in sales teams.

Addresses the primary concern regarding Q3 profitability and explains the strategic rationale behind current investments for future growth.

Asked by Aditya Sen

Aspirational Sales Targets for FY26 and FY27 Evasive
Thanks, Aditya. We would probably not want to give out numbers -- absolute numbers at this point, but we can assure you that we are running for good growth.

Analyst sought specific quantitative guidance for future sales, but management provided a qualitative response, indicating caution or strategic non-disclosure.

Asked by Aditya Sen

Shift from License-based to Transaction-based Revenue Model Direct
So, while the designer piece of the communication product, the market is still kind of used to buying a license-based model. We've added extensions to it in terms of transmission services, marketing automation services, which can be recurring in nature. In fact, 2 of the logos that we added in the last quarter are logos that give us this recurring billing.

Clarifies the company's progress and strategy in evolving its revenue model towards more recurring and transactional streams.

Asked by Vidhi Shah

Progress on International Logos and US/UK Market Penetration Direct
We've not added any new international logos in this quarter, but we have expanded on our existing international engagements. We've added a couple of sales folks in the U.S., one full time and then we brought one rainmaker, so to speak, with a network in the BFSI space in the Americas and Europe.

Provides an update on the international expansion strategy, highlighting specific actions taken despite no new logos in the quarter.

Asked by Vidhi Shah

Status of Trade Receivables Direct
The current receivable that we have is about INR55 crore. So whatever was billed in Q2, we've realized it. But also in the current quarter, we have had additional Managed Services portion of this contract that we are continuing to implement, so which is why the INR77 crore has come down to INR55 crore for the as of December 2024.

Addresses concerns about working capital and provides an update on the reduction of trade receivables.

Asked by Vidhi Shah

Impact of Project Butterfly on Margins and Revival Strategy Direct
Honestly, this has been a very conscious choice. We've never had the ability to be able to invest in our sales teams in a sales strength in a marketing presence in the past at all. Now is a pivotal time for us where we need to be taking these risks, we need to be making these investments and we're confident that these investments will pay off in the long term.

Explains the strategic rationale behind the current margin compression as a necessary investment for long-term growth, linking it to the Project Butterfly initiative.

Asked by Narayan Nikunj

Increase in IT Infrastructure Costs Direct
all these IT infra costs are project based. In government Managed Services everything is always end-to-end. You hire you must provide the infrastructure, the servers, whatever they require to run the project, you must provide the software, and you must manage the entire show over there.

Clarifies the nature of increased IT infrastructure costs, attributing them to project-specific requirements for government Managed Services contracts.

Asked by Narayan Nikunj

Explanation of Low-Code Platform and Customer Base Direct
So, our low-code platform is a platform that you use to develop applications. So, by that, what we meant is applications that were developed using our low-code platform, using those applications these are the success metrics. So, the platform as such is used to develop applications, whether it is workflow automation, BPM or whether it is forms like the ones that we're talking about over here, right?

Provides a clear explanation of the company's low-code platform and how the customer numbers relate to its usage and impact.

Asked by Narayan Nikunj

2 min read 5 chapters

Detailed narrative

Robust 9M FY25 Revenue Growth

Intense Technologies reported a significant 37.34% increase in 9M FY25 revenue, reaching INR 114.47 crore compared to INR 83.35 crore in 9M FY24. This growth was driven by both core revenues (CCM reach and CPaaS), contributing 58% of the total, and the 'green shoot' segment, which accounted for 42%. Managed Services revenue notably grew from INR 11 crore to INR 27 crore, and Professional Services from INR 3 crore to INR 10 crore in the 9-month period.

Strategic Investments Impacting Short-Term Margins

The company is undertaking substantial investments in sales and marketing, expanding its sales team from 10 to 30 individuals, which is a conscious decision for long-term growth. These investments, alongside increased professional consultancy expenses (INR 11.9 crore in 9M FY25 vs INR 4.71 crore in 9M FY24) and a new corporate office costing INR 1.35 crore, contributed to Q3 margin compression. Management expects these investments to yield benefits in Q2/Q3 of the next financial year due to the long sales cycles in the CCM segment.

Strengthened Leadership and Operational Focus

Intense Technologies has bolstered its leadership team with key hires, including Venkat Ravuri as Chief Customer Experience Officer and Philips Eapen as Chief Revenue Officer. The company is enhancing its operational efficiency through process-centric approaches, tracking sales growth and project profitability. Emphasis is also placed on AI-driven innovation, with platforms reportedly saving customers INR 80-100 crore in communication spend, and the company received three new recognitions for AI-driven innovation and customer experience management.

Profitability Outlook and PAT Margin Target

Despite a 7.65% increase in 9M FY25 PAT to INR 13.6 crore, Q3 margins were squeezed due to accelerated revenue recognition in H1 for Managed Services contracts and the aforementioned strategic investments. Depreciation and amortization also increased by INR 3.57 crore in the current fiscal year. Management views this as a temporary impact from growth investments and aspires to achieve a PAT margin of 18-20% over time.

Healthy Cash Position and Managing Receivables

The company maintains a strong cash position of INR 64 crore as of December 2024, with these funds invested in treasury functions, fixed deposits, and mutual funds. Trade receivables have decreased to INR 55 crore from INR 77 crore in H1 FY25, though the net working capital days stand at approximately 140. Management acknowledged that collection from certain government contracts and Nigeria takes time but expressed confidence in their recovery.

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