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

Good day, ladies and gentlemen. I'm Harpreet Kapoor, the moderator of this call. Thank you for standing by, and welcome to Nucleus Software Quarterly Earnings Conference Call for the Quarter and Half Year Ended on 30 September, 2021. [Operator Instructions] So I would like to now hand over the proceedings to Swati Ahuja. Over to you, Swati.

Thanks, Harpreet. 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 second quarter and half year ended as on September 30, 2021. For discussion, we have here from the management team, Mr. Vishnu R. Dusad, our Managing Director; Mr. Parag Bhise, CEO; Mr. Anurag Mantri, CFO and Executive Director; Mr. Tapan Jayaswal, colleague from the finance team; Ms. Prema Rajaraman, Global Head HR. As you all are aware, Nucleus Software does not provide any specific revenue earnings 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 conjunction with the risks that the company faces. An audio and transcript of this call will be shortly available on the Investors section of our website.www.nucleussoftware.com. With this, we are now ready to begin with our opening comments on the performance of the company for the second quarter and the half year ended on September 30, 2021 from the MD. Post that, we would be available for the question answer session. With this, I now pass it over to Vishnu sir. Over to you, sir.

Thanks, and a warm welcome to all of you for joining this earnings call, as usual. I would like to thank you for your continued interest in Nucleus Software and would request our CEO, Mr. Parag Bhise to take you through the proceedings. Over to you, Parag.

Thank you very much, Vishnu, and a warm welcome to everyone who has joined, and thank you for joining this call. I hope you all had great festivities just last week. The second quarter has seen us emerging stronger after the COVID pandemic and specific cybersecurity breach incident that we reported during the last call, we are out of it now. This would not -- this turnaround could not have been possible without the untiring efforts of our leaders and our client partners who have been very patient with us and who have supported us all this time, and of course to whom we continue to deliver immense value for [indiscernible] We've also taken unprecedented calls to invest in our most important assets. That is our high performing associates who continues to deliver value and come out with world-class platforms and ensure high customer delight. While these measures that we have taken have affected our profitability, but we are confident that we'll be able to get back to our standard profitability endeavors in near-term. We believe that this is an investment in our most important assets, as we said, and an investment in the future for taking us to the next level of business performance. Thank you very much once more. Over to you, Swati.

Thank you, sir. Tapan sir, please put some light on financial highlights.

Thank you, Swati. Key highlights from financials are; our consolidated revenue for the quarter is at INR 114.12 crores INR 108.4 crores quarter-on-quarter and INR 137 crores year-on-year. Overall revenue in foreign currency, including India rupee revenue is USD 15.5 million for the quarter against USD 14.8 million quarter-on-quarter and USD 18.6 million year-on-year. Product revenue for the quarter is at INR 93.2 crores against INR 89.9 crores quarter-on-quarter and INR 114.7 crores year-on-year. Revenues from projects and services for the quarter is at INR 20.9 crores against INR 18.5 crores quarter-on-quarter and INR 22.3 crores year-on-year. As for expenses, cost of delivery, including cost of product development for the quarter is 81.5% of revenue against 81.2% of revenue quarter-on-quarter and 65.9% of revenue year-on-year. In absolute terms, this is INR 93 crores against INR 88.1 crores quarter-on-quarter and INR 90.3 crores year-on-year. Marketing and sales expense for the quarter is 3.6% of revenue against 5.7% of revenue quarter-on-quarter and 3.6% year-on-year. In absolute terms, this is INR 4.1 crores against INR 6.2 crores quarter-on-quarter and INR 4.9 crores year-on-year. General and administration expenses for the quarter is 10.8% of revenue against 11.8% of revenue quarter-on-quarter and 6.1% year-on-year. In absolute terms, this is INR 12.4 crores against INR 12.8 crores quarter-on-quarter and INR 8.4 crores year-on-year. EBITDA for the quarter is at INR 4.7 crores against INR 1.4 crores quarter-on-quarter and INR 33.4 crores year-on-year. Other income from investments and deposit at INR 8.4 crores against INR 8.8 crores quarter-on-quarter and INR 7.7 crores year-on-year. Total other income for the quarter is at INR 9.5 crores against INR 10.8 crores quarter-on-quarter and INR 9.1 crores year-on-year. Total expenses are at INR 2.4 crores against INR 3.1 crores quarter-on-quarter and INR 9.5 crores year-on-year. Net profit is at INR 8.6 crores for the quarter against INR 6 crores quarter-on-quarter and INR 29.5 crores year-on-year. Other comprehensive income is at negative INR 1.5 crores for the quarter against negative INR 3.2 crores quarter-on-quarter and INR 0.5 crores year-on-year. Total comprehensive income, which includes net profit and other comprehensive income is at INR 7.1 crores for the quarter against INR 2.8 crores quarter-on-quarter and INR 29 crores year-on-year. EPS for the quarter is at INR 2.95 as against INR 2.07 in the previous quarter and INR 10.14 in September '20 quarter. In terms of foreign currency hedges, on September 30, 2021, we had USD 5 million of forward content at an average rate of 75.62%. There is a mark-to-market gain of INR 24.36 lakhs, which is taken to hedging reserves in the balance sheet. Revenue contribution from the top 5 clients for the quarter is 23% as against 26% in the previous quarter. The order book position is INR5 46.8 crores, including INR 514.8 crores product business and INR 32 crores of projects and services business. In June 30, 2021, the order book position was INR 534.9 crores, including INR 490.4 crores of product business and INR 44.5 crores of projects and services business. Total cash and cash equivalent as on September 30, 2021 are INR 724.5 crores against INR 734.3 crores as on June 30, 2021. This includes balance in current account of INR 33.4 crores, various schemes of mutual funds INR 518.3 crores, fixed deposits of INR 29.9 crores, investment in tax-free bonds of INR 115.1 crores, INR 27.8 crores in preference shares. With regards to the receivable, we are at INR 77.7 crores against INR 69.5 crores previous quarter. During the quarter, there is a gross addition of fixed assets of INR 2.81 crores, consisting primarily of INR 5 crores in plant and machinery, INR 2.16 crores on software, INR 0.03 crores on computers and INR 0.12 crores on furniture and fixtures. Now I'll hand over to Swati.

Thank you, sir. With this, we are now open for the question and answer session. I will now hand it over to Harpreet. Over to you, Harpreet.

[Operator Instructions] First question of the day we have from Himanshu Upadhyay from Himanshu Upadhyay Company.

I am Himanshu Upadhyay from [indiscernible] Capital. So my first question is on the revenues. I was going through your annual reports and numbers, so if we look at our revenue contribution of domestic market has increased from 27% to 38% in last 5 years. Exports have grown from INR 271 crores to INR 318 crores and domestic from INR 100 crores to INR 195 crores. Export is a bigger market and underpenetrated market. Why is it so that we have got more effectiveness in our sales in domestic versus global markets? And what are the challenges we are seeing in the global market that it is not at all growing or growing at a very, very feeble rate, okay? Based on the order book we have, do you think this trend is reversing of slower export growth from here on? So this was my first question.

Okay. Thanks, Himanshu for reading that question. This is Parag here. I would answer that the domestic growth, of course, we have seen is primarily because of our strategy of going ahead with the cloud business, which we have launched so far in India and now we have started to expand it into the other geographies. So India growth is because of that. There's no specific reason for not growing outside. We've got -- as we've proved in the past, we've got traction in Australia, Middle East we were seeing a slowdown for a couple of years, but now, again, we have started seeing traction there. So such no specific reason. Of course, past one and a half years of pandemic, that time the export traction was less. However, in India, we did not see any challenge, after the initial few months, of course, but the moment the market opened up, the economies started opening up, India traction was fast again. So no specific reason of not growing outside. We now got a few deals already in Vietnam, in Australia, in Middle East, we -- as I said, we started to see traction. So probably, I can't predict, but currently, the trend would change. That's all I have to say right now.

Based on the order book what we have and the inquiries, I think the exports will grow at least in high-single-digit or low-double-digit. Is it possible or do you think that is far off from current time?

Giving a number -- any case, giving number is not existing policy also. But I can tell you that we are seeing customer traction. We are already seeing some contracts materializing, including there were -- I can only say that our existing customers who are on our older platform are also wanting to migrate to the newer FinnOne and FinnAxia platforms. So that's the traction we are seeing, and which includes the export market as well. But I can't talk about any numbers in percentage terms right now.

Okay. So the question was not just on numbers, but yes, the situation is improving, that was what we were trying to understand. Okay, that is fine. Last call you said our growth strategy will be to increase the number of customers in particular geographies and gain market share. Which would be your focused geographies where you think you can reach at least 25% market share in lending on retail side in next 5 years? Do you think you don't want to have any targets? And how are you planning in those focused geographies? Some light you can throw, it would be helpful.

So again, no numbers, but I can tell you that our -- as we have talked in the past, references based business is probably the best way to grow in our business. So wherever we have customers already, which is Australia region now, which is Middle East region, which is Southeast Asia region, Africa region, those are the areas where we expect to grow. Of course, if leads come from other markets, we will be more than happy to match on to them. But as regards our focus and our initiatives, we would update in -- we would like to grow in markets, which -- where we already have customers rather than exploring big time or investing big time in emerging markets.

Okay. One last question and then I'll join back in the queue. I have a question that we are a large player in our chosen field of retail lending and also most respected even by our customers when we meet your customers. So let's say, a CSL Finance or South India Bank and here we have seen your names in their con calls and annual reports, in every place. But single-digit EBITDA margins currently and mid-teens in last few years are very difficult to accept when we see a ticketing solution company, which had a very tough faster airline ticketing, but still margins better than us. The question comes, are we able to get the right money for the value we are providing to the customers? We also said that we'll soon move back to our margins. And we had a last few years -- as in FY '21, the margins were in mid-teens. So do you target those mid-teens margin? And how are you pricing the product? And are you satisfied with the value you are getting from the -- what the money you are getting for the value you are providing to the customers? Just some of your thoughts and how are you working on those things will be helpful.

Sure, Himanshu. Firstly, I would say that's a very good question and it's kind of striking the cord because the kind of investments we have done definitely and to activate the recent regions that we have given that I just talked about keep our head by revision. This is a recent phenomena. But otherwise, the kind of investments we have done, we definitely believe that our pricing should change. Of course, it's not so easy to change pricing, especially with customers which are there with us for the past so many years. But there is a definite attempt to work on that, and we are getting some successes in that area. But definitely, there is there. So to answer your question briefly, just definitely, we are looking at getting much more value or much more dollar value to our products and services in times to come for sure.

Next is Vaibhav Badjatya from H&I investments.

So just kind of a follow-up to the Himanshu's questions on the pricing. See, there is very sharp rise in employee costs and our employee cost is short by around 25%. Otherwise, this increase would have happened in 4, 5 years. Now this thing has happened in just a matter of 6 months now this year. So obviously, to negate that impact we need to have the pricing improvements. And so that is -- and as you earlier said that near-term, we want to get back to our margin. And on the other hand, you also said that is a difficult thing with the existing customers. So both of these things are -- I'm not able to tie up that is the existing orders that we have already secured early before March 2021, if we are not able to reprice them, how we are going to get back to our earlier margins is something I'm still trying to understand?

Okay. So it's not purely -- when I say pricing, it is not purely the performance pricing that I'm talking about, because especially in our business where we have created a significant IP. Our focus will be to get more and more of licensee and then related AMC revenue rather than performance-based revenue. So kind of the change in the structuring, if you may say, the structuring of the deals. So less of revenue, which is dependent on the manpower and more which is like dependent on our IT. That is the direction in which we are moving.

Right. But that cannot be changed by the existing customers, right? We already have placed contract with the existing customer so that cannot be changed by existing customers, am I understanding right?

That's true. But as I also mentioned, a lot of our existing customers are also moving -- wanting to move to our newer platforms. We have more than 100 plus customers who are on our existing customers. So when they move to the newer platform, we get an opportunity to work out new pricing.

Got it. And sir, apart from the pricing structure, on the employee cost front, what can we do to improve our margin? In other words, what is the possibility to reduce the blended employee cost burden? What kind of productivity improvements can be realistically possible?

They are possible. I can tell you there are sort of 2 parts. One I already answered is on the composition of our deal changes, of course, then we are not so much bothered about transaction cost. Secondly, if you see in [indiscernible] we already shown improvement in our revenue, it's marginal, but it is there. Our employee base has not grown so much. In fact, it has depleted a little bit. So even with lesser number of people, we were able to deliver marginally better revenue, and the reason for that is very high focus on operational efficiency. So there is a theme running within Nucleus of operational excellence there. All teams are looking at how they can improve their work better, and it has already in some smaller way starting to show results. That's how I'll answer.

Got it. And secondly, if I look at your segmental thing, so in 3 of our geographies, we have significant profit decline in comparison to our revenue decline in first half of 2020 is what I'm talking about. So for example, in Middle East, the revenue has declined only by INR 5 crores, but profit has declined by INR 15 crores. And similarly for Australia, Australia as well, Southeast Asia as well. So apart from the increase in employee costs, are we facing any other issues in the cost structure on our international business or international segments? Otherwise, why would the revenue has not resulted in employee costs or other savings on the variable cost front? Because if the revenue is slowing down, obviously, there should be some savings on employee cost and some of the other costs, but that has not happened in the international side of the business. So I'm just trying to understand any other cost pressure that we are facing there?

No. So I am -- we did not experience any other cost pressures. But this point, which you raised, I don't know, Tapan, if you have any ready answers for this, otherwise, we can respond later. But to answer your question, as such, no, we are not facing any other cost pressures than the employee cost going up. But what you said, we made some reflection already [indiscernible] at least with me it's not there.

Okay, because the profit decline has been very sharp in the international business as compared to the domestic business. And as I said more than the revenue decline in first half. So I was just trying to understand, but you can respond later on. I will actually come back in the question queue I think to provide [indiscernible].

Sure. Thank you, Vaibhav. Thank you for the question.

Next is Deepan Shankar from Trustline PMS.

Could you throw more light on this BNPL platform? Is it a completely newest platform or extension of offering things on the current platform? And also, what kind of revenue potential are we foreseeing over next 2 to 3 years?

So BNPL is an extension in our lending suite. BNPL, as Buy Now Pay Later, which is a popular model now becoming popular. It is an action. So you would know, Deepan that we come out with our product releases every 6 months. So as part of one of the releases, we have come out of this and we will build upon this further. Revenue potential is on a particular -- since it's not a different plus numbers, we don't predict it like that. It will definitely value-add into our offerings. There is already a set of customers who are interested in wanting to inherit this feature into their business. So I can respond that definitely this is a future which people are looking forward to. But revenue predictions, of course we don't do.

Okay. And for the last 2, 3 years, we have been saying that old customers are moving or migrating, but this is not happening at a faster pace. So can you share some names, few larger names who have already moved are tending to migrate it?

Names at this moment would be difficult, But -- and firstly, your observation is correct. We've not been able to move at a pace where we would want to definitely. And there is definitely one of the initiatives that I mentioned briefly about it for the current year and next year is to put very high focus on migrating our existing and cash little customers to our newer platforms. So it's going to be a focus area, a very definite focus area for the next couple of years at least for sure. And I agree, the rate of movement is not as fast as -- your observation is correct there.

Can you at least share a number perspective, how many have moved out of the total customers?

It's difficult to say, but I would say either they are right now single-digits or low-double-digits. I think that's what I can comment right now. But I can tell you that in progress, WIP, there are many customers which are [indiscernible] including large and small customers.

Okay. And lastly, we have seen our product revenues have been declining from INR 115 crores last year to currently around INR 90 crores, INR 94 crores. So what are the key reasons for the same? And when are we expecting that to bounce back to old levels of product revenues?

I think the traction as I mentioned is definitely from our customers who are wanting to get on to our products. Of course, there's equal traction from our services customers also. So that's the good news. The decline in revenue primarily would be last 1.5, 2 years. Yes, there was a slowdown due to the pandemic, but then we've seen an upturn. The cloud customers which we have got, typically, the model there is that we are experiencing, first initial years the revenues are lesser because there we typically engage with them on a growth-less lengthy model. So as their portfolio increases, our revenue also increase in multiples. So that's what we are banking on and that's what we are experiencing. So definitely, product-based revenue growth is expected in the remaining part of this year and for the years to come for sure.

Okay. Lastly, if I may, please, one last one. A couple of quarters back and also during AGM, we had requested for more disclosure from Nucleus in terms of revenue split, license, AMC implementation and cloud subscription. So any progress on that? When we can disclose that kind of information?

So frankly staking, not yet Deepan. We will have to defer that. We've been focusing a lot on these critical issues that we talked about. We faced unprecedented challenges and an unprecedented revision exercise that we did consumed a lot of our energy because it was such a big decision. So we've been pretty much occupied in these things last couple of quarters. So it will have to wait some time more. But as we said that we have said we will go back to our board and come back to you. So that we will do for sure. But our focus last few quarters have been on dealing with these major challenges that we faced.

Okay. Sir at least you can share this cloud decline percentage over the last 2 quarters?

Cloud decline. Can you be more specific?

Cloud revenues declined in the past -- Cloud revenues declined over the last 2 quarters.

Tapan, is that -- could you provide [indiscernible] Tapan?

This is Anurag on the line. I'm afraid that is not the case. There is no decline in the cloud revenues so far. And just to extend what Parag has mentioned, while we are working on these actionables, as mentioned in the previous investors call as well that whether we can really go to the slice and dice of the implementation AMC and all these things, that is something which we are not considering right now based on our discussions internally and with the board. If there is a change in the approach, we will definitely let you. But as of now, this remains at the level what we are sharing the information.

So if that is not the case, then where -- how the revenue declined, sir? Cloud also has not declined.

So I think you have been talking about general revenue decline and not specific to cloud, because I'm a bit surprised on cloud because cloud is giving us good traction. So overall, revenue declined as we -- issued there in past investor calls also, Deepan, revenue decline in the past couple of quarters has been because of the multiple challenges that we faced, which we talked about time and again. First the COVID, secondly then the ransomware attack and then the massive attrition, which not only regressed the entire industries facing it, one after the another I believe multiple factors impacted us and which showed a definite decline in revenue. This quarter, marginal improvement is there. And we extend the improvement to continue in the direction is at least positive. So if that is the revenue decline we're talking about past couple of quarters, the reasons we found about earlier. And I would only say that now the things are working up.

But if you see, over the past 2, 3 quarters, the entire industry has been performing quite robustly. So only we are in the declining zone. So that's why we wanted to understand what is actually the reason.

So we know our reasons and we've shared them in the past as well, the multiple challenges that we faced, including some that was very specific to us and some which was generic. Possibly commenting on how industry is doing otherwise, I won't be possible for me, but I can tell you, we've told some openly about our reasons of revenue decline. And while they were there and why there is a change now of positive as well.

Sir, I'm sorry to say this, but the call is not giving much confidence on revenue traction at all. So that's the kind of observation we wanted to make, and thank you on all the questions.

I'm not sure if you attended -- because we've been talking about it at length in the past, at least 2 investor calls and this is the third one. So you've gone into that and we've been pretty transparent about the reasons of revenue decline from our side the multiple times at least. But now that things are looking -- let's see that it only grows positive from here. That is our focus. Thanks for raising this operation, Deepan.

Next is Vivek Ganguly from Nine Rivers Capital.

Two questions. One, in the first quarter, you all have this ransomware attack and that obviously had an impact on your revenue profile. Now that it is all in the past, would it be fair to assume that you all will again go back into the double-digit growth track or there are other challenges which you are all struggling? That is one. The second is you all had mentioned that you all will be coming out with the dividend policy and also on the revenue breakup, which is not asking for too much to begin with given the industry and the transparency, that is prevalent in the industry. So I was really wondering, is the board so caught up that they can't take up these issues which have been on the mind of the investor community for such a long time and the other matters which are as important, and you all need to shed the light on that on the growth and the profitability aspects of. So is that like 2 such strong competing factors that one displaces the altogether?

Thank you for asking such a great question. So first on the revenue part of it. Yes, ransomware is behind us. It had an impact. There may be some residual impact, but we got out of it completely. You probably have also noted that the attrition challenges that we faced in the industry as a whole setting are continuing. Though because of the unprecedented measures we have taken, the rate of attrition has surely declined significantly, but getting the resource trend back to where we were, it is taking -- it takes time. So we are already on a very strong initiative on hiring both metal and freshers that we have talked about in the past, there was a press release also to that extent. So yes, growth is expected in the quarters to come. The rate of growth depends on -- because the impact of attrition has been large, it will take time to come back to normal. But definitely, the trajectory grows. There are -- apart from this, there are no challenges that I think have -- I mean apart from the attrition, rest of the challengers are beyond us. The attrition remains to be still a challenge for us and for the industry, but it's -- the impact is getting lower. And just to give you, which we talked about -- which I talked about earlier also, the traction from the customers is very high. So there is no strain on order book. There is a lot of that customers are expecting us to do. So definitely there is a challenge, which is what we are trying to build. But there are no other challenges, at least we're feeling it is. How is the industry dynamics tomorrow, that none of us can predict because industry is still very dynamic. [indiscernible] attrition hit the industry, we don't know. [indiscernible] we're building our capacity. The customer traction is there. [indiscernible]. I think the dividend policy, revenue split Anurag already talked about, occupation of good and management is we -- we've taken some very, very significant decisions in last -- and come up -- and overcome some very massive challenges. For sure, the management has been occupied. And we thought that as priority because getting back on to the growth trajectory was most important, taking care of our employees was most important. So the decisions were unprecedented. We had to put a lot [indiscernible] on it as compared to what we would do on an annual basis. So yes, a lot of focus has been [indiscernible] And thank you for the question. And is there's any follow-up question?

No, I'll come back into the queue later on.

Next is Kunal Sharma from SMC Private Wealth.

So just actually, most of the questions have been answered. So just a follow-up question on the margin. As it drastically dropped down to 2 times employee expense. So earlier, you said that the exceptional due to the cohort issue in the ransomware attacks. So are you still sticking the same issue as of now? Or is this so only because of the ATI, as you said earlier?

So COVID has is behind us, and that's a [indiscernible]. Hopefully it is behind us. There are no residual impacts of COVID. We think it is behind us. There will be marginal impact because you could not work for a few weeks, but that's behind us. So as I mentioned, it's still a challenge. We are building capacity, and we are seeing good traction there. But I can say we are out of it because the impact was large. So that's what -- I hope I answered fully [indiscernible].

Next is Rahul Jain from Dolat Capital.

Firstly, a question to [indiscernible] also a small request because when you read this data, you missed too much data to be not down. It's little impossible to takes down all that data that you've read so fast. So a, if you could give that data in the presentation or press release that we share, that could -- at least the key data -- that will be of help. But for now, you can possibly give me the revenue split between product and services and also the order book data, if you can.

So can you do that in addition to what we have already done? Maybe repeat what we shared earlier?

You'll be able to read out that, the different between the products and services, the revenue breakup?

Okay. So we are having this revenue for the quarter [indiscernible]. So this was the product revenue. And revenue for the services for the quarter is [indiscernible].

If I I'm specifically asking only for this quarter, I think you said product is 93.5 and services is 20.9, have I noted down it perfectly?

[indiscernible]

And similarly, for the order book only for this quarter. What was the order book and what was the split?

So total order book [indiscernible] INR 32 crores [indiscernible] services.

Okay. You said, INR546.8 crores and INR 32 crores in product out of that?

INR 32 crores project [indiscernible].

Yes, sorry, INR 32 crores is project and INR 546.8 crores is total?

Right.

Right. Okay. Now, the question for Parag. If you could share input on firstly on the competitive landscape as we keep sharing more and more solutions emerging on the origination segment, even from so-called fintech guys. Secondly, I think there has been some discussion on normalization on profitability. Just I wanted to understand that is it clearly a function of revenues? So if we go back to pre-COVID revenue and like 10%, 15% growth on that, then I think we should be more over around the profitability pre-pandemic -- not pre-pandemic, but let's say, what we used to have 2, 3 quarters back. So that is the question number 2. And thirdly, on the hiring, you said in the press release that you would add 500 people. So can you tell the current headcount and what was the data in Q1 and Q2 last year, as QoQ and YoY? And [indiscernible] where you expect to end the year on a net basis? So if you could share your thoughts on these 2, 3 things.

Okay. So 3 questions. [indiscernible]

Sorry, Rahul, I've muted your line because there's background noise from your line. I'll unmute you later. Go ahead, sir, please.

Yes. So 3 questions. First is on competitive landscape. Yes, competition from fintechs and [indiscernible] there's no doubt about it, but we have the business globally and product management team does a competition analysis. And based on that, of course, inputs come from our product strategy as well as engagement setting. So right now [indiscernible].

On revenue, you said if it's direct -- if the profitability is only a function of revenue, I'll say no because confiding the employee costs have risen so much, share increase in revenue will not give us that level of profitability. So not sure, in the earlier part of the call, I talked about a change in competition. We definitely have to move toward a bigger chunk of revenues from license and related things like AMC and all. And there's less percentage of revenue from which is manpower dependent. Manpower is getting scarce so much. In any case, manpower-dependent revenue is going to be becoming [indiscernible]. That's my personal view going forward. Thankfully, we are in a business where we have IP-based revenue, a large opportunity of IP-based revenue. So that is what will be our focus. So that's on revenue. On people, I'll ask Tapan to go on through the specific numbers because you asked for some specific numbers, but we have started hiring [indiscernible] both latterly and from campuses. This last month, we had launched a very focused campaign for referral where existing employees can refer to their friends and colleagues from the other organizations. For that matter, we reach out to ex-Nucleus [indiscernible]. So that has been a big initiative that has given us traction. On the campus hiring, we are moving very good. There had been in the past couple of months about 60 campus connects. We have already batches running in our [indiscernible] technology. This is our training now where all fresh [indiscernible] come in. We expect by the end of -- okay, last quarter of this year, by the end of last quarter of this year that we should be fulfilling our numbers, as we refer to the press release. So that -- we should be on target to reach those numbers. So that's why -- on specific answers, I think Rahul asked whatever answers we can get [indiscernible].

So headcount as on September 30 was 1,687 And in the last quarter, it was 1,732. And on September 30, 2020, it was 2,064. Rahul?

Operator, can you unmute?

You're always unmute, Rahul.

Yes. And sorry for the background nose. So if I heard you right, Tapan, you said 1,687 now versus 1,732 in the previous quarter and 2,062 in the YoY.

Right. Absolutely.

Okay. So last bit from my side. Since we -- the we are seeing the environment on the headcount side, do you think this remains a challenge to you be net [indiscernible] and that is also impacting on the revenue performance and it will be very, very tough because, A, the inflation is definitely very, very high and [indiscernible] is very, very low. So both way, if you -- either you lose business on the table or you have option of having a very different cost structure, which you may not like to have on a sustainable basis. So what's the view and what is the impact of that? And secondly, is that also the reason or any other reason if you want to have a why our order book is not culminating into any revenue growth performance and it's been focused now on that front?

So definitely, I talked about capacity challenge continues to be there. We are working on it. It's improving. But definitely, so that's kind of [indiscernible]. Look, we are -- there are multiple initiatives that we are taking. There no [indiscernible]. So I talked about the composition change. But for sure, we have to work on that. About pricing, that's another initiative that we are working on. I felt about improving our efficiency and [indiscernible] we're talking about operational excellence, where all teams are focusing on what they can do better with existing resources, and we saw some reflection of that in our marginal revenue. There is a lot of hopes on quality that is going on. So there are -- there's no one answer which can help us. It is a challenging situation, no doubt. But we are hopeful that a combination of all these things and plus the hiring that we have done, that will also -- in the months to come, that will also start giving us results. So a combination of these 4, 5 things is what is going to give us the answer to your competitive questions or.

Yes. So are we saying that the supply side is the key factor for us to see this revenue culmination coming from the order book traction, which we are having for some time? So if the supply side issue [indiscernible] out, we can get back to double-digit kind of a growth purely from current order book status perspective?

So from supply side, you're talking about [indiscernible]?

Yes.

Unfortunately, that is not the -- fortunately or unfortunately -- I'll say fortunately because our revenue model is not purely [indiscernible] that's a very positive part. We have built a great IP for in the last decade. We already had great IP, but we have given it a new shape. So our revenue is not purely manpower-based. So I would say, I'll not talk more in general about industry but companies [indiscernible] purely manpower-based are probably going to face more challenges. Our model is IP-based and revenue related to it IP like ANC, etc. I do hope we'll be -- with all these initiatives that we talked about, definitely, supply side plays a very vital role in it, especially because the kind of impact it had on us, and it had on everyone. So [indiscernible] but that's not the only thing for sure. And the thing for us is that our revenue model is not purely manpower-based. So it will just give us advantage. But yes, manpower is required for us, but as it is not the only [indiscernible].

Yes, we had that impression, and we understand the business model of a product business. But if you just look at the 16% YoY growth despite having a strong order situation and our headcount is also down almost 16%, 17% or little more than that. So that clearly explain that there is some impact which is coming purely from our inability to complete orders on time. Maybe you are, of course, in a better situation. But if that are connecting somehow, which looks like a linear impact rather than any other factor.

No, sure. I'm not to be interpreted, and then say that because the accretion has been massive. So I absolutely -- I'm not saying that there is no impact. Obviously, there is a significant impact. There's no doubt about it. What I was responding is that that's not [indiscernible] factor. We have to work on many things. And there are some which are definitely to our advantage. Our model -- business model is definitely to our advantage. That's how is responding. So yes, the restore. There is an impact because of all this, no doubt about it.

We have our last question of the day from Imran Contractor, individual investor.

Yes. Good afternoon. Are we on close to recruit 500 people that we have mentioned in our press release? And can you allude to some time line for the buyback which we intend to do?

Okay. So first question, and I answered that [indiscernible] maybe there was disturbance that...

No, I heard about hit [indiscernible] I would say, generally speaking, we are on track. We're getting good attraction from the campuses as well as [indiscernible]. I did mention about 60 campus connects, which we have already done. Some batches are running in our trainings school, which is [indiscernible]. Right now -- today, the numbers are less, but the pipeline is very strong. And yes, we are on target to reach that number.

[indiscernible] question for time line, yes, good afternoon, this is Poonam Bhasin. Sir, we will be declaring the results of our postal ballot tomorrow. And post that, we have already announced that our record date will be November 27. So after the declaration of the results, we'll be filing the draft letter of offer with SEBI. So it will all depend that how much time SEBI will take approval of our draft letter of offer. So tentatively, we are targeting that after the approval from SEBI, we'll be able to open the offer by mid or end of December, sir.

Okay. And just one more question. Will this [ NSBT ] become a profit center, or it's going to be for internal recruits?

I'll say like this that we're primarily using it for our internal purposes. Our focus is not -- at least currently, our focus is not that [ NSBT ] should be a [indiscernible]. We are more concerned that it gives us scale and power. That's our focus. It should [indiscernible].

I would like to now hand over the floor back to Swati to take final remarks from speakers. Thank you so much. Over to you, Swati.

Thank you. So we would like to thank all the investors for joining us today for this earnings conference call. I would now pass it on to Parag sir for his closing comments. Over to you, sir.

Thank you, Swati, and thank you very much, everyone, for joining and for posing some very [indiscernible] questions. These are the kind of questions which keep us on our toes, which keep us thinking. Thank you very much for your confidence in us, and thank you for all your support. Thank you.

Thank you so much all the speakers. Thank you, investors, for joining the call. That does conclude our investor call for today. You may all disconnect now. Thank you. Have a pleasant evening.