Intellect Design Arena Limited (INTELLECT) Earnings Call Transcript & Summary

Greetings, and welcome, everyone. Thank you for joining us today to discuss Intellect Design Arena Limited financial results for the third quarter of the fiscal year 2023-'24 ending 31st December 2023. The investor presentation and the press release has been sent to you and is also available on our website. Our leadership team is present on this call to discuss the results. We have with us today Mr. Arun Jain, Chairman and Managing Director; Mr. Manish Maakan, CEO of iGTB; Mr. Rajesh Saxena, CEO of iGCB; Mr. Banesh Prabhu, CEO of IntellectAI; Ms. Vasudha Subramaniam, CFO. Besides, there some other senior members of the Intellect management team are present in the call. Now I hand over to Vasudha to take you through the financials. And later Mr. Arun Jain will give you his comments on the same. This would be followed by a Q&A session, where your questions would be replied by the senior members of our management team. [Operator Instructions] Now on safe harbor. I would like to remind you that anything which we say which refers to our outlook for the future is a forward-looking statement, which must be read in conjunction with the risk company faces. With this, I request Vasudha to give her brief. Over to you, Vasudha.

Thank you, Praveen. Good evening, everyone. It's my pleasure to take you through the financial highlights for quarter 3 and the year ended till December 2023. When we looked at the CAGR for 3 years, which indicates our predictable and sustainable growth, the key metrics like the LTM revenue, LTM license-linked revenue, EBITDA and PAT grew 20%. Our year-on-year growth in LTM revenue is 19%, while the license-linked revenue is 23% and EBITDA is 33%. Our DSO as of quarter 3 is 107 days as against 108 days as of quarter 2 -- as of quarter 3 of last year. We have collected more than INR 1,760 crores till December, and our cash position improved to INR 712 crores. On the absolute numbers, our LTM revenues, INR 2,522 crores, and our license-linked revenue was 55 percentage of the LTM revenue. We have made an EBITDA of INR 555 crores in the last 12 months, which is 22 percentage of the said revenue. We have achieved 48 deal wins in the last 1 year and have gone live in 46 digital transformation projects. Now taking you through the YTD numbers. Our revenue for 9 months till December was INR 1,901 crores, and our EBITDA stands at INR 412 crores. EBITDA remained at 22% as it was for the last 12 months. Coming to quarter 3 of this year, our revenue was INR 635 crore, and our EBITDA was INR 132 crore, being 21 percentage of the quarter 3 revenue. Our collections for the quarter was INR 591 crore, which took our cash position to INR 712 crores. If you look at our LTM numbers, which we have plotted in the deck for the last 14 quarters, it clearly depicts our consistent growth journey, both the LTM revenue as well as the LTM license-linked revenue. Finally, our currency-wise revenue mix represents 37% in USD, 14% in GBP, 11% in Euro, 26% in INR besides others. And this is tabulated in the usual format. On the deal wins, winning OTP was a proud moment for us and a major milestone besides Indian Bank and other deals in Kuwait and Pacific region. With this, I will hand it over to Arun, who will share the business updates, including these major wins and the outlook for future. Thank you.

Thank you, Vasudha. Just to have a commentary, which is continuing from the last quarter or last few quarters, as you've seen that there's a consistency of 20% CAGR on last 3 years. So that is a very significant milestone, the way we designed the organization. It's panning out in the same manner. It's quite a delightful experience personally to me, that -- but not on a 1 quarter, 2 quarter basis, but on a 3-year basis, the number is sustained. And for product company, 20% on a sustained basis is a difficult journey normally. So I must congratulate Manish, Rajesh, Banesh on the call, who are able to make this delivery possible. Then other point is, let's say, why this is happening 20% because of our own thesis that we want to run multi-portfolio product company. Today, all the 6 spaces in the financial space: core banking modernization, digital transaction banking, lending, wealth, trade and supply chain finance and insurance underwriting. All the chosen 6 -- chosen space are now start firing for us. We looked at it in Intellect 2.0. We went from GTB first, then GCB and then AI. Now in this year, when we look at it, all the 3 business units are having a product like wealth is having a good traction, trade and supply chain having good traction which was not there insurance underwriting is having a good traction. And in this quarter, if you look at it, it's era of the core banking. I think we won 3 large deals of core banking this quarter itself. And there are multiple deals in lending. What change we brought in, in February '23 of what eMACH.ai, that is driving our accelerated implementation, accelerated transformation. And if you look at it from a business perspective, one driver for us is a product. Second driver is a country in which we put a lighthouse implementation. If I look at it country by country, Thailand as a country, the largest Thailand bank has gone live with our entire GTB suite over there. Philippines, we have largest suite available where largest bank of Philippines has gone live with the system. Largest Singapore bank, UOB has gone live with our trade and supply chain finance solution. Vietcom in Vietnam. In UAE, we have ENBD and FAB. In Saudi Arabia, we have gone live with Saudi National Bank. In Europe, we have a bank like Lloyds or Barclays. The top 3 French bank, we have won the deal in all the 3 banks, one of them we announced 2 days back, Crédit Agricole, before that the SocGen and BNPP is working with us. We are working with 2 largest Canadian banks, RBC and CIBC. We are working with the BNY Mellon, Northern Trust, JPMC in U.S. So chosen market and then OTP deal is giving us -- paving the way for Eastern Europe and Bulgaria and Hungary. The 2 places we won that deal for core banking as well as lending. So they are almost equivalent to 4 deals packed into 1 for going into Eastern European market. OTTO is in Germany, which is the lighthouse site. So why this is important the lighthouse site is for all of the product companies, the biggest challenge for us is first reference account. And once that first reference account gets established, then next 3 accounts come much easily for us. So now Saudi Arabia, we have 4 banks out of 8 banks are working for us. In Middle East, 9 out of top 10 banks are using Intellect technology. So that's what makes us exciting right now because now this is a time when other products are getting mature. And we have a reference sites available in those accounts and country references are there. We are able to approach core banking modernization or lending modernization or origination modernization or digital experience platform, you have a reference available there. So that completes our journey of 2.0 where we wanted to establish my product in a market, my architecture in a market and a reference site in a market. Now next area which is left to be conquered is, we need to get into the having right investment in GTM for Americas. U.S.A. is a large market, where we're not fully invested right now. We invested in insurance underwriting in U.S., which is doing well. But besides underwriting in U.S., GCB and GTB, our investments are more focused on Canada rather than focused on U.S. So that's -- we'll be requiring some of the investments over there. In this period, we could close out on GeM contracts. GeM contracts got over on 14th of December. So we have, in this quarter, won't be able to build -- compared to last quarter, we had a shortfall of almost $2.5 million from the GeM on the -- topline on the revenue side. The best part is, I think we were able to hand over completely and come out of this. It was not a profit-making deal. We somehow able to release and hand it over successfully to TCS. Looking at the outlook from the perspective, what is exciting for us, I think this AI business is exciting for us. The excite -- the way the AI business, we were able to build an entire document intelligent management system, IDX, which is leveraged for not only credit underwriting for the insurance -- sorry, insurance underwriting, it is useful for credit underwriting. So to build that product for other line of business like trade finance origination, same thing to be used for lending origination. It's taking less than 6 months' time and very small amount of efforts to drive new products on AI very quickly. So AI business is one of the most exciting things. Second exciting thing is our whole micro services and API architecture is getting a significant accolades from all the analysts. So many analysts are putting us -- our payment system into the leadership quadrant, our core banking system in leadership quadrant. So most of the places when you look at the quadrant, whether it's Gartner or Forrester or Aite, we are getting into the top 3 players in most of it, we are the #1 player in this basis. So that's where -- what is we are seeing as the outlook. On company growth, which is there. I think Q4 revenue -- our focus would be how the Q4 revenue will look like when GeM will be out for Q4. What our current estimate? It will be similar number will be there in Q4 in spite of a drop in GeM revenue. So our growth in the rest of the business means is growing at a significant faster pace to compensate for the GeM revenue. EBITDA margin will improve, obviously, with the exclusion of the GeM revenue. Our tax payout ratio, which is close to 26.5% at this point of time. And this actual payout is less because a lot of things is -- because of MAT, we are -- actual cash flow is not there, 26%. Our actual cash flow is equivalent to MAT almost close to MAT. Next year, we'll be choosing to get into the lower tax bracket of 25% tax bracket. And effective tax rate would be lower by 3%. 26% may come down to 23% for the next year. So these are the few data points, which I wanted to share, and then we'll leave it to you for asking all the questions.

Thank you, Arun. [Operator Instructions] First, we have Mr. Mohit Jain from Anand Rathi Securities.

Yes. Sir, one is on GeM. So you spoke about $2.5 million revenue shortfall in this quarter because we lost 15 days towards the quarter, right? Should we -- like for finding out a normalizing Q4 revenue and impact, like 2.5% is the recurring rate that we should assume and for the full 3-month impact?

I said 2.5% is reduction from that perspective. So the remaining banking business, other business has grown to that level, compensate for making INR 635 crores revenue.

INR 635 crores for the...

Total quarterly revenue is INR 635 crores, so $2.5 million is INR 20 crore shortfall in the GeM revenue.

Right. But this quarter, you will have a full 3-month revenue impact, right, in Q4, so that's...

That will be close to...

3 million impact will recover through growth in other segments.

That's right. That's right. That's right.

Okay. And sir, second was related to the margins. Now that our margins naturally will improve. As you have mentioned in the press release earlier as well, GeM was not a highly profitable business. So does that change your outlook or guidance at the EBITDA margin level?

Sure, that will change, but it will go by 2%, 3% more. It should come closer to 25% levels. EBITDA margin may come up.

Okay. So now we should be closer to 25%. So I'm just comparing, sir, '22 versus '25, so that time also, we were at 25-odd percent levels, at the EBITDA level. So naturally, if you're talking about high growth and without GeM, should I build in 1%, 2% from there on? Or do you think 25% is now the recurring margin for the company?

Let's see. I know you want to push the agenda, but yes, it will be 25% plus, yes.

25% plus for the -- okay. And sir, lastly, for the full year, is there any outlook without GeM, like where are you headed? Because there's some momentum on the product side.

What I've just mentioned, the -- only 1 quarter is left if it's currently $76 million, if...

No, no. What I meant to -- sorry, what I meant to ask was like from a 12-month standpoint, like -- from a growth standpoint, are you seeing some acceleration, steady state? Any outlook there?

Overall is looking good, [Foreign Language] the funnel has improved. Now INR 8,000 crores is our funnel size from INR 7,500 crores. There are more Destiny deals, 79 Destiny deals are there, which we are pursuing right now. So there's a more structured approach, which is happening over here. But now LTM revenues, we are consistent. Quarterly is always ups and downs are happening.

Right. So I think we can take as a trend and move forward, right?

Yes. Yes. Yes.

[Operator Instructions] Next, we have Mr. Ravi Mehta from Deep Financials.

I just wanted to understand this a bit on the GeM that since we had a shortfall of GeM, but when I see sequential dip in the cloud revenues, it's even more. So is there something apart from GeM, that has also hit us particularly in this quarter specific and we can get back to the earlier run rates?

The platform revenue for this quarter, I'm not seeing so...

So we were tracking INR 140 crores, INR 145 crore kind of a run rate for at least 2 quarters, and I believe cloud is sticky. Now if I remove the GeM part of it, I think still the number is a little lower in this quarter. So is there some one-off? And...

There was a couple of one-off items included in quarter 2, and that is where you are seeing some dip from INR 147 crores to INR 111 crores. So that's what you are mentioning, right?

Yes, yes, yes.

So beyond GeM, yes.

Okay. So what would those be like another INR 10 crores, INR 15 crores?

So that is from some of the customer in -- related to SaaS and subscription. That was one time. And so we included that in quarter 2. And quarter 3, it does not include any one time. So it just has GeM. So when you look at the difference from quarter 2 to quarter 3, and that's where you are seeing something more beyond GeM.

Okay, okay. Just one broader question. The kind of cloud deals that you've been clicking. Just wanted to get some color that usually, the understanding is as the customer keeps using more or adds more locations or branches, the revenue from the same deal will keep increasing. So I just wanted to understand, to get some flavor, as to whatever deals that you've been clicking for last 2, 3 years, how those can grow without you adding any more deal to it, just those particular contracts, how can they grow in terms of revenues?

Yes. So those volumes grow in 2, 3 days. So there is a fluctuation in cloud also. So your first question is why there is a reduction in the cloud revenue. Volumes do change quarter-on-quarter, certain policies -- some business conditions are there, which are linked to the transaction or the particular quarter, they have more transactions on it. So let's say, we charge for underwriting policy, X dollars per policy, in 1 quarter, there could be larger number of renewals. Second quarter, there could be a lower number of renewals. So it's not only growing larger. But looking from your perspective of asking the question between cloud revenue, the forecastability of cloud revenue is -- as of now, we are not too much very, very [Foreign Language] it's -- we are at the early stages of the cloud revenue. Still, we are not that mature in the cloud revenue, where all the forecasting is there. So we are finding -- certainly ups and downs are happening in the cloud revenue. But on a long run basis, if you're looking at a 3-year picture or 4-year picture, the 2 models we have on cloud revenue. We have a subscription-based revenue which is a monthly subscription on the cloud, which has remained constant. So that is much more predictable. The second revenue is on transaction-based revenue. And within transaction, there is a percentage of the policy book and there is a per transaction revenue. So 3 models are there on the pricing and those pricing also vary quarter-on-quarter.

Okay. So the monthly subscription usually is the same amount...

Yes, monthly subscription is there. That's the most stable.

Okay. Okay. And currently, what numbers we see that has more of these monthly deals? Or are you already getting those transaction-led negotiations?

Mainly monthly -- a part of it is monthly, but transaction based is also there. There could be monthly plus transaction also. So all possible combinations are there.

There is something called as minimum commitment that will be recurring on a monthly basis. And so beyond that, as and when the volume grows, we get that.

Sure. And one question I had on this eMACH.ai, the repertoire of 312 micro service I can see in this presentation. Earlier, it was 280. So I'm seeing that number growing. Your APIs are almost same, 1,214. So I wanted to understand that as you have to keep adding these micro services, probably using the same APIs in eMACH.ai offering. So what kind of -- maybe any targets you have, like what kind of micro service you think at some point you would be ready in the market?

300 is a very large number of services, Ravi. We keep adding some 7, 8. So whenever we are going maturing, like say, if we have a lending micro service and we want to get to the mortgage, there will be 2 or 3 micro service will add on the mortgage side. If you have wealth as a micro service, there will be another 3, 4 can be added. Each product line can keep on adding few micro services. So this number of 312 is after 1 year. So when we looked at it last February, it was 285. This year, it is 312. But API should have been more. I think there's some error in reporting over here. There could be more than 1,214. It should be close to 1,500 or so APIs. We should -- we should have published that. And event also is close to 400, not 200 plus. Thank you for highlighting.

Okay. Okay. All this is probably happening at the same R&D budgets that we've been working with. And do we plan to increase that if you think to make this eMACH.ai offering more comprehensive, you -- or as of now, whatever the annual budgets you've been highlighting is good?

As of now, it seems to be okay. And budget-wise because our cordless platform is reducing the effort for generating new products, so on one side, we are increasing the output at the lower cost because of the Turmeric, we are able to use an AI, IDX we are able to use and build new products. So that's why the incremental quantitative investment, which is there is coming the same cost as what we have budgeted for. But our investment in next year will be an area of market entry. So market entry investments will be what we need to plan for in '24, '25.

Okay. Okay. And just bookkeeping, what could be the capitalized R&D number for the quarter?

It's INR 35 crores?

INR 35 crores.

Next, we have [ Mr. Mukul Verma from Verma Associate ].

Am I audible?

Yes, yes, Mukul, please go ahead.

Congratulations on a good set of numbers. I have 3 questions. One is on, what is the minimum amount of cash you think the company should have, like, as of now, we have INR 712 crores, post which you can look at the buyback option? That is number one. Number two is on the other income of INR 19 crores. So apart from the interest income, what else does that comprise of? And number three, there is a note in our accounts that we will soon be moving to a new tax regime. So will that kind of lower our taxes? This is what I wanted to know. Any if yes, by what percentage points?

The other income comprises of 2, 3 things: one we have the treasury income out of our fixed deposits and others; and secondly is from the rental income that we have; and third is some Ind AS-related entries, okay? So Ind AS is Indian Accounting Standard-related entries or the deferred interest. So these 3 are the major elements in other incomes. And we had a onetime other income on the rental part this quarter. There was some settlement that happened and it got cleared this quarter, and that's where you see some spike in this quarter on the other end.

Correct. So what would that amount be?

That would be about close to INR 7 crores, INR 8 crores.

All right, okay.

And the second thing is tax.

That is a Ind AS...

He meant tax rates...

Tax rates, okay. We are moving to a new tax regime in the next financial year. So we've been having MAT, unutilized credit. So we would like to exhaust that by the end of this year, March 2024. And we'll be moving to the new tax regime because we worked out the cost benefit of either retaining with 35 percentage or moving to 25, and we are much more beneficial in moving to the new tax regime. That is a note which you are seeing there, and it's getting carried on quarter-on-quarter, yes.

So kind of as of now, I see we are in a 26% net bracket, the tax what -- so what would that then go down to?

It will go down to 23 percentage. So 26 percentage is across the globe with stand-alone being 35 percentage. So when the stand-alone improves to some 25 percentage, that will also come down.

Great. And sir, any thoughts on the buyback after what minimum cash balance you would consider rather than giving dividends?

Yes. I think this is the conversation happening in the Board. So we'll let you know as the Board decides about what level of buyback. And obviously, that will be required at some point of time.

Next, we have Mr. Nemish Shah from Emkay Investment Managers.

Am I audible?

Yes, yes, please go ahead.

Congratulations on a very good set of numbers. So just firstly, one clarification on what you mentioned for the GeM contract and the revenues in the Q4, so you mentioned our Q4 revenues will be similar to the Q3 number after the GeM impact? Is that understanding correct?

That's right. That's right.

Okay. So then if I have to just calculate X of GeM revenues for us, so then that implies a growth -- sequential growth of about 18% to 20%. So is that calculation correct?

Yes. If you look at it from that perspective, definitely, that number would be of that nature. So because there was one deal of what we mentioned INR 30 crore deal last quarter is continuing for this quarter itself. So that will be a carryforward deal, which we'll get a benefit for this year, this quarter.

Right. And 3 large deals that we signed this quarter, will that revenues also start going in from Q4? Or that has already started?

No. Revenue, whatever the deal signed last quarter has already been accounted for it. So some lag revenue can be further being accounted in this quarter.

Okay. So then are we anticipating some more deals to come in? Or -- so because...

It's good enough for a license. What you're saying is around the same number is a good number for all of us.

Right. And just one more point was that if I have to just see our Destiny deal data that you provide, so the average deal size has been constantly been going up for us. So some -- if I have to see 3 years back, it was around INR 40-odd crores and now it has gone up to like INR 53 crores, INR 55-odd crores. So incrementally, the deal size has been quite -- it has been even more. So is there anything to read into it or it's just natural price rise that we are seeing?

No. I think this is a more transformational deal. When the deal -- number of deals in the transformation space are there, the value of -- the average deal value goes up, so -- and because when the transformation happens. So we are now participating with the eMACH.ai in more digital transformational deals than we are participating in a smaller product deals. So very good observation, Nemish, on this average deal value, very few investors are looking into this.

Next, we have Mr. Rohit Balakrishnan from ithoughtpms.

Am I audible?

Yes. Please, go ahead.

Sir, I have a couple of questions. So you mentioned in your opening remarks that the journey towards Intellect 2.0 is sort of over now with the traction that you've been getting. So if you can just share probably what kind of improvement in your strike rate of winning deals has happened in those geographies that you mentioned in Europe or in Eastern Europe or in Middle East? And if you can also talk a bit about our investment in the U.S. and the Americas in general, Canada and with iGTB and iGCB? So next maybe 8, 10 quarters, how do you see that those kind of -- the benefit of Intellect 2.0, the fusion of that in terms of your strike rate improving and also your investment in U.S. and Canada, how do you see that improving? I remember in the last probably 5, 6 quarters back, you talked about us getting to that 100 million quarterly run rate. We are still a bit away from that. So if you can just maybe round it up and give us a view on that.

Yes. So Rohit -- maybe, Manish, if you can bring it out that what is the win rate, what is the impact happening in various countries since as of -- Manish and Rajesh both are in Canada today. So Manish, will you just -- do you want to take this question on Rohit?

Sure, Arun. No, definitely, the win rate is improving significantly. I think there are 3 things in the -- which I want to call out. I think Nemish said in the previous one, because of our technology, eMACH.ai's recognition of it, the brand value consistently is going up. Each of these markets, if you see, we've got 6 to 10 banks in each of the regions. Some markets, we've got 8 out of top 10 banks. So that brand recognition is growing. We've all known that as you move towards the leadership journey, everyone else wants to join that journey and with a stronger brand recognition. This is growing. Both Rajesh and I are sitting in Canada right now, and we were in U.S. before. There's a lot happening here, which where we need to add to the distribution to be able to get to the coverage. Hopefully, in the coming quarters, we can share a lot more over there. Market movements happening. There is vacuum getting created with some players having financial challenges and troubles and having legacy technology. So this is where -- with the technology investments we have done, we're looking forward to expanding on the distribution and replacing some of these players. Working with a number of SI partners, both Rajesh and I have been -- this whole week having multiple discussions with 4, 5 large system integrators. And some of them actually have also started tweeting on LinkedIn, if you would see there, how they are excited by us coming in this market. So I would say we're seeing good tailwinds. We need to capitalize it by expanding distribution. The product maturity and strength is already recognized. In North America, already 6 of the top 10 banks work with Intellect, and we should share something more soon.

Sure. So that journey towards 100 million, is it -- I mean, how -- what do you sort of see on a quarterly basis? I mean how far you think you guys are away from that? We've been talking about it for a while.

There are 2 things in your question. First of all, offsetting the GeM, which was a significant revenue. We're already saying that in quarter 4, we'll be able to offset and make it neutral. So that demonstrates the growth. I think the second thing, Arun has said it consistently now for last 14 quarters and the track record also shows, we're continuing to say that we want to grow around -- we'll design the business to grow around 20%, and we would want the financial profit to be between 25% to 30%. So take that as a guidance. We have to rebuild a vacuum created by A account. We're sad to lose it. But from a financial perspective, you've seen already from a profitability perspective, it will improve the profitability.

Mr. Mukul Verma once again wants to ask a question.

I just wanted to know that on the Destiny deal front, I had a look, deals above INR 50 crores, we have won all the 5 deals what were put up; and INR 30 crores to INR 50 crores also, we have lost 1, 2. But on the lower deals, we have -- loss ratio is higher. So is it that on the higher deal fronts, we have less competition and we are getting more traction there? And on the lower deals, like there is price competition and that's why we are losing? How does that -- how should we look at that?

Good observation. I think our focus is there on Destiny deals. So Rajesh, Manish, we all focus on those bigger deals. And we should do good learning from this data that those midsized deals need to get that same kind of attention from us maybe. So we've not lost too many deals in the lower quadrant, but we have not pushed that agenda. So I think that's where there's opportunity for us to drive higher push on, sitting -- because sometimes deals get closed when you are sitting next -- face to face with the customer and that bandwidth becomes an issue to sit in front of the customer. So we are using that bandwidth for -- between INR 50 crore and INR 30 crore to INR 50 crore bracket, more than we are using in less than INR 20 crore bracket. So we need to spend that time. So sometimes it's...

And sir, since now that we do not have GeM with us, so is the team which was handling the GeM function put to a different use? Or we have like done away with them? How does...

There, we are looking now...

Because you opened an office in GIFT City as well and...

That's right. So this team is working on it. Same need we are experiencing in direct-to-corporate and procure-to-pay area because corporate procurement portals are also not there. So we have looked at the market, the government procurement portal outside India, state governments. We're also looking at state portal. So those are -- that is the place where this current team -- because technical team was not that big. The other team was -- operation team was larger, which was outsourced anyway. So we have let go the team. And technical team is working on direct to corporate as the fourth LOB, which will take some 2 years to shape it up income in that -- in this area. The 2 products which are there are the APX and CPX. APX is account payable exchange, which is the Magic Invoice end-to-end processing; and CPX is corporate procurement and GPX is government procurement. So these 3 product lines will be building it up in this -- by this team right now.

Adding to what you said, Mukul, you called out that the GIFT City, we are opening up our AI center, which you called out in your initial, that's where the excitement is going forward. Through GIFT City, we will be distributing our AI products.

[Operator Instructions] As of now, I think Ravi wants to ask one more question. [Operator Instructions] Ravi Mehta? I think he's left.

[Operator Instructions]

I think he's not there, it looks like.

Okay. So if there are no questions, I think, Rajesh, if you want to just brief about...

A few more questions...

Are there more questions?

Yes.

We have now [ Mr. Chinmay Nema from Prescient Capital ].

Sir, am I audible? Yes, sir, could you share the total number of deal wins in core banking for the 9 months?

Deal wins from core banking.

He's lost. We can't hear.

We can't hear, Chinmay.

Chinmay, can you ask again?

Sir, could you share the total number of deal wins in core banking software for the 9 months?

Rajesh, can you -- would you like to share, core banking and -- take some color also on core banking, how is the market evolving, what is the competition evolving? So just take.

Sure. So I think we are -- first, from a market perspective, we are seeing some traction in core banking transformation deals. We are seeing many more opportunities come up. And in the markets that we operate, we are seeing some good opportunities coming up. I think last quarter, we worked on this deal for more than 2 years, and this is the OTP deal that we announced last quarter, as was mentioned earlier. Right now, it's a 2-country core banking, lending, complete digital transformation, but it has a potential of being a 12-country rollout. So that itself, for us, is a very large deal. We also -- and let me talk a little bit about competition, how we went through this process. So it was a very rigorous process that we went through. It started with a long list of about 21 vendors who were called for this. And from 21 vendors, they shortlisted to 3. The 3 -- the last 3 vendors were Temenos, Thought Machine and Intellect. And through a very rigorous POC process, demo process, functionality demo process perspective, we were able to cross the line as against Temenos and Thought Machine. So that's something that we are seeing. We are seeing in certain markets mostly Temenos and Thought Machine and Intellect in the final 3. Some we win. Some our competitors win. We also saw some very good traction in Pacific Islands. We actually in the last 9 months have announced 3 large core banking deal transformation. There, we have won most of these deals against Oracle FLEXCUBE. So very good traction. What is really happening in the market is architecture is becoming a very important consideration. And the kind of work that we have done in the last 6 quarters, especially on eMACH.ai, where our APIs are very fine-tuned, we have very good micro services, documentation, et cetera, is really helping us in this process. Because in most of these markets, Temenos and Thought Machine are spending much more marketing dollars than we are spending, and they have a head start from a brand recognition perspective. But in spite of that, Intellect coming in and being able to win deals against them, I think, is creditworthy. It talks about our architecture. It talks about the good investments we have done. And it also talks well about our people. So I think all factors are coming together from a tailwind perspective, and that's why I think Arun mentioned that we are seeing good traction from a core banking transformation perspective.

In 9 months, we would have won 7 deals in core banking, Rajesh?

Yes, we have won -- I think -- I don't remember often, but I think it's either 7 or 8 deals we have won, Arun.

That was really helpful. If I could quickly ask one more question, if that's all right?

Please.

Sir, I just wanted to understand -- so from what I understand, there are 2 types of core banking softwares: one that address to larger banks which have CASA accounts; and there are other softwares which cater to NBFCs which do not have any retail presence, which do not have any CASA accounts and any liability franchisees. So I just want to understand, our software pertains to -- caters to the first category, right?

That's right. Yes.

Next, we have Mr. Rahul Jain from Dolat Capital.

Yes. I hope I'm audible.

Yes. Yes. Please, go ahead.

Yes. Firstly, just to understand what kind of fixed cost savings we would have from Q3 going into Q4 that we may not incur because of this termination of the contract. And also, any headcount-related savings that you just alluded to some time back?

It's part of the margin improvement, so not to specifically looking at what is the quantum of the amount, it's about overall -- there'll be reduction -- total cost, which is currently INR 503 crores. There will be reduction from that cost in the Q4.

Okay. Okay. Then moving to my second question. What is the kind of pipeline you see on the implementation side of the business? Because if you see on a TTM basis, our license growth has been around 20%, but the implementation pace is around 6%, 7%. So what is causing this? And is that a good tailwind going into next fiscal?

That's a good sign. So we are implementing it at lower cost to the customer. So it is an edge where we would like to see that implementation cost comes down. And so that is a competitive edge if implementation costs are lower because it will deliver faster at lower cost.

So are you trying to say that the current -- we don't carry any extra pipeline from the wins that we already have? It's a normal say of the run rate of win and implementation which is going on. It's just that maybe the third-party component or the total value of the implementation in the deal value has reduced, which is causing this disparity between the growth of 2 items?

Disparity -- there's no disparity. I think implementation revenues are not growing at the same pace as license and AMC revenues are growing. So that's a conscious decision on -- looking at it, implementation revenue, so my license-linked revenue is improving.

Got it. I think Manish wanted to add something...

Rahul, 2 things. One, license and license-linked revenue is growing. You're transparently seeing that. Second, with eMACH technology, you are seeing our efforts to implement are reducing where we're giving the margin -- we will be helping the customers execute faster, which we have also shown in the track record. I think the third equally important aspect, like you're seeing, our wins quarter-on-quarter are increasing. That means the forward order book is there for implementation. It doesn't mean our forward order book for implementation is gone.

Yes. I mean that's the last line which I was actually looking for.

No, as we sign more, it is -- more is coming through.

I mean, future, of course, yes. But also for the recent past traction, there must be something which is setting to be executed.

Yes, we just announced these 3 large deals, if you see today with Indian Bank, with a bank in Kuwait and OTP Bank, they are fairly large-sized deals. So there's fairly large implementations in there.

Next, we have [ Mr. Vivek from Bestpals ].

Am I audible, sir?

Yes. Yes, Vivek. Please, go on.

Arunji, can you elaborate on the partnership, especially with Microsoft? Last year, you spoke about the consumerization of corporate banking and how we will take it up. So can you throw what is the status there or how is it shaping up?

Manish?

Vivek, Microsoft, Accenture, these 2 partnerships are going very strong. There's a number of things, like I shared and announced with Microsoft is jointly investing for us to build our iGTB copilot, which is the assisted AI user journeys where we're working on a number of POCs. Along with Accenture also, we have now -- we won a joint deal in Asia, which is going through implementation and it's getting templatized along with them. I spent -- early this week, I was along with them, and we're putting a template out to take that forward. So these 2 partnerships are definitely showing us good positive signs and a good funnel along with them right now. We're also nurturing along with a couple of other large SIs. So the brand is getting recognized. People are actually inviting us and calling. Rajesh and I are sitting in Canada where another large system integrator invited us to take certain offerings into the market. So those are very, very positive signs. You will continue to hear on this in calendar '24 a lot more.

Okay. Any other questions? Just in case, you want to ask a question...

We can close the call, Praveen, if there are no more question.

There's no question.

Yes. Well, thank you very much for attending the -- yes.

Thank you very much for attending our call. In case anything else is there, please do write to us any questions are there, follow-up questions, we'll be replying you. Thank you for attending today's call. Thank you.

Thanks, everyone. Bye.

Bye.