Subex Limited (532348) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Q1 FY 2024 Earnings Conference Call of Subex Limited. [Operator Instructions] Please note that this conference is being recorded. I now 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 quarter ended June 30, 2023. Now I'd like to introduce the members of the management who are present for the call. Along with me, I have Ms. Nisha Dutt, CEO; and Mr. Sumit Kumar, CFO 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 include, but not limited to fluctuations in earnings, our ability to successfully integrate acquisitions, competition in an area of businesses, 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 now hand over this call to Ms. Nisha Dutt to take it forward.

Good morning, everyone, and welcome to Subex's investor call. It's a pleasure to have all of you here today. But before I delve into the financials and strategic outlook, I'd like to actually take a moment to introduce myself. As this is the first time I'm speaking to all of you. I think after I took charge, I must have met quite a few of you in AGMs before. But just to reintroduce myself, my name is Nisha, and I'm your new CEO. It gives me a great honor to give me -- given this responsibility of leading one of India's earliest product companies towards its new next chapter of growth. My prior experience on the Board of Subex has provided me with insights into company's operations, strategic vision and governance. So I believe that this knowledge equips me to step into this role with comprehensive understanding of Subex's business model and industry landscape. And of course, our stakeholder relationships that are very vital to our growth. I bring a strategic and growth mindset, and I'm confident in my ability to deliver to shareholder expectations. And what I've done since I've taken over, over the past 3 months, I've had the privilege of spending time with many of our customers. And this hands-on experience has given me insights into their needs, aspirations and challenges. And I've witnessed the potential of technologies first hand, actually. And I've personally also conducted workshops on AI. And it's been a journey of learning and growth for me. So combining all these learnings and assessment, because one of the key focus areas for me has to assess what are the new growth opportunities for Subex. And I've come to a conclusion that Subex's capabilities can expand, and I'm able to see a clear strategic intersection. And I'll call this the next pivot actually, that we'll make in Subex. And I call this as creating connected experiences for our telco clients. So let me expand on this idea of connected experiences a little bit and paint a picture for you. So I'd like to imagine that we are on a brink of a massive digital revolution that's about to reshape the world of telcos forever. With data is spreading everywhere, digital and real worlds are really converging right now. We are foreseeing a future that could be here as soon as 2025. In this future that we foresee, more than 30% of messages that we will send out will be specifically actually generated by AI. Around 10% of data will come from generative AI, gen AI also in local parlance know as ChatGPT. And 65% of global population will have digital wallet. So what this will do is that we'll be spending a lot of time in digital [ realm ], and the whole world is almost converging on our smartphones. So while all this happens, one of the great things is that shift -- the whole shift is underpinned by connectivity. And that's what our telco customers provide to their customers, correct? So this forms the bedrock of massive transformation. And we believe that telcos now have a very different and golden opportunity to create amazing value for their customers, and we want to be on this journey with them. So we see foresee a future where end users like you and me, like all of us, will be augmented by AI agents, and we will be self-generating content in virtual world. For example, your phones will literally become like robotic agents. Communications will shift from personalization to self-generation. So content will be self-generated, will move from graphical to conversational user interfaces, just like we have been using ChatGPT. And this will transform the interaction that we have with our applications as well. In this, we will live in almost an AR/VR world, where AI agents will call each other and perform tasks autonomously. So this is the world that we foresee, which is so different from the one -- we are actually seeing a lot of this transformation unfolding in front of us. We also believe that Large Language Model, LLM will have the intelligence to orchestrate better software stacks, and actually replace them. Call centers will become copilot. So this will fundamentally shift the way telco data, the way we understand telco data and software infrastructure. But like I said earlier, connectivity will be the bedrock of these diverse experiences. And we at Subex are now committed to providing seamless solutions for this landscape. So I'm really excited about the changes that we are seeing in landscape. And we have been serving telcos for many decades as most you know, and we recognize that navigating this transformative landscape is not without its challenges for them, right? So the telco industry, if you -- if I were to talk about it, it is really being disrupted right now. And it's across 4 key areas that we see, customer experience, delivery, the ecosystem in which they are having to operate now and technology stack changing. So this is quite a bit of disruption for telcos. But the good news here is that each area presents a unique set of questions and challenges. And a plethora of new AI use cases is opening up actually to deliver the idea that I call connected experiences. So towards this, what we have done at Subex is, we have curated a comprehensive area of offering to [ pay day ] for this. Our mission is to empower telcos with personalized, seamless, secure and intelligent solutions. And we want to go after this future together with them. So what we are doing is we are focusing on unlocking new use cases and building on the foundation of the Digital Trust that you know you are all very aware of that we have already been delivering on. So how will our portfolio deliver to this? So our offerings will range from enabling personalized experiences through AI customer experience studio and digital onboarding solutions. We'll guarantee cost optimization through our network analytics portfolio will deliver intelligence with our business assurance portfolio and AI use case studio and secure connectivity through fraud and security solutions. And of course, telco fintech is a big area that's emerging. So we will actually enable cashless commerce through AI fintech solutions. So we have net-net, I think, aligned our portfolio to deliver unmatched value to our clients, I believe. These are demand for the future, and we are actually at Subex diverting to a next-gen stack. I call it the next-gen stack, because we are now ready with 5G, AI and cloud, right? So the convergence of these 3 technologies, I think we are very well primed to make use of this opportunity. And this whole stack will be powered by a HyperSense line of offerings that combine cloud readiness, AIML and generative AI capabilities to deliver superior customer experience. So what this will do to make it really easy to understand is that the stack, the stack that we are moving towards will provide us with expanded addressable market to cater to and position us actually in midst of these tailwinds. We have over 200 global customers. We have 300 installations and in 100 countries. And all the customers that I've met and personally spend time with, they are actually really excited about the new stack that we are talking about, and it's transformative potential. So -- and we have been getting really good feedback and direct feedback on this new opportunity. So if I were to really conclude, I would say that in Subex, we see the [Technical Difficulty] of experiences driven by AI and shaped by collaboration. We are super excited about this. And we really want to take the -- be on this journey with telcos like I said, we want to empower our customers and partner with best of technology partners. I assure you that we are committed as ever to delivering exceptional value and look forward to your continued support. And so this is what I wanted to sort of cover connected experiences a bit, to explain it a little bit. But going forward, when we talk in the investor calls, I will be providing updates in investor calls around 3 strategic pillars in addition to the earnings that we will talk about. So the 3 pillars that I will cover in every investor call would be around growth, efficiency and talent, because I think these are the 3 pivotal areas that really demand a lot of our attention. And I want to make sure that we are monitoring and disclosing this. Because these are the 3 things that will put us on an upward trajectory. So on the growth front, to come to these 3 aspects on the growth front, the first quarter has delivered promising outcomes. We have secured addition of 3 new logos in our core business domain, despite we had a lot of competition. These accomplishments, I would say, are significant because the contracts that we have won are with really good and renowned CSPs. So this means I underscore our capabilities in our core solutions. And our strategic focus has also pivoted towards expanding our footprint within the strategic accounts. So I call it almost a farming strategy, right? When you have a strategic account, we want to go deeper and make sure that we are able to do more for our current clients. So we will augment our adoption of our products across the key clients. And as I spoke earlier, we are very focused on AI right now. So we will make sure that we will pick select geographical regions with pronounced AI for our AI offerings and delve deeper into these accounts. The second one that I spoke about was efficiency and efficiency, as you will understand, is a very important pillar of our strategic road map. So we have -- what we are doing is we have embarked on a journey of hyper focusing on our portfolio optimization. We are trying to streamline our operations to extract maximum value out of every aspect of our business. And this approach is underpinned by a firm belief and contemporary technology as a cornerstone to our advancement. We cannot offer contemporary technology stack to our clients without being on the journey ourselves. So we will embrace a very tech first mindset. That should really help us drive efficiency and productivity in this organization. Also, most of you have heard, but we are actually on the path to collaborating with one of the world's leading strategic players. We are forging alliances, and I believe that what this will do is eventually help us reduce our cost footprint and also open up a new market, which we haven't been able to tap into help before this. So I'm confident that efficiency focus will really help us deliver the operational excellence. And the third focus area that I wanted to talk about was talent. This without -- goes without saying that this is going to be critical to our success. In the tech-driven area where the technology stacks are changing very quickly, we completely understand the game-changing incidence of talent. And I want to make sure that we make most of the potential, their potential, the talent that we have, and we are actively investing in programs to enhance and reshape their skills. So we are making sure that our workforce is equipped with latest know-how to equip, to navigate this new landscape. And more importantly, I want the best talent to create almost like an innovation engine for the company. The acquisition that keeps experimenting internally so that we have newer and newer offerings to take to our clients. So this is going to be very critical for us. Those were most of business updates for the quarter. And now I'd like to take an opportunity to present the financial highlights from Q1. The performance highlights for the quarter that ended on June 30, 2023, compared to previous quarter, March 31, 2023. Revenue for the quarter stood at INR 673 million as against INR 473 million for the quarter that ended on March 31, 2023. EBITDA for the quarter was at INR 147 million as against INR 368 million for the quarter. And profit after tax was at INR 193 million as against INR 472 million for the quarter that ended on March 31, 2023. And if you -- if we do the comparison with the corresponding quarter, the performance highlights for the June 30, 2023, compared to quarter that ended on June 30, 2022, was revenue for the quarter, we ended at INR 673 million as against INR 833 million on the -- for the quarter that ended previous year. EBITDA for the quarter ended at INR 147 million this quarter against INR 7 million for the quarter that ended on June 30, 2022, and PAT for the quarter ended at INR 133 million as against INR 55 million for the quarter that ended in June 2022 -- June 30, 2022. In summary, if I were to summarize this, we saw 42% increase in our revenues compared to the previous quarter. And I believe this moment has been a result of collective efforts of our [ deal ]. Our order booking performance, OI looks good for quarter 1, and it has exhibited a robust strength, surpassing the levels in preceding quarter. So this demonstrates to me that there is continuous demand for our products. We just need to make sure that we are making good on this. Equally noteworthy, I would say, positive trajectory of our EBITDA. I feel that we are on the recovery path right now. And we'll take measures to enhance operational efficiency, optimize costs, and definitely maximize shareholders for us -- maximize value for our shareholders. And as we navigate this business landscape, we remain committed to driving sustainable growth and enhancing shareholder value. So really, your support and trust means a lot to us, and we are committed on delivering value to you. Finally, I would really like to -- a big thanks for your confidence in us. We would welcome your feedback on the strategic road map that we have set for ourselves. And I would love for these calls to be a 2-way communication platform where we just not just talk to you but also hear from you. Thank you once again, and we will open up for questions now, and I'll give it back to the moderator at this point.

[Operator Instructions] The first question comes from Sanjay Shah from KSA Securities Private Limited.

Yes. This is Sanjay Shah from KSA Securities. Thank you for highlighting and welcome you on the Board as a CEO and good to hear you ma'am. Ma'am, whenever we listen to the prospects of our company and understand the business, we get very excited. But you will appreciate that since last many years, we could not deliver on the growth trajectory, what we envisaged 2, 3 years back, even when we migrated from -- to HyperSense and which we found that after 2 years, that will also get into a growth trajectory. But we don't see anything on the top line side. So can you highlight what is going wrong and what you envisage for next 2 years, you see that coming as an opportunity to us.

So thank you for your question, Sanjay, and thank you for welcoming me. I understand -- I completely understand your frustration, and I acknowledge that. But what I can say is that I actually do see massive opportunity for us. And I've spent a lot of time with the clients. And I think we are actually -- we have the tailwinds of AI, cloud and 5G. And at this point of time, management is very committed to making good on this. I understand that in past, we may not have fulfilled expectations, but I'm very committed to making sure that we make good [Technical Difficulty] in front of us. So please give us some time and you will see some changes coming through. That's my only request to you right now is not to kind of lose hope enough now. Please stay with us because I think we are trying our best, and we are trying to turn this around right now.

Fine. And my next question was regarding our partnership in -- we added some portfolio that is Partner Ecosystem Management. Can you highlight what's going on that side? And what the progress on that side? And the other one was our partnership with Tech Mahindra on blockchain technology. Is there anything happening over there?

So Partner Ecosystem Management or we call it PEM, actually, it has been a part of our portfolio for a while now. It's not a new addition. While maybe we have gained quite a lot of traction in it recently. So maybe you've heard about it more in recent past, but it has been a part of our portfolio. Actually, we get quite a few, I would say, a significant part of our -- not a significant, but a good part of our revenue actually comes from Partner Ecosystem Management. And this is only going to be more critical for us as we go into this whole 5G era, right? In 5G, what will happen is that wholesale billing settlements will become very important, actually, for telco clients. And what we are also trying to do is invest in these newer areas in this product itself, Partner Ecosystem Management. So we are preparing ourselves to strengthen this product even more. Actually, I'm really excited about the potential of this product. But just to answer your question, it has been around for a while, and we are getting very good traction actually on it. As you know, more and more partners are onboarded in telco ecosystem and partner settlement and real-time settlement becomes critical, and we have just the product for it actually. In terms of our blockchain and Tech, this is one of the projects that we have been pursuing. And we are trying to see what -- where it can take us. It's too early for me to comment on how it's evolving. But I would say that the first signs are very promising actually. So we have partnered with them on one of the projects that we are delivering for the client, and we are monitoring the results very closely to see if this could be a good area of opportunity for us.

What about IoT security with Telefonica?

IoT security has been with us for -- again, it's an older part of our portfolio. So we have been working and we continue to sort of strengthen that offering. In fact, in IoT security, we are looking at taking newer offerings to our telco clients just beyond Telefonica as well. So yes, I mean, this has been a part of our portfolio again. Like I said, right, we do have some pillars that are working well for us. There is IoT, there is 5G, there is AI. And we are trying to see if we can bring like a more converged and a more synthesized solution to our telco clients. So that continues to be an area of opportunity, Sanjay.

[Operator Instructions] The next question comes from [ Mahesh Kumar ], an individual investor.

And my question is regarding manpower costs. Every quarter manpower cost is going up, whereas sales is not going up. Hello, are you able to hear?

Yes, I can hear you, yes.

Yes. See, what I say, every quarter, manpower cost is going up, but sales is not going up. How you are going to control manpower cost? Are you going to use AI and robotics to reduce cost of your development and testing? And second question is, what is the investment required in your new strategic program?

Okay. So thank you, Mahesh, for these questions. So manpower cost going up, I will ask the CFO, Sumit, to comment on that. But my brief comment on this aspect would be that, like I said, right, we can't bring efficiencies to our clients and unless we bring efficiencies internally in-house ourselves. So definitely, these are initiatives that I'm very focused on. And that's why I also mentioned that we'll be reporting against growth efficiency and talent because efficiencies are very critical metric and manpower cost is a part of that. So we are focused on that. I have made a note of it, and we will see what we can do there. In terms of new initiatives, I actually don't think it will require a lot of investments. Definitely, it requires some investment, but I don't foresee a huge investment because Subex is actually already on the path to some of these. As you know, we already have a robust AI portfolio. And finally, we were already preparing ourselves for 5G growth. I think what probably needs a little bit more of our focus is cloud and 5G. So we are going to do that. With the current resources that we have, maintaining -- but because I'm also aware that we need to deliver to shareholder expectations. So we are focused on numbers as well. So hopefully, we'll do this without too much on board. But Sumit, can you answer on the manpower cost, please?

Sure. So just to add on what Nisha just mentioned is the whole objective what we are right now working is how to improve the productivity because typically, the manpower cost is more or less fixed and it's all long driven projects. And the only way to control is to just improve the productivity. So as and when we will start seeing the top line growth, our manpower cost will not increase to the tune of that. So there is more about, I can just say it's a semi fixed. And once the businesses start coming and it's growing, it will eventually, as a percentage to revenue, it will start dropping it. So that is what largely around. If you see the year-on-year side, there is a close to INR 3 crores of increase has happened, which is, again, you know that the cost inflation is there, though we are working on the productivity side. So eventually, we will start seeing the cost optimization as a percentage to revenue, and the things will start under control. So that's what as a management team and the [ chambers ] to adding what Nisha just mentioned, we are just working towards to optimize that. Yes.

Yes, we are also partnering with hyperscalers, as you know. So that should help us offer up new doors without significant burn at our end. But yes, I mean, points well taken, and that is something that's a high priority for us.

No, you have to use AI internally to showcase to your customer that we can reduce cost by using AI.

I completely agree. I couldn't agree more, Mahesh. And this is something that we are actually doing, so I couldn't agree more, complete agree.

The next question comes from [ Abhishek ], an individual investor.

Nisha, this is Abhishek. Am I audible?

Yes, you are. Hi, Abhishek.

Yes. Nisha, first question, Q3 2022, '23, the former CEO said, give us 2 quarters and then things would start to stabilize. Vinod has gone now and he's now into the Board of Directors and all that stuff, and you have taken over. Give me a realistic number in terms of the time you think that we will see a positive bottom line period. I mean, I don't care about the initiatives, how they are shaping up. Just give me a time frame. Sorry for being so blunt. But you have seen the numbers, our performance in the past. And so it has come down to asking this question and probably in this worldwide audience. And I apologize if it is sounding too harsh.

No, no, no. I appreciate the question, Abhishek. You are our shareholders, you are entitled to ask anything and we must answer to you. So I cannot -- Abhishek, I would not like to really comment on what was said before I took over. Please, pardon me, I would not like to comment on that. But I can tell you where -- sitting where I am today, given that you had -- I mean, all of you know that there has been some contraction in business last year. And this is like -- I think of Subex is, we are involved -- we are in some choppy waters, but Subex is not a small boat, right? I cannot turn it around immediately. It's like a ship. It will take some time for us to turn around. So I would request that be patient and give us a few more quarters please, before you start seeing the real impact of all the changes that we are trying to make. I will not promise overnight results, but results will come. That's all my request to you, really.

If I may follow-up on the same question, may I please? If you can quantify, I mean, can we say it will take you a year or another 2 years before we turn the ship around. I understand that it is not -- do you have any inherited the captaincy of the ship. You have to now steer -- start steering it around make the necessary adjustments. What is the realistic time frame that you think from where you are sitting right now as to where we will see a positive bottom line?

I would -- it's a tough one, honestly. But if I were to say sitting where I am from my vantage point, and you have to remember, I have been in the help for all of 3 months. No, no, I agree. But I think that this would take us a year before we actually really turn it around. This will -- that is my realistic outlook right now.

Okay. And following up on probably Mahesh and Sanjay's question, we are not seeing the top line increasing because it's been a perennial problem for us since the time I've been a shareholder that our sales team are very poor at delivery. Somehow, we have got the product portfolio, everything that we look at from the advantage point looks very hunky-dory. But then when it comes to our sales team getting the sales through and that contributing to our top line, that is something that is not happening. I don't know. I mean, what are we doing to change it? Again, I'm not expecting you to do anything overnight. You have rerated the company in whatever shape form it is right now. But from where you sit, our sales is where I see the problem is that products may be fantastic. But it is our sales, which are for the root cause of this entire show that is not going as for what we see. It is my 10,000 feet view of the company. I'm not privy what the sales team does. So please take it with a pinch of salt.

See, I mean, the truth is, Abhishek, that there are -- I have noticed that obviously, there are areas of improvement, I think, in sales and in other areas as well as in products and sales also. We have identified multiple areas of improvement. And my focus is definitely -- at the end of the day, if I have to deliver results to you, our top line has to grow. And everything that needs to get fixed to grow that top line, be it sales, be it products, be it our deliveries, every aspect has a good attention, and I'm personally making sure that this will change. If it means that we need to do more sales enablement, we need to hire better talent. We are making -- I'm almost like stop taking situation right now to see what changes need to be made, so that we are better prepared. But again, I would really ask you to be a little patient, we are making changes.

Sure. And one positive comment, sorry for all the negatives that I talked about. I really like the concise version of the presentation without part too many [ acquisitions ] what we have done in the past, blah, blah, blah -- it was -- it's a very concise deck that I'm seeing for the first time, and I really appreciate that's the change for me that I am seeing. That's very [ practical ].

No, thank you so much. Really good to hear that because I think that we want to be direct, we want to be, at least, I want to be very pointed in my communication to make sure that we really communicate what you need to know.

Exactly. And the deck actually reflects that. So I wanted you to get the accolades for it. Probably that is the first change that we as an investors are seeing. So -- and good luck and I'll keep tracking the progress of the organization. Thanks a lot for giving me the opportunity to ask my questions. Appreciate it.

The next question comes from [ Ashish Bubna ], an individual investor.

Okay. Thank you, Madam, for giving this opportunity. Well, most of the questions have been asked by previous investors of the company. But I'd like to know, definitely, as you are the listed company prepare a budget, which get approved at our Board meeting as regards what is the outlook for sales and expenses in the next year or next quarter. So can this particular statement would be shared by us -- with us?

No. First of all, hello and thanks for coming on the call. What you have asked is literally a forward-looking statement. So my apologies that I won't be able to comment on that specific aspect. Ashish, if you understand.

Okay.

Apologies.

The next question comes from [ Sanjay K ], an individual investor.

Hello, can you hear me?

Yes, we can. Hi, Sanjay.

Hi, Nisha. Welcome to this -- welcome to the company, and thank you for hosting the call. With the last 2 quarters, there was no call. So we couldn't interact and get more information about the company. So my question is about Q4. In the Q4, the revenue has gone down almost 30%, and there was some -- again, information was given that some milestones were not met, and that's why there was no, I think, payment done probably. So how -- what is the situation now? I mean, whatever -- about INR 30 crores or INR 27 crore of revenue probably might have not recognized. So how is the situation now? Have you recognized in this quarter? And are we seeing such challenges going forward as well that losing revenue because of milestones, not meeting?

So first of all, synthesis like Q4 and also as CFO, Sumit will come in. But the short answer to your question is that whatever revenue was reversed, we are looking to recognize it through the course of the year. So I believe that we are on track to recognize this through the course. Right now, we haven't in this quarter. Sumit, would you like to add something here?

Yes. Same thing. Last time, last quarter 4, we have -- so the revenue has been built based on certain milestones. And when we are just trying to work on the things and getting the customer sign off, there are still needs to be rework and all that. So that's how the revenue got reversed. And there's a work is going on this year. So eventually, this number will come back to us, as Nisha has mentioned, this year, we are looking for getting this number back. And it will take some time to recognize it...

Sure. And one more question about -- so about a year back or maybe one and a [ half ] year back, the company has formed alliance or some partnership with Jio. And so there was -- certainly now progress happening like Jio your licensing like HyperSense or any of the services or it is just a partnership, which should get eventually benefited only whenever main future, but it is not so far any revenue coming from Jio?

Jio is a partnership that we are closely nurturing. And I believe that there are benefits that will come to us in future. But right now, actually, it's still a partnership where we are seeing what would be the best way to partner, what would be the best mechanism with which both of us can work on all the -- because Jio is also very tech-forward company now. So we are -- and we are also very tech forward. So we are trying to figure out what could be the exact synergies. But beyond that, my apologies, I'm not able to comment more on that in this relationship right now.

No, no problem. I just wanted to get some idea. The next question is about HyperSense. I mean, definitely it's one of the advanced product. And just if you can throw some light on how the market is looking now? Are we really seeing that the convergence are happening or how many companies are showing interest? And how the outlook looks like for the HyperSense?

Actually, HyperSense, I would say I'm quite excited about because like I mentioned in my previous -- when I was speaking, I did spend a lot of time with key clients and all of them because HyperSense is inherently an AI-enabled platform. And that's the capability that telcos are really looking for right now. We just have to make sure that they understand what the inherent capability is in and deliver to it. Telcos are also looking at this whole cloud and 5G. And I think we are now really positioned well. So HyperSense is good reception in the market. In fact, I would say that everywhere I went, the reception has been really good. And that's the portfolio on which -- that's the base, right, on which we wanted to build a lot more product. So it gives us a great base platform. I'm feeling good about it. I've heard great feedback as well.

That's great. And then last question is about -- yes, there is a good improvement from Q4 to Q1, at least improvement into top end and bottom, I mean, just the loss is less on that. So how you see -- I mean it may take more time to get a really positive bottom line. But at least quarter-wise, are you seeing now from Q3 -- Q2 and Q3, it's going to be better than Q1 at least, at least you are seeing that things are improving compared to what you have seen last 3 months?

We are going to try our absolute best, but I won't be able to specifically comment on forward-looking quarters. But rest assured, we are doing our best really to make sure that we continue to deliver results and build on the momentum we have from Q1.

Sure. Just me want to hear how you see a market looking at? And are you seeing more convergence into the orders is going to happen or happening comparatively because -- so how the outlook look like? I know it is not like saying whether it would be a positive -- I mean, the profitability of a positive outcome by this quarter. But at least, are you saying positive or improvement into what outlook implement business on that?

I think, Sanjay, because like I mentioned, right, we have added 3 new logos just this quarter actually. So we are seeing quite a bit of momentum at our end. Like I said, right, we have to make sure that we continue it actually and continue having those conversations. So hopefully, we'll continue to deliver good results. So yes, I mean, we added 3 new logos. We are seeing a lot of uptake of 5%. We are seeing AI use cases coming to [ forward ]. So hopefully, this will continue.

Are you seeing any interest from the U.S. geography, U.S. and…

Sorry for interrupting you, sir. If you have more questions, please come back in queue.

U.S. is a important market for us. In fact, I would say, good percentage of our revenues come from developed markets. So U.S. remains the key market, Sanjay.

The next question comes from [ Rajesh ], an individual investor.

Hi, Nisha, this is Rajesh.

Hi, Rajesh.

Yes. So -- and I've been attending all the conferences call of Subex for the last many years. So what I understand is one of the major reasons for poor performance of Subex is, we are shifting from -- to subscription model, from outright sale to subscription model. So I would like to understand what is the status as of now of this shifting? What percentage of business approximately have been shifted? And when do we expect to complete this process?

So thank you for that question, Rajesh. So first of all, I think, pretty wide, if you look at the practice, industry-wide, all software companies, all product companies, the trend is that it's moving away from license and more into subscription. So that's like we are following something that industry trend and also our telco customers expect it now. So I wouldn't say that we are doing something which is drastically different from the industry trends. So I think on -- as far as our pricing model goes, we are on track. I think this is -- it's a sound sense of model. So model is not now. But I don't think the revenues have dipped necessarily because of subscription. It's just -- it's a different billing model, that's all it is I think. We just need to get more clients, and we need to do better on many aspects. I wouldn't necessarily put it to this. Again, I think there is no cutoff time in which we would have moved completely to do subscription to license. We continue to do both actually. We continue to sell licenses. We continue to do subscription. In fact, our HyperSense is primarily subscription and license, it's a combination. We continue to do both. But more and more telco customers, definitely accept -- expect a lot more subscription models.

So what would be your current monthly recurring revenue, current? I'm not asking for future revenues. What is our current monthly recurring revenues? And what is the position? What is the outstanding contracts in hand as of now?

I would request Sumit to convey you.

Our current monthly revenue is we have actually reported in the investor deck. It is $2.4 million -- $2.3 million, sorry. And that's the monthly recurring number. And the outstanding contracts, which we are in the process of that kind of onetime revenue, you can spend it to the license and implementation. That is to the tune of around [ $20 million ] or something. So again, this backlog keeps growing it as Nisha just mentioned, we -- this quarter itself, we have added 3 new logos. And it keeps coming and then you will start finishing and then so the whole idea of transitioning completely to subscription. But again, we are slightly flexible based on the client budget thing because some customers just want, let's say, the license based kind of a CapEx kind of a model. So there is more about the commercialization. But as the industry is moving towards, we are also eventually moving towards the subscription base.

And these outstanding contracts, what is the duration in which we can -- we expect to complete these projects?

The duration is -- so typically, it's like a long implementation contract, it goes between, let's say, 15 months to 24 months kind of a thing. That's how it's typically range.

The next question comes from [ Mahesh Kumar ] an individual investor.

Yes. Nisha, last quarter, we have reported INR 100 crore trade receivables. What is the amount recovered as on 31st July 2023? And what is trade receivable as on today? That is first question. Second question is regarding sales team, what problem I have seen interacting with the investor call since 2016. The sales team is lacking the ability to sell the HyperSense and IoT security products, which is my impression. I may be wrong, but it is not reflecting in the numbers. The numbers are telling there is a lacuna in the sales team.

Okay.

How you are going to address this issue?

So Mahesh, I will have Sumit come in with the trade receivable comment -- to answer your question on trade receivables. But on sales enablement, like I said earlier as well, we are going to do a lot of sales enablement across sales organization to make sure. In fact, I would say that a lot of our recent sales have been in HyperSense. So that's not entirely true that our sales teams don't know how to sell HyperSense. I would say that we are -- we have added 3 new logos. We are seeing a lot of momentum. All the new logos are on HyperSense. So I would say that the sales team now have their act together. We -- and if I'm seeing it as an area of concern, that's getting flagged again and again. So I will definitely look into this and make sure that we become sharper actually. But your point is well taken. I've taken your comment on both, and we will definitely look into this aspect a lot more. But I'll request Sumit to comment on the trade receivables aspect.

Yes. Thanks, Nisha. So just to add on. So from a collection side, last quarter ending on June, we have collected INR 67.76 crores for collection as against the INR 67.29 crores of revenue, just to give on a collection, our trade receivable balances are -- basically on a DSO side is actually -- it is on an annualized basis on a DSO, it is that we have reported, it is [ 109 days ]. And our closing trade receivable is to the tune of around [ INR 80 crores ].

Okay. So you have recorded only INR 20 crores out of last quarter, INR 100 crores?

Yes, because it keeps filing because it's a running business, it's not like you stop and then collect entirely, because this year revenue will even -- or this quarter, revenue will come to the trade receivables and then you keep collecting. So the funnel is working. If the collection is more than the billing, that collection is more than the revenue, that means our trade receivable balances eventually we'll [ maintain ]. That is what...

The next question comes from [ Samir Mansuri ], an individual investor.

Yes. This is Samir. Thank you for the opportunity and welcome Nisha on board. And as investors really appreciate that you were again resuming the investor call after year and a couple of quarters. So thank you for that. My questions -- these are my 2 questions. One is what are the low hanging fruits that you see and implementing in the short term to address investor concerns, I mean, I'm sure you are very much aware about and the kind of concerns that all the investors are [indiscernible] in past so many quarters. And the second is what are the up most to challenges in the expansion, expansion in the sense of expanding in the top line, basically?

Interesting question, Samir. Let's see -- so what I've been doing in the first 3 months, like I said, I've been doing 2 things. One is spending a lot of time with individual teams internally to understand what are the areas that can -- what are the quick wins for us, right? What is it that we can quickly fix and move forward with. So that's one thing that I've been doing. But at the same time, I've also been spending time with customers to understand what -- because I think that if you wanted to be on the journey with them, you have to understand where your customers are going, right, on their journey. So we need to make sure that we are prepared for that. And one of the areas that's come out very strongly, like I said earlier also, is definitely cloud, 5G and AI. These are the tailwinds, actually, for all telcos right now. So I think in Subex, we are primed today use our big use of this opportunity because we have been AI first. Our HyperSense platform itself is AI first. We have a plethora of use cases. So in AI, what we are doing is we are going after a use case approach now. We are trying to unlock a customer experience use case, a churn, a fraud management, different kinds of use cases. In fact, Subex's known as an [ RASM ] company, and fraud is rated as one of the top AI use cases for telcos. So that prior progression does very well. So I see a lot of opportunity for us to kind of work with them on this. So I would say that we have identified some quick wins [Technical Difficulty] that's not without challenges. We are trying to make sure that portfolio is really optimized. So a lot of optimization work is going on internally. But externally, I think we have identified what the opportunity is. And I think that's where we have pivoted to this stack of connected experiences because I think that is really what telcos are looking for. They want to make sure that they give seamless and connected experience to their customers. And we think that we have exactly the offerings actually that fit into that portfolio. And we'll keep adding to those offerings. And so I think I see the opportunity. Again, as always, I think the challenges will be in making sure that we implement and make good answers, right? I mean, understanding an opportunity and delivering to it is a different thing. So I'm very focused on making sure that we not just understand, but we also deliver. So we have been doing workshops. We have been co-creating these things with the telco clients. I feel extremely positive right now, sitting where I am. I think we'll be able to do this actually. I think Subex is prime. We are a product company. We know how to build products and take them to market. So I feel confident that we'll do this.

Okay. Thanks for the great confidence. But just on the delivery part, I mean, are we still facing any challenges in terms of -- because I think 1.5 years, 2 years back, the reason that was Q1 was because of COVID, a lot of travel restrictions are there and people are not able to be get beside signing off and give that services. So do we see any other challenges or current challenges in terms of delivery or we are on track to pivot commitments?

I think we are back on track. I don't see any delivery challenges per se. I think our -- on the contrary, I would say the only challenge I would see is that our clients are expecting more from us now. They're expecting us to deliver higher value. They're expecting us to deliver stacks to them. So the challenge is -- and it's a good problem to have, in my opinion, because it allows us to also challenge ourselves internally and make sure that we can deliver to their expectation. But per se, in terms of the challenges that we had in COVID time, I don't foresee it anymore, teams are traveling freely, all the client sites are active and we are delivering projects. So nothing, in fact, we should be recognizing the revenue also, the reversal that was taken in Q4, we should be recognizing it through the year. So all that is back on track.

We have a follow-up question from [ Abhishek ], an individual investor.

Nisha, Abhishek again. One question. The $2.3 million MRR that you have put on the deck, what is going to be the contribution of the 3 new logos that we've added in this past quarter. What would be their contribution to this MRR going forward?

MRR... Yes, sorry, Abhishek, I'm -- Nisha, I'm just taking this question. So MRR number is actually, Abhishek, MRR number is we compute our definition of MRR is in the year kind of thing. So the new logo which is added [Technical Difficulty] will even trigger once the implementation happens. So all the new logos, which we take in, there is some component of our implementation of onetime revenue and then subscription. So then this MRR eventually doesn't come in that number.

Okay. Okay. One more request, if I may make. The 3 new logos -- the 3 new logos, I mean, we did not receive any kind of a communication during the quarter, the past quarter that we have had some wins. See, I mean, as an investor, it is more confidence to keep holding on to the company's stock, if you know that the company is adding new clients or we are at least bringing new logos or expanding organizer. So if the communication of that sort is made to the exchanges for us to consume, that would be highly appreciated. I mean I don't want which company that you signed up because of -- if there are any security-related reasons. But I would -- yes. I would appreciate if that is something that is communicated to the exchanges. And so we are privy to that lot of information. That's about...

Okay, Abhishek. We'll try to do that. I mean, this we probably didn't do because we see it as a regular course of business. But anything to add G.K., sir?

Yes. Hi, Abhishek. So things like there are regulations around the disclosures, which we need to make to stock exchanges on one side, which are like -- which are not in the ordinary course that materiality insignificant. Also, other side, we do also have some confidentiality agreements where in which the customers approvals and everything. So whatever we have been like coming in this framework, we will definitely be closing, and we have did it in the past as well.

So my ask is we can be very discrete, but that whereas, so in the past 15 days or as and when you sign the dotted line, right, or the customer signs the dotted lines. We can inform that as not a particular customer, but we had a bill from a local telco...

We did the...

So, I think it's a request. Can we keep doing it going...

Exactly.

Noted. Okay.

The next question comes from [ Arshit Patel ], an individual investor.

Hi, this is Sachin here. Thank you for giving me an opportunity to [indiscernible]. So, ma'am, I have 2 questions. One thing that we are a software company, right?

We are a product company, yes, you're right.

Yes. So just wanted to understand that why we are making losses? I don't want this background, so I'm very sorry this [indiscernible] really maybe for you. But I just wanted to understand, I don't generally marking a company especially as IT company or service based company because added chartered accounts and also service industry. So generally, what my understanding says that bascially the service industry does not make losses, so here when I see the results of the financials. So I feel that the company is making losses, and that's the cash losses, especially product company making a cash losses is something that it sounds [ sarcastic ] to me.

Thanks, Sachin, for that question. First of all, you are right. We are a software company, but we are a mix of products. We do have service component as well, but we are primarily a product company. And we have -- I think the market is great. The market is good for us. But we have had some losses in the past. It's been due to a combination of reasons. I think some COVID impact was there. And then we also had some contraction in business. But like I've been saying through the call that the focus is on making sure that we get back on the growth trajectory. So definitely, that's my focus to see how we can address some of the concerns that shareholders should have. But Sumit, anything to add here?

Yes, just to add on, Sachin, we are not only just a software company. It's basically, in fact, turnkey kind of thing. So it's like a product along with the services. So whatever things which we sell it to our customer, it is not like a out-of-shell kind of a software. And you recognize a revenue, it is a service element to that and the support maintenance and further things. So that's how -- it is more about your entire like manpower has been involved on that, that's why the employee cost has been -- I need to maintain certain levels of employee costs and then the revenue will grow eventually. And that is the thing. So while the point is well taken on the losses while we are making and now Nisha is anyway here, and we are just as a management team, we are working towards to bring the profitability back. And [Technical Difficulty] right now, but, yes. Your point has been taken.

Okay. Second question, but I still have -- my answer that I was hoping for because I see period results, right? You are around [ INR 67 crore or INR 68 crores ] for this quarter. Your salary cost is [ INR 58 crores ]. So when we say product or service, it's more, right? The salary cost will be around 40% or 50% in that range of revenue. So say [ INR 70 crore ], my approximate cost would be INR 35 crore, [ INR 35 crores to INR 40 crores ] this year. This is what I see when I look at the service industry per se, right? Okay. Second thing on -- when I see a lot of companies, and this is just my concern not only for Subex, for lots of companies where those companies do not publish their result of report, annual report because we are not keeping the annual general meeting before publishing the June quarter results. What I'm saying is, I will not actually put the annual report for March '23, and now we are requesting June '23 results. So this is -- I find it funny for not only about particular economy. This is the governance framework what I'm talking about. At least, we should just probably our annual report keep the [ ATM ] clearly because at least in the other way, we are depending on June quarter results, in case [indiscernible] does not approves the account for March '23. Then what will you do?

That is true, yes. That...

[indiscernible] published annual AGM earlier before and it could be AGM before June quarter results, so at least we have a excess of June quarter annual report what management is trying to [indiscernible] excess of for and all that thing. But we would like to see the annual report for management discussion and analysis is talking about what they are seeing, right? When you publish annual report, no one will go because we already closed June quarter. Now having the information from March is outdated.

Yes. And the point has taken material. That is what the framework and time lines around. So annual report, you will appreciate is a lengthy array, a lot of information needs to be added unlike LR or limited review things. So -- but your point is well taken. And yes.

So because all IT companies are doing, so I'm not talking about -- because like all our IT companies have response when the requirement for maximum…

Okay.

And then we expect to be become profit. That's the only leadership. I understand the money...

We have more questions, please join back the queue, sir. The next question comes from [ Chetan Laddha ], an individual investor.

Hello, Nisha. Welcome on board, [Technical Difficulty] first quarter, and you have been really candid about all the disclosures, so thanks for that. The first question is, we had been giving out [Technical Difficulty] please tell us in percentage terms, what has been the increase in the API pull?

Sorry, Chetan, your voice was breaking actually. I couldn't get the question entirely.

Yes. Nisha, so this was around the API pull numbers. So we had been publishing the API pull numbers in the past quarters. I wanted to know what in percentage terms the increase has been for the API pulls?

So the reason we sort of -- I didn't want to -- as you know, for me, when I look at this whole -- the stat that I was talking about connected experiences in my opinion, this whole -- it's a merged capability now. So we haven't been tracking it separately like that. So IDCentral is core to our business. It was new initiative earlier. So we were reporting it separately. But now I think they have been around for 5 years, right? So they are a part of the core portfolio. I don't have it handy, my apologies, but may I get back to you on this?

No problem at all. So -- and the second question was around the R&D spend. What I understand is in the past quarters, Mr. Padmanabhan had said that most of the R&D spend is now complete, and we are now in the phase of leveraging whatever R&D spend we have done. So as it stands today, what is the R&D spend that is currently ongoing? And what are the future plans for the R&D spend? Or are we just going to leverage going forward, whatever we have done?

So I would say that in a product company, Chetan, R&D spend is an ongoing activity, right? So for instance, we have to invest in 5G. We have to make sure that we are cloud ready. So this is our spend, I would say, in a product company, never goes away really. There is never a point where you say that you stop spending and now I won't be sort of harness what I have spent. It's never that. But yes...

Can you quantify that number, Nisha? Can you quantify that for the coming year?

I -- maybe I have to get back to you, Chetan, because we think of it as an expenses more -- it's an employee expense number. No, it's hidden in that. In the sense that our employees are the ones that are working on some of this initiative. So we don't kind of track it separately like that. But I would say a lot of expense to Vinod's point, he is right, that a lot of AI capability has been built. But we continue to, for instance, now, I want to build a lot of AI use cases on 5G on customer experience for telco clients. So for that, I will continue to kind of invest in those areas, right? So this is -- this keeps us sharp. This keeps us in market, it keeps us at the edge, right. So it's important. I think this is kind of a given a product company can never really go away from this. And on your API question, I quickly got the number. I think -- maybe there have been -- I have to kind of reconfirm it to you, but 11 million API pulls happened.

That would be the last question for the day. Ladies and gentlemen, this concludes your conference for today. Thank you for your participation and for using Door Sabha's Conference Call Service. You may all disconnect your lines now. Thank you, and have a good day, everyone.

Thank you so much. Thank you, all.

Thank you, everybody.

Thank you.