IZMO Ltd Management Discussions

For the Financial Year Ended March 31, 2026

OVERVIEW

Izmo Limited is a deep technology company with two complementary business verticals.

The Digital Intelligence business, built over more than two decades, provides automotive digital retail, content licensing, AI-powered analytics and enterprise software platforms to manufacturers and dealership networks across 22 countries.

The semiconductor business, operated through izmo Microsystems Private Limited, provides advanced semiconductor packaging and photonic IC packaging services for IIT Madras, where the Company has served as the designated Photonic IC Packaging Partner at CPPICS since the Centres inception five years ago.

FY 2025-26 delivered the Companys highest-ever revenue and a material improvement in operating profitability before Other Income.

Consolidated revenue from operations reached ?284.88 Crore, a growth of 26.8% over the previous year. Over the three years from FY23 to FY26, revenue compounded at approximately 23% annually, from ?153.83 Crore to ?284.88 Crore. EBITDA before Other Income grew approximately 36% from approximately ?38.31 Crore to approximately ?52.09 Crore, with the corresponding margin improving from approximately 17.1% to 18.3% of revenue.

This improvement was not visible at the reported EBITDA level because Other Income declined from ?335.26 Crore to ?14.75 Crore. Profit After Tax stood at ?47.56 Crore, EPS at ?31.89 per share, and net worth strengthened to ?408.97 Crore.

The Digital Intelligence platforms continued to generate stable recurring revenues, providing the financial foundation that supports the Companys continued investment in semiconductor and photonic capabilities. izmo Microsystems expanded its defence electronics engagements, advanced its photonic IC packaging capabilities and continued investing in packaging infrastructure.

The Companys strategic trajectory over the past several years has followed a consistent path: an established digital technology business generating recurring revenues and cash flow; sustained investment in deep technology, including advanced semiconductor packaging and silicon photonics; the development of an operating semiconductor packaging capability with commercial customers, cleanroom infrastructure and institutional partnerships; and increasing exposure to structural growth in AI infrastructure, defence electronics, telecom and Indias semiconductor localization program.

THE SEMICONDUCTOR OPPORTUNITY

Advanced Packaging

Advanced semiconductor packaging has become increasingly important as semiconductor products require greater integration density, bandwidth, thermal performance and power efficiency. As traditional transistor scaling has slowed, the industry has shifted toward heterogeneous integration, chiplet architectures and advanced packaging as the primary means of delivering improved system-level performance. This has expanded the addressable market for advanced packaging services across virtually every semiconductor end market.

izmo Microsystems operates within this segment, providing packaging, assembly, testing and qualification services for semiconductor and photonic devices. The Companys advanced packaging capabilities form the established commercial base of the semiconductor business.

Silicon Photonics and Optical Interconnects

Within advanced packaging, silicon photonics represents a high-value growth segment with particular relevance to izmo Microsystems capabilities.

The growth in AI compute is driving higher bandwidth and power-efficiency requirements across datacenter infrastructure.

This is accelerating the adoption of optical interconnects, which in turn is driving demand for silicon photonics and specialized photonic packaging. Industry estimates project the datacenter photonics market to grow at a compound rate of approximately 12% annually through 2030.

The packaging layer in silicon photonics contributes a significant proportion of the value of a finished optical module. The precision required in aligning optical waveguides, integrating laser sources with photonic integrated circuits, and managing thermal and electrical performance creates a meaningful barrier to entry.

izmo Microsystems sustained investment in photonic IC packaging through the CPPiCS ecosystem at IIT Madras positions the Company within this segment.

Indias Semiconductor Ecosystem

Indias commitment to building a domestic semiconductor capability deepened during FY26. The India Semiconductor Mission (ISM), backed by a ?76,000 Crore outlay, continued to attract investment in fabrication, OSAT and advanced packaging. Large-scale projects in semiconductor fabrication, mobile phone manufacturing and electronics assembly are now underway across the country, and the Indian semiconductor industry is maturing rapidly.

Global-quality supply chains are being established, encompassing wafer fabrication, assembly and test, advanced packaging, and component manufacturing. For the first time, India is developing an end-to-end semiconductor ecosystem rather than participating solely in design services. This structural shift is creating sustained domestic demand for packaging, testing and integration capabilities across the value chain.

As the domestic ecosystem develops, companies with established operations, demonstrated capabilities and institutional relationships within Indias semiconductor infrastructure are better positioned to participate than those at earlier stages of development.

IZMO MICROSYSTEMS

Capabilities and Infrastructure

izmo Microsystems has been operating in semiconductor packaging for several years, with cleanroom packaging and testing infrastructure at its Bangalore facility and commercial customers across defence electronics and other segments.

The Companys current capabilities encompass advanced semiconductor packaging including die attach, wire bonding and encapsulation; photonic IC packaging and assembly; testing and qualification of semiconductor and photonic devices; integration of optical and electronic components; and packaging process development for silicon photonics applications.

Capital work-in-progress related to izmo Microsystems stood at ?74.88 Crore at March 31, 2026, reflecting continued investment in equipment and facility development.

CPPICS at IIT Madras

izmo Microsystems has served as the designated Photonic IC Packaging Partner at the Centre for Programmable Photonic Integrated Circuits and Systems (CPPICS) at IIT Madras since the Centres inception.

This sustained operating partnership, supported by MeitY, has provided the Company with access to photonic IC design and fabrication research at one of Indias premier engineering institutions, participation in the process development kit (PDK) and multi-project wafer (MPW) program, shared infrastructure that reduces the capital intensity of capability development, and practical packaging experience accumulated through years of execution within the program.

SilTerra Malaysia continues as the foundry partner within this ecosystem for wafer fabrication, with izmo Microsystems handling downstream packaging, testing and qualification.

izmo Microsystems participates in photonic IC design, simulation and characterisation activities through the CPPICS ecosystem and its international technology collaborations, complementing the Companys packaging and integration capabilities.

INTERNATIONAL COLLABORATIONS

The Company collaborates with CCRAFT Technologies (Switzerland) and Alcyon Photonics (Spain) in areas related to photonic design, fabrication and related technologies. These collaborations broaden izmo Microsystems access to specialised expertise and complement the Companys packaging capabilities.

(Image: izmo micro, Alcyon Photonics, CCRAFT logos – "izmo Microsystems joins European Photonics Leaders to Accelerate Next-Gen Photonics Solutions")

Defence Electronics

izmo Microsystems expanded its defence electronics business during FY26, building on relationships developed in prior years.

Indias defence budget for FY 2025-26 stood at ?6.81 lakh Crore, with the FY 2026-27 allocation increasing to ?7.84 lakh Crore. Nearly 75% of the capital acquisition budget is reserved for domestic procurement under the Indian-IDDM category. The Defence Acquisition Council accorded Acceptance of Necessity worth over ?3.3 lakh Crore during FY26, creating a multi-year pipeline of indigenous procurement opportunities. Defence PSU order backlogs now represent multiple years of revenue, indicating a sustained investment cycle in indigenous defence electronics across electronic warfare, communications, electro-optics, radar sub-systems and photonic components.

The Company provides packaging and integration services for components used in defence communication and surveillance systems. The structural preference for domestically manufactured solutions under Indias defence procurement framework supports companies with established indigenous capabilities. The Company expects its defence business to continue growing as Indias procurement mandates create sustained demand across the defence electronics supply chain. Global-quality supply chains are being established, encompassing wafer fabrication, assembly and test, advanced packaging, and component manufacturing. For the first time, India is developing an end-to-end semiconductor ecosystem rather than participating solely in design services. This structural shift is creating sustained domestic demand for packaging, testing and integration capabilities across the value chain.

Telecom

Indias telecom sector invested over ?71.5 lakh Crore in 5G infrastructure through FY26. The next phase of network evolution demands higher-bandwidth optical interconnects for backhaul, fronthaul and core network infrastructure. The transition to 5G standalone architectures, fixed wireless access and fiber densification creates sustained demand for photonic components and optical sub-assemblies.

The broader India telecom market is projected to grow from approximately US$38 billion in 2025 to over US$72 billion by 2034, with the investment mix shifting from coverage toward capacity, latency and spectral efficiency, each of which increases the optical content per network node.

izmo Microsystems packaging capabilities are applicable to components used in telecom optical infrastructure, and the Company is pursuing opportunities in this segment.

(Image: rocket launch / satellite)

DIGITAL INTELLIGENCE

The Digital Intelligence business provides established recurring-revenue, technology and cash-generation foundation that supports izmos continued investment in deep technology. The business encompasses four platforms: izmocars, izmostock, FrogData and the izmo.ai DEEP platform.

izmocars

izmocars provides automotive manufacturers and dealership networks with digital retail solutions spanning virtual showrooms, interactive vehicle configurators, inventory merchandising and omnichannel customer engagement tools. During FY26, the platform operated across 28 countries, serving global OEMs including Stellantis and Ford.

The Company added over 113 new dealer customers in the United States and more than 33 across Europe and the United Kingdom during the year. Deeper integration with Stellantis across European markets and continued expansion of the FordDirect relationship reinforced the platforms position within the automotive retail technology ecosystem.

izmocars long-duration customer engagements, deep workflow integration and multi-year contracts provide meaningful revenue visibility.

izmostock

izmostock.com is one of the worlds largest licensable automotive content libraries, delivering stable, high-margin recurring revenues. The platform houses a substantial repository of high-resolution CGI vehicle imagery, 3D models, 360-degree spins and video content, curated and expanded over more than two decades.

OEMs, dealer groups, rental car companies, media companies and automotive portals license content on an annual recurring basis. Retention is strong. Once integrated into customers digital retail, marketing or fleet management workflows, the content becomes embedded operational infrastructure. Margins are structurally high because the incremental cost of serving an additional licence is minimal against the amortised production base.

The rental car segment is a meaningful contributor. Major rental car companies require comprehensive, consistent vehicle imagery across their entire fleet for digital booking platforms and mobile applications. The breadth of izmostocks library across makes, models and model years supports multi-year contracts with strong revenue visibility.

frogdata

FrogData is an AI-powered analytics platform that helps automotive dealerships improve customer retention, optimize service department operations and make data-driven decisions. The platform demonstrated strong unit economics during FY26, with healthy margins and strong gross revenue retention.

(Image: DEEP – Data Engineering & Enterprise Platform – AI, Data Analytics)

The partnership with Ford through FordDirects "The Shop" marketplace materially expanded FrogDatas addressable channel, providing access to one of the largest dealer networks in the world. FrogData combines deep domain expertise, high retention and expanding OEM distribution.

izmo.ai DEEP Platform

The izmo.ai DEEP (Data Engineering and Enterprise Platform) is the Companys proprietary AI infrastructure. DEEP is built on years of software products experience and dealer operational data from FrogData, domain knowledge embedded in izmocars, existing OEM and dealer integrations, and proprietary data engineering infrastructure. These assets provide domain-specific data assets, automotive context and an established customer distribution channel, a combination that differentiates the platform.

During FY26, DEEP was deployed to enhance capabilities across the Companys existing product lines, supporting faster product development, workflow automation and AI-powered customer engagement.

TECHNOLOGY INVESTMENT AND INTANGIBLE ASSETS

The Companys intangible asset base of ?275.99 Crore primarily represents technology developed and accumulated over more than two decades. This includes the automotive content library, which is the largest component and has been built through continuous CGI production, 3D modelling and photography over more than twenty years; the digital retail platform software powering izmocars across 28 countries; the analytics platform underlying FrogData; the AI and data infrastructure supporting DEEP; and other accumulated technology assets.

These assets support the Companys existing revenue-generating businesses. The automotive content library generates recurring licensing revenue. The digital retail platforms serve customers across 28 countries. FrogData and DEEP operate on the analytics and AI infrastructure represented in this base. The assets have been developed through sustained investment in software engineering, content production and data infrastructure in accordance with applicable accounting standards.

Continued investment in proprietary technology is necessary for the Company to maintain its competitive position across its businesses. The Companys approach has been to invest consistently and build an asset base that compounds over time, creating platforms and accumulated technology assets that provide meaningful barriers to replication.

FINANCIAL REVIEW

Particulars (? Crore)	FY 2025-26	FY 2024-25
Revenue from Operations	284.88	224.61
Other Income	14.75	35.26
TOTAL REVENUE	299.63	259.87
Employee Benefit Expenses	108.79	112.12
EBITDA (incl. Other Income)	66.84	73.57
EBITDA before Other Income	52.09	38.31
EBITDA Margin before Other Income (%)	18.3%	17.1%
Profit Before Tax	47.73	53.72
Profit After Tax	47.56	48.88
PAT Margin (%)	16.7%	21.8%
Earning Per Share (?)	31.89	33.90
Net Worth	408.97	395.15

Revenue

Revenue from operations grew 26.8% to ?284.88 Crore. Export revenues grew 25.4% to ?265.53 Crore. Domestic revenues grew 50.1% to ?219.35 Crore, reflecting the contribution from izmo Microsystems and growth in India-based services.

Over three years, revenue compounded at approximately 23% annually, from ?153.83 Crore in FY23 to ?284.88 Crore in FY26.

Operating Profitability

EBITDA before Other Income grew approximately 36% from approximately ?238.31 Crore to approximately ?252.09 Crore. The corresponding margin improved from approximately 17.1% to 18.3% of revenue. This improvement was not visible at the reported EBITDA level because Other Income declined from ?35.26 Crore to ?14.75 Crore. Reported EBITDA (including Other Income) stood at ?66.84 Crore compared to ?73.57 Crore in FY25.

Profit Before Tax was ?47.73 Crore and Profit After Tax was ?47.56 Crore. The effective tax rate remained low, supported by net operating loss carry-forwards in the US subsidiaries from legacy acquisitions.

Delivery Model

During FY26, the Company expanded delivery capacity through a combination of internal teams and specialist external resources. This supported revenue growth without a corresponding increase in fixed employee costs, although it resulted in higher consultancy expenditure.

Employee Benefits Expense declined from ?112.12 Crore to ?108.79 Crore, while Consultancy Charges increased from ?30.02 Crore to ?79.84 Crore. This reflects a deliberate shift toward a more flexible delivery model that scales capacity in line with project demand while managing fixed cost commitments.

Balance Sheet

Net worth strengthened to ?408.97 Crore from ?359.15 Crore, supported by retained earnings. Total assets grew to ?493.82 Crore. Trade receivables stood at ?129.05 Crore compared to ?98.89 Crore in FY25. Intangible assets of ?275.99 Crore are discussed in "Technology Investment and Intangible Assets" above. The Company maintained a conservative capital structure with total borrowings of ?3.57 Crore on a net worth base of ?408.97 Crore, a debt-to-equity ratio of less than 0.01x.

PEOPLE

The Companys ability to operate across automotive digital platforms, AI infrastructure and advanced semiconductor packaging depends on the depth of its engineering and leadership talent.

The US operations are led by a senior team with decades of combined experience in automotive technology, digital retail and enterprise SaaS. izmo Microsystems combines semiconductor packaging engineers, photonic specialists and process engineers. The digital and AI teams in India bring expertise in cloud architecture, machine learning and full-stack product development.

The breadth of engineering disciplines required across the Companys businesses, spanning advanced semiconductor packaging, silicon photonics, AI platform development, CGI content production and SaaS analytics, is unusual. The Company has invested in building multi-disciplinary teams capable of operating across these domains. Its association with IIT Madras, partnerships with international technology companies, and the technically demanding nature of the work contribute to its ability to attract and retain skilled professionals.

As at March 31, 2026, the Companys workforce comprised 594 employees across its operations in India, the United States, the United Kingdom, Germany and France.

OUTLOOK

The Companys priorities for FY27 are disciplined execution, commercialization of existing capabilities, continued expansion of recurring digital revenues, and focused investment in semiconductor and photonic packaging opportunities where the Company has established technology and institutional advantages.

Within Digital Intelligence, the focus is on broader commercial deployment of the DEEP AI platform, expanding recurring SaaS revenues through deeper customer penetration and geographic expansion, and building on the FrogData-FordDirect partnership.

Within izmo Microsystems, the Company will continue growing its advanced packaging business, expanding its defence electronics customer base, and pursuing opportunities within the telecom and datacenter optical interconnect markets.

The broader environment supports both verticals. AI infrastructure investment continues to expand demand for advanced packaging and optical interconnects. Indias defence budget and indigenization mandates create a multi-year procurement cycle for domestic semiconductor capabilities. The India Semiconductor Mission is developing an ecosystem in which izmo Microsystems has an established presence.

Digital Intelligence provides the recurring-revenue and cash-generation foundation. Semiconductor and silicon photonics represent the Companys major emerging growth opportunity. The discipline to invest in one while generating returns from the other has characterized the Companys strategy over the past several years, and will continue to do so.

KEY RISKS

Customer Concentration: A meaningful proportion of revenue is derived from a limited number of large automotive OEM and dealer group relationships. The Company mitigates this through geographic diversification across 28 countries and continued expansion of its customer base.

Semiconductor Commercialization: Commercialization timelines in semiconductor technologies can be longer than anticipated. The Company manages this through disciplined investment, institutional partnerships and a capital-efficient approach to capability development.

Foreign Exchange: With over 93% of revenue earned in foreign currencies, the Company is exposed to exchange rate movements. During FY26, favorable currency movements contributed ?111.47 Crore to other income. Natural hedging through the US and European cost base partially mitigates this exposure.

Technology Evolution: Rapid advances in AI and semiconductor technologies require continued investment in capabilities and product development. The Companys proprietary platforms and domain-specific engineering assets provide a foundation, but sustained investment remains essential.

Talent Retention: The departure of key technical personnel can affect program execution. The Company mitigates this through competitive compensation, technically challenging work and institutional partnerships.

CAUTIONARY STATEMENT

Statements in this Management Discussion and Analysis describing the Companys objectives, expectations and projections may constitute forward-looking statements within the meaning of applicable laws. These are based on managements current expectations and are subject to risks and uncertainties.

INTERNAL CONTROLS

The Company maintained a comprehensive internal control framework, reviewed periodically through internal audits and Audit Committee oversight. Internal financial controls were found to be adequate and operating effectively during the year.

Actual results may differ materially due to changes in economic conditions, technology developments, market dynamics, regulatory changes, competitive intensity, geopolitical developments and other factors beyond the Companys control. The Company undertakes no obligation to update forward-looking statements except as required under applicable law.