Good afternoon, everyone. Thank you for joining Fat Pipe's earnings conference call. We'll begin in a minute. It is 415 Eastern Time. So good afternoon and thank you for joining Fat App's earnings call. Before we begin, I would like to remind everyone that today's discussion may include forward-looking statements within the meaning of the federal securities laws, including the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements regarding Fatbab's expected financial performance, business strategy, growth opportunities, customer demand, product development, recurring revenue initiatives, market position, and future operating results. These statements are based on management's current expectations and assumptions, and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by these statements. For a discussion of important risk factors that could affect Fat Pipe's actual results, please refer to the risk factors and other disclosures contained in the company's filings with the SEC, including its most recent annual report, quarterly reports, current reports, and other SEC filings. Any forward-looking statements made on today's call speak only as of today's date. Except as required by law, FactPipe undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. And during today's call, we may also discuss certain non-GAAP financial measures. Reconciliations of these non-GAAP measures are to the most directly comparable GAAP measures, where applicable, are included in today's earnings release and related materials available through the company's investor relations website and SEC filings. With that, I will turn the call over to our CEO, Dr. Ragula Bhaskar, to discuss the earnings results.
Good afternoon, ladies and gentlemen. Thank you for taking the time to join us for this earnings call. We appreciate your interest in Fat Pipe and your investment in Fat Pipe shares. Today, it's my pleasure to talk about our Q4 2026 results that ended on March 31st of this year, and our full FY26 results that ended in March 2026. The next slide would be about the safe harbor provisions. Kanishka, you want to go to the next slide? As Vikrant presented, there will be many statements that could be forward-looking statements, and these are not meant to be construed as such. As for the statements presented by Vikrant, the next slide, please. Year in review, FatPipe has continued to execute on sales growth strategy. We have expanded our sales team as outlined in the IPO, and we continue to recruit more sales members to fill out our sales teams, both geographically as well as in various market segments. We are continuing to expand our channel manager team to manage the channel better. This channel includes all the telco channel as well as other solution provider channels. We also developed new partnerships during this last year, including KD Synnex, which is the largest tech distributor in the country, or perhaps in the world, and we have more such partnerships being worked on currently. We are also working to make these partnerships productive. We have been included in several state and federal purchasing contracts, including Equilix and Omnia. Our next step this year is to make these channels productive by hiring channel managers, marketing, and investing in this channel. We are also working with an entity to prepare our own GSA, so our schedule so that we could be part of the federal government purchasing system.
We have continued to be rated highly by a company called Info-Tech Software Reviews, where we have been rated very highly in the mid-market segment. In fact, off the charts, as they call it. And this only reiterates what we believe in as a company, that we need to have the best product and back it up with the best service, because we can have a great product, but it's also important to make sure the customer is very happy with us, happy with our product and happy that we take care of them. And that is why we have continued to invest in that thought process.
In terms of what we achieved, we have now, for public general release, a single response solution for SD-WAN, cybersecurity, SIM, and email security. As far as we know, this is one of the very few or probably the only company that has a full single stack, highly optimized product, which means fast response time for the customer, and we can do this on-prem at the customer premise if the customer is looking for a highly secure, fast response solution for its network security, cybersecurity, SIM, and email security. Or we can have it in the cloud if the customer wants it, or even in a private cloud. Some of the financial institutions have their own private cloud, and if they want this in their private cloud, we can onboard them.
Next, I would like to talk about our financials for the fourth quarter. This is the fourth quarter results. Our fourth quarter revenues grew 90% year over year. Our adjusted EBITDA earnings grew about 1,500% for the fourth quarter last year. So we are pleased that we were able to achieve these numbers. The next slide talks about our full year financial year numbers. For the year, our revenues were $19.2 million, representing 18% revenue growth. Our EBITDA was $5.4 million, representing a significant increase and a 28% margin. And our non-GAAP net income grew to $6.4 million, about 200% increase, and EPS was $0.46 per share. We are very happy with these results. And in terms of recurring revenues, which is based on our billings of customers, we continued to see strength.
In terms of billings, we increased both our quarterly billings for monthly recurring and annual billings. We achieved a 24% increase in total billings. In terms of monthly recurring billings, we achieved a 56% increase. So overall, we have been working to increase our sales by adding to the sales team, making the sales team productive, increasing our channel partner engagements, and working to make the channel partner productive, and also adding more products so that the sales teams have more in their quiver to present to customers. So that is the basic presentation for today. I will open this up for Q&A. Vikrant has been collating various questions, and we have solicited some questions from different people who are investors. So go ahead, Vikrant, if you could fire away.
Yep, I'll wait for some Q&A to come in from the chat to provide responses for them. But also, first question that we received ahead of the call is, can you walk investors through the key drivers behind the strong fourth quarter performance and what changed in the business during the year?
Okay. What changed in the business in this year was increased sales force, better engagement with our channel, and larger sizes. As the team matures and as our customers and partners have more trust in us and are seeing that we can execute, they are bringing bigger and bigger teams. And so those are the three factors. Those that have helped us increase our revenues.
Our next question comes from Lisa Thompson at Zach Small Tech Research. I will bring her on screen now to ask the question.
Hi Lisa, how are you? Lisa, you are mute.
Okay, sorry. It looks like your net income and EBITDA came in much higher than expected. Can you tell us what happened between the top and the bottom?
I think it's just the operational leverage, number one, because our fixed costs haven't changed much. So whatever comes to the top line flows, the margins are still at 91%. So whatever comes in nine-tenths of that flows to the bottom. We also had an advantage of setting aside more for taxes, provision taxes than we actually needed, so we had pulled that back. So those are the two pieces, essentially operational leverage.
Okay, great. Okay, thank you. That's helpful.
Thank you.
I think so. Vikrant, I believe you have the next question.
Yes. And fabric for the strong revenue growth and profitability in Q4. How should investors think about the balance between growth and operating discipline going forward?
I'll continue to do this exact same thing. If the formula works, continue to execute on it, add the sales teams, grow the sales teams, grow the partners, invest in the partners, do more marketing with the partners, and keep a tight lid on the cost, right? Controlling cost is very important. And we achieved that by doing a lot of automation, operational automation. As I mentioned before, we automate everything that we see that is repetitive. And by doing that, we are able to scale without having to scale costs or increased costs. So that's primarily the reason.
And what is that type doing in AI?
Good question. AI is permeating all aspects of our business. Everything from product preparation, product development, execution, deployment, everywhere, it's AI. We are also incorporating AI into our products for network visibility, network monitoring, is a general product in terms of support for customers. We have our own internal LLM where we have all our data stored. So AI is pretty much every part of our organization. The other thing we are working on, we have a few ideas we are working on.
I.
Related to AI, and when those ideas are ready for being presented to the public, we will do it at that time.
Thank you, Dr. Bhaskar. And will you be issuing guidance for the next fiscal year or quarter?
We have decent visibility in terms of sales for the next quarter, and we feel comfortable. And my personal goal, as I said last time, is to grow the company 15 to 18 percent. So that is what we are going to try and work towards.
And what makes SD-WAN technology meaningfully different from larger competitors in the market?
We have the best product. I mean, I'm proud to say we do have the best product. And there are customers who buy the best of breed products. And we are those. And we have our own niche. We have 13 patents and we have unique technology that the big boys don't have. And the big boys focus on their customers primarily, and we are focused on those customers that need the technology that we have. And we seem to be finding that niche, our sandbox, where we can play in and grow our sandbox. And again, it also matters a lot to customers that we do take care of our customers. We have a high level of support. And I said before, for customer calls, and if it's not a fatpipe issue, we don't say, go talk to somebody else, we quickly identify the problem and tell them. Part of the reason is, each of our people here have seen between 200 and 300 networks, some of them like 500 networks. So when we see a customer network, we can very quickly identify where the issue is, whether it's with the router or a switch, and that may not be a fat pipe product. But just helping that customer increases the loyalty to a fact.
Thank you, Dr. Bhaskar. And we have a question from Jordan. Does the business have seasonality in its earnings?
There is going to be some seasonality, but since we book our orders as we receive them, there is going to be some seasonality. But what matters most is as we continue to build sales, as we continue to bring in new customers, increase our channels, we should see a significant growth. Again, that's a forward-looking statement. That's just a personal statement, not a company's statement.
Okay, thank you, Dr. Bhaskar. And FatPipe has been expanding its cybersecurity offerings through Total Security 360 and related services. How important is cybersecurity to the company's growth strategy?
This is a rocket booster. Fatpak will continue to do this as demand growth. Cycle security boosts the potential for Fatpak sales. Typically, for every dollar value of a customer for SD-WAN, the customers potentially worth $3 for cybersecurity, and so we are starting to market that. We did a general release recently, and now it's a matter of getting the customers to... Take a look at that when the current contracts expire with the various providers. Typically, customers have three to four providers providing what we provide as a single vendor. makes a huge difference. So we are talking to customers where they want to ease in chat pipe as their contracts start expiring. So yes, that is a big part of our strategy. We are also developing other products, and we will reveal them as they come to rotation.
One example was our satellite booster product that works with Starlink and other satellites. We are finding more interest in that product. And so we are now working with various partners to supply our products to work with Starlink and other GEO and LEO satellites out there.
Thank you, Dr. Bhaskar. We have another question from Jordan regarding the monthly recurring billings. So just in terms of disclosures there, Jordan, that monthly recurring billings chart is billings that were billed during the quarter for customers who are on monthly recurring contracts. So to reference that in terms of financial disclosure, that's on a quarterly basis. So to annualize it, it'll be 4 quarters as opposed to doing it by 12, given that that's representing cash billed during the quarter for customers on the monthly contracts. Next question we have is from Randy. Are there any plans to enter the defense sector?
Good question. How fortitious actually. Vikrant just attended a meeting with one of the largest defence wars, thanks to our partner, one of our partners who brought in this bar, and made a presentation. I think he talked to six groups, four groups are interested in working with us. And I think we're making another presentation the next couple of weeks for the same team. So yes, we are working to build that out. There are certain requirements that we have to meet in terms of various processes. So we are working on that. So the short answer is yes, the long answer is it takes a long time to get that point.
And then one additional question, what are the biggest growth opportunities for Fat Pipe in fiscal 2027?
Growth opportunities, it's more of the same. The more salespeople we add, the more opportunities that bring, the more growth. We also find that the deal sizes are getting larger, and that helps in terms of accelerating the growth. So we are firing in multiple cylinders. the lower end market, the mid-market, and the higher end market. So all of them are drivers. Partners, as they get comfortable, they bring us to their bigger customers, and that helps.
Great. And then one additional question from the group. As CEO, what are the two or three priorities you are most focused on for the next 12 months?
Increasing our sales team, increasing sales growth, adding our channel, making our channel productive, and also introducing the very best products out there. We want to make sure that we can always be the number one in the product offering. We want to be the best networking related software company, which means SD-WAN, which is software defined wide area network, cyber security, compliance, which is SIM, network monitoring, and network visibility. All of these are software, and we are very good at very complex software. I think last time I mentioned one year ago, we were at 2.5 million lines of code. I think we are now at 3 million lines of code, as sophisticated as they come. But the most important thing is putting it all together and like a symphony, the orchestra has to perform to gather all the elements. And that's what we are good at, and we want to continue to be good at that. So those are the factors that I'm focused on. Better product, larger sales team, more channel opportunities.
Thank you, Dr. Bhaskar. Next, we have a question from Neil at Northland. I will bring Neil on screen to ask the question.
Oh, by the way, thank you, Nihil. I appreciate your report. Nehal is on mute. Nehal is still on mute.
There may be some technical difficulties. Nihil, I will leave you on screen, but Vikrant, if you want to ask another question from chat, you can. And then once Nihil's microphone is fixed, he can get back on screen.
Or if Nehal would like to type in the on chat, we can also ask that.
Yep. And next question we have as well from the Q&A. Could you please discuss how you think about channel concentration and how the or how this relates to your relationship with customers?
A channel concentration happens as you're building out your channels. Some channels are more productive than the others. I remember Arista networks had a 66% channel concentration at one time a couple of years ago actually. And then they are seriously built to build out the rest of the channels. And that's exactly what we are doing. We are very happy that the channel concentration is there. However, the channel is buying the product for its end customers. So if I work through a channel, they bring in deals with their end customers and we have individual contracts written for each of these customers. So if you look at the concentration of customers, it is highly distributed. And the channel partners, some bigger channel partners are going to be more productive and there will be some concentration. But the end customer is what matters and we have a very distributed concentration of customers. Customers. And we are also building out new channels. TDC Next, like I said, is one of the largest in the country. We are working with CDW, so many other potential opportunities. Nehal, would you like to ask your question, please? Looks like, guys, do you have to unmute Neha?
No, I think it may be a Teams versus Zoom issue.
Oh.
And.
Hey, would you like to type in your question? on the chat screen. Or if you email me, I can pull it up on the screen there. Go ahead and please email. Oh, there it is. Okay. Nehal's question is MRR trends and how that converts to projecting total revenue for the June quarter and beyond. We book our revenues as we receive them, the orders. MRR trends point to... revenues that are being billed at various quarters and various months. And that is continuing to increase simply because it's a layering effect every quarter contributes to the next quarter. So if you have multiple quarters over 36 months, they keep adding up. And so that trend is a positive, consistent trend, and we like that trend. And every quarter, we bring in new revenues, new customers, new prospects, and also new recurring revenue streams when renewals come after three years, or five years. The next question you had was drivers for the March result. Again, we had hired a number of salespeople. Those salespeople have become productive over the year. And also deal sizes have become larger. So those two have been the primary drivers of the results. Any future offerings? Yes, we are working. We are working on a new offering that we are test marketing right now, actually testing at a potential customer site. When that happens, And then we are ready to launch it, doing all the marketing planning we need to do. But that will probably be next quarter before we launch that because our pipeline now of products is busy. We are focusing on cybersecurity today. And then we have the satellite offering. So we have a pipeline that needs to be pushed out the door in terms of marketing to our sales, telling our salespeople how to sell, telling our partners how to sell, and doing our marketing incentives. Another question from Nehal is, How can Fat Pipe gain market share? Increase our feet on the street, increase our partners, make our partners productive, our channel managers work with more partners to make them productive. And then the new products as they come to get more attention of the customer and more wallet dollars from the customer. But the most important thing is to bring value to the customer, right? Whatever we do, we want to bring value to the customer so that the customers feel that they're getting something out of us, not just a wallet, right? And our cybersecurity product is about 40%. lower cost than all the others combined and the customers has to see that value so that he can buy and he can talk about it with other people. Another question you sent was, why not accelerate pace of investments? Yes, we can. We can increase the number of salespeople we hire. My only concern is I don't want to go in the red. So I want to find that balance between being profitable and grow it at the same time. Matt. I hope I answered your questions, Neha.
All man.
Nehal says he's unable to mute, unmute. So it looks like there's a glitch in Teams that's not allowing him to unmute us. It says it's grayed out. Can you say anything, Vikrant?
Uh, let me try one, one other thing.
Okay. Okay. Any other questions Vikrant from the audience?
I believe those are most of the questions that were asked. If anyone has any final questions that they would like insight on, please feel free to ask in chat or in the Q&A section and Arturo Bhaskar will answer them.
And then I believe Nehil's microphone is fixed now, so I will let Nehil ask his question.
Okay.
Yeah, great. Thanks. Sorry about that technical difficulty. Let's see, and my camera's working now too, I think. All right, good. So monthly recurring revenues up 56% year over year. Incremental MRR for the quarter was 0.16 million. And that compares very favorably to the year ago period of just 50,000. Can you, you know, incremental MRR, is that something that you guys are looking at? And, you know, what are your expectations on how incremental MRR
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proceeds on a quarter by quarter basis. I do believe that there was a question on seasonality, but I think that was on the overall business. Can you talk about that from an MRR perspective, incremental MRR perspective?
Yeah, our incremental MRR is a function of all the deals we close and then deploy and then start building. So what you see in this last quarter, new sales closed, will start showing up later this quarter or early next quarter, depending on the rate of deployment. We are not specifically focused on incremental MRR as much as focused on overall sales because if we get more sales that automatically starts flowing through the MRR system or Netflix.
Got it. All right. The rest of my questions were already answered. Thank you.
Okay, thanks. I guess there aren't any more questions.
I believe we are also at time on the earnings call, Dr. Bhaskar. So if you have any other questions, please direct them to the IR email. Vikrant can provide the investor relations email and we can answer any additional questions there. Thank you, everyone, for attending.
Okay. That's right. Okay.
the Fat Pipe Q4 and fiscal 2026 investor call. We appreciate everyone taking the time from their day to attend, and hope everyone has a great rest of their day. Thank you, everyone.
Thank you, everyone. Take care.
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