Subex Limited (532348) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Subex Limited Q4 FY '21 Earnings Conference Call. [Operator Instructions] Please note that this conference has been recorded. I now hand the conference over to Mr. G. V. Krishnakanth. Thank you, and over to you, sir.

Thank you very much. Good evening to everyone who have joined the earnings call for the period ended March 31, 2021. Now I would like to introduce the members of the management who are present on the call. Along with me, I have Mr. Vinod Kumar, Managing Director and CEO; Mr. Venkatraman G. S., Chief Financial Officer of the company. I would like to start the conference by going through the safe harbor clause. Certain statements in this call concerning our future growth prospects are forward-looking statements, which involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements includes, but not related to fluctuations in earnings, our ability to successfully integrate acquisitions, competition in our area of business, client concentration, liability for damages in our contracts, withdrawal of tax incentives, political instability, unauthorized use of our intellectual property and general economic conditions affecting our industry. So with this, I hand over the call to Mr. Vinod Kumar to take it forward. Over to you, sir.

Good evening, everyone. At the outset, I hope that you and your family are safe and on sound health. Let me start with an update on the health of Subexians. Like millions in our country, we at Subex have also been affected by the current wave of COVID. Several have been infected and many have lost their near and dear ones. Along with our Subex Aid volunteers, we are doing all that is practical to help and support the affected Subexians. The only comforting factor is that most of them are currently recovering at home, and we hope the situation will improve in the next couple of weeks. As you would have seen from the FY '21 published results, the revenue for financial year '21 stood at INR 372 crore. The EBITDA for the year is INR 98.5 crores, and PAT is INR 51.7 crores. We have also significantly improved the overall cash position to about INR 143 crores from about INR 93 crores of the previous year. Based on the financial position, the Board has declared a final dividend of 5%. So along with the 10% interim dividend, the total dividend for FY '21 stands at 15%. Now coming to the order booking. After a slow start in Q1 and Q2, the OI conversion started picking up in H2. And we finished the year with a contracted backlog of $110 million. Out of this, the 12-month backlog amounts to about $39.7 million. Now providing the overall backlog figures was a constant request from the -- during these calls, and we have started providing this, and you'll see that in the investor presentation as well. From an operating -- operations standpoint, most of the teams are working remotely at this point in time. Taking advantage of the situation, we also moved into an open collaborative and smaller office, and that has worked very well for us. Now let me provide also an update from the portfolio standpoint. It was indeed a very difficult period, but we took advantage, we doubled down on efforts to scale up our Digital Trust portfolio, and we have made some significant improvements. Let me take it one by one. On the IoT portfolio, IoT security portfolio, I'm very glad to inform you that we have extended the coverage to operational technology. Now operational technology security is a growing space. And this is -- operational technology primarily means the technology that is there in the industrial sector, that is in the manufacturing side, the large infrastructure organizations, public infrastructure companies, their existing infrastructure is called the operational technology, and security of that is becoming an important consideration. You would have very well heard some of the high-profile attacks that have happened around the world on pipelines, grids, electricity grids and things like that. So we have now expanded our capability to cover that, the upside of the security aspect. The next one is partner ecosystem management. Now we have a very strong offering around the interconnect and routing optimization and settlement area. Now we have expanded this to cover -- to provide an end-to-end coverage of the entire partner ecosystem -- digital partner ecosystem management. The specific things that we have added are partner onboarding, contract life cycle management and Blockchain-based settlement. So these are a significant thing. And with this, we are in a position to provide an end-to-end management of partners starting with telcos, and we will slowly start expanding to other areas adjacent to the telcos as well. The other product area was the capacity management, which we've talked about in the previous calls. Now we have again extended the application areas by introducing investment planning as a very important use case. Now this was very important as we move towards the 5G related use cases. With respect to IDCentral, the identity analytics, we have strengthened the product offering by including onboarding and next-generation eKYC functionalities onto the IDCentral platform. The last one is on the HyperSense no-code platform that we have recently launched. I'll take a couple of minutes to explain the whole rationale behind HyperSense. If you look at the enterprises, most of the industries are today suffering from the large monolithic software systems and the processes around them. While it has served its purpose at some point in time, at this point in time, with the digitization and a lot of competition from the digital natives, it is becoming very, very difficult for these enterprises to compete with this very large clunky monolithic software. So therefore, the need of the hour is a very lightweight, complete cloud-enabled, loosely coupled platform that is driven by AI and -- AI, ML and data. And that is what exactly that we have done with HyperSense. With HyperSense, our enterprise customers will be able to bring products much faster to the market because we have taken care of all the engineering and AI/ML capabilities in the platform and using a no-code environment, meaning the customer can drag and drop and the business users, without any prerequisite strengths on data science et cetera, will be able to work with their data, create insights and improve their customer experience and drive business. So this is going to be a game changer, both for Subex and the customers. For Subex it's a game changer because this sort of launched our foray into a platform. From a software product player, we are becoming a platform player. And also this will help us to transition more and more from a license to a subscription-based or a SaaS-based business offering. Now let me move into the new customer engagements that we had during the course of the year. Let me start with the core. Now we won several large deals, the notable ones being Saudi Telecom, the Telefónica Group deal for the South American properties, a very large deal from a Tier 1 in APAC for our Business Assurance portfolio and another one in North America from a Tier 1 for the partner ecosystem management portfolio. We have also added 3 new logos, again in the core product area, which means that we are still finding it -- I mean, our portfolio is becoming interesting to a lot of customers, even in our core areas, and we are grabbing market share from our competition. And also, wherever we have the new -- very large MVNOs et cetera, we are able to tap into this segment. When it comes to IoT, we have taken a completely new approach of approaching the market using channels and distributors. This is showing signs -- positive sign, positive initial signs. We have already onboarded strong partners and distributors in the Middle East, North America and India. Using -- through these partners, we have already secured businesses in the oil and gas sector, the shipping industry and also the manufacturing side. Now in the manufacturing side and the petroleum side, these are initial deals that we have signed with large corporations for one plant in one country. But as we start completing the implementation and providing the value, that is an opportunity for us to expand this to other plants in the country and plants in other countries of the same multinational enterprise. Also, I'm very happy to inform you that we have secured the approval from U.S. government on the SAM, which means that we will now be able to provide services to the U.S. government based on the SAM approval. Moving to IDCentral. From a -- because the extension that we have done, we have started securing customers in all the 3 areas to -- if you recall, we have discussed that the primary use case is on solving identity-related issues, but we have sort of augmented that with onboarding and with next-generation eKYC. So we have also started onboarding customers onto this platform to provide some of these services. These are all SaaS-based offerings. So the ramp-up will be slow. But the important thing at this stage is for us to have customers on to the platform so that as the customers start using, we can tweak, and we can get the product market fit right before we sort of scale the offerings. We have also expanded the offerings to -- from Indonesia to Nigeria and India in that order. Nigeria is getting launched during the course of this quarter. The parter -- local partner has been identified. The first customer is onboarded, and we will be launching formally during the course of this quarter in Nigeria, and the next market that we will be targeting will be India. From a talent front, we have had very nice additions. We have a CTO who came onboard. We also have expanded the sales capability around the new areas. With respect to security portfolio, we have added sales team members in North America, Middle East and India. These are the 3 markets that we are currently focusing. We have also added the capability of -- around -- for the identity analytics, which is predominantly driving by an off sales team -- offsite sales team in India. The other aspect that we have significantly improved is the delivery capacity. We have started augmenting our delivery capacity in the last quarter. And most of the team members are on board, and those team members are on the training mode at this point in time. And by the mid -- by the end of this month, most of these team members will be delivery -- delivery team members would have been trained and ready for deployment. Now looking ahead, we are entering the new year with very good momentum with enhanced portfolio and a good contracted backlog. In the last couple of years, even though we have significantly improved the effectiveness of our operations and moved the needle in many fronts, the revenue growth had been at the low single digits. While we do not provide specific guidance, this year, we expect the growth to be in double digits. Also starting this year, we expect the new offerings to make a noticeable impact to the overall revenue of the company. With respect to the quarterly trends, historically, Q1 revenues are lower than the average quarterly revenue and -- for that year, and then it slowly ramps up, and Q4 is significantly higher. We expect the trend to be the same this year as well because still the large portion of our revenue will come from our core portfolio. On the portfolio side, we will be migrating all our existing portfolio onto the HyperSense. I also want to update that the CrunchMetrics, which was a new offering, we have decided to roll it into HyperSense. So it will be now available as the functionality on top of the HyperSense portfolio. Once we migrate all our existing products on to HyperSense, we intend to come up with an attractive migration path for our existing customers and transition all our existing customers into the HyperSense SaaS or subscription-based platforms. We also have planned training of our customers, and also we intend to train community developers so that both our customers and community developers can develop applications, models and modules on top of our platforms. The idea is, by and by, we want to build a marketplace around HyperSense so that there would be a community on one hand and consumption for the enterprises to consume these models, applications and modules on HyperSense, which are developed by both our existing customers, we will also develop some of these applications modules, and we will also have a community developing these applications. Now as we go through this very challenging times, I definitely want to -- would like to express my gratitude to all the Subexians who despite the trying circumstances are keeping their spirits high and doing a wonderful job. The continued support of our shareholders means a lot to us, and we also thank you for all the confidence that you have reposed on us. I also sincerely hope that we can see the end of this wave soon, and we'll be in a position to physically meet our teams and also be in front of our customers. With that, I would hand over to the operator to take some questions, and I'll come on later to close the session. Thank you very much.

[Operator Instructions] The first question is from the line of Sanjay Shah from KSA Securities.

Vinod, thanks for a nice explanation and appreciate and congratulations on good set of numbers. So my question was regarding HyperSense, which is the most exciting right now what have you cited. So migration of all our portfolio on this SaaS model platform, what negative impact it could have on us in the initial period? And what future you see an opportunity on that side?

Okay. Thank you. I think it's an interesting question. So I will take a bit to explain the whole rationale with respect to our existing telco segment. Now if you look at, our largest customer base is today telcos and that's what we have been serving for the last 20 years. Now if you look at the telco as a segment, they created, in a way, the digital economy. But unfortunately, if you look at telcos, their overall percentage of the digital commerce has been a fraction. It is under 5% today. And one of the reason is when we compare it with the technology companies, they have been very slow. Anything to launch, it takes 12 months, whereas some of the OTT players or the digital natives launch the product in 3 weeks, 4 weeks. So all the telcos have also been realizing this, and they were looking for a very nimble platform there. If the platform can take care of all the engineering capabilities, then they know the prospects, they know the market very well. So they can very quickly, within -- using their domain knowledge, can come up with applications and launch it to the market. Now we are playing exactly to this need. So what we have done with our platform is that we are providing to our customers, including telco, a no-code environment where you can drag and drop, they can create products, they can create services which are IoT ready and 5G ready and launch that to the market. Now using this platform, for Subex also, it becomes very easy for us to launch new product because the same advantage that our customer has, we also have that. So what we are doing is that now that we have developed a platform, the next step is to migrate all our existing products on to the platform. So we will have fraud management on top of HyperSense, RA on top of HyperSense and many other products on top of HyperSense. And I'm sure that customers would love it because this is the way they naturally want to move on, where it can -- because when we talk about a new feature to be added, we are not talking about months, we are talking about days and a no-code environment to launch that. Now what would be some of the challenges for us to take them on to the platform. One of the important things is the transition from a license kind of model to a subscription kind of model. Now that is where I think both of us will have to evolve a workable model to how to make the transition. We have enough references, we have seen Adobe moving, Microsoft moving. So there are a lot of companies who have moved from a license to subscription thing. So it is not something which has not happened. So it has happened over a period of time, and we expect that, that will also will be the same with us. We do not, at this point in time, see a particular downside. But on the upside now is that for every new customer, if we look at today, we have -- if you look at today, if you talk about, I'm selling to a telco, there are 3 large components there: a license or a technology implementation, the support, and the infrastructure software and the hardware, right? These are the 5 components. These are contracted for license, implementation in most of the cases and support. The infrastructure software and the hardware was always provided by the customer, and we used to support -- we used to take the help of Oracle, Cloudera and things like that. Going forward, the infrastructure software will also be provided by Subex. So for every sale going forward, the ticket price will go up because we are going to provide the infrastructure software. The only thing the customer will have to provide is the hardware or for that even a virtual hardware or AWS or whatever is. So I think directionally, it's a very, very positive move. As we transition our existing customers to the new customers, we have a way for that. We have thought through that. We have already discussed it with a few customers. We do not, at this point in time, see a major kind of negative at this point in time. But it's a new platform. It's a new model. There will be a learning period for both us and customer to migrate into this new model. And during that period, it will be a kind of iterative process. There could be some challenges. But at this point in time, we don't foresee a major challenge with respect to our existing customers. With the new customers, it is a much more easier discussion because it is -- I mean we are talking about the latest and in-demand architecture of cloud-native, AI driven, data-driven platform. So we do not see an issue with the new area. So that's my view at this point in time based on our current discussions that we are having with customers. Hope that answers, give you some view of that.

Yes, Vinod, it was very nice. But can you elaborate on that. We have now added 1 more, that is providing infrastructure support. In that -- it's again a different business to play into. So what we have done on that? We have tied up with any subscribers or any hardware guys or anything?

No, no. The hardware, we are not providing. Hardware is something which the customer will provide. But there was a software infrastructure required for running of our software in the past. Like Oracle Database was required, things like that. So what we have done with the HyperSense, it's a complete platform, which has got the storage requirement. So you don't require any more Oracle or a separate Hadoop or a Cloudera to run our applications. This platform is a complete end-to-end. All what we need is that we need a off-the-shelf or off-the-shelf hardware to be provided. And this will deploy the entire thing on that hardware. So there is no dependency or no need for us to -- customer to procure any other software to run our product. Now in the backend, we have a lot of technology relationships that we have in development of this platform. We have leveraged some open sources. We have used those open sources, built the API and the interfaces that are required to bring all the components together. It's a fully componentized architecture that we have. So we have been at it for the last 1.5 years, and we have made very nice progress. And there's a lot more works to be done -- work to be done. But directionally, I think we have taken a significant step in solving some real, relevant and long-standing problems for our customers with respect to providing a platform that is very nimble, on which customers can launch the products much, much faster than what it is currently.

[Operator Instructions] The next question is from the line of Amish Kanani from JM Financial.

Sir, congrats on a good set of numbers. One question was, if you remove the volatile part of the ForEx income, then the Y-o-Y growth looks slightly more muted. So if you can just explain, should we take ForEx income as part of core operating income? Or it's actually fluctuating and kind of -- how do we look at that? What explains the losses versus the gains last year? And the second question is, sir, if you can give us the sense on the partnership, the Snowflake's partnership, I think, was one of the key event for us on the HyperSense side. So if you can explain what roles will the partner play? And what is the opportunity there for us and updating the other various partnerships that we had during the year, which was Tech Mahindra, SkyLab and O-RAN Alliance, if you can give us some sense how are they progressing.

Yes. Venky, can you -- you want to take that ForEx one? I will come back.

Yes. [Technical Difficulty]

Sir, we are not able to hear you clearly. The audio is breaking from your line.

Okay. Is it better now?

Yes, sir.

Okay. Yes. So last year, we had a ForEx gain, as you rightly mentioned. And this year, it has been a loss. And ForEx gains and losses, as you know, is a function of how the market moves. And so while we do hedge and -- a portion of our exposure, and that happens, but I think to an extent of the way the market moves, it does have an impact on our numbers. But I think if you exclude that, our operations have been fairly stable and they have had good improvement in our profitability numbers. But -- so I think we have to -- it's part of the process. We are still trying to see what else we can do to remove the -- reduce the volatility. But that's something you will see to an extent given the nature of the business.

Okay. Now coming on to the partnership side, as you can appreciate with the platform approach and some of the areas that we are playing, which is, we are catering to a wide segment, it is important for us to have the right go-to-market partners. Now -- so we have partners for all the new areas. We have struck a lot of strategic alliances and strategic partnerships. I'll start with IoT side to start with. IoT, we have key partnerships with SkyLab, which is a provider of the 5 -- of the MEC or the mobile edge computing. And we have already going -- we have a go-to market, and we have already tracked into the 5G security market with them. We have looked at on the shipping side with them. We are also looking at other deployments of smart cities, theme parks and many other areas wherever there is a mobile edge computing requirement. We are embedded into the mobile edge computing application with SkyLab. So that's been a very important thing. The other thing that we have had a partnership is that a battery manufacturer, which is primarily making fuel cells for the autonomous -- the electric cars. Now this is again an integrated aspect that every fuel -- you know that fuel cell is probably the most important part of electric car. So every car in which that operator -- that battery operator is providing to support, our security will be an embedded part of that. We also have Telefónica which is again as a key go-to-market partner. So wherever Telefónica takes their security offerings, we'll be a part of that partnership. So these are some of the things that we have done with respect to the partnerships on the IoT side. We have other -- many other large distributors which we have signed up, but that is more kind of a channel distributor, very important strategic mainstream distributors that we will be announcing some of them, a major one that we have signed in Middle East during the course of this quarter. But we have signed, we have already started deploying some of the deployments to them. That is with respect to IoT. When it comes to the identity analytics, we have gained partnership -- key partnerships which we have signed up with the telcos because we are -- arrangement is that we will take the concern from the consumer, look at the telco data and provide lot of insight. So we have arrangement with our telco partners, which is helping us to solve identity-related issues. Now coming to HyperSense, now HyperSense is, when we launched the platform, one of the key aspects that we are focusing is on the AI/ML studio. So we have an AI studio, which means that if any of the business users wants to use artificial intelligence, we have provided a no-code environment. Now Snowflake is also a key provider of the platform in many markets. And they found that our AI part -- AI studio is a very interesting concept and in their evaluation, they felt that it is important for us to have a -- we wanted Snowflake because it gives us a platform to reach the entire Snowflake customers with our AI studio and Snowflake found it as a nice way to sort of fill a portfolio gap they have, so that when they go to the customer along with some of the other aspects of platform, they can also provide a AI studio as a part of it. So our AI studio is what evoked a lot of interest with Snowflake. With respect to Tech Mahindra, it was again a partnership around the Blockchain. That is around the partner ecosystem management. And that is -- we have started evolving it. And it will take a while for us. We are discussing with several customers at this point in time. We have one implementation, which is not a Blockchain, but which we are directly doing with customers, with a Tier 1 customer in North America. But we have started discussing with group operators on how we can provide a Blockchain-based settlement among the operators among the group. So these are interesting discussions because the Blockchain is still -- we are looking at what is the best way to take Blockchain to the telco segment. But the partner ecosystem management is a very -- it's probably one of the first use cases that will be applied in telcos. So we are quite excited with that. So partnerships are very important, and for all our new areas, that will be a part of our GTM, go-to-market strategy.

The next question is from the line of V.P. Rajesh from Banyan Capital.

My first question is regarding HyperSense. Two questions actually. One is that, are you using it beyond telco vertical or -- I mean, the partnership with Snowflake and things like that? Or this is primarily starting with the telcos? And second question, relatedly, we do have a lot of managed services contracts. So what is your thinking on transitioning them to the SaaS model.

Okay. So first, on the HyperSense. Rajesh, our initial focus is going to be telcos because that is where we have the reach. But having said that, we have already had some inbound reaches coming from other segments like insurances, fintechs, et cetera. And we are engaging, and that is where we -- some of these partners are becoming very clear. And that is, again, we mentioned the partnership, and we were talking about Snowflake. So for example, Snowflake does not have a big coverage on the telco segment, but we have a good coverage on the telco segment. So it works for both sides, right? We are able to bring them into our customer base, and they are able to bring us into their customer base. So our current focus, Rajesh, is on the telco segment. But having said that, through our partners and with some inbound, we have started looking at the other segments because we can find an integration -- somebody who can develop the use cases or if the customer themselves have a team which can develop the use case, then this is a platform that can serve just about every segment, Rajesh. So that's on the first part of that. Rajesh, what was your second question? I'm sorry, I missed that, the second question part.

Yes. No, you have a lot of managed services contracts. Would these -- so I mean would you transition them to the SaaS model?

Okay. Look, Rajesh, managed services is in any case a services model, it's a monthly services model. I wouldn't call it completely as a subscription type of it. So I think the subscription is more on the technology side, Rajesh. So this HyperSense is where -- what -- the license is what is getting transitioned into a subscription model. But the operations part of it, even today, operations is on a monthly service charge basis. I do not see that there will be any impact on that. If the customer wants us to do the business operations and that will be something outside, independent of the platform or the platform or subscription that we are talking about, Rajesh.

Okay. So just not to belabor the point, Vinod, the way I was thinking about is that earlier we were using a technology, which was, let's say, old gen, and we were charging X percent to the client for the services on a monthly basis. Now with HyperSense coming in, because it's a new technology, you can argue that your operations will become more efficient. And therefore, you will have higher savings, so to speak, meaning your profitability per contract will go up. And from the client perspective, they can argue that because we have this new technology, well, why don't you pass some of the savings to us also. So that's where I was coming from, if you can just comment on that.

All right. Okay. So I think you have a point in the sense that the new technology is much more nimble and easy to use. But having said that, the operational requirement does not come down. So let me give you an example. We provide a fraud management system, and we provide the best fraud management system that will provide -- that will point to fraud much more smarter than what it was doing in the past. But still, there is a need for somebody to evaluate that and take an action, right? Now that is the operations part that we are talking about. So we are talking -- so that requirement of managing, maintaining the system will come down. But the business operations is a separate thing all together. So the customer would need support. I mean in many cases, the customer have their own tool to support, but it's based on the customer view. I mean we are seeing that an onshore, offshore kind of model and wherever there is a possibility for customer to offshore, they will look at offshoring the business operations so that they get the advantage of that. So we don't see a drastic change happening on the business operations side of it. But on the IT operations side, yes, there was the much reduced need for IT operations. And to that extent, the operations need of both the customers and we are supporting the customer, that might come down. But that is not our focus area when we talk about the managed services. When we talk about managed services, we are talking about the high-value services, that is we are talking about as a consulting on an ongoing basis or the business operations on the ongoing basis. And that does not drastically change with the platform change, Rajesh.

Okay. That's very helpful. And then this new slide that you have added on the deck regarding the analytics of $500 billion market opportunity. So what product are we mapping this to? Is it the CrunchMetrics? Or is it the IDCentral? And what realistically is the market we are going after in the near term because I'm sure this is like more 5 years kind of market opportunity. But if you can comment on that?

So Rajesh, that is the opportunity of just the platform, not the applications on top of the platform. If you look at today, what we are expecting that, starting with telcos, just about every segment, every enterprise will go through a cycle where they change their existing technology and invest in a technology of platforms where they can start doing things digitally much more faster. So the mapping of what we are talking, so if you look at telcos, we are talking about that being about $10 billion. Now telco, telecoms, now that $10 billion, we are talking about just the platform, which will -- the platform market, not the application that will sit on top of that. Now of the $10 billion, there are a lot of players that will play in that space as well. There will be players as because -- like, for example, Snowflake's place in that market, Cloudera will play in that market. So there are a lot of players who will play in that market. Now our thing is that we are leading with AI, while some of Snowflake and Cloudera, et cetera, they have been focused -- they have been looking at the normal clumping elements like data management, data visualization, we are taking a pole position with respect to AI/ML studio and how we get sort of democratize AI and ML. And that is where I think our story is sticking because we are tell -- we've been telling the enterprise CXOs saying that, with all the investments that you have done in data analyzing business intelligence, et cetera, your business is still waiting on your IT team to deliver insights. This is an opportunity for you to change that paradigm. Can we go and say that with a small subscription, offer this to your business users and the business uses without any knowledge of data science, can use drag and drop. Of course, we are creating some libraries for each of those areas. So for example, if they want to look at customer churn, we will have a library of AI models that is adaptable to solve the churn issues. So the customer can apply this model using drag and drop, get the data, use the drag and drop, see the results and see whether they can act on it, and see whether it is working. Now this is how we think that the democratization of AI will happen, where business users without any training will start using analytics. And that will be probably a very enabling thing for the businesses as well. So that's what we are leading with, Rajesh. So each of these areas have been mapped out, and currently, our focus is, we are going after the telco segment, specifically, but with our partners, et cetera, we will slowly start expanding it, Rajesh.

The next question is from the line of [ Chetan Ladda ], individual investor.

Vinod and team, congratulations for the good performance last quarter and also for the double-digit revenue growth guidance that you just provided. My question is more towards the disclosure that you made regarding the dividend distribution policy. So if you can give some details around that as to like what percentage of profits are we speaking about? Or any more details that you would like to provide as of now.

Okay. I just want to quickly confirm. GVK, is that something that we can discuss, right? I just want a confirmation with GVK. Can we share that information in the call now?

It's that we have not made it public, so we have to publish this first, then we can do it.

Okay. So can I -- so we have -- so we will pause that question because we will make that public first, and then we will address that, if you don't mind.

I think that's fine. We will wait for it.

The next question is from the line of Supratim Basu from Americorp Capital.

I last saw -- I last looked at Subex back in, I think, 2003 or something. So congratulations to you, Vinod and your team, for setting the foundation for a new interesting company. I have 2 sets of questions. I mean the first is actually mainly a suggestion for creating a database, which will help us understand the company better as an analyst or investor. So if you could provide the revenue breakup in terms of license fees, management services, other revenues. And then the revenues geographically, and then the revenues sector-wise for the large scale, for -- what else, as an example. And then if you could also provide the number of active customers per quarter and also the metric for what is your net revenue retention rate or net expansion rate on a quarterly run rate basis? I mean I think these would be really helpful for us to understand the company better. And it also would help us map the progress of the company better. So that's just a suggestion from my side. Happy to send this list, this laundry list to Diwakar and then he can probably coordinate with you guys.

Sure. So first of all, thank you for that suggestion. So if you look at -- we have started -- we have provided the breakup of managed services, support and implementation, customization and license as the 3 components. And that's how we are tracking. And the only...

I didn't see that on the deck though.

Slide 18, it is there in Slide 18 of our deck.

Okay. Okay. Okay. I saw -- no, the point is that this is -- that basically says, if you could strip out license from implementation and customization, that would actually be helpful. And if you could provide this metric in the form of actual numbers rather than these percentages.

Okay. All right. Okay. We will look at that.

If you get where I was going to -- you get what I am driving at, right? Because it would help us understand to what extent this can be a non-linear company versus a linear people-based model that you have on the managed services side.

Yes. So that is where, I think, because of the product side of the things, I mean, I presume that you understand the product side of things. Now in our case, the license, implementation and customization, that is all driven by new product implementation, right? So it is becoming more and more as one thing together and we also want to package it that way by the customer because of some of the account base of the customer, dimensions kind of thing. We are...

Here is a suggestion, Vinod. As a previous commentator also mentioned, we would actually want -- instead of selling an enterprise license which is valid until the next release comes out, you would actually want to look at moving to a per seat basis licensing, whether it is an existing product or whether it's a new product. I mean I'm sure you'll get pushback from your customers. But essentially, you'll have to put bells and whistles on existing products and say that this is a new product, and therefore, you got to pay me in this new model for me. But I mean, it's -- you will see that absolutely for managed services side, especially given that telcos are, what, 80% to 90% of your revenue, that business will grow very slowly. The key growth that you're going to get is -- I mean, even for whatever you want to do with HyperSense, you really want to have a per seat model. You don't want to go with an enterprise license model?

Yes. So it is going to be a subscription model. It is not going to be on a per seat, but it is going to be the per compute because that is what is relevant for that similar to the Cloudera, things like that. So all the new areas, we have already transitioned to a subscription basis. So for example, IoT security or identity analytics, HyperSense, everything new is based on subscription. And as I told you, as we migrate all our existing products onto HyperSense, that will also be taken to the market on a subscription basis. Now at this point of time, that revenue is very small. But as we go through this year, I definitely think that the subscription thing will become a larger portion of the overall -- I mean rather an impactful portion of the overall revenue. And we will start bringing that color when we provide the details. It is very insignificant at this point in time, the subscription part, to provide that. But we take your point, and we will bring that. As we make progress in that area, we will start providing more metrics around that subscription part.

The next question is from the line of [ Anuj Daftari from Daftari & Associates ].

Congratulations on a good set of numbers. So just wanted to understand whether the HyperSense platform has already been monetized? Or is the monetization going to start shortly? And secondly, in the same context, what is the charging structure going to look like in terms of per enterprise or per user? Or how does that simply work?

So on the first part, we just launched it last month, so we are just in the phase of talking with customers. And hopefully, we will have something to -- I mean, as part of the next update, next quarterly update, we should have some updates around how we are progressing there. With respect to the charges, we now have 6 modules, specific modules on HyperSense. So each of the modules are going to be separately charged. And it is a component of it, right? Every component is a module by itself. And each component has got a monthly subscription charge based on -- 3 modules are based on the compute and 2 modules are based on number of seats. So AI module and business intelligence module are based on seats, and the rest of the modules are based on compute. We also have a storage module, which is based again on the compute. So this is the model that we have. It is consistent with the other products and other platforms that are available in the market.

So just a small follow-up question relating to this. So when you talk about charging per compute model, you are saying 3 modules are compute modules and 2 are in the number of business seats. So what is the charging process for each of these business seats and each of these compute modules. Is there something structured there? Or is it subjective?

No, no. We have -- we are working with a list price, and we have a specified price for per compute and per seat basis, price per seat. I mean, I didn't fully understand what was the question. So we have a list price based on per compute what will be this thing. So the idea here is that the customer can start small and as they add more and more use cases on top of our products, the subscription -- the compute will increase, and therefore, they will have to pay us more subscription fee. So that's how we have done. So we have a price list, which we are working with, and that's how we are engaging with our customers at this point in time.

[Operator Instructions] The next question is from the line of Jay Dattani from BJD Securities.

I just wanted to know what kind of revenue growth or additional revenue are we expecting with all the new developments like the HyperSense, the new partnerships with the Tech Mahindra, the SkyLab, O-RAN Alliance. So what is the kind of revenue addition that we are expecting in the current year and also in the long-term, let's say, 5-years down the line?

Okay. So to be -- so we have been consistently providing the expect -- our expectation that we are looking at the new areas to contribute about $15 million to $20 million to ARR in the next 2 to 3 years. So we stick with that guidance. That's what we are working towards. With respect to the specific guidance for this year or this quarter, et cetera, that is not something which we are providing. But overall, this is what we provided. But as and when -- I mean at least by quarter 3 -- quarter 2, quarter 3, at least by -- we feel that we should be able to provide you some more color on how we are doing with respect to how the MRR or the ARR is growing for these new areas because at this point in time, it's very early contract, so it does not make -- overall -- from an overall standpoint. If you look at our overall new product revenue, it's about $2 million at this point in time. So if you come back and do MRR and ARR, it will be very small number of the overall thing. But as it starts growing, we will start providing probably the growth happening in the MRR and ARR, things like that.

The next question is from the line of Rattan Joneja from CoValue.

Yes. Congratulations. My question is on the interesting market size of analytics that you presented in the investor presentation. What's the addressable market that we are going after out of this $500 billion. This $500 billion seems to be a very large number, which excites everybody. So what is the exact addressable market over a period of, say, 5 years that we would like to address? My second question is that how do we compare ourselves to a company like DataRobot which has tied up also with Snowflake and also provides artificial intelligence, ML. That's about it.

So I think on the first question, the segment that we are initially focusing is on the telecom segment. And if you look at the size that is estimated, it's about $10 billion, is the size that is estimated today of the platforms in the telecom segment. And as I told you, there are a lot of players playing in that space, but we had a sweet spot when it comes to -- we only got 200 customers at this point in time and we have a possibility for us to convert all these customers eventually into HyperSense customers starting with our products and then encouraging them to use the platform to solve other use case, which they might have. So that's the current approach of targeting on the telecom segment. With respect to DataRobot, so it is a product which is in the AI space. But I think if you look at the components that we have as a part of our offering, it's an end-to-end -- it is not just doing one part of analytics around. While we are leading with AI and ML capability, we do have the capability to provide an end-to-end platform taking right from the data management, data visualization, AI/ML and the operations and the workflow management. So it is an end-to-end platform that we are providing. So at least for our core segment, to start with telecom, this is quite an interesting composition where they do have data lake. So we don't have to replace them. We can coexist with them. But what they want to do is a platform that can leverage their existing kind of investments that we've done in the storage, et cetera, and thereby leveraging the existing processes rather than hipping them all together. And that's what we are playing with to start with. And the advantage that we have is the existing customers and our ability to migrate them over a period of time to this new platform.

The next question is from the line of Amit Bachhawat from Optimum Financial Solutions.

My question is, what is the revenue sharing with Snowflake? Like in terms of any business you get from them, what will be the revenue sharing? That is first question. Second, like what has been the CapEx on HyperSense product, which we've built and ongoing basis, what kind of expenses you would do on the platform.

Okay. On the first part, I don't think that we are in a position to, let's say, share the details of the commercial arrangement that we have with them. At this point in time, what we are focused on is creating a joint value proposition that we are going to take it to the market. So we are in the space of developing and training and creating the content for a joint value proposition to the market. And as we get into the market, we will provide, as and when we are in a position to provide more details, we can provide that. That's where we are with respect to Snowflake. With the question of what is the investment, at this point in time, we have about 100-odd engineers, developers who are working on this platform. And the other -- so with respect to the marketing and -- marketing, go to market, our existing team, all the enablements, we have been working on this for the last 2 to 3 months. Most of the customer reachout being -- the initial customer reachout is planned on telco side. So our existing field teams will take this to the market. Obviously, there will be some partners for us to sort of move it to the other segments. But for the -- most of the initial go-to-market we've planned with our existing team, and we have an existing team in the marketing sector that is already in place to take this to the market. The number of engineers who are working as the developers and architects et cetera, who are working is around 100 at this point.

The next question is from the line of [ Subrata Sarkar ] from Mount Intra Finance.

So first a suggestion, sir. Like since we have launched the new product, like it would be great, like if you could do an analyst call or Analyst Day like something on your -- all your new existing initiatives and products, and you can give some demo on that also. This is the first point from my side. Now related to question, first, a few data points I want to know, like first is, what is our total employee in the organization right now. And out of which, you have shared like 100-odd developers are working on this HyperSense or including all new products and initiatives, like how much is total manpower who are involved into this area. This is the second question. And third, sir, if you can share -- I understand it's a very -- like we have recently launched this product. But if you can share 1 or 2 case or experience of or initial reaction from the customers regarding this product, HyperSense.

Okay. First on the total number of Subexians, we have at this point in time about 1,200 Subexians. Out of that, if I count the total team members who are on the creation side, I would say it will be closer to about 300 to 325, will be on the creation side of things, creation side with all new products, engineering, everything together, our AI labs, all put together, is about 300 to 325 people. That would be what I would say the creation side of things. Then the question on the interaction, we are having -- we launched it on April 22. And post that, we have had -- on an ongoing basis, we are engaging with our customers. And the overall response is quite positive. We are moving into the phase of demos and things like that. What it is most exciting for the business users and the CXOs is the AI studio, as what we call it, [ a big 5 ] studio, which is where I think the business can apply some of the AI models because even if you look at our existing customer base, they've been quite challenged with retaining -- first of all acquiring the talent with respect to data sciences and retaining them, I think, quite a bit. And therefore, if you look at many of the telcos, there's a long list of requests to the IT teams to provide insights. And the business is never happy with the pace at which things are happening. So this is a welcome change to the approach that they can involve themselves to do this. So I think the initial response is quite positive. We are getting in the phase of demos and things like that. So that's where I would say. We have also got some quite investments from the analyst community and that we'll share as we go along where we talk to the investors and the analyst community on what we are trying to do there.

The next question is from the line of [ Amit Mishra from BWS ].

Vinod and the team, congratulations on very good numbers, very good financial year. I have a couple of questions to ask. Some of the questions are already answered. So I was just thinking that this cloud-native platform, that is HyperSense, and you said that you will be moving all the platforms, products you have on this cloud-native platform. So the -- I guess, there is some -- I think there is some policy from the government in accounting, where you have to show depreciation or accelerated depreciation moving products into cloud from your old technology to the new technology. So is there going to be a D&A for FY '22 because of this transformation? This is my first question.

Venky, do you have a view on that, Venky?

Yes, Amit, I'm not sure what regulation you're referring to. See, typically, what happens is wherever there is goodwill...

There is a regulation. Venky, there is a regulation in the telecom, TRAI in India. But I don't know if worldwide you're saying that. When you move -- because there are few companies which had to go through the accelerated depreciation by moving -- when we move the technology to the cloud. So just wanted a little more...

Okay. First thing was -- I mean first thing was, in our case, we don't capitalize our product development costs. Okay. So all of our products which we have developed over the years, we don't capitalize it. And it starts to be in the whatever development cost which we incur. So to that extent, we don't have any of those accelerated depreciation requirements. The other, if at all, from an accounting perspective, if you look at it and -- and it's not that we are regulated by TRAI. We are providing services to telecom operators. So our services doesn't come under the purview of TRAI in any form or manner. And the last point, from an accounting perspective, which we want to clarify, there are dividend investment-related impairments, which we need to make on an annual basis, which we'll continue to do. And I don't see any risk of any impairments given that we took a large impairment last year.

So that's the INR 340 crores still remaining, right?

Yes. Yes. So I don't see a problem with that. And I think whatever the projections of the business which we have right now, and we have closed our financials for last year as well and the auditors have also looked at it. So we don't see any potential or a need for any further impairment on that remaining goodwill which is there on our books.

Okay. Second question for me is just our focus on bringing the institutional investors like we talked in various con calls previously. There is a thing called ESG, the environmental, social and governance model where you have a lot of funds which are dedicated for companies following this policy within the company. So I'm not sure if Subex is considering something like incorporating this new thing or new trend in investing community. Your thoughts, Vinod and Venky.

So I think we definitely are -- I think from the last -- in the last couple of years, we've been actively reaching out to the investor community, and we have stepped up the activities on that front. And that's where we have Diwakar and team helping us as well. In terms of your taking on additional disclosures like ESG and all, those are things which will evolve. And I think we want to step up our investment activities and get some institutional investors onboard. And then we'll continue to look to evolve how do we do that. There are no immediate plans to do that, but I hear you, and that's something we will consider as we go along.

The next question is from the line of [ Ravi Kumar from Hyderabad Tech ].

Like I just want to know what is the stable -- how stable we are financially? What is the current debt on the books and cash position, if it all any.

We are completely debt-free. We don't have any debt on our books. And there is a small borrowing that is there in the financials, if you see. And that's the PPP loan which we have got, the Paycheck Protection Plan, which we've got in the U.S. that's a small number. Apart from that, there is no debt on the balance sheet. So we're comfortable from a financial position. I think we've -- cash on the balance sheet is also extremely good. We've almost like INR 140 crores of cash in the balance sheet. So financially, we are fairly strong, and we don't see any challenges to whatever growth plans we have or funding requirements we may have for our growth plans in the near future.

The next question is from the line of [ Deepak Chugani ], individual investor.

I just wanted to know, would EBITDA margins also start going up given new product mix and product of [ existing is concerned ]?

Venky?

So I think it's still early days. I think if you really look at HyperSense, I think there will be a transition process which will happen as we move from our existing products getting onto the platform and then customers adopting it and us transitioning to the newer model. So as we get to scale, this should start seeing benefits. I think more than the HyperSense, I would say -- or newer areas like IoT security, IDCentral start scaling up, definitely, we'll see a significant uptick on the margins because those products are all purely subscription-based and as this starts scaling up, the margin profile of the company should improve. But I think we will need to give it a little more time before we can start profiling that or giving you forecast around it.

The next question is from the line of Bharat from Manthan Research and Advisory.

Congratulations to the team on the performance. I have 2 sets. One, basically on the P&L side, fairly basic question. The performance for the last quarter was muted. So just wanted to understand, is it because of the transition to the new model or we had a loss of legacy business or something like that?

No. So look, I think if you -- you are qualified in the sense that in the previous quarters, you compare that with FY '20 last quarter, we had a special revenue of -- we had a hardware supply revenue of almost close to INR 10 crores. So that was a one-off thing that was an event which happened on fiscal '20 and FY '20 Q4. So that's something which you have to consider because it's a one-off kind of thing. So to that extent, it is not an unusual, let's say, kind of a lack of growth. But having said that, we did have some challenges on the delivery front due to the challenges of delivering on new projects. We secured some very large new projects, and we had found a bit of -- we found it's difficult for us to progress this at the pace that we wanted because of the remote working mode, both from our end and the customer end. So as a part of that, we have added the capacity as we intimated in the last quarter. But we added significant capacity so that we can factor some of these additional requirements of working from -- working remotely. I would still don't feel -- think that we have fully solved that thing because it's not so much from our end. It's both end, have not been suited for running new brand-new projects in a complete remote mode. So we are learning some of those things. And hopefully, by next quarter, we are -- at least in Africa and all, our teams have started traveling. So some of these things will move on. So 2 points there. One is that it is -- we had a one-off revenue of INR 10 crores in the last quarter of FY '20. So that should be something which you consider when you compare. The second aspect is that we did have some challenge with respect to the deliveries of new projects on account of both remote centers. So that will get ironed out as we like increase the capacity and that should get ironed out as we go through the season.

The next question is from the line of [ Aditya Sharma ] from ICICI Prudential.

Just a quick question. I just wanted to ask, our cash position has actually moved up since last year. And I was just looking at the P&L. Our other income has actually gone down. So -- not a fairly substantial number in terms of we're holding our balance sheet. Is there a thought behind using it much more wisely? Because almost INR 150-odd crores, earning of INR 4 crores annually. Are we putting some mind behind this?

Yes. So I think the other income going down is -- let's say, it's not necessarily because of the cash position. I think it is more around the fact that we had some one-off receipts of some insurance-based claims which came through last year, which is not there this year. Otherwise, other income from deployment of surplus cash has gone up compared to the previous year. On the larger question on cash itself, I think we continue to look at how best we can deploy this cash, and which is why I think the Board has also been looking to return some of this money to the shareholders by the way of dividends, and that's how you'd have seen the interim dividend, which was declared at 10% and then another 5% now for this quarter, which the Board has recommended for the shareholders approval. And apart from that, we continue to look at opportunities for how to deploy this in terms of -- as you would have heard, I think we also have a lot of plans for our new businesses, but also need to invest cash. So some of this cash will go into those investments. If you look at it from our own internal plan, we're looking to spend at least -- anywhere in the range of $4 million to $6 million in the newer areas. So there will be need for some of this cash to be deployed on those newer areas. Apart from that, if there are any other better ways to deploy this cash, then we continue to evaluate that and we will continue to update -- keep you updated on the progress we make.

Okay. But just one thing. So what you are trying to tell me is this INR 140-odd crores is sitting in our current account, earnings nothing or probably just in an FD or something of that sort, if I'm not mistaken there.

Yes. Obviously, I think to the extent whatever this cash is not required immediately, we do park it in FD. But I think there is also a need for that money to be deployed in newer areas, and that doesn't necessarily happen in one go, right? I think it happens over a period of time. So therefore, there's a little bit of a timing to that extent. But we continue to evaluate other options as well in terms of how do we look to deploy this cash.

The next question is from the line of [ Palkesh Jain ], individual investor.

Congratulations on the steady set of numbers. Vinod, I would like to ask you that with the launch of so many products we are doing regarding IoT, IDCentral, HyperSense, what kind of orders we're expecting from such kinds of products? What can be the size of the orders we're expecting?

So as I clarified to an earlier question, our expectation is that in the next 2 to 3 years, we should be able to get an ARR of about $15 million to $20 million, annual run rate revenue of $15 million to $20 million from these new areas. These are subscription business, and that's where I'm saying that ARR becomes more relevant. So that is what we are expecting. And as a technology company, and we are not a services company. So as a technology company, there are 2 things that we are doing. One is we are logging into areas that have got a lot of run rate for growth. So therefore, we will find Subex competing in much larger segments than we have done in the past and we are gearing up for that fight in that larger segments. That's point number one. And as we go to these larger segments, we will have an adjacent products that we are -- we can take into the same segment. So if you look at our entire set of products are coming into a bucket of Digital Trust. So our vision is to be the largest player when it comes to enabling Digital Trust for customers. And that is where we're working. And there's a lot of things around Digital Trust that still, as the portfolio grows, that we would have. So we are very clear that we're playing in the area of Digital Trust. And the expectation, as I said, in the near term, 2 to 3 years, is to get to an ARR of $15 million to $20 million.

The next question is from the line of [ Avinash Malpani ], individual investor.

I'm sorry, I -- congratulations for good numbers. So my question was around institutional buying, which has already been answered. So you can mute and maybe pick another person.

The next question is from the line of [ Amit ], individual investor.

Congratulations, sir. My question is, this much talked HyperSense product, is this product can be used in governments also worldwide because you have AI, ML and big data science? And this product can be also effectively used in like Amazon or Flipkart-like companies, e-commerce companies? Is there any plan to go there?

Okay. So first question, can it be used in any environment? Yes, it can be. But are we talking about taking it to the Amazons, Amazon may not be. But I think at some point in time, we would -- based on the use cases, there might be something that probably we might engage with the large e-commerce players. So as I told you, our current focus is on telcos because that is where we see a natural traction for us, and we have a path to migrate all our existing products, existing customers to the platform. But every new product that would come up would leverage this product -- this platform. So if you talk about tomorrow, IDCentral, IoT security, everything will start leveraging this platform. So today, we have customers with security in oil and gas, smart cities, manufacturing, shipping, by and by everything will go as a part of the platform, that's been a part of the plan.

My next question is that what we -- after 1 year, how -- what one can see the hiring program in Subex? Right now, we are 1,200 Subexians. What you see at the end of the year?

Look, I don't think that we will add significantly on top of this from a numbers standpoint. There could be an addition of maybe 5% or something of that nature. But the -- from a people perspective, we will not have because we will -- the idea is to leverage a lot more partners to reach to the market. So I don't expect in the 12-months period for our workforce to increase more than 5%, if at all. I think we have currently gone -- we've sized the capacity. I mean we have built a capacity for our current needs, for this year's needs. But any case, I don't see us going above 5%, if at all.

The next question is from the line of [ Ashrit Gorti ], individual investor.

I've had 2 questions. One was, while you have given in your presentation that like analytics, different markets, different segments like healthcare, bank -- BFSI and things like that, what is the overall international market size would be of the -- in that particular product analytics. Now in that, would you be able to provide information as to who -- in each segment, who are the top 3 or 5 competitors we would be competing with?

Okay. All right. That's something which we can look up at. At this point in time, we are looking at only telecom as a market. And -- but in any case, we will start developing that and providing more color on some of the competition in the target segment that we have provided. We'll provide that as we go along, yes.

Because as you've given over there, multiple segments you have mentioned healthcare, BFSI and telecom and whether -- in telecom, I had seen, so the growth prospect was the lowest among all the sectors, which was -- you had shown as 13% CAGR.

Correct.

Compared to others.

Correct. Yes.

So in a way, telecom, possibly with a lot of consolidation happening worldwide, apart from India, the market is shrinking or no?

Oh, no. So look, I think telcos will always going to be with 5G and -- around the corner, I do not think that the telcos will...

No, sir. But market will -- sorry to interrupt. Market may be expanding. The user base might be expanding, but the players, players might be consolidating. They would be.

That might be, yes. Players, there is -- I think we have gone shrink -- I mean last couple of years, we have seen a lot of consolidation happening. Will there be more? Maybe. But on the one side, also, you should understand that with 5G coming in, there is a set of alternate service providers already coming in. So my -- the market expectation is that, when it comes to 5G for the enterprise segment, about 40% of the enterprise segment will be catered by an alternate segment, which means that they have nothing to do with the current telecom operators. There will be other operators, let's say, operator X who will start to providing 5G services to all the enterprises. So while on one side, we have seen consolidation, on the other side, we are having MNOs, MVNOs -- sorry, MVNOs and alternate service providers come in. So expect there is going to be a spend in this market. But for the existing telcos, yes, I would say that we should at least for the next 12 months, it is quite possible that we could see some more consolidation happening, particularly in the emerging markets.

So with 5G, lot many new operators would come in, specifically with 5G, that's what you mean to say. In that scenario, what would be the business -- overall business size you are expecting, overall business. And of that, how much Subex would be gaming for?

Okay. So look, we have an existing set of portfolio that we take to telcos. So all of them will have to be migrated or, let's say, upgraded to support the 5G environment. So we already have the 5G use cases and we are working with the customers. So that's the kind of -- that's a revenue possibility on an existing core to support the update to the 5G. So that's one part. Second, we are looking at 2, 3 areas as a new product offering for telcos, specifically around 5G, that is on security side, on partner ecosystem management side and the capacity management side. I mean, one of the earlier gentlemen asked about the O-RAN partnership and all those things. The O-RAN partnership and all are very relevant as we talk about capacity management into the 5G side. So we have had new set of products that we are catering to. And then, of course, the HyperSense is a completely new platform, which we have never played in that space so far. This is a new area offering space. So by and large, I think that we have -- in the last 2 years, what we have been focused on is creating the right side of IP. We have never had so much of IP created in a period of time within our company. And now that is what we have created. And the next step is for us to execute on the GTM in an appropriate way, so that we can just start seeing the benefits of some of these IPs that we have created. Now how do we size that at this point in time? This year, as I said, we will get to a double-digit growth. That's what we're looking at this year. And overall, I think the new portfolio, as I also mentioned, we are looking at an ARR of $15 million to $20 million. We want to stick with this for the time being as our interim target, and we'll see how that -- as we go along, we will provide more clear projection as and when things start emerging.

Ladies and gentlemen, we will take the last question from the line of [ Ashish Dash ] from Sharekhan.

I just wanted to understand, when you say double-digit growth, so my understanding is your Horizontal 1 business contributes maximum revenue, that is 90%, 95% of your total revenue. And that would grow at suppose mid-single-digit or high single-digit rate. So what would be the driver? Which area, like Horizontal 2 or Horizontal 3 would drive your growth in FY '22? And relating to that, when you say new portfolio will become USD 15 million to USD 20 million next 2 to 3 years, what is the annual run rate currently? Could you please answer?

Yes. So on the first line, I think, first thing, yes, you're right that we should have growth both from core and the new areas for us to get to that number. Please also bear in mind that some of these new revenue -- new business model is on a subscription mode. So therefore, as you know, some of the subscription modes tended to take time for us to ramp up the revenue. But I think we are more focused on getting those strategic wins at this point in time, so that it will start providing revenue as we ramp up. So to answer your first question, we should have growth both in the new areas and on the core areas. Because then only we can get to our overall double-digit growth this year. So that's what we have planned, growth in both core and new. On the core area, all the 5G and the developments that we talked about, and all those things will support the growth, with the HyperSense and things like that from the new areas with IoT, IDCentral, analytics et cetera. We have also started executing those, accordingly, those customers are put together, we will -- it will contribute to that. So that's the first part of it. And the second part is, with respect to what is the current view of new revenue this year, the new revenue was just under $2 million from the new areas.

The last question is on the margin. So when you say the transitions will happen during this quarter, the customers -- existing customers will be moved to the new products. So it would impact the margin?

Venky already clarified. I do not think that this year, we will have -- we are expecting the margin to be more or less in the same thing, same bracket. But as we start executing by and by, definitely, some of the new business have the potential to deliver higher margins. But I think it's too early for us to profile or, let's say, take a view on it because the SaaS-based thing by inherently SaaS-based business are more profitable. So therefore, it should lend itself to more profitability, but it's too early for us to take a view on it. So for FY this year, our profitability will be more or less in the same range.

Ladies and gentlemen, due to time constraints, we will take that as the last question. I would now like to hand the conference over to the management for closing comments.

All right. Okay. So thank you all for taking time and for attending this call and your continued interest in Subex. I want to wish you and all your loved ones a safe passage through this very, very difficult period. Thank you very much. Stay safe and take care.

Thank you.

Thank you.

Ladies and gentlemen, on behalf of Subex Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.