Xelpmoc Q1 FY26: Is This Hybrid Tech Model Finally Unlocking Profitability & Venture Value?

Xelpmoc Design And Tech Limited, a distinctive entity blending technology services with venture building, recently announced its Q1 FY26 earnings. This comes at a crucial time for the Indian market, which saw a strong rally in Q1 but experienced a correction in July, partly due to cautious guidance and global uncertainties. The IT sector, in particular, has been underperforming amidst soft global demand. Against this backdrop, understanding how Xelpmoc’s unique hybrid model is navigating these currents becomes paramount.

Xelpmoc positions itself as a “technology co-founder,” partnering with startups through cost-plus-equity models and engaging with corporates for service-based engagements. The long-term vision hinges on creating value from its portfolio companies, making it a fascinating case study for investors looking beyond traditional linear growth. Let’s peel back the layers of Xelpmoc’s latest performance.

Revenue Trajectory: A Strategic Pivot?

Xelpmoc’s operational revenue in Q1 FY26 demonstrated a steady climb, hinting at focused execution.

On a sequential basis, revenue from operations grew by a healthy 11.2% to Rs. 7.8 million, showing consistent quarter-on-quarter improvement. Year-on-year, the growth stood at a respectable 7.8%. While these absolute figures might appear modest, they reflect the company’s deliberate strategy to generate revenue primarily from its corporate clientele, a point explicitly emphasized by the CEO as key to achieving profitability.

A striking highlight from this quarter’s revenue mix is the 100% contribution from Corporate clients, with no operating revenue recognized from Startup or Government segments. This marks a significant shift, aligning with management’s stated focus. This strategic concentration on corporate projects, which likely offer more immediate and stable cash flows, could be a prudent move in a volatile market. It suggests a pragmatic approach to securing foundational revenue streams while its venture portfolio matures.

Geographically, Xelpmoc maintained a balanced footprint, with domestic revenue contributing 52% and international revenue 48%. This diversification helps mitigate risks associated with reliance on a single market, especially given the global slowdown impacting many export-linked sectors.

Marching Towards Profitability: The Numbers Tell a Story

While Xelpmoc continues to report losses at the net level, the Q1 FY26 results paint a clear picture of improving operational efficiency and a narrowing financial gap, signaling a positive trajectory towards profitability.

Note: Adjusted Operating EBITDA excludes ESOP expenses, providing a clearer view of core operational performance.

The Adjusted Operating EBITDA, though still in negative territory at (Rs. 16.4 million), shows a substantial improvement year-on-year. The loss has significantly narrowed from (Rs. 28.0 million) in Q1 FY25. This 41.5% reduction in operating loss YoY is a strong indicator of better cost management and increasing operational leverage. Similarly, the Profit After Tax (PAT) loss nearly halved year-on-year, shrinking from (Rs. 39.3 million) in Q1 FY25 to (Rs. 18.8 million) in Q1 FY26. While there was a slight sequential widening of losses, the dominant narrative here is the significant progress made over the past year.

This consistent narrowing of losses, even as revenue grows modestly, indicates that expenses are growing at a slower rate than revenue. The contribution from “Other Income” also decreased YoY, which is a healthy sign as it suggests the company’s path to profitability is driven by core operational improvements rather than one-off financial gains. This aligns with what markets appreciate: sustainable earnings growth driven by strong underlying business performance.

Portfolio Power & The Mihup Monetization: Unlocking Core Value

Beyond the consolidated financials, the true essence of Xelpmoc’s strategy lies in its investment portfolio. This quarter saw a pivotal event that validates its “asset play” model: the proposed partial sale of its investment in Mihup Communications Private Limited.

Xelpmoc’s Board approved the transfer of 11,782 Series Seed Compulsorily Convertible Preference Shares (CCPS) in Mihup for Rs. 8,487.32 per share, totaling Rs. 100 million (Rs. 10 Crores). This is a significant transaction as it represents approximately 38.6% of Mihup’s fair value (Rs. 25.88 Crores) as of June 30, 2025. This partial exit not only brings in substantial cash but also serves as a critical proof point for Xelpmoc’s venture-building capabilities. It demonstrates management’s ability to identify, nurture, and strategically monetize investments, which is crucial for a company operating as an “Asset Play.”

The overall fair value of Xelpmoc’s investments in client companies stood at approximately Rs. 531.8 million as of June 30, 2025. While this is a slight decrease from Rs. 546.2 million a year ago (likely influenced by the Mihup partial sale and general market revaluations), the underlying performance of individual ventures remains encouraging:

• Mihup: The Conversation AI platform continues its impressive scaling, achieving Rs. 200 Million Annual Recurring Revenue (ARR) and targeting Rs. 250 Million by fiscal year-end. Its strong client base, including industry giants like Tata Motors and Angel Broking, underscores its market traction and future earnings potential.
• Woovly (Live2.ai): Woovly’s Live Commerce Solutions vertical, Live2.ai, is a standout performer. It reported a healthy $2.6 Million ARR and, notably, is EBITA positive. Its success with major global brands like L’Oréal and Unilever validates Xelpmoc’s capability to build scalable, profitable SaaS products. This directly contributes to future earnings visibility for Xelpmoc.
• Snaphunt: The HR Tech venture continues to innovate, launching agentzane.ai (a digital recruiter product) and Snaphyre (managed recruiting for SMBs/startups). Paid customers grew 1.5x in 2024, indicating expanding user adoption.
• The Star In Me (TSIM): This career advancement platform for women is gaining momentum, booking Rs. 2 crores in Q1 FY26 and securing new enterprise clients like Siemens.
• Pencil: This creator economy startup is leveraging AI for audio generation in multiple languages, with reported revenue from intellectual property monetization.
• Biome (Zoop.Money): Xelpmoc’s latest co-founding investment in Zoop.Money, a digital loan platform for home buyers, highlights its continued pursuit of high-growth sectors, particularly those leveraging technology in financial services.

These updates collectively reinforce that Xelpmoc’s portfolio is actively progressing, with several ventures achieving significant milestones in ARR and even profitability. This paints a positive picture for future value creation and potential further monetization events.

Financial Prudence & Future Funding

While detailed breakdowns of working capital (like receivables or inventory days) and Capital Expenditure (CapEx) plans were not provided in the investor presentation, the strategic partial sale of Mihup is a significant financing event. The Rs. 10 Crore inflow provides Xelpmoc with additional liquidity, which can be deployed for general corporate purposes, new investments, or to further strengthen its balance sheet. This demonstrates that the company can generate non-operating cash flow by realizing value from its portfolio, reducing its reliance solely on service revenue for funding growth and operations. Investors will be keen to observe how these funds are utilized in subsequent quarters.

The Road Ahead: Key Investor Insights

Xelpmoc Design And Tech Limited presents a compelling, albeit unique, investment proposition. It stands out in the current market climate, especially as the broader IT sector faces headwinds.

• Operational Momentum: Xelpmoc is delivering consistent sequential and annual revenue growth in its operational segment, largely driven by its renewed focus on corporate clients.
• Strategic Validation & De-risking: The partial sale of Mihup is a strong validation of Xelpmoc’s venture-building model. It not only provides a significant cash inflow but also demonstrates the company’s ability to create and realize value from its investments, effectively de-risking its balance sheet.
• Clear Path to Profitability: The substantial year-on-year narrowing of both Adjusted Operating EBITDA and PAT losses signifies improving cost management and efficiency. This pushes the company closer to its goal of overall profitability, indicating that management is capable of delivering on its stated guidance of reaching break-even and beyond.
• Robust Portfolio: Key portfolio companies like Mihup and Woovly (Live2.ai) are showing strong ARR growth, client acquisition, and even profitability. This provides confidence in Xelpmoc’s ability to identify and scale successful tech ventures, which will be the primary driver of long-term value and future earnings.

For investors, Xelpmoc is best viewed as an “Asset Play” and a “Turnaround” story. Its value is not just in its modest quarterly service revenue, but fundamentally in the successful scaling and eventual monetization of its deep-tech investment portfolio. The partial Mihup exit is a strong signal that this strategy is beginning to bear fruit, reinforcing confidence in Xelpmoc’s unique positioning as it navigates towards a more robust financial future amidst a cautious market environment. 📈

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