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 9 months ended on 31st December 2021. [Operator Instructions] I would like to now hand over the proceedings to Ms. 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 Third Quarter and 9 Months ended on December 31, 2021. For the 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; Ms. Ritika Dusad, Executive Director and Chief Innovation Officer; Mr. Brajesh Khandelwal, Vice President, Neo Business; Mr. Ashwani Arora, Senior Vice President, Global Customer Success team; Mr. Sanjeev Kulshreshtha, Senior Vice President, Product Build; Ms. Prema Rajaraman, Chief People Officer; Mr. Tapan Jayaswal, colleague from the Finance team. 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 conjunction with the risk 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 the opening comments on the performance of the company for the third quarter and 9 months ended on December 31, 2021, 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.

Thanks, Swati. Thanks a lot, Swati, and a warm welcome to all of you for this investor call ending third quarter 2022, financial year 2022. This is one of those bereaved years, and despite the turbulences in the environment, we have taken all the responses and built these steps to continue building the strength of all our stakeholders. We have continued to innovate for our customers, coming out with [ INR 1 billion, 6 months remunerate], full of ultra-flexible and ultra-rich functionality. Opportunities for all the [ VCIs ] to continue growing to the best of their abilities have been further enhanced during this year. And likewise, for our shareholders, we have done a buyback that is the biggest and unprecedented, again, on our side so far. This buyback is also an indicator of our confidence in the future of the company, and that is how we would want our investors and all our stakeholders to appreciate this fact. With those words, I would now like to hand over to Parag Bhise, our CEO.

Thank you so much, Vishnu, and good afternoon, everyone, and thank you very much for joining this call once again. While it continues to be another tough quarter for us, I'm happy to share that we've been able to recruit a large number of freshers, as mentioned in the last investor call, and they are at various stages of onboarding, including many who have started to contribute to our deliveries, and hence, to our top line. Adding on to the initiatives that Vishnu just mentioned, we have taken the following more initiatives in this quarter to strengthen, both the security as well as the convenience of Nucleites, as we call our associates, by providing them with better work environment. We have completely eliminated BYOD, that is bring your own devices in India. BYOD is the concept where we allowed Nucleites utilize to use their own devices, essentially laptops, tablets, and it has become mandatory for us when we have to suddenly mobilize our entire workforce to start working from home. We have replaced all such devices that -- by new company-owned laptops. The large number of laptops that we have procured are also being distributed to the new joinees, both freshers and laterals. We are also transitioning to MS Teams, Microsoft Teams, one of the best collaboration platforms that you may be aware of for all the Nucleites, for use by all the Nucleus. This kind of explains the significant investment that reflects in our books in addition to the increase in personnel expenses that we spoke about earlier as well. We are otherwise experiencing good traction from the market, both with our existing as well as our new customers. And we have a sizable work in hand as well as strong pipeline, with the measures mentioned earlier, both in terms of upgrading the skills and knowledge of our associates as well as by providing them a better working environment, we are expecting significant productivity gains to come in, in the following quarters. Also considering that the market situation still remains very dynamic in our sector especially, we have taken a decision to advance our next year increments by 3 months to be effective from 1st of January 2022, as against 1st of April 2022, that we will have normally done. Thank you so much once again, and over to you, Swati.

Thank you, sir. Now I request Tapan, sir, please put some light on the financial highlights. Over to you, sir.

Thank you, Swati. Am I audible?

Yes, sir.

Swati, am I audible?

Yes, sir, you're audible. Please go ahead.

Yes. Okay. So key highlights from financials are for revenue, our consolidated revenue for the quarter is at INR 121.6 crore against INR 114.1 crore quarter-on-quarter and INR 124.1 crore year-on-year. Overall revenue in foreign currency, including India rupees revenue is USD 15.3 million for the quarter against USD 15.5 million quarter-on-quarter and USD 16.8 million year-on-year. Product revenue for the quarter is at INR 99 crores against INR 93.2 crores quarter-on-quarter and INR 103.2 crores year-on-year. Revenue from projects and processes for the quarter is at INR 22.6 crores against INR 20.9 crores quarter-on-quarter and INR 20.8 crores year-on-year. As for expenses, cost of delivery, including cost of product development for the quarter is 79.5% of revenue against 81.5% of revenue quarter-on-quarter and 67% of revenue year-on-year. In absolute terms, this is INR 96.7 crores against INR 93 crores quarter-on-quarter and INR 83.1 crores year-on-year. Marketing and sales expenses for the quarter is 3.8% of revenue against 3.6% of revenue quarter-on-quarter and 3.3% year-on-year. In absolute terms, this is INR 4.6 crores against INR 4.1 crores quarter-on-quarter and INR 4 crores year-on-year. As for G&A expenses for the quarter, it is 12.3% of revenue against 10.8% of revenue quarter-on-quarter and 8.7% year-on-year. In absolute terms, this is INR 14.9 crores against INR 12.4 crores quarter-on-quarter and INR 10.8 crores year-on-year. EBITDA for the quarter is at INR 5.4 crores against INR 4.7 crores quarter-on-quarter and INR 26.1 crores year-on-year. Other income from investments and deposits is at INR 7.1 crores... [Technical Difficulty]

Tapan, sir, can you hear us? Are you there, sir? You are not audible.

Swati, I can see his line, but not audible.

Tapan, sir, I request you if you can please disconnect and dial in again.

Swati, let me call in on another number.

Okay.

Hello?

We're here, sir.

Suddenly, my line got disconnected. Okay.

Go ahead, sir, please. You're on.

Total comprehensive income -- yes. Total comprehensive income, which is net profit and other comprehensive income is at INR 7.6 crores for the quarter against INR 7.1 crores quarter-on-quarter and INR 26.3 crores year-on-year. EPS for the quarter is at INR 2.77 as against INR 2.95 in the previous quarter and INR 8.55 in December 31 quarter. In terms of foreign currency hedges, on 31st December 2021, we had USD 4.7 million of forward contracts at an average rate of 76.12. There is a mark-to-market gain of INR 41.40 lakhs, which is taken to having reserve in the balance sheet. Remaining contribution from the top pipeline for the quarter is 23%, which is same as previous quarter. The order book position is INR 563.8 crores, including INR 541.4 crores of product business and INR 22.4 crores of projects and services business. In September 30, 2021, the order book position was INR 546.8 crores, including INR 514.8 crores of product business and INR 32 crores of project and services business. Total cash and cash equivalent as on December 31, 2021, are INR 543.3 crores against INR 724.5 crores as on September 30, 2021. This includes balances in current accounts of INR 32.4 crores, various schemes of mutual funds INR 377.1 crores, fixed deposits of INR 29.9 crores, investments in tax-free bonds of INR 98.6 crores and INR 5.3 crores in preference shares. With regards to receivables, we are at INR 83.4 crores against INR 77.7 crores previous quarter. During the quarter, there is a gross addition of fixed assets of INR 16 crores, consisting primarily of INR 10.5 crores on computers and INR 5.5 crores on software. Now I hand it over to Swati.

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

[Operator Instructions] First question of the day we have from Vaibhav Honest and Integrity.

So I just have first 2 questions, actually. So on the buyback, I think, congratulations that you are -- that was good move. But going forward now, given the promoters are already close to 75% of the stake, we need a radical rating on the capital allocation. In the sense that whatever problems you are currently going through, I'm sure you will overcome that and a window for buyback unless and until promoters start tendering their shares. So can we expect a dividend payout ratio to be substantially higher going forward when things return to normal?

With these decisions pertaining to dividend payouts and buybacks. These are taken by the Board considering various factors, both short term and long term -- keeping various factors both short term and long term at the back of mind. And appropriately, when the Board would take the difference, I don't think we will be able to commit anything in this call about this matter. And I would rather want to understand, in fact, from you. You talked about radical rating on capital allocation, what exactly is meant by that?

Capital allocation, I mean to say how the -- whatever cash that we generate, how that cash is utilized in terms of what is retained in the business and what is distributed to shareholders, right? So but the more and more cash we retain in the company that gets reinvested into low-earning investments, like debt mutual fund and all of those things, also the distribution to the shareholders. So that's what I meant by capital allocation.

Fair. Fair. So we would -- the Board will be keeping all these factors in mind when these decisions are taken in future.

Correct. And lastly on the PaySe platform. So good thing that RBI has approved our product under regulatory sandbox and now probably, we'll some -- we'll see some more action. So just wanted to understand where does the potential lies for PaySe and what would be the revenue model. Because at the time when we launched it, we said that there will be potential on the payments bank on the e-commerce side. But I think most of that has already been now captured by Google Pay and Paytm and likes of the world. So I think -- so what is the remaining place where PaySe can be relevant? And what would be the revenue model that can be there?

Yes, the -- excellent question. So the PaySe is there. PaySe continues to be relevant in -- where people do not have smartphones and that population is quite huge. I think at least anywhere between 200 million to 300 million adults who would not have a smartphone. So that is the target statement, which is still relevant. However, we continue to face challenges in terms of acceptance by the relevant government agency, and we continue to focus on how do we get them to appreciate the value of this very, very unique offering. And we will come back to you with the latest in the next quarter.

Next we have Ramesh from Investor First Advisors.

Congratulations on a well-executed buyback. Just a couple of questions, sir, from my end. Number one is that, sir, I was going through the results and our operating and other expenses are up year-over-year from, let's say, INR 15 crores to about INR 21 crores even on a Q-o-Q basis. I think in one of the comments you mentioned that essentially it was on account of G&A, because the sales and marketing were not up that much. So in the G&A, sir, which part of it has it expanded? Is it something that's going to continue on a continuing basis at this pace? Or is it just a one-off thing? That's one of my questions, then I'll come with a few more, sir.

Yes. So thanks for appreciating the buyback. Now as far as this increase is concerned, mostly it is because of the depreciation that has gone up, thanks to the purchase of hardware and software. So this is the last for quarters to come.

This would last -- like a license fee or what? What have we paid here?

See, as I mentioned, this is both depreciation as well as license fee, combination of the 2.

Okay, sir. So do you see it'll continue at this pace? Or do you think it'll go on increasing also?

As of now, it should continue at this pace unless we acquired some very high-level hardware, et cetera, which there is a possibility. But as of now, I would say, it'll continue at this pace.

Okay. Okay. So basically, our G&A, we can assume, will continue at INR 16 crores, roughly.

Yes, yes, yes.

Okay, sir. And sir, in terms of the employee cost, I know that we've had quite a time and we've successfully added a lot more pressures. So do you think, sir, on the employee cost front, we are past the troubles and times at least, and now we are into the steady state period? Or do you still think that we still have some ways to go?

I'll request our Chief People Officer, Prema, to take this on.

Yes, sure. Thank you, Vishnu, sir. With the trends that we're seeing in the past year and more than a year actually, whatever -- we are leading in the market. It appears like the trend is likely to continue for anywhere between 12 to 18 months. So this is something that this entire industry is seeing. And definitely, it's not unique to our organization. And yes, so we are just desiring for that. With the induction of freshers, we do see that we will be able to manage on the cost front and hiring related costs that one would normally incur. So yes, the trend we do see is likely to continue for 12 to 18 months.

Got it. Got it. And just one question from my end, again, on another point. We see a segmented result, sir. There seems to be -- I mean, some -- in the -- in Southeast Asia, sir, we seem to be both losing revenue momentum as well as there's a PBT loss, a segment loss. So just to understand, again, is it a one-off? Or was it some project roll off and that's why our fixed costs have come out here? Or what is the situation there, sir, in Southeast Asia?

I'll request Anurag to take this question.

Can you repeat your question, please? I was trying to...

So essentially -- yes, no worries. No worries, yes. So Anurag, essentially, if you were to see the segmental reporting that where -- we did about INR 24 crores of revenue, with a segmented EBIT of about negative INR 78 lakhs in December 2020. And December 2021, that's moved to about INR 2.5 crores segmental loss. And there's been a de-growth even in the revenue as well from INR 24 crores to INR 21 crores. So is there something to read through in that in a sense that some projects are rolling over and that's why our fixed cost is now coming out? Or do you think this is a temporary thing? Or is there something that's happening in Southeast Asia?

Okay. Okay. So first of all, regretting the inconvenience that you have to repeat the question. I'd like...

No worries. No worries, Anurag.

Yes. Yes. So first of all, it's actually a very, very -- though it has lasted for a few quarters, but it's a very, very temporary situation, I will still say. But the reasons are, again, related to the overall industry situation that we have a good number of projects and business pipeline in our hands. Having said that, as the immigrations for Singapore have been closed for almost 18 months now, the talent posting has increased here and we are not able to execute all the projects to the extent we wanted them to be executed. In addition to that, there is a significant increase in the personnel cost here. You can imagine, it's an island which is closed from everywhere, so the talent scarcity has increased, and that has increased our personnel cost and lest to this type of change in the financials. But we are expecting a few innovative methods to increase our revenue. And at the same time, once the borders are open, we will be easily getting the talent as we used to it in the past and this situation will be surely reversed.

Understood. And last question from my end is similar situation in the Middle East, because Middle East also, INR 8 crore EBIT has come down to about INR 2 crores. So is that also because of the closed borders?

To a large extent, yes. And the personnel costs have increase, that phenomenon is only present. So that has caused everywhere. And Middle East was also closed for the -- from the aviation perspective. Recently it has opened up, and that's why we will be seeing the differences there as well.

Got it. And there should be more projects in Dubai and Saudi in things?

Predominantly in the UAE region, and yes, there are a couple of things in the GCC rest of, easily, the region, yes.

Got it. And just -- if I may just ask, you had mentioned the cash -- total cash on books. And I know the signal tell at that time. So just don't mind repeating the total cash on books. That's all.

Next, we have Rishi Modi from [ Bar Sella Investment ].

Can everyone hear me?

Tapan, you -- just a sec. Tapan, if you may, just repeat the cash on book situation the 31st December?

Sure, sir. Okay. Total cash and cash equivalent as on 31st December 2021, is INR 543.3 crores, sir.

Yes. Okay. Thanks, Tapan, and back to you. Sorry. Go ahead. I had to interrupt.

Yes, no problem. On -- so I have a few questions. First on just the numbers front. I think in the past con call also and in the month, people have suggested if we could have a segmental revenue based on premises FinnOne Neo and similar for FinnAxia, ultimately on cloud? So do we have those numbers with us right now? Or should I reach out offline for those numbers?

No, we don't have those numbers off-line, and we may not be able to give you this off-line either.

Okay. So just, like, if you can give a brief guidance on how FinnOne Neo's clientele and revenues have grown, like just the Neo has grown over the past 3, 4 years? And how much of that has been from shifting of on-premises to Neo versus new additions? If you could give a brief overview of that.

Brajesh, would you like to take this or Parag would?

Yes. Okay. Yes, Brajesh, go ahead.

Yes. Thanks for this question. We will not be able to give the product-wise and the deployment methodology-wise, the bifurcation. [Technical Difficulty]

Sorry to interrupt you here. Is it just me or is your voice breaking for everyone else?

Yes, Brajesh. This is not audible...

Yes, sir. You are breaking.

So I'll -- maybe -- I hope my voice is audible. This is Parag now. So yes, segmental revenue as -- for product-wise, as Vishnu said and Brajesh said that, that's not what we'd be able to give. But I would like to -- since you talked about last few years, I would like to mention that FinnOne Neo is going strong, both on, on-premise as well as in the SaaS model. We have 50-odd customers on the SaaS model already and some big names on, on-premise. Some of whom are our existing customers, [ and ] has started to migrate from FinnOne to FinnOne Neo. So yes, if that answers the potential for FinnOne Neo, it's very promising. That's how we look at it.

Okay. All right. And if you could give us just a couple of numbers before I move on to the qualitative questions, do we have revenue from repeat clients as a percentage of revenue or a renewal rate for the clients on a year-on-year basis? Hello?

Yes, this number -- the precise number we would make it available off-line. And next quarter onwards, it will be -- we'll be talking upfront about it. Our guess is, as of this quarter, it will be in the vicinity of 90% to 95%.

Okay. That's great. That's helpful. Now coming on to the qualitative end of the questions, if I could get a brief idea about what -- do we have any products in the pipeline and any new technological capabilities that are being built into the staff or even within the company, like be it blockchain or any other sort of decentralized system that we are building our capabilities on?

Brajesh, would you like to take the question?

Yes. I can take this question. Is my voice clear?

Yes. It is clear.

So recent developments on the technological front. One is AIML. We are investing into AIML. We have come out with some solution offering, leveraging this capability, and we see more that would be done on this front. Apart from that, if I talk about the business technology, we have come out with a "buy now pay later," offer, which handles the scale required for the massive lifestyle financing that is happening in these days. .

Okay. All right. And one more thing, we were trying to reprice our contracts, even in renews, we see new contracts with new clients. If we could get on overview of how successful the repricing has been, like, how much percentage increase in the contract value on an average has taken place? And are we facing any pushback from the clients? That would be helpful to know.

Thanks for asking this, but this is too specific. I can only say that client-wise, appropriate pricing strategy has been worked out to ensure that it is win-win for both lines and us. Beyond that, I will not be able to share this takeaway.

Next, we have Vivek from Nine Rivers Capital.

We understand from the commentary that you gave that -- and in the past commentary that you have made that you'll have given a significant risk to your current employee base and also hired new people who are yet to go online, so to say. We appreciate that's a forward-looking and a requisite step that you'll have taken. So what we want to understand is, correspondingly, why have you not seen a growth in revenue? Is there still some lingering effect of the ransomware attack that you all had? And I'm asking this question specifically because some of the peers who are listed in the space, they have come out and shown significant top line growth or traction in the revenue profile. So this is something -- is this something that is likely to get corrected in short order? Or is this -- while we work with elevated cost structure, the top line will take much more longer time to start showing traction? That is what we wanted to understand.

Clearly -- thanks for a very meaningful question. Clearly, the way we would like to respond to this question is there are 2 approaches that we are following. One is the long-term approach, which would take a few quarters. It could be a couple of years also to demonstrate results. And parallelly, we are working on the short-term measures. How well do these measures pan out in terms of numbers, et cetera, that remains to be seen. This is more of a, I would say, experimental work that is happening. But we are extremely confident that results of these experiments are going to be very, very meaningful for our -- certainly for our customers and, then in turn, for other stakeholders as well.

Sir, when you say these experimentations, what are these experimentation that you are referring to? The delivery? Marketing? Or how we manage our cost structure, PPE cost? What exactly are we referring to? If we can be a little more precise, that will be very helpful.

Yes. These are experiments that we are conducting across the board, right from concept stage of a product through validation of those ideas into the marketplace and then converting them into meaningful architecture, design, testing implementation, the entire life cycle and making sure that our customers are able to derive value out of the world-class intellectual property that has got created. So is the experimentations across the entire end-to-end value stream.

So if I can just drop on what you said, and please grant me this request is -- it is more from the delivery, product development delivery model. But even -- and that is futuristic in nature. So there is a cost turnover, we understand that. But even otherwise, you all had a good set of products, which you're already delivering to the customer. So why aren't we seeing a traction there? Is there something that has come up which is hampering you all from even showing marginal growth even, single digit -- high single-digit growth? Is there some clip somewhere which is holding you all back and it is kind of confidential or it has some strategic importance from a business point of view, which you all are not -- it's not so much the cost structure results, so the top line -- inability to accelerate the top line? That is what we want to understand.

No, no, it is essentially those feedback that we got. And that is what -- in terms of the COVID and ransomware attack and attrition, which is what is holding us back.

So going forward, how are we making this -- because while COVID might be out of the way, attrition is going to last, ransomware happened, the last place we would expect a ransomware to happen is a tech company. But all the same, it happened. So are we -- are there any lingering effects of the ransomware, because of which certain projects are on hold, filing of deputed people, the execution is not happening, billing is not happening, where exactly is the holdup? And again, this is in reference to people have gone through the same -- the external macro factors and have shown growth. They have had ups and downs and -- temporary, and we assume that is also temporary in the case of Nucleus. But even in the last 1 year, they have shown growth, so that's why we were trying to understand. What exactly is holding back the top line growth?

Yes. So once again, let me reiterate that when it comes to ransomware attack, no lingering effect whatsoever. In fact, I'll request Anurag to elaborate for your benefit and at your benefit, how we have, like, much, much more stronger than a whole lot of players. And -- yes. So likewise, we are confident that we will come -- we'll bounce back. The top line will bounce back soon enough as our experimentations become -- start becoming more and more successful. Over to you, Anurag, to just give a perspective on how we have grown stronger on cybersecurity.

Sure, Vishnu. Thank you. So after -- see, first of all, when we were hit with ransomware or cybersecurity breach, we could contain it to a maximum extent. That is one. Second, our, you can say, recovery, was quite faster in comparison to generally what organizations take to recover after this type of attack. So this is the second thing. After that, we have gone for a very comprehensive assessment. We have engaged, unarguably, the best cybersecurity consulting firm in the Southeast Asia. They have been our cyber tech advisory. And our internal team and that cyber tech advisory have actually gone for a very comprehensive measures on strengthening our cybersecurity posture. We -- I can tell you that our -- all our digital assets are currently protected with best of the class cybersecurity platforms and tools. We have gone for a different type of multifactor controls, multilayer controls in our environment. As a good practice, what we have done precisely to add still to our fiber security, I will not be able to share those details. But I can tell you that 1 of the top 4 in single-consulting organization. In addition to that -- our cyber tech advisory, has gone for a detailed discussion with us. At one time, they have mentioned that, right now, probably, we are among the top 3% IT organizations having the proper cyber guards. So that's the level. And as we had to update our customers about this incident and our recovery, just to add how strong we have become, it's also evident from the fact that many of our customers have gone for detailed discussions with us, what we have done. We have also consulted the same consulting organization and gone for quite a few detailed exchanges with us to see whether they can also follow the same type of measures and put the same type of controls. So that's the level that worked this. Also we have got multiple appreciation from our customers at what type of guards we have put in after the incident. I hope that answers the...

That's all from my side. Yes. Yes.

Next is Rahul Jain from Dolat Capital.

Hope my line is audible. Firstly, if you could share the order book data. I think I missed if you shared that in the opening comments. And then I have a follow-up question to ask you.

Tapan, can you hear this?

Yes. Am I audible or not?

Yes, you are.

Yes, I can hear you.

Okay. The order book position is at INR 563.8 crores, including INR 541.4 crores of product business and INR 22.4 crores of project and service business. In September 30, 2021, the order book position was INR 546.8 crores, including INR 514.8 crores of product business and INR 32 crores of project and services business.

Right. My second question is, is there any 3 specific things on the positive side that we can highlight and say to these 3 good development that's happened in the business in the last 12-odd months, because how -- because if you look at some of the comments that we share in this quarter as well, like, on the supply side, you said that it's not going to normalize in any time near future. And also from the demand side, you're not able to scale up despite very strong tech spends, valued by fresher segment that you are witnessing in case of many Indian services as well as software peers. So anything we want to highlight as a -- for all those things that has happened?

Parag, would you like to take that?

Yes, I will. But would you -- because you -- mainly the -- a few observations. Could you repeat them because some of them -- I can share the positives, which I have done. Some of the operations, if you could repeat because -- yes, that will help.

So -- okay. So if you want, I can rephrase my question. I'm essentially trying to understand some of the...

Yes, that will be fine.

Okay. Okay. I'll do that. So on the supply side, we are saying that the supply side is going to be tight for some time. So that is not going to resolve in a hurry. That, we all know, right? That is something which everyone else is also talking about. From a demand side, what we have delivered in the last couple of quarters is also not very exciting, which is different from what others are experiencing, where you are seeing one of the best growth for many of your peers. And those peers, I'm counting in the product peers as well as services peers. So I'm saying to you, the demand does not look like good for us. Supply side, we are going to see challenges. So what -- in this kind of a situation, what are the 3 big positives that you can highlight is happening in the business?

Okay. So I'll respond with a perspective. Look, I'll kind of repeat what I shared in my opening remarks that the good thing is we are able to hire a good number of freshers from the market. That's a positive. And it's in hundreds, it's not just a few numbers. They are in different stages of onboarding, including some who have already been deployed on projects -- on our implementation and projects and starting to contribute to our top line. Yes, if you're talking about supply side in terms of propping our level, that's going to be -- continues to be a challenge. However -- so to be frank, lateral hiring, we have been facing challenge. However, fresher hiring, there is a very good traction. Now as regards deliveries, you talked about revenue growth also. So I mentioned in my initial comments that we have good tractions, both with our existing customers as well as the pipeline. The challenge remains execution. And the primary reason, I agree that as Vishnu, sir, answered that ransomware was kind of onetime phenomenon, COVID also, onetime or a couple of times. These are like -- but what is having a lasting impact is the senior attrition that we faced. Now while we hired so many people from -- in the fresher [ area ], you'd appreciate. And especially in the product domain, it takes longer for us to get those people to understand our products and then start to deliver, as compared to what we would do in a normal services situation or in a project situation. So while you've got those people, it will take us some time for them to deliver. There is no dearth of work, and that's why I talked about both work in hand as well as good traction from pipeline, which I am winning the new orders, okay? Now some of the experimentation that Vishnu, sir, talked about is, just to give you some quick examples, we've hired these freshers from market, it takes us a few months to train them. The experiments we are trying is how can we make them productive in lesser time. So that's one simple example. Those are the things which are -- because they need to and -- they will -- they come with some technology background, but we have a program where we bring them up on the technology front. And more challenging is we bring them up on the product front. So we are trying to see how that can be reduced. So the processes are we've got good traction from the -- on the fresher hiring. We're getting good traction from our existing -- a lot of our customers are wanting to migrate to a newer platform. Execution, just -- it is a challenge at the moment, but with the fresher hiring that we have done and with the productivity gains, the tools and the platform that we talked about. I talked about the MSP and I talked about huge number of new laptops that have been acquired and given to people. And process improvement and the planning that we are doing, we expect that to give us benefits in the coming quarter. I'm not sure if I'm able to answer you. It may not be directly to your precise question, but I wanted to give you a perspective of how the business is looking to us. So we are quite hopeful and upbeat about it. The kind of -- the situation has not -- I don't know if you mean that, but it's not such a -- I can't comment about other competitors, how they are doing. We don't know their business model and how they go about it. The other aspect which we test in the very beginning of -- as a response to some -- one of the questions is we are also working on our pricing, which is also kind of an answer. It's early, but then that is an area of focus which we are working on, because our customers do realize that the costs have increased. More than the cost, we also are getting into value discussions with them. We tell them what values our products is giving to them, how is that, in general, benefiting from -- that which is something which we are probably not doing so explicitly fast. So these are the kind of experiments -- these are the experiments that we are trying. I hope I'm able to answer your question in the larger perspective.

See, I understand and I appreciate your detailed thoughts on it. But what essentially we are seeing as an outcome is that in FY '22, we are going to close our revenue which we did in FY '19. And incidentally, this is the same period where most of the companies are talking of the common word, which is the most commonly used word which you might have also come across is digital acceleration. And I don't see that acceleration, we've been beneficiary of it. In fact, looking at the numbers and not spending any analogy on understanding your business, people would say that we are a very traditional business and that's why we are getting disrupted in such a scenario. While I know and have spoken to your clients, they speak very highly about your product. But from earlier, the kind of product that we are having and the kind of numbers which we are delivering does not look like that people at the helm are doing the right justice. Maybe it's much easier said than the situation on the ground. I understand hyperinflation and hyper-accretion, it's a real worry which every company in your industry is facing right now and also in many other industries. If that is your biggest concern because you have, as you said, there is no dearth of work, right? So you have the right positioning for your products. You have demand for that kind of product, but you're not able to deliver. If the issue completely on the supply side, not on the demand side, then why we are not able to take some very, very aggressive step? Because it's not 1 quarter or 2 quarters, it's been 2 years and we are getting into a third year where we're not -- possibly will not grow. So is there something that somewhere, we need to do an introspection into and come out to be? And maybe you already have seen those early signs, as you rightly said, that some of the things have started falling in place. So can we say that the FY '22 is going to be a very good growth year because some of the challenges will be behind us? Can we give that kind of comfort? If not, we see any challenge in the current situation? That's it.

I would say we hope to that, as Swati mentioned in the beginning, we don't give any projections. So I will not talk about it. Of course, I only said that the kind of things that we are working on the basics. Basics in terms of getting good intelligent fresh people from the institutes, working on infrastructure. Our product is very strong and you kind of validated that. You also considered one of our customers, so you could consult more customers. And on the technology front, look, we come out with product releases every 6 months. And one, there is a functionality component with -- in the current circumstances. They have a very strong technology component it. So our product releases are not only functionally enriched, but they are also technology equally enriched. And Vishnu talked briefly about the AI and then -- because they're slowly -- which are certainly getting into our products. So saying that, maybe you made that statement that -- saying that the product is very traditional and not up to speed on technology is probably not fair. Because as you would know, we talked about it earlier. This new product that we've created has been completely re-architected, which probably no one or very few in the industry would take such a big risk. We've completely rewrote this product because we want it to always remain on the latest technology. And this is what -- so I would -- in summary, I would respond that probably some more patience is required. We are very sure of what we are doing. And unless the market dynamics again change very, very unreasonably, we should be meeting that. spot, with which I would like to conclude.

Yes, I completely agree. Just one last one I would like to say. I have heard only good things about your products. There's no question about it. But if in the same market, we see that our product is superior to others, but probably the companies with lesser superior products has increased so that -- from that matter, on a related scale, are delivering better numbers than ours, then there is something wrong between having a good product and having a good market. So that is something, as you said, you cannot comment on others' performance, but I think you need to look into what others are delivering. They're delivering their best-ever numbers in these years. But on the contrary, we are seeing the worst performance in last 5, 6 years happening right now with that. So it is very conflicting with what is happening in the marketplace. So that is something which I wanted to highlight your attention to.

Yes, Thank you. Thanks for your inputs. We'll -- anyway, reflecting upon these things. We will keep your inputs in mind. Thank you so much for these critical inputs.

We have a last question of today from the Vaibhav Badjatya from Honesty and Integrity Investment.

Yes. Just one on numbers. So what is the number of employees in this December '21 quarter ending in December '20 quarterly?

Vaibhav, thank you so much... [Technical Difficulty]

Hello?

Yes.

Yes, we are having -- we are adding a headcount of 1,689 as of 31st December 2021. And we were having 1,998 as at 31st December 2020.

Okay. And lastly, on the -- I understand the pressure that we are seeing on the employee cost front and you also highlighted that you upfronted increments from Jan, so you've also said the employee cost will keep increasing. But apart from the employee cost, do you see any other place where costs can be managed or reduced? If you can highlight which are those areas where we can probably reduce costs to offset some of the margin impact that is coming from the employee cost.

We are tying the productivity measures and that is how we can hope to reduce the cost otherwise -- percentage terms wise. But otherwise, as the industry is experiencing, it is a rate of execution as of now.

With this, I would like to now hand over the floor back to Swati for final remarks. Over to you, Swati.

Thanks, Harpreet. Now we would like to thank all our investors for joining us today for this call. I would now pass it over to Vishnu, sir, for his closing comments. Over to you, sir.

I'd like to take this opportunity to thank all of you for your continued interest in Nucleus Software, and I would like to reiterate our commitment to ensure that we deliver value in the long term to all our stakeholders. Thank you so much.

Thank you so much. So thank you so much to all the speakers and investors for joining the call. That does conclude our conference call for today. You may all disconnect now. Thank you, and have a pleasant day.