IRIS Business

IRIS Business Services successfully completed the divestment of its TaxTech business, which contributed exceptional income to the Q2 results. This transaction significantly strengthened the company's balance sheet, with cash and investments now standing at approximately INR 170 crores. Consequently, net worth surged to INR 189 crores from INR 76 crores as of March 2025, and book value increased to INR 92 from INR 37, providing a strong financial foundation for future growth.

The RegTech segment, comprising IRIS CARBON and IRIS IDEAL, showed mixed results in H1 FY26. IRIS CARBON's Annual Recurring Revenue (ARR) grew 14% compared to March 2025, with the bulk of this growth coming from Disclosure Management. However, the IDEAL business experienced a revenue drop of INR 2 crores due to delays in purchase decisions by prospective banks. Overall, the RegTech segment incurred a loss in H1 FY26, attributed to increased investments in sales, marketing, and product development, with an internal target to achieve 35% ARR growth for IRIS CARBON in FY26.

The SupTech segment demonstrated positive momentum in H1 FY26 by securing two new logos: the Qatar Central Bank and the Qatar Tax Authority. The company views its entry into direct tax returns with the Qatar Tax Authority as an opportunity to expand its offerings in similar areas. Management expressed optimism for decent growth in the SupTech business, noting that the pipeline is looking interesting and the pipeline building process is ongoing. The SupTech segment generally maintains an operating margin of approximately 30%.

The company's operating margins experienced a 'drastic drop' in H1 FY26, primarily due to significant investments in sales, marketing, and product development for its SaaS business, particularly IRIS CARBON. Employee expenditure increased by approximately INR 7 crores, and headcount grew by about 8%. Management clarified that these are strategic investments aimed at achieving substantial ARR growth and scaling the SaaS business, with the benefits expected to materialize with a lag. They aim to reach a threshold where operating leverage will improve margins, acknowledging that the current phase involves front-loaded expenses.

IRIS is actively developing and enhancing new product offerings. The Peridot platform for MSMEs is being expanded with a new lending layer, currently in a pilot stage, which will allow MSMEs to access potential lenders. In ESG Sustainability reporting, the company has developed a 'pretty strong MVP product' and is in advanced stages of conversations with prospective customers and partners, actively building a sales pipeline. While global policy uncertainties have caused some ESG mandates to slow down, IRIS's solutions are designed to be less dependent on mandates.