SMARTWORKS COWORKING SPACES Q2 CONCALL: RAISES FY27 REVENUE GROWTH GUIDANCE TO 33–35%, RETAINS 19–20% EBITDA MARGIN TARGET; ₹5,800 CR CONTRACTED REVENUE, 13 MILLION SQ. FT. FY27 CAPACITY TARGET & 28% FY28 ROCE GUIDANCE

• FY27 Revenue Growth Guidance: Management upgraded its revenue growth guidance to 33–35% from the earlier 28–30%, supported by strong H1 performance, new workspace additions and enterprise customer demand. • FY27 EBITDA Margin Guidance: Management maintained its normalized EBITDA margin target of 19–20%, expecting performance toward the upper end of the range. • FY27 Operational Capacity Guidance: Management reiterated its target of approximately 12.5–13 million sq. ft. of operational workspace by March 2027. • FY27 Capex Guidance: Management maintained its planned capital expenditure of approximately ₹550–600 Cr, focused on new campus development and fit-outs. • FY28 ROCE Guidance: Management reiterated its target of approximately 28% ROCE by FY28, supported by maturation of newly commissioned campuses and improved capital productivity. • Free Cash Flow Guidance: Management expects free cash flow to turn positive as its approximately 13 million sq. ft. workspace base matures and begins generating recurring cash flows. • Annual Capacity Expansion Outlook: Management intends to continue adding approximately 2.5–3 million sq. ft. of operational capacity annually. • Long-Term Growth Strategy: Management expects sustained expansion through larger enterprise-focused campuses, GCC demand, multi-city contracts and increasing adoption of managed flexible workspaces. • H2 FY27 Revenue Outlook: Management expects continued revenue growth, with meaningful rental contribution from new campuses beginning toward Q4 FY27 and accelerating during Q1 FY28. • FY28 Revenue Visibility: Management indicated that most of the workspace supply required to support FY28 growth has already been secured. • FY29 Expansion Planning: Company has started securing buildings for FY29 and subsequent financial years to protect against shortages of quality office space. • Workspace Supply Visibility: Management indicated that its expansion requirements for the next approximately 18–24 months are largely secured. • Contracted Revenue: Contracted rental revenue increased to more than ₹5,800 Cr from approximately ₹5,400 Cr in the previous quarter. • Rental Commitment Coverage: Management indicated that customer lock-in commitments cover landlord rental obligations approximately two times over. • Lease Liability Matching: Management indicated that its contractual rental commitments do not create an asset-liability mismatch through FY30. • Total Workspace Portfolio: Company's overall platform increased to approximately 17.5 million sq. ft. across 71 centers. • Operational Workspace: Approximately 10.9 million sq. ft. across 58 centers was operational at the end of Q2 FY27. • H1 Capacity Addition: Company added approximately 1 million sq. ft. of operational workspace during H1 FY27. • Upcoming Workspace Pipeline: Approximately 4.3 million sq. ft. of workspace is under fit-out or awaiting handover. • Workspace Under Fit-Out: Approximately 2.1 million sq. ft. of workspace is currently under fit-out. • Awaiting Handover: Approximately 2.3 million sq. ft. of additional workspace is awaiting landlord handover. • H2 FY27 Capacity Commissioning: Management expects approximately 45,000 seats to be added during H2, representing the largest capacity addition phase in the company's history. • Eastside Pune Project: Management expects the large Eastside campus in Pune to become operational during H2 FY27. • Eastbridge Mumbai Project: Management expects the Eastbridge campus in Mumbai to become operational during H2 FY27, subject to receipt of the occupancy certificate and completion of fit-outs. • Eastbridge Revenue Timeline: Management indicated that meaningful revenue contribution could begin toward the latter part of Q4 FY27, with stronger contribution during FY28. • New Campus Pre-Commitment: Management indicated that approximately 35% pre-leasing visibility is already available for the Eastside and Eastbridge campuses. • Campus Pre-Leasing Demand: Existing enterprise customers from BFSI, manufacturing, logistics and IT/ITES are contributing to early commitments at the new campuses. • New Campus Revenue Outlook: Management expects Eastside and Eastbridge to make meaningful contributions to FY28 revenue after operational ramp-up. • Overall Occupancy: Occupancy stood at approximately 81% during Q2 FY27, compared with the company's normal operating range of 80–85%. • Overall Committed Occupancy: Contracted and committed occupancy stood at approximately 86%, including seats signed but not yet occupied. • Mature Center Occupancy: Mature centers, representing approximately 9.7 million sq. ft., operated at around 88% occupancy. • Mature Center Committed Occupancy: Committed occupancy at mature campuses stood at approximately 91%. • New Campus Committed Occupancy: Management reported approximately 48% committed occupancy across its newer campus portfolio. • H2 Occupancy Outlook: Management expects blended occupancy to temporarily decline below 80% as substantial new capacity becomes operational. • Occupancy Recovery Outlook: Management expects overall occupancy to move toward approximately 84–85% as newer campuses mature over the next four quarters, although the timing depends on new capacity additions. • Mature Campus Occupancy Guidance: Management expects mature centers to sustain approximately 88–90% occupancy. • Campus Stabilization Timeline: Management indicated that new campuses generally reach approximately 88–90% occupancy within 18 months of commencement. • Campus Breakeven Timeline: Management expects newer campuses to achieve operating breakeven within approximately 10–12 months, supported by pre-leasing and large enterprise deals. • Capacity Absorption Strategy: Management highlighted that larger campuses are attracting bigger customers without materially increasing the time required to achieve stabilized occupancy. • Enterprise Customer Contribution: Large enterprise customers account for approximately 91% of rental revenue. • Large Customer Relationships: More than 35 enterprise customers occupy over 1,000 seats each. • 1,000+ Seat Customer Contribution: Customers occupying more than 1,000 seats contribute over 41% of rental revenue, compared with approximately 35% a year earlier. • Multi-City Customer Base: More than 70 customers operate from Smartworks centers across multiple cities. • Multi-City Revenue Contribution: Approximately 35% of revenue comes from customers using Smartworks facilities in more than one city. • GCC Revenue Contribution: Global Capability Centers account for approximately 22% of rental revenue. • GCC Growth Contribution: Management expects GCCs to contribute approximately 35–40% of incremental rental revenue growth. • GCC Customer Expansion: Management indicated that growth is coming from both new GCCs entering India and existing GCC customers expanding across cities. • GCC Demand Drivers: Management highlighted demand from global corporations expanding technology, AI, engineering, finance and other centralized business operations in India. • IT/ITES Revenue Mix: IT and IT-enabled services contribution declined to approximately 36% of rental revenue from 40% a year earlier. • Non-IT Growth: Management indicated that more than 75% of incremental revenue added over the previous year came from customers outside IT/ITES. • Customer Diversification: Demand is increasing from BFSI, manufacturing, logistics, multinational corporations and major Indian conglomerates. • Top 10 Customer Concentration: The ten largest clients contribute approximately 24% of rental revenue, compared with about 20% a year earlier. • Customer Retention Strategy: Management expects long-term customer relationships, multi-city expansion and large campus offerings to support revenue visibility. • Enterprise Contract Tenure: Management indicated that major enterprise contracts increasingly involve commitments of approximately 40–50 months. • Customer Expansion Strategy: Large existing customers are adding seats and expanding to new cities through the Smartworks platform. • Workspace Pricing: Management indicated that average seat rental is approximately ₹8,200 per month. • Annual Rental Escalation: Customer contracts generally include rental increases of approximately 5–6% annually. • Rental Realization Outlook: Management expects better realizations from larger new campuses, higher-rental locations and repricing of older contracts. • Legacy Contract Repricing: Management is gradually replacing or renegotiating certain lower-priced agreements signed during the pandemic period. • Rental Repricing Timeline: Management expects opportunities to reprice older customer contracts over the next one to two years as renewal and exit windows arise. • Landlord Rental Escalation: Management indicated that contractual rental escalations paid to landlords are generally around 4–5% annually. • Property Acquisition Strategy: Company focuses on securing large Grade A buildings early, allowing it to negotiate favorable long-term rental terms. • Long-Term Rental Cost Advantage: Management indicated that selected landlord agreements can offer approximately 25–40% lower effective rental costs over long lease periods compared with prevailing market alternatives. • Customer Pricing Advantage: Management believes its large-scale campus operating model enables pricing approximately 25–30% below certain competing flexible workspace offerings. • Campus Procurement Strategy: Company evaluates more than 300 buildings and selects approximately six to seven high-quality opportunities annually based on location, economics and return potential. • Landlord Relationship Strategy: Management works with both institutional and non-institutional landlords to secure large buildings at preferential terms. • Workspace Capex Per Sq. Ft.: Management indicated fit-out expenditure generally remains near ₹1,350–1,400 per sq. ft., with approximately 4–5% annual inflation factored into budgets. • Capex Cost Control: Management expects procurement scale and larger project sizes to partially offset inflation in workspace development expenses. • H1 Capex: Company invested approximately ₹307 Cr during H1 FY27, with additional expenditure expected in H2 for Eastside and Eastbridge. • Maintenance Capex Guidance: Management expects approximately ₹95–100 Cr of maintenance capex during FY27. • Maintenance Capex Policy: Management indicated that annual maintenance expenditure is generally equivalent to approximately 12–15% of gross fixed assets. • Growth Capex Outlook: Management expects most incremental capex to continue supporting expansion rather than maintenance of the existing portfolio. • Internal Funding Strategy: Management intends to fund continued workspace expansion through operating cash generation and borrowing facilities. • SmartVantage Expansion: Company's SmartVantage offering supports GCC and enterprise customers with workspace, hiring, legal, taxation and compliance-related services. • Value-Added Services Outlook: Management expects increasing revenue contribution from workspace-related services as the number of occupied seats and operational campuses expands. • Other Operating Revenue Growth: Other operating revenue increased approximately 125% YoY during Q2, supported by ancillary services and newly introduced business verticals. • H1 Other Operating Revenue: Management indicated that other operating revenue increased from approximately ₹70 Cr to ₹170 Cr. • Other Operating Revenue Mix: Revenue includes electricity services, car parking, meeting rooms, conference facilities, food services, fit-out services and other value-added offerings. • Other Revenue Growth Outlook: Management expects recurring ancillary revenue to grow at least broadly in line with the expansion of operational workspace. • New Business Contribution: SmartVantage, value-added services and fit-out-related offerings contributed to the increase in non-rental revenue. • Cost Optimization Strategy: Management expects energy efficiency, centralized procurement, scale benefits and improved campus operations to support profitability. • Mature Campus Margin Contribution: Management indicated that mature centers generate EBITDA margins approximately 300–400 bps higher than the overall portfolio margin. • New Capacity Margin Impact: Management expects profitability from mature campuses to offset the initial margin drag from newly commissioned workspace. • Normalized Operating Cash Flow: Q2 normalized operating cash flow stood at approximately ₹107 Cr. • H1 Operating Cash Flow: Normalized operating cash flow stood at approximately ₹202 Cr. • Cash Conversion: Normalized operating cash flow to EBITDA stood at approximately 0.9x. • Mature Center Cash Conversion: Management indicated that operating campuses generate operating cash flow exceeding EBITDA, with conversion above 1x. • Working Capital Outlook: Management expects reported cash conversion to improve as new campuses begin collecting customer security deposits and rental income. • H1 Free Cash Flow: Free cash flow remained negative at approximately ₹104 Cr, reflecting front-loaded capex and landlord security deposits for new centers. • Free Cash Flow Recovery: Management expects the business to become free cash flow positive as the approximately 13 million sq. ft. capacity base matures. • Receivables Collection: Debtor days remained low at approximately seven days. • Net Debt Position: Company reported net debt of approximately ₹83 Cr. • Borrowing Cost: Management indicated that borrowing costs remained below 8.5% following its recent credit rating upgrade. • ROCE Performance: Annualized normalized ROCE increased to approximately 21.6%, representing an improvement of around 800 bps YoY. • ROCE Expansion Outlook: Management expects additional improvement in ROCE as capital invested in currently unopened campuses begins generating revenue. • Unproductive Capital: Approximately ₹200 Cr of capital employed is currently associated with campuses that have not yet begun generating revenue. • Singapore Expansion: Company operates four centers in Singapore with more than 1,600 seats. • Singapore Occupancy: Management indicated approximately 86% pre-committed occupancy across its Singapore portfolio. • Q2 Revenue Performance: Revenue from operations increased 39% YoY and 8% QoQ to ₹591 Cr. • Q2 Normalized EBITDA: Normalized EBITDA increased approximately 68% YoY to ₹117 Cr. • Q2 Normalized EBITDA Margin: Margin stood at approximately 19.8%, expanding around 340 bps YoY. • Q2 Normalized Net Profit: Normalized PAT increased approximately 136% YoY to ₹43 Cr. • Q2 Reported Net Profit: Reported PAT stood at approximately ₹26 Cr. • H1 Revenue Growth: Revenue increased approximately 41% YoY during H1 FY27. • H1 Normalized EBITDA Margin: Margin stood at approximately 19.7%. • Sequential Growth Track Record: Company recorded its sixth consecutive quarter of sequential revenue growth since listing. • Key Challenges: Temporary occupancy dilution from large new campus openings, delays in building handovers and occupancy certificates, front-loaded capital expenditure, negative near-term free cash flow, landlord deposit requirements and execution of rapid workspace expansion remain important factors.

SMARTWORKS COWORKING SP L

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