ESDS Software Expects International Revenue To Overtake Domestic From FY27

ESDS Software expects international revenue to overtake domestic revenue from the next financial year as the company targets large customers across the US, Europe and APAC and shifts its focus towards AI factories and private GPU clusters says Piyush Somani, Chairman and Managing Director, ESDS Software Solutions

International customers currently account for 25% of revenue, while domestic customers contribute 75%. The company expects this mix to reverse from FY27, with the international share potentially increasing further be adds.

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ESDS is currently in discussions with procurement teams of around 17-18 large global companies that account for a significant share of AI workloads. The company is also targeting large domestic enterprises.

The management said the company's current growth has come entirely from its core business and not from factors such as lower interest rates.

Customer Base To Be Reshaped

ESDS is looking to streamline its customer base and focus on larger, profitable organisations. Of its around 2,500 customers, the company is willing to let go of nearly 1,200 customers that contribute only a small portion of revenue.

The strategy is aimed at improving revenue quality and allowing ESDS to focus on customers with annual revenue of more than Rs 10,000 crore.

The company's revenue retention rate declined to 94.9% in FY25 from 128% in FY24, while revenue per customer fell to Rs 19 lakh from Rs 21 lakh.

Rs 576 Crore Investment Eyed To Add Similar Revenue

ESDS has earmarked around Rs 576 crore for cloud computing equipment and infrastructure. The management expects the investment to generate roughly Rs 576 crore in additional annual revenue once the entire capital is deployed and goes live.

The company said the standard in the sector is for a large infrastructure investment to generate a similar amount of annual revenue after becoming operational.

ESDS currently operates at around 75% capacity utilisation but plans to maintain headroom across its infrastructure.

AI Factories Become Key Growth Driver

The company is increasingly moving away from conventional cloud utilisation towards AI factories and private GPU clusters.

Under its GPU-as-a-Service model, customers pay a fixed amount for access to GPU infrastructure irrespective of actual utilisation, amid a demand-supply gap in the market.

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Piyush Somani said they are targeting deployments ranging from individual AI factories to large clusters involving 1,000-10,000 GPUs for a single customer.

The company currently has an AI team of around 35 people working on the design and optimisation of large GPU clusters and superpods he adds.

ESDS Cloud Losses Seen Easing

ESDS Cloud had reported losses earlier due to initial lease and operating costs. The management expects the business to improve as revenue scales up.

Its Australian AI factory, being developed in partnership with Sharon AI, is expected to go live next month, with its financial contribution expected from the third quarter onwards.

The India cloud business currently operates at around 50% EBITDA margin and 25-27% PAT margin, according to the management.

Government Business To Grow In Absolute Terms

Government-linked customers currently account for 27% of revenue, down from 34% in FY24. The management expects the government business to increase in absolute terms, but its share of overall revenue to decline as international and large domestic enterprise business grows.

ESDS also expects its Swaraj Cloud platform, which offers more than 54 services, to help reduce India's dependence on foreign cloud and software providers.

For now, the company's strategy is focused on scaling one AI factory and one large GPU cluster at a time.

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