FATN

Good afternoon, thank you for joining FatPipe's earnings conference 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 FatPipe'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 factors that could affect FatPipe's actual results, please refer to the risk factors and other disclosures contained in the company's filings with the Securities and Exchange Commission, 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, FatPipe undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. During today's call, we may also discuss certain Non-GAAP financial measures. Reconciliations of these Non-GAAP measures 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 management.

Thank you very much, Vikrant. I appreciate it. Vikrant is our Director of Corp Dev and Investor Relations. Sitting along with me in the room today is Sanchaita Datta. She's the Co-Founder of the company, Chief Technology Officer, and now the President of the company. We like to let all of you know that Sanj is a major player in this company, directing all of engineering and also assisting in customer relationships and product management. Today, as you can see on the screen Vikrant, is this screen being shared?

Yes, it is.

Thank you. Our sales has grown about 27%, income has gone up around 65%. We are happy to let you know that the earnings per share has gone up to $0.09 a share from $0.05 a share the previous year. As we grow and we start doing bigger deals, obviously the margin falls a little bit, but not by a lot. It is still around 92%-93%. Overall, we had a good quarter coming on the back of a previously very large quarter. We are very thankful to our employees, our partners, and our customers who are continuing to support us in our endeavor to be the very best company in this space in terms of product and in terms of support and management of customer relationships.

As you will see in the next slide, our products have been recognized for their contributions to the technology space. This is ChannelVision, the largest channel partner show in the United States, or probably in the world, and we got an award for our product offering. We have been able to successfully convert customers from other vendors, such as VeloCloud. We have an active VeloCloud conversion program. VeloCloud is a company that became part of two different large companies, and since then we have been able to win customers who are using those products. I will show you as a sample here. This is InfoTech. They are about a 4,000-person data analytics company. As you can see here, the third year or fourth year in a row, our products have distinguished themselves sharply compared to everybody else, whether it is Cisco, VMware, or any of the other big boys.

On the right, you see in every category, we have a very good rating. Top of the chart. We also like to pick one competitor and show you the comparison in a Gartner survey. This is a Gartner survey of end customers. We have not paid Gartner for any of this. These are pure rankings by customers. As you can see here, we beat out Cisco's products in this space, and 97% of customers said they will recommend FatPipe. This gives you an idea of our product offering and what we do in this space. We have been fortunate. We have been developing new products. We earlier released a cybersecurity product, and now that is going into various customers, quotations, and more marketing.

This year, this quarter is one of the first quarters where we spent a significant amount of money in developing our partners, marketing, our trade shows, and related travel. That is helping us a lot. For instance, in Las Vegas at ChannelVision, we hosted a Happy hour at one of the bars. We thought we needed only quarter of the space. We ended up occupying the entire bar, and about 120 people, partners showed up. That is becoming an event by itself, because last year we had 80 people, the previous year we had about 40 people. We are finding that our name is getting out there, which also means that more partnerships to come. With that, I will open it up for any questions. Vikrant, if you want to add any more to this conversation.

If you have any questions, please feel free to put them in chat and raise your hand, and we can answer them live. Looks like the first question is coming from Lisa Thompson from Zacks. Let me see if I can bring you into the room.

Hi, Lisa.

Lisa, you are now unmuted. Please ask your question.

Yes. Got it figured out now. Hi.

Hi, Lisa.

You had a great quarter. Could you tell us where the revenues came from? Were there a bunch of large contracts? I know you had the second half of one of them. Are the channel partners doing better? What's happening out there?

Lisa, we are clicking on all cylinders, both in terms of market segments as well as various channel partners. Channel partners, as you know, we have started investing in the channel partner program. We signed up TD Synnex, used to be called Tech Data, the largest distributor in the world for technology.

The size of the deals have gone up, and this is partly because as we develop closer relationships and trust with the partner, the partners are taking us to bigger deals, and that started happening. It's a combination of deal size increasing, more deals, more markets, and more partners bringing in deals. We expect the channel partners to increase the amount of deals, and number, and amount, and size of deals.

Is the percent of revenue going to shift more to partners, or is direct sales also growing?

We don't do any direct sales. I can't say any. There's always a few, where the customers want to deal with us directly. Almost all our sales come through partners, and that is our strategy, that partners will be our feet on the street.

One last question was, you did announce a $7 million deal a few weeks ago. How much of that is going to get booked in the September quarter?

I will have to find that exact number, but we can get back to you on that.

Okay. Thank you.

It's probably about 30%, 35%. Probably about 30%, 35% will probably be booked this quarter as we deliver those units out. In fact, I saw a whole bunch of units going out today.

Oh, great. Okay. That's close enough. Thank you.

Thank you.

Okay. Thank you, Lisa. I will move you back into attendee for now. Next up, we have two questions, one in the chat, and Nehal's raising his hand. I will have Nehal ask his questions first, then I will answer the question in chat. Nehal, I am making you a presenter, so you should be able to unmute and ask the question..

Good afternoon. For folks who do not know Nehal is ranked 185 out of 12,000 analysts in the country, and he works for Northland Securities.

Thank you. Thank you, Bhaskar. Congratulations from me on a good quarter here.

Thank you.

Can you give us a sense as far as what were bookings in the June quarter?

Can you repeat that, Nehal?

Can you give us a sense as to what were the bookings in the June quarter?

What were the bookings.

Can you hear me?

for future purposes? Yes, we can.

Yeah.

Bookings is a significantly higher number. However, it is a really forward-looking statement, so at this point, I would like to answer that question on one-on-one rather than.

What we do, Nehal, as we get the orders, and we start getting the units in and assigning it to customers, there's always a lag between bookings and actual revenue recognition. There's a little bit of lag. Yeah.

Understood.

Those that we didn't fulfill in June or ending June, they'll be starting rolling over to this quarter, the present quarter.

Got it. The $7 million education win disclosed a couple of weeks ago and discussed already, that was booked within the June quarter. Is that correct?

Not all of it. We book as we get the orders processed and assigned to the customer, the products assigned to customer, either shipped or installed or assigned. Got it.

Not all-

Can you discuss what are the drivers for winning this very material order?

Working closely with the partner. It was an RFP. Partner chose us over a major incumbent. We just met all the technical criteria and of course, made sure we gave a good price to the partner to win the deal. Essentially, product and pricing.

Okay, great.

Sorry.

Were you disclosing the monthly Yep, go ahead, please.

Oh, yeah, sorry. One additional detail I wanted to add is that the incumbents who we were replacing, as well as the competitors we won against, those companies have recently been acquired. Juniper was acquired by Hewlett Packard Enterprise, and VeloCloud was reacquired for the third time in five years by Arista. As these competitive products have been acquired, support from OEM has dropped significantly. Customers choose FatPipe because we still provide first-party support and market-leading support that customers appreciate.

Got it. Great. You were disclosing monthly recurring revenue for the past two quarters, which was up 50% year-over-year. Are you disclosing it again this quarter? If so, what is it?

Good point. I didn't check the actual numbers. We will be posting it as we get the numbers together. I don't think we disclosed that this quarter. Yeah. It does go up. Every quarter it goes up, as you can imagine, as we have new customers being added and renewals happening. Yeah, it does go up.

Okay. Finally, can you give us an update on where you are in sales headcount and where you expect to be at the end of the fiscal year?

Yeah. I think we are now up to 30+ people, 30 people, 31 people. We were 24 people at the end of March. We have about five more people. Our goal is, as we had stated before, to get to 36 people by the end of fiscal. We will be recruiting more people. We actually added two, three people a couple of weeks ago, we will be adding another five, six people by the end of December. If there's any stragglers or netting out anybody we let go, by end of March, we'll be at 36 people-38 people. We are on track as we projected last year.

Okay, great. Can you just remind us what are your sales quota expectations? Presumably, you're seeing a ramp-up satisfactory that is driving this healthy pace of sales ramp additions.

When we add the sales team, their quota's $2 million the first year. We can expect between $700,000-$1 million. Those who have a good Rolodex will hit that number faster. At the end of the first year, they all become very productive. We always are evaluating those who are not very productive and helping them get to be productive or having them leave. It's a simple concept there. The persons who have a good Rolodex and who have applied themselves very well to their job are doing well.

Thank you for the update.

I don't have a specific number.

No, you answered the question beautifully. Thank you.

Oh, thank you.

Congratulations.

Thank you, sir. Thank you, Nehal.

Yes. Going into question in chat. Got a question from Rudy. Question being, "SATBOOST is a latent game changer, especially in the government space, where many agencies are operating in low power and austere environments. Have there been any serious inquiries about adopting it?" To answer the question, Rudy, yes. We've already had deployment with state health agencies, with supermarkets, and with other, call it, rurally distributed customers. These deployments have already happened and customers are live and appreciating the use of the SATBOOST product. In terms of the sales pipeline, I obviously cannot talk too much about the sales pipeline due to it being forward-looking statements. However, we are seeing strong interest in the SATBOOST product from a variety of end customers across both public sector and private sector.

As we get more sales and specific case studies regarding SATBOOST, we will continue to post those on a regular basis, either on the website as case studies or we will mention it in future earnings calls.

Also, in fact, just today, we had a call with a major partner about the product and its application. Interestingly, a variant of the same product can be also applied for 5G. We can speed up 5G performance and connectivity. We had a call with a partner who's looking at both for satellite as well as for 5G. Anything wireless, really, in a generic way. Anything wireless because of our technology that we can improve the performance of these transmission media or lack of media here. We are able to improve the quality of this transmission as well as the speed of the transmission. There is very good traction. Short answer is yes.

Those of you who are investors, we appreciate you sending us leads. I know a couple of investors sent us leads saying, "Hey, you need to talk to this guy and that guy." Those of you who are on the call, if you know any potential opportunities, we would very much appreciate you sending us these leads. We'll take leads from anyone, and especially our investors who have a very vested financial interest in this company. You're all a big family for us. What is interesting is some of our original investors, they still have held on to their shares, and they're accumulating shares every time the stock drops. You can imagine that we have a big ecosystem that supports FatPipe.

Thanks, Bhaskar. One question-and-answer we've received is, FatPipe reported their strong revenue growth and profitability in Q1. How should investors think about the balance between growth and operating discipline going forward?

It's a balancing act, right? When there's growth, you are investing more in growth. I think it was Nehal or somebody had told me, focus on growth and it's okay for margins to come down. We are doing that, as you can see here. Also last quarter, we invested a significant amount of money in inventory, because when you get these big orders, you have to lock in the inventory. We locked in the inventory. We spent buying the inventory and also buying RAMs and SSDs and paying it forward in terms of buying those products with a fixed price. Marketing, we spent nearly $400,000 last quarter on marketing. The reason is that's the time when a lot of trade shows happen.

Now, this quarter, we won't have much marketing expenses, we are investing in all these opportunities to increase the growth of the company.

Great. Thank you, Dr. Bhaskar. An additional question we have is, where are you seeing success in the market? Are there any areas that you've been seeing notable wins in or continued momentum?

Very similar to the answer that I gave to Lisa. Across the board, there are some segments where the deal sizes are bigger, obviously we tend to focus on those kind of deals. Other than that, we are servicing the economy, regardless of whether it's a hospital or a retail store or a company, a manufacturing, financial, credit unions, just across the board.

Great. Thank you, Dr. Bhaskar. One question is someone is inquiring about our VeloCloud replacement program that we had announced in press releases in the past. How is that VeloCloud replacement program coming along?

It's actually coming along well. We have enough number of deals that we have closed to turn those customers to our side, we have a number of opportunities we are working on. The way this works is as more and more of those customers, more marketing happens to our partners and bringing awareness. As time goes by, when those deals come up for renewals, we'll see more happening.

We are not just going after VeloCloud. As you know, some of the big companies don't do a great job of taking care of their customers or partners. There's one company that takes three weeks to give you a quotation to a partner. We just snag that partner and that customer. The whole important thing is being a smaller company, we are able to produce products faster, features faster, respond to our partners faster. We are doing all of that at the same time. Like the $7 million order, we displaced a very large company. It was all about product and pricing and the fact that our partners know we are very responsive. All of that is captured in the awards that InfoTech gives us or the customer feedback on Gartner's website. All of that is captured.

One question we got in chat was describing the equipment spend that we have over competitors and how this edge is defensible. The way a child would characterize that is FatPipe is first and foremost a software company. The actual appliances we sell are commodity hardware, and we load our proprietary software onto that. In the vein of that, where some of our competitors have seen significant supply chain price increases as a result of competing needs from their semiconductor manufacturers overseas, where they're now competing with the standard GPU and data center companies for allocation of fab times.

FatPipe has continued to use our commodity supply chain for our equipment, which allows us to see less price increases and less increased lead times than what our competitors have seen, which has allowed us to maintain prices as is, in terms of the customer-facing prices and partner-facing prices, while competitors have had to increase their prices, and we haven't had any increased lead times as a result. That's for both order fulfillment and in general, supply chain. In general, we have that advantage versus our competitors, given we are using commodity hardware and loading our proprietary software onto it. Hey, thanks, everyone. If you have any other questions, please feel free to send them to me or put them in Q&A or in chat. One question is: what is FatPipe doing in AI, Dr. Bhaskar?

FatPipe has added AI in all aspects of our business, software coding, fulfillment services, software for fulfillment, pretty much everything. In terms of the product, we are a highly deterministic product. We use machine learning. When you say AI, machine learning is a subset of that. Machine learning enables us to do the fastest routing using spanning tree algorithms and allowing for jitter latency and everything else. Our job is to transmit packets from point A to point B in the fastest route possible with the least latency, and we do that better than everybody else. Now, you cannot apply AI to a very deterministic problem. Where AI comes in is when you have more fuzziness. As you all know, fuzzy logic is where AI came from originally. We are now looking at how to generate reports.

If you look at HPE and others, their application of AI in the business has been about creating reports using natural language questions. That is the easiest thing to do, right? It's not the smartest application of AI. Where we need to apply AI is when we can see how we can take a whole network and then see how to release congestions in the network. That is what we are working on. That is a lot more harder in a real-time space than anything else. I also told you how we have applied AI to content, graphical content. Graphical content, AI is perfect for that because it's fuzzy. When I say fuzzy, meaning you could have a person in a bikini versus a person who's naked, and the AI has to distinguish between the two. We have developed the software for that.

If you're a school and you want to block graphical images or sexual content, we have the AI technology applied for that. That is a perfect example of a perfect application of AI. Totally fuzzy logic. Content that cannot be just described deterministically, and our software is doing a great job on that. That will be applicable more to schools, but obviously, I have to charge more for that.

As Chief Executive Officer, what are the two or three priorities you are most focused on for the rest of the year?

Okay. I'm going to be a little facetious here. Number one is sales. Number two is sales. Number three, go to the person for number one and number two. It's all focused on sales, performance, financial discipline, and trying to help the stock price go up. It's just focused on sales, guys. That's all I tell my team. We have good products. We have a good organization in terms of customer support. The only thing we need to focus on is increasing our sales and keeping our margins as much as possible.

Great. One additional question is, do you have any updates on FatPipe's Total Security 360 cybersecurity solution that you have mentioned in the past?

We have completed the product. We have fully tested, load tested the product, and we have started giving it out to customers. It's been not as fast to start, but it's happening now. Like anything, our customers will change their current products with our product as those contracts come to an end. That is what we are focused on, finding out when the contracts are coming to an end, then pushing our product. Like I again said, our products are a lot more comprehensive. Total Security 360 is designed to block any type of gaps. Between when you buy three or four different products from four different vendors, there are gaps, cybersecurity gaps. By we giving a single product that covers all aspects of cybersecurity, we give you a total cocoon in which you can operate your business.

For the price of a latte per employee per month, you get everything, including endpoint detection and response, which itself costs about $5 from CrowdStrike. For that, I give you all the other aspects of cybersecurity.

Great. I think we are at 3:00 P.M.

Okay. Thank you, everyone. I really appreciate you taking the time to listen to this presentation and also being a shareholder. It's a great privilege to have you as a shareholder.

If you have any additional questions, please feel free to email the investor relations email. I believe it is [email protected], and that email can also be found on the website, and we'll be happy to respond to your questions over email if you weren't able to get them answered on today's call. With that, thank you everyone for joining the first quarter fiscal 2027 FatPipe earnings call. We hope you all have a great rest of your day. Thank you, everyone.

Thank you

Hi everyone, thank you so much for joining FatPipe's Q3 fiscal year 2026 earnings call. I will go ahead and read the Safe Harbor statement. Certain statements contained in this earnings call, including statements relating to the company's expectations regarding the completion, timing, and size of its proposed public offering, and listing may constitute forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as may, will, expect, intend, anticipate, estimate, believe, continue, or other similar words. Listeners are cautioned not to place undue reliance on these forward-looking statements, which are based on management's current expectations and are inherently subject to various risks, uncertainties, assumptions, or changes in circumstances that are difficult to predict or quantify.

These risks and uncertainties include but are not limited to risks and uncertainties associated with the consummation of the offering and other risks described in FatPipe's registration statement for the S-1. Except as required by law, FatPipe expressly disclaims the duty to provide updates to forward-looking statements whether as a result of new information, future events, or other occurrences. Now I will let Dr. Bhaskar, the CEO of FatPipe, conduct their earnings presentation.

Good afternoon, everyone. My name is Ragula Bhaskar, and I'm the CEO of FatPipe. Thank you for joining us on this webinar call, the Q3 earnings call. We have updated SEC with the latest filings, and we are submitting we're also putting out a press release in a moment. The next slide, please. I would like to show the highlights for this quarter. Our total revenues was $4.1 million, representing a 30% growth. We want to make sure if the others are able to listen.

Sure.

Those who joined the webinar, if you could check that.

Yep.

Okay. So the total revenues was up 30%. The monthly recurring billings grew 48% compared to last year's same quarter, reflecting a continued adoption of FatPipe's subscription model. Total quarterly billings increased 27% compared to last year, and then adjusted EBITDA for three months was $0.59 million, approximately 14% EBITDA compared to last year's $0.57 million. Cash equivalents were $6.2 million, providing us a flexibility to support growth, and then continued expansion of the sales organization and channel partner network to support growth and pipeline activity. We closed multiple large multi-site SD-WAN deployments across education, financial, and enterprise verticals. Next slide, please. Adjusted, again, the EBITDA was up 14% versus the 18% in the previous quarter, year-over-year, reflecting an increased investment in growth.

In the nine months ending December 31st, EBITDA margin for nine months was about 21% versus 31%, again reflecting the investment in growth, which is starting to reflect in the top line. Net income was $310,000 compared to $84,000 last year, again due to higher revenues. And then net income ending December 31st of $1 million for nine months was lower compared to the previous year. A significant part of it was because of stock-based compensation expense.

One thing I would like to caveat here, the stock-based compensation expense was recognized in the second quarter for the $625,000. The third quarter did not have stock-based compensation expense.

Thank you. Next slide, please. This reflects the MRR and ARR growth as our strategy moves towards recurring revenue models. As you can see, there's been a growth in both MRR and annual and quarterly billing rates. We are happy with this progress as more customers adopt our recurring revenue model, while the bookings have been growing every quarter. New bookings. Next slide, please. This shows you the EBITDA numbers. These numbers are already in the 10-Q with the SEC. Next. Balance sheet has grown significantly, reflecting both the proceeds from the IPO as well as from operations. Cash flow for the last nine months was $132,000 Cash flow for the last three months was $240,000. Again, our focus is on growth and investment in growth, but we want to always keep it cash flow break-even. This quarter, of course, last quarter was a cash flow positive quarter. Next.

This basically gives you the highlights of our financial performance for this past quarter. We are working towards making sure that this quarter also is a very good quarter. Again, these are personal aspirations, not projections.

That concludes the presentation portion of the earnings call. We will now open it up for questions from the attendees on the phone. Vikrant will be managing the Q&A. So I'll ask the attendees, if you have any questions, please use the Q&A feature of the Zoom webinar to ask your questions, and we will start going through the Q&A as it comes in.

Overall, while Vikrant is collecting the questions, we have been working towards building our other partner channels, so both in the traditional VAR channel, the solution provider channel, as well as the ISP channel. We have initiated those paths, and we have been hiring. As we told the Street, at the end of December, we had 24 salespeople, and the goal is this year to add another 12 salespeople in markets where we don't have a presence to bring it up to about 36 salespeople for our team. That should help in increasing the revenues for the company as well as expanding in different markets around the country. Vikrant, any questions?

Yes, Dr. Bhaskar. So first question we received is, what do you see as FatPipe's top strategic priorities for the next quarter, so Q4 fiscal year 2026?

This coming quarter, the focus is on executing on all the orders that we have received as well as getting our salespeople to be productive and start to push more of our new products into the market.

Then received one additional question related to that. Where do you see FatPipe going six months from now, and what is your level of confidence in meeting the expectations you set?

We are pretty confident, I should say, for the goals we have set for the next six months. We have orders coming in. The pipeline looks very good. The new people have become productive. And so I feel comfortable that the next six months should see continued growth for the company. And as we have excess cash flow, we will continue to invest in building our sales team further.

And then a question for Sanch. Can you explain the drop in deferred revenue this quarter while revenue has increased on the top line?

That's a very good question. Thank you for that. The deferred revenue was a traditional revenue that we had from our existing customers from the past. As these customers move to monthly recurring revenue model, that revenue portion is going to decline, and it is going to contribute towards our monthly recurring revenue, which is increasing quarter-over-quarter. We are encouraging our customers to move to a monthly recurring revenue model, and this is a positive trend that we are seeing from our customers.

Great. Thank you so much. And then for Dr. Bhaskar, FatPipe has been producing consistent product growth and very high gross margins. How sustainable do you see this trend going forward in the next few quarters?

Our goal is to keep the margins up. However, if we get some big deals, big deals will require some level of discounting, as all of us know. So if those deals start coming in, you will see some lowering of gross profit margins, but that is going to be more than made up by total profit because the bigger deals don't need as much sales. Cost of sales will be less. So it'll balance out. Probably a lowering of gross margins will be more than offset by increase in gross profits.

Great. Thanks so much, Dr. Bhaskar. How do you see your outlook with your various partners looking for revenue contribution by partner? Do you think that your larger partners will continue to contribute the same percentage to sales going forward, or do you think direct sales and other channel sales strategies will also have contributed to your top line?

We expect our largest partners to continue to contribute. However, having said that, we are also developing other partners who we have ignored in the last few years simply because we were focused on our large partner. We are adding salespeople to support the other large partners that we have signed up, but we didn't have the resources to invest. Now that we have resources to invest, we are going back and developing those partners. By the end of the year, you should see a nice tilt again into more balance. That's a good problem to have. We are happy we have that problem. We will build out other partners who were contributing, and we just want to bring them back up to a healthy level of production.

Thank you so much, Dr. Bhaskar. An additional question we received is, how does the company balance growth investment against maintaining positive cash flow? You have shown positive revenue growth compared to quarter this time. How do you anticipate this impacting cash going forward?

The perfect scenario would be growth as well as cash flow break-even. Again, my goal is cash flow break-even for the next two years and reinvest the money in growth. But you'll find that as the growth goes up, you will have more positive cash flow. It's not going to be a perfect science of balancing cash flow versus growth. The emphasis is on growth because there is enough opportunity. The market is huge, and we feel that we are scratching the surface right now. So we feel comfortable that we can continue to invest in growth and see a positive return. But I always don't want to burn cash, so I want to be cash flow positive as much as possible.

Great. Thanks so much, Dr. Bhaskar. And on the sales headcount, you mentioned that you plan to continue to grow your sales headcount quarter over quarter as you have been doing historically in the last few quarters. What is your plan for sales headcount and your sales organization over the next few quarters?

As we mentioned, we have multiple channels, multiple partners, and multiple territories where we don't have a presence. To put things in perspective, like I mentioned last time, there are 30 NFL cities, and we are not in most of them. So there's a huge opportunity to be in the large cities, add local people. And in each local state or each state and each market, there are multiple channels, right? So we can add 12 people and not make a big dent in terms of coverage. So we'll continue to add more people in more geographies and in verticals. The possibilities are pretty much endless in terms of how many people we can add into different markets without bumping into each other.

Thank you, Dr. Bhaskar. Next question is for Sanch. Are there any comments you can provide on current sales trends, and how is FatPipe navigating the political environment?

Being in technology, politics plays a little less of a role in our sales trajectory. And as U.S. markets continue to grow, U.S. economy continues to grow, I don't believe politics has had any impact on us in terms of the sales trends. We have shown that we have continued to grow over the last several quarters, and as you can see in the nine-month results as well. As Dr. Bhaskar said, our pipeline looks healthy, and 95% of our business is in the U.S. Given that and technology markets continuing to progress, we don't expect any impact of politics on our sales projections, sales projections, or sales outlook.

If I may add, Sanch, it's more about us executing to what we told you we are doing, which is adding sales professionals with a solid experience in the business, solid Rolodex, come on and ramp up fast. So that is probably the most important thing for us. It's not about the size of the market, or it's not about the politics. So that's why we are heavily focused on our sales. Another question that had come up last time was acquisitions. We are interested in acquisitions. I know there are several people on the call who are investment bankers. We would love to talk to you if you bring in acquisitions that are attractive to the company, serving the same customer in terms of the buyer profile.

Thanks, Dr. Bhaskar. And one additional question we've received from the group is, have you integrated any AI-driven threat detection or behavioral analytics tools into your Total Security 360 product that you have on the market?

That's a good question. We have added different AI models inside our cybersecurity. In fact, we have our own AI machines in our premises here. The reason for that is customer data. We don't like customer data leaving the customer premises or GDPR requirements. So let me give a simple example of application of AI. Some schools would obviously like to block any images, pornographic images. Now, those are very hard to normally determine if they're pornographic or not. And we have our own AI model that can take a look at these images and determine if they are naked images or images that shouldn't be presented to children. And therefore, we can then highlight those images as blocked and refuse to download those images.

Besides all the different things we do for URL filtering for porn sites and sites that we shouldn't be sending children to, we also have a way of doing image analysis. That is all pure AI, as you can imagine, because it is not a cut-and-dry process. Yes, we have added the AI component to a very specific portion of cybersecurity and security needs of, say, schools or companies.

Dr. Bhaskar, one additional question is, what is it about FatPipe's suite of tech products that uniquely positions the company for continued and future growth? And how do you see durability holding up moving forward for FatPipe?

FatPipe, if any of you have been using our products, you realize that we are always on top of the market, right? We develop technology before the customer asks for it. We develop technology that is unique, that serves a particular need for the customer even before the customer anticipates. So we have been with this for 20-some years. We have always been ranked number one. We just put out a press release that customer ratings we don't pay analysts, as you can imagine, but customer rates us always as number one for the product and for the features and for support. And the most recent one was Info-Tech SoftwareReviews where we were called off the charts in terms of our support for the customer and our ability to take care of the customer. So that is always going to be our priority, adding more features.

For instance, the most unique thing is, as you all know, typically, all the cybersecurity companies do cloud-based solutions. The problem with cloud-based solutions is, 38% of the time, this was a study done by McAfee. 38% of the time, hospital healthcare companies said that they have difficulties accessing the cloud because of latency, jitter, and everything else. Most recently, you've seen that several cloud cybersecurity companies went down. Cloud providers have gone down. So the system is starting to creep. What we have introduced is, besides a cloud-based solution, an on-premise-based solution for cybersecurity. The advantage is everything is local to the customer. Jitter and latency is almost removed because most of the employees are in the office or very close to the office, and the data does not leave the building.

That is of great importance to a lot of people because every week, you see articles about that data being exposed. We have made sure that this technology, this architecture is very much suited for high security of data and then also applying the same cybersecurity postures across all types of security: network security, cybersecurity, and email security. So now your email is also processed internally. We look at everything about your email, data loss prevention, any attachments that you're sending that are confidential or have keywords. And if you're receiving an attachment that has a virus or a phishing email, we can monitor that. By doing this comprehensive cybersecurity and network security and email security solution, we believe we are offering the best solution for cybersecurity out there.

And now we are going to spend a lot of time pushing hard on this particular product offering because we feel it's far superior to these disparate systems being offered by different companies.

Thank you, Dr. Bhaskar. For Sanch, are you getting revenues from the new security products already, and are you planning to separate security and SD-WAN revenues in the future?

So as the revenues grow and we start categorizing our product with different products, we will separate the revenues by product in the future. At the present time, we do have revenue from our cybersecurity offering where we are providing firewalling, access control, geoblocking, all these functionalities to our customers. So yes, we are generating security revenue as well as SD-WAN revenue. At this time, we have not separated them, but in the future, as the company grows, as the revenues grow, we will consider separating them.

Great. Thank you, Sanch. And Dr. Bhaskar, do you see any growth? How do you see growth comparing between the mid-markets versus enterprise or SMB markets for FatPipe? And do you plan on targeting any of these markets going forward with a particular emphasis?

We have different products for different customer markets, right? Our main SD-WAN product is for enterprise-class customers. However, having said that, small customers, single-location customers also use our SD-WAN products. We have so many features that different customer startups use different parts of the product. So to answer the question, we would go where the market is. Obviously, enterprise customers are high-margin customers, and the smaller, lower-market customers are more scattered, but they contribute there. It's an economic contribution from those customers too. And everybody needs cybersecurity. Everybody needs network security. And then we are also introducing a new set of services, and we will be announcing that this quarter. And so we are going to add more security services to customers that will benefit both across the enterprise to the lower-end mid-market and small customers. But security, everybody needs security. And people cannot afford the current cybersecurity providers.

They charge ridiculous amounts of money per seat. You need a whole lot of bandwidth going back and forth. We believe that the lower-end customers need service and support because of our low-cost structure and we have expertise in providing on-premise products. Not everybody does anymore. For instance, we can take all the cybersecurity features. That's an amazing amount of features. We can pack it into a box that sits at the customer's site and can respond faster and can process thousands of emails, literally 20,000 emails I can process, and also thousands of sections. I'm able to do it in the box sitting on the customer's premise. That's the beauty of our architecture. We are able to do what the customer needs and more.

There is a question around the stock price and M&A activity. To be clear, we are aware of what the stock price is and do not plan to issue shares to do acquisitions. We will be balance sheet financing any acquisitions to avoid any dilution to the stock where it does not make sense to use equity in that case.

Yes, I agree with that. Equity is not on the table. We do have good friends in the investment banking industry. If we are going to acquire something, it will be in the form of a note payable, in which case we will be using the cash flow from the acquired entity to finance a lot of the project. As we grow, we will continue to generate cash, and we'll have to do a delicate balance between additional investment and growth or needing the cash to pay for the acquisition. I have two Wharton graduates here who have worked in the industry with significant experience in investment banking and in consulting, management consulting.

So they have seen between them 18 acquisitions, very large, of course, but they bring the same philosophy to the table to help figure out how to do an acquisition and how to finance an acquisition.

Thank you, Dr. Bhaskar. In terms of your cybersecurity product, do you see Palo Alto and CrowdStrike as competitors, or how do you think about the competitive landscape for your cybersecurity solution?

Yeah. CrowdStrike does what it does, and it does extremely well. Palo Alto does what it does, and they do it extremely well. And they are the 800-pound gorillas in the industry. But as we all talked about, everyone has their sandbox. The focus is to thrive in your sandbox, take care of your customers, and have your cost structure such that you can offer an equivalent or better product at a lower price. There's somebody who told me once, it says, "Always be the mostest with the cheapest." And if I can provide the mostest with the best possible pricing, I will get my market while the big boys have their own cost structure.

Thank you, Dr. Bhaskar. I think those are the bulk of the questions in the chat. If anybody has any final questions, please feel free to add them to the Q&A.

Again, thank you very much, everyone, for joining the call. We appreciate it. We look forward to your support of FatPipe. We will, on our side, continue to work to do a good job of growing the company, getting good margins, and more importantly, providing value to the customer and making sure the customer continues to like our product and rate us number one. That's probably the most important thing because if we can take care of our customer, the customer will take care of us. Thanks, everyone.

Thank you so much, everyone. That is the FatPipe Q3 2026 earnings call presentation. If you have any additional questions, please feel free to email us at [email protected]. We look forward to continuing to meet your expectations for FatPipe.

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