Ladies and gentlemen, good day and welcome to the Q2 FY 2023 earnings conference call of RateGain Travel Technologies Limited. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. 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 complete. 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. Bhanu Chopra, Chairman and Managing Director. Thank you, and over to you, sir. Thank you. A very good afternoon to everyone, and thank you very much for joining the earnings call for RateGain Travel Technologies Limited for the second quarter and first half year ended September thirtieth, 2022. We are very excited to meet all of you again and share some key highlights from our Q2. Joining me on the call are Mr. Tanmaya Das, the CFO of RateGain, Mr. Chinmai Sharma, President of Americas in our Distribution vertical, Mr. Divik Anand, our Head for Investor Relations, and Thomas Joshua, Company Secretary of RateGain. Alongside we have our investor relations partner, Strategic Growth Advisors. We announced our second quarter results for the fiscal year 2023, and I hope you've had a chance to go through our financial results, the press release and investor presentation that are available on the stock exchanges on our company website. We're proud to announce another quarter of healthy broad-based growth with strong performance across all our three business segments. We continue to witness strong traction with existing clients and healthy volume growth with travel demand holding up well along with new client additions, contributing to the underlying growth performance. The standout for us this quarter is the operating leverage kicking in with expansion in our operating margins to a trend quarter high of 15.2%. This is a testament to the strength of the business fundamentals and our commitment to prudent growth as we continue to be one of the very few profitable growing SaaS companies globally. On a run rate basis, we are now exceeding our pre-COVID annual recurring revenue by 22% and are well on our way to meet or even exceed the annual growth guidance given at the time of the IPO. Also, considering the Rule of 40, which is a typical benchmark for SaaS companies globally, we're exceeding this Rule of 40 by a great margin as we are now at 62%, which is an aggregate of our 15% EBITDA plus 47% growth. We are focused on our mission and commitment to our customers to help them unlock new revenue by helping them acquire guests, retain and engage them, and expand on their wallet share. In line with this commitment, I'm pleased to announce the launch of our latest AI-powered offering developed in-house at RG Labs called Engage AI. This is a virtual concierge tool that will be available to hotel guests on their preferred messaging app like WhatsApp right from the time of booking to the culmination of their stay. This tool will assist them with virtual check-in and check-out, answer their simple queries to making reservations at a restaurant or a spa of their choice, and get personalized recommendations for shopping and tours and activities, thus enabling the hotels to engage better with their captive audience and also grab a share of all their travel spend. We are already live in some properties and in talks with some large clients. In terms of global travel trends, we continue to see that the demand remains strong despite growing concerns on macro headwinds. Volumes and reservations continue to remain strong with the strong holiday season coming up in key destinations globally. Also, there are several reports indicating that the consumers have put travel experiences on top of their discretionary spend. The Skift Travel Health Index released by Skift continues to hold steady, and many geographies are at or above pre-COVID levels now. While the near-term demand remains strong, we are cautiously optimistic in our outlook for next year and are cognizant of the macro headwinds that we are facing that might affect demand. Our big customers like the big OTAs, the biggest car rental companies and hotel companies, have reported record Q2 performance in terms of revenue and profit. Given the need for digitalization and record profits, we continue to see robust demand for our products. On a year-on-year basis, we continue to see very healthy improvement across all our critical business metrics, with strong margin expansion in this quarter on the back of operating leverage kicking in as our revenue scales up sequentially while our costs have essentially remained flat. We continue to focus on our sales and marketing efforts. With more events happening, our teams have been participating in hosting e-events focused on new technology trends, and it is giving us a chance to physically reconnect with a lot of our clients. We built up a very, very healthy pipeline of INR 315 crore. I want to commend the team on their continued endeavor to deliver consistently strong all-round results. With that, I will briefly now touch upon the performance across our three business segments, starting with Distribution segment. This division accounted for 35% of our total revenue, with a recurring revenue of 99.2%. Volume growth continues to be strong on the back of robust recovery across the mid-sized hotel chain segment and pick up in GDS business, which is a parameter of business travel. We've closed some good deals this quarter in terms of pairings between popular OTAs and large hotel chains, and some of the pairings from previous quarters are scaling up well. We continue to invest and scale new products like Content.AI that will enable us to position our distribution vertical with a 10X differentiator. Within our MarTech business unit now has a recurring revenue of 99%, contributing 38% of our overall revenue for Q2. We are seeing some good signs of early traction in APAC and specifically Middle East region as these markets open up and have onboarded multiple properties for one of the largest global luxury chains. Our growth within this segment continues to be driven by an increase in existing engagements as customers are looking to include our metasearch product. Properties are focusing on optimizing their distribution costs and reduce customer acquisition costs to tackle inflationary pressures. Our end-to-end digital marketing offering covers all essential customer acquisition channels, including Google, Meta, and social media, including Facebook, WhatsApp, TikTok, Snap, et cetera. We're able to drive higher returns on ad spend for our clients with real-time demand and parity insights through our DaaS products. The DaaS business unit grew at a healthy pace into the second quarter on the back of stronger volumes and new logos added within our OTA and airline segments. You must have seen some of the press releases on new airline customers we've added in the past quarter. Our newly adjacent sub-vertical within the travel space, which is vacation rentals, has been seeing some good traction and is a promising new growth segment. We are seeing some good opportunities within the vacation rental space with some of the largest OTA customers. The recurring revenue for DaaS business was 98.3% and contributed to 27% of the revenue in the second quarter. One of our new products under DaaS, which is RevAI, continues to perform well and is seeing strong traction within the car rental space. We have recently completed integrations with some of the largest CRS systems of large car rental companies, which will allow us to make further inroads with the franchisees of these car rental companies. Our strategy is to penetrate these verticals and then look at other sub-verticals within travel industry. On M&A, we have a very, very robust pipeline, and we're looking to consummate if the value is right. These opportunities spread across strengthening our existing business lines of DaaS, MarTech, and distribution. On the people front, RateGain was given the award for talent management by Economic Times Ascent National Awards. We're constantly investing in upskilling talent and have recently instituted a digital learning platform with over 80,000 courses. This, along with our promote from within policy and opportunities for the people to grow within the company, have been key to retaining talent. In terms of awards and recognition, we received the Best Channel Manager and the Best Car Rental Technology Provider awards from World Travel Tech Awards, which is a prestigious awards program for the global travel industry. I'd like to now ask our CFO, Mr. Tanmaya Das to take you through the performance of Q2. Thank you, Bhanu, and a very warm welcome to everyone on this call. I'm proud to report that the company has posted another quarter of strong performance with the margin expansion being the standout, which has exceeded the guidance provided in our last quarter earnings call. The improvement in margins year over year and sequentially is a testament to our strong fundamentals of driving sustainable growth, resulting in operating leverage. Our revenue growth continues at a healthy pace. With more broad-based growth across all three segments, we witnessed another quarter of healthy performance across key KPIs contributing to all around growth and margins. The growing pipeline and strong client additions despite a volatile global environment highlights the strength of the travel industry and the adoption of tech products to drive revenue. Continuing with the momentum last couple of quarters, the company registered a 47% year-over-year revenue growth with the Q2 FY 2023 revenue at INR 124.6 crore compared to INR 84.8 crore in the corresponding quarter last year. The growth in the first half of FY 2023 stands at 52.7%, with the company posting a total revenue of INR 243.9 crore in H1 for this year. The growth is primarily on the back of continued monetization clients added, along with an uptick in volumes of bookings seen across our platforms. In terms of profitability, happy to report the company has posted its highest Adjusted EBITDA margin, 15.2%, in the past few years, and this is against 8.4% in Q2 FY 2022. As I had mentioned in our last call, we have managed to post healthy sequential growth in our operating revenue with our cost remaining flat. With operating leverage kicking in, we have managed to post an operating margin of 15.2%, exceeding the guidance given. This takes the Adjusted EBITDA margin to 12.8% in the first half of FY 2023. The Adjusted EBITDA for the quarter grew at an impressive 170% to INR 18.9 crore against INR 7 crore posted in same quarter last year. The adjusted PAT has grown 5.3 times to INR 19.6 crore in Q2 FY 2023, compared to INR 3.7 crore in Q2 FY 2022. The adjusted PAT for H1 stands at INR 34.4 crore. The EBITDA margins of Q2 were in a significant improvement sequentially and year-over-year in line with the guidance given last quarter that we should see quarter-over-quarter growth in revenues leading up to Q4 while our cost will largely remain flat. Our payroll and other costs were flat sequentially in line with the guidance given. The company continues to have strong customer relationships that are helping in building a scalable, predictable, stable and sustainable revenue streams. Recurring revenues for the quarter stood at 99% and 76% revenue were in subscription nature. Gross revenue retention and net revenue retention stood at 90% and 105% respectively. Our new contract wins posted healthy year-over-year growth of 11.5% and came in at INR 21.2 crore. With that, we saw an improvement in our LTV to CAC, which remained at 12.2 for H1. A marked improvement over 8.9 reported in Q1. Our employee headcount was flat sequentially, with the revenue per employee saw 12% increase over last year at INR 78 lakhs. Our annual recurring revenue stands at INR 483.4 crore, almost 20% above the pre-COVID levels. Our pipeline increased by 10% to INR 314 crore as compared to last year. We continue to have a strong balance sheet, where our net worth saw an increase by 3% as compared to last quarter and stood at INR 653.1 crore. Our cash and cash equivalent balance for the quarter increased by INR 18 crores, stood at INR 435 crore. Our cash from operations saw marked improvement in H1, where we have generated 1.4x of cash generated in entire fiscal year of 2022. In respect of guidance for Q3 FY2023, we expect to continue our growth around 30% year-over-year and our margins level would be similar to Q2. With this, I'll thank you and I'll give it back to you. Shall we start with the question and answer, sir? Yeah. 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 the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Ankit Kanodia from Smart Sync Services. Please go ahead. Thank you for taking my question, and congratulations on good set of numbers. My first question is on the net retention rate. In our last conference call, we mentioned that the net retention rate will sequentially move up from 105% to 110% and maybe 115% by the end of the year. We are still at 105%. If you can provide more color as to how it has been and how we see for the rest of the year, how we'll achieve that 115% mark. Or do we want to revise that guidance? That would be great. Thanks. No, I think the net retention rate will continue to see improvement. Look, our business is little bit seasonal in the sense that our Q4 is our highest quarter and the volumes are pretty high in Q4. We'll continue to see the improvement from, you know, Q2 to Q4. We don't need to change any predictions at this point of time. Sure. Okay, sir. My next question would be, when we look at our performance Q-on-Q, our employee expenses and other expenses have been flat, but we have seen a big bump up in the ESOPs expenses. Would you elaborate as to why that could be? Is it the same we can expect for the rest of the year and in the future as well, or do we see any changes there? Yeah. In the month of June, we approved a stock appreciation rights scheme, which was rolled out in June. Only one-month cost was factored in Q1, and this Q2, it had to factor around three months cost. That's why there is a bump up. The stock appreciation rights were issued at market price. There was no discount given to the employees. The strike price was the market price. Ideally there should not have been any cost, but because of the Black-Scholes method and accounting treatment, we're carrying a notional cost for that, which is non-cash cost. Yes, I think this will continue for the rest of the quarters as well. Because we have not given discount, so the cost is lesser than what it should have been. Yeah. In terms of the employee expense and other expenses, any color, more detail on that as to how we see them? It should remain, you know, flat, at least in Q3. It will remain flat. Q4 might see slight increase but not materially, because we have to plan for next year's growth and all. You know, more or less it will not be, you know, huge uptick from Q1 and Q2. Thank you. We won a contract from Akasa Air. If you can throw some more light as to what was the nature of the contract and how big it is in terms of the overall scheme of things, that would really help. I'm not sure I can, again, talk about the quantum of the contracts, but it really shows the value of this product line. Because Akasa Air, which even had not started its operation, they had to sign a, you know, price comparison, competitive price intelligence product from RateGain. On the back of, we also won from Air India, and most of all the Indian airlines are with us. That shows the value that this product really carries. Because without this, you know, the entire pricing strategy will fall flat. This is a significant contract for us and a very good brand. With this, I think all the Indian clients are with us, so it's a very good sign. However, in the overall scheme of things, India still forms a very small part. Am I correct in that? Or should we expect that to get better over a period of time? That's right. You know, in the overall scheme, India carries less than 1% of our revenue. There are other brands like, you know, Singapore Airlines and Emirates, et cetera, which are also our clients. Yeah. Thank you. Thank you so much, and all the best for the rest of the year. Thank you. Thank you. The next question is from the line of Deepak Purswani from Sapphire Capital. Please go ahead. Hello? Hello. Yeah, Deepak. Yeah. Thank you very much, sir, for the opportunity. Sir, I wanted to understand on the first part on the revenue front. I think in the past as well, we have been iterating that at the minimum we should be growing at about 30% CAGR, right? I mean, just wanted to understand this. That is largely our organic aspiration, right? I mean, through organic route, that is the CAGR we are looking at. Right. Any inorganic aspirations also we have or anything on the cards, so anything on those fronts? Let me take that. You know, as we've stated all along since the IPO, part of the reason we raised fresh capital was to actually go out and consolidate. As you may recall, we've actually demonstrated that we have the ability to acquire companies and turn them around and make them very, very value accretive for RateGain. We've done three acquisitions already. Given we raised the money to do M&A, and I'm happy to share that. Although the tech markets, especially in the U.S., have crashed, it has created some very, very interesting opportunities for RateGain. When I look at our pipeline, really since the beginning of the year, it has been pretty robust and we run an active M&A program as well. We are talking to a bunch of companies, and given we have the experience in doing this and we've been judicious about how much we are willing to pay, it's also a game of patience, right? Sometimes it takes longer to engage and get the right price at which you are willing to consummate the deal, because we look for very large alpha returns after we consummate the company, you know, in terms of synergistic value that we can drive both on revenue and cost. Net-net, like I said, there are some very, very good conversations in play. I am pretty hopeful, because the valuations have come off for RateGain also. You know, I do think that it should, you know, create some very good opportunities for us. You know, there is actual activity happening in that area. What I understand is that we are in conversation with various opportunities since the valuation have also kind of tapered off. This is one area where we are actively looking and any kind of inorganic route would be over and above this 30% revenue CAGR that one might look at, right? That's correct. What we had guided was that, you know, we're, you know, in terms of deeper penetration of our existing product lines, just continuing to cross-sell, upsell, we should organically see 30% and then, you know, whatever we do sort of from an M&A perspective will be above and beyond. Fair enough. I got the point. My second question is regarding your margins. I mean, currently it is 14%. Is that going forward, at least, the run rate one can envisage? We'll not see any kind of weakness that we have seen in the past in terms of margins? Yeah. You know, as we have guided, if you recall a couple of quarters ago, we were at 10% and we said, "Look, this year we'll get to 12%, and going forward, we can expect between 200-300 basis points expansion getting to about 20%-25% by FY 2025." Yes, we are exceeding that number for FY 2023. Like you saw, we are already at now 15%. I can tell you that the forecast for Q3 and Q4 is similar. The H2 of our business is usually stronger than H1, so we do see maintaining these margins from a Q3 and a Q4 perspective. Q4 should be even better because it's usually the strongest quarter for us. At that point, we will look at, you know, we will look at the situation and also because there is a growth aspiration also. We wanna continue to grow the company and, you know, we follow this Rule of 40, which is to recalibrate basis meeting the aggregate of 40, which is the EBITDA% and growth%. You know, if we continue steady course, yes, I do see the, you know, margins continuing to expand. Like I said, you know, if there is opportunities to accelerate, you know, we will look at those opportunities as well. Fair enough. Since you mentioned that 2-3 years, I mean, this 200-300 basis points every year. Largely, if we continue current performance this year, our margins could be in the range of 13%-14%. A 200-300 basis points for next 2.5 years, ideally that means FY 2025, 20% margin it could be a possibility, right? I mean. Yes. Okay. Yes. Fair enough. I got it. Yep. That's it from my side, sir. Thank you very much. All the very best. Thank you. Participants 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. Hello. Congratulations on a wonderful numbers, sir. I'm sorry to interrupt you, Mr. Chirag, but you are not clearly audible. Your voice is breaking. Is it proper now? Yes. Please go ahead. Yeah. Congratulations on a good set of numbers. Sir, I have a few questions on our predictable revenue part, which we have given on slide seven. You mentioned that the subscription revenue constituted about 76.8% and recurring is 99%. I just want to know some basic understanding. When we enroll any client, do we have any such contract that the minimum service period should be of this month length or something like tenure of, let's say, 1 or 2 year or anything, sir, condition is mentioned over there in contract? Yeah. Majority of our clients are one year with auto renewal clause. Like, you can terminate the service at the end of the year. If you don't do, then you are auto-renewed for another year, right? That's the subscription nature of the contracts. Okay. Some of the large customers do sign off for multi-year deals, but this is, you know, is around a one-year auto renewal nature of contracts. Okay. My second question. The digital technology space and IT is passing through tough phase due to this attrition and all. Is there any impact of such broader issues of industry on our business? On the employee attrition, look, yes, it is. It is high across the board, especially in the tech space. Our attritions are currently around 22%-24%. Historically, we have been around 16%-18% attrition rates. We have taken steps towards it, like, there is a lot of upskill training, you know, there is a lot of investment going into L&D. Secondly, we have a predictable hiring method where we have hired bunch of management trainees from tier one, tier two colleges in July, which were utilized to refill the batches, the attrition, which really helps both from margin front as well as, you know, tenure of the employees. At the same time, our average tenure of employees in our organization is more than four years. You know, that is higher than any of the newest companies, newest tech companies or even IT, ITES companies. It has not impacted our business as such as of now. The trend is continuing to, you know, go down. We are seeing lesser attrition month-over-month now. Hopefully it will go back to the 16%-18% attrition rate, you know, in coming quarters. Sir, one final question. If attrition have been back to the normal level of 16%-18% range, which we used to have earlier, will it have any impact on employee expenses on positive side? Will it result into higher EBITDA than what we posted even in this part? Yeah, it should because, you know, generally when there is higher attrition and you replace people, you generally replace at a premium, right? If attrition, you know, comes under like 16%-18% historically, then the average cost of employees will obviously reduce. Thank you so much. Best of luck. Thank you. The next question is from the line of Hitesh Zaveri from Axis Mutual Fund. Please go ahead. Yeah. Hi. Thanks for taking the question. So like when I'm looking at, you know, the quarterly top line revenue number at INR 15 million and so on, and the number of customers and so on, of course, I do understand the SaaS company and the number of seats phenomenon and so on. Having said that, you know, as compared to the number of customers we have and the revenue number currently. Is it a, you know, fairly low realization per seat kind of situation? How should one think about this? Not sure I understood your question fully. I'm just looking at the total revenue of the company, number of customers that we serve and so on. Mm-hmm. Therefore cost per customer realization and then. If you can provide some color there and, you know, the trajectory thereof, that would be useful. Samit, let me make an attempt, and then you can ask again. You know, at the end of Q1, we were sitting at about 2,300 customers and we added about 200 customers, but we lost about 50. Net addition was about 150 customers. If you look at customer addition, you know, it was roughly about 6-7%. If you look at our quarterly revenue growth, it's similar, sort of 4%-5%. I don't know if that sort of addresses the question you had. I'm just looking. In case you are aware of some other competitors of yours who are based in, let's say- Mm-hmm You know, in any of the advanced countries and so on, either maybe in Western Europe, U.S. and so on. I'm just wondering how in your vertical are the realization, the pricing? Are you referring to sort of the position as in terms of market share and as a result of which, you know, our ability to sort of charge more? You can use it that way. Sure. Go ahead. In terms of basically, you know, our pricing, there is an initiative that we talked about in the last quarterly also, which is, you know, we are sort of adjusting our pricing because when we were coming out of COVID, on compassionate grounds, we were very accommodative of our clients, where we gave them sort of discounts as well as gave them free periods. Now that we are completely out and, you know, as I mentioned earlier, our customers, they're having record performance in terms of revenue and profit. We're trying to restore back our sort of pre-COVID pricing. B, you know, we are now going back into each of our contracts and ensuring that we have CPI clauses such that all the renewals that come up on an annual basis organically see a CPI increase in our contracts. The fact that we have moved from being a two, three product company to now, you know, almost 10 to 12 products and we are able to effectively bundle them, it does create a much, much larger sticking point. Based on that, you know, we are able to charge more. You know, one of the examples I've given previously is our revAI offering, for instance, which is vertical integration of the pricing process for car rental franchisees. We started with giving them competitive intelligence and now basis knowledge of demand and supply, we're also able to make recommendations on how they should price. As an example of car rental franchisee, which was a $50,000 contract for us now with, you know, revAI bundled in, you know, that's a half a million dollar contract for us. A, we are able to, you know, increase our pricing, because we are out of COVID. And B, because we are moving higher up in the value chain in terms of the value we provide, the integrated bundle, we are able to charge more. Got it. That's helpful. Thank you. Thank you. Participants who wish to ask a question may press star and one. The next question is from the line of Rahul Jain from Dolat Capital. Please go ahead. Yeah. Hi. Hope my line is audible. Yes, you are. Please go ahead, sir. Just couple of questions. Firstly, congrats on a very strong number. The question on the Engage AI tool that you have launched, what is the typical pricing or earning model in this kind of a product? Is it bundled with the other services that you're already offering? Or this can be standalone, sold for a relevant incremental revenue? That is question number one. What could be the incremental TAM or any one or two-year kind of a addition that this kind of a product can bring in? That is question number one. Secondly, when you mentioned about, and we've been also following global large hotel or various travel companies, we are seeing that they are reporting very strong numbers and their commentary also continues to do better. In that light, if they are doing far better than what they were doing in the recent quarter, don't we see, we should be witnessing some more acceleration even on a sequential basis, year-on-year? Is there any thought from the conversation that you might be having with them versus how it is shaping versus what it was, let's say, three months back? Thank you. Sure. On the question around Engage AI and the sort of commercial model, it's a subscription model, and it's based on the number of rooms that the hotel has. We also look at, you know, what is sort of the average daily rate. Because we are able to directly impact both on revenue and the cost side. On cost side, because we are able to automate a lot of the queries that a guest might have at the hotel through this virtual bot. On the revenue side because we are able to cross-sell and up-sell, you know, different services that the hotel may have at the property or outside the property. The commercial model is basically, you know, looking at what is the average daily rate and then looking at the number of rooms. Secondly, we also have a model to take a percentage of share of whatever cross-sell, up-sell revenue that we generate at the hotel. Now, in terms of your question around the TAM, the TAM is everything that we do is, you know, basically targeted to, you know, the same mid-market and enterprise market level of hotels that, you know, that I always refer to, which is, you know, there are over 1 million hotels. Really our key market is the 300,000 hotels that are part of this mid-market and enterprise segment. In that sense, you know, TAM is very, very large. You know, we are still at sort of very, very initial days. We've just recently launched this product. We've got, you know, a few hotels that have recently implemented it. As you can tell from previous earnings calls also that RateGain is a very, very innovative company. We've launched multiple products and, you know, some of these experiments will work and some will fail. You know, I'll only be able to provide you more color, definitive color on where do we see which of these experiments really moving the needle. I can tell you from everything that we've done in the past 18 months, we're seeing, you know, huge amount of traction on our revAI product, and that's why we won the best SaaS technology provider award from World Travel Tech Awards also. The second question, I think you asked, can you repeat the second question, the follow-on question that you had? Yeah. What essentially I was saying about the comment that you made about how some of the global companies are making those record profits, who are in your client pool list. With those companies having this kind of a numbers, don't we see there has to be some immediate acceleration on a sequential basis that our business should also witness the way they are doing for next at least in the near future. Any thoughts on how that kind of a conversation changed on a sequential basis for you versus what they were saying three months back versus what they're saying now? Yeah. This is something, you know, as Tanmaya mentioned also, I think the way to look at our business is not really doing a sequential growth analysis, but doing really more sort of a year-on-year. As you saw, you know, we delivered a 47% growth. But having said that, I do see, you know, very, very good momentum going into sort of Q3. In our business, you know, given the fact that most of our customers are B2B and in U.S. and Europe, they start doing their annual budgeting and planning exercise going into 2023. A lot of the decisions are made in this next couple of quarters, especially this Q3, in terms of new, you know, bookings. You know, we have some very, very good momentum, and I'm pretty hopeful that, in terms of new bookings, this should be again a very, very strong quarter for us. Okay. Just if I could add one more. I mean, if you look at this number, of course, these numbers on a year-over-year basis are very, very good. We definitely have some advantage coming from, you know, some of the past acquisitions coming to a very normalized business run rate. To your argument of that 40% SaaS kind of a thought process, how one should look at FY 2024 right now, because profitability, I think can stay where it is, at least if not more. Should we think of that FY 2024, we should be comfortably above that 40% number, with 25% plus kind of a growth, or you would stick to the 40 as a thumb rule, for now? Are you talking about the Rule of 40? Yes. Yes. Yeah. You know, like I said, you know, right now, as you can see, there is a tremendous amount of momentum, and we are at almost 62% in terms of our aggregate of our EBITDA and growth. You know, our endeavor is going to continuously be to continue to exceed that number. I very comfortably see the 15% EBITDA margin for this Q3 quarter and hopefully exceeding that in Q4 as well. Like I said, you know, we are. We want to do a balancing act. You know, we will continue to see you know, the margin expansion happening, given you know, the operating leverage is kicking in. We also then want to see if there are opportunities to accelerate our growth as well. If we continue, you know, by operating the way we are, we could, you know, see much larger expansion of our margins. Like I said, if we, you know, we're doing all these experiments by launching new products. This quarter we are also making investments to expand our teams in Latin America. As we see the results of these incremental investments we are making, you know, if there is an opportunity to sort of seize and get accelerated growth, you know, we don't want to hesitate to invest in that. Like I said, we are doing all of this in a very calibrated fashion such that we continue to maintain that Rule of 40. I mean, Bhanu, the whole point is that, you know, you are adding new products, which are doing well and well accepted by the client. You are consistently adding new customers. Your customers are doing well, which is not the case with most of the industry at this point. Everything clicking in, somehow that optimism is not visible. Is it that you are conservative because of in general macro headwind that we all hear about? Or, you think you can really do well, year-on? Yeah, I would say, look, we are cautiously optimistic. I mean, having come out of COVID, you know, you don't take anything for granted. There is a lot of talk about inflation and recession in our key markets, although we don't see anything in our numbers. You know, we wanna be careful about what we guide the market. I think so far we have over-delivered, and we wanna continue to do the same in the future. Right. We always like any company doing better than what we think of, but should not be extremely higher. I think your thought should be aligned with also with what is the realistic growth. Just a thought. One incremental request. Is it possible to also try and get the revenue mix from a geo perspective in a manner where in terms of where the service are getting consumed? I know it's not an easy thing, but just to get the thought clear. For example, if you are doing, let's say, INR 100 of business with one big hotel chain, what part of that revenues are actually earned, let's say, in India market? Because the customer will be called as American or European customer, but maybe the bulk of the revenue that hotelist con brand is consuming may be consumed in you know some of the Asian market, including India. Is there a way- Yeah. to understand which are the key markets by that revenue? Yeah. I think it's a great question, and you're right. It's a little bit of work for us to sort of reverse engineer it because you're absolutely right. Marriott may have hotels across the world, but we will record it as a U.S. revenue because the entity that pays us is from the U.S. HQ. I get your question. Let us come back to you. You know, Tanmay has a pretty phenomenal finance team here. I'm hoping, you know, next time we speak with you, we're able to sort of reverse engineer and share that information with you. Because if we have that, I think, it will make us get more confident because, most of us, I mean, most of us would agree, that in India we are paying all-time high hotel rates or and very high airfares for near-term bookings. If those companies are actually making a lot of profit, their commentary is very positive, all the hotel companies in India. Somehow that's. Sorry to interrupt, Mr. Jain. May I request you to please rejoin the queue? We have participants waiting for their turn. Sure. Thank you so much. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants, please limit your questions to two per participant. If you have a follow-up question, you may rejoin the queue. The next question is from the line of Pranav Landbo from Goldfish Capital. Please go ahead. Yeah. Hi, Bhanu. Thank you for giving me this opportunity. Two questions from my side. One is that you mentioned this subscription-based revenue or recurring revenue. Now you gave an example of how you are able to bundle and upsell, right? I want to understand your pricing structure in a single product, right? I mean, now you have 7, 8 products or 8, 9 products in your kitty. In a single product, is there a, I mean, is there a tiering in the pricing where you start with a low rate and then you're able to take up for the similar service, not by adding more hotels or not by adding more rooms, for example, but is there a tiering there wherein you... There is an opportunity to upsell within the same product by offering some more features in the same product? Is there a metric that global SaaS companies also report on cross-sell and upsell? Can we also get some qualitative or quantitative color on the same? Sure. On the question about, you know, how does the model work, it's basically different for each of our product lines. The fundamental pricing methodology that we follow is, you know, what is sort of the economic driver for our customers. In case of, you know, our distribution business, the economic driver is the number of rooms that the hotel has and how many outlets or distribution channels that we enable them on. More rooms connected to more channels means more transactions. As the number of bookings or transactions increase, you know, we get a higher realization as a result. Similarly, in our DaaS business, you know, our information enables the customer to be more competitive. The more data that they get from us, the more we are able to charge. A lot of the growth that you're seeing in our business is not really cross-sell or the bundling itself. A lot of it is upsell because, you know, as the demand has come back, our customers, the larger customers, for instance, have become data hungry and the data volumes have really gone up. Similarly, on our distribution business, you know, there are more people traveling, more bookings happening, and as a result, we are also enabling them on more shelves or more marketplaces or OTAs, and thus we are able to realize more transactions. We see, you know, significant amount of volume in that sense also. The question about giving you some more metrics around cross-sell or upsell, Sumit, do you wanna take that? Is there something that I know we don't provide some specific numbers, but is there something that we could do and maybe, you know, take up with them at a later stage? I think, you know, upsell from net retention rate is a quite good metrics to assess. I think it's a, you know, 110% is a good metric to follow. Yeah. On cross-sell, which, you know, net retention that we generally report in every quarter. Yeah. No. Just to follow on that. What I understand, Bhanu, is that maybe right now, that whole operating leverage which might come because of cross-sell, that lever is something which we are yet to press in the business, right? Is that a fair comment? Also, as a follow-on to that, I mean, if I look at the growth across your three segments, the fastest growing has been MarTech, which is the latest innovation in our arsenal, right? In terms of we added that business sometime in 2018 and 2019. Is that a worry? Because if I look at the size of the opportunity that we are playing with, I would have thought that there would be an equal opportunity in each of the three segments that we are present in. Is that a worry that except MarTech, our growth is not as aggressive or as attractive as maybe what the underlying demand is suggesting? I think you asked a few questions here, and let me try to address. If I forget any one of them. Sure. You can ask them again. I think the first one that you asked is that the whole cross-selling capability as a growth lever, has that kicked in? It doesn't feel like it. You're absolutely right because if you look at sort of the chronological order of all the capabilities we've added, it's really happened since 2019 because our first acquisition happened in 2018 and then 2019. A lot of these new product capabilities that we have launched, it's really happened over the last 18 months. You know, we have sown the seeds, I would say, for future growth over the last 2-3 years, both organically and inorganically. We were hit with COVID. Now that we've come out of the COVID, we are beginning to, you know, realize the fruits of our hard labor that was done. Yes, it's not fully kicked in. I think we are still at a very infancy stage on a lot of the new capabilities that we've added, and that's why it makes me very excited about the future growth prospects of RateGain. On the overall growth prospects for all the three business lines. Look, if you've attended our previous quarterly calls, you know, there is definitely more bullishness on MarTech and maybe lesser bullishness on distribution and DaaS. I'm happy to report that you know, our DaaS and distribution business are doing extremely well. You know, on the basis of penetration of our existing products, getting new logos and, you know, as I talked about, there is more consumption of data. There are more transactions happening. We're connecting more pairings. Also in our distribution, what's been a very, very positive surprise is that the business travel has bounced back. For us, the parameter of that is really the GDS connectivity that we do for the larger chains. We have, you know, recently won some business, and we see a very, very healthy pipeline there as well. You know, we are also launching additional products both in DaaS and distribution. Net-net, you know, it's a positive surprise that both these segments are growing significantly faster than what we have anticipated. It's a, you know, like I said, function of this whole business travel bouncing back and also, you know, success with some of these products that we have launched under these product lines, under these business lines. No, that's great, Bhanu. Just one suggestion I have to give is that, you know, on this MarTech part, I mean, and this requires a slightly more detailed discussion on a different forum, but it would be great if you can share a sort of an analyst meet where each of your products are highlighted in a better manner. The reason why I'm harping on this MarTech is like we are probably looking at what is happening in U.S., right? To do with this whole AdTech industry and the ad revenue growing and the what Apple is doing. That is the reason why we probably in case if you can highlight each of the product in a detailed analyst meet, that will help us to understand the product better, right? Just a suggestion. No, I think it's a great suggestion. We do have in our pipeline to have like an analyst day to actually do these product demos. We intend to do a virtual session and followed by like a physical session to, you know, showcase all our capabilities. Great, Bhanu. Thanks a lot and best wishes. Thank you. Thank you. The next question is from the line of Ashish Chopra from GSAM. Please go ahead. Yeah. Hi. Thanks for the opportunity. Just a couple of questions from my end. Firstly, Bhanu, out of the INR 488 crore of annual recurring revenues that you disclosed in your presentation, how much of that currently would be from the new product initiatives that we launched during COVID? Ashish, the number, I don't have the exact number, but it's not a significant number, at this point. As I said, as I mentioned, you know, these are seeds that we have sown over the last 18 months and, you know. I have, you know, a huge amount of conviction and confidence that, you know, as we sort of weed out all the teething issues that we have around sort of go-to-market and implementation, you know, these can be big revenue generators for us. You know, for instance, the revAI product that I talked about that does pricing recommendation requires us to integrate with the key car rental company's CRS systems. Those integrations are being placed, and we have one, two car franchisees sort of, you know, using that product. As we establish, you know, the success with these pilot customers, it can open up the floodgates and, you know, really give us the ability to scale across all the car rental franchisees. The number is not significant but, you know, we are quite confident that, you know, these are seeds of future growth. As I mentioned, you know, they have other sort of intangible benefits of positioning the company as an innovator. We are, you know, sort of vertically moving up the value chain from a bundle offering. You know, customers look for one integrated tech stack. It also enables us to position these new offerings as 10X differentiators to RateGain's existing product set. Understood. Bhanu, secondly from my end, if you could just help me understand little bit about any seasonality that persists in the MarTech business as well, where I guess this quarter, at least sequentially, the number was down. Although I understand we should be looking at it on a Y-o-Y basis, but considering the fact that 99% is recurring revenue and you added 80 properties, I think those are new additions to the MarTech customer base. I was just wanting to understand as to, you know, what drives the quarterly maybe upticks and downsides on revenues. Yeah. You know, as I stated earlier, Q3 and Q4 are sort of the big quarters for us. H2 is bigger than H1. You know, that's what we will find seasonally in Q4, you know, being the best quarter. However, in the MarTech business, as I was mentioning earlier, that as we were coming out of COVID, you know, they were, you know, we were very, very aggressive in doing the kind of deals that we did. You know, as we were sort of coming out of the COVID. I think there is some correction that we have done, you know, given the fact that we are, and that's why you're seeing a huge margin expansion also that we wanna make sure that, you know, we are escalating prices where it's due and if some of the customers are unwilling then, you know, it leads to separation of those customers as well. You know, we've cleaned up some of the contracts also on the MarTech side. There was, you know, small amount of impact with that. As I stated, across all our three business verticals, you know, we should see some very good momentum in Q3 and Q4, and Q4 being the, to be the biggest. Understood. That's very helpful. Thank you so much. Thank you. The next question is from the line of Hitesh Yadav from Dusk Investments. Please go ahead. Hi. Thank you for taking my question. Just wanted to know on the IPO amount of INR 90 crores raised for general corporate purposes, is there a plan to use that or are you planning to return that to the shareholders in some form? We have got from the IPO proceeds, inorganic expansion is one of it which we'll utilize. The strategic investment into AI-led products that utilization has already started. General purpose we'll utilize as part of the M&A or the organic investment into the AI-led products. Okay, got it. Just one more question on RG Labs and the products coming out of the lab. Could you just help us with the sense of what's in store, which segment or what kind of offerings are you experimenting with right now? Yeah, sure. You know, as I had mentioned in our earnings call, you know, the big new offering from RG Labs is Engage AI. Prior to Engage AI, the three products that we had launched were Demand AI, Content AI, and RevAI. Our focus right now is, as I mentioned earlier, to sort of continue to scale up on these products from a go-to-market perspective, iterate through, you know, what we are learning from the customer and continue to accelerate on these. I think in terms of new product dev, you know, there is a bunch already happened, now we need to basically nurture and cultivate these seeds that we have sown. Okay, got it. Thank you so much. Congratulations and all the best. Thank you. Thank you. The next question is from the line of Rishi Jhunjhunwala from IIFL Institutional Equities. Please go ahead. Yeah. Thanks for the opportunity. Just a couple of quick questions. Firstly, can you give some color on how much of our growth this quarter would be organic, given that DHISCO should have been incorporated only from 3Q or maybe sometime in 2Q. You know, even growth going forward, because it looks like it is a touch below 30%. Just trying to understand that we are in the middle of peak pent-up demand on travel, and growing organically at 30%. Is there any scope to increase it beyond that? Or is it primarily because our business is volume-driven rather than value-driven that the growth is limited to that number? Okay. Tanmaya Das, I'll let Tanmaya Das speak to the exact organic growth numbers that we have. To your point about, you know, where do we see the growth? Look, you know, again, I'll go back to you know, the core philosophy for the company is to, you know, really focus on sustainable revenue growth. You know, keeping in mind this Rule of 40 where, you know, there is a focus on the margins as well. This is what we sort of learned from the market as well. You know, we wanna continue to be very, very prudent with how we sort of accelerate. We feel very good about where we are today. You know, as I mentioned earlier, we are sort of cautiously optimistic. We don't wanna go crazy given, you know, given there is a lot of talk about interest rates and recession next year, although we're not seeing anything. You know, it would not be prudent to step on the gas at this point. You know, we are making all these experiments, both from a product and a go-to-market perspective. You know, I think we're a great company in terms of how we manage metrics, and we are very, very data-driven. We wanna see proof points on success and calibrate and go forward in a very, very managed fashion versus, you know, crash and burn, right? Although Yes, it does feel like we could go crazy and accelerate, and then, Rishi, next quarter you'll come back and say, "Why has the margin gone down?" So we wanna be, you know, we wanna be just sensible about, you know, how we move forward given just the overall macro trends that we see. Tanmaya, can you comment on the organic growth point? Yeah. Organically, we see we grew around 33% and total was 47%. Understood. Just quickly, is it possible to just give some breakdown in terms of margin expansion that has happened this quarter, broken down between you know mix change, given that MarTech being lower margin business has gone down QOQ, currency depreciation and other efficiencies. Thank you. Yeah. It's primarily because of that. I think we have high profitable business like distribution and DaaS doing better than expectation, and that's actually, you know, improved our margins. Look, I had hoped it would have helped us, but the challenge is that the US dollar appreciated, but we had, like, more than that euro and GBP depreciating. It has kind of a compensating impact both on revenue and profitability as well. You're right. I think the operating leverage kicked in because our high profitable businesses like DaaS and distribution grew more than expected. Thank you. Thank you. Ladies and gentlemen, this was the last question for today. I would now like to hand the conference over to Mr. Bhanu Chopra for closing comments. Thank you, everyone, for your support and, you know, as I mentioned, very, very proud of the team in delivering a great set of Q2 numbers and feeling very confident as we sort of go into the second half of the year and looking forward to everybody's support here. Thank you. Thank you. Thank you. On behalf of RateGain Travel Technologies Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.