TAC Infosec — Q2 FY26 earnings call

Call held 31 Oct 2025

Management summary

TAC Infosec delivered exceptional H1 FY26 results, with total income soaring 137% to ₹30.6 crores and PAT growing 138.5% to ₹15.5 crores. This strong performance was driven by product innovation and successful client acquisition, leading to significant margin expansion with EBITDA margin at 63.4% and PAT margin at 51.3%. The company is actively pursuing its 2026 client targets and the Cyberscope IPO in the US, while addressing concerns regarding standalone performance and receivables.

Highlights

  • Total Income (Revenue) for H1 FY26 surged 137% year-on-year to ₹30.6 crores, demonstrating robust top-line growth.

  • Profit After Tax (PAT) for H1 FY26 increased by 138.5% year-on-year to ₹15.5 crores, indicating strong bottom-line performance.

  • EBITDA margin expanded significantly by 10.3 points year-on-year to 63.4% in H1 FY26, showcasing improved operational efficiency.

  • PAT margin improved by 1.7 points year-on-year to 51.3% in H1 FY26, reflecting enhanced profitability.

  • The company's client base grew to 7,500, making substantial progress towards its 2026 target of 10,000 clients and solidifying its position as the fifth-largest vulnerability management company globally.

Concerns

  • Higher ESOP costs and the absence of tax rebates (available in prior years) impacted profitability, though margins still improved.

  • Standalone financial numbers showed a decline, which management attributed to internal transactions and strategic shifts to international subsidiaries, raising analyst questions.

  • An analyst highlighted high receivables (less than nine months) noted in the annual report, prompting management to promise a follow-up response.

Key financials

  1. Total Income (Revenue) ₹30.6 Cr +137%YoY
  2. PAT ₹15.5 Cr +138.5%YoY
  3. EBITDA ₹19.2 Cr +178%YoY
  4. EBITDA Margin 63.4% +10.3%YoY
  5. PAT Margin 51.3% +1.7%YoY

What they filed

Q1 FY27: revenue up 9.9%, net profit up 0.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY24Q4 FY24Q2 FY25Q4 FY25Q1 FY26Q2 FY26Q4 FY26Q1 FY27
Revenue5 7 12 18 10 +95%29 +314%16 +29%20 +10%
EBITDA2 4 6 9 5 +127%18 +350%7 +16%10 +6%
Net profit2 4 7 8 3 +70%16 +300%6 −14%8 +1%
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.

Order book

medium confidence

Pipeline

deal pipeline tcv

Socify aims to disrupt the SOC 2 compliance market

The company focuses on client acquisition and product innovation rather than traditional order book metrics, aiming for 10,000 clients by 2026.

Source: Inferred

Guidance & targets

Customer Revenue Growth

  • Per customer revenue growth Customer Revenue Growth · Half-yearly basis (for next five years) · High confidence 20%
    So we are planning to grow 20% on a half yearly basis per customer revenue. That's what our internal goal here is.

    — Trishneet Arora

Client Acquisition

  • Total clients Client Acquisition · by 2026 · High confidence 10,000 clients
    If we see our target for 10,000 clients by 2026 to become one of the largest vulnerability management company

    — Trishneet Arora

Market Position

  • Vulnerability management company ranking Market Position · by 2026 · High confidence Top three
    Uh we will become Uh one of the largest vulnerability management companies in top three by 2026

    — Trishneet Arora

Socify Client Acquisition

  • Socify clients Socify Client Acquisition · null · High confidence 10,000 clients
    So the target is to have 10,000 clients for Socify

    — Trishneet Arora

  • Socify customers Socify Client Acquisition · by December · High confidence more than 200 customers
    I can share that by December we would have more than uh 200 customers for Socifi that that's what our internal goal here is

    — Trishneet Arora

Investment

  • Investment in AI and R&D Investment · by 2030 · High confidence $100 million
    2030 our plan to in by 2030 our plans to invest $100 million in cyber and we are not only you know focusing or in the R&D on Socify or Cyberscope or ESOF we are of investing heavily on Al and in an R&D space

    — Trishneet Arora

Revenue & Profitability

  • Top line and bottom line growth Revenue & Profitability · next H2 · Medium confidence Maintain and overachieve
    I think we'll, we'll not only able to maintain, we'll try to over achieve that.

    — Trishneet Arora

Company Vision

  • Revenue Company Vision · by 2030 · Medium confidence $100 million
    2030 our bold vision to add $10,000 per client revenue and make $100 million INR company. That's our 2030 bold vision.

    — Trishneet Arora

What to watch in Q3 FY26

Cyberscope IPO status

Next quarter (December 2025 timeline mentioned for SEC process).
Current Filed confidentially (F1/DRHP), SEC shutdown impacting process.
Target Progress on IPO, potential public filing.

Why it matters

Cyberscope IPO is a major strategic event to unlock value and raise funds for the company.

At the moment SEC is shut down because of the US government shutdown. Uh, but that's not impacting our timelines. We will already head of our timeline which is December Uh 2025.

Risks & concerns

  • US government shutdown impacting Cyberscope IPO timeline

    medium

    The SEC is shut down due to the US government shutdown, potentially affecting the Cyberscope IPO process, though management states it won't impact their internal timelines.

    Management acknowledged

  • High receivables

    medium

    An analyst pointed out that the annual report showed high receivables (less than nine months), which management promised to address.

    Analyst acknowledged

  • Higher ESOP costs and absence of tax rebates

    low

    The company faced higher ESOP costs and did not have tax rebates available this year, unlike the previous three years, but still achieved significant margin improvement.

    Management acknowledged

Q&A highlights

3 direct, 2 evasive
Decline in standalone numbers vs. consolidated Partial
The standalone number has not actually gone down. So we have focus on the large contract. If you seen we wanna contracts from the Government of India as well. So all we understand the government revenue comes slow and goes slow, right. So the number has not gone down which will be counted in the H2. So that's what we are aiming but. You will end of the day you will see in consolidated you will see the growth in the standalone as well and also there is a there is a internal transaction.

Highlights a potential discrepancy between standalone and consolidated results, which management attributes to internal restructuring and slower government revenue recognition, requiring further clarification.

Asked by Ashish

ESOF business shift to new entities (UK, Canada) Direct
Yeah, that's that's one of the reason because in the US through the cash flow we are investing in Canada. We are also investing in UK and other entities, right. So internal ratio has been gone down.

Explains the strategic shift of business to international subsidiaries for growth and tax benefits, which impacts standalone numbers and overall business structure.

Asked by Ashish

High receivables in annual report Direct
So in the annual report, again the annual report we have put it the numbers of receivable less than nine months is quite high. ... I'll, make sure Ashish, I'll make sure you'll get the response by Monday.

Indicates a potential working capital concern that management acknowledged and promised to address, requiring investor follow-up.

Asked by Ashish

Cyberscope IPO funding amount Evasive
Oh, I think I addressed this question. We are not allowed to speak at this moment because of the confidential filing, but as we have the information we are allowed, we'll definitely address to you.

Cyberscope IPO is a significant strategic event, and the lack of detail on funding amount due to confidentiality leaves uncertainty for investors.

Asked by Pratham Modi

Sustainability of high margins Direct
I think we have able to not only maintain from last three, four quarters, we are also increased our margin significantly, not just one point or two points, but significantly I think that. Uh, showcase our commitment towards the margin and our commitment.

Addresses investor concern about whether the impressive margin expansion is sustainable given rising costs and the absence of tax rebates.

Asked by Pratham Modi

Funding for $100 million AI investment Partial
Yes, definitely we'll try to, you know, fulfill this through our Cash flow and our profits and our earnings, but definitely if required immediately to invest in a, you know, to acquire a large company, maybe larger than us in the revenue or a profit, definitely we can explore our external fundings. We are, we are pretty open about it.

Clarifies the company's capital allocation strategy for future growth, indicating a preference for internal funding but flexibility for large M&A.

Asked by Deekshant B

Segmental revenue split Evasive
Numbers. You can ask me a question. I can send you a separate response to that. I we don't mind sharing that.

Lack of segmental revenue breakdown makes it difficult for investors to understand the individual contributions and growth drivers of different products/solutions like ESOF, Socify, and Cyberscope.

Asked by Deekshant B

2 min read 6 chapters

Detailed narrative

Strong H1 FY26 Financial Performance

TAC Infosec reported robust financial results for H1 FY26, with total income reaching ₹30.6 crores, marking a 137% increase year-on-year from ₹13.1 crores in H1 FY25. Profit After Tax (PAT) also saw a significant jump of 138.5% to ₹15.5 crores, up from ₹6.5 crores in the prior year. This strong top-line and bottom-line growth was accompanied by substantial margin expansion, with EBITDA margin improving by 10.3 points to 63.4% and PAT margin rising by 1.7 points to 51.3%.

Product-Led Growth and Innovation

The company emphasized its identity as a 100% product-driven company, attributing its high growth rates, including a 178% YoY EBITDA growth, to solution innovation, particularly its ESOF solution. Management highlighted that their generative AI solutions, developed over several years, are now yielding significant results. New products like Socify, Cyberscope, and Cyber Sandia are expected to further drive growth, with Socify's base price increased to $4500 due to demand.

Client Acquisition and Market Leadership Ambition

TAC Infosec's client base has grown to 7,500, positioning it as the fifth-largest vulnerability management company globally. The company reiterated its target to reach 10,000 clients by 2026 and become one of the top three players in the vulnerability management space. Socify, a new offering, aims to disrupt the $4 billion SOC 2 compliance market, with a short-term target of over 200 customers by December 2025.

Strategic International Expansion and Cyberscope IPO

The company is heavily investing in operational setups in Canada, the UK, and other international entities, which is influencing standalone financial reporting due to internal transactions and tax benefits from subsidiaries like Delaware Tax Security Inc. A key strategic move is the ongoing process for Cyberscope's IPO in the US, with an F1 filing already submitted. Management noted that the SEC shutdown due to the US government shutdown is not impacting their internal timelines, with a December 2025 target for the process.

Capital Allocation for Future Growth

TAC Infosec plans to invest $100 million in AI and R&D by 2030 to develop new products and solutions. While prioritizing funding through internal cash flow and profits, management stated openness to external funding for large acquisitions that could accelerate growth and shareholder value. The company aims to achieve a $100 million revenue target by 2030, though the transcript ambiguously stated 'INR company' for this target.

Margin Sustainability and Cost Management

Despite facing higher ESOP costs and the absence of tax rebates available in previous years, the company successfully expanded its margins. Management expressed confidence in maintaining and overachieving its top-line and bottom-line growth targets for H2 FY26, suggesting that the current high profitability levels are sustainable due to operational efficiencies and product value. An analyst's concern about high receivables was acknowledged, with a promise for a follow-up response.

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