Ladies and gentlemen, good day and welcome to Newgen Software Technologies Limited earnings conference call hosted by ICICI Securities. 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 star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Aniket Pande, Lead Technology Analyst from ICICI Securities. Thank you, and over to you, sir. Thank you, Peter. Good afternoon, everyone, and welcome to the Q1 FY 2023 results of Newgen Software Technologies Limited. Connecting with me today from my side is Mr. Diwakar Nigam, Chairman and MD, Mr. Varadarajan, Director, Mr. Virender Jeet, CEO, Mr. Arun Kumar Gupta, CFO, and Ms. Deepti Mehra Chugh, Head, Investor Relations. I now hand over the call to Mrs. Deepti for further proceedings. Thank you, and over to you, Deepti. Thank you, Aniket. Good afternoon, everyone. I'm Deepti Mehra, Investor Relations Newgen Software, and I welcome you all to the Q1 FY 2023 results of the company. Before we move on to the discussion, let me highlight that this call may contain certain forward-looking statements concerning 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 the forward-looking statements. Past performance may not be indicative of future performance. The company does not make any announcement in case any of these forward-looking statements become materially different or update any forward-looking statements made from time to time by or on behalf of the company. For further details, you may please refer to the investor relations section of our website. I now hand over to Mr. Nigam for presentation of the results, which will be followed by a Q&A. Thank you. Thank you, Deepti. Good afternoon, everyone, and thank you for joining us today for our Q1 results call. We're starting FY 2023 on a strong note with revenue growing at 18% YOY. I would like to highlight once again that there is a seasonal seasonality in our business due to the license-based model historically. Q1 is a leaner quarter in comparison to the rest of the quarters. Thus, we do not look at the sequential performance in the business. Having said that, we have now increasingly seen a growth in cloud subscription side of business. It grew by 33%. The cloud and subscription revenues put together have now reached 38% of our total revenue. This shift is expected to lower the seasonality in the coming years and lead to more uniformity in revenues across the quarters. The annuity revenue for the quarter was INR 131 crores, witnessing a growth of 25% YOY. The annuity revenues now comprise 70% of our total revenues in Q1. In terms of geographic growth during the quarter was led by India and EMEA markets. Indian market had been subdued for some time now, and we are happy to see developments in this market. We have entered into key transformation projects with existing customers, including a license agreement with an India-based oil major and a key life insurance player in India. EMEA continues its growth trend since last year. The U.S. market has been lacking traction, and we are working across the various initiatives to combat the same. We had new logos win in Q1 2023, six total, with two logos in Americas region. Moving to update on our offerings and opportunities. Just as the cloud eased scalability and distribution access at an infrastructure level in the past decade, low-code platforms are now equipping organizations with the ability to develop their business applications faster through digital technologies and abstract it for ease and functional riches. The next phase of our product journey will be led by artificial intelligence and data sciences-led digital automation. Organizations are now looking to leverage data to take informed decisions. Newgen ONE, along with Number Theory, has now become a unified platform for meeting all data sciences need of the customers. We continue to work on our long-term platform and cloud roadmap. We have enhanced Newgen ONE with cloud native multi-persona artificial intelligence and data sciences platform. The platform is further enriched with intelligent document classification and extraction, integrated processes, and RPA capabilities. Also, we have strengthened our DevOps for easy application deployments. We have recently co-commissioned Forrester Consulting to conduct a total economic impact study and examine the potential return on investment to the enterprise. Enterprises employing our solution may realize Newgen solutions are giving very good ROI. We are happy to share that key findings in terms of the ROI and payback period have been very encouraging. On operational fronts, we are increasingly seeing the employees back to the workplace. In-person meetings, team collaboration, and customer meetings are now increasing. Business travel is starting to normalize. We have started hosting and participation in face-to-face events and doing in-person customer meetings. At the same time, we continue to offer the required flexibility to our employees. We have been investing in all spheres of talent acquisition, retention, development, and incentivization to mitigate the impact of elevated attrition costs across the industry. On the sales and marketing front, we are continuously working on building our direct sales channel along with focused alliances with our partners, especially the system integrators, to expand our markets. Through the partnership with system integrators, we are driving joint sales and marketing activities and campaigns as well as joint solution development. During the quarter, we entered into a strategic alliance with companies like India-based Coforge and Indonesia-based Anabatic Digital as a part of our strategy to accelerate digital for organizations across the globe. We are also exploring partnership with large consulting firms. Profits and margin. Q1 has historically been a low profit quarter for us, given the nonlinear revenue across the quarter. Our profit after tax for the quarter was at INR 19 billion. We are increasingly witnessing normalization of the cost base. Employee costs have increased on account of salary increments and continued supply side challenges leading to additional costs. In addition, there has been normalization of travel expenses. We continue to invest in our global expansion, our product, in our people. During the year, R&D expense comprising about 11% of the revenue and sales and marketing expenses comprised 25% of the revenue as usual. As an organization, we remain committed to our medium-term margin targets and working across initiatives to achieve the same. Our net cash generated from the operating activities was at INR 73 crore. Our net trade receivables were INR 226 crore at the end of June, which resulted in net DSO of 102 days. To conclude, we believe we have a resilient and growth-oriented business model in place for long term. Our cloud and subscription revenues have been growing at a fast pace, providing healthy visibility of long-term revenues. Our products have significant leverage across both sides of the market opportunity, revenue enhancement as well as cost optimization. We have been continuously investing in improving our strength in solving multiple business goals for organizations. This includes transforming a business to maximize the organization's growth and market share and become future ready. Digitalizing the process for enhanced operational efficiency and cost optimization. Applying analytics and data sciences to accumulated process data, generating business insight for enhanced decision making, building new machine learning models, and using these to improve a straight-through business process, reinventing business model. That's it. We are now open to Q&A. Thank you. 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 touchtone 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 will wait for a moment while the question queue assembles. Our first question is from the line of Akshat Agarwal with Jefferies. Please go ahead. Hi, good afternoon, sir. Thank you for the opportunity. Akshat Agarwal with Jefferies. A couple of questions from my side. Firstly, why is it that we're seeing a steady decline in new logo additions for the company over the past several quarters? It used to be about 20 new logos every quarter. It's currently come down to six. That's one. Secondly, we were expecting a step up in growth in the U.S. markets, particularly driven by our partnerships with GSIs. What's happened there, and why is it that U.S. markets are not performing the way we expected them to perform? That's it from my side. Thanks a lot. Thanks, Akshat, and good evening. I think on the you know first on the new logo front we have you know historically been able to generate around 50-60 logos a year. We have also moved away from some channel-based sales which used to generate larger momentum of logos. They were smaller ticket items. In last two, three years we have deliberately shifted from them. As we are progressing in the market it's becoming more and more meaningful for us to get after slightly larger deals which fit in our profile of about $400K of annuity or more. This is one of the switches and one of the reasons in fact where we have also suffered in terms of moving away from such accounts both in U.S. and in other markets as well. While having said that, our expectation even for this year is to do around 50-60 new logos. Some of these logos are very large, and they will give us multi-year revenue. We have missed some orders which have slightly been delayed or, you know, deferred. On a yearly basis, we are still on track to do around number of 50-60 new logos, and we are hopeful that that's gonna happen. On the growth in U.S. market, I think, we explained that last time also. There are a couple of factors. Last year, you know, for the last six quarters, you know, ending up to last year March, we had a one-time PPP revenue, which was generally between INR 5 crore-INR 8 crore on every quarter, which was not sustainable and recoverable. The second part of this issue is also, you know, we have completely shifted from license sales. You know, some of the license deals which we used to get from Caribbean and other countries, we have completely stopped and gone to subscription. You know, there is a decline. But the other bigger factor is, you know, we have realized that in U.S., some tier of accounts which we are pursuing as part of our direct go-to-market strategy on banking, we don't see substantial yield coming from them as part of repeat business. We've slightly shifted that to a larger account, and we are hopeful in some period of time we are able to build that business and, you know, go to a more meaningful tier of accounts. Because with you know getting even those 25 logos, we are not able to generate a substantial value in the business. We are doing some amount of pivot out there. On the GSI front, you know, we have been telling continuously. I think the funnel though it's very positive, but the deal close are not at the same speed as we expected. We will close some deals with GSI this year also. I think last year also we closed 560. I think we are hoping that this year also we'll be doing better number than that, but not at the same speed. Having said that, I think we have reached in U.S. a number which is at the most bottom of our number in terms of. This number is based on almost the regular annuity business which we generate from U.S. Any deals which we have got last quarter, and this quarter should start adding revenue to the coming quarters. We are hoping towards the, you know, next three quarters, U.S. will show a growth momentum for us. Because the base has been, the current revenue is at a very base level. I hope that answers your question. Sounds logical. Very helpful. That's it from my side. Thank you. Thank you. Our next question is from the line of Sachin Jain from Carnelian. Please go ahead. Yeah, Jeet, thank you for the opportunity. My question was largely on U.S. because that is one of the key region for your larger strategy. Can you give more qualitative comment what is happening at a GSI front, though you covered a bit on a previous question, previous answer. Can you give more qualitative? Because I think it's last one and a half or two years you are making efforts towards U.S., and we are not seeing meaningful traction yet. Can you give more qualitative input how it's unfolding for you, one from GSI point of view and second, your direct sales point of view? Yeah, Sachin, thank you. I'll try to further give you some color. See, what's happened in the U.S., as you're rightly saying, we have two businesses. One is our direct sales business, which is typically going in to tier two, tier three banks in the U.S. Out there, what we have a steady funnel, you know, of winning trades. Of course, during the COVID period, those banks behaved very differently, and we didn't have a lot of banks winning. But the other bigger challenge, we didn't see long-term potential in some of that account base because they were too small to give us repeat businesses. We have done a deliberate pivot of, you know, leaving a large part of that market and going to slightly larger accounts. This is one part, and as part of that, we have restructured the U.S. team. We are working on that, and that will happen over a period of time. The second part on the GSI, as I told, I think we have done considerable work on the GSI ecosystem in terms of how we have strategic partnership with multiple, we have funnel going. We are approaching that market. One of the challenges is our control on the deal has been very less out there in terms of closure cycles. We have seen, sometimes the deals may take multi years for us to close for the GSI because his bill is substantial. For us to solve that, we are looking at acceleration of the funnel. In terms of creating more funnel, and that's what we are focusing on. We are hopeful that, you know, it may have taken like slightly more time, but over the next quarters, we see significant results coming out of that effort. What’s your expectation, Jeet, as far as GSI is concerned? How many deals probably last year? It was six last year, if I’m listening correctly. What do you think, in your opinion, this year’s number could be? A ballpark. I mean, I’m sure you also won’t have a complete handle on it. Generally, what is an aspiration? What kind of traction in terms of possible deals you think from U.S.A. through GSI channel, you think Sachin, we are still expecting at least 15 deals coming this year from this channel. Sorry, sorry, can you repeat that again? Around 15 deals coming this year from this channel. 15. Understood. How do you see the environment? Because we keep hearing a lot on demand environment getting deteriorated in U.S.A. particularly. How are you reading from your business perspective environment over there? In what has happened in last two quarters, on the ground, the activity has started picking up. In fact, we are finding more and more interactions with customers in terms of events, physical events, roadshows are happening. There's a lot of activity happening, and some of these smaller accounts have started, you know, reopening for us. You're right. On the other front, the larger accounts, I think, we are, you know, talking a lot about what's gonna happen down quarters, three quarters. This is a challenge. I don't know, today, we don't see any concerns, but a lot of people see kind of an apprehension. I don't think it is affecting right now our business, but we'll keep on observing it around next two quarters or three quarters. I think that is specific, but U.S. and Europe are more about it, but in the markets like India, we see a very little impact on this. Okay. If suppose for some reason, GSI and all does not like. Let's say at the Newgen level, 15%-20% growth, as it's typically been, would be continued? Yes. We said that GSI is gonna be an acceleration engine. On our own, we have a sustenance of generating around 20% of our growth, and that will happen irrespective what happens on the GSI trend. This year also you should see that will happen. Yeah. We are still planning to hit our target of around 20% growth. Understood. What is the reason for growth in India? Because India has shown a very substantial number in, if I compare the last year. Is there anything to read in India's business? Not much. I think it is organic. I think, one of the things is that the accounts in India are quite sizable, and they have continued to give us more business, and they are using our platforms for more and more things. It has accumulated over multiple quarters. If you see, it's not very different from what we did Q4. Q1 last year was an exception because of you know, everything being shut. That's why you see a huge growth compared to that. We think it's all in India. Most of this growth is sustainable. You will see there's more jerkier revenue. See, unlike in other times, we had lot of license revenues which determined the jerky nature. This time you won't see that much at all. Most of the deals we have got in India this year are again, either more continuous in terms of revenue and support and/or on subscription side. Okay. One last question. Post Number Theory integration, how now this platform is being perceived after integration with Number Theory, offering with AI side? Some color on that. See, we are very excited about it. One of the biggest advantages we are having, our customers' use cases which had requirements of machine learning and data sciences, we are able to service them much better, and they're quite excited. As part of our first handover, we are integrating this product into our platforms and solutions. We have already integrated in certain lending solutions in our case, and we have started taking them to market, and we are very happy with the response. Over a period of time, we'll be going and integrating this platform into all other aspects of our products and services, and that's where we will see much more value add. It's a piece of technology which we are very, you know, happy about, and we want to leverage it in more and more across our products and customers. Thank you. I'll come in the queue for any further questions. Thank you. Thank you. Ladies and gentlemen, if you would like to ask a question, then please press star and one on your telephone keypad. Our next question is from line of Girish Shetty from Banyan Tree Advisors. Please go ahead. Hi, sir. Thanks for the opportunity. My question was, you mentioned about the six logos, right? What is the average ticket size of the six logos acquired? That would be my first question. I don't have the exact data, but these are all larger logos for us. I think maybe around $400K-$500K would be an average ticket size. Okay. In time, we can provide you the data if you put me through. Sure, sure. Also, sir, I wanted to know about your sales force. If I see a company like Appian or ServiceNow, these, if I see their sales and marketing spends, it is quite high. It comes to around 40%-45%. Whereas for us, I believe it is in the range of 20%. How does [Newgen] compare in terms of sales and marketing capabilities, as compared to these companies, especially in U.S.? You're absolutely right. Some of the U.S. companies in the same area or similar domain or similar size are spending roughly around 40% on sales and marketing. We are able to do slightly some amount of efficiency because globally, a lot of our cost bases in sales also are India-centered in terms of all your inside sales, marketing, as well as a lot of travel-based sales happens out of India. The other thing is also, you know, we have been able to successfully generate substantial profits at a $100 million size, which none of these companies, they end up to $200-$300 million, they keep on burning up to $40-$50 million a year. We are lucky that, you know, we have built a business model which is quite healthy as a product company generating roughly around 20% of margins at $100 million. With that kind of a model, that's how we would like to proceed. In terms of, we are not shying away from investing more in sales and marketing. We have taken a conscious call that we have to maintain a balance between growth and profits, and we'll continue doing that. Okay. Does it make it difficult to sell as in, when you go there versus an Appian which has a local sales force selling the product to a local customer, does that make a huge difference in conversion? I don't think the cost of sale makes difference because finally it's about your strategy, your value prop to the customer, your ability to reach. Those are the issues which our sales and marketing is trying to work and overcome. I don't think the cost of sale. In case if you find an opportunity to invest more in sales to make that success, we'll go and invest in that. I don't think the overall budget of sales is how we are modeled as a company rather than what happens on a transaction. Okay. No, I meant local as in, Oh, yeah. Appian has a local sales force versus. In the U.S., we also have a complete local sales force. This is all U.S. nationals or U.S. citizens who are operating as our sales force. We have a large, around 14, 15 people sales team out there, which is all local. We have our sales costs are exactly same as any other guy out there. In terms of we are able to optimize in terms of sales support, marketing, pre-sales, where we have slightly less, you know, better operational control and minimize the cost out there. Okay, got it. Sir, last question is on attrition. You mentioned about around 35%-40% attrition last time. Can we have that number? Has it come down this quarter? How is it? What are your total number of employees right now? I believe it was 3,285 last quarter, right? Yeah, it's around same number. We are around 3,350, if I'm right. Attrition is slightly better than last quarter, but we've not seen a very significant shift in attritions yet. We are hoping the planned attritions for next quarter are showing a decline by around 5-6%. I think it's too early. I think things are changing and. Overall sense is that it will stabilize in next two quarters for sure. Okay. You maintain your margin guidance that you had given around 21%? Yeah. See, we are, I'm saying the margin is a factor of our top line. Our top line guidance is to keep meeting our 20% growth, and in case of that, we should be able to be close to our margin guidance. Okay, sure. Yeah. Thank you. you. Thanks a lot. Thank you. Ladies and gentlemen, if you would like to ask a question, then please press star and one on your telephone keypad. Our next question is from the line of Saurabh Sadhwani from Sahasrar Capital. Please go ahead. Yeah. Hi. Thanks for the opportunity. I had two questions. Excuse me for the noise. I'm sorry for that. First, is Indian business meaning, is it the business because of the first quarter of Indian financial year licenses getting renewed, or will the momentum be sustained throughout the year? What do you think about that? Saurabh, as I said, I think more and more the jerkiness in our business, the license is getting minimized. Whatever business happens is now more sustainable in terms of the base of that business has gone up. If you look at our subscription or our annuity business now is almost gonna reach around INR 40 million at the end of the year. The base business and 70% is of our business is annuity business where we have complete control. The base itself is changing, and the jerkiness part is going away. I am assuming that India growth, what we have achieved in Q1, we should be able to maintain such numbers and grow on those numbers. There is no jerky revenue in this. Okay. How many of the new logos? I mean, all of the new logos are subscription-based, right? I think so. I think because most of them I don't see any. I think one of them in India is licensed. The rest is most of them are subscription, yeah. Okay. Second thing about the margin is, I know you said in the previous con call that the margins are going to decline. But, I mean, will it recover from here for the rest of the year? Also, a little bit of detail on why the margins have been impacted so? Yeah. I think, you know, first, if you look at margin history of Q1 because of the seasonality of revenue, as Mr. Nigam said in this call, our historical, if you track five-year Q1 margins, they have been either negative or in the percentage of 2%, 3%. At the highest low before this was 6%, leaving the last year first Q1 because the cost base were unnatural at that moment of time. Because, our costs are, you know, front-loaded in terms of resources, other things, there's not very much variability you can create out there. On first quarter of any year in last five, seven years, there's no margin. In fact, our 10% margin this year is healthy compared to our first quarter. As you look at our revenues keep on growing in Q2, Q3, Q4, while the costs have not shifted significantly, the costs remain the same. We keep on unfolding margins in the next four quarters. I'm very hopeful that, you know, we will be able to maintain our growth momentum for the remaining quarters. In case we are able to achieve that, the margins will automatically unfold. There can be 0.5% here or there, but it won't be very different from the guidance we provided. Okay. The cost will stay flattish or are they going to increase for employee expenses and the travel expenses? Slightly more in Q2 and then declining in Q3, Q4. That has been the trajectory. Okay. Yeah. Thanks, Virender. That's all. Namaste. Thank you. Ladies and gentlemen, if you would like to ask a question, then please press star and one on your telephone keypad. Our next question is from the line of Mihir Manohar from Carnelian Asset Management. Please go ahead. Yeah. Thanks for giving the opportunity. Virender Jeet, I had a question. I mean, you mentioned that, you know, you're looking to close roughly 15 deals from GSI channel this particular year. I mean, just wanted to understand, you know, how is the product adaptability moving? I mean, what gives you confidence that, you know, we are looking at this number versus close to 6 number of deals in this particular financial year? What gives you confidence for that number? That was the first question. Second question was understanding the operating leverage. I mean, GSI coming into, let's say, GSI, more revenue coming in from GSI, how will the operating leverage and how will the margins or profitability change for our company? Wanted to understand that from a structural angle. Yeah. First of all, the confidence comes from the funnel and the opportunities and cases which are already running in the field. There's, you know, we have roughly around 79 cases which we are pursuing right now with GSIs in different areas. We are very hopeful that, you know, between Q2 to Q4, even if we are closing 3, 4 cases, we'll reach that number. That's one. It's clearly coming from the funnel. The confidence is coming from that. Of course, there's an uncertainty on closure but still, having said that, factoring that uncertainty, we still think that 15 deals are doable. On the operating leverage, I think, broadly, since service delivery part of these deals more often the GSI does. We have only what comes to us is more higher gross margin revenue, either in subscription or in licenses. Operating leverages do expand through GSI deals, but unless the GSI revenue on its own becomes substantial, it may not change the overall picture. I think we'll have to wait for the GSI revenue to become 20, 30, 40% of the business. You will see we should be able to move from 65% gross margin to around 73% gross margin. Does that answer your question? Yeah, sure. Just on the deal size, I mean, the 15 deals that you are looking at, what is the average size of the deals that we should consider? I mean, I understand it is difficult to pinpoint a number, but just from an understanding angle. Yeah. Around $400K would be on average. Because there will be 250 Ks and there will be a million-dollar deal, but I think around $400K would be an average deal size. INR 400 K annual. This is my guesstimate. I can send you more data. You can ask Deepti to get you more data. Yeah, sure. Yeah. That's it from my side. Thank you. Thank you. Ladies and gentlemen, if you would like to ask a question then please press star and one on your telephone keypad. Our next question is from the line of V.P. Rajesh from Banyan Capital Advisors. Please go ahead. Thanks for the opportunity. I joined the call late, so I'm not sure if this question has been asked. There is lot of news about some of the large banks in the U.S. pulling back on their IT spends. I was just curious in that context, given U.S. is a big market for us and especially banking segment is bad, what we are hearing and what is the view that we have in terms of any kind of slowdown from the spends from some of these banks in the U.S.? See, Rajesh, you know, one thing we have seen in, you know, our solutions have a need for growth as well as for cost optimization. We have seen cases, even in extreme cases of contraction or pullback of spend, we have seen our kind of solutions being deployed to optimize cost, optimize backends to reduce manpower. We feel their use cases do get created in all kind of economies. Having said that, today my penetration in large banks, U.S., is very minimal. Actually we don't have too much of insight into the ecosystem, what's happening in very, very large banks. We're still working on tier two and tier three banks. In that we are seeing right now the activity has started again, you know. In fact, they've been sleeping for last two, three years. Having said that, everybody is saying that there is going to be something horrible happening around the corner after two quarters or three quarters. Right now we have no idea about, you know, on the ground, our clients have not started showing any signs of that yet. I see. Okay. I'll get back in the queue. Thank you. Sure. Do that. Thank you. Ladies and gentlemen, if you would like to ask a question then please press star and one on your telephone keypad. Our next question is from the line of Ankush Agrawal from Surge Capital. Please go ahead. Yeah. Hi, sir. Firstly, you know, what kind of increase in the cost base have we budgeted for this year, 2023? Overall our costs may increase in around 18%-19%. 18%-19%. Right. In the long term, let's say four-five years, what kind of sustainable growth in the cost base should we expect? Will it be closer around 20% or will it go back to, like, 15 odd%, which was historically there? The reason I'm asking this question is because this year obviously, we are coming off a low base from last year, so the number could be higher. In the long run, what will be the run rate for that? It's very difficult to predict the future, but, you know, if I look at our historical data, we have been able to grow at 50%-20% of growth with much lower cost per growth. Around 13%-15% has been the cost within those years. Right. Right. Taking this year as an exception because it's starting from a low base, no travel costs. We think in future with every, you know, you know, 10% of revenue growth, we can easily manage between 7% or 6% of costs. Secondly, would you like to comment on what explains the sharp decrease in license fee? Is this one-off for the quarter or it's largely, you know, structural wherein more and more subscription deals are coming up, so should be something that will stay? I think two things. One is deliberate. We are pushing back on license sales and, you know, which we are taking the hit on that in terms of our top line because of that. The second is also you've seen that we have missed on new logo acquisition this quarter. We've got some orders which have got deferred, or we missed them by, you know, boundaries of the quarter. That's been the primary reason. Having said that, our license revenues may not grow at the speed at which the, you know, the overall company is growing. In fact, there may be a decline. The right measure for us to track is the subscription revenue, which we are growing at around 32%. Okay. All right. Internally, we are now more focusing on subscription deals and not license, if that was your answer, right? Yes. Right. Then lastly, you know, in one of the recent interviews, you kind of commented that, you know, that your goal is to grow to a business of $500 million in next five years. Can you shed some light on that? Because, you know, internally in the conference, you have been guiding for some 20%-25% growth, but the $500 million target is, you know, at least double that. So what's that? I think, you know, we are a software product company which is operating in a market size which is roughly around $60 billion with businesses operating in India, Middle East, APAC, and now we are shifting to more mature markets. The addressable market and opportunity size is very large. Of course, it depends on the execution. We have a trajectory of growing at a particular percentage. Our initiatives of GSI, our initiatives of entering more mature markets should accelerate our historical growth rates. That's the plan. Once any of these starts clicking and gains us more sustainable revenue, we should be able to accelerate this growth rate much beyond 20%. That's what our business plans are drawn for and our investments are made for. Okay. Great. You know, earlier I believe you had been making a comment that, you know, GSI would be adding probably 4%-5% extra on top of what we do organically. Is there any change in that front, that GSI will probably add much more than what we had earlier expected? It should add, but I think it will start with, when I say 4%-5%, I am saying that if I can meet my 15-20 logo target this year, that should add 4%-5%. Next year it can become much bigger than that, and it can become compounding. The whole GSI stream is going to target of accounts which we generally have not been our accounts. We have not been targeting those accounts, so it increases our market. Thus, we should be able to increase our growth momentum. Right. Internally, we don't have any, you know, kind of constraints in terms of how much business we want to maintain internally and versus GSI. Like, we are okay with even GSI doing, like, 50% of our business. We are completely going with GSI becomes 70% of the business. We have no problem in that, but it takes time. That's a desirable state. Okay. Got it. That was good. Thank you. Thank you. Thank you. Ladies and gentlemen, if you would like to ask a question then please press star and one on your telephone keypad. Our next question is from line of Karan Doshi from Edelweiss Financial Services. Please go ahead. Hi. Good evening, sir. My question is on the deal that we have signed with Coforge and Anabatic Digital. Can you give us some color in terms of what kind of client additions or deals you can expect from signing this deal with such GSI? Also, have you got a footprint in the door with one of the clients at Coforge, or are we still ramping up? Can you have some color on that please? Karan, what about both Coforge and Anabatic, we have got early successes. We have already deals together, and I think the Anabatic in Indonesia. I hope I'm right. Yeah. It is a very large local system integrator, and have got huge penetration in the market. Our deal and signing and making raising the partnership level to a level where we are having joint go-to-market and plan is helping. Similarly, in Coforge, from a tactical deal, we have also signed an agreement to pursue markets in Europe, U.S., and other areas and go after areas and set joint targets. These are business plans. I think, you know, they don't have right now direct correlation in terms of how much revenue we can get. We are hopeful that once we go work on these plans over next 2, 3 quarters, we should be able to build a substantial business with both these partners. Okay. Got it. My next question was just an extension of this. How do these deals come into play in terms of how did we get a deal with Coforge? And similarly, how can we then penetrate into, let's say, other similar system integrators? Do we first sign a deal with the GSI and then move on to the clients? Or do we have a client interaction first and then talk to the GSI? If you could explain. Both ways, I think what happens, but historically the India-based ecosystem of GSIs is where we already had client interactions. We had common clients, we had common partnerships, we had joint cases historically. Once there is a more momentum and people see that we can carry the same solution to different markets, that's where the partnership becomes strengthened. That's how we work with other GSIs as well. We have, you know, moved away in some of those cases from the tactical client partnerships to having more joint go-to markets with these GSIs, and that's what's happening. It is, you know, we have a history being in Indian market and working with these guys for nine, 10 years. They've seen our products, they've seen our platform, they've seen the capability and what we deliver as the end result for client. Together we are very hopeful we can take the same thing to global customers and, you know, make them successful. Right. Okay. That's it for me. Thank you. Thank you. Ladies and gentlemen, if you would like to ask a question then please press star and one on your telephone keypad. Our next question is from the line of V.P. Rajesh from Banyan Capital Advisors. Please go ahead. Yeah. One question was that, you know, how is your sales funnel looking now, vis-a-vis like three months or six months ago? Has it been consistently going up, or are you seeing some kind of pullback in that? See, from last six months, I think things have started opening up and becoming better on the sales activity front. Also on the result front, in terms of we have started, you know, converting from more flattish quarters to more growth quarters. We see all across, especially, markets like India and Middle East are doing considerably well. Okay. U.S., we are trying to pivot, and we are trying to change some amount of our strategy of how we are growing. Other newer markets like Australia, we have start getting the early wins. Overall, we are seeing the, you know, for us, the market activity becoming better over last six months. I see. As you were talking about your gross margins expanding because you will do more businesses with the GSI partners. Is it because that you will not stop doing integration internally, and that's why the margins will expand or is there some other variable? Yes. As part of our sale, there is an element of service delivery. Today, since we are selling our own systems, we are doing also the implementation, which is a service delivery part of. Any service delivery has got much lower gross margins than the overall license, because generally license and subscriptions. Right. are at a very high gross margin. As the service delivery is taken by the partners or the GSIs, we and more and more our revenue composition becomes of higher gross margin in terms of more license and subscription, thus improving our overall gross margin. We may continue to do service from some tactical clients or some strategic clients, but overall, more and more services are passed on to that, GSI and, higher gross margin revenue gets passed on to Newgen. In this quarter, what percentage of revenue came from services side for us? Good question. Let me think. Just give me one sec. I think we had, on purely services side, we are at INR 180, roughly around 60%-62% of the revenue came from services. Okay. That is associated with the license revenues which were. Yeah. These are all services. They're associated with the sale of our license. I'm sorry. Could you repeat that, sir? Yeah. All our services are associated with sales of licenses, either for implementing the software or having a long-term support, additional support contract with the customers. Right. If you take out the support part, that's what I was interested in, that with the new license and how. The implementation part is roughly around 42.1%. 21%. Okay. All right. And in terms of your, you know, the business, you said you're pushing back on the license deals. Did you lose any deals because the clients really wanted to have a license deal and you were not willing to give in, or how is that dynamic working out? You see, you know, we are not having such a luxury that we'll completely leave deals. What we are saying that deals which are of smaller size, something in the range of $100K-$200K as license, we have no interest in selling them because the annuity component we generate becomes considerably small. It becomes $30K, $40K. As a long-term, we lose interest in that account. For larger license deals we still are ready to accommodate and say yes. For smaller license deals we are pushing very hard. In fact that also means sometimes leaving it on the table. Okay. In terms of our market share, if you can comment on that, both in our core geographies of India and then some of the newer markets as to where we stack up among the other providers? Rajesh, you know, there is no official study for that. In the global market share, I think we're very small. We don't even own 1% of the global market share because the market is predominantly U.S. and Europe. We have got a substantial kind of a leadership position in India and Middle East for sure, because almost all marquee customers, banks, insurances, we have acquired them, at least most of them. There's a, you know, a 10-year-old study done by IDC in which we were the number one and IBM was number two. That is a very old study. Nobody has done a study after that today. I think we are still number one in India. We are still number one in MEA region. in other regions we don't have a substantial market share. Given the size of the market share, aren't Gartner or the other analyst firms talking about who are the leaders, who are the challengers, et cetera, et cetera? They don't do it in sub-market. They do it at a global level. The percentage of revenue across vendors. Out there, the big guys are the IBMs and Microsofts and Pegasystems of the world. But on a regional level, they don't have market share for who's the. Because they can't do that regional size estimate. Mm-hmm. Understood. Okay. Thank you. That's all I had. Thank you, Rajesh. Thank you. Ladies and gentlemen, if you would like to ask a question, then please press star and one on your telephone keypad. Our next question is from Kewal Shah from Jeet Investments. Please go ahead. Hi, sir. Thank you for the opportunity. Just one question that, since you mentioned that we're keeping up with our growth target, should one assume that the couple of deals that got postponed are likely to get closed or would have got closed in quarter two and our H one deal wins would look considerably stronger than compared to last year? You know, I wouldn't go as far as, you know, predicting that. I'm saying is that, irrespective of the number of deal wins, the way we are building business more or less jerky, that means less license-based but more subscription AMC, we have a continuous growth momentum. Even the deals which we have added in last year, Q4 and Q1, will start contributing revenue in Q2 for this year. We'll surely add many more deals in Q2. Many more deals we add in Q2 will play a part, but may not play a substantial part in revenue of that quarter. No, absolutely, sir. I understand that the revenue is a function of the order book that is being there for last year or whatever time period would it be. I'm just talking about orders in specific, not really their contribution to the revenue. Just independently talking about the order book, do you think the order flow for second quarter and so on should be stronger compared to? Should be better, totally better than Q one, yeah. Okay, okay. All is well. That, that's about it. Thank you so much. Thank you. Our last question is from the line of Vivek Khera from SBI Mutual Fund. Please go ahead. Hi, Vivek. Thanks for the opportunity. I was not in the call throughout the time. Sorry if I'm asking this again. I think you also spoke about 15 new deals from GSIs that you are targeting this year. Firstly, I wanted to check how many of them have happened in this quarter, and what gives you the confidence that you'll be able to do 15 this year? That is part one. Part two, on GSIs, would the construct of deals be more dependent depending on how they actually structure deals? For example, we are trying to move away from license. Would that be very similar through GSIs as well? Would they be also looking for license-based kind of overall deal that might accrue to you? Hi, Vivek. How are you? Yeah, I think both the questions. First, I think on the deals, expectation from GSI is completely based on funnel. We're already operating kind of a 79-case funnel, which some of those cases are in advanced stages and some will add also during the year. We are hopeful that we should be able to do better than what we did last year in terms of deal wins. Especially since we are opening few more markets like Australia, APAC, where also deals are coming from GSI now. I'm very hopeful looking at that funnel, we should be able to do much better than what the current situation is. On the question of deal construct, I think selling subscription is quite normal even to GSIs than, because this is what the model which every other vendor sells. We don't see. But in some large cases, if it's a license deal and it has been structured in RFP like that, we are quite open to go and pursue that as a license deal with the GSI. As long as, you know, we are able to get a substantial revenue in terms of multi-year revenue from that client, we are okay with that. Today the deal construct of GSI is not very different in terms of when our part is, you know, our licenses are introduced, it does not matter. There are two kinds of deal constructs. One is if we are part of a very large RFP where we are getting positioned, then the RFP construct determines the kind of model they are buying in, then we go and support that. In case we are creating a single opportunity around our solution, then we are normally going with the subscription most of the times. I hope that answers your question. No, that's helpful. The other thing I want to check is this entire association with Coforge looks very interesting. Is there a difference between probably midsize or a small size GSI versus a large size GSI. Would there be probably better connect with the management and potentially a better push, from a medium-term perspective this taking? Yeah. You know, the question is, with most of the GSIs, there are extremely good relationships with them. Their headquarters are in India, and we have good relationships with them. I think finally it depends on the hunger in the market and the opportunities we are able to create in the market and play them. We are hoping with Coforge, with some successes in India and in other markets, they are quite interested right now. We are quite interested, and we are hopeful that we should be able to build an interesting funnel. I think it's too early. Let's give it a few quarters and then we see how it unfolds. Got that. No, best of luck, guys. Thanks so much. Thank you very much. Thank you. Ladies and gentlemen, this concludes our question- and- answer session. I would now like to hand the conference over to Ms. Deepti Mehra for closing comments. Thank you everyone for attending the call. For any further queries, you can connect with me or go to our website. Thank you. Thank you. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.