Sonata Software Limited (SONATSOFTW) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Sonata Software Limited Q2 FY '24 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Samir Dhir, CEO and Managing Director from Sonata Software Limited. Thank you, and over to you, sir.

Thank you, operator. A very warm welcome to this conference to all of you. We will discuss our strategy and the financial results for the Q2 quarter ended September 30, 2023. I thank you for joining us today. I appreciate your valuable time and support. We are proud and excited to deliver yet another quarter of industry-leading growth despite the macro, geopolitical issues, economic challenges and slowdown of tech spending across geographies. Our big bets and continued investments are delivering outcomes, and they're delivering very well. We are moving well to scale Sonata as per our vision. Team Sonata in committed to judiciously accelerate the growth curve and build scale and scale in terms of large deals, clients, markets, partnerships and talent. With that, let me cover an update on our strategy, strategic goals first. As a recap, our objective is to be the fastest-growing modernization engineering company, powered by our unique Platformation framework, with a goal to achieve revenue of $1.5 billion by the end of FY '26 with an international EBITDA of low 20s. We called out the strategy about 4 to 5 quarters back. We are very pleased to inform you that the international business crossed $80 million run rate in Q2 FY '24. This is right after crossing $75 million in Q1 FY '24. In Q2, we delivered industry-leading growth of 4.6% quarter-on-quarter and 40% Y-on-Y. And that is at the back of 4% Q-on-Q last quarter and 4.5% Q-on-Q the quarter prior to that. Our India business is consistently delivering strong growth and industry-leading ROCE. We're very proud of the achievements of our team in Q2 quarter. Our strong focus on driving modernization engineering with sharp focus on cloud and data is driving our growth curve through large deals. We continue to deliver tremendous progress towards the strategic goals of consistently winning large deals, M&A focus and verticalization. Let me provide you an update on the progress on our strategic goals. Let me start with M&A first. Quant Systems, Inc., the company we acquired about a couple of quarters back, was a historic acquisition for Sonata. It provided a strong foothold into our invest verticals of health care, life sciences and banking, financial services. Quant is now fully integrated into Sonata. Our investments in sales and marketing is enabling us to scale Quant accounts rapidly. The synergy pipeline is well over $150 million now. We've come a long way in the last 2 quarters with Quant. As far as large deals are concerned, we're delighted to report our large deals pipeline is now 38% of our total pipeline, which is about a 3x jump compared to same time last year. Let me provide 3 large deals that we won in the quarter -- in the most recent quarter. Deal number one, this is a big client, is a premier third-party logistics company that provides supply chain solutions. We're going to build and maintain their logistics solutions across all lines of business, including transportation, distribution, fulfillment and warehousing. We won this contract against stiff competition by leveraging our strong data analytics, cloud architecture and engineering capabilities. This is a U.S.-based company and this is a multiyear contract. Second large deal we won in the quarter is a leading network service provider powering global connectivity for new media providers, telecom carriers and enterprises. We signed a large multiyear contract to transform their core business and financial processes leveraging our cloud data and Harmoni.AI platform. We are delighted that with this win, as our Harmoni.AI platform, is our first multiyear AI win using our responsible-first AI approach which differentiates us against the competition. The third large deal is for a client which is a leading industrial steel and mill services steelmaker. Client wanted to modernize their existing trading platform with a next-gen scalable solution. Sonata proposed a solution to develop and implement a next-gen trading platform. This solution, we'll implement over multi, multiyears for the client, and we'll build a centralized platform for trade execution, position monitoring and risk management. If you recall, we have announced several large deals over the last 4 to 5 quarters. Every quarter, at least 2, maybe 3. In this quarter, we are proud to announce 3 large deals again. With that, let me move to the third strategic area, which is the verticals and geographies. And let me provide you an update on the key verticals that we're focused on. First, BFSI. With the interest rates on the rise and the mortgage lending rate of the banks and witnessing cost pressures, we're looking, innovative ways, to really help our clients in that area. In the banking space, we are taking market share due to continued focus on data privacy, which was an offering we got through Quant acquisition; efficiencies using automation and AI, which is a capability that Sonata has built; and really, consumer-facing application work for -- in the consumer space for the banks. We are pursuing several large programs where clients want to drive rapid digitization for their consumer-facing applications and offerings. We're very bullish about our positioning in the banking space, where we continue to take market share away from generation-one companies. On the health care and life sciences side, the shift towards value-based care and technological advancements have led to development of new treatments and medical equipment, leading to overall positive outlook for the HLS industry. We are taking, again, market share in the health care and life sciences space through modernization and automation focus. In the retail and manufacturing vertical, after our historic win of $160 million TCV that we announced earlier this year, that continues to power our growth. But in addition, we're winning large deals in this segment with the need to innovate across the board by these clients to accelerate their supply chain and time-to-market efficiencies really bringing digital as the core of their business. In the TMT vertical, as we mentioned earlier, we are seeing some softness in the high-tech industry in select few clients and this softness has continued in Q2 as well. For TMT sector overall, we remain positive. As they turn to spend later this year, we expect we will continue to grow with them. We continue to collaborate with a Fortune 25 technology giant to accelerate their ability to bring new products and features to the market. We are cautiously optimistic as companies are adopting newer AI technologies in the core engineering areas as well. With that, let me move to providing an update on scale. We are making key bets, especially in the AI and generative AI space. Sonata aims to lead the AI wave from the front with its AI-powered solutions of Harmoni.AI, and we expect that to be 25% of our revenue in 2 to 3 years' time from now. Responsible-first AI is gaining significant attention from our clients because our proposition and offerings are unique. We have had 50 clients show some active interest in working with us in addition to the large deal or multiyear large deals we just talked about. Our Harmoni.AI is a bouquet of industry solutions, service delivery platforms and accelerators using GenAI capabilities. In the most recent quarter, Sonata assisted a Fortune 25 technology giant in integration of open-source GenAI models to Azure ML. The solution helped their AML team make view into the model health, performance and status to decide on onboarding; provided scalability to process thousands of models in less than a week instead of multiple weeks earlier. The second bet we have made on scale is Fabric, Microsoft Fabric. If you recall, Sonata is the only India-based SI partner that has been called out by Microsoft to lead the launch for Fabric platform for Microsoft. Our team of over 300 data engineers are enabling our clients to leverage this new paradigm of Fabric end-to-end analytics SaaS platform. We continue to witness significant pipeline build on Fabric as we move forward. We are in active conversations with 70 clients as they embrace and adopt Fabric as we move forward. The third key bet of scale is partnership ecosystems. We continue to make rapid progress with our partnerships with Microsoft, AWS, Google, UiPath, SAP, Salesforce and ServiceNow in addition to MetricStream, which is our BFSI partner. I'm proud to share with you outstanding accolades that our teams won in the quarter. We won Microsoft Inner Circle Award, a partner award with Microsoft. Everest Group announced us as the leading global analyst, as the leading provider for cloud services in North America and Europe. And Sonata also recently won Infra awards for outstanding demonstration of sustainability. And we will continue to remain committed to our ESG endeavors as we move forward. We will scale our India business with a sharp focus on annuity business. With that, let me provide an update on talent. Sonata University, that was launched a few quarters back, witnessed a sharp jump in enrollments. Now 5 out of every 6 Sonatians is engaged in active learning within Sonata using Sonata University infrastructure. To continue to build Sonata as a global firm, diversity and inclusiveness is a high focus area for us to grow. Our current diversity ratio is 30-70. And our global D&I Council's charter is to make strides towards making it 35-65 in 3 to 4 years' time from now. With that, let me provide you an update on the quarter's performance. In Q2, our international services business grew 4.6% quarter-on-quarter, 40% Y-on-Y. In constant currency terms, we witnessed 5.2% quarter-on-quarter and 38.5% Y-on-Y growth. Our Q2 consol PAT grew 3.4% quarter-on-quarter. Operating margins before ForEx, FX and OI for the international was at 23.1%. Gross contribution in domestic business grew 16.5% Y-o-Y. In Q2, we had a strong order booking with a book-to-bill of 1.24 in the international business. We have 32 large deals in pipeline and our large deals pipeline is 25% up quarter-on-quarter. From an operating efficiency perspective, we improved our utilization by 1.4% in the quarter. As we mentioned in the last call, we had hired people in Q1, and that gave us a full quarter impact in Q2. Our large deal of $160 million that we announced earlier in the year is fully ramped up now and the transition is -- at this point in time is completed. We now have 17 clients with more than $3 million annual revenue at Sonata. Last year same time, this number was 9. We have almost doubled more than $3 million clients -- revenue clients in last 1 year. In addition, we have 11 clients with $5 million -- greater than $5 million run rate for Sonata now. I'm also pleased to announce the bonus share. In the last 1 year, our back-to-back industry-leading financial performance has yielded stock returns of over 100% for our shareholders. In recognition of the support and confidence of our esteemed investors in the company, it is our pleasure to announce that the Board has approved issue of bonus shares at a ratio of 1:1. We look forward to your continued belief and support in our journey to achieve $1.5 billion in -- by end of FY '26. In summary, we continue to remain optimistic about the long-term growth prospects. In coming quarters, we will continue to have tailwinds -- 2 tailwinds and 1 potential headwind. The tailwinds are multiple large deals that we talked about earlier and the pipeline that we have. The tailwind of Quant System acquisition and the logos that we got from them and the proposition that we have with them and the synergy benefits that we're driving through Quant. And the potential headwind is the softness of TMT vertical which continued into Q2. But we're hoping that, as we move forward, the spend pattern will resume in the TMT vertical as well. All in, I'm very excited. Sonatians are very excited, to where we are in terms of our journey. We expect to stay in the top-quartile performance, fueled by strategic investments we have made in the business. Our focus on modernization with Platformation at the core of our industry-leading approach is paying, winning large deals and opening enterprise-grade logos. Thank you. With that, let me turn to Jagan for his comments on our financial performance. Jagan?

Thank you, Samir. Good morning, good afternoon, good evening, all. We've had another top [ big line ] performance in this quarter, which is the industry-leading in terms of revenue growth and in terms of the other aspects of the financial result also. Coming to the international business. The performance that we had of 4.6% quarter-on-quarter growth, which is on constant currency terms, it is 5.2% quarter-on-quarter growth and 5.7% in rupee terms. It is also reflecting about 40% year-on-year growth, and in rupee terms, it is 45.5%. We have consolidated EPS for the quarter is INR 8.96 per share compared to INR 8.96 per share compared to INR 8.66 per share last quarter. This is, again, continue to be a strong growth compared to the market situation at present. The ROCE for consol level stood at 31.1%, and for return on net worth, was 34.5% for this quarter. The PAT grew for the quarter at 3.4% quarter-on-quarter, and year-on-year, 10.2%. The major reason for the PAT movement has been given in the -- updated in the presentation. If there is any questions, we can cover that also. We have also given the GAAP of what is the amortization and interest that has come and hit the P&L. This is for the further clarification on the questions that have been raised on the what is related to Quant acquisition, and what was the other costs included, complete information has been provided for. We have also given the breakup of other income and ForEx for the reference of the investors. Coming to this performance. Domestic business has been -- continued to have a solid GP of INR 62.4 crores. This is about 0.9% quarter-on-quarter growth, but year-on-year, a very strong growth of 16.5%. Domestic PAT has grown by 0.7% quarter-on-quarter and 18.7% year-on-year. In the domestic business, as you notice, there is a seasonal impact on this quarter, next quarter being the major quarter for them. In international business, other operating performance has been utilization has increased to 84.2% compared to 82.7%. We have added 4 new customers. Top 10 clients is 61%. And clients greater than $1 million are 65 customers. TMT contributed 27%, retail manufacturing 36%, HCLS at 11%, BFS at 21% and emerging at 5%. The data constitute 22% of the revenue and cloud is 39% of the revenue for us. The Q2 order bookings stood at 1.24x, that is book-to-bill has been industry-leading, 1.24x of that. Our DSO continue to be very good. International DSO has come down to 45 days compared to 46 days last quarter and domestic DSO has come down to 35 days compared to 36 days last quarter. The headcount for the quarter end has moved from 6,666 in the quarter to 6,494 for this quarter. In summary, we are very, very happy to -- as mentioned by Samir, happy to announce 1:1 bonus share for shareholders, as well as we have declared INR 7 dividend for this -- interim dividend in this quarter also. We continue to perform very well. And also, we want to thank the shareholders for their continued confidence. Thank you.

Thank you. With that we can open for questions, operator.

[Operator Instructions] We have a first question from the line of Baidik Sarkar from Unifi Capital.

Congrats on a phenomenal quarter. Could you give us a flavor on how your large client is looking, specifically? There was a sense of weakness the previous quarter. I understand there might be some pullback, maybe like for the macros. How are you reading the specific engagement with Microsoft? Any flavor will help. And also on large deals, Samir, sorry if I missed this in your opening comments. Have we added to this [ kitty ]? Did you say your pipeline is up 25%? Or was it the order book?

thanks, Baidik. So 2 parts. I think on the large client, the spend pattern has resumed on newer areas, specifically around AI and GenAI, which is where bulk of our focus is in winning that business. We have -- like we announced last time, we already have closed 1 deal with them on that -- in that area, and we continue to make progress on that. So in general, the market within the environment from a Microsoft perspective is looking up. Their results were also pretty strong. So we believe that we will continue to grow back with them as they come out and start the spend pattern. So the future looks relatively strong as we move forward with them. So that's on Microsoft. On the large deal, Baidik, the large deal that we announced, the single large deal we announced, the $160 million deal, is fully ramped up now. What I talked about was the in-general pipeline improvement that we have seen in the large deals, it's up by 25% quarter-on-quarter, and the total pipeline of all large deals put together.

Sure. In the domestic product business, I understand every now and then, there will be a quarter of consolidation. So should we read Q2 as one of those quarters? Or is there a caution in the demand ecosystem specifically? Any flavor from you or Mr. Mohanty will help.

Sujit, you want to take that, please?

Yes. So Q2 has always been -- over the years has been a little bit weak quarter for us because a lot of these are large contracts the way they have been structured after the quarter, that's why we have -- Q2, Q4 is -- little bit of Q2 as far as the numbers are concerned in terms of the top line. This is not an exact indication how the market is and how we're going to -- from the profit point, of how we are going to do quarter-on-quarter. This is just that, historically, this quarter has been always like this from the revenue point of view.

Yes. But getting into Q3, Sujit, should we expect a flush? I mean, there's been years in the past where a flush happens in Q3. I'm just trying to understand what your broad sentiment is.

Yes, Q3 is a good quarter for us.

And then lastly, Jagan, on the margin front. With the -- is it fair to assume we'll hold these levels? I'm just trying to understand how we read our investment levels into the business given what our growth momentum is.

Yes. The margins for international business or domestic business?

International.

Okay. International business, as we mentioned, we will continue to be at the lower 20s EBITDA before ForEx and other income. We will continue to maintain that. Depending on the quarterly requirements and our investment plans, it can vary from quarter-to-quarter. The investments will continue in our focus areas where we have announced already. So in the medium term, it will be only lower 20s of margin.

We have our next question from the line of Mohit Jain from Anand Rathi.

As a follow-up to the previous one. So when you say large deals ramp up, $160 million is completely built into revenues now. You also announced 1 large deal with TUI. So that part, should we expect to ramp up in second half? Or that part is also built into the revenue?

No, Mohit, that will continue to ramp up. That is early days of that ramp-up right now. Part of it is already inside, part of it will go into Q3, Q4, and some part is in Q1 as well.

So with that, what is the general outlook for second half? Like I was initially anticipating a sharp ramp-up in Q3 and Q4 given our deal signing. So is that the trajectory, or do you think the usual Q2 strong and Q3, Q4, it is on the slower side given furloughs and all, that's how we should look at Sonata International business?

Mohit, we don't give quarterly guidance. But I think in general, what we have said, we will go in high teens this year, Y-on-Y, that I think is the trajectory we are on. And I think we're very confident. Again, organically, we're very confident of getting to the same trajectory during the course of the year. So yes, the business momentum is pretty strong. As you can see, this last quarter also, 4.6% reported currently. We expect to be in the same high-teens growth Y-O-Y.

Understood. And last is on headcount reduction. Like there was, I think, some reduction in the quarter, which was -- like we were expecting some addition given this ramp-up, et cetera. So is that a quarterly aberration? Or do you think headcount is something which may lag behind revenues?

No, it's a quarterly -- not even an aberration, it's a correction. If you recall, last quarter, we had talked about we had fully ramped up for 2 large deals in the quarter and they were in transition. So this quarter, we had the benefit of having them give full quarter revenue, and it impacts the utilization as well favorably because those people were all billable this quarter. Secondly, this quarter also, we could not hire in time for AI. We wanted to ramp up more, but just couldn't get that hiring done. So we are -- that full quarter impact will come into next quarter. So I think it's just a delayed hiring a little bit that happened for us this quarter, it will catch up in the next quarter.

Q3, Q4, we should -- when we look at the numbers, potentially, you will start adding again?

Absolutely.

We move on to our next question from the line of Mayank Babla from Enam AMC.

Congratulation on a great set of numbers. Am I audible?

Yes.

So I just had one question. This was around -- in this quarter, we lost one senior talent to a peer. So I wanted to understand from you if there was any key man risk at all over there? And if yes, has it changed or derailed our vision of international revenues doubling in the next 4 years? Or any sort of vision changes there?

Yes, no. So it's a fair question. I think, yes, we had one senior exit. But like I've always said, we have built the organization for scale. And you'll be delighted to know that we could fulfill that position from within. And Anthony, who you met, has taken that as an additional responsibility. So as far as Sonata is concerned onward and forward, we're moving forward and stronger. And I think we have enough leadership that we are building in and have built that we feel we can take the company to the goals that we have outlined for ourselves.

We have our next question from the line of Mihir Manohar from Carnelian Asset Management. [Operator Instructions] Since there is no response, we'll move on to the next question. [Operator Instructions] We'll take the next question from Vipul Kumar Shah from Sumangal Investment.

Sir, is it possible to give revenue and EBITDA for Quant System separately?

So it is difficult to disclose that because we are fully integrated at present and there are quite a lot of cross-selling opportunities happening. So for the purposes of earnout, we will have a financial, but it's difficult to publish it outside.

Okay. Okay. And sir, a lot of your large peers have given very cautious commentary due to recent macroeconomic and geopolitical situation. So are you experiencing any cautiousness on part of your clients? Are you experiencing any ramp-downs or delays in project starts? So your comments will be highly useful, sir.

Yes, Vipul, thanks. Look, the market, like I said at the beginning of my comments, is the macroeconomic headwinds are still there, the tech spending is still low. So this situation is notwithstanding. As far as Sonata is concerned, I think our proposition around moderation engineering continues to resonate with the customers. Across verticals, we continue to see good demand buildup. Our large deal pipeline is up. Our overall pipeline is up. The confidence in Sonata value proportion is quite high as far as we can see. Now are there pockets where we see some softness? Yes. We see softness in high-tech industries, we've seen softness in 2 clients in health care in the most recent quarter, but those are isolated pockets of softness that you're seeing. But in general, the overall momentum is looking pretty good as far as the industries and geographies we operate in, with the proposition that we operate in, Vipul.

And lastly, sir, Microsoft published results yesterday night only. And they are relatively very ahead in generative AI. And since you are their sole partner in India, so do you expect a competitive advantage from that relationship?

Yes. So let me just qualify the question first. So we are not the sole partner for GenAI. We are the sole partner for the Fabric offering, which is a SaaS-based offering from India. So that's just one qualification. As far as GenAI is concerned, we -- our proposition on Harmoni.AI is resonating well with the customer. And that's what is reflecting in the multiple 70-odd client conversation that we've been involved in now to really take this proposition on. And that proposition, Vipul, candidly, is platform-agnostic to some extent because there's some LLM from Microsoft or any other partner, our offering is stand on top of these industry-leading LLMs out there. So that's how we are seeing it, and we are very excited about the investment we made in Harmoni.AI. We were probably one of the first ones to come out with the offering with the responsible-first, and we continue to take that advantage ahead as we move forward. And the large deal we announced with the telecom companies has Harmoni.AI as the base infrastructure to really drive automation using GenAI in that business operations area.

[Operator Instructions] We have a next question from the line of Mihir Manohar from Carnelian Asset Management.

Am I audible?

Yes.

Congratulations on a great set of numbers. I mean, quite wonderful in this environment. Sir, largely wanted to understand on Harmoni.AI. I mean, you mentioned that you are looking to have 20%, 25% of your revenue in the next 2 to 3 years from this particular offering. I know you provided one example of the telecom side, if you can provide some more examples as to what is the solution exactly that you're trying to target here, which are the areas which will be a primary focus? That will be helpful. My second question was on the MS Fabrics. I mean, MS Fabrics, are you the sole SI partner at the global level or at the India level? I mean, I just wanted to have a clarification around that. And how important is this product? I mean, it looks quite interesting. So how to understand business from MS Fabrics in the next 2 to 3 years. I just wanted to get an understanding around that. And my third question was on the deal wins. I mean, there are 3 large deals which were there, one the $160 million, and previously another 2 which were there in 1Q. So you have provided clarity on 2 deals. I mean, is that third deal also ramping up as per the expectation? I mean, so I just wanted to get a clarification around that. I mean, are all the deals ramping up as per expectation? Or is there is a slowness there in the ramp up itself? Yes, so those were the questions.

Yes. So let me go in the reverse order, Mihir, so I can cover all the 3 parts. So the deal wins that we've had, we are seeing ramp up as planned, and in some cases, slightly faster than planned, but not delayed at this point in time. So that's on the deal win side, all the deals that we have announced so far are moving as per the plan. On the second point, on Fabric, they have 6 or 7 partners globally. Sonata is the only India-based SI which is headquartered in India in that list. Others, of course, are the general global partners that they have that are part of the list. We are excited with them in this partnership specifically because we are working with them to help them build a product, test a product and so on and so forth. So we're really much ahead of the journey. Fabric is really Microsoft's attempt to provide a SaaS-based offering on a data platform, SaaS-based data platform. So we believe that's a market that will keep growing for them as they launch the product in November. So this will give us some accelerated growth not in next 1 or 2 quarters, but I would take -- it will take about a year for it to really fully ramp up. But we've got to -- we are investing in the areas where we believe the future investment -- the future growth will come from. So that's on Fabric. On your point about Harmoni.AI. Our proposition is really simple, Mihir. We are not in the space of building an LLM. We have built a bunch of services, service-related platforms, RPA services, integration services, around the LLMs which are there in the industry to provide responsible-first peace of mind to the customer. To give you an example. If you're a health care company and you want to make sure that your data privacy is ensured of the consumers remember, our RPA services ensure that we have built out. So anything which really provides responsible-first from a consumer perspective, that they feel secure that their data, their information, is not in wrong hands, is what we're really after as a proposition. So that's really what Harmoni.AI is. We're not competing with Google or Microsoft or any of these big tech companies. Our offering is really a bolt-on as a service offering and sort of delivery platform which augments to the capabilities of the native LLMs in a very simple way. I hope I answered all the 3 questions here, Mihir.

Yes. Sure, sir, sure. That's helpful. And just 2 extensions. On the book-to-bill part, you mentioned 1.24x as the book-to-bill. Is this book-to-bill ex of the large deal wins? Because last time, the number that you have given was ex of large deals. So I mean, even this quarter, is it ex of large deals or including large deals?

It's the same framework that we had last time. So same methodology, what we explained last time, Mihir.

Sure, sure. And just lastly on the synergy pipeline of $150 million which is there with Quant Systems. I understand it is difficult, but what can be the potential wins out of this? I just wanted to get an understanding on that all.

So these are, in general, us taking Quant offerings into Sonata accounts is one part of it. As you know, Quant is very strong in data privacy area and enterprise data in general Salesforce is the third area. So those offerings into Sonata accounts is one part. The second part is to take broader capabilities of Sonata into the accounts that Quant had, which is the second dimension of it. And third is that, in the newer clients, we are seeing some accelerated growth that either Quant could not have won alone or Sonata probably won't have won alone. So we're seeing some deal buildup in that area because of our joint proposition for our net new customers as well. So those are 3 broad areas there.

[Operator Instructions] We have a question from the line of Tushar Wavhal from InCred Capital.

Am I audible?

Yes.

So my first question is regarding the weakness in the Dynamics business. Anything to read into it? And my second question is, sir, what will be the average deal size for the large pursuits which we are having in the pipeline? My last question is related to travel vertical. So any outlook? And what is the current size in the overall services?

Yes, sure, Tushar. So let's just talk with the first one, the Dynamics. I think we explained last quarter, the dynamics -- the Microsoft year turns over in June and July time frame, so it takes us a quarter or 2 to build the pipeline and continue projects going. So we're pretty confident that starting next quarter, or current quarter now, we will start to see uptick coming into that business. There's a seasonality effect that you see in the number as probably it was in last quarter, so we're not worried about the Dynamics. I think we'll be back to growth in the coming quarter onwards on Dynamics question. The second question was on the deal size. I think we've not been able to give a deal size, I know this has been a common ask. But think of these as multiyear contracts, Tushar, which are anywhere between high single digit to multiple of double-digit million dollars of contract in multiyear. That's the range. It's a pretty broad range, so we can't give a singular number to you. But these are multiyear contracts, which can only grow from there because once you get into these digital programs and cloud-transformation programs, we are there for the long haul. As far as the travel is concerned, I think the travel client that we have is doing well. We announced a deal last quarter also, and that ramp-up is moving well. And we believe that it's time to come that business will continue to grow on us.

[Operator Instructions] We have a question from the line of Sanjaya Satapathy from Ampersand Capital.

Congratulations for a good set of numbers. Sir, can you just help me understand the EBITDA margin changes in this quarter compared to last year as well as year-on-year?

Jagan?

Yes. So what is EBITDA margin changes from last quarter?

Yes. And the key positives and negatives, if you can just walk me through them, please.