Nucleus Software Exports Limited (531209) Earnings Call Transcript & Summary

Good day, ladies and gentlemen. I'm Roady, the moderator of this call. Thank you for standing by, and welcome to Nucleus Software quarterly earnings conference call for the third quarter and 9 months ended on 31st December 2020. [Operator Instructions] I would like to hand over the conference to Ms. Swati Ahuja. Ms. Ahuja, welcome to the program, you are now ready to begin.

Thank you, Roady. Good afternoon, everyone. This is Swati from Investor Relations team at Nucleus Software. A very warm welcome to all of you for this Nucleus Software earnings conference call for the third quarter and the 9 months ended on December 31, 2020. For discussion we have here from the management team, Mr. Vishnu R. Dusad, our Managing Director; Mr. Parag Bhise, Executive Director; Mr. Anurag Mantri, Executive Director and CFO; Mr. Tapan Jayaswal, colleague from the Finance team; Ms. Debyani Sinha, Global Head, HR; and Mr. Ashish Khanna, Business Consultant, Financial Inclusion. Please note that Mr. R.P. Singh could not join because of some personal emergencies. As you all are aware, Nucleus Software does not provide any specific revenue earning guidance. Anything which is said during this call, which may reflect our outlook for the future or which may be construed as a forward-looking statement must be reviewed in the conjunction with the risks that the company faces. An audio and transcript of this call would be shortly available on the Investors section of our website, www.nucleussoftware.com. With this, we are now ready to begin with the opening comments on the performance of the company for the quarter and 9 months ended on December 31, 2020, from the MD. And post that, we would be available for the Q&A session. With this, I now pass it over to Vishnu, sir. Over to you, sir.

Good afternoon, ladies and gentlemen. First of all, apologies for starting the call slightly late. This is essentially because of some technical glitches that we were facing. [Technical Difficulty] Okay, we just wanted to make sure that ringing that was going on was -- had stopped. So warm welcome once again to quarter 3 investor call. As we've been mentioning, this is a tough period for the industry for the global economy and also for us as a company. And it is in that background that we can very confidently say on behalf of management and on my personal behalf that our #1 priority continues to be helping our customers successfully execute their digital transformation programs, while delivering tremendous value to their business. We are proud to report that during the quarter, we added 3 new customers, and our solutions were successfully implemented by 9 financial institutions worldwide. In addition, we launched the latest version of our award-winning digital lending platform, FinnOne Neo 5.5, which is designed specifically to help leaders rapidly expand business operations and generate new digital revenue streams by targeting new customer segments. We were also delighted to win the Best Technological Innovation in Payments, B2B, award for FinnAxia at Seamless Middle East 2020 conference in Dubai. We launched the latest version of our integrated global transaction banking solution FinnAxia 7.5 to help banks increase corporate supply chain resiliency in COVID-19 world. I'm proud to report that our digital cash solution, PaySe, has been selected by the Reserve Bank of India for inclusion in India's first regulatory sandbox on retail payments. PaySe is 1 of only 2 solutions that were ready to immediately start testing under the program. The other important announcement that I would like to make is that as we had announced to stock exchanges, that the Board of Directors have appointed Parag Bhise as the new Chief Executive Officer, effective from April 1, 2021, as R.P. retires having reached his retirement age. He will continue as Executive Director of the company. On top of that, Anurag Mantri, Additional Executive Director, has been appointed as the Chief Financial Officer with immediate effect. Both Parag and Anurag have been with Nucleus Software for more than 2 decades. In fact, Parag has been with the company for more than 3 decades. And Anurag has been with the company for 2.5 decades. And we are certain that under their leadership, Nucleus will continue to focus on what it does best, helping our customers succeed by developing innovative technologies. With these words, I would now like to invite my colleague from finance team, Tapan Jayaswal to share with all of you the numbers. Over to you, Tapan.

Thank you, Vishnu sir. Key highlights from the financials are: Our consolidated revenue for the quarter is at INR 124 crores against INR 137 crores quarter-on-quarter and INR 130.3 crores year-on-year. Overall revenue in foreign currency, including the India rupee revenue is USD 16.8 million for the quarter against USD 18.6 million quarter-on-quarter and USD 18.4 million year-on-year. Product revenue for the quarter is at INR 103.2 crores against INR 114.7 crores quarter-on-quarter and INR 103.9 crores year-on-year. Revenue from project and services for the quarter is at INR 20.8 crores against INR 22.3 crores quarter-on-quarter and INR 26.4 crores year-on-year. As for expenses, cost of delivery, including cost of product development for the quarter is 67% of revenue against 65.9% of revenue quarter-on-quarter and 67.8% of revenue year-on-year. In absolute terms, this is INR 83.1 crores against INR 90.3 crores quarter-on-quarter and INR 88.4 crores year-on-year. Marketing and sales expense for the quarter is 3.3% of revenue against 3.6% of revenue quarter-on-quarter and 6.1% year-on-year. In absolute terms, this is INR 4 crores against INR 4.9 crores quarter-on-quarter and INR 8 crores year-on-year. General administration expenses for the quarter is 8.7% of revenue against 6.1% of revenue quarter-on-quarter and 8.2% year-on-year. In absolute terms, this is INR 10.8 crores against INR 8.4 crores quarter-on-quarter and INR 10.7 crores year-on-year. EBITDA for the quarter is at INR 26.1 crores against INR 33.4 crores quarter-on-quarter and INR 23.4 crores year-on-year. Other income from investments and deposits is at INR 9.2 crores against INR 7.7 crores quarter-on-quarter and INR 7.4 crores year-on-year. Total other income for the quarter is INR 10.3 crores against INR 9.1 crores quarter-on-quarter, and INR 9 crores year-on-year. Total taxes are at INR 8.1 crores against INR 9.5 crores quarter-on-quarter and INR 5.3 crores year-on-year. Net profit is at INR 24.8 crores for the quarter against INR 29.5 crores of revenue quarter-on-quarter and INR 23.2 crores year-on-year. Other comprehensive income is at INR 1.5 crores for the quarter against negative INR 0.5 crore quarter-on-quarter and INR 1.4 crore year-on-year. Total comprehensive income, which includes net profit and other comprehensive income is at INR 26.3 crores for the quarter against INR 29 crores quarter-on-quarter and INR 24.6 crores year-on-year. EPS for the quarter is at INR 8.55 as against INR 10.14 in the previous quarter and INR 7.99 in December '19 quarter. In terms of foreign currency hedges on 31st December 2020, we had USD 4.73 million of forward contracts at an average rate of 75.52. There is a mark-to-market gain of INR 71.1 lakhs, which is taken to hedging reserves in the balance sheet. Revenue contribution from the top 5 clients for the quarter is 29% as against 28% in the previous quarter. The order book position is INR 460.2 crores, including INR 420.3 crores of product business and INR 32.3 crores of project and service business. In September 30, 2020, the order book position was INR 482.4 crores, including INR 422.9 crores of product business and INR 39.5 crores of project and services business. Total cash and cash equivalent as on 31st December 2020 are INR 673.3 crores against INR 645.6 crores as on September 30, 2020. This improves balances in current accounts of INR 38.6 crores, various schemes of mutual INR 422.6 crores, INR 43 crores in fixed maturity plans, fixed deposit of INR 29.4 crores, investment in tax-free bonds of INR 112.1 crores, INR 27.6 crores in preference shares. With regards to receivables, we are at INR 80 crores against INR 78.8 crores in previous quarter. During the quarter, there is a gross addition of fixed assets of INR 0.70 crores consist primarily of INR 0.37 crores on plant and machinery, INR 0.12 crores on software and INR 0.22 crores on computer and office equipment. Now I'll hand over to Swati.

Thank you, sir. With this, we are now open for the Q&A session. I will now hand it over to Roady. Over to you, Roady.

[Operator Instructions] With that said, Ma'am, the first question is coming up from [ Ritesh Bhagwati from Nucleus. ]

Can you help us understand what was the reason for the negative top line growth where other IT players have rather shown a strong pullback? So that was my first question.

Certainly, the -- essentially, the negative top line growth will cause certain projects are getting delayed because of concerns that our customers because of the -- while we are trying to do implementations off-line without being there, some customers do find it difficult to proceed in that manner. And that is essentially the number one reason. This is Vishnu Dusad. And the other reason is customers are also taking time to take decisions about placement of orders. While we do -- we have won some orders, our -- some of our customers continue to be cautious and they're taking time to place orders.

So the orders have not been canceled is what I understand. It's just a delay of the orders getting executed, right?

Absolutely. Absolutely. No cancellation of orders whatsoever. I cannot tell you that.

Okay. Great. And secondly, like, can you talk a bit about growth trajectory visibility from near to midterm perspective for Nucleus as to what lies ahead, say, for 1 or 2 years down the line for Nucleus as a company?

Okay. The response to that is essentially that in terms of numbers, it is a practice in Nucleus that we do not give any guidance. And having said that, we continue to be absolutely bullish about the way our products are being received in the marketplace. So we -- that is the only word that comes to mind, bullish.

That's okay. But then like what is the strategy of Nucleus going ahead? I understand we don't give forecasting guidance, but then how does strategy pan out for next 1 to 2 years?

Strategy is going to be continuing to focus on our existing markets, existing customers, make them highly satisfied. And that, in turn, spreads the word around and essentially that's how we will grow.

Okay. That's great. Lastly, I just wanted to understand how are we going to utilize this cash and equivalents that we have?

Yes. That has now become almost a routine question, and maybe we can then tape to answer that question, sorry. But we are essentially being both conservative in preservation of cash, as we had done a year back or 10 months back when we were entering the pandemic. On top of that, we would want to keep ourselves comfortable with cash for years to come. And that's our strategy as far as the cash is concerned.

So conservating is okay, but then how are we going to monetize or utilize? Like are we looking at some M&As or something or something which CFO shared with shareholders?

Yes. M&As are clearly out of house. We are not planning for any acquisitions. But we would be obviously at an appropriate point of time excluding -- getting into new opportunities where we will put this cash to use, organic opportunities we are talking about. I just wanted to add -- yes. Ritesh, I just wanted to further add that [indiscernible] our strategy. Another part of strategy is taking use of the latest technologies to make our customers really lead the way. We have done that in the past, and we are getting further more aggressive in that direction with the engineering head now becoming the CEO, someone who has led the research and development for last 8 years. We are more confident and more aggressive on making use of the technology in the right direction.

The next question is coming up from Vaibhav, HNI Investment.

So sir, last quarter, we made a provision of INR 15 crore on the employee cost. And if I normalize for that, even after normalization, our employee cost has gone up significantly on a Q-on-Q basis. So just wanted to understand why it has gone up? And are there any additional provisions that you have taken?

Thanks a lot for raising that question, Vaibhav. We have -- like last quarter, we had taken a provision of INR 15 crores, this quarter, we have taken a provision of INR 7.5 crores.

Okay. Okay. So do you think that now we are done with the provisioning? Or there can be further provisions going ahead because now on a 9-month basis, our employee cost is pretty much same as what we had last year, which is quite a normal year?

Exactly. So just before we got into this investor call, we were having open house and what we have conveyed to all our colleagues is the fact that we would be providing for a similar amount in the last quarter also, we have an accrual -- in principal accrual from the Board. And unless there's something completely unthought of comes up in the next 2 months, we would be providing for another INR 7.5 crores in the last quarter as well. And that would become -- sorry, that would become the base for the compensation for the next coming years, which is '21/'22.

Right. Right. So then basically, we are looking at -- on a 12-month basis, there will be a reasonable increase in the employee cost and in spite of the fact that our revenue is quite flattish till date. So just wanted to understand your thoughts around what is driving this willingness to have -- have been rewarding employees in such a manner, and the revenue has been flattish?

No, excellent question. Thanks, Vaibhav, once again for this pretty clear question. We have maintained and we will continue to maintain that we are building this company for the long term. And we also want to make sure that we are doing justice with all our stakeholders. So when you are doing that dip in revenue or a flat revenue in a year, does not -- I repeat, does not warrant as far as we are concerned any implication directly on our employee cost. Yes, some of the productivity gains that we are looking for, they may take time to come. But having said that, we would want to make sure that we continue to begin with retain and then attract the best talent that exist.

Got it. And sir, lastly, on the other operating and other expenses line. We had -- for the first half, we have seen kind of declining trend. But now this quarter, it has reversed and it started kind of going up. So do you think this is the new normal? Or there will be further normalization in the quarters ahead and there will be a further increase in expenses -- in operating and other expenses line I'm talking about?

No. I think for the time being, you can assume this as a new normal.

Right. Okay. And sir, on -- again, on the expenses, I think we have the numbers in front of me by employee benefit and operating other expenses. But -- and then R&D, we earlier used to give this number. So R&D expenses for the 9-month versus the 9-month of the previous year, what -- can you give us the numbers for the R&D expenses? For the 9 months, not for the quarter, but for the 9 months?

I would say -- I would like to say broadly, they will be in the same range. Tapan, would you have that number readily available?

Sir, it's not available readily with me right now.

Yes. So please take it as our focus -- as I've answered just a few questions back, that our focus on R&D continues to be high.

Right. So basically then, sir, most of the savings would be coming from the savings in the travel cost, that would be the only thing that will be driving this decline in operating expenses, which is basically on the market side?

You're absolutely on the dots in that observation.

The next question is coming up from [ Simranjeet Singh Bhatia from SMC Global Securities. ]

Sir, I first want to ask that you have stated that there is some delay in the certain projects from your customers, which have led to this top line degrowth. I -- means, can you assure us or can you give some time line when this will get over in the upcoming quarters, first of all? Secondly, I want to ask that in your initial remarks, you have clearly stated that we are facing the tough time in the industry, while other IT players are growing like anything and the same players in your own segment are going fantabulously. So what is that toughness in the industry going on? Can you elaborate something on that? And thirdly, your employee expenses are some -- means, as you know, one of the participants has also stated that we are seeing a very flattish sort of growth in your top line despite of increase in your employee expenses. Can you elaborate what's that because, means, these employees expenses are more in India or in a broad? Or means, if you can throw some light on this also?

Yes. Thanks for reading these questions. Hello? I'll attempt answering the last question first. We have -- I suppose you heard me answer about our long-term perspective on being balanced -- balancing between all the stakeholders. I hope you've heard that. I'll just -- so I'm not repeating that part. But I would -- only additional point I would like to add is, this is across the board, both domestic as well as international.

Okay. While sir, your other players in the same segment are growing phenomenally, means, how can you see this? Means, are you going to be aggressive or how you're going to be counter this thing going forward in terms of your top line growth in the future? At least, you can share some strategy with us because at least -- so that we all have some sort of confidence in your strategies also. So at least if you can throw some light because you have a lot of cash in your hand, and that's why I'm asking.

Yes. Yes. Yes. So the way this is going to go about is, as far as the -- I'll just further clarify on my opening remarks on the industry. When I said this industry, I was not referring to IT industry alone, I was referring to the industry as a whole and global economy as a whole, okay? So that's what adding side when I said that the industry is going through a tough time. Now having said that, our strategy is going to be the same strategy that we have had all these years, all these decades, satisfy our customers and pick up the latest -- make sure that you deliver the best results from the latest technology that is available and get your products to be the best product. And that is what we have been doing. We'll continue to do that. As far as the industry -- IT industry is concerned, there is a slight difference between IT services industry and IT products industry. I think the growth that our peers in the services side are experiencing may or may not be there in the product industry. Our focus on innovation continues to be high and our customers are happy about that fact.

And sir, any margin guidance sort of going forward, means we can -- can you give? Means, in terms of whether these margins will be sustainable, which you are posting? Or means, how can we expect on these margins front from your side? Means, margins will be going to be like this going forward? Or it will be going on the upside? Or at least, if you can throw some light on the margin side also?

Okay. Okay. Again, I'll just repeat our position, which is we don't give any guidance. And...

The next question is coming up from [ Parag ], individual investor.

Question for Vishnu sir. So given the impact of remote working being fairly acceptable now in the banking industry because of COVID, do you see a structural change in the way both sales and implementation is going to happen in banking software in future? Does this structurally change our cost of selling and implementing? So I can understand on the temporary distortion in terms of sales cycles being impacted. But then longer term, do you see remote selling being more acceptable? So you already said that SGA is already at a new normal of 3% versus 6% earlier. You also see this happening in the implementation space where now customers are okay with the implementation being done remotely from our data center or our premises as opposed to sending engineering down to the data centers?

Thanks. First of all, thank you very much, [ Parag ], for joining this call, and very nice to hear from you after long years. Yes, what we are experiencing is a very interesting phenomenon. Customers are taking decisions, purchase decisions remotely and are -- most of them are open for remote implementations also. Now having said that, there are certain customers who still feel that on-site presence is highly desirable for implementation. And that is where we are now moving on to bringing in new ideas and then new technologies for training and for support. And the kind of trainings that we have been able to do in last few months, they are indicating to us that, yes, remote implementations should also become a new norm. But we are keeping a close watch on how various people respond to these changes. And then we are sort of preparing ourselves proactively because we are talking to -- even when we are making proposals, we are talking to them that ideally, we would want to do implementations remotely. So yes, there are structural changes that are -- some of them are already happening and some of them are on horizon, which would be then maybe -- may return to be permanent.

Wonderful. So that will reduce implementation costs. Will it also speed up implementation?

Certainly, yes. We do visualize those side benefits also.

Okay. Sir, a follow-up question, we saw RBI came down pretty heavily on the HDFC Bank, and we've seen ever since the great financial crisis, most financial institutions have been dragging their feet on core banking infrastructure and even provisioning their data centers. Post that, have you seen any impact for our business or your customers in the way they are thinking about how to plan and provision for their banking software? And is that going to lead to some sort of spike in sales from local customers?

Again, a very, very thoughtful question, [ Parag ]. The way I would respond to that is, I think at an industry level, we have to accept this reality that the economies are going to be more and more digitalized. I think our Prime Ministry also talked about it in Davos meeting recently. So economies are going to be more and more digitalized. And hence, the focus that banks -- not just banks, anyone and every one of us that -- I mean, every one of us who is a service provider, including banks, has to -- the focus that we have to provide through the continuity of service becomes extremely important. And I guess, it's -- if it's in some may, I would say, a blessing in disguise that something like that happened at HDFC Bank, which was really unfortunate. But the regulator responded, the regulated people responded, and I think we would be in a much stronger infrastructure situation. That's how I would like to respond. And yes, our role become far, far more responsible, given the digitization of the economy.

One last question. So when we provide the split of revenues, would it be possible to split out different product line? Or is there a strategic reason for not disclosing FinnOne or FinnAxia or some of the new digital on analytics initiatives?

Right. Right. We would rather stick to our current method. And the strategic reason being, while in front you get to see some of the offerings that are running with the customers, there are a whole lot of things that are happening at the back. And we want to make sure that, that experimentation continues -- at least continues, if not growth because it's only through experimentation that we can come up with the powerful applications of the technology that -- technological advances that are happening by the minute.

No, fair enough. I understand and you don't want to show your cards to the competition as well. But if you look at [ FSS, ] for example, they do talk about the growth in our analytics space. So maybe not split out numbers, but generic trends? And are you seeing traction in analytics on budgeting?

Yes. There is interest in our offerings. I would just stop at that, okay?

Sure. One last question, sir. Could we get some kind of breakup on new license revenues at least at overall product level? So not at specific product levels?

See, as of now, we are more comparable with this level of disclosure, and we would like to stay here for the time being at least.

The next question is coming up from [ Himanshu Upadhyay ], individual investor.

I have a few questions. One was on the questions which Vaibhav asked only. Sir, you see, I understand that we -- on employee cost, we want to have -- our longer-term vision is there. And hence, we are providing, but why do we provide? Why not distribute to the employees? Means, what is the rationale? And in the last quarter, we stated that if the performance is good, we'll distribute at the end, okay? So currently, the way the...

So we have already distributed, okay? The reason for providing is essentially -- I mean, part of it we have distributed. The reason for providing essentially was to be cautious. And as things are opening up, we are making -- balancing act of committing for those expenses. Does that answer your question?

Yes, to a partial extent. So the Q1 and -- so Q2, Q3, Q4 is what provisions we'll be making. So Q2 or Q -- half of those things we have already provided, okay? So that would be the right understanding?

No. 3/4 we have already provided, including the provision in the yesterday's Board meeting.

Okay. Okay. Okay. So that was one of the thing. Second was, we have -- means, on the growth only, okay? We have seen pretty good growth in various products or on the IT services and IT companies only. It's a digital, cloud, et cetera, and financial services. But for us, the growth has been lower over, okay? Or the improvement has been much slower, okay? Is it because our product is more matured and well penetrated? And hence, last few years, we have seen much lower growth rate? Or how should -- means, now if I should try to understand the growth, what would be the areas why our growth or the products growth or where we are present has been lower than other things? Just can you throw some light and just make us understand that thing? Hello?

Yes. Certainly. I think -- hello, can you hear me?

Yes, yes, I can hear you.

Yes. I think the way I would respond to this question about growth is we are, as one of -- in, I guess, 2 investor calls back, one of the investors had raised a question about marketing. We have not been able to -- allow us to admit. We have not been able to do justice to the marketing of our value of our products, which now we are getting into. And once that -- once the prospective customers start understanding the value of our products, I see no reason why we would not be able to grow at least at the pace that our competitors are going.

No. So the thing is the product penetration or the opportunity still is very big, would it be right to say? Or it is -- one is taking market share from competitors? The other is the market itself is growing, okay? Or let's say, a growth...

Yes. Yes. Yes. So it is -- your assumption is right, the opportunity continues to be sizable, very sizable.

Okay. Okay. And 1 last thing. If -- means -- if let's say, at what point of time would you like to add any other product or suite of products? Because see, if we see some of the IT product companies also, they have gone into various other products, okay, compliance or analytics or anything else, but we have stuck on to this thing, okay. And despite being -- the growth has been lower, okay, or let's say, our assumption is or -- means what we are believing to or made to understand is the marketing has been poor, okay? But will there be a time when you would like to also experiment with other things because you know the customer very well, and there are maybe newer opportunities also coming up. So is there any newer adjacencies where we can think of or we are thinking about growing ahead our new products? Just some thoughts of yours also, if you can throw on that, I think it would be helpful.

Thanks a lot for raising this very interesting question. Yes, there are clearly adjacencies where we are exploring possibilities. And as and when we experienced some real outcomes, we will be sharing it with all of you. So that is one point I wanted to make. The second point I wanted to make was the depth of our offerings and the richness of the technology that has been made available is so high that it is one of the -- clearly one of the best in the world, if not the best. Now that being the case, we do need to press full throttle on our marketing, and which is what we are in the process of doing. And then the results are going to follow. We are confident about that.

Okay. One last question, sorry. On the marketing, where you have stated that there has been weakness and we have making changes or making improvements, okay? In last few quarters, where have we reached? What have we done? And have we added employees in that base? Or what are the things? If you can give 2, 3 minutes, so just to track what is happening on that side? And how should we -- which is what real improvement you are seeing or anything on that sort, it would be helpful?

I think as far as that is concerned, we are -- the Board is absolutely cognizant of this. So we do want to thank the investors for raising these questions. And yes, the -- as far as the costs are concerned, they are being monitored, and they are being -- their effectiveness is being monitored. And if required, there will be increased. And while there is some improvement, but we do have a long due to go with -- from our own point of view, when it comes to marketing. So yes, just some more time on that.

Have we increased employees on the marketing side? Means, number I'm saying, not the cost, but numbers also and focus for them or something? Means, can you elaborate -- try to...

Yes. The focus on communicating the value has gone up because that is what the customer is keen on. And then it will be visible in near future.

The next question is coming up from Umang from AMSEC PMS.

Am I audible?

Yes, you are.

Yes. Sir, could you speak more about the FinnAxia suite? How is it different from FinnOne? And how sticky is it?

Yes. Thank you. Thank you very much once again for rising this meaningful question. FinnAxia takes care of the corporate side of banking, which is transaction banking as against the conventional FinnOne suite, which is only retail banking. Of course, we have now added corporate banking on the lending side as well. Now coming back to FinnAxia, this module helped bank in doing collections and payments business in the most efficient manner. And it is, I would say, very sticky because most of the banks, where there seem to have -- seem to -- they're always seem to lower their cost of funds. And it's through transaction banking that they are able to get funds at 0 cost. So when -- yes, yes. So that's it.

Sorry. Sir, I wanted to just ask -- the thing is, are you implying that this product is not used by NBFCs but only used by large banks? And second, is it layered on the core banking system? Or is it separate from them?

Yes. Excellent question once again. Yes, it is essentially for all banking purposes used by only banks and not by NBFCs. And yes, it is layered on top of core banking system.

Okay. So core banking also -- the companies which have the core banking solutions, is this bolt-on loaded into the system and it makes it easier? Or can core bank -- so does the core banking company have a competing suite with respect to FinnAxia?

They do have, they do have. And like they have retail lending platforms also, they have -- certainly, they have the functionalities, which competes with FinnAxia.

Okay. So this was 1 question. Sir, second is, sir, you work with large global banks on one hand, while you also work with smaller NBFCs all over the world. So in terms of implementation, licensing and AMC, could you give the differences between the 2 of them?

Yes. Again, a very good question. The cycles are almost entirely different. The times are much longer in the -- with the global players, the kind of value that they look at is very different than the kind of value that a small player would be looking at. So -- and the pricing also, at the lower end of the system, the transaction base pricing is what is preferred. And at the other end of the spectrum, it is on-premise solutions, which the large players would think that long-term players will deliver that are more relevant. So that is how -- in fact, it is a wide spectrum of offerings in terms of the pricing and implementation cycles and so on, that is there. In some of the smaller players, we have been able to implement within as less as a week or 2. And of course, these implementations take much, much longer. They're done in 2 years.

Right. But basically, to give more specific data, will you be able to comment on what is the AMC charge as a percentage of initial fee in case of banks, in case of NBFCs? Very broad, like you can give me as a percentage or you can give me the difference between the 2?

I'm sorry, we won't be able to do that.

Okay. Sure, not a problem, sir. And the last question, sir, most of the core banking companies have not been able to make a significant headwind in North America because the systems there are very old. So for you, as the company, is North America, something that you're looking forward to continue working with? Or how do you -- do you even envisage North America as a part of your overall future business? How do you understand that?

Okay. The way I would like to answer this question is, as a player, which has implementations in 7 continents, there is no reason why -- or 6 continents, there is no reason why we should not be looking at the 7 continents also. And having said that, we have invested some time and effort in that direction, and we will keep exploring. This is what I can say as of now.

The next question is coming up from Gautam Gupta from Nine Rivers Capital.

As a product company, as a software product company, we would have 2 kinds of revenues. You would have the recurring revenue, which is AMC and cloud. That is my understanding. And we would have onetime revenue, which is more in the nature of implementation and license. Would we be able to get some split between these 2 revenue streams?

As of -- not as of now, Naveen (sic) [ Gautam. ] Your question is certain relevant, but unfortunately we're not in a position to...

May I ask why, sir, I think this is a very basic information that will help us understand the company a lot better? Because I'm sure we have a very rich recurring revenue stream, which we're not able to see today. And therefore, we don't appreciate the company sometimes as well as we should. So I just want to understand what is the difficulty in sharing this?

See, Naveen, I'm sure there are a whole lot of things, which we -- any business would want to achieve and that is its own proprietary information. And that is what you have to look at...

You think this is going to be something which will affect us competitively if you share it?

Maybe, maybe.

Sir, all our peers share this information. And honestly, I'd like you to think this through. If you really feel there's a specific competitive concern, we're happy to understand that from you, but I would request you to think about this. You don't like to give too many details, even if you just share recurring versus nonrecurring, that at least gives us 1 layer of insight into the business.

I do accept your perspective, but this is where we are, as I answered in an earlier question -- to an earlier question...

I know there were some other questions on product-wise revenues, all of those, I was listening into those. Fair enough, sir, but just think about this because I'm asking for a very broad and a very relevant classification. So I'll leave it to you all. On the marketing side, sir, I had a question. On -- so as part of our future plans, to step up the marketing, are we looking at consulting and IHC from partnerships and where are we there? Is that a relevant challenge for us?

Sorry, consulting and?

Your system indicators, consultants, are there a challenge for us?

All those factors, we are...

Sir, any color you can give us in terms of where are we on that today? Is that -- do you think that's like a low-hanging fruit for us to look at? Or are we already pretty well entrenched in that channel?

Okay. Okay. Let me answer it in this manner. We are making sure to begin with, that breadths and depths that our product offers to prospective customers is what we are trying to communicate...

Focused on communicating, right.

Including the ISVs and including the consultants. And we are -- in a very limited effort that we have made as of now, we are getting a fair encouraging response from all of them. So after that, what we need to do is make sure that in our defined rules, we are able to tie up with all the right ISVs, right consultants and so on.

Sure. Sure. Sure. Fair enough, sir. Sir, I know -- I hesitate to say this because there's been a lot of talk on this already. But sir think of some sort of clarity for us on the cash utilization policy. We have INR 670 crores of cash, we're generating at least INR 25 crores, INR 30 crores every quarter. So -- and this is something that I think we have been asking since a long time. And we understand your desire to keep a cash buffer and to keep watches for any marketing or any other investments? But when we're generating INR 25 crores, INR 30 crores or more every quarter of cash, I really wonder why are we so scared of distributing it. I'm sorry to -- maybe scared is not the right word, but why are we so hesitant of distributing or at least outlining the policy? Let us know that this is a cash level that the company needs, beyond that, we will start thinking of distributing. Give us some clarity on that.

See, [indiscernible] this question. Let me answer it by saying that whenever we have felt we have distributed the cash back. So we look forward to our investors considering us to be wise enough to be holding the cash despite these quarterly requests from most of the [indiscernible] that there will be some meaningful reason. You -- I don't know how to track that, but...

Sir, we are in long-term investment. Sir, we're very happy with the way you [indiscernible]. You've been there for more than 4 years, I think, in Nucleus, yes. So we have -- we've seen -- which you have guided the business and you've done really well as a business. I mean there's no complaints at all there. But I think at some point, you should give us some clarity in terms of what is there in your mind and what is the right cash reserve for the company? For example, if it's a view that INR 1,000 crores is where we want to get to, after that, we can have it -- we can think about distributing and it not only dividends, it can be buybacks where the founders don't want distributions, they cannot exercise their buyback, there are ways and means around that.

Suffice to say that this company's Board is very, very wise Board. We are very fortunate to have also wisest women and men on the Board. And they are applying their mind to balancing the interest of a stakeholder -- multiple stakeholders.

Fair enough, sir. Please communicate that to us at some point when you can. Sir, I just leave with a note of appreciation for Mr. R.P. Singh, I believe he is now retiring as CEO and joining the Board. So just convey our thanks for his leadership over the last few years.

Thank you so much, Varun (sic) [ Gautam. ] Really appreciate that, and it is colleagues like R.P. and now are able upcoming CEO Parag Bhise who had their -- given their entire careers to building this institution, and we are very proud of the fact and I'm very happy to receive this communication from you. I wish he was also listening to this personally, but for the personal emergency that he has not joined the call.

The next and the last call coming up in the queue from Vaibhav from HNI Investment.

Hello? Can you hear me?

Now we can hear you, yes.

Yes. Yes. So I was talking about the revenue buildup and the implementation road map that you have kind of highlighted earlier. So in the last quarter, we have seen significant -- I mean, at least a reasonable growth in revenue. Despite of the fact that, that was a quarter where the restrictions and everything was relatively higher as compared to what it is today and in the December quarter. So can you help us understand what are additional problems that you've faced over and above what was faced in the last quarter, which is September quarter, which has led to this revenue implementation issue? And secondly, when do you think that it will be normalized? And what would lead to the normalization because whatever restrictions are today, they will be there for probably next 3 to 6 months more?

Yes. So let's look at it this way. A very valid question, Vaibhav. And as I was attempting to answer in response to one of the questions, maybe it was a question from [ Parag ], sir. The response to COVID is reasonably different among different customers. Some of them are converting that this is an opportunity and saying that, okay, we will -- let us also experience this "faceless implementation." And there going live without -- as I had mentioned in the opening, going live without any travel. There are -- at the same time, there are other customers who have not been able to yet adjust themselves to this new thought. And that's where -- and what would -- I cannot say with certainty, but what would have happened in the last quarter when we had a higher revenue, we came across the customers on the first variety. And in this quarter, we -- our implementations were with the customers of the second variety. The way I'm looking at it is this phenomenon is here to stay, like digitization is here to stay. Our digital payments are growing exponentially. And likewise, these remote implementations also would grow but quarter-to-quarter, there could be ups and downs. That's how I would like to respond to your question.

With that said, sir, there are no further questions at this point of time. Turning the program back to you for your closing comments, sir.

So we would like to thank all our investors for being with us in this call and having this discussion with us. With this, I would like to pass it over to Vishnu sir for his closing comments. Over to you, sir.

Once again, as always, thank you very much for your continued interest in Nucleus Software. And we reiterate our commitment to build a long-term institution that balances the interest of all the stakeholders. Thank you so much once again for your interest.

Thank you so much, respected speakers. Thank you participants for joining the call. Wish you all have a great year and requesting to please stay safe. Thank you so much.