Shadowfax Technologies Ltd (SHADOWFAX) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day and welcome to the Shadowfax Technologies Limited Q2 FY '27 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing "*" then "0" on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Abhishek Bansal from Shadowfax Technologies Limited. Thank you, and over to you, sir.
Abhishek Bansal (Shadowfax Technologies Limited): Thank you, ma'am. Good evening, everyone, and thank you for joining us today. With me today are Praveen Kumar, our CFO, and Sachin Dixit, who leads corporate development and investor relations. For those of you who are newer to our story, Shadowfax is a new-age, technology-led, third-party logistics company.
Abhishek Bansal (Shadowfax Technologies Limited): Our job is to take digital commerce deeper into India. We started with hyperlocal delivery in 2015, and today, we deliver for e-commerce marketplaces, quick-commerce platforms, D2C brands, and small sellers across the country. Quarter two, financial year 2027, has been a milestone quarter for us. There are two significant, important milestones that we have hit in the current quarter. The first one, we have crossed 1,500 crores of top line for the first time ever. Along with accelerated growth, we are also proud to report a 5% adjusted EBITDA margin, which is also a first for us. As we do this, growth is still picking up. And we go into the festive peak with more capacity than we have ever had in the business. Before Praveen takes you through the quarter, I want to start with the single reason we win in this market today. It is not price. It is speed. A logistics network competes on price, reach, and speed. Price can be matched within a quarter. Reach can be bought. But speed has to be built. And it has to be built before the volume arrives. Speed comes from the DNA of the company, where first principle thinking results in solutions that were unheard of earlier. We brought speed to hyperlocal delivery since our inception in 2015. When quick commerce came up, clients partnered with us to improve their delivery timeline. Next up came where we pioneered Prime, which is our same-day, next-day deliveries, which we offer to e-commerce players. And that has been the big driver of our rampant market share gain in the D2C and the SME space. Even today, we remain the only third-party network of national scale, delivering same day and next day across more than 120 cities. It is also increasingly what our customers are buying from us. Let me give you one example of what lets us do. On a marketplace, a fast delivery promise has historically been available for inventory sitting inside a marketplace-owned warehouse. If small sellers shipped from their own shelf, they could either not offer same-day, next-day delivery, however good their price or product was. The badge belonged to the warehouse, not to the seller. This quarter, we have changed that. We now pick from a small seller's own location and still deliver same day or next day on those marketplaces. A seller in Delhi can show the same delivery date as a marketplace fulfilled listing, without prepositioning inventory, without paying for storage, and without giving up control of their own stock. This capability always belonged to large sellers with deep pockets, now belongs to everybody. And this is also why speed pays. A seller competing on a delivery date values speed very differently from a large marketplace optimizing for cost. And this shows up in our realization, which is 15% to 20% higher for same-day delivery on the same network. This is also the reason we acquired CriticaLog, where we service time-critical requirement of more than 550 customers today. This is what we love, innovating, thinking ahead of the curve, to enable India's digital commerce penetration and to take more and more customers online. Now, for most of industry's history, scale in Indian logistics meant one thing, carrying volume for a handful of large marketplaces. That business built us, and it remains a large part of what we do even today. Whether
Abhishek Bansal (Shadowfax Technologies Limited): fastest growing part of our business for some time now is the massive long tail of D2C brands and SMEs shipping directly to their own customers. Our D2C business more than doubled year-on-year. Our share of the D2C market rose 2 percentage points quarter-on-quarter to above 14% right now. We service twice the number of brands we did one year ago. And we have also doubled our wallet share across our largest D2C customers. Shadowfax 360, a self-serve platform for small sellers has scaled faster than anything we have built. Within just 200 days of launch, we now have more than 6,700 sellers ordering through the platform. 2/3 of these came without any sales effort. Customers outside the top 10 are now our fastest growing group. They pay higher realization, so this mix lift the quality of the revenue and helps pay for the capacity we are adding. The network runs exactly like how it was. With this, we believe we are just getting started. India has 15 lakh sellers selling online today, and we are still a very, very small fraction of them. We are building the delivery infrastructure for this long tail. With that, let me hand over to Praveen to take you through the financials of this quarter.
Praveen Kumar (Shadowfax Technologies Limited): Thanks, Abhishek. Good evening, everyone. Coming to the quarterly financials, before I start, you know, one thing I would like to highlight is that the sales season happened in October and hence, Q2 does not have any revenue from this. And yet, we grew 13% over quarter one. Now, you have all seen the numbers by now. Revenue for the quarter was 1,538 crores, up 57% year-on-year. This is our 6th consecutive quarter of growth above 55%. And for the first half, our revenue standard at 2,896 crores, 60% ahead of last year. In this quarter, we delivered 27.1 crore orders, which is a 70% year-on-year growth. Adjusted EBITDA was 77 crores at 5% margin, and profit after tax was 67 crores. Coming to growth in different business segments, our Express Parcel business generated 1,096 crores with a growth of 55% year-on-year and 10% over quarter one. This was on 21.7 crore shipment. So, volumes were up 72% year-on-year. Within Express, Prime is scaling the fastest, with Prime revenue growing 36% sequentially. Speed is becoming a larger share of what we sell. Hyperlocal really stood out with quick commerce extending to tier 2 cities. Revenue grew 88% year-on-year and 26% over quarter one to 341 crores. And it grew with better economics, as our realization per order rose 13% sequentially. And the third one, other logistics services contributed 100 crores growing 13% sequentially as both CriticaLog and dark stores continue to scale up. In quarter two, we undertook a massive capacity addition and in fact, largest in our history, and this comes now ahead of the sales season quarter. Our total operating space expanded from 53 lakh square feet to 69 lakh square feet, and within this, our middle-mile footprint expanded rapidly from 24 lakh square feet to more than 34 lakh square feet in Q2. And also, please note on this, as we do this every year, roughly 5% of this footprint is by way of pop-ups or temporary facilities taken only for the peak and is wound down after the season is over. The rest is permanent, and those are the ones which are being put to work. There are also two mega sorters and volume profilers which are under completion, which will go live in quarter four. This will give a huge boost to our automation
Praveen Kumar (Shadowfax Technologies Limited): and weight reconciliation capacity. Overall, I think our capex cycle remains on track for the year, where we expect this to be in the range of 3.8 to 4% of revenue, as we had committed earlier. Talking further on scaling up for the festive, we also ramped up our delivery partner network by 31% from 2.9 lakh partners in quarter one to 3.8 lakh partners in quarter two. So thanks to our unique crowdsourced model, we have managed to scale this without really taking any significant burden on our cost. While we are on capacity, let me also cover an additional aspect on how we intend to get the best of our network as we continue to scale. So ahead of this season, we deployed an AI optimization engine across our network completely built in-house and trained on our own operating history. What this does is that, it plans how freight moves across the country and it replans and optimizes it every single day against live demand and the capacity that we actually have. It ensures that this is all done within the constraints of our promised delivery timeline. So speed is something the engine will not breach. As a result, we derive lower cost per shipment, fuller vehicles and faster movement without adding incremental fleet capacity. We'll be able to see this reflect in our cost line item over a period of time and it compounds further because the more volume and coverage we add, the more there is for the engine to work with. With that, I'll hand it back to Abhishek for further comments.
Abhishek Bansal (Shadowfax Technologies Limited): Thank you Praveen. Broadly two more things I wanted to cover before we move to the Q&A. Number one is is our growth engine then what do we see in the coming quarters. Starting first with quick-commerce and dark stores. India's quick-commerce continues to surprise and amaze us. Despite increasing competition, every single player continues to grow fast. Today, all horizontal players combined, we are doing last-mile deliveries from more than 4,000 unique dark stores across the country. Our partnership with Amazon Now is also deeply strategic and continues to outperform our own expectations. Today, Amazon has entered into our top five customers. Couple of quarters back, we had also announced that we will launch 100 dark stores this year. Good news is, we have already opened 70 by the end of Q2 FY '27. This is across 9 cities and this continues to exceed our expectations. Focus on prime, D2Cs, SMEs, and 360 is something we have already covered. On the latter, we are also extending our hyperlocal delivery for small businesses with around 30% of the incoming leads asking for hyperlocal delivery on S- Shadowfax 360. Prime Large, which is our business into bulky deliveries, has now crossed 100 crores of annualized run rate. This has also grown 33% sequentially with white goods and value-added services entering into the pilot phase now. Now, with this, I want to also make a new announcement of a new business opportunity that Shadowfax is entering into. This is on micro-fulfillment centers. These are small facilities we are going to open close to demand where we will hold a brand's inventory and run operations. We see room to open MFCs across 50 cities over the next few years. Today, a brand has two choices. It can keep its catalogue in a few large warehouses and promise delivery in 2 to 3 days, or it can put in a couple of hundred quick-commerce dark stores and promise minutes. Most of the catalog actually sits in the gap between the two.
Abhishek Bansal (Shadowfax Technologies Limited): close that gap. A brand can hold hundreds to thousands of SKUs with us and deliver within eight to 12 hours in the entire city, to even more customers than what a dark store reaches. It all runs on the same Prime Network we already have as part of the larger ecommerce ecosystem. This MFC business, we will be building it out over the next six to 12 months. Revenue this year is going to be small, but we will put capital behind it, because our customers want it. Now coming over to an interesting aspect of what we are seeing in the technology space across the world. I'm talking about something which is growing even faster than quick commerce and this is AI. Until recently, AI primarily helped us become efficient. What is now changing is that AI has started to shop for us. In the US, we can already see what this does for sellers. The ones with the sharpest price and the fastest speed are growing fast and they are doing it without spending money on marketing, because the agents are finding them. And it has started in India as well. Today, in Bellandur, where we are all sitting today, people now orders through simple WhatsApp agents that search across platforms and websites to get them the best deal. This is where commerce is going. The best product, at the best price, at the fastest speed, found for you. When buying is as easy as asking, people buy more often and from sellers they would never discover on a search page. Each of those orders is a parcel someone has to deliver. It also changes who wins. AI can buy from a seller anywhere in the country and it picks the one who delivers first. Speed also wins. This is why we built Shadowfax 360, so that every seller can offer it. An AI agent can find the product and actually pay for it, but it cannot ring a door bell. That's what we are here for. The easier AI makes buying, the more parcels need to reach a door. Getting them there fast is what we do best. As I close this conversation for now, I'd like to go back where I started. This quarter carried no sale season and we still grew 13%. We added more capacity than any point in our history. Margins went up anyway. This is not a coincidence. It is what happens when a network is built around speed. Customers would pay for a faster delivery than wait an extra day, and every one of our clients wants to deliver faster, as that helps them reduce RTO. They are counting on the fastest 3PL network in the country to make that happen. We go into this festive peak with more capacity we have ever had, with an AI engine planning the network every single day. Micro fulfillment will bring a fight- far wider range of products to customers within hours. We expect to remain India's fastest-growing 3PL while delivering industry leading returns. Agents will soon make it easier for our clients to sell, but someone will still have to carry every parcel to the door. That has always been our job. We are better equipped to do it today than any point in our history. Thank you. We would be happy to take your questions now.
Moderator: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question, may press star and one on their touch tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question is from the line of Kripashankar NJ from Avendus. Please go ahead.
Kripashankar NJ (Avendus): Krupashankar.
Kripashankar NJ (Avendus): Hi, thank you for the opportunity. And congrats on great set of numbers. The first question is on the the guidance so just wanted to get a sense that you know, you you've done great numbers in the first half. Do you see you know the the numbers significantly going up given that sales season has shifted towards Q3 and do you want to revise your guidance for near term as well as medium term?
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