Saksoft Ltd (BOM:590051) (Q1 2027) Earnings Call Highlights: Stable Revenue and Strategic ...

Q & A Highlights

Q: What is the company's revenue guidance for FY27, and how does the current demand environment impact it? A: Aditya Krishna, Chairman and Managing Director, confirmed that the company maintains its FY27 revenue guidance of INR 1,200-1,250 crores, which implies roughly 25% growth over the previous year's INR 1,007 crores. He acknowledged that Q2 is also expected to be muted due to delayed decision-making but remains hopeful for growth in the second half of the fiscal year. The guidance may be restated at the end of Q2 if necessary.

Q: How is the sales pipeline looking, and what are the challenges in converting it to revenue? A: Aditya Krishna stated that the pipeline is "looking good" and has never been better, currently at approximately $28 million, up from $25 million last quarter. However, he noted that decision-making is getting delayed due to industry headwinds. The company is deliberately shifting away from headcount-based deals toward larger, outcome-based managed services contracts, which take longer to materialize but offer better long-term value. This strategic transformation, combined with industry softness, is causing near-term pain but is expected to yield growth in the medium term.

Q: How is the company leveraging AI to improve efficiency, and what impact is it having on employee costs and headcount? A: Aditya Krishna explained that AI is driving productivity gains across engineering and managed services, with efficiency improvements of 30-50% in engineering and 20-30% in managed services. The company is also using AI agents for internal operations like recruitment, invoicing, and payables, reducing the need for support staff. This has led to a decline in employee headcount over the past two quarters, and the company expects the percentage of employee and resource costs relative to revenue to decline over time as it moves toward outcome-based contracts and leverages AI efficiencies.

Q: Which industry verticals are expected to drive growth in FY27, and where are the main headwinds? A: Aditya Krishna indicated that three of the four verticals will drive growth: emerging verticals will lead, followed by banking and financial services (BFS) and transportation & logistics. The company is seeing the maximum headwinds in the digital commerce vertical, which is expected to remain soft. This diversified approach is part of the company's strategy to build resilience against uneven demand across segments.

Q: How are recent senior leadership appointments, such as the Chief Growth Officer for Europe, expected to impact pipeline generation and client acquisition? A: Aditya Krishna noted that the Chief Growth Officer joined in June and has already contributed to adding one significant new clienta logistics/airline company that is a major supplier to Amazon. The company has repurposed costs from exited founders of previously acquired companies to fund these senior hires, so overall employee costs are not expected to increase. While it will take time to see the full impact, early progress is encouraging.

Q: Is the company deliberately letting go of tail accounts, and how is client concentration changing? A: Aditya Krishna confirmed that the company is deliberately letting go of accounts that lack scaling potential or where it is marginalized. This is reflected in the declining client concentration, with the top 10 accounts dropping from 58% to 56% of revenue. Despite flat overall revenue, the company is maintaining BFS revenue in absolute terms between Q4 and Q1, indicating a healthier, more diversified revenue base.

Q: How is AI helping the company compete for larger deals and expand its wallet share with existing customers? A: Aditya Krishna explained that AI has leveled the playing field, allowing Saksoft to bid for much larger projects and receive invitations to RFPs where it was previously not considered. This has significantly improved the pipeline's quality and size. AI is embedded in every project, whether engineering or managed services, and is helping the company move higher in the customer value chain, strengthening strategic relevance and broadening engagement scope.

Q: What is the company's strategy regarding the US market, and how does it plan to grow its revenue contribution from that region? A: Aditya Krishna stated that the US currently contributes about 52% of revenue, and the company's objective is to increase this to at least 65% over the next two to three years. This focus on the US as a primary growth market is part of the broader strategy to deepen client relationships and expand share of customer technology spending in key regions.

Q: How is increased competition from larger IT players affecting Saksoft's addressable market? A: Aditya Krishna acknowledged that competition has increased as larger companies compete for smaller deals. However, he emphasized that the reverse is more relevant: AI has enabled Saksoft to enter deals where it was previously not present. He believes companies of Saksoft's size are in a better position because customers receive more attention from mid-sized firms compared to tier-one or tier-two players, which is a competitive advantage.

Q: Are AI engagements in production or still in pilot phase, and what is the average ticket size for AI-led work? A: Aditya Krishna clarified that nothing is in pilot; all AI engagements are in production. Every project has an AI component, with the extent depending on customer maturity and LLM approval. The company does not track AI revenue separately, as AI is embedded across all work. The only pure AI offering is the AI co-innovation lab, where trained resources work with customers to identify and implement use cases, typically for customers at the lower end of AI maturity.

For the complete transcript of the earnings call, please refer to the full earnings call transcript .