Please note that this conference is being recorded. I now hand the conference over to Mr. Hardik Sangani from ICICI Securities. Thank you, and over to you, sir. Hi, everyone. Thank you, Aisha. Good evening, everyone, and welcome to the Q1 FY 2022 results of Newgen Software Technologies Limited. I hope everyone is keeping safe and are well. Connecting with me today from the management side is Mr. Diwakar Nigam, Chairman and Managing Director, Mr. Varadarajan, a Wholetime Director, Mr. Virender Jeet, Senior VP, Sales and Marketing and Products, Mr. Arun Kumar Gupta, Chief Financial Officer, and Ms. Deepti Mehra Chugh, Head Investor Relations. I now hand over the call to Ms. Deepti for further proceedings. Thank you, and over to you, Deepti. Thank you, Hardik. Good evening, everyone. I am Deepti, Head – Investor Relations, Newgen Software, and I welcome you to the Q1 FY 20 22 financial results. I hope everyone is keeping safe. Before we move on to the discussion, let me highlight that this call may contain certain forward-looking statements, which concern Newgen's future business prospects and profitability, which are subject to a number of risks and uncertainties, and the actual results could materially vary from these forward-looking statements that are made. Past performance may not be indicative of future performance. The company does not undertake to make any announcement in case any of these forward-looking statements become materially incorrect in future or update any forward-looking statements made from time to time on or by behalf of the company. For any further details, you may please refer to the investor relations section of our website. I would now hand over to Mr. Nigam for presentation of the results, post which we will have the Q and A. Mr. Nigam. Good evening, everyone. Thank you for joining us at our Q1 FY 2022 post-result conference call. I hope you and your families are keeping safe. I'll come straight to the results. We are happy to announce a robust growth quarter. We witnessed accelerated and broad-based growth in revenues and profits in this first quarter. Revenues were at INR 160 crores, witnessing a growth of 21% compared to Q1 last year. Revenues across all geographies witnessed growth. EMEA, which was slow last year, witnessed a growth of 57% during this quarter. APAC witnessed a growth of 45%. U.S. and India grew at 5%. In U.S., many of the cloud digital transformation projects are back-ended in nature. This would take time to reflect in revenues. As an organization, we are staying focused on tapping the growth opportunities across digital transformation in enterprises. We understand the urgent need for expediting digital transformation initiative, and we are here at every step to help organizations successfully implement this. We are a reliable and stable partner for these enterprises. We saw continued strength in demand for digital transformation initiative across various segments. Banking and financial segment, services, government, PSU, and healthcare were the fastest-growing segments during the quarter. We won 11 new customer logos in the quarter, notably in Middle East, APAC, and U.K. region. Some of these logos are in the process of being built currently. Some notable success stories this quarter include execution of an agreement with one of the leading banks in the Middle East region for supply of software licenses, ATS implementation, and other support-related services. The total size of the project is $5.9 million, spread over three years. We are working with another large financial services group in Finland, which is a provider of comprehensive range of banking and insurance services for private and corporate customers. We are also undertaking a project for a federal statutory body under the purview of Ministry of Finance in Malaysia. As the markets are opening up, we hope to maintain the growth momentum. Our differentiated capability and deep contextual knowledge creates value for our customers as well as our partners. We are continuing our operations in a remote working environment as we prepare towards transforming to a hybrid environment moving forward. We hope an early return to normalcy, bringing employees back to office as vaccination gains pace. We have also been supporting them in every way possible, whether it is medical and managerial assistance or any other form of support. Customer success has always been our top priority. Our major focus has been on ensuring uninterrupted and quality services to our customers. We recently concluded our three-day virtual customer events, Newgen Connect 2021, where we interacted and engaged with the customers across multiple locations, including India, Singapore, Australia, Dubai, London, Africa, and in the United States. We had sessions from the management, industry, analysts, our customers, and partners, where they shared their experience with Newgen and views on digital transformation. We are excited about that. We also unveiled our digital transformation platform, NewgenONE, a comprehensive low-code platform that is recognized by the industry. It automates processes using content services and communication management capabilities. NewgenONE simplifies complex enterprise-wide business processes and information for superior employee and customer experience. We continue to invest for growth and work together, strengthening our industry recognition and position, especially in the mature markets. Our efforts transitioning to subscription model. Even in the last conference, I've been talking about this. Our efforts continue towards transformation to more stable subscription-based revenues. Our overall annuity revenue witnessed a growth of 20% during the quarter, reaching INR 105 crore and contributing 66% of the revenues. Our subscription revenue witnessed a growth of 14% and reached INR 54 crores during this quarter. SaaS revenue witnessed growth of 39% YoY, contributing 9% to the revenues of the organization. As I had mentioned last quarter, this model is expected to start giving the revenue optimization over the next few years. We believe that in time we would be able to transform most of our existing customers also into cloud or on-premise subscription model. This transformation would lead to enhanced visibility and growth in longer term. Enhancement of product platforms. Globally, successful enterprise are relying on NewgenONE to rapidly develop and deploy complex content-driven and customer-engaging business applications on the cloud. NewgenONE is natively built, unified low-code platform for complex content-driven business applications, delivering modern customer experience. These proven industry products have been built over time and cover the wide areas of content services, process automation, and customer engagement. We continue to make our product more intuitive, robust, and comprehensive. We received two additional patent grants during the quarter, taking our total patent grants to 20 in India and the U.S. We were granted patent for invention entitled Online Collaborative Signing of Documents and Methods and Systems for Managing and Archiving Electronic Messages. These patents are part of our core areas of content management, enhancing our product capability. We have been consistently recognized by leading industry analysts over the years. We are happy to share that during the quarter, we have been positioned as strong performer in The Forrester Wave for content platforms Q2 2021. Building powerful Newgen brand and enhancing marketing and sales organization. This has been our continuous endeavor. We are targeting to invest across growth opportunities this year, including strengthening the team, enhancement of our branding and digital presence. During the quarter, R&D expenses comprised about 11% of sales, and sales and marketing expenses comprised 20%. We have enhanced our system integration through exemplary cases and success stories along with our partners in target markets of North America, Europe, and APAC. We are targeting Forbes Global 2000 employees in enterprises through these partnerships with system integrators. We continue to build acceptance from some of the largest players, and their largest customers have chosen our platforms. These system integrators have implemented these solutions successfully. Profit and margin. Our EBITDA was up by 46% YoY at INR 22.8 crores. Profit after tax was up 137% YoY at INR 21.6 crores. Net cash generation from operating activities was INR 52 crores. As we continue to work on our better days, our net trade receivables have been reducing and were INR 192 crores at the end of the quarter, which resulted in a DSO 100 days on the back of robust sales and collection. We continue to strengthen our balance sheet and cash position, and are now ready to make big investments on various fronts across technology, sales, and marketing for long-term growth. We will remain agile to address the challenges of current environment and drive consistent and cash-rich growth over the medium to long. That's all from me. We are now open for Q and A. Thank you, Diwakar. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star then one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star then two. We just request that you use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the questions queue is ending. The first question is on the line of Mr. Hardik Sangani from ICICI Securities. Please go ahead. Okay. Hi, Virender. Sir, a couple of questions. Particularly within U.S. geography, just wanted to know have the spends been normalized towards software implementation and deployment, especially across small to medium banking credit unions, and how are they approaching low-code software platforms now? Has there been any particular change in their approach towards implementing those systems? Secondly, last year in FY 2021, our travel expenses would have been hardly 1%-2%, which in normal course is around 8%-10%. As developed economies open, how do we see this expense line item going forward? Mr. Nigam earlier alluded to hybrid work environment, if you can throw some more light on it. In the earlier quarter, you would have mentioned that particularly our India business would recover from second half onwards in this year. Is there any material update on the same? I have further questions, and I'll come back in the follow-up. Thank you. Hardik Sangani, thank you for asking these questions. I'll try to cover, and if I understood right, you can tell me if I got it right. About the U.S. banking and our credit unions out there, I think as you understand that we are pursuing direct go-to-market out there, where we are targeting these roughly around 1,200 institutes, which is banking with our banks and credit unions. We are going solution-focused out there, one of our differentiators is the platform-based sales out there, where we use our domain knowledge and the low-code capabilities of the platform to deliver these products quickly to those customers. That has been one of the differentiating, we are still going strong with that. Our implementation cycles out there have reduced from two years back, what used to take around eight months, we have come to two months now, three to four months, depending on kind of the solution. That has surely helped our cycles and more and more customers are getting live and they are becoming referenceable. That's what I understood from your first question. I'll cover the rest. On the travel expenses, you are right. Travel expenses last year were a small part of, they had come substantially down. So far for the first two quarters of this year, we expect the travel momentum to remain as the same as last year. We don't see any substantial increase. We do expect in Q3 and Q4, there's going to be incremental travel happening. Having said that, I don't think in any time in future, in next two, three years, we'll be able to reach the travel volumes which used to be. Fundamentally, the behavior of doing business also has changed. Lot of things which we have to do onsite now is happening easily remotely, right from sales cycles to acquisition cycles to integration. That amount of operating advantage will anyway be always in the business now, and that will reflect in some amount of gain in margins, which you have seen also previously. On the growth, as Mr. Nigam said, with that the growth is broad-based. In spite of still the what you call restrictions due to COVID on travel, we are still finding lot of interest in cases. EMEA has recovered and that has come back strongly. APAC has continued its growth momentum in spite of the COVID situation not being great out there. U.S. we have a strong funnel, but we did have some amount of slowdown in some amount of deal conversion. We expect that momentum to keep on happening and we close more deals. Our growth in U.S. and India were more muted, right now around 5%. I think India is, generally we have said India on the first quarter, we have been able to hardly do any business on the new logo side. On the U.S. side, it is more to do with deferment of the revenue, which is slightly back-ended because of the cloud-based sales and cloud-based implementations. On the India side, you're right, I think we had earlier said that India, we are not still feeling that it can come to a 20% growth. We are hopeful that our next few quarters, as things of COVID stabilize in India, we should be able to push the growth rates higher than the current rates. It is still a story which is unfolding. Hardik, does it answer your questions? Because there were many. Yeah. It answers my question. Thank you. Thank you. Thank you. A reminder to the participants, anyone who wishes to ask a question, hit star then one now. The next question is on the line of Dhonka Godha from AM Enterprises. Please go ahead. Hello, sir. The first question was, and I think you answered in the past. What is specific about the company's business which causes such a large seasonal change for the first quarter relative to the last quarter? It doesn't look like you have that many government kind of contracts, et cetera. If you don't mind explaining why there's such a big variation where, normally in the technology services industry, we don't see such a large variation. Thank you for asking that. You are absolutely right. The only difference what you have seen, we are a company still where a large part of our revenue is license sales revenue. If you look at any company which is doing the license sales revenue, there is a natural lopsidedness which gets aligned to the financial year, either of your customer financial years or your own financial years. That makes Q4 and Q3 slightly larger quarters for us. It has been historic. It has been for last 10 years. In fact, Q1 has been hardly ever we have been able to deliver any margins in Q1, and all the margins are unfolded in Q3 and Q4. As we have now started shifting to subscription cloud and more sales in mature markets and going from the traditional markets, we have seen this lopsidedness reducing. With more and more subscription business and AMC business becoming a larger part of that. Today, the subscription and AMC overall becomes roughly around 33% is subscription, with more ATS added. Around 60% of our business is more what you call recurring business. As this business moves to 75%-80%, you will see that lopsidedness further reducing. We are also doing aggressive shift in more and more markets. We are going only for subscription sale rather than the jerky license sale. We have made an internal plan. In next couple of years, we should be able to smoothen out further. This is the history of this company. This is the business model. If you look at historical sales, we have the smallest quarter has been the Q1 because we have very few license sales out there in Q1 compared to the Q3 and Q4 license sales. I hope that answers your question. Yeah. No, it does. Thanks. I think we'll just look at the numbers and maybe follow up if there's something. The second question was more in this context of this market, this low-code or low-code, environment that stuff doesn't require that much detailed codification of the solution. If you can give us some sense as to which is the target side of the market that you are looking at with your solution. How large is the market? What is your current share over there? How do you see that scaling up? You mentioned your partner who's helping you access that market. How do you see working with them and in terms of cost side as well as economics, how will you be sharing the revenues, et cetera? If you look at the area of low-code is very wide. Enterprises globally, when they are looking at their digital transformation cases, they are evaluating low-code products and platforms to make sure that they follow very agile and a quick way of getting their solutions out to the market. The horizontal market space for the low-code is very wide. Traditionally, we start from the business process management market and content management market, which is roughly around a $28 billion industry. With digital and low-code, they have not been very accurately estimated, but people estimate it could be a very wide market. The market for us is we are dealing in the market wherever customers are looking at complex processes with complex content needs. These are our two very strong areas. We have traditionally been very strong in doing very complex business processes, and we are one of the leading companies in the world on content management. Wherever customers' digital projects or transformation projects need these two technologies, we end up being very strong. This is across all industries, across all markets. With the global system integrators, the initiatives which we have done, they have seen that these, our products and technologies provide a great differentiation or great value prop to the customers when they take it. It may be difficult to estimate the market size. Right now, I think we are not in also the shape of calling that we have a significant percentage of that share. This is a growing market. More and more customers globally are seeking to get low-code. Maybe in one or two years, we'll have more accurate sizes and estimates of the market. Does that answer your question? Sir, I had a couple of maybe follow-up clarifications, if you could help us. This market that you're targeting, low-code, how is it sold? Is it more sold as a SaaS or is it like a license? What's your selling model over there? It's typically, all these low-code platforms are sold now in subscription model. Whether it's an imprint subscription or a cloud-based sale. Both models exist. Lesser of license sale, but more of subscription sale or cloud sale. Okay. This GSI, this global system integrator that you have partnered with, is it sold by them and they do the other kind of integration services of your license? Or is it something that is sold on the strength of your product and they are acting more like a sales agent? If the customer is paying INR 100 for a combined solution, what part of that accrues to you and how much accrues to the GSI? Generally, this initiative which we are doing with global system integrators, we are doing with multiple of three and four of them. We are approaching Forbes Global 2000 as our target base because these GSIs have inroads on those customers. The idea is for us, we still as a product principal have to do the platform sale. We go along with the GSI and sell it to the customer. GSI becomes our implementation partner because of the fact that they have seen successes over last five, seven years with us using our platforms. For them, the revenue can be multiple times because the revenue comes from all the services along with the product as well as global rollouts. While our product licenses can be anywhere between $500K to $1 million to $2 million, they could have a multimillion-dollar service streams build over years around that. They are just not resellers. They are the ones who provide the solution. They are the ones who implement this product. We are the ones who will be able to sell the license and sell our product out. That you do for these clients. Is it like, you have a standard code and you just provide the interface to the customer who can access it based on a cloud, or is there a reasonable amount of customization that you provide? What happens is these are platforms which have got all the ways of building systems over them. People can customize, configure these products, integrate these with their ecosystem. This is what a global system integrator would do as services and then roll them out. These are single software platforms which same platform is sold to everybody. The platform does not change, but the platform provides you framework to configure, customize, integrate that within the customer's ecosystem. Does that answer your question? We would request the current participant to please come back in the question queue for any follow-up questions as we have several participants waiting for their turn. The next question is from the line of Deepak Poddar from Sapphire Capital. Please go ahead. Yeah. Thank you very much, sir. Just wanted to understand if you kind of given any kind of guidance for this year in terms of growth and margins. Yeah. That's it from my side. Thank you. No, Deepak, we don't provide any guidances. The only thing we are saying that, we have been maintaining a historical growth rate of around 20% for many, apart from this COVID last five quarters which have changed that. Our first aim is right now to come back quickly to that as soon as the market starts reviving or even in the current state if it became stable. Those are the plans. Q1 we have delivered more than 20% growth. In fact, on constant currency we are more like 23% growth. Which gives us quite confidence that we can carry some momentum for the whole year. I think it's too early days right now to give a guidance on that. We fully expect this year to be a growth. That's the whole idea. This has to be a growth year for us where we should be able to come back to our growth momentum. Okay. In terms of margin? I think we have discussed this margin issue many times if you're following. Last year margins are unsustainable because there were lot of costs which could not be incurred in terms of optimization, travel, manpower, SG&A cost. Going forward, we have always said that we should be expecting to be having around 23%-25% EBITDA margins and roughly around 19%-20% margins and we should be able to reach them in short period of time and sustain them. Yeah. Understood. That's fine. Thank you. A reminder to the participants, anyone who wishes to ask a question, you press star and one now. The next question is from the line of Rajesh Kothari from AlfAccurate Advisors. Please go ahead. Good afternoon, sir. Sir, is it possible for you to give a little bit more color in terms of the new clients? Last quarter you won one of the largest fund globally. That's question number one. Second question is, over a period of, say, two years, three years, how should we see the breakup between annuity revenue and subscription revenue? The third question is, if it is possible for you to briefly highlight how the subscription model works. Thank you. Rajesh, thanks for the question. On the new clients, we have roughly around 11 wins and they were spread across places. Some of them we had a very large deal from a financial institute in Middle East. We have some interesting wins in banking and insurance in APAC. We have also some interesting wins coming out of India. We had a very interesting win coming in Europe through a global system integrator, a large group of banks in Finland. It was Finland. These are broad-based wins. These wins do reflect the kind of, it is predominantly businesses in banking, insurance, financial services, government and some enterprises. On the two to three-year kind of horizon. What happens is, we are strongly focusing on growing the subscription and the cloud revenue part of it. In fact, most of the mature markets, 90% of our sales will be pushed through a subscription-based model. We expect that the percentage of this revenue will considerably grow in next two to three years because they've been compounding revenue. It may be difficult to project exactly the number but maybe we can, if you contact Deepti that she can give you more details about what's going to happen. All cloud and subscription sales are sold predominantly in a consumption-based model. For us the most obvious consumption is PUPM, per user per month. Customers end up buying this platform and depending on their usage they end up say contracting for 100 users or 500 users or 1,000 users and we charge somewhere anywhere between $50, $60 per user per month to $180 depending on the kind of components they are consuming. Does that answer your question, Rajesh? Basically, as you move from annuity to cloud, your margins basically would improve? Yeah. I think, no. I think what happens is basically we are trying to move from licensed to subscription. Both are mechanisms of license sale so their margin profiles are same but the revenue realization is very different. The revenue realization in license is upfront so it is jerky. But on subscription, it is more smoothing out. As customers start using and consuming, it's more like a rental, so you start paying. On the, what you call the margin profile, they are the same. In cloud, customer is using the same subscription license on cloud, then our costs are roughly around 10%, 15%. The margin profile is slightly lesser than the license, but it's still a very high gross margin business. Understood. Basically, just trying to understand your business model. In your annuity business, basically, one is your license. Whatever number of license you sell, that is one revenue. Secondly is the maintenance, AMC kind of revenue, and that gets featured into annuity, am I right? Yes, you're right. Once you have the subscription revenue, whether that part also would have a AMC and that will also reflect part of the annuity revenue? Exactly. Subscription, cloud, AMC, all reflect in the annuity part of the revenue. Okay. Subscription also reflects in annuity. Yes. Understood. Basically, license revenue will reduce and subscription revenue will increase. Exactly. The license revenue may become stable or reduce, but we'll start pushing and making sure that all those things start coming more and more in subscription. Got it. Thanks. I'll come back in case. Sure. Thank you. The next question is from the line of MJ Purani from Renam Securities. Please go ahead. Hi. I have the question on the low-code software. Definitely low-code software is built on an agile software factory model. We'll have large number of apps that are built, APIs that are built. The idea is to reduce complexity and simplify the whole process of software development. It expands market and user base, and it also creates scale economies. In the process, what happens is you are expanding market in a big way, plus the process of software development expands faster. You are able to create software in much lesser time. Maybe one is to five, one is to 10. How does that get reflected in your P&L balance sheet, in your P&L particularly? Also the TAM, the total addressable market. Will it expand by 5 times, 10 times? The big market expansion. These are the couple of questions. I want to understand what kind of complexity you face in the enterprise integration. Okay. Yeah, I'll just try to answer and let me know if it's good. I'll come to market size first. As I earlier said, low-code is very horizontal, so it's opening up the market. The market it's opening up is all digital initiatives happening in enterprises do seek low-code intervention. Now the digital landscape could be a $200 billion market, and this could be a part of it. It could be 10% or 50%. We don't know right now. I think, you are right. Our addressable market, which has been typically around content management, process management, becomes very wide. Rather than those areas, we end up entering the digital transformation market of portals, channels, mobility, everywhere. That does open our market size considerably on that. On the other question about what the platform does and how it fits. Low-code is a new terminology. If you look at traditionally, most of us in this industry as a product play, we have been looking at various technologies which typically make whole engineering cycles very participative, where business can participate, very visual. You have already technologies which are about modeling, which are about quick integrations, which are about more WYSIWYG, what you see what you give in terms of UI interfaces. Low-code is a combination of many technologies. Of course, integration is very important in low-code, all low-code platforms are very strong on the integration side, whether they have inbuilt readymade adapters or they provide frameworks to integrate. These are established area. I think I would recommend that probably if you can look at Gartner and Forrester's reports on LCAP and low-code, you will get much more detail about the overall market size, the Newgen play, our strengths whether with competition and where we can play, and also about how integration plays in that. MJ, did I leave any part of your question? How quick is the software development process? Sorry audio is not clear. We are finding it a little difficult to listen to you. Yeah, it's becoming difficult, I got the last question. Let me try to answer that. Generally what happens in low-code, the spectrum, the enterprises could have an overnight need of launching a particular survey. You could do something in 24 hours, you may be trying to reimagine your insurance for claims process, which could take months. Broadly, the idea of low-code is that you should be able to condense it substantially. You should be able to respond to customers and markets and competitions at a speed which is acceptable. Most of the things which we do with our customers do span around few months. Let's say six weeks, eight weeks to six months. That is the kind of area we work on. The process of simplifying complexity, how good is that? Does it really do that? It's very effective. That's where customers and globally Oh, okay. We push for that. I think I would recommend that if you can go and have a look at the global LCAP market and how the complex is, because they're a very large technical area. This may not be the right forum to talk about it. Okay. I'm trying to understand from the users, the non-tech users, particularly when they are using a software, will they be able to use it with ease? Yeah. The whole universe total addressable market for you. Sure. It's very participatory. They're able to use it. Sure. Good. Thank you. Thank you. Thank you. A reminder to the participants, anyone who wishes to ask a question may press star and one now. The next question is from the line of Mayank Makkar from Mirae Asset Securities Private Limited. Please go ahead. Hello. Firstly, I want to ask, there is a very high other income this quarter. Why is the reason for that? Secondly, with respect to low-code platforms, typically, what are the competitors that you think globally you have? Because primarily, most of your sales are to global customers rather than to Indian customers. Whether the technology in itself is very replicable kind of technology. That means that any other software company can replicate the platform in whichever manner possible or is there something unique that is provided by Newgen? Okay. I'll take the low-code issue. The global low-code where the competition for us is pretty complete. You've heard about companies like Appian, Pega, and then there are companies also like ServiceNow, OutSystems. These are the companies who play strongly in the global low-code. The entry barrier for any new company to enter this is very high. Because if you look at any horizontal product play, you only see companies who have invested in that technology for at least 15, 20 years. Most of the other companies we see in this competition here are the companies who have started somewhere around 20 years back and are now recognized. Newgen is one of those companies where we have spent, or whether you call it BPM, low-code, or any other name which comes in future. The core underlying technology stack is what we have built over 20, 25 years. There's a huge entry-level barrier. If a company starts today trying to enter this area, I think it'll be 15 years before you see their name being recognized in the market. Product companies have a huge entry barrier. On the higher other income, I think I'll ask Arun to answer that. Yeah. Hi. High other income is majorly on account of the forward cover, which we have taken in the current quarter. This is basically the mark-to-market gain, which we have recognized in the other income. The increase is on account of that. For the future contracts, which we have already contracted with plain vanilla forward. Thank you. Okay. Thank you. Thank you. A reminder to the participants, anyone who wishes to ask a question, may press star and one now. The next question is from the line of Hardik Sangani from ICICI Securities. Please go ahead. Hi, again. A couple of questions. In terms of the relative supply side issues which are coming up in mainly the software development or IT services market. How are we seeing those trends and any major hikes or payouts which we are planning to give in this particular year? Secondly, in terms of the GSI deals which you were talking about. Earlier you would have mentioned we have approximately 40 use cases. How has been the conversations around closures or any major conversions which can potentially happen in the next couple of quarters? Thanks. Yeah, Hardik. Thanks. On the supply side, we know the whole industry. You would have seen the commentary from all the companies. There is a supply side issue in terms of cost of people, and there is a higher attrition rate. We are also finding our set of challenges out there, and we have taken a series of steps to control them. In fact, earlier, we had discovered some challenges earlier in last November only we had revised and given a substantial increment to our people. We have also done increments for many people in April. I think we are now also contemplating that there will be some increments happening in this quarter as well for a large part of our people. There are going to be supply, and we are looking at various strategies to address it. I think we believe that in next two quarters it will stabilize. Right now, yes, on the supply side of resources, there's an issue. On the GSI funnel, we had given some indicative numbers last time. I think that funnel has grown by another 10%, 15% in a quarter. We do see positive growth and momentum in that funnel. Right now the funnel sizes are not such large that we can make exact predictions about that. Sorry, there we go. Sorry. Last quarter, we got one very important deal in Europe through one of the larger GSIs. This quarter, we are expecting to close at least more than three, four deals. Let's see because right now the funnel is not that large that we can do exact prediction. We do expect this year to close around more than 10, 15 deals on the GSI front. Just another last question from my side. Earlier in the opening remarks, Mr. Nigam mentioned increased investments in R&D and product development and sales onshoring in the developed economy. If you can provide some further comments around exactly if any specific commentary around where exactly you will be making those investments? Yeah. I think investments, we are always in that mode, but I think one of the primary investments we are doing is all around mature markets, which is either in U.S., Europe, Australia. We have done substantial investments, and we are looking at opportunities in investing in marketing out there, in product management, and also expanding the sales teams out there. This is a continuous one, and over next few quarters, we are even thinking of accelerating it further. That's the area. Most of the investments on the product and all are already in place. We will continue doing those over next two, three years. On the sales and marketing side, we'll be slightly more aggressive in coming couple of years. They will be predominantly in mature markets. In that also predominantly U.S. and Europe. Okay. Got it. Thank you, Jeet. That is all my side. Thank you, Hardik. Thank you. The next question is from the line of Raunak Ajit Jain from Jito Advisors LLP. Please go ahead. Actually, I need to ask you about the future vision and expansion of company further for five years like that way. Yeah. Okay, so it is about future vision and expansion, what we are doing? Yeah. Sorry. Raunak, I think we are. Actually, I need to ask the expansion plan, where the visions looks like further like? Yeah. On the expansion side, as you know that we have built this company from India, Middle East, Africa and APAC, and last four, five years, we started investing in mature markets. Most of our goals around next five years are around expansion in mature markets. There are two strategies we are focusing on. In certain core verticals like banking and financial services, we are going direct and having large presence of direct sales team. Other most important driver also for us, building the global partner ecosystem. Most of the product companies beyond a size of $100 million-$200 million do grow strongly through a partner ecosystem. That's what we are investing in. Is it any acquisition plan you are planning for future like? Yeah. We have not formalized any plans on that. Once we have any plans on that, we'll surely come back to that. Right now, our own market and market opportunity is quite big. We are aggressively focusing on tapping into that. With the global system integrator going traction and we trying to position to larger Forbes Global 2000 company, I think our work for next four, five years is quite chalked out, and that's where we are trying to invest. We hope that in next four, five years, around 70% of our revenue starts coming from mature markets and rest 40% from the emerging markets. Oh, yeah. That's great. Yeah. Okay. Thank you. Thank you. Thank you. A reminder to the participants, anyone who wishes to ask a question may press star and one now. The next question is from the line of MJ Purani from Renam Securities. Please go ahead. You talked about credit union as a large market opportunity. What's your go-to-market strategy? What kind of partnerships do you have, and how do you make it work? It's a large market. Yeah. It's a small size. Each credit union may not be very large account, but smaller account. Yeah. There'll be large number of smaller accounts. How do you reach them? Who are the partners? Yeah. As I said, when we are talking of credit unions, we were talking specifically about U.S. financial services market. Correct Which is typically banks and credit unions. I understand that. We target banks with somewhere around asset sizes of $2 billion-$50 billion. Uh- Credit unions also, which have asset size above 1 billion all the way up to 52. Can you give some name of the system integrators who are going to help you? Let me first try to explain. Okay. There are roughly, if I'm right, around 300 such credit unions who fall in that and roughly around 900 such banks. Very good. This out there, our go-to market is very direct. We have already 30-40 customers of such banks. Okay. We have solutions in the areas of commercial lending, retail, digital onboarding. We are selling these directly to these through our direct sales presence out there. Our alliances are the alliance ecosystems. The alliance ecosystems could be the cornerstone of the world, the digital signing players, the core banking guys, the Fiserv and all. We have a lot of alliances, around 40 ecosystems which we have built. These alliances are not the sales alliances out there. They're the ecosystem for getting the system ready for that market. Our sales out there is quite direct. Does that answer your question? No. How do you motivate these guys? Yeah, I've seen a lot of companies build partnerships, but motivating them to do deals, because sometimes it's too small a deal for them. How do you create? Again, let me again repeat myself, we don't have partners. This market is direct for us. For partners, we are only targeting Forbes Global 2000 companies. That's a separate segment. This market of 1,200 accounts is through my direct sales team. Direct sales team. Okay The deal sizes out there are varying anywhere between $200,000-$300,000. Oh, okay. To around INR 500 thousand. Oh. It is not very lucrative for partner ecosystem play. Yeah. For our direct ecosystem, once we enter the account, we have more solutions to sell. It's a direct sales strategy for us. Okay. What are the other solutions you will have? Multiple solutions you said. In lending, we do a lot of things, both in commercial and retail side. We have solutions in cash, we have solutions in digital onboarding is a very interesting use case out there, digital origination, opening of accounts. That can grow the account to $ 1 million? The potential of these accounts can grow up to an annuity of $600,000-$800,000, less than $1 million, because they're not really with larger banks. That's the potential. They don't have a potential to grow up to a $2 million kind of an annuity. I think I would say that they have a potential to grow around $800K, $900K of annual. You said 30, 40 accounts have come to this channel? Yeah. Directly, we have already broken into U.S. We have got overall around 75 customers, with 30, 40 of these banks and credit unions over last three years. Every year, 200 accounts can come into your kitty? The potential to get around 60, 70 accounts is there. Today we are targeting roughly around 15, 20, and over two years we'll have to grow to that number. These are all subscription accounts, cloud- These are all cloud-based subscription accounts. Cloud-based subscription accounts. When you say $600,000 revenue per account, that means over a lifetime of the project or the annual you're talking about? I'm talking of basically the first order can be around $600K, which is around $300K of annual subscription. Once you sell more solutions, then the overall annuity pie can grow. The annuity can go up again back to $ 300,000. Yeah. Can keep on growing as you have. Keep growing. Thank you. Thank you very much. The next question is from the line of Rana Arora from AUM Advisors. Please go ahead. Yeah. Hello again, sir. Sir, a question, I think. I'm sorry, couldn't hear you too well. The competitors that you mentioned. ServiceNow is one name we caught. What were the other name is, if you could just speak a little bit slowly, sir? Yeah. Appian Corporation. Appian, is it? A-B-I-N? A-P-P-I-A-N. Appian. Okay. A-P-P-I-A-N. Yes. Pegasystems. Sorry, again, please. P-E-G-A, Pega. Pega, okay. Yeah. Pegasystems. Okay. There are also horizontal, completely low-code, which is called Mendix and OutSystems. Mendix. M-E-N-D-I-X? Mendix and OutSystems. Out. O-U-T. Yeah. Okay. OutSystems. Okay. One question maybe for the CFO. The balance sheet we saw, I'm just trying to understand the business, of advance from customers or billings of about INR 104 crore last year. We are not sure we understood what it meant and the services model which has this as a feature. Could you clarify exactly what are you referring to? Because it's becoming difficult to understand. This line item on the balance sheet, it says advance from customers and billings of about INR 104 crores. Advances from customers and- From customers, yeah. This is what we got from the balance sheet. Just wanted to understand what that meant. I'm sorry, we are not able to pinpoint on that. Are you talking about deferred revenue? Okay. That. Yeah. Deferred revenue. Yeah. That was what. How does that work? If you could explain, please. Deferred revenue is basically when we are billing, for example, for Annual Maintenance Contracts. There, I think we are billing for a one-year period, and whatever period falls in the next year or next quarter, accordingly that revenue is shown as deferred. This is a good chunk of the deferred, is basically majorly on account of this Annual Maintenance Contract. Some amount of even cash billing also, where it is a period again. The cash comes to you upfront, is it? Cash comes to us upfront. As soon as we bill, according to the payment term, cash comes to us. Okay. That's why you showed it. Okay, fair. That was why. The second thing, I think you had some margin money of INR 30 crores as well. Is this for performance guarantees or something like that for your solutions? Just a minute. Which line item you're talking about exactly, INR 30 crores? INR 30 crores, yes. Maybe we can take that offline. No, I understand, if it's okay. You can come back with the question, we will explain. If you send us the details, we can reach Deepti on the email ID, and she can speak. Yeah. Thank you. Thank you. That was the last one. I would now like to hand the conference over to the management for closing comments. Thank you so much for joining us for the call. For any other questions, you can connect to me, or you can look at our website. Thank you. Thank you. On behalf of ICICI Securities, that concludes conference. Thank you everyone for joining us, and you may now disconnect your lines.