Subex Limited (532348) Earnings Call Transcript & Summary

[Audio Gap] Earnings Conference Call of Subex Limited. [Operator Instructions] Please note this conference is recorded. I would now like to hand the conference over to Mr. G. V. Krishnakanth. Thank you, and over to you, sir.

Thank you very much. Good morning to everyone who have joined the earnings call for the period ended September 30, 2021. Now I'd like to introduce the members of the management who are present on this 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 call 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 limited 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 intellectual property and general economic conditions affecting our industry. So with this, I now hand over the call to Mr. Vinod Kumar to take it forward. Over to you, sir.

Good morning, everyone. Thank you all for taking time for this call. I hope all of you and your families are safe and doing well. As you would have seen from the results announced yesterday, the revenue for the quarter stood at INR 86.3 crores, EBITDA at INR 9.9 crores and PAT at INR 4.8 crores. This quarter has turned out to be one clearly below our expectation. The overall financials are not looking good as there is a difference of revenue when compared to Q2 of last year. But the primary reason for this dip is that we could not initiate some major projects in the Middle East region. As we updated in our projects, the customer is supposed to provide us the infrastructure to start the project. Recently, one of the prominent Hadoop vendors had a change in the pricing strategy and changed from a free open source to a full license-free model. Now this has resulted in customers needing additional budget to procure their infrastructure. And as telcos being big organization, it has taken time for them to secure the additional budget for the overall project. While this is not an issue created by Subex, it is having a knock-on effect on us with delays in the initiation of one project. We expect these customers to sort out this issue through this quarter. Further, the pace on some of the ongoing projects also have been slow due to the challenges of remote implementation. As we have updated, we have started some new projects last quarter. And while on the -- some of the existing projects, considering the fact that we have finished the data gathering, et cetera, once we finish the data gathering, we can proceed at a pace. But during the data gathering phase, because it's new to many of our new customers who are starting new projects, it is definitely taking more time than what the original end result. But overall, this resulted in a lower implementation revenue, and that had an effect on the overall revenue of the company. Now having said that, the order book is intact, and the emerging market, particularly of APAC and Middle East region, is doing very well. The H1 order booking is 38% more than that of last year. While we do not want to give any specific guidance from a full year perspective, we expect the order booking to continue to be robust in Q3 and Q4. On the cost side, Venky will subsequently provide further clarification. Coming to the portfolio update. During the quarter, we launched HyperSense AI Studio on a SaaS option to engage a wider user community. The projects on HyperSense are progressing well. And we plan to start more projects on HyperSense once the current projects reach a stage that validates platform's capability. We also expect the rollout of Fraud Management and RA modules on the HyperSense during this quarter. So overall, HyperSense rollout and customer adoption is progressing as per our plan. Incidentally, we also won the pipeline innovation award for HyperSense. This is a prominent global award presented in the telecom segment. I also want to bring to your notice some remarkable work that we are doing along with TMF on our core ADS. Subex is part of an innovative TM Forum Catalyst project, championed by Verizon and Colt. These are major telcos to revolutionize B2B2X business model on the 5G marketplace. In this catalyst, our AI-based capacity management solution will solve the quality of experience versus quality of service-based predictive analytics capabilities for network slicing using cases like Connectivity as a Service, which will be very, very prevalent and predominantly the use case that is going to be in the 5G environment. The second Catalyst project is around measurement of trust in AI and beyond. In this project, Subex will build a framework and tool set to enable enterprises to build trustworthy AI models. This project is supported by Axiata Group, and outcome of this project will be an AI trust measurement framework along with the required tool set to measure and quantify AI model with a trust score, which then will help consumers to understand the challenges in any AI model. And as this trust score gets lower, then the intervention can be done and made the corrections in the algorithm so that the trust score comes up again. This is a significant development, and we expect this to be the standard framework on AI -- on trust in AI going forward. Though these Catalysts won awards in their respective categories in the recently concluded TMF award ceremony, only 9 Catalysts amongst the total of 41 this year went on to win an award, and we won 2 of them. Further, as we already announced that we also were granted the patent on revenue management in the handset. Now as the compute moves more and more to the edge with 5G and IoT, the capability to manage revenue management at the edge will be very important to prevent both customers and subscribers from fraud and other nefarious activities. Coming to the new areas of IoT OT products. We had a new identity product. It was rebranded as Sectrio, indicating the triad of coverage of IoT, OT and IT. We are progressing well on adding the OT capabilities and has significantly improved the threat intelligence reduction capability of our honeypot network. The new GTM approach of going by our distributors and channel partners are increasing our reach, and we have signed up 3 distributors in North America, Middle East and India, which is our current focus markets. On IDcentral, the uptake from onboarded partners are increasing as per our expectations. As you recall, this is a SaaS business where our revenue will depend on the uptake or number of API calls they make into our platform. We expect to more than double the number of customers during the quarter. This whole business is getting into the profile of a fast-growing SaaS business, which is precisely what we wanted. Also, we are proposing a restructuring wherein the business carried out by Subex Assurance LLP will be transferred to Subex Limited. This is primarily done to achieve higher operational efficiency upon integration and consolidation of the business and the listed entity. Venky will further elaborate on this. Coming to the people side. As we have announced, Venky, our CFO, will be moving on to pursue some opportunities outside Subex. We have initiated the search for the backfill, and I'm very -- I'm working very closely with Venky on this transition. While the Q2 results have definitely not been in line with expectation, the lead indicators of our business, specifically the order book, remains to be strong and better than last year. Our focus continues to be on execution of the digital transformation, and thereby unlocking possibilities for all our stakeholders. We look forward to your continued support. Thank you, and I will now hand over to Venky to clarify on a few points.

Sure. Thanks, Vinod. Good morning, everyone. Maybe I'll first talk about the restructuring, which has been approved by the Board in its meeting yesterday, and then talk about some of the specifics around the costs in the last quarter. So I think what we are looking to do is to do a slump sale of the Subex Assurance LLP business into the listed entity Subex Limited, which will enable us to reflect the core business which we have in the listed entity and also help us drive certain operational exchanges as part of this exercise. And -- so that is the focus of this exercise. It will have to go through the required regulatory approvals before that -- before this can reflect in the [indiscernible] financials. So we are working through to get those approvals in place, and we'll continue to keep you updated on the progress we make on these clearances. So that's the approval that the Board needs. On the performance for the quarter, I think Vinod already spoke about revenue and the EBITDA margins for the -- for Subex on a consolidated basis. A couple of things I wanted to call out. I'm sure some of you would have dropped that. I think our employee benefit expenses had gone up from INR 51 crores in the last quarter to about INR 52.4 crores, primarily due to 2 factors. One, the rollout increments for our existing [ INR 4 crores ]. Subex is actually second level in July this year. So the impact of the increments are reflected in the increase in the employee benefits expenses. And you would also see a reasonable chunk in other expenses from INR 13.3 crores to INR 21.98 crores. This is, frankly, on account of 2 or 3 factors. One, we had ForEx loss this quarter. We had a ForEx loss of about INR 1.5 crores versus INR 2 crores or [ INR 3 crores ] last quarter. So that's about a movement of about INR 4 crores on a quarter-to-quarter basis, if you have to look at the movement. And then we also had -- we've also stepped up some of our other activities, given that we are seeing movement in the market and we're also seeing some traction. So from our marketing and travel ability, spends have also gone up. And so that is also that about INR 2 crores or INR 3 crores of costs going up compared to the previous quarter. And in the first quarter, we had also cleaned up some of provisions with holding cost for specific things, which is about INR 2 crores, INR 2.5 crores. So all of that has led to this INR 9 crore kind of strength between the quarter. Nothing unusual in terms of the credit costs are. Obviously, the big ticket item is ForEx. And ForEx is a function of how the currency is booked. In our case, the dollar strengthening to euro and GBP has the biggest impact on the INR 1.5 crores of loss in the profit for the quarter. So primarily on account of the ForEx movement and a few other cost increases, we expect that given the traction in the market we're seeing has led to the increase in cost. Otherwise, I don't see -- anticipate any significant increases in our costs going forward.

Okay. Thank you, Venky. Now we can move to the questions.

[Operator Instructions] Our first question from [ Ashish Koti ], individual investor.

I wanted to ask, sir, with regards to the onetime sale of our loss in LLP. I think I have missed out your earlier conversation. So if you have already discussed that, I would request you to just share that. And what is the purpose of still maintaining the LLP structure, because that does not give a clear overall clarity of performances as well as activities being done?

I think I didn't pick up your first part of the question. What is the onetime thing you talked about? You didn't...

Not onetime, the loss in LLP.

Loss in LLP. Are you talking about the Subex Digital LLP?

When I was looking at the results, there is a loss of, i.e., if I'm not wrong, INR 9 crore of loss or something in LLP. What are the LLP?

Okay. Okay. So I'm sorry. All right. So the loss that you are referring to is the digital asset. All our new businesses, these IoT, OT security or the IDcentral, which Vinod talked about, all of them are currently under the Subex Digital LLP umbrella. So as you know, right now, we are in the investment phase for some of these newer areas. The revenue momentum for them is picking up, and Vinod just provided updates in terms of how we have seen traction in IDcentral and IoT, OT securities as well. So to the extent that revenue momentum has not yet picked up, those are our investment goals, which is why you are seeing losses in the Subex Digital LLP. On the second part of the question, what is the need for LLP. I think these LLPs were carved out 3, 3.5 years ago for very specific reason in terms of how we wanted to look at the business in terms of having 2 LLPs, one property -- one assurance business and one property on Hadoop. But then we've also realized that the core part of LLP, which we had carved out at that time, has given us some benefits. But we are now looking to see how do we consolidate them back into the listed entity, and that was the first step we did yesterday where the Board has approved some sale of the LLP -- it is approved, that the LLP is approved, business in-house, we are now coming back into the listed entity. So we will continue to keep looking at the structure and see how we can optimize. But as you can imagine, some of these things once you have created, unlining them does take time. So therefore, we'll have to do it gradually and advancing the most optimal manner considering [indiscernible].

Another question, sir, is with regards to constant selling, which is being done by the major shareholders. Now though it would always be considered as an investment decision by the concern entities, it also raises out in terms of do they not see further growth in coming years while we are talking about new technology, new platforms, new businesses. So are they not seeing the growth per se and that's why they are selling out?

Look, I think that's a difficult question for us to answer as to what is there beyond that. But as well as our view, we are very, very clear that we are at that point where all the 3 new areas that I mentioned on security and identity analytics and HyperSense, all of them are in the position where the market validation is there. And as Venky mentioned, we are stepping up the investment for the business development so that we can scale those things and make it into a mainstream sale. So we remain very committed and very positive on the outlook and the prospects for these new areas that we are working.

I think just to clarify, I think these are some of the insiders who are selling, our employee shareholders who got these options as part of the -- as part of like, whatever employee stock option program. So these are specifically management's biggest shareholders. Yes, they are insiders, but then we also have to recognize all of them will have their own investment views and need for cash at various points in time. So to read too much into that -- I wouldn't read too much into that because I think this is -- it's a larger picture the way the company is looking at the business.

But sir, I can. I can -- have been selling for quite some time, and they've reduced their holdings, maybe now just to a miniscule 1.13% or something. That's my concern.

I hear you, but I can -- it's never a very large shareholder, right? It is about 1.5%, which maybe they brought it down. So -- and those are...

No. No. Sir, sorry to interrupt. Earlier, they were holding more than 3% or 4% down the line. I mean, say, 4 years back or so, 3 years back. I could be wrong. My reading could be wrong. But what I recollect is I think they were holding 3% to 4% or maybe more, which has come down to 1%. And when the company is going on a growth trajectory, major move is happening now, technologically new advancements, new openings. And that's why investors are [indiscernible] about Subex in that scenario. That raises the question. And I suppose, CFO, sir, is also moving out.

Look, I think -- this -- I can appreciate while individuals take a call on this matter, but I would want to reiterate again what I said. The -- my view and the management view on the prospects of these things are quite robust. And we are, as we talk, stepping up our investments on these new areas because as we see the markets -- as I've told you maybe by the end of the year, we will be in a position to provide you the specifics of the profile that we are talking about, saying that IDcentral and IoT are getting into the profile of business that we wanted, which is primarily the IDcentral being a SaaS-based profile and the IoT being a distributor channel-based profile. So we are getting there. We are very, very confident that we are setting our investments. Now there are personal reasons. There could be other reasons. But as far as the company and our view is concerned, we are consistent that these are -- we are -- we see this opportunity as very real, and we are quite bullish on the prospects of these products going forward.

Sir, I had requested for -- in a real meetings also, just one second. Just one second, please. I have requested for -- on the [indiscernible] major competitors on our new products offering a new platform. So I was told that it will be shared later on in next 1 or 2 meetings that these are the main major competitors vis–à–vis us, and where do we stand compared to them. I would really appreciate because we are also new to many of the things. So for us to understand the industry also will take time and new for us.

Sure. Sure.

And sorry for asking too many questions.

That's all right. Look, I think I can provide an update on that. When it comes to security, our major competitors today are a company for clarity business from an Israeli company. Another company is [indiscernible]. So these are the 2 companies that are competing with us in the specific area of OT, IoT at this point in time. There are many others planning to get into this space because this space is definitely getting hotter. When it comes to identity analytics, as we said, we are working today in the 2 markets of India and Indonesia. We have many smaller competition, but it is really the timing as we talk, and probably maybe in the next call because there are so many, not somebody I can call out -- talk as a global player. It is an emerging space, as we talk, right? So we will be able to tell you because it's very early. So it's not that -- we are not even competing in many places one-on-one with others. It's that earlier stage, but it is evolving. With respect to HyperSense, I think we have 2 large competitors which we can consider as a competition. One would be Alteryx and other one is [indiscernible]. These are the 2 players that we consider as competition. There are others also that are emerging. So all these things are emerging spaces, and these are some of the competition that we have started competing with them in some of the opportunities. We will also provide an update on some of these things next time going forward at our investor presentation.

Our next question from [ Mr. Deepak Chauhan ] from [ Rate Capital ].

Just to extend the question about the HNIs exiting including some of the top management, I'm not pointing fingers at anyone. But it seems like these HNIs and some of the management were aware of what is coming, which is why probably, again, I'm saying I'm not pointing out, but this needs to be noted down to where probably these people were aware of what was coming in September. That's my question number one. I don't need any answers on that. But on behalf of retail shareholders, that's a suspicion we guys have. My second question is -- sorry, do you want to say something on that?

No, go ahead. I'll -- complete your question, then I'll come back.

My second question is in spite of your best efforts, sir, I'm not doubting on the management capability, but for some of the other reason, our top line just doesn't grow. Is it right time for us to probably merge with a bigger entity or a completely different corporate entity?

Okay. So let me take the second question first. See, as we said, that there is -- the result is definitely not in line with our own expectation. And we are correcting that situation because, as I said, our order books are in place. We have the backlog, and just the conversions that we had some challenges, as I have explained in my brief. Now as I said, the lead indicators are quite robust at this point in time. And if we continue that in Q3 and Q4, we will definitely be in a better situation with respect to the order backlog, and then the focus should be on conversions. But we definitely have some challenges with the conversion based on what I mentioned with the customers and taking more time than what we originally invest as for us to initiate the projects and complete some of the projects and things like that. Dependency -- there's a lot of dependency from customer for us to complete good projects, particularly the newly initiated ones. But I guess those get sorted out as we go through and revenue will start going up. And then probably, obviously, I think still that I can only tell you that I can only talk about the lead indicators, which is probably what will get converted into revenue as we go along. Now one thing that you mentioned about the -- some of the employees selling, et cetera. I just want also to...

It's not only employees. Sorry. The top HNIs, if I compare the shareholding cycle of June versus September, sir, all the HNIs have disappeared. My question is, did they probably get some hints that what's going to happen in September. So that's still...

So let me clarify, absolutely not. We have -- whatever we have had discussions with all the investors that have been listed, that have been notified on the same day to the stock exchanges. So there's nothing beyond that. We have had any discussion whatsoever with anyone. But let me also take to clarify about the employee thing. Now we do have a stock -- sorry, ESOP teams where based on the vesting and based on some of the requirements for exercising, people have to cough up some money, and therefore, there were some liquidation, what, in terms. That was required for them to get this more resource before the exercise period is over. So there are some movements on that front. But other than that, I think, by and large, as far as from a compliance standpoint, we are absolutely clear that we have the same briefing. And as soon as we have any kind of investor activity, that is updated to the stock exchanges on the same day will we have the discussion. There is no other discussions or information of any kind that we're having with anyone.

Okay. This is -- so is it that the worse is over for the coming -- because we keep hearing that the next quarter will be better, the next will be better. But I mean -- and that's what we were guided by. And my -- that's what I was trying to link that the retail investors are guided by some positive assurances in your last call. Whereas if you see the shareholding pattern, these HNIs went away. And here, we keep getting assurances from the top management that things are good. Next quarter will be better, H2 will be better, but it just never happens.

Yes. Look, I think, I'm giving you that all the stats with respect to the lead indicators that we have, that we had an order booking which is 40% higher than what we did last year. Our backlog is intact. So that all points to things looking good going forward. So I'm not giving any assurance beyond that, but I'm just providing with the fact that we have closed the order intake, order booking, which is a lead indicator for the revenues to come, was strong and we had -- compared to last year, it was almost 40% over what we did last year.

Thank you, sir. Look forward to better performance from next quarter onwards. Thank you.

Thank you. Thank you.

[Operator Instructions] The third question from Mr. V.P. Rajesh from Banyan Capital Advisors.

Just a question on the MRR for the Horizon 3 products. So for IoT and ID test, et cetera. What was the exit rate at the end of the quarter?

Okay. So Rajesh, on the -- 2 aspects. One is on the -- let me first talk with the IDcentral kind of thing. So our current ARR for IDcentral is trending at about 150 at this point in time. And our expectation is that we will have that almost 3 or 4x doubled by the next 2 quarters. So that is our current expectation, and the profile is building up that because at this point in time, our -- after we onboarded the initial few customers, our focus was to stabilize the platform, and they are having -- and we have not added more customers because we were stabilizing the platform, and we were -- these customers who are onboarded, their volumes have gone up from what they started to almost 500% when we started. As you know that these are API pulls. And therefore, based on every API pull, we have agreed on our revenue. So we have seen a 500% increase on the API pulls from the existing customers. And that has -- and that [indiscernible] platform is stabilized, and our next effort is to increase the customer onboarding, which we will, looking at more than doubling the onboarding of number of customers every quarter going forward. And our expectation, as I said, as I should say, we will almost get to about very, very close -- I mean we are working towards getting to the first milestone of ARR of $1 million for the IDcentral business. Now coming to security business with the transition office moving into the OT side of it, the profile is not fully on a SaaS-based model. We have a mixture of both CapEx and the OpEx there. So those details, I will provide you as we get into. As I said, we'll provide the details of both the businesses as we get into the end of this year, Rajesh.

Okay. And my second question is regarding this restructuring. So I believe you are only restructuring 1 of the 2 LLPs, and the second one will continue. Is that correct?

Yes, that's correct, Rajesh.

Okay. And so the idea of getting some strategic capital in the Digital LLP, is that still on? Should we conclude that? Or should we -- we're signaling that perhaps that is also easy at this point in time.

We will try it at the right time. We would hold that till we get to a particular revenue side based on some of the guidance that we have got from the market, and that is some of the experts in this area, Rajesh. So we -- the plan is on. But from a timing perspective, we would wait to get to a particular level of ARR before we pursue that again.

Understood. Understood. And Venky, all the best for your next venture and hope to stay connected with you. Bye-bye.

Sure, sure, Rajesh. Thanks a lot.

Our next question is from Mr. Sanjay Shah from KSA Securities.

So my question was regarding this quarter performance, where -- what you -- the reason what you cited. What do you see there going ahead? And what about -- have you lost any market share in any of our verticals? Or have we failed in any of the new verticals where we are entering?

Okay. Thank you. So the -- we have not lost any contracts. We suggest that it is delayed. As I told you, they will have -- they are figuring out the additional budget for the ensign. Some of the cases, and there's been some delay. So the contracts are not going away, it's just that it is getting delayed from an execution standpoint. On the new areas, I think, again, because the market is just getting developed rather than going, so we have not lost any market share or anything at this point in time. And in the 2 regions, particularly in the emerging markets of APAC and Middle East, we are competing very, very well. And other markets, we have just sort of opening up. And as the new projects are coming in, we are engaged with our new product portfolio. And that's why we are significantly increasing the business development, both with people and marketing. We have stepped up our thing. So as I said that, I mean, the higher ROI, et cetera, is the result for that. And we expect in Q3 and Q4 for this to continue.

So my second question was regarding our transition on SaaS platform. The business is HyperSense and that IoT security. Can you highlight more on that how it is -- the transition is and what opportunities you will see on that [ front ]?

Okay. So there are 3 specific products that we are taking in that direction. One is IDcentral, which is completely translated staff. From day 1, it's, as I told, it's getting into the profile of the fast-growing SaaS business. Now with respect to HyperSense, we are doing 3 projects at this point in time that's getting into a stage of completion -- or rather, completion of Phase 1 of the delivery, and we are waiting for that to happen, the entire load to be pumping so that the platform stability can be verified and validated. And there are other upgrades that we have already secured. So as soon as we have this at this stage, which we will get other products, other projects also moving to this mode. Now with respect to specific HyperSense, the conversion of some of the existing -- I mean existing license-based business to the SaaS, that's a work in progress. I would not say that we have kind of already succeeded in converting all of our customers. No. It's a new process. We are now looking at a blended model where some part of the solutions, which they already have the license scanned at the main asset thing. And there are some parts of the platforms will be on SaaS-based tech. So those discussions are happening with the customers. As we onboard the customers, slowly, things will happen. So I guess all the new contracts that we are securing from Q3 and beyond. So from start of this quarter, we are only securing new contracts and upgrades for HyperSense. So everything going forward will be on HyperSense. Now some -- most of them, we expect them to convert into SaaS. Some will remain in the on-prem model based on the sensitivity of data and some of the customer telco-specific requirements. But it will take a while for us to convert every customer into the HyperSense and into the SaaS model. It's a work in progress.

So continuing that, is it that during the transition period, we may lose some of the businesses or revenue?

There might be a change in profile of the revenue for a short term, but it's too early for us to factor it at this point in time. Most of our upgrades -- yes, I mean, all the sectoral upgrades that we have secured, we are not seeing any loss of revenue. But I think as we bid for the new projects, new RFPs that we have there, all of them we have bid on a SaaS-based model. And when compared with the profiling of our existing projects with those projects, there will be a smoothening out of the revenue rather than transloading of the revenue, if you consider like 3- or 4-year term of the contract. So at this point in time, we are not seeing it. But as we start securing more and more new contracts, that is brand-new contracts from customers, not the upgrades ones, we will see that smoothing out. But our belief, our view is that by that time, some of the new areas will start contributing so that overall, we will not see sort of that kind of impact that we're expecting from the transition from a license to SaaS. It's too early for us to take it. As soon as we have some more view on that thing, we will provide that. But at this point in time, I mean, the revenue -- kind of the different revenue compared to last year was not contributed by the SaaS conversion. It was primarily because of our inability to start some of the projects that we have won on time.

The next question from [ Mr. Amit Mishra ] from [ Inpex ].

So enough discussions on revenue degrowth and insider selling. I would like to raise one issue that we have been talking about 10% or, let's say, double-digit growth since the start of the year. It was mentioned in Q4 and again, we reiterated on Q1 con call to being -- it was 10th August. So I think this quarter already. So I want to understand what happened to that guidance of double digit. And what is the current guidance? So that's number one. The second question is there is significant increase in receivables and -- which reduce, of course, the operating cash flow. What happened there? And I don't understand it had a decrease, big decrease. And the third question is, we do want to see metrics in the presentation for new products. It's absolutely essential. Now Subex has been saying for 3, 4 quarters that we will include that increment. We have never seen it. So I would urge the management to include this and make it transparent basically, including any clarification if you have any. So we need to be more clear, more transparent with shareholders. That's my questions.

Yes. So I think as we have been maintaining that we will provide a view of the new areas when it becomes a sizable number because at this point in time, that our emphasis is to add more...

I'm sorry, Vinod. I'm sorry, Vinod. I understand the point and we -- I understand it's on hold for a long time. Right? I understand that it's not up to the scale to report. But this needs to be transferred quarter-on-quarter how you're doing and needs to be published. This is -- we have been waiting for 4 quarters to get the presentation.

Right. Look, I understand the thing, but I would want you to appreciate where we are coming from. I think, as I said, we just want to...

Yes. [indiscernible] the last 3, 4 quarters.

Yes. Once we to get into -- sure. Once we get into a profile, that's what I said by end of this year, we definitely think that -- I'm talking about the end of this year for IDcentral. We will get into a SaaS profile, and we will be in a position to get to provide you that detail. Because at this point in time, we are only adding customers. Our emphasis is to add customers, get their user ability fixed, get them -- give us, get us the feedback. We get the product better before we scale it. So that's our focus, and that's -- so adding users, let me put it that way, not even paying customers, getting users. That's our focus on the new area. Now coming to the first aspect of the guidance perspective, I just want to clearly call out that at this point in time, we are not giving you guidance. Now the things have changed. I've already detailed as to what things have changed. This was not expected. And we have to -- we have started on a particular thing and this screening, this was an uncertainty because some of the customers that we are talking about are very large customers, having huge volumes of data. Now you imagine that infrastructure was given -- coming free to them and they had to only pay the support fee. That support fee is to take the support. Many of them have the internal capability to support-based free Hadoop infrastructure. Suddenly, they provide -- one of the mainstream providers changed the model, and they have to -- the data, it was licensed, which meant at that volume, it was a large proportion of the overall budget that they will have to secure again for these projects to go ahead. So this was...

Sorry, Vinod, to intervene. So this happened post [ 10 hours ]. I would like to understand this.

That is correct.

You said -- yes, okay.

That's correct. So we did not expect that thing because then we did not -- we were not even comfortable to continue with the working unless we get a clarity. And then it was -- because it was a big amount. It was a sizable portion of the overall project cost. They have to cough up again and because of the price -- I mean the license of this model is -- and it's quite upsetting. I mean while it is upsetting on one side, on the positive side of this is that this has also prompted some of our customers to look at HyperSense because HyperSense was a viable alternative to the platform they are using, but the telco is very, very large team and they have a very large team supporting these products. It's not for -- our infra price is not for our products alone. They have a common infra. But I guess the base will get sorted out kind of thing. So while considering these things, I hope that most of these things will get ironed out during this quarter, and we will see that in the result. But I do not want to provide any specific guidance at this point in time. And as soon -- and probably, the clarity that we have is on the order book. That is clear that -- and I'm calling it out and that we are close to H1 with a 40% higher order booking, which would mean that, that will result into revenues going forward. Yes.

And this is the same 40%?

Yes, 40% over H1 of last year. Our order booking is higher by 40% -- actually, 38%, to be accurate.

38%. Okay.

And the last...

Sorry, Venky.

Yes. Your question on receivables. I think what happened is, I think, there were a couple of invoicing which we are awaiting confirmation from the customer and some of them spilled over to the current quarter. So it didn't happen before the end of the quarter. So that has resulted in the invoicing not happening. So it's a still the unbilled portion versus receivables. So as soon as we get that, we get converted to receivables in the coming quarters. So it is a one-off kind of a situation, which has led to that. I don't recommend [indiscernible].

You have all of us scared, Venky, and Vinod.

Yes, I understand. So I think it is very much explainable. If you look at the -- obviously, you don't have the details of the breakup of the balance sheet, but a similar movement of increase has happened in the unbilled receivables. So it is in line.

Okay. And Vinod, you mentioned about IDcentral ARR. Is it ARR or MRR?

ARR. The current ARR is tracking at 100,000.

100,000. Okay.

With a handful of customers. We have only a handful of customers, but I guess that our -- but we have seen a 500% increase over the last 2, 3 months on the ARR. Actually, we did not add too many customers because as I told you, the emphasis was to streamline and stabilize and ensure that the platform can scale. Now we have done that. We will even more than double the number of customers this time. And our next short-term, near-term milestone is 1 million ARR.

Okay. Just on the investors, it's not going really well if we see how [ SHPs ], quarter versus quarter, we have lost many HNIs. We have lost even [indiscernible] managed funds. So why -- can you just develop on that? Like what are you facing, like why you are not able to convince the investors to buy in because there's enough liquidity in the counter?

Look -- yes. Look, I think the fact that is that this quarter, particularly this quarter, where we are, we have explained earlier. And our focus has been to be looked at how to support, particularly on the new areas where we think we are sitting on a huge opportunity. We are very bullish. We are more aggressive as we go into the market. And I presume that as we start executing and start reporting some of the -- around progress that we are making on the new areas, you will see that the profile is building that of a fast-growing SaaS company. So while all the activities that we are doing towards convincing or talking to the investors, we are reporting it. Beyond that, we are not having any discussions with any of the investors, as I clarified. But we are translating all of them. And our hope is that as we start providing details of some of these new areas, there will be much more interest on account than what we are seeing today.

[Operator Instructions] Our next question from [ Mr. Prashant Saban ] from [ KLS International ].

So I come from a technology background and I know most of the technology stack right from the early 2000s where we started with data warehousing, business objects and all these things. So I see HyperSense more into that category, which is the underground level and flavored with Hadoop and AI, obviously. From my perspective, for growth of the company, what I see is how well connected is our sales team as compared to the production. Because from my knowledge and from my experience, a good sales team can definitely make an average product look good. Whereas we do have a good product, but I see somewhere we are lacking on the sales front. That's one thing. And my second question is most of the companies, which went 10x CapEx last year in a similar segment, they have good connects, again, come back to the sales team. And I have seen that they have been getting projects from the government of India as well. So do we have any connection there? Are we getting into any major 5G projects with any of the big names going forward? Can we expect some big turnaround in Subex with regards to the sales team?

Okay. Look, I think on the strength of our relationships, we have been very, very strong with the CIO and CFO organizations of telcos. But as you can appreciate with HyperSense and a wider sense of the platform, we are today able to appeal to a lot more constituencies within the telcos like CMO, CTO and Chief Digital Officers and things like that. Now those relationships are that we have to build, leveraging the net existing CFO and the CIO relationships that we have today. So earlier, we were working on a very niche area of revenue management, which was more towards the CFO as a business user and CIO as an enabler. But now we have the ability and a lot more. Or we can appeal to a lot more within the telco aspects. Now those are the efforts that we are building. They have augmented the team that the people who have got that experience into selling into those CTO organization. We all augmented the team. And wherever required, we are also making the changes to ensure that in the specific accounts based on what we achieve, we want to do that. It's a work in progress because, as I told you -- I'm talking specifically talk about telcos at this point in time. And so we expect that as we get -- as we gain more and more traction on the HyperSense, you will see a lot more new logos coming into us, coming into us along with existing sites. So I think that is a work in progress, and we have augmented the team. And at this point in time, in the regions that we are strong, we have very strong contacts and our sales team is probably very well engaged. Now the areas that we are significantly stepping up our effort is in Europe and North America, where we have, primarily, we were working with very large telcos and with it, on small range of products. And again, with HyperSense, we have an ability to engage with a lot more customers on a lot more areas. And there, we have augmented the team by adding more business development teams. Our teams are putting more people on the ground. We are also leveraging mainstream partners, a very large size, and we are also engaging them so that some of the large transformational projects we can play a lot more than what we are earlier playing in the market. So that's one view on this. We are stepping up our effort on the engagement both on the new areas by having more feet on the ground.

Thank you very much, Mr. Vinod. And I fully support you. We are totally going back as an investor. I see a definite revolution coming ahead in Subex. So all the best to you and the team.

Thank you very.

We appreciate it.

The next question from [ Mr. Rishi Anejo ] from DeepDive Equity Research.

I've been looking your top line since December 2018 till this quarter. Your numbers are continuously moving around, on an average basis, INR 85 crores to INR 90 crores only, whereas we have seen numbers of contracts and tie-ups during these periods. And those contracts have been [ getting utilized ] or being continued aren't reflecting in your [indiscernible]. We have been seeing -- like we have seen on February 2019, we have on [indiscernible] partners to get Subex to cybersecure [indiscernible] contracts gained in '19, 2019, 6-year contracts from Vodafone, [indiscernible]. Florence -- Town of Florence in June 2019, [indiscernible] in July 2019. [indiscernible] September '19. [indiscernible] in January. There are a number of soft contracts. But your sales numbers are still moving around INR 85 crores to INR 88 crores only. Only 2 quarters are exceptions, March 2019 and it was...

Yes. Look, I think if you look at our business today, I think about 35%, 40% of the business comes from the new projects that we execute. When I say new projects, it's also projects from existing customers and new projects from existing customers and new logos. So some of the things that we called out are the revenues that are sitting in the 40% of the revenue that we report on an ongoing basis. Now I guess the point that you're making is that why the number is not going beyond, let's say, about 2 million revenue level. That is where, I think, some of the new areas will have to start. The revenues will have to come into those new areas. Yes, this quarter has been a kind of an exception in the sense that we are faced with some challenges on initiating some projects. Things would have been very different if that wasn't the case. But I would -- we are tending towards the number that we mentioned about one of those, FY '19 Q4. But we'll see as we get into Q3 and Q4, probably some of the things will become more clear to you.

Sir, we have seen selling from your side also on 22 June 2021, and then when the share was at the peak. So aren't you still bullish on your company itself or you said like this quarter won't be good and you have sold your stake also, and we have observed that the ESOP has been used to just cash in on employees, of those cashing on the opportunity.

Okay. Look, yes, so we have some -- just because you're asking, we have some restrictions on how much we can sell and how much we can exercise during the period. And I assume because of the blackout period, the period is only available for about 15 -- about 45 days or thereabout in a quarter. And we have put an internal restriction -- let's say, internal best practice that we have put that we can only sell 100,000 shares even if you want. So there were some cash flow needs based on which that happens. And that's why you will see the concentration happens during only that 45 days, and you will see that it happens only in 100,000. These are some of the internal restrictions or the best practice we have put in place. So this is purely on the cash flow needs, and I still have a lot of resource with me, and I intend to convert that as we go along.

Sir, we have also seen one announcement from your side...

[ Mr. Anejo ]?

Yes?

I'm really sorry to interrupt, sir. Do you mind coming back in the queue?

All right.

Thank you, [ Mr. Anejo ]. Our next question from [ Mr. Manuha Guino ] from [ Lynk ].

I got answers from companies that I already covered. But just I want to ask you one more thing. And what are the gaps we can take out from the competitors? So probably your plans on that.

See, I think on the competition on the base and our core products, if you are talking about there is this type of whole HyperSense, the whole way we are engaging with the customers with an ongoing update and [ Mac-based ] architecture. It's completely forward-looking, and it is creating a lot of excitement in the market. So that's a big differentiator that we have created at this point in time. On the new areas, for example, on the IoT, OT threat, we have, we are developing that threat intel based on our expensive honeypot. That's something which we are constantly investing to ensure that we have more and more coverage of OT and IoT devices. So that will be, again a complete thing. On IDcentral, particularly with respect to the opportunity in India, as you know, that India, most of the -- I mean the RBI has recently cleared the video KYC. So these are all moments that we are taking advantage of, and we are working on that area of onboarding and on identity analytics. So these are all things that we are doing. And at this point in time, we are -- our accuracy is much better than some accuracy or some of the other internal tools that our customers are using. So we are on a constant basis trying to differentiate ourselves and increase accuracy while improving algorithms and AI models that we are using, and that will be our differentiator. Second, particularly your question about the opportunities in India per se, we have started pursuing it, like, for example, IDcentral predominantly on the Indian -- focused on the Indian market and the Indonesian market, and we are making good progress there. Some of the logos that we have is very good. Average companies on the crypto and on the fintech space, and they are growing, and we intend to grow along with them. So India is going to be a big part of the market that we focus when we talk about IDcentral and IoT segment. On the 5G, our current focus is predominantly on Europe and North American customers because that's where a lot of actions are there. And we have those -- we'll engage with the customers here other than there is an opportunity. But our -- currently, most of our activities around 5G are happening in North America and European customers.

Okay. I have one more question. And I see a quarter-on-quarter basis, there are expenses are increasing significantly. And so is there any other investment plan on that expenses or the work?

Yes. So the expenses -- the movement for the expenses in the current quarter, I explained earlier in the call, I'm not sure whether you listened to it. I think we had explained there were very specific reasons, which was primarily contributed by ForEx and some additional investments we're making for the demand pickup we are seeing in the market. Apart from that, I think our investments for the newer areas, we'll continue to keep making those investments in the newer areas like IDcentral and OT security, which we spoke about. So nothing unusual. I think we will continue to do what we have been doing in the last couple of quarters. The specific movement in the other expenses you see is factor called is influenced by 2 or 3 factors, which I spoke about. And I don't see that going up significantly in the coming quarters.

Okay. So how about for the next 2 quarters? So is it that very less compared to quarter 2 and quarter 1?

As we explained earlier, we are not getting into quarterly or yearly guidance at this point in time. I think we will continue to keep you updated as we report each quarter, but we are not getting into still guidance at this point in time.

Ladies and gentlemen, that would be the last question. Now I hand over the floor to the management for closing comments.

Okay. So thank you for all the interest and all the questions there. As I said, while Q2 has definitely not in line with expectation, I think the order book -- the robust order book gave us the confidence that we are on the right -- clearly, we are on the right path, and we will continue to focus on the execution, particularly around the new areas and we are scaling that up. We also thank you for your continued interest in Subex. And if you have any further clarifications and you can reach out to us at investorrelations.com. Thank you, again, and stay safe and take care. We wish you all a very Happy Diwali as well. Thank you very much.

Thank you. Happy Diwali, too. Thank you.

Thank you, sir. Ladies and gentlemen, this concludes your conference call for today. Thank you for your participation and for using the [ Subex ] conference call service. You may all disconnect your lines now. Thank you, and have a good day, everyone.