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

Thank you for joining us today to discuss the Intellect Design Arena Limited financial result for the third quarter of the fiscal year 2024-'25 ending 31st December 2024. 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 IntelectAI; Mr. Vasudha Subramaniam, CFO; and Mr. Vikas Musa, he is a partners and he looks after the strategy of the company. Besides 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 results. This will be followed by a Q&A session, where your question would be replied by the senior members of the management team. [Operator Instructions] 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. This must be read in conjunction with the risks that company faces. With this, I request Vasudha to give her briefing. Vasudha?

Thank you, Praveen. Good evening, everyone, and thank you for joining us for the Q3 full year '25 investor earnings call. It's my privilege to take you through the highlights of this quarter. As you would have noticed from the press release and Investor deck, we have significant milestones to share in this quarter. So today's discussion will cover 4 sections. Number one, a deep dive into our financial performance; number two, the strategic initiatives that would significantly drive growth and market leadership; number three, how eMACH.ai is accelerating our leadership position in the market; and number four, on market recognition and events. Now let me begin with our financial performance. Revenue from operations for Q3 stood at INR 607 crores, while the total income is INR 625 crores, registering a growth year-on-year on a like-for-like basis. Our year-to-date revenue from operations for the year has reached INR 1,768 crores, while the total income was INR 1,828 crores. We continue to maintain double-digit growth in 2-year and 3-year CAGR on an LTM basis. Our license linked revenue, comprising the platform license and AMC stood at INR 292 crores, contributing nearly 48 percentage of the total revenue this quarter. The LTM ARR as of Q3 was INR 700 crores, underscoring the trust and stickiness of our platform-driven solutions. EBITDA for the quarter stood at INR 121 crores with a margin of 20%. Profit before tax came in at INR 93 crores and profit after tax was INR 70 crores. Despite global challenges, we have sustained financial stability with 0 debt and INR 804 crores of cash in hand. The financial resilience positions us to capitalize on future opportunities, ensuring sustainable growth for stakeholders. Now let me move on to the second section, which is about our strategic initiatives. Q3 was pivotal for Intellect as we continue to execute bold strategic moves to strengthen our market leadership and drive sustainable growth. A significant milestone this quarter was the signing of an agreement with Central 1 Credit Union, enabling Intellect to assume its digital banking operations. This agreement marks an important step in expanding our presence in North America, a reason critical to our growth strategy. To put this agreement in perspective, we have stated in earlier calls that North America is a mix focused geography after our success in Europe, initially with transaction banking products and subsequently with consumer banking, wealth and insurance. We have a significant presence among the P&C insurance leaders with our Purple Fabric platform adopted by 20-plus carriers after individual PODs and evaluation. Our liquidity and payment products also enjoy an installation base to the market leaders in the U.S. and Canada. We recently struck a large engagement with a market leader in Mexico. This arrangement will further strengthen our presence in this geography, taking our digital engagement platform to a whole position. We are excited about our association with the credit unions and the possibilities with our EMA platform and driving their transformation agenda as well as the other financial leaders in the U.S. and Canada. The transaction is expected to close in the next few weeks and will serve a substantial network of Canadian credit unions. So the second initiative is on the SME enablement through global linkers. A strategic investment of INR 20 crores in DigiVation Digital Solutions Private Limited positions Intellect as a leader in corporate and government e-procurement, driving growth in trade and supply chain finance globally. The Asia Pacific has been identified as a major trade corridor in most global studies. Similarly, the vibrant SME segment has been identified as a key engine of economic growth in every developing economy as well as advanced markets. Global Linker is a start-up in the SME ecosystem space that offers shopfront and e-catalog services to SMEs, apart from access to financial services through partnerships with banks and has an enrolled base of over 300,000 SMEs. Intellect's eMACH platform encompasses the ITPS and IDTF platforms that power the intelligent procurement process for corporate and government. Our transaction banking products support global trade and supply chain finance, apart from the regular payments and selection. We've seen significant synergies and potential in the IT assets coming together to form an interconnected commerce ecosystem with value accretion to all participants like SMEs, banks, buyers and the platform. Let me go to the Section 3, which is about eMACH being a catalyst for transformation. eMACH.ai continues to lead the digital transformation journey for financial institutions worldwide. The 0 waste architecture based on first principles taking help financial institutions accelerate the realization of the transformation vision, while keeping total cost of ownership across Run the Bank and Change the Bank initiatives the least. In Q3, eMACH.ai achieved significant milestones by being chosen by 11 global customers across key regions, showcasing its capability to address diverse and complex financial requirements. The notable deal wins include one of the largest U.S. banking institutions focused on asset and wealth management adopted CTX, Corporate Treasury exchange; the enhanced liquidity management and automate cash operations ensuring efficiency and superior client service. A wholesale insurance brokerage firm specializing in risk management across multiple P&C lines has adopted eMACH.ai Magic Submissions, Exponent and Risk Analysts, empowering underwriters with AI-driven tools to streamline workflows and improve decision-making. A prominent Nordic wholesale bank reinforced its trust in CPX, leveraging the platform to optimize liquidity and provide sustainable treasury solutions. A Spanish banking giant expanded into Asia with eMACH.ai payments, focusing on innovation, operational excellence and seamless customer payment experiences. A large Turkish bank implemented the DEC to deliver AI-driven personalized, real-time interaction for customer across all touch points. Africa's largest financial institutions awarded us a multi-country CPX engagement spanning across 22 countries, replacing legacy systems of scalable, future-ready treasury solutions. A major South African banking conglomerate adopted the digital engagement platform, enhancing customer satisfaction with personalized and seamless engagement. A financial services leader in Southern Africa implemented eMACH.ai core banking to provide contextual and personalized banking journey for evolving customer base. A prominent corporate bank is the UAE renewed its trust in eMACH.ai trade, delivering a unified omnichannel experience across its transaction banking services. A top Saudi financial institution adopted eMACH.ai trade, enabling seamless omnichannel solutions tailored to the dynamic needs of trade corporates. Finally, we are thrilled to announce that a greenfield EMI in Malta has revolutionized its services across the European economic area by implementing our eMACH.ai and iTurmeric platform, significantly enhancing the customer experience and operational efficiency. So we now saw how eMACH.ai was a checklist for transformation. So eMACH.ai is driving business impact across the globe. Its compatible, open architecture coupled with iTurmeric composability platform accelerates transformation initiatives with more customers successfully adopting our platforms this quarter. Here are some of the go-live highlights of Q3 that showcases eMACH.ai's global impact. There were 3 go-lives in America: Magic Submission, powered by Purple Fabric; one go-live in Europe in corporate treasury; 5 go-lives in India in digital core and treasury solution, cash management and wealth management; 4 go-lives in Middle East and Africa in Central Banking transformation, core banking, cash management and digital banking innovation; 2 go-lives in Asia Pacific in liquidity management and DTV platform; and one go-live in Australia, New Zealand involving co-banking transformation. So on a year-till-date, we had 34 wins and we have gone live on 37 digital transformational projects. Now let me come to the last sections about events and market recognition. Let me talk about the events. Intellect also made its mark in key industry and technology events during the quarter, showcasing the prowess of our eMACH.ai architectural and technical superiority. SIBOS, the annual event for corporate banking, was held in China in October, where we demonstrated our AI-led trade and supply chain platform apart from other industry-leading platforms of CPX, payment and digital transaction banking. In the transaction banking business, we also had a launch of wholesale banking in Dubai. At the InsureTech event at Las Vegas, we demonstrated the versatility of our Purple Fabric platform and industry-specific products such as Magic Submission and Risk Analysts. In the Consumer Banking business, we hosted the Global Finance Awards event in Washington, attended by the global citizens of the industry. We also hosted the iGCB Oxford Central Banking event, attended by several leaders from the Central Bank's world over. Arun delivered the plenary address at the BIAN Banking Summit in London. Closer home, we held an event for bank treasurers at Mumbai and a 2-day event for transformation through eMACH.ai for bankers from the Indian subcontinent. The response and feedback during and post these events enthuses us further in our pursuit of global leadership in the financial technology space. Now on the market recognition. Our leaders are consistently acknowledged by top analysts. We're recognized as a strong performer in the Forrester Wave for digital banking platform. We are named category leader in the Chartis Risk Tech Quadrant for regulatory reporting. We are ranked leader in Omdia Universe Payment Hubs with best-in-class vendor execution. These accolades validate our position as a preferred partner for financial institutions globally. In conclusion, Q3 has been a quarter of transformation marked by stable financial performance, bold strategic moves and innovation-driven growth. eMACH.ai platform continues to accelerate our acceptance and adoption by leaders across geographies. In December, we hosted a session with specific focus on Purple Fabric, our enterprise connected intelligence platform. The potential of these technologies and platforms is evident in the robust pipeline built and enhanced market activity. With the advent of the new calendar year that marks a new financial year for institutions in the advanced markets, we are hoping for further closures in the ensuing quarters. We are confident in our ability to deliver long-term value for stakeholders through disciplined execution, continuous innovation and customer-centricity. Thank you for your time, and I now welcome your questions. Over to the operator.

Before jumping to question, I think Central 1 is a very big initiative. Can you hear me?

Yes, Arun.

Yes. So fortunately, we have Rajesh here. So Rajesh, the investor will have to know what agreements you have signed in Canada with Central 1 and how Central 1 is important from its growth of GCB business to cross INR 1,000 crores for next year.

Yes. Thank you, Arun. I think let me just step back and talk a little bit about what we have told investors a couple of quarters back. I think we've talked about our strategy of first going to Europe, following GTB and building a business -- a good retail banking business in Europe. We've had decent success there. And our next bastion was North America, wherein we said we will go into Canada. So Canada is an important market for us. It's what we call as a strategic C 1 market for us. So from that perspective, from a marketplace perspective, Canada is important. And if you look at our products and if you've been listening to our investor calls, our platform, our digital experience platform, which is a cordless platform, has been seeing a lot of success in the markets, built on the eMACH.ai principles, and it's seeing substantial success in the last couple of quarters. If you look at both the market and the product, we had an opportunity to look at C 1. So I'll just take 2 minutes to give a credit union perspective for Canada. In Canada, there are about 390 credit unions, 200 plus are in Quebec region, which is a French-speaking region, and 190 are in the other parts of Canada. C 1 has been formed by serving this credit union, and it has 3 or 4 businesses. One of the business that C 1 does is to provide digital platform for retail customers, SMB customers and commercial. So out of this 190-odd credit unions, C 1 has a majority of these customers who run their digital experience platform on C1's platform. They have 3 platforms. They have MemberDirect, Forge and a mobile app. All of this is multi-tenant and SaaS-based model. We have signed into an agreement with C 1 to acquire the digital business and run this business from C 1. And with this, and as Vasudha said, the deal will close in a couple of weeks from now, wherein we will be getting a substantial number of employees from C 1 to come into our fold. So we will have scale in Intellect Canada with Canadians coming over and working with us. And also, we get substantial number of customers who will become our clients now from a digital experience platform. The important thing to note is that this is not only about digital experience platform but it's also about opportunities where we can cross-sell core banking, we can sell lending, loan origination and also commercial banking solutions. Most of these credit unions are also looking at getting into the commercial banking space. So from that fit, we are suddenly seeing a significant scale that we will -- we are getting into from a Canadian, from a strategic market and a strategic line of business for us. Arun, back to you.

Yes. So thank you, Rajesh, for concluding this acquisition of the more than 150 clients in that region. So this makes Americas over 200 clients for Intellect. And as we said, there are 5 markets for the investor. America market was the last when we entered in a strategy, and that was a focus you would keep asking and ARR is a second focus. So this brings a INR 200 crore of ARR, equivalent in this business will bring INR 200 crores of additional ARR through this business to the revenue pool of Intellect. So this is substantially valuable entry from 3 dimensional perspective, eMACH expanding the product line into a large number of customers, North America entry, and expanding eMACH.ai footprint from a perspective of multiple products can be sold. So this is one very, very important leveraging we are looking at it. The second part was, Manish, to highlight around what is the global linker investments could be or the whole GTB growth engine is working on. So if we just take -- just to update because all the 3 businesses now are accelerated in 2025. Intellect AI, we shared on the 18th of December, we shared with you Purple Fabric, the potential of Purple Fabric would be INR 1,000 crores to INR 5,000 crores. Manish is sharing the growth engine with GTB, which is our front line business, which is the first business, which crossed INR 1,000 crores. Now Rajesh business will be crossing INR 1,000 crores. And then the third business, which we are creating, Intellect AI. So that's the kind of story board what we have telling you from the last 5 years, I think step by step is moving in the right direction.

Thanks, Arun. This is an important asset from my perspective. We focused from a transaction banking perspective of how to expand the cash management and trade supply chain capabilities for all large corporates and SME mid-market segments. What this offers us as a capability is to be able to offer 3 things now. Number one, its capability equivalent to Alibaba to create a marketplace. It has capability like Shopify that you can create your e-markets and you can create your own engines from where you can do payments. And the third capability it brings on board is that I can embed this into my CBX channel now, whereby the banks can get access to a much larger SME customer segment base. So our attempt with this investment will be to scale this up to add to the edge of our platforms, whereby all SMEs can be onboarded through it, and then we can potentially run the entire life cycle of an SME where banks will go after them through this route. This will help in the supply chain as well as receivables with the large corporates really look after them for. This is a good footprint in the market right now. It's about now taking it across Asia, Middle East and Europe for its expansion and in Stage 2, take it to North America. So we're going to closely work along with the team to scale it up. Our distribution access to the product sophistication will be the magic, which will be created with this. Back to you, Arun.

Thank you. Manish, anyway we shared last time. So let me hand it over to investors to ask questions of this strategic move with what we have at this point of time.

Thanks, Arun. [Operator Instructions] First, we have Mr. Rahul Jain from Dolat Capital.

I think I would still need some more help to understand about this Central 1 kind of a transaction. If I -- what I've got so far is, basically, we might be taking over the testing of C 1. And is it also involved migrating from their current back base platform to eMACH.ai or that's not part of the equation at this point? So I'd love to hear more on this.

Rajesh?

So I think, Rahul, thanks for that question. I think what we are taking over, as you rightly said, is a team of people, predominant a team in that is engineering solution architect there. But we are also taking over a team, which is the relationship management team, the sales team, the product team. So it's a combination of members coming from various fields, predominantly being on the engineering and the solution architect side. To your second question on the back base. A couple of years back, C 1 had decided to go into take back pace. But unfortunately, they were not able to scale up and that project was discontinued. And so they went with a few credit unions to back pace, and then they had to discontinue and come back to the original -- their homegrown solution. And that's the solution I talked about, which comprises of 3 products: MemberDirect, Forge and the mobile app. The possibility for us is that now, over a period of next couple of years, we would like to migrate many of these customers from this platform to our digital experience platform. So we are going to run this platform and then over work with the credit unions to migrate these customers into our platform.

So Rajesh, if I got you right, essentially, right now, this is just like rebadging of their team, and we will have a fixed billing on this team. And over a period of time, since we will be knowing all this 150-odd credit union over a period of time, we might chase some of them into our customer base and migrate it to a much better and modern solution. Is that understanding right? And if yes, then what are the billing and costs that we might see on a annuity-based at this point?

So I think, Rahul, you have to understand this. Like the acquisition of business of INR 200 crores as a revenue line, ARR business INR 200 crores running it and upgrading it using our eMACH.ai technology, as simple as that.

So basically, we would be getting a INR 200 crores from this 150 credit union or this would be from C 1?

That's right. That's right. From the credit unions.

Okay. And eventually, if we are able to migrate the potential of this INR 200 crores, we'll keep on increasing over this?

Keep on increasing. So our target is how do we cross-sell them core banking and lending and upgrade them on DEP.

Just to add, Rahul, just to be precise. It is 160 customers. So that's one. And I think important point for all of us to note is the opportunity is not only to migrate them to our digital experience platform. But these credit unions also, as I said in my earlier preamble are looking for core banking, lending and commercial banking solutions. So there is an opportunity to cross-sell other eMACH.ai assets that we have.

Right. And just last bit from my side on C 1. Is there a lock in for us for the employee base that we are going to take it? Or we are open to optimize it. whenever we wish to do that? And secondly, on the other transaction that we have done, is this a strategy wherein we would start using our cash flow to add more capability on more product size? Or it's like one-off transaction and we would not like to see this as a trend?

Okay. So just to respond. First question is around -- sorry, Rajesh, you can respond.

I would rather not answer that question, Rahul, because it's a little sensitive about employees. So if it's okay with you, we will let the deal close, and then we will talk about that, please.

Sure, please. On the second question, if you could.

Second question is about strategic fit. We have a CPX and GPX announced earlier. That's what the 2 products got. So we want to get into procurement space. And this is the SME business space, we saw the opportunity. And it fits into DTB. So we have over 50 customers on DTB. So because is it kind of a -- it's not just cash to be reinvested, is it part of the strategic fitment, which requires this investment to be there.

Can we see as a module extension to our existing GTB system?

That's right. That's right. Where we are bringing all the CPS, GPS and GTB and GlobalLinker into one common ecosystem. It's an ecosystem design investment.

Good to see all this transaction is like we are working beyond the usual part. I'll jump back to the queue.

Rahul, this significantly expand the TAM, which we are going after and to be able to bring in things for the full life cycle of an SME.

So thanks, Rahul. Next, we have Mr. Meet Rachchh from Equirus PMS.

So first question is on a few of the deals, which were won in earlier quarters but mostly to the subsequent quarters due to needing compliance or signing maybe. So I just wanted to know, have those deals started to ramp up.

Manish?

With that, some of those deals are what Vasudha readout, which we closed in South Africa and we closed in U.S.

Okay. Okay. So all of those deals have been started right?

Yes.

Okay. Second question is in terms of FY '25 revenue. So earlier, our expectation was to clock a 15% growth in FY '25, excluding revenue. But if I look at the 9 months revenue at the QoQ for Q4, it seems a very bold task. So that guidance is still intact or are we expecting some lower growth?

Obviously, last time also you mentioned the guidance we have stopped giving guidance. But I think we are looking for expecting better, much better next quarter. So that's what we would like to look at it. I mentioned to you INR 700 crores a quarter, I think we'll be closer to that.

Okay. Okay. Okay. Next question is regarding R&D expenses. So Vasudha, we capitalized INR 140 crores, INR 150 crores worth of R&D annually and another INR 200 crores worth of R&D spend got expensed out in P&L. So just wanted to know the breakup of that between the maintenance or upgrade of our existing products and the R&D, which is spent for new product development.

Anything related to the new product development is what is allowed to be capitalized. So for maintenance or something is anyway being expensed. Whatever you see as part of the C-WIP, which is the capitalized work in progress, relates to the new product development.

Okay. Okay. And can we expect the current trend of R&D expense to continue?

Continue. Yes, yes.

In absolute terms?

Yes.

Okay. So as a percentage of revenue, it may decline?

As far as R&D spends are concerned, we only look at the absolute number. So INR 140 crores is the target that we have and that's the budget that we had put in the beginning of the year, and we'll be meeting that budget.

Yes. And in percentage terms, it will decline. That's right.

Understood. And can I squeeze in one more?

Yes, yes.

Yes. So last is in terms of the contract assets that we report under the other financial assets. So just wanted to understand the nature of this because if I look at our contract assets for last 5 years, they've remained between 100 to 120 days of our revenue. While if I compare that with some of the other product companies as well as service companies, that normally ranges between 30 to 50 days. So just wanted to understand the accounting treatment and the nature of this.

Generally, in a product company, it will be quite difficult to have it between 30 days and all. So it will be quite high because the approval happens as and when we complete the deliverable milestones whereas the invoicing will happen only when we kick in the payment milestone, only when we meet the payment milestones. So the gap will always be there in many product companies. So that's the reason for the 120 days.

Okay. Okay. And related to that, so what is the normal deal cycle that we sign once we close in the revenue is booked?

The moment -- see, all those deal wins that you are seeing this quarter, you have some approval in the books. We report deal wins -- whatever deal wins that you see as reported during the quarter, we have accrued against all of them this quarter itself. So between signing and approval, there not be much of time.

Thank you, Meet. next we have Vivek Kumar from Bestpals.

Sir, my question is regarding if you see in the last 2 years, our pipeline is growing at a much faster growth rate than our revenue, even if you take away GeM. So someday and with Trump, and yields falling and financial to get if you see the bank stock, I understand it's a very superficial comparison. But people are cautious about banks investing in technology because -- can you comment about the cycle in coming because even in the last quarter, you mentioned why many deals are getting stuck at the stage where things are taking time to move. So do we -- because pipeline is growing at a faster rate than our revenue. So that's my question. I think I'm very clear. So will we see the same boat translating into revenues?

Obviously, that's when we are saying Q4 will be much better. I mentioned in the previous answer.

So we can go back to 15%, 20% from next year, we can hope? I'm not asking for guidance but the pipeline...

And we have a good pipeline. And I think deals the pipeline to closure is a cycle time of 12 months. So when we went to eMACH.ai marketplace, we are putting to Europe and Americas. So now if you look at it, Europe and Americas, both markets, Americas will be INR 600 crore market as of now. Europe will be another INR 600 crores. So we have a potential for these markets to become INR 1,000 crore market, both the market could be INR 1,000 crores market in the next 4 years. So -- and then we have a Middle East market, which could be -- Middle East and Africa, it could be INR 800 crore market. APAC and -- that could be an INR 800 crore market. India, an INR 800 crore market. So this is a kind of a landscape we are planning to expand, and we are quite confident of meeting some of the expectations that you have. Because there's a delay cycle between when pipeline gets built and there's a 6-month delay from the pipeline to the closure.

So from gen -- how about the receivables, can you throw, I mean, have we got from government, and any opinion on that? Any comment?

No comment there. Government is government. So they are billing their process right now. We have to look at it, what we can do.

Thanks, Vivek. Next, we have Mr. Manoj Dua from Geometric.

Okay. Sir, last few years, we have seen AI as one of the greatest technological innovation. You are very early on top of that. As an individual, we are now understanding the importance of that and trying to learn. So I know Intellect is more than a software. We have the relationship. We know the exact detail of banking and insurance and a knowledge of the industry. Now if you see AI is helping us to create our products more cheaper, and anyone who is a beginner in this industry or a new, is it an advantage for them to build a product more cheaper? As we have talked a lot about earlier that we have spent so many hours to build our products. But at the same time, it would be useful to you to build further new things. Can you throw some light on it? Just as a toolkit to explain to us because we are not a computer person.

So there are 2 things about, the enterprise-grade product in banking for large corporations like HSBC, HDFC Bank, AI can help facilitate reducing some of the drudgery work to build a product. But fundamental product is not just coding, it's about entire life cycle of saying, can I build a car? Can I build a Mercedes car? Obviously, it requires much more than a Mercedes building. It requires much more than just assembling the car, which could be done differently over here. So I think AI will have a 2-way facet of it. How do I use AI to reduce my cost or to reduce the efforts for implementation to become more competitive in the market? That's the one facet, which we are doing. Manish is leading that initiative of applying AI within Intellect for further standing. From a moat perspective that other people can build a product fast enough, I feel that in enterprise-grade space, it's a long way to go for anybody, unless they have a deep domain understanding, substantial domain understanding to make the right product for the customer. Because AI gives you 95% right, 96% right, 92% right but for enterprise-grade solution, we need 110% right, not 100% right. So that's the difference between the 2 of them.

Okay. And how now AI is an advantage to you going further that you answered in that first part? How AI is being in terms of reducing cost or whatever you have? Or building, because you have already have domain knowledge, how fast can you accelerate new products or something like that?

Yes. So it will definitely decrease the cost. We have targets to reduce our headcount for efficiency of AI efficiency, which is there. That's the one part of it. But second part is, more interesting for the investor is, we can build a business. If you can go back to the call of 18 December, which is published on our website, that's where we are putting a complete AI, Purple Fabric, as a product in the market, which we are first in the market for the AI as a product, which we are selling to many enterprise in the world. So please go through that script. That will be useful for you to understand.

My last question is, as we are increasing TAM and building products, so I understand a lot of new cost is being incurred. And what operating margins, which our mature product throws and the cash flow we are not able to capture that. As you said, that INR 800 crores will come from this INR 4,000 crores, INR 5,000 crores, can come in 4, 5 years. How much operating margin we can see from -- where the expenses, which help us to grow are a little bit reduced or comes at normal pace, how to look at that part? Not that I'm asking for operating margin next year or 4, 5-year period. I don't know whether, at that time, what we will be doing. Just a color on that to understand how much cash can come at that period.

So Manoj, the mature product gives a margin of 30% plus. So like GTB as a business, if we have a separate business, that will give 30%-plus margin. Then GTB will be less margin, then AI will be less margin. That's how the old construct is constructed, book is constructed for as a portfolio of book. So whenever the product gets mature, significantly, it can start going up to 40% margin product level itself. So that's how the -- a 4-year horizon, we are looking at it. Getting to 30% margin can be expected in 4 years' time window.

Thank you, Mr. Dua. Next, we have Mr. Pankaj Bobade from Affluent Assets.

Well, sir, just wanted to understand, we have almost all the products launched and in the market. So how soon do you expect to reach sales revenue of around $0.5 billion and margins of upwards of 20%?

Four years.

Okay, sure. And the second thing regarding this C 1, is this acquisition margin accretive or dilutive?

Yes. Initially, it will be dilutive. Overall, it will be accretive. With the cross-sell opportunities, it will be accretive. Individually, it will be dilutive.

Thank you. Next, we have Ruchita Ghadge from [ I-Wealth. ]

So my question was on the Purple Fabric platform. So if I have missed it, is the POC done already?

POC, the full product is ready. It's been in boot camp. So we'll forward you the link of this full system, full investor call is there. Praveen, can you forward the full call? The product is in there.

Yes, the product is being used by many customers, both in North America and in U.K.

Sorry, I kind of missed it, recurring here or done? There's some technical issue. Can you please repeat, like is the POC done?

Yes. So this is a live platform. It is operating in the -- if you exclude the December thing, which was attended by almost 100 investors, you can go through the script, and it will tell you that the platform, which has evolved over the years is fully functional. There's many pieces of that are already being used by customers in North America as well as in the U.K. and few other customers in different geographies. But it is primarily up and running. So there's no POC. It's not like the platform is not live.

Thanks, Ruchita. Next, we have Mr. Prolin Nandu from Edelweiss.

So yes, I have 3 questions. So Arunji, firstly, on your comment that from Q4 FY '25, we should be at INR 800 crores revenue. Right now...

No, no, no. Not revenue. I'm not saying INR 800 crore revenue.

Sorry, sorry, sorry. Yes, I'm sorry. My bad. My bad. Right. So is that a base now going ahead? Or would it be from -- so how -- I mean, should that be a new normal?

No, no, no. We are seeing this for full year. Some of the deals got postponed in this quarter as well. So this will -- this quarter will be -- definitely, Q4 will be a much better quarter. We are not giving guidance to it. But I'm saying we are looking for 20% growth year-on-year. That trajectory, we want to keep it by the 15%, 16%, 18%. Those are the numbers, which we look at it as a trajectory.

Understood. So my larger question was that one of the reasons why we stopped giving guidance was because of these deal delays, right?

Yes, you are right.

And you were talking largely these larger deals. So when will you get it back -- confidence back of giving guidance? And this is not from a guidance perspective but from a clarity on pipeline perspective I'm asking this question. Is it still a bit of delays, which are going on in the system? Or now that pipeline is declogged, how do you see that?

Let me just try to clarify that point to you. The guidance is because these deals have very large values in enterprise space, if deal value is $5 million, it fits the revenue. And these last 12 months, the numbers are more predictable. So if you are somebody who talked to me, for the next 4 years, where we will be reaching, we are thinking we can be INR 4,000 crores in the next 4 years. That is very easy for me to answer it. But when you say, what will be the next 90 days? I cannot say what's my next 90 days. Next 90 days, we are seeing this Q4 is definitely looking close to INR 700 crores. But whether all the quarters will be of that baseline, we'd love to have it. Let's see how much we can able to do it.

Sure, Arunji. That's understood. Second question is on this AI, and you will be using internally also AI to see. And I think in the Purple Fabric call also, you mentioned that probably you won't be adding more employees, right. Maybe, all right? So -- and I want to link this comment of yours to the margin guidance side, wherein, some of the past calls, you have guided for this 30% trajectory a lot sooner, right? Maybe next 6 to 8 quarters is what you had guided for. And so internal use of AI, can this accelerate the growth of margin? You said 30% aspiration is what I want to understand.

Yes. Definitely, that's the whole objective. Manish, you want to highlight? Manish?

Yes, sorry. I'm muted. Could you please repeat that, sorry?

How AI can help you reducing the cost and margin -- improving the margin.

So okay. No, good, good. No, I think, 2 things. One is we've experienced good success with Purple Fabric by embedding that in as we build out our applications. And those are things which Banesh has been talking to about it. I think the inspiration we have taken from that is to internally put that in use to automate how software engineering is done. So let's look at 4 stages of the software life cycle and engagement with the customers, the build, the validation and migration. Step one, we are looking at the entire build cycle, how do we bring in significant productivity. Next will be how do we -- the validation cycle, how do we bring in significant productivity? The 2 ends of working with the customer and migrating, those will be in the second phase we will take at. So over the next 2 quarters, we'll focus on the middle 2 legs of driving engineering, using this as well as validation using AI.

Margin, obviously, will go up because if you're not hiring more people -- so it's an obvious corollary that if I'm growing even margin by 10 -- revenue by 10%, margins will grow by 20% there.

Right. So then in that sense, maybe that 3 to 4-year time line of 30%, you would, I mean, want to probably -- I mean is that more like a conservative kind of a number? Because see, Arunji, if you look at the product company, right, there is an operating lever. Some of your peer also, which are in the company are earning far higher margin, right, and we are starting from a lower base, right? So is that 30% can be achievable slightly sooner than what you have probably called out earlier in this call?

We can earlier but then let's not look at that earlier. The point is if a product company -- a lot of product companies have not crossed INR 1,000 crore number. So if you look at it, if you have a focus on margin, your growth gets stopped. In technology business, yes, growth is important. So we have a credibility now. We made GTB with the INR 1,000 crores. I'm saying we can -- we'll make GCB with INR 1,000 crores, then we'll make AI business INR 1,000 crores. How many companies in India have a product business of INR 1,000 crores? Three businesses with a INR 1,000 crore nature, and that requires investment. If I publish separate numbers of separate margins, you will see the margin of the GCB business is very high compared to the other businesses.

Sure. That's clear. And last question from my side is that, in your slide deck on Slide 30, right, where you have probably talked about the funnel, almost INR 10,000 crores of the value of the funnel in Q3 FY '25, do you want to call out a number out of this, which can be attributable to Purple Fabric?

Not right now. As of now, we are not separating it.

Okay. Okay. But any time line by, which we will be able to give this number? Will it be a bit a year from now, or do we think more...

We have a good traction. We have a lot of boot camps happen. We have around 100 different people in various stages of interest being shown. Large service companies are showing interest that they can use. So this is the, yes, Purple Fabric platform. We are saying Tier 2 and Tier -- some of the Tier 1 SIs and Tier 2 SIs. We are giving to them so that they can solve the customer problems. So it's a platform play, which SIs are feeling very, very interested. Service companies are finding, let's say, a good way for them to grow their businesses better.

Sure. Sure. Because there, also, you are saying that it's not a question of mainly the INR 1,000 crores, it's a question of INR 1,000 or INR 5,000, right? Did I get it correctly?

Yes.

There are probably, though, booking might -- should be happening in the next 1 year, right, I mean, to probably achieve that number, right? Am I correct?

It may say adoption. Revenue number is not an objective for Purple Fabric, adoption is. How do you get a 10,000 people using Purple Fabric will be our first objective. This is a platform play, not a revenue play in the beginning.

Thanks, Prolin. Next, Ram has come back again, Mr. Ram KV of QFSPL.

Thanks, Praveen. Arunji, the question is addressed to you. Typically, I have been with the IT product space so the question is coming from a macro point of view. So I would just like your thought process on that. We have seen typically in the IT product space that investment goes in, the products become light, volume builds up, and then at the end of it, the PAT margin or the gross margin goes up substantially. In Intellect, we have been investing -- we have remained invested over the last 6, 7 years. When do you think in the next 3, 4 years will the tipping point come when PAT will grow much stronger than what we have seen in the past, especially in the background of INR 19 million quarter revenue?

Sure. That's what has been, Ram, I have just talked earlier also, when you were not on the call, that the PAT margins will definitely grow. If you look at the cost structure in last 4 quarters, it remains around INR 475 to INR 480 crore or INR 485 crores, and the revenue numbers are only -- so it is a INR 60 crores to INR 70 crore number, or you take INR 625 crores, that number will be different. As soon as it becomes INR 700 crores, the margin will look very, very different. So if you just plot yourself the number or the top line growth, the margins need not be articulated to you. It will automatically improve. So that's what I'm saying 30% margin can be possible there. It's a question of how much we reinvest back into building it, business 1, business 2, business 3. So now business 1 has been INR 1,000 crore-plus business, GTB. Business 2 is now GCB business, it will be INR 1,000 crores next year. Now we are building AI business into this. So that's how the margin getting redeployed. It's not that current business have it by lower margins than the other product companies.

That is obvious because the mix will always change, correct?

Yes. So the growth -- as an investor, both things are important from a growth perspective because other product company has become very stagnant. If you see, many companies doesn't grow -- for example, many companies doesn't grow. They just grow the margin, but not the revenue.

Exactly. So I was looking at the base part of it. So my question is focused manner in the next 4 years, will we see a INR 1,000 crore vertical?

INR 1,000 crores margin will be there out of 4 years, definitely. If you want to put that in my mouth, we are also looking for INR 1,000 crores margin in 4 years. Indirectly saying [Foreign Language]

Thank you, Ram. Next, we have Mr. Chirag Kachhadiya from Ashika Institutional Equities.

Yes. So I want to know your thought process on demand environment and outlook from 3 to 4 years' point of view.

I have to repeat again, I think Vasudha has told us, mind you, it was as a part of the strategy. Would you like to share the market outlook?

Yes. So Chirag, good question, but I guess, probably you were not there before, yes, see, the demand is very much there and which is pretty evident from the pipeline that we have. And the outlook also, we talked about in the next 3 to 4 years, we -- Arun also talked about it, it is to create a $1 billion thing. And that's where we're heading. Just a few minutes ago, we just talked about the margin piece also. So I guess you had all the answers, maybe you just need to just go back and rewind a little bit more.

Thanks, Chirag. Next, we have Mr. Ryan Floyd from Barca Capital.

Where are the financial statements on your website? Let's just start it easy. The financial statements. So you guys are doing an investor presentation for December 2024. Where are those financial statements that all of us can see? It's not on your website. And this is not the first time that you've done a call where it's very difficult for investors to see the financial statements before the call.

You mean for this quarter?

Yes. For December 2024. It's not on the website. Where is the presentation?

It's been to investors. I think, at this point, Nachu and Praveen Malik, we need to look at it that when we are loading it from the website or not.

Sure.

It's not on the website.

Okay. So there's a delay in the loading on the website.

It's very frustrating. And I'm sure I'm not the only one that's frustrated by this. We're having a conversation here without knowing what the numbers look like. So let's do our best here. I think that we went through a bunch of deals, which sounds great. Usually, when you sign a deal, you're bringing in revenue. Can you give us some rough sense of the revenue growth by segment, like license, maintenance, SaaS? And if it went down, can you give us a sense of why those segments went down?

Yes, Ryan. I think all other part of the presentation, maybe, if you want, we'll put you into investor list of communications.

Yes. That's okay. But let's talk about it now, please. Because we haven't talked about those things on the call, and it seems it is fairly important.

Vasudha, can you just share the revenue numbers again?

Yes, sure.

And the way you switch on those -- if you want to put the presentation or the...

Okay. So let me voice out now. Yes. Ryan, let me voice out now. Maybe you can even look at it later after we put up on the website. So the breakup of the revenue is like this. For the quarter, I mean, the total revenue, as you would have seen, the revenue from operations is INR 607 crores, while the total revenue, including other income, will be higher. So out of the INR 607 crores, we have about INR 118 crores for license revenue, SaaS revenue is about INR 50 crores, AMC is INR 124 crores and implementation is INR 315 crores. So you can see some growth maybe, if at all, you want to compare with the previous quarter. There is a growth in the implementation revenue, AMC revenue and also in the SaaS revenue as well as in the licensing. So we have grown over the previous quarter in all these segments.

And that is for the quarter, not 9 months. That's for the quarter year-on-year, is that right?

You can say last 12 quarters.

Yes. Yes. Okay. Let me -- even if you compare it -- yes, go on.

What is the free cash flow that we've produced? Because I think the free cash flow declined last quarter. This quarter, is the free cash flow margin on revenues higher?

It is higher. It is higher. When I say free cash flow, it could be as high as close to INR 50 crores.

Okay. What is that as a portion of total revenues? So this is after intangibles, this is after leases, like the free cash flow that we can use for things?

Right. This is after intangibles and after leases, yes.

What is that as a portion of revenues for this quarter?

It's closer to 10 percentage of the revenue.

10%, okay. And if it's 10%, that sounds very healthy. So this deal in Canada, can you -- it sounds like you guys are buying their operation, which sounds great that you are looking at M&A. Can you give us some sense of what revenue multiple or approximate revenue multiple you're paying on this?

It's a very competitive industry right now, Ryan. We are not publicly announcing the price we are paying for this acquisition.

Okay. Is it lower than the one at which you're trading? Could you give us some rough idea?

Yes, yes. It's much lower, yes.

Okay. Great. That sounds interesting. Are there more acquisitions that you could make of modular product companies in financial software?

We want to go slow. Definitely, we'd like to look at it as part of this strategy to enter into. So each region, if you don't know America, whatever, North America, whatever 200 customers plus. We would like to have Europe to also have similar kind of a number of the customers. So we'll look at it option, but we'll go step by step. You have observed our company. We are very, very conservative. We -- first, we build GTB business, then we build GCB business, then we build AI business. We don't go all around the business. Our focus is go very -- paced growth.

Right. If you're producing free cash flow to the tune of 10% of revenues, that will leave a nice cash that you could potentially make nice acquisitions for. Have you mapped out the -- I don't know, do you have someone or have you mapped out potential companies that, in theory, you would like to buy? Have you reached out to a bunch? Or are these inbound deals?

As of now, acquisition is not a part of our core study. eMACH.ai is keeping us busy. We don't want to get distracted as the core part of the strategy. It's inbound only right now.

Okay. And you mentioned on the call, I think that this Canada deal would not be accretive before cross-selling. It seems like what should be a good product, why, when I hear that, I'm thinking you're buying something that's very low margin. Why would that be the case?

No, no. The current cost structure of the Canada will be higher than the current cost structure of Indian company. So obviously, it will be -- any Western acquisition will be value dilutive in the beginning.

Why is that? I mean there are certainly Western financial services software companies with more than 10% free cash flow margins.

This kind of -- this acquisition will have a dilutive -- margin dilutive -- on the overall, margin dilutive. So obviously, we need to build up the accretion when we sign up a new credit core banking deal. We want to bring it to the value accretive in the next 18 to 36-month period.

Okay. And then if this is sensitive, you don't need to answer it. But is this because perhaps the previous owner hadn't taken price increases? That the prices weren't high enough for the customers?

Leave it. Leave it.

Okay. That's fine. That's fine. So you have many customers and some have been customers for a really long time. Sometimes the financial services software companies, the margins can be much higher for a unit of growth than you have. And I'm wondering, out of all of your hundreds or maybe even thousands of customers, do you have some that are not profitable? And if so, why? And is there opportunity for you to make them profitable? This is at the free cash flow level after including working capital changes.

Ryan, just to answer your question, I think I mentioned earlier also the margin question was asked. We have 3 businesses, and we want to -- our whole business design from 2016 is based on how do we keep a CAGR growth in double digits. So that's the whole approach. Lot of a time product company gets into the trap not growing, including the margin. We want to grow both of it. So we've built up 1 business and make it INR 1,000 crore business, then reinvest the money and cash flows from there to build up a second business. Then we make INR 1,000 crores and then we reinvest back into third business, which is the AI business. So that's how our journey is progressing. So individually, on a GTB as a business, our margins are as comparable to any other product company, which is long-standing customers.

Right, right. When I look at other financial services software firms with similar revenues, they have higher margins, though, for the same level of growth.

Sure.

It would just mean that perhaps you have some products...

Ryan, they are valued much here that. We are not valued that much. As of now the company is valued...

Your margins are very healthy. But is it possible you have some products where your customers just aren't paying you enough, you need to increase the prices of those products in order to make it worth your development, energy and expense?

There's always a case. Some products will be more profitable than others, so we'll look into that. Thank you for your advice.

All right. I would humbly request that before the call that investor presentation and the financial statements are on your website.

It's now up on the website, Ryan. You can check that out. Sorry for the inconvenience but it's now up on the website. You can please refer to that. Thank you.

Thanks, Ryan. Then next, we have Mr. Mukul Varma, I think, is left.

Let's close the call, Praveen. How many are there left?

Close the call?

Yes. If something is left, only 1 question.

Mukul is not there. Jatinder is not there. So the last one, we can have it, just the one. Mr. Rohit Balakrishnan from ithoughtpms, if you're there.

Yes, sir. So most of the questions have been answered, sir. Just 2 questions. This C 1 deal that we have. So sir, I was just expecting that a balance sheet that is there in their website for last year. So I think this division is loss-making. So I mean, would we also incur -- I mean whatever you can share. You already mentioned this is margin dilutive, but will there be losses? Because I'm assuming that cross-selling, et cetera, will be probably -- will take quite a long time. So if you can just share maybe what are your thoughts maybe for the next couple of years? How do you think -- do you think the margins will sort of -- I mean because of the...

It will not be loss-making. So we want to just tell you, it's not loss-making. We didn't -- done a deal in a manner that it will not be loss-making for us.

Okay. That's happy to hear, sir.

Yes.

And this last question, sir, so you've already mentioned that INR 1,000 crores of profit. So this is...

Full year, yes, not right now.

Sir, I've been invested for the last 5 years now. So -- and I've been asking you for a long time. So I understand, sir. So I just wanted to hope, and I mean, I just wanted to reiterate that, sir. Like I mean, sir, historically, we've grown around 15% to 16%. So with all of what you have been doing, I mean, we've been investing ahead of the curve. We've been trying to invest more, and you've been articulating this fact that our idea is to keep growing the top line and keeping -- keep on increasing our TAM and keep on increasing the runway. So -- and so is there -- and still like -- so historically, 15% growth has been there. When these things were not there and over the last 6, 7 years, we've invested a lot. So I know this is maybe a bit, I mean, you've been conservative but what are the [indiscernible] from a revenue growth point of view. Because Purple Fabric...

Digital and DEP, any core banking, I think you take anything, is kind of a major blockbuster. We have to just -- we remain calm so that we can deliver to our customer high satisfaction. This business is nonforgiving business. You can't make a mistake. That's the only thing we want to protect. Otherwise, my GTB business, GCB business, I think the beauty of the business is what we have built in the past is everything is a distinctively story. We have displaced and disrupted the existing competition each time. We disrupted Finastra. We are disrupting Temenos. We are disrupting Palantir. We are a company from India disrupting a global player with such a lower investment of, what you say, INR 140 crores plus INR 200 crores, INR 350 crores. What's the investment in terms of global terms? It's less than $40 million. Our R&D team and our committed team, which we have in Intellect, is an amazing team.

Got it, sir. So relative to that, of course, last -- I mean, you've mentioned the growth has been tepid because of certain delays. So hopefully, sir, I mean, next year should be a better year. You already mentioned Q2 will be better?

Yes, yes. Sure. Thank you, Rohit.

Thank you, Rohit. Now we are closing the call. And 3, 4 people who have left can write their questions to me so we can answer you accordingly. And those also, once again, who put their hand, just request them to please write back to us. And thank you for attending the call today. So now we are closing. Thank you, everybody.

Goodbye.