Thank you very much. We will now begin the question-and-answer session. We take the first question from the line of Yajat Shah, an Individual Investor.

So, we expensed approximately INR 40 crores to INR 50 crores a year as AI R&D investment. So, what would be the guidance there for this year? Are we expending more or less this year as well?

We will keep it at approximately the same level because right now, there's a lot happening in that space, and we need to keep abreast with what's happening with latest technology, plus we are investing in the platform that we are building. So, we will sustain it at the same levels for this year.

All right, sir. One more thing I wanted to ask, we have reported INR 710 crores approx cash balances. This is before the INR 200 crores TNQTech payout?

That is correct. That payout was in this quarter. The numbers you're looking at INR 710 crores pertains to the last quarter-end.

So, at current run rate, we would have INR 500 crores and approximately INR 200 crores from the remaining three quarters. So, we would again have maybe INR 700 crores. So, is there a plan for a buyback, or will that be used for a better allocation like from acquisition?

We are in dialogue with some companies from an M&A point of view. And no conversation has matured to the level that we need to sort of report it, but we are in dialogue with some companies.

A lot of the projects have, will have an integral AI component. And therefore, it might be difficult to call out just AI in itself. There are some projects that are purely AI, but many other projects have a combination of AI and the legacy work. So, it may be difficult to fully pull out only AI because everything will be automated on the back of AI. So, let's see how the projects unfold, but I don't think we'll end up doing a pure AI reporting because, pretty much across the board, we will be implementing AI.

We take the next question from the line of George John from Equity Intelligence.

It's good to see the pickup in revenue and margin of your digital operations segment. But over the past few periods, the Digital Technology segment has kind of had a muted growth alongside some margin pressure. So, is there some sort of seasonality in Q1 or the fact that we have added some clients in the past few quarters, what are your aspirations for growth and margins, especially in the segment going forward?

So, we are seeing a good traction we are getting on the KAi underwriting solution and the KAiSDLC and KAiBRE solutions. These are for enterprise modernization. We have kicked off some projects in that space already. So, the customer response has been very encouraging because these are for legacy modernization and using these tools, which are all AI-powered or largely driven by AI, the risk factor comes down, the timeline comes down. So, a project that will take three years can be probably done in six months now. So, because of that, we see a lot of interest from customers looking for legacy modernization. So, it reverse engineers legacy systems, extracts business tools and then forward-engineers that to the target environment. So, I'm quite bullish on the Digital Technologies. Also, the underwriting solutions that we built is getting a good response. We are in dialogue with all the top insurance companies in India and of course, some of the good ones in the U.S. and Europe as well. And once again, I'm very confident that, that will give us a good revenue stream.

So, the underwriting product is going to be clubbed within digital technologies, is it?

Yes. What's happening actually is that we are getting a combination of both. So, operations and technologies are coming together because operations understand business processes and technology understand technology. And it's only when they work together that you are able to deliver the maximum value to the customers. So, we are seeing more and more situations where they need to work as an integrated solution. And then it becomes a little difficult to separate them out as independent units or independent streams. So, yes, a lot of our investments that we are making, we talk about it has been going into the digital technology space. So, we will recognize revenue there as well.

We have started booking. We've got the first customer. We'll have a few more very soon.

We take the next question from the line of Nishita Shanklesha from Sapphire Capital.

So, I just wanted to understand, we had a very good growth in Q1 FY27 Y-o-Y. So, is this growth trajectory going to continue? What sort of growth can we see for the whole year FY27?

So, we have projected a high single-digit growth in our guidance. We are maintaining that. There is still a degree of softness in the market because of the war and the uncertainties. Fortunately, the conversions on AI have been higher. If you look at the current financial year, about 60% of the deals we won have been AI-led or largely AI-driven. So, we see a good conversion ratio there, but we do see still some degree of softness in the market.

Right. So, like in Q1, we did around 43% growth Y-o-Y and you're giving a single-digit growth guidance for the whole year seems a little inconsistent, which is because of some seasonality where H1 is more dominating than H2. Is that the case?

What we are highlighting is the revenue growth which is Y-o-Y growth of 9.9%, which you see right now, INR 513.9 crores is what we did. The 43% growth is for the PAT. We will continue to maintain the healthy EBITDA margins, and we will sustain that.

And my second question is that our TNQTech integration is fully completed, what sort of revenue did TNQTech complemented in Q1?

So, TNQTech, anyway it has been fully integrated in our business. And what you see in terms of the Digital Operations revenue, it is already integrated into that, and that's the kind of improvement and growth that we have seen across the Digital Operations segment.

TNQTech is growing healthily, but I think going forward, what we need to look at is our Digital Content space, which is part of Digital Operations and an integrated offering. But I think the growth rate was, I don't have the exact numbers with me, somewhere in the range of about 12% to 14%. It's been a very good acquisition for us.

We take the next question from the line of Yajat Shah, an Individual Investor.

So, one question regarding our business transformation. As we are integrating towards TNQTech and Lumina Datamatics publishing businesses, I can see that the margins there are significantly higher at 24% to 25% EBITDA compared to the original business. So, do we plan on eventually shifting towards high 20s margin?

So, across the board, we are at about 19-odd percent EBITDA margin. We are looking at about, roughly 0.5% improvement in this financial year. So, we should be hitting closer to 20% this financial year. Some of the other practices are showing an upswing. Digital Experiences, we've got some good deals going. We signed a few good deal sizes in this financial year. So, they're seeing an upswing. On the Digital Technologies front, there are two parts to it. One is that we continue to book all our investments into this service area because all our investments are fundamentally in the area

of technology. So, I think if you remove that, if you remove INR 40 crores to INR 50 crores of investment, then you can see a much healthier EBITDA margin on that practice area. So, I think if you make those adjustments, you will see a fairly healthy margin across the board.

So a follow-up to that. You were saying that if we add back the R&D spend, so is the R&D spend fixed for every year or eventually we will reduce it or instead increase it? Is there a guidance on that spend?

So, right now, for this year, we will maintain it, in the past, we've maintained it at that level. Really because the whole world of AI is moving so fast and so many new things are coming, it's very hard to predict what will be the budget next year. But certainly for this year, we will maintain that spend. When we do our planning for next year, we'll take a call as to what really the spend should be next year. But at this juncture, it's too early to say what the budget will be for next year.

All right, sir. And on the customer front, are we transitioning and looking for more sectors outside the insurance, banking and logistics side like except those?

So, we are trying to focus on these sectors, and I think focus is very important. Occasionally, we do come across opportunities. When we come across opportunities, we may pick it up. But we are not focused on those other sectors. We are focused on these core sectors.

We take the next question from the line of Ritika Sheth from Anantaya Wealth Advisors.

Just wanted to ask more of a logical question regarding the competitive position. How do you feel the competitive landscape has evolved over the last threeto six quarters, considering a lot of companies which are into digital tech and digital operations, particularly the larger ones like Persistent or Coforge. How do we see the competitive scenario in this business avenues going forward?

I can't comment on Persistent and Coforge types of companies. We don't tend to come across them too much in the customers that we are targeting. But we do see competitive situations coming up with many local auto tech companies who are well funded, who are bringing new technology solutions to the market. So, we tend to come across those. And then, of course, we also come across the internal tech teams or their own captives. Many companies are looking at India for setting up their captives and also their own tech teams are playing around with artificial intelligence. So, we see more competition coming from internal teams, from GCCs and not so much from the other tech players. The start-up ecosystem, which tends to be well funded and they bring in some interesting solutions.

Okay. And one more question is, do we have any like a 5-year blueprint on where does the company want to reach by theyear 2032 or say, 2030 in terms of margins or in terms of net profit in any of these metrics?

Yes. So, we are looking at about a 3-year window of about INR 3,000-odd crores. We are about INR 2,000 crores right now roughly. So, we are looking at roughly in that range. And then, of

course, on top of that, we might have some inorganic. So, it's a mixture of organic and inorganic growth. That's the current outlook. Having said that, because there's so much change and transformation happening in the industry, it's very hard to predict exactly where you will go because right now, I think the entire outsourcing industry and the tech and BPO industry will go through a huge change because of the dynamics of AI.

Agreed sir. Just wanted a follow-up question on the existing answer. Is that INR 3,000 crores starting from FY27 or FY28?

Yes, the current year.

And what are the EBITDA margins we're looking at year-end?

We are roughly maintaining the same 19% to 20% EBITDA margins.

We take the next question from the line of Pratik Jagtap from E&Y Investor Relations.

I would like to take this opportunity and ask two questions. So, I just wanted to ask you, what are the key factors required to accelerate this revenue growth from here on? As you mentioned, you are targeting INR 3,000 crores mark by next three years to four years. So, what will be the key revenue drivers?

I think the key revenue drivers are how well these AI-based platforms take off, the agentic underwriting, claim processing, the KAiBRE, KAiSDLC, SuperCX that we have for contact center automation, front office automation. It's really these platforms that will be the key drivers, and that's where we are investing our energy behind. And then, of course, there will be some degree of bolt-on acquisitions as well.

Okay. Definitely. And what can go wrong in this, if you say like in FY27 or in next 1 year, what can go wrong? What are the risks here for us?

I think the risks is that when the customers are automating because today, every customer is very sharply focused on automation. And if they do a lot of automation, which they will and they choose not to outsource the automation to companies like Datamatics and third-party organizations, but try to do things themselves, then the outsourcing budgets will shrink, and that would have a pressure on all companies in the outsourcing world in India, particularly. And also their move towards captives. Some of the organizations are looking at setting up their own captives. So, captives like GCC. So that's where we could have some risk. So tworisks. One is automation by themselves and the second is the captives. But the global economy, I think needs to stabilize. Right now, there's some degree of softness because of this uncertainty of the war. Every day, today, there's war tomorrow it stops, then day after it starts again. So, you really don't know which way it's going to go. I think that needs to settle down. And once that settles down, the world will be in a little more sort of stable situation.

Okay. And one last question. How are the customer spending patterns evolving in different verticals in different geographies like U.S. and Europe? Are we seeing any changes?

No major changes. They are flirting more with the AI space. So, they are investing more on automation. But outside of that, there's no really pattern shift other than some degree of softness that we see, but there's no as such pattern, then the trends we talked about is GCC and automation, but those are the trends that we see generally. Yes. The projects are becoming smaller tenure projects versus the large annuity deals that they were in the industry traditionally because many of the AI projects are smaller 3 months, 6 months, 9 months and not a 3-year, 5- year type deals.

But will those have any impact on margins or because we are getting smaller projects or will those have any impact on our margins or our deal size is shrinking in that case?

So, actually, our deal sizes are going up. It's just that they're not the annuity types. The deal size have actually gone up. But margins are where they are. There's no major shrinkage. These are really long transformation type projects. So, yes.

As there are no further questions from the participants, I would now like to hand the conference over to the management for closing comments. Over to you, sir.

Thank you, everyone, for participating in our Q1 earnings call. We really appreciate the time you spent with us, and we look forward to speaking with you again at the end of next quarter. Thank you again, and wish you all the best.

Thank you. On behalf of Datamatics Global Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.

This transcript has been edited for readability and does not purport to be a verbatim record of the proceedings.