Ladies and gentlemen, good day, and welcome to the Newgen Software Q1 FY 2024 earnings conference call, hosted by ICICI Securities. We have with us today Mr. Diwakar Nigam, Chairman and Managing Director, Mr. T.S. Varadarajan, Whole-time Director, Mr. Virender Jeet, Chief Executive Officer, Mr. Arun Kumar Gupta, Chief Financial Officer, and Ms. Deepti Mehra Chugh, Head Investor Relations. We will start off with the remarks from management, after which we will open the floor for Q&A session. As a reminder, all participant lines will be in the listen-only mode. 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 touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Newgen management. Thank you, and over to you. Good day, everyone. I'm Deepti Mehra Chugh, Investor Relations at Newgen Software, and I welcome you all to the Q1 FY 2024 results of the company. Joining with me is the management team at Newgen. 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 the future performance. The company does not undertake to make any announcements in case any of these forward-looking statements become materially incorrect 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 the website. I would now hand over to Mr. Nigam for presentation of the results, which will be followed by a Q&A, by Mr. Virender Jeet. Thank you. Good afternoon, and thank you for joining us today for our Q1 financial results call. Getting straight into the business performance, the first quarter of the fiscal continued the strong growth momentum of last year. Q1 witnessed revenues of INR 252 crores, up 34%, with robust growth across all geographies. APAC market witnessed a growth of 46%. EMEA, U.S., and India markets witnessed a growth of 38%, 36%, and 25%, respectively. Historically, the business has been seasonal in nature, with Q1 being the leanest quarter. We have been in the process of reducing the seasonability by increasing annuity business, and thus Q1 growth is reflecting that. Our annuity revenues have been getting larger, and we were at INR 168 crores. We continue to steadily build our subscription revenues. They were INR 89 crores in Q1 and comprised almost 35% share of our total revenue. It was a strong license growth quarter as well, with license revenue at INR 42 crores, growing 1.9x compared to Q1 last year. During the quarter, we witnessed strong traction and booking from both existing and new customers. These include large orders from existing bank customers as well as healthy new logo additions. We added 13 new logos across the geographies in Q1. Some key customer includes: providing digital account opening solution for a privately held bank in Americas region, providing lending origination and management solution to a leading diversified business group in Saudi Arabia, operating across seven core sectors, providing trade and supply chain finance solution to a leading financial institution in the UAE market. We are witnessing expanded opportunities across different segments, particularly in the banking. The renewed thirst on digital journey across the banking sector has resulted in significant increase in our orders, particularly from existing bank customers. We are also witnessing revival of new journeys in insurance and government segment, creating a high demand for services, service accelerators in these verticals. Globally, there is a growing emphasis on automation at scale, especially in financial organizations like bank, wealth management groups, et cetera. These organizations are actively planning to integrate their front and mid-offices, leading to a surge in interest from customers. This increased interest has translated to large licenses and implementation, indicating a strong market. We are excited to see that our innovative offerings are well-positioned to tap the large market opportunities. The new generation of our product suite, NewgenONE, is designed to provide enterprises with the tools they need to build, deploy, and manage applications, bridging automation silos and streamlining the processes. Our platform's modular design, advanced AI capabilities, and cloud-first approach will enable organizations to deliver superior customer experience, operational excellence, and business innovation. It has got contemporary user interfaces and more integrated environment. The new platform also produces better applications using low-code principles. It allows development of attractive portals with very little effort, facilitates end-to-end integrated processes at enterprise scale. We are adding AI/ML capabilities in process automation for suggestive and prescriptive intelligence. For work introduced, timelines can be estimated, work can be diverted to suitable person, et cetera. We are unleashing our lending solutions with AI/ML-based auto decisioning and no-touch, low-touch strategy. In our recently launched trade finance solution, we are again using our AI-based strategy for extracting data from paper images and PDF documents. On the operational front, we have been working extensively at enhancing employee engagement, productivity, talent management, and capability building. In fact, we are working on utilizing the different AI technologies to enhance employee productivity. At the same time, we are also focusing on expanding strategic hires to lead our growth. On the sales and marketing front, we are strengthening our direct sales channel, along with a focused alliance with our partners, especially the system integrators, to expand our market footprint. As a part of growth edge strategy, Newgen is building across relationships with four types of strategic partners: GSIs, the global system integrators, consulting firms, technology partners for enhancing capabilities, and lastly, marketplace partners like Mambu and Guidewire. On profits and margin, we delivered healthy growth in profits during the quarter. Profit after tax was INR 30 crore, witnessing a growth of 57%. As we grow, we are investing heavily in technology and sales and marketing initiatives while maintaining cost discipline. During the quarter, apart from investing 10% of our revenues on R&D initiatives, the company invested 24% of revenue on the various sales and marketing initiatives. On the balance sheet front, our net cash generated from operating activities during the quarter was at INR 57 crore. Our net trade receivables were INR 359 crore at the end of June, which resulted in a DSO of 126 days. For the year ahead, we are excited about the growth opportunities across geographies. Newgen is dedicated to staying at the forefront of technology and innovation, and continue to empower enterprise towards a more holistic automation. Newgen is working on leveraging AI to bring in enterprise-wide transformation, such as meeting the ever-changing customer expectations and empowering employees to make intelligent decisions. We are looking forward to this interesting journey and driving a positive change through our products and solutions. Thank you. We are now open to Q&A. Thank you very much, sir. 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. The first question is from the line of Baidik Sarkar from Unifi Capital. Please go ahead. Gentlemen, good evening, and congrats on a strong quarter. The beat we've had this quarter on the license revenues was good to note. Should we read this as a sign of acceleration to come in the license, product side of the business, given your go-to-market efforts, especially in the U.S. over the last two years? Or would you caution this as a one-off? Does this in any way change the H2 loaded license revenues that were due anyway? Thanks, Baidik. Yeah, your question about the license. As part of our growth, we are already seeing strong license business because that's our primary business. The issue is about realization of those licenses. In some cases, we have perpetual license sales, in some cases, we have annuity-based license sales. In annuity-based licenses, the revenues are deferred. Talking about this quarter, we had some of the perpetual deals coming in, and they were coming across all territories, including U.S. We do still expect this year to be very strong on licenses, because we need to, you know, get at least a substantial level of perpetual licenses in this year, along with other subscription licenses. I don't think the license is gonna be one time, it's gonna be always a continued journey for Newgen. In regards to U.S., generally, the U.S. sales are subscription-based sales. I think, you know, this time's license sale is slightly surprising, but I think there is also many more prospects who are now standing and shifting to more perpetual license sales. There's a kind of a pushback from market from traditional subscription and SaaS sales. You are finding that kind of a trend happening across all geos. It will be difficult to say what's gonna happen in future, but we will see that both kind of license, subscription as well as perpetual license sales across all regions. Okay. That's good to know, Virender Jeet. You know, keeping that in context, you know, how should we read the growth in order book that was quantified in your opening statement? From an annualized number, from an annualized book to the ratio, is there a number, is there a range that you could share? You know, what's the quantum of growth that we've seen here in the order book, both from annualized basis and otherwise? I understand you don't disclose the number, if at least the growth number, you know, can be spoken about. As Mr. Nigam has just said, you know, some amount of transition from in the lopsided revenue in terms of you look at a transition for last 3, 4 years, the Q1 has to be in very small quarter. We have moved from a revenue percentage of 16, 17, to roughly around 20% of annual revenue, that transition is happening. We do expect normally the Q1 to be stronger in terms of percentage growth year-over-year. For the overall year, we are still maintaining that we'll have a strong year, and we have a historical of growth momentum, which is about 20%. You know, we would surely try to, you know, meet that and exceed that. Right now, I think we are too early in the year, and there are a lot of other variables. Taking, this percentage as a trend of year is not a fair way of looking at. Sure, sure. No, actually, Varinder, I was trying to understand, you know, what the momentum in your order book was looking like, right? You know, is there a range that you can help us understand? Because you did allude to the fact that there was a very healthy growth in your order book. From an annualized order book perspective, 12 months rolling, and, you know, the gross number, how much is that number? I'm just trying to understand what kind of momentum you're seeing, you know, we expect to see in the quarters to come. So far, the last year order book was substantially better, and I think the growth in order book at an annual level was much higher than our growth in revenue. You know, we were at, if I'm not wrong, around 30% of growth in order book, while as the revenue grew by around 24%. There is a tailwind on the previous year. So far in the Q1 this year, that momentum continues. The order book is still growing at a substantial pace than the last year's Y o Y for the same quarter. It is very difficult to predict and draw that trend for the year, so we'll have to wait for that. I'm saying that all the variables are looking very, very fine for right now. We are not seeing any challenges in the market. The business is, you know, there's a lot of interest from the customers, especially on the digital journey side for us, and we hope to continue this growth momentum. Yeah. Thanks. Thanks, Varinder. That's helpful. All the best. Thank you. Thank you. Thank you. The next question is from the line of Ashish Chopra from Goldman Sachs Asset Management. Please go ahead. Yeah, hi. Thanks for the opportunity. Just a couple of questions. First one, just as a follow-up on the license sales that you did this quarter. You mentioned that there is no one-off over here, and when I look at your historical trends as well, just like you mentioned in the overall business, even the license sales tend to be the least in the first quarter, and then they build as the year goes along. At least that's been the trend in each of the past 5 years. Is that something that is likely on such a high base of license number in this this year as well? Do you see that being a little bit different, considering just that you nearly tripled from where you were in the first quarter last year on the license sales front? Yeah. Ashish, what's happening, you know, if you look at last three, four quarters, I think there has been an overall growth in the business, and that growth translates into deals, which are sometimes license and sometimes subscription. Luckily, for some of those deals in last three quarters have been on perpetual license side, so that's why, you know, last year, though, the license growth was less than the company's growth. This quarter, the first quarter, there has been substantial license deals for us. I don't see the base number is such a large number that we can't exceed that growth target. We will continue to, you know, sell a substantial number of licenses every quarter, and I don't think this is a one-off thing. What is one-off is that, as you're rightly saying, that in some territories, like in U.S., we got a substantial license deal, as well as, you know, the Q1 being lean, generally, this time it has defined that leanness. Whether that's a one-off, you know, thing or it's gonna continue, I think we'll have to wait. I don't see any reason why we can't continue the growth momentum in next few quarters. Fair enough, Jeet. Just, secondly, from my side: given that the annuity-based or subscription-based revenue is now almost 2/3 of your total revenues, does that not give you a good semblance of visibility in terms of how the year pans out? I mean, I'm coming from the perspective that if you are, let's say, 30%+ YoY in the first quarter, what holds you back from having a clear visibility of at least a 20%+ growth? What has to go wrong for growth to be lower than 20% when you have an annuity base which is as high as 2/3? Just wanted to understand some nuances of the portfolio. Yeah, Ashish, I share your enthusiasm, and the only thing what you read, it's slightly wrong, what you're seeing that annuity is 2/3, is basically for this quarter. You're extrapolated it for the year. Since this quarter is smaller, our annuity is still at between 55%, and we may bring it up to 60% of the revenue this year. Still, you know, the total annuity is not 2/3, it's more close to 60%. There is still a variability depending on licensed businesses. When you are looking at this 2/3 number, you are taking this quarter number, because this quarter to the other, you know, generally, it's a smaller quarter for us, the traditional business lines end up performing much better. I hope that, you know, our next, few quarters, we can keep on increasing this annuity. I've said, as we are able to escalate the subscription sale, escalate the mature market sale, we do expect this annuity to go all the way up to 70%, 75% of the business, which should give us much higher visibility in the whole year. Fair enough. Just lastly from my side, you articulated that you're not really witnessing any significant pressures in your U.S.-based customers. Anything that you could share on the traction, in your own efforts to grow your client base there, as well as, maybe the results of the GSI channel model? Ashish, I think the U.S. performance this quarter, I don't think should be taken a reflection that everything is all right on that market. We are still working on resolving. Like we said last time, we have already pivoted. We are pivoting our strategy from going to larger banks. Some of those deals have come this quarter. We expect to repeat that. It's not that all quarters are still firing. We are resetting our GSI strategy out there. We are working on multiple initiatives on that. I think this is still still some quarters to go before we start building a much more stronger U.S. Which we, you know, drives the growth for Newgen. As of now, you know, this is... I would say that, last year was very weak for U.S., and this year, in percentages, it looks strong. I think we'll have to wait for some time before we can really say that U.S. is gonna be the growth driver for the company. Got it. Thanks so much, and wish you all the best. Thank you, Ashish. Thank you. A reminder to all the participants, anyone who wishes to ask a question, may press star and 1 on their touchtone telephone. The next question is from the line of Mihir Manohar from Carnelian Asset Advisors. Please go ahead. Yeah. Hi, I'm sorry, sir, we are not able to hear you. I would request. Yeah. Now audible? Yes, sir. Please proceed. Yeah, sure. Thanks for giving me the opportunity, congratulations on a good set of numbers. Sir, I mainly wanted to understand, you know, in which parts of the BFSI is driving the growth? I mean, you know, is it insurance, the mid-sized banks, large banks? What is that- I'm sorry to interrupt you. And how- Your voice is breaking. I believe there is a network issue from your end. Sir, could you please rejoin the queue? I would request you to kindly rejoin the queue. In the meanwhile, we move on to the next question, which is from the line of Ankur Kumar from Alpha Capital. Please go ahead. Good. Congrats for the great set of numbers, and thank you for taking my question. My first question is on the jump in the other expense. while the this quarter is lean, we, and Q4, last Q4 is heavy, other expense has increased to INR 75 crore from INR 67-odd crore. Can you explain the reason, and what can the expectation on this? I will have to excuse me, because other expenses, could you be more specific? SG&A. These are all our SG&A expenses. This is about including our marketing and our all other travel, marketing, and all other expenses. There is a, as the business grows, there is already, you know, kind of an investment happening on the marketing side, and there is some amount of what you call cost base growth on all other heads as well. I could not understand, is there a? Last year was not pretty good. Yeah. I think the last year, the first quarter was not even quite open. There is, in fact, in effect, we had budgeted, so we are, in fact, slightly lower than what we had budgeted for this year. We don't see any concern on other expense side. Any guidance on this number going forward? See, I think the Q1 cost base is generally, I think, gonna be the similar for, you know, the, most of the things. Only the manpower expense would vary after the increments and other things kick in. Generally, these are the cost bases we operate for most of the year now. Got it. Got it, sir. Another question is, to the previous participant, you said, now Q1 should be around 20% of revenue is generally happening. Even if we assume it to be 20%, this year should be north of 25% of growth. Am I right on my assumptions on that front, sir, based on the visibility that we're currently having? Yeah, I think, you know, what I said is that, we know our historical trend rates have moved. The Q1, which was 17%, has moved all the way up to 20% up to last year. We do expect that momentum to continue this year. I think it will also depend on our performance on the subsequent quarter. Yeah, if everything remains the same, we could extrapolate the data, but I think that's not going to be that. You know, having said that, right now we are quite, you know, hopeful of maintaining a strong year this year. Got it, sir. On margin side, we generally are talking about 18%-20% of PAT margin. Any color on that front? I think there's still things around, you know, between 20%-21% on EBITDA and around 17%-18% on PAT, depending on our investments that year. Generally, the cost bases are very pretty much fixed. Where we reach on the top line will determine the net margin. Right, sir. Thank you. All the best. Thank you. The next question is from the line of Mihir Manohar from Carnelian Asset Advisors. Please go ahead. Yeah. Hi, thanks for giving the opportunity, and congratulations on good set of numbers. Sir, largely wanted to understand on BFSI side of the piece. It will be, so what is driving that? You know, is it financial services, is it banking, is it insurance, is it capital markets? Mihir, I'm sorry, we couldn't hear the second part of your question, but if you can hear me, then I can answer the first part of the question. Besides banks, such as banks. What is driving this growth? Mihir, there is some issue with your line probably. The moderator. Sir, I would request you to kindly rejoin the queue. We are not able to hear you. Mihir, can't hear you. You know, I think let me answer the first. Maybe if you can hear us, let me answer the first part of this question. Yes. Mihir, the... As you said, the growth momentum, I think we are very strong in BFSI, and I think in that the banking is driving the growth. Banking in our emerging markets like India, Middle East, APAC, we are talking of Tier 1 accounts. As Mr. Nigam's address said, it is typically the journeys which is whether it's an onboarding journey or a digital lending journey, which is driving a lot of traffic. There is. We have moved from, pivoted from our earlier deal sizes, which were into few INR crores, to much larger deal sizes across all these regions in India, Middle East, and APAC. In U.S., we have been focusing on mid-market, and that was our, you know, kind of a bread and butter out there. Now we've pivoted slightly to banks which are bigger than $20 billion, $50 billion, and above. In those, I think the origination journeys, the digital journeys is driving. Banking is number one, where we are finding traction. Beyond banking, also, insurance is looking positive, though we have not converted as many deals as we do in banking. Insurance is looking as also very strong. Again, I think the need for digital revamping, journeys, infrastructure, everything is there. I'll stop here. Probably, Mihir, if you can join again, and then we could have a chat, because right now I can't hear you. Thank you, sir. Yes, sorry. Yep. Ladies and gentlemen, a reminder to all the participants. Anyone who wishes to ask a question may press star and one. The next question is from the line of Chirag Kachhadiya from Ashika Institutional Equities. Please go ahead. Yeah, congratulations to the entire team for a very strong set of numbers in a lean quarter. Again, it's very really transforming the result on revenue largely start coming from annuity and subscription base, then what kind of cost structure are we looking for? On sustainable basis, the ballpark aspiration to reach a certain million of turnover by FY 2027, which we have been provided since last couple of quarters. At that time, what margin profile are we looking forward? What is the attrition during the quarter? Yeah, in terms of, you know, our As the revenue mix keeps on growing in terms of becoming more annuity, that happens because of either we sell perpetual license and the ATS part of the annuity part of license gets compounded, or we sell more subscription licenses. It will keep on improving. In terms of our margin, I think it's not directly connected to that. As company grows, our gross margin position will keep on becoming stronger as the larger percentage of revenue will come from, you know, what you call, our licenses or subscription sales. But it will depend on our opportunity of growth in market and how much we invest in our R&D and sales and marketing. That's why when we, when we give a broad guidance about, you know, meeting some numbers, we are saying, assuming that the larger part of the margin will get reinvested in businesses for growth. We'll continue to be around 20%-21% of EBITDA and 17%-18% of PAT on a healthy growth line of anywhere around 20%. We should be able to deliver that. In terms of, you know, attrition, I think the attritions have come down significantly. I think we are almost talking at less than half what was last year at the same quarter. It's just one quarter, and I think let's wait. I think the market is still looking up now for most, again, software industry. Let's see how it unfolds. I think we are, you know, on that trend, I think the larger problem which of industry, I think we are much away from that problem right now. We think that this year we should be, you know, at a much, much lower number than compared to the last year. I couldn't get your third question. Okay. One more question I have. Like, when the wage hike impact is to be there, in the quarter, and in which quarter we're going to increase the payrolls and all? Also, will it be similar to like we used to give in previous years, or this time is there any differentiation, considering the growth we have achieved, in last couple of years? No, I think wages are dependent on our growth, our own, you know, perception of where we want to be, and as well as the market reality. I think our, you know, increment cycles are divided across three quarters: April, June, and predominantly January. I think the impact will be. There is some amount of impact on this quarter, which already there has been increments, and there is going to be some impact on next year, next quarter, as well as then there's going to be a substantial number of people getting increments in the last quarter. What percentages? I think it's a very difficult call right now. I think we'll have to take it very close to that. Okay. Thank you. All the very best. Thank you. Thank you. The next question is from the line of Sumeet Jain from ICICI Securities. Please go ahead. Yeah, hi. Thanks for the opportunity, and thanks for allowing ICICI Securities to host your call. The first question I had is generally the health of the mid-sized banks in the U.S. Generally, we have heard post the banking crisis in March, the overall technology demand from them has been a tad weak because of the consolidation and merger happening. In your client base, within the U.S. portfolio, have you seen some kind of a pressure playing out? As per your numbers, it doesn't seem like anything of that sort has played out. No, Sumeet, thanks for your question. Sumeet, you're absolutely right. I think what you're saying is quite visible in U.S. I think the mid-sized banks, especially the smaller end of the mid-sized banks, are struggling. Right now, I think their spend on IT is quite weak. In terms of when you look at our performance in banking, it is still I think the deals which we have won or what we are winning are slightly in the larger accounts. We are, as we said, we are pivoting towards those accounts. You know, the banking in U.S. right now is under cost pressure. They are looking at projects which we can optimize, Some amount of a play off our products is in terms of, you know, challenging the existing cost basis and doing things at a much more viable cost. We think even on the cost pressure side, there is a demand for our kind of products. You know, I say the Q1 is a very small quarter. Any number seen in percentages and trends from Q1 may not be a fair thing to take. We are also, you know, learning how the U.S. market is going to behave to our new kind of offerings. I think the process is, you know, It's half done, so we can't draw conclusions on that. Are you a bit cautious on your U.S. geography demand in the coming quarters, should we take it like that? It's Okay, the way I would say it is quite diversified. Last year, last year base is quite small, we should be able to do substantially better than last year. In terms of overall, our perception of building long-term U.S. businesses in terms of through GSIs or large-sized banks, I think it's going to be a while before we'll be able to comment on that. Okay, got it. Next, I wanted to just ask around this, INR 35 crore five-year deal you mentioned towards yesterday. When will it start ramping up, and in which geography and vertical will we see it? Yeah, Sumeet Jain, this is a deal from India, one of the Indian public sector banks. It's for our new offering, which is trade finance. This project needs to be executed immediately. I think the large part of this revenue will come in next 18 months, the part of this revenue, which will follow up as ATS/A MC. It's a very good sizable deal, we are very excited about this trade finance offering. I think last quarter also, we have already communicated, we have won substantial deals in this, in both India and Middle East. There's a interest in other markets also around this product. I think our digital lending and trade, and especially larger accounts, are driving very different deal sizes, which is also helping our growth. Will it take one to two quarters to see the ramp-up of this deal in your revenue profile? No, I don't think this deal on its own changes the revenue profile, because at the end of the day, this, if you take, you know, 70% of this deal, which is going to be executed over 18 months, and divide it on quarters, so this is just another deal for us. I think you're absolutely right. I think next quarter onwards, we will be executing this. Got it. Got it. Next, I wanted to check around your debtor days, like, at 120 straight, that is typically higher than what you have reported in the past year since Q1. Any particular reasons why the debtor days are much higher this quarter? No, nothing much. I think this is our traditional markets, where we are having some challenges. I think the bigger issue is what has happened in Q1, the last year closure, Q4 and Q1, I think there's been substantial amount of billing. That billing is to do with also a lot of revenue, which is not realized in terms of our subscription advances, our ATS advances, as well as the growth rate has been much higher in these two quarters. Some amount of, since some amount of provisioning is getting created even for, you know, day 30 and day 90, so you have DSO increase. Also on the other hand, we have our traditional problems in some markets and on some accounts, which have added to roughly around 10, 15 days of DSO. We are, you know, we are on it. As I told you, I think in some period of time, we are trying to bring it to near 100 days and then even go below that. Got it. Just last question to squeeze in, your gross margins have expanded by almost 400 basis points YoY. Is it a function of higher license revenue sales this quarter, or is it that your wage hikes come in the next nine months and you will see a bit of a pressure there? How do we see the gross margin trending over the remaining nine months? I, you know, Sumeet, it's very difficult for me. I think, you know, slightly going out of my subject, as you're saying, you're right. Since the percentage of annuity as well as the license is high on this quarter, the gross margins will look much better. I think in subsequent quarters, other schemes start kicking in. A lot of implementation milestones start setting in Q3 and Q4, which are other service profiles which, you know, start balancing the gross margin. Having said that, I think, this year we have a high cost base, because on the previous year cost base, multiplied it for this quarter, we are on high cost base. We do see, you know, margins to remain slightly healthy, but I don't think they will expand, you know, 400 basis points for the year. Got it, got it. Thanks a lot for responding to my questions. All the best. Thanks a lot. Thank you. Participants who wishes to ask a question may press star and one on their touchtone telephone. The next question is from the line of Rushabh Sharedalal from Equirus PMS. Please go ahead. Yeah. Am I audible? Yeah, Rushabh, please go ahead. Yeah. Thanks for the opportunity and congratulations on a great set of numbers. My question is pertaining to the regional banks of U.S. only, in continuation with the previous participant. You did mention that we are moving from the smaller end of the regional banks towards the larger, so, you know, the mid-sized regional banks. What kind of a competition are we seeing from the larger IT companies, and how do we actually plan to, you know, play this competition? If you can give some color on that. Rushabh, the, you know, in regards to the banks, for our kind of products, the competition does remain similar. The competition landscape does not change from the size of the bank. We still, on the horizontal side, have the same competitions like Pega, Appian, OpenText, and on the vertical side, we have the same competition, like, companies like nCino and all. I don't think that dynamics changes. The only dynamics what changes is that, you know, they, the larger banks can see better value of our pro platform, our NewgenONE. We can position ourselves better for the holistic end-to-end journey of automation, where we think we have a stronger play. Also with traditional case studies in terms of referenceability across the geos in the world, show those better examples out there. Also, the bigger issue was about lifetime value of a customer, which we thought that in smaller banks, we were not able to realize that in two, three years, we see a good potential. Just to answer your question, in a short, the competition landscape does not change very drastically from a mid-sized bank to a large bank. Okay. Okay. You know, how big is this pie? Like, in the U.S. regional banks, I've heard that there are some 4,000, 4,500 regional banks, how many Indian IT services companies would be, you know, going for the same business? How big is the industry size? If you can give some color on the industry size. You see, the financial entities in banking and credit unions are roughly around 5,000 out there, and they keep on, you know. I think what we had targeted earlier was a section of, you know, those banks, about $2 billion assets up to $20 billion, which was roughly around 800 in number. I think we have pivoted to a much smaller number, which is roughly around 150 to 200 accounts. Okay. In these 150-200 accounts, you know, other regional players also participate. Mm-hmm. These are typically banks about $20 billion, above $50 billion asset size. Okay. In other banks, if you said 4,000, I don't think there are very niche software players who really play in those. Okay. Okay. Just one question on the generative AI thing that is going around in the market. You know, are our clients also expecting us to provide some kind of efficiency in terms of delivering the projects when generative AI tools we use? Does it disrupt the industry, the sector in any way? If you can give some color on that, too. Yeah, that's a very wide question, but I'll try to answer it in a small what is relevant to us. We are already in the business of, you know, assembling solutions at a very fast pace through a no-code, low-code kind of a technology. Mm-hmm. I think most of the conversation when it comes to demand or, you know, optimizing demand, is about code generation. We are already in the game where code generation needs to not be done. generative AI also adds further value to our products and offerings, which we are trying to put in the roadmap for next 12 months. Right now, the value which we are delivering to the customer is not around people and cost, it's around the solution, the benefit, it's around the product. We don't see those pressures right now in terms of cost becoming coming on generative AI. There's a huge opportunity on our product side and on the solution stack side, where how we can use AI and generative AI to give better value to the customer. I think that those roadmaps are already being drawn. We're working on many of such areas, and as we are ready to release, we'll release them to market. Okay. Okay, just a small bookkeeping question, if you can just quantify the attrition rate for the quarter? I think I'll ask Deepti to respond to you. You can say she can give you exact number, but I'm not very sure. Okay. Thank you. Thank you. We have the next question from the line of Dhawal Doshi from IDBI Capital. Please go ahead. Hi, am I audible? Yeah, you are audible. Hi, yeah, thanks for the opportunity. My question was on the revenue growth. If you look at the last quarter, we grew 18%-20% QOQ. We ended FY 2023 with 25% growth. When we look at Q1 performance, it has been healthy on a YoY basis, 30%+. Do you see FY 2024 growth to be similar with as FY 2023 growth? That's a difficult question to answer, what we are saying that the way last year was looking right now, we don't see any headwinds like you see in service companies around our growth. We think there are enough areas for us to keep on doing business. You are absolutely right, I think on Q4 is stronger always, and we will, we expect this year also the Q2, Q4 sequentially to be better than the pre-previous quarters. That kind of trend, there is no reason why we should not continue that. What exact absolute growth rates we hit at the end of the year, I think we have to wait for that. Okay. thank you. that's it from my end. Thank you. Thank you. We have the next question from the line of Sarang Sanil from RW Investment Advisors. Please go ahead. Good evening, sir. Thank you for the opportunity, and congrats on great execution. First question is, have any GSI deals been converted this quarter, and how is the pipeline like, and is it coming as per expectations for the company? My second question would be, if you could give some more color on how generative AI is seeing application through your NewgenONE product. Has there been any deal that included this, or are you still exploring the space? Yeah, thanks for the question. You know, on the GSI, we did have some deals in U.S. this quarter, but not significant number. You know, from our expectation, we are very, very far from the number. I think we have done the investments. I don't think they are showing the returns right now. I think you have to be on it for some time before things start becoming better. That's. On the generative AI side, I think it's too early in terms of what we are going to do and what things we are going to come to the market. So far, generative AI is not part of our any deal. As I said, we are already working on an area which is typically about assembling of applications on a low-code platform. Most of the conversation you feel is about how the code generation can happen through AI. That's not where we are right now. As I said, we are finding huge amount of opportunities both on our solution side as well as product side to introduce generative AI and other AI capabilities. In next couple of quarters, we'll be launching many products in that area. Sure. Sure. Thank you. All the best. Thank you. Thank you. Before we take the next question, a reminder to all the participants, anyone who wishes to ask a question, may press star and one now. The next question is from the line of Akshat Khemani from Carnelian Asset Advisors. Please go ahead. Yeah, hi. Thanks for giving the opportunity. May this side. Am I audible now? Sir, sorry to interrupt. I just request you to kindly use your handset. Your audio is not that clear, sir. Yeah, sure. Am I audible now? Yes, sir. Please proceed. Yeah, sure. I think I really wanted to understand the traction on the trade finance side. you know, if you could provide some color as to what is the pipeline on the trade finance, specifically India and Middle East, what kind of opportunities are there? If you can quantify that, the number of deals, kind of traction, what can be the potential value, that will be really helpful in the next two to three years. What kind of inquiry pipeline are you building on trade finance? How is our solution placed, when compared to competition? I mean, you know, what is the differentiated, solution which we are offering on this side? That will be really helpful. My second question was just on the perpetual licenses part of the piece. I mean, at the start of the call, you mentioned that, you know, some of the business is shifting to perpetual license. I mean, if you can provide, why is that happening, and how do you see that traction for the balance part of the year or maybe for the next two years? Will perpetual license be still higher and why that situation happening in the market? That will be really helpful. Those were the questions. Akshat, thank you. They were quick questions and a lot of questions within a question. Let me try to answer them, and then probably if you, I miss something, you can ask me. First of all, I'll talk about the trade finance. Why Newgen? On trade finance is, one, we realized trade finance is document-intensive, and Newgen is very, very strong in any process-centric versus or document-centric process automation. We have been traditionally strong, and we have been providing some parts of trade solutions to our customers over a long period of time. Last couple of years, we have gone ahead and built a full trade product. We got early wins from some very, very large accounts in India and Middle East. I think some of the largest banks in this territory, which has established us as one of the prominent players in the markets, which now we want to compete, especially as you said, Middle East and India is our market where we are you know, competing strong. In terms of trade, I think we do expect to close every year at least four or five deals on trade. But, you know, in terms of these cases are sometimes long gestation, and they are, as you've seen, the deal sizes are pretty large compared to our traditional thing. I think it's still early, and if I'm not wrong, I think we have already around five to six customers on trade now. And I think we do expect by this year end, we may have another three, four orders on trade. Coming to the second part of this perpetual license, see, what we have seen lately in many markets, we have seen that as I don't, I don't know whether it's a function of pressure on cost right now or over being oversold on subscription licenses. Some of the customers are demanding perpetual license sales. What that actually means, they want to pay lower annuities. They don't want to pay very high annuities for the. This has been a conversation going on, has been always in India and markets like India, but we have seen it happening in Southeast Asia, we have seen it happening in Middle East and U.S. lately. I do see that a perpetual license sale will continue to be part of our segment, revenue segment. As I said, I think the growth of that will not meet the growth of the company. It will be slightly always lower than the growth of the company because our other heads, like subscription, compounding annuity, our support heads, will grow faster. It will continue to be part. How big and, you know, what percentage of growth may be difficult to predict, but last year, I think when we grew at around 24%, 11% was the growth on licenses. I think this year, you know, if we continue doing that, we may be able to do slightly better than that. sure. That's really helpful, sir. Thank you very much for that. Thank you. Thank you. Ladies and gentlemen, we take that as the last question for today. I would now like to hand the conference over to Ms. Deepti Mehra Chugh for closing comments. Over to you, ma'am. Thank you so much for participating in the call. For any further questions, you can connect with me, or you can go to our website. Thank you. Thank you, ma'am. Ladies and gentlemen, on behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.