Subex Limited (532348) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Q1 FY '25 Earnings Conference Call of Subex Limited. [Operator Instructions] Please note that this conference is being recorded. I would now like to hand over the conference over to Mr. G.V. Krishnakanth. Thank you, and over to you, sir.

Thank you very much. Good morning to everyone who has joined this earnings call for the quarter ended June 30, 2024. Now I would like to introduce the members of the management who are present for this call. Along with me, I have Ms. Nisha Dutt, Managing Director and CEO; and Mr. Sumit Kumar, 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 areas of business, client concentration, liability for damages in our contracts, withdrawal of tax incentives, political instability, unauthorized use of our intellectual property and general economic conditions affecting our industry. So with this, I now hand over the call to Ms. Nisha Dutt to take it further. Over to you, Madam.

Thank you. Good morning, everyone, and welcome to Subex's Investor Call. By now, you must have seen the results, and I received some messages as well. And I wanted to assure that while our Q1 looks muted compared to the last quarter, the good news is that our telco business is actually showing corresponding quarter growth. And since we are going to double down on telcos, I still feel that we are on the right trajectory to create long-term value for all our stakeholders. So you have heard me say this, and I will repeat it again today, is that we are on a multiyear transformation journey and transformations by their very nature are sometimes long drawn and have their ups and downs. But I'm very sure that we are taking the right path on the business. Again, our business is -- for those of you who have been with us for a while, you will know, our business has always been H2 heavy. So we hope to catch up during the year. Another aspect I am focused on is ensuring the right capital allocation as a part of this transformation, and I will cover a little bit of that later in the call. So coming to my anchor point for the transformation: growth, efficiency and talent. In terms of growth, in Q1, we won a few logos. We won a new logo in Europe. This is significant from a growth perspective that -- since this is a Tier 1 group account. So this not only has fraud management component, but we will also be delivering a few AI use cases as well. This also continues to reinforce our position as a leader in business insurance and fraud management space. As I have mentioned before, we continue to invest in our AI portfolio with specific focus on GenAI use cases for telcos. We have been actively contributing to and influencing TM Forum standards, particularly in the BFM domain. We recently released TMS696 API in partnership with Google, providing [ fraud risk ] scores as an API. We also released TMS770 APIs around exposing fraud management scores to other industries in partnership with operators like Orange, Verizon, Safaricom, Econet, et cetera. This foundation has -- kind of we did this -- we set the foundation with DTW and we also showcased our proprietary LLM-based agents, AI agents, that we have started calling [indiscernible] Subex AI squad. And we launched this in MWC in Barcelona as well a few months ago, if some of you remember this. Again, you must think that what is all this amounting up to, but I would be happy to share that this work has now been recognized and it has resulted in us now being featured in Gartner's Magic Quadrant for AI in CSP Customer and Business Operations Report. So we think that one of the -- being recognized as one of the key players validates our relentless focus on developing this AI-based solutions. This is a significant milestone in our journey, and I'm very committed to solidifying our market position further. So this is something that we will continue to focus on. And I've also said it in AGM earlier this week. And I think that AI is becoming more and more real, actually, and we are starting to see a lot of green shoots. So for us to -- so we will continue to double down and we'll continue to push on this. Now if I -- to -- now to switch gears to the certain aspect of the update that I usually do on efficiency, so in addition to top line growth, we are definitely focused on making cost investments in the right place and turning EBITDA positive. So as I mentioned earlier about the capital allocation decision, some of you must have already caught it, but after the quarter ended June 30, 2024, Subex Digital LLP, with the approval of the Board of Directors of Subex Limited, sold IDcentral to Handy Online Solutions Private Limited, which is also known as OnGrid, at a valuation of INR 526 lakh shares -- INR 526 lakhs via [ slump sale ] effective 15 July, 2024. The transaction involves payment of aforesaid consideration of INR 526 lakhs by OnGrid by the allotment of 104 equity shares of OnGrid. So this represents 0.75% of OnGrid fully diluted share capital. This is a question that I've repeatedly received, so I wanted to clarify that. Also, I would like to additionally clarify that none of Subex's management, top management, has any interest or holding in OnGrid. So I wanted to straightaway clarify this. I think this move remarks -- this is actually a significant move for us in the journey of innovation because I'm actually very proud that they incubated IDcentral. And now we have found it a better home. I think that IDcentral will now focus in an environment which is completely going to complement its strength. We also believe that this is going to be really beneficial for the shareholders in longer term because we will continue to be invested in this space because I do believe that digitalization space is actually very good one to be -- to remain invested in. But we are invested in it today, via superior asset actually. So this should actually be good for all of us. We have also, in terms of efficiency, again, we have also launched a code copilot for our internal AI and engineering teams. So what this will do is this will bring a lot of productivity into our engineering process. So this is another initiative that we have taken internally. And in terms of talent, I always said that retaining and nurturing key talent remains a focal point for us. So I'm happy to say that our current acquisition rate is on par with industry standards. And if you compare it to last year, it's actually significantly lower. So I see it as a positive sentiment from employees. Since for us, in the domain that we work in, it's a high -- it's technical domain. So for us, it's very important to retain domain knowledge. I'm also pleased to share that we have concluded the annual increment cycle for the year. So we are done with all that. So turning to the business update, those are the business updates. Now I'll just quickly cover the financial results for the quarter that ended on June 30, 2024. So revenue for the quarter stood at INR 68.2 crores as against INR 83.8 crores for the quarter that ended on March 31, 2020. EBITDA for the quarter 2024 is minus INR 6 crores as against INR 3.1 crores for the quarter that ended on March 31, 2024. PAT for the quarter is at minus INR 11.2 crores as against INR 156 crores for the -- minus INR 156 crores for the quarter that ended on March 31, 2024. And if I compare this to the -- I'll also walk you through the high quarter ended -- I'll also give the corresponding quarter comparison. So if I do the quarter comparison, so revenue for the quarter that ended on June 30, 2024, is at INR 68.2 crore against the corresponding quarter last year, which was INR 67.3 crores. So it's broadly in the same range. EBITDA for quarter -- current quarter is at minus INR 6 crores as against minus INR 14.7 crores for the previous year, for the quarter that ended on June 30, and PAT for this quarter is at minus INR 11.2 crores against INR 19.3 crores last year. So these are, broadly, the financial results. Again, I thank you very much for joining the call today, and thank you for your constant support. I'm happy to take your questions and comments now.

[Operator Instructions] First question comes from [ Gokul ], an individual investor.

So I just had a question regarding the monthly recurring revenue. We started to report it 2 years back during -- when Mr. Vinod was heading in. And we have sort of remained flat on that front. So are you still trying to convert into recurring revenues or you are looking for long-term contracts? So how is the thought process on that?

No. I mean, thank you for the question. So we will -- so our business model itself is dependent on recurring revenue now because we are on license plus subscription model, right? So recurring revenue is something we do track internally. I think we were also reporting it; if we haven't reported it, we will start doing that again. But recurring revenue is something that's a part of our business model right now. So our -- if I were to kind of break it dow,n, our business would have 3 broad components. It has license, then it has some implementation fee, which is usually professional services, and then there is subscription. So those are the 3 components. And once the implementation of the project is done, then the recurring revenue starts kicking in, in terms of subscription. So that remains a core part of our business model.

So like for the past few years, it has been remaining flat. So is it -- does it mean that it's going to pick up? It will take a few years to pick up? Because there has been -- like now actually Vinod mentioned that in 1 year time in FY '24 was supposed to happen. And then we also have in like -- you haven't mentioned anything during our past calls regarding the recurring revenue. So could you maybe explain a bit on when we can see some improvement on that trend and how much time it would take, like 1 year or 2 years, how much time you would need to see some improvement on that front?

So Sumit here. Our current revenue itself includes the recurring revenue, okay? The only thing is, what we used to report the MRR number, which there was -- per se the number is, there was no growth per se, given, as Nisha explained, it is first year to complete the project and then the recurring revenue starts kicking it up. So that was like last 2 quarters, it is just scoring around the same $2.4 million as a monthly MRR and all that. And that's what we start. We actually not reported this time given the number was more or less there. Having said that, as Nisha has just mentioned, the focus is to bring this back and once this project closure happens, then this MRR will start. So this is what it is eventually, and we are working towards to improve the monthly recurring revenue year.

And it shouldn't take a few years. It should happen in a few quarters actually. We're looking to -- now we are almost end stage of quite a few projects. We will start closing the projects and this MRR should start picking up.

Okay. And second question is -- so when we got the aggregator license, it was mentioned during one of our con calls that it would be deployed for the identity business mostly. Now since we are selling the IDcentral, we wouldn't -- is it a correct understanding that we wouldn't be needing the aggregator license anymore? Or will it find use case in some other divisions?

No. Actually, your understanding is correct. With the sale of IDcentral business, the underlying asset is not there anymore. So because we wanted to -- we applied for that license to use in that business. Now that the business itself has been divested, we will be initiating -- we'll be taking steps to return that license. By the way, we didn't get the license. It was an in-principle approval, just to clarify, it was an in-principle approval. We didn't actually have -- we don't have the license. We had to do some prep work for 1 year before we will be granted the license. So we have the in-principle approval. Now we'll go back to RBI and take steps to return it.

Okay. And the final question from my side, when do you think we could touch around INR 100 crores of revenue on a quarterly basis up? Like how many quarters would it take, in just a broad sense, if you can...?

Actually, [ Gokul ], this is -- you took words out of my mouth. This is not just your target. This is in my target actually. And if you ask anybody in the management, they will tell you that this is the explicit target that I have that I want to hit a INR 100 crores quarter. This is something that I have been reemphasizing again and again. And I'm really, really pushing in that direction. And I'm hoping that it happens in a few quarters. Honestly, this has been -- and this is not just your question. In fact, this is the question that I have posed to the management, that we need to do this. I need to see a INR 100 crores quarter. So absolutely.

Next question comes from [ Nish M. ], an individual investor.

Basically 8 quarters of losses for Subex, quarterly losses, 4 from Vinod and 3 from you. Is the management incapable to give us the estimates of profitability? Because every quarter we have heard sweet talking. Yes, we are doing this, we are doing this, we are doing this, we are doing this. But no estimates. Being the senior management, being the CEO, you should be able to give us the estimates. Where are the estimates, when you are going to go in positive profit? If you can't increase the revenue, decrease expenses. It's as simple as that. Anything to answer that?

No, I mean, your question is valid. See, first of all, if you look at our costs right now, you will see that our costs have actually reduced from last year. If you really...

I can see that in this present quarter, absolutely.

Yes, yes. So we are -- so that is an effort that's an ongoing effort for us. So every time we think that the revenue is not ticking in a manner -- see what happens is that we are expecting a certain revenue number to happen, right? And if that revenue number is something that we don't see manifest in the quarter, we start taking action on the cost side. So that's an optimization that we do throughout the year, every quarter. You will see that there is a decrease actually and my focus is really now to take telco core back on track right now. So for me, while your point is valid on the cost side, I feel that there is only so much that you can do on costs. Beyond a point, it becomes cost of doing business. So for us, revenue kicking in is becoming so much more important. For me, the top line must be really kick in because, beyond a point, you cannot touch cost. What will you do? And also cost is something that you don't get immediate benefits from. So anything that you do, you will only realize it after a quarter. The benefits only start kicking in after a few quarters. Or exit cost is -- you will actually take the cost down 3, 4 quarters. An immediate exit -- benefits you only see after a quarter or so, right? So I think it is only a certain amount that we can do on cost side, and we have been constantly doing that. On the cost, you will see it. It's been reduced. We do optimization, but I think for us, the truth is that I think the revenues haven't kicked the way they should have.

So what is stopping to get the revenues? What is stopping actually, Nisha, to get the revenues? To get the number?

I will tell you it sometimes -- so I would say that, see, did I lose a deal? Actually, I did not lose any deals. So what's happening is that sometimes revenue gets shifted because you don't have control of the deals, right? I mean it becomes a little unpredictable. So what happens is that the deal that I'm expecting to close, let's say, this quarter gets moved even by 15 days, for me the quarter has moved. I've not lost it, but it has moved, shifted. So what's happening is that quite a few deals are shifting actually, out of the box. So I can tell you that we haven't lost anything actually -- so I can't tell you that now we are losing business left, right, et cetera, that's not true, actually. But what is happening, though...

But you're not able to give us the estimate when we are going to be becoming positive. That is the most important thing -- shareholders have been getting a negative returns.

I agree. And then, see, Q3 we did turn EBITDA positive. Of course, with EBITDA doesn't come flat, right? So EBITDA we did turn positive Q3, we did -- we were positive in Q4. Again, we have seen a dip here. I am focused on taking the EBITDA back to positive. I mean that was the focus last year. That's why we got to EBITDA positivity in Q3 actually. So that has remained the focus. So can I give you...

You just said one thing right now, to bring back on track telco. Is it not on track? That is what you are saying?

No, no. So this is -- when I say telco back on track, what I mean is that the whole organization's focus has to be back on track because, for instance, that's one of the reasons why we divested out of IDC, right? It was focused on a sector that is not core to me today. And I feel that that's not -- I don't want any energy being diverted into a direction which is not core to me. So that's why we divested that asset and we said that let it be with people who are actually focused on Fintech. I'm not focused on BFSI as a sector today. So why should I have an asset sitting which is not focused on BFSI. So that was one of our decisions. That's why we started making the divestment decision out of that. So what I meant by bringing the focus back is to make sure that we have no distractions actually in the company. And everyone knows that there is only one focus and that is all we will do this year and for the next couple of years for sure. So that's what I meant. It's not to say that we are off track, but it is to definitely say that we are trying to remove the distractions.

So as you have seen, in which quarter will be the positive? When the quarter will become positive for us, for the shareholders? Which quarter will become -- the next quarter do you think will become positive?

I wish I could tell you, but I've been forbidden from giving you any forward-looking statements, but I can assure you that...

To be honest, Nisha, don't take me rudely, because -- but this is incapability of management. To be honest with you, it is incapability of management to give us estimates. That is the most important thing. Don't take me rudely -- I'm just an investor because I'm putting my money, it's more than 500,000 shares in my -- in Subex for me. And I'm not happy with the performance of the 8 quarters. I had the patience till 6 -- the 4 quarters of Vinod I had a very good amount of patience, 3 quarters of yours. I was, because you were a new CEO, I just gave you the time of 3 quarters. But this is...

Actually, we did turn positive in Q3 -- I mean, I took over in Q1. We were positive in...

When you say positive -- when you say positive, I want the net profit to be positive, not the accounting tricks to be making positive. Net profit should be positive.

No, no. I wouldn't accept that as a comment, please. No, there is no accounting trick here.

No, no -- The accounting, we put something else like exceptional things and non-exceptional items and all those things I don't want. I want a clear net profit, which we are not getting since 7 quarters. So this is very -- it shows -- and you are not able to give us the estimates as well. So which is incapability of the management, according to me.

I have an estimate, but I can't tell you that estimate. That's my issue. Because this is considered [ price sensitive ], and you would know. This is considered [ price ] sensitive information. These things are recorded...

No, no, it is not. Madam, first of all, Nisha, it's not a price sensitive. Estimates means when the -- when you will become positive in quarter, which quarter. For example, TCS gives the estimates. Infosys gives the estimates. If Infosys gives the estimates, why can't you give the estimates? Is -- if there is any problem let us -- let shareholders know. I don't want you to put that in public even if you were getting a new contract, but...

I have also given an estimate of the growth, right? Last quarter I did give. So I have given growth estimates. In last quarter, I did mention what is the percentages and all that we are looking to do. So I think I have given growth estimates. It's not that I've never given any estimates, it's just that on EBITDA, I'm unwilling to comment right now.

And I have one request. Okay, I understand that part, okay. I take it back. The second question is that can you send us the e-mail to the shareholders regarding new sales and figures, if that is possible? Because you had 3 things -- 3 news, which I was monitoring, like 3 acquisitions or 3 telco, 3 new contracts which you reported to Bombay Stock Exchange or National Stock Exchange. We want the details of those contracts. If you can give it to the shareholders, I'm not asking you to give it in the public -- shareholders or you can give it to the shareholders who are holding more than 500,000 shares or 600,000 shares. Or according to me, even someone holding 1 share is also -- should get all the information about the company.

We do give, in that disclosure, generally contract amount is mentioned.

No, no. It's very, very big information which you give it to stock exchange, because there are certain things which are not informed even to the stock exchange, which I can understand, which is a business sensitive, why can't you give it to shareholders? That is what I'm saying.

I'd like to intervene. We always give that amount of contract over a number of periods, which is mandated. There is an annexure which always go with such kind of disclosure. We give that kind of disclosure whenever we get a deal. It is a format which stock exchange keep asking. You have to fill when there is a deal. If you see our latest IDC also, there is an annexure which we add. Maybe in the next pages there is an annexure which we give the details of the deal. Or else we definitely say this is up to for this amount for a period of xxx years.

We always give that. Please go and check. And if for whatever reason, you don't see it, we are happy to provide it separately to you. But as a general governance, we do it. We give that information, what you're asking for has been given.

Can you send a separate e-mail to shareholders if it is -- e-mail, not a paper -- to the shareholders of this business is in the company which we have gone through. So we are also satisfied that it is on the right track, which you said right now. This is the company is on growth trajectory. So if you can send the e-mail to the shareholders, that would be very good, if it is possible.

We'll look into that.

Yes, because we have been disclosing actually. This is not confidential information. We do this.

But the name is never disclosed in the stock exchange when you send the report to the stock exchange. There are, last 3 disclosures -- no, not OnGrid one, the previous 2. Check, there is no name. You just said southwest telco, or this telco. Yes..

Because it's a matter of consent. That's why we are not able to disclose, because it's a matter of consent.

So when you finish the deal, you can send it to the shareholders.

No, it's a matter of consent between us and the telcos. There are telcos who are okay with their name being disclosed, there are telcos who tell us that you can make a no-name announcement, as in you can say I'm a European carrier, but please do not disclose my name. So it's a matter of consent between telco and us. I cannot disclose something that the other party is not consented to. So I can...

Nisha, I totally agree with you, I totally agree with you. Don't disclose it to Bombay Stock Exchange but shareholders have the total right to get that information, right?

No, matter of consent is matter of consent, is equals -- equally applicable to every one. But see, it's what is material to you? Material is the contract value, which is given, right? I mean...

Contract values as well is important. And then the name of the client. Who is a new client, if it is existing client or if it is a new client, we should know if it is existing.

Okay. No, I see your point, but I would ultimately emphasize that -- please understand our constraints -- material information is given, which is the value of the contract. The name of the client, however, is a matter of consent. I disclose it at the moment we have consent, we are -- actually, we are proud to disclose it, if I can disclose. Where we are not allowed, I cannot disclose it. Whether it is a one-on-one conversation or whether it's public disclosure, consent is required. So if I don't have the consent, then I cannot do it. But we always disclose the value of the contract.

Value is fine. Value I have seen in both right -- so that is the...

That is the material information...

Yes, definitely. Even the client is important, why not? Even if you know that whether it is existing one or whether we are getting the new ones or what -- and the new ones we are getting it. So at least we will understand that, right?

We try to give as much color as we can without disclosing the name. But like I said, we are bound by NDAs sometimes, so we can't. But again, I would request everyone who asked this question -- all the shareholders also have it, there is Annexure A that goes with every disclosure. So please, go read that. It has as much information as we are allowed to give about the deal, we give it there. Values are definitely mentioned. The contract value is there. It's clearly mentioned.

[Operator Instructions] Next question comes from [ Akasha ], an individual investor.

My question would be that there was a news of Jio doing a partnership with Subex. So what is the update for that? And are we generating revenues? Or is there any venture, or it is not there now anymore?

No, no. So we do have a partnership with Jio, and we continue to get the AMC from them. So I think it continues to be there. If that's your question, yes, we continue -- they use our system actually, and we continue to get AMC from them.

So where is the revenue? Do we generate any revenues on that?

AMC is revenue. Sorry, it's recognized as revenue. No, these are annual maintenance contracts. They do...

What is the revenue you generate from that?

Sorry, I don't have the number handy. I apologize, but we can send it to you.

Is it a material revenue or it is just a nominal amount?

It's a nominal -- it's nominal. It's not material. I think the Jio platform is the one that we had disclosed, right?

When are we expecting that to go positive approximately?

No, no. That -- so the -- so just to give you some context here, Jio did buy our system. They continue to use actually, and they are paying us maintenance fees for that. So they continue to pay us. That's net-net what it is, so it is positive. I mean there's nothing negative.

No, no, no. And when do you expect the results start to go positive?

The EBITDA you mean...

No. Not EBITDA, PAT.

PAT positive. Like I was just telling the previous speakers, this is not a statement -- or this is not a forward-looking statement that I can make at this point. But rest assured, I understand the sensitivity, the management is completely aware of why growth -- and why do we need to be positive. I think the sensitivity is there. Everyone is definitely working very hard towards getting that. Our costs have been controlled, as you can see. Costs have been controlled we go back and see how we can boost our top line to make sure that the benefits start flowing to the bottom line right now. So -- and we will continue to optimize cost. So that's my commitment. Beyond that...

So where do you see the revenue in the coming quarters? Because if you compare with the last quarter -- like the Q4, the revenue declined a lot. From [ 83 to 68 ].

No, no, you're right. That's also because, like I was saying earlier, our business is a little bit -- there is a seasonality. You will see that if I look at corresponding quarter, right, last year Q1 and this year Q1 is almost the same actually...

There is no growth, then there is no growth.

No, it's not that. What happens is that there is a catch-up that happens in H2. There is a seasonality to this business, where you will always see, if you will go back and also see results from the last few years, usually H1 is a little muted, and then it starts kicking in H2 because these are aligned to -- our business is aligned to business cycle of the buyers, right? So you will start seeing a lot more uptick happening as the quarters go by. Q1 usually remains a little muted -- H1, actually. So I would -- if you go back and compare, you will see it's the same pattern, actually. So that's what I meant to say. The reason why you were seeing it -- so compared to Q4, it is muted. Like I already kind of acknowledged. Yes. Yes, it is muted. And it's kind of expected. That cycle is also expected in a certain way.

Where do you expect the coming quarter revenue to be?

I can't make a comment on the exact number, but this...

Compared to this quarter at least, do we see a double-digit growth at least?

I'm sorry, I can't actually, but definitely we are looking for growth, for sure. That much I can tell you.

Next question comes from [ Sanjodh Gare ], an individual investor.

After 4 quarters of growth, [indiscernible]

Sorry. You are not very clear actually.

Yes. What I was saying that, yes, after 4 quarters of growth, and suddenly this quarter we have seen a huge drop in revenue, basically a disappointment. So anyway, you explained that how the thing works, and hope quarter-over-quarter now revenue grows and H2 is going to be better. My question is about overall telecom because we are seeing only overall telecom market is growing. AI is becoming the center stage everywhere. How -- so how Subex is seeing higher demand for services for services Subex is offering compared to last year? That's the first question. And from which regions we are seeing the demand coming up. That's first question. And second is about this -- we are seeing the cash has reduced from INR 104 crores to INR 101 crores this quarter -- I mean last quarter. There was about INR 8 crore tax refund has approved. I don't know that's going to be improving your cash flow situation. And that's the other question.

Okay. I will take the first one, and I will request Sumit to respond to the cash question and the tax system. So in terms of growth, you are right. Actually, I said that earlier also, we are starting to see AI becoming real. And when I say it becomes real for me is that I can see revenue actually against specific AI contracts. So we are definitely seeing a lot more uptick actually, even as compared to last time. I would say that broadly, if I were to talk about it in terms of number of, let's say, AI models that I'm deploying at client sites, the uptick is almost to 8x, right? What I did last year versus this year, I will be doing it 8x. So we are definitely starting to see a lot more pull actually from the client. It is evidenced not just in our conversation, we are seeing it explicitly being asked in RFPs. So if you were to just pick up an RFP from any region, you will see that a lot of demand is starting to come. Use case demand is increasing. Device fraud, for instance, very, very big, subscription fraud, and then of course the new age fraud with advent of OTT and all that. So fraud actually has become a big area for AI because as the money is growing, obviously, the fraud is going there, right? So we are seeing a lot more pull in those areas. In terms of regions, again, developed markets, because obviously they are a lot more ahead of the curve. We are starting to see a lot more requirements from them. But even in developing markets, we do see a lot more pull from APAC region, actually. So we are seeing -- if I were to talk about it, I would say Middle East, Europe, APAC and Americas, right? So these are the guys who are really leading this right now. Africa, we do see demand, but it's other kinds of fraud. It's more, I would say, fintech, and users, I would say, churn -- they are still doing something which is a little bit different. But other regions are trying to sort of catch up right now. So that's broadly been our experience with AI. But again, like I said, we are doing 8x the number of orders that we are deploying in client side. So obviously, we are starting to see a lot more pull, and this revenue should start kicking in and it should start becoming -- I mean we already have revenues against AI. But I'm hoping that -- I'm hoping for almost like a hockey stick, right? At least for AI the base that we have, we should be able to see significant growth -- that's probably -- I hope that answers the question. But Sumit if you can comment on the cash flow.

Yes, sure. So on the cash side, your observation is right. There is a reduction of roughly around INR 3 crore on cash from the March level. And obviously, the cash is needed to support the business losses. So that is what the -- on the specific comment around on the income tax refund part, we did receive the orders. But having said that, that is still not -- the money of that order is still not in the bank. So your observation is right, this INR 8 crores [indiscernible] should add back to the cash once we receive our income from the department.

Yes. So that will be impacting the positively the cash flow, right? And -- whenever you get the refund?

That's correct. Once we receive a refund, it will increase our cash balance.

Sure. That will be great, because that's a huge thing. I mean, definitely because the kind of business you are in, I mean, investments are very important, and as you get more cash, you can [indiscernible] around the business growth on that. And the second question to -- again, because there was last Q4, there was some revenue, some deals were pending from this company, I think last Q4 or something, there was a huge drop, and some revenue was or some dues were pending. So is -- are you starting getting it or you completely need to forgo that revenue completely on that? And second, also on the revenue front itself, was there any revenue or any dues pending from the Vodafone which was not performing, [indiscernible] performing, so whether you'll be getting any revenue from Vodafone?

I think the one in the Middle East that you are referring to, we have been trying to recover that money. We are in negotiation with them. We are constantly in touch with them. This is an effort that I can tell you that we make it every couple of weeks. There is an effort to recover that money. But truth be said, we haven't really recovered that money right now. And do we hope to recover it? I don't know. So we have provided for it already.

So yes, there is effort. But yes, it's still not [ materialized ]. On the Vodafone side, we don't have any such kind of exposure right now in the sense -- the payments is on, and we are not finding any risk of that account which we are working on.

Okay. And the last question about this is about 23% drop in revenue from Q4 to Q1. As Nisha already mentioned, there are some deals, programs you might have moved to Q2 and only 1 new logo is what we are seeing probably added in that quarter. So are you seeing that more -- it's like more deals will be getting closed early next quarter? And because cyclical nature, are we seeing that Q2, Q3 -- Q2 is going to be better than Q1 and Q3 is going to be better than Q2? So is that way it's going to work -- it works?

I really am hoping that is how it works for us. This is how -- the effort is to make every quarter better than the last one. Nobody wants a bad quarter. So -- that's really the effort, yes. That's all I can tell you. Definitely should get better from here.

You actually mentioned some deals got moved. I mean...

Like I said, it just got shifted actually. So sometimes the client says that I'll close it after 2 weeks. For them it's 2 weeks, for us the quarter has moved. So I think those are things that we can control to a certain extent, but it can be unpredictable.

And drop, because it's a huge drop. So it is not like a little -- do you think it's a big customer or something? Is it just moving the revenue to next -- and not losing of a big customer?

No, No, no, that I can confirm. We have not lost anything. Telco actually is growing -- telco has grown. Telco has growth right now. So it's definitely not that we have lost deals and things like that. It's just that it's shifting for us.

Next question comes from [ Ramesh Vilay ], an individual investor.

Nish, this question is for you. Specifically, we had investment in a company called Privasapien post the sale to -- the sale of IDcentral. Is it getting impacted, or how is it? And what's the -- and if it is not, what is the rationale of us being invested in that company?

So Privasapien, we all still -- we remain invested in it, actually. So we made an investment alongside Omidyar, actually. So we see the benefit of remaining -- why we are invested there is simply because they are very aligned to the kind of work that we are going to see come in future, right? So they are doing what is called as AI risk. So digital risk, AI risk, is actually an expanding area today. So what it means is -- just to kind of simplify it and I'll simplify it, it's almost like when a telco is deploying AI, they have a lot of functions, right? So every function is deploying hundreds of models. And data is getting generated and it is being shared to vendors openly because people are just trying to deploy models -- but what happens is that there is a lot of PII information of customers that gets generated along with this data when the models are getting generated. And a lot of bankers get their hands on this kind of data. There are jailbreaks, there are ChatGPT hacks. There are a lot of things that happened. So what Privasapien actually does is it tries, it can go into a telco or in any other company basically, and it can do a risk assessment of what is their AI risk exposure, the number of models that are running in the company, where all the data is going out that they should not be because it is AI data, right? It should not be going out. So I think in that sense, this area actually has been becoming more and more relevant because AI is getting regulated today. A lot of governments have started regulating AI, so I think this area will only expand actually in the future. And we are anyways a risk assurance provider. So for us it's very complementary. What we are doing is very complementary today. So that's why I think it would make sense for us to continue to be invested there actually. So that's not -- that's an investment that we will keep for now. Does that answer your question?

So the understanding is it's not being impacted with the sale of IDcentral?

No, no. Because I am not actually putting any money there. I mean, money has already been invested. It's an investment of past. We are not actively doing anything right now. We do partner with them and sort of do joint GTMs and all that. That's something that we kind of try to help them and take them -- so they provide all other support actually...

Got it. The second question is, I mean, in the past and even though this deal for OnGrid is more of like a share swap or a slump scale, whichever way we call it. Earlier in the past, we had acquired a company and somewhere it can -- led to an impairment. So how do we -- how are we trying to safeguard is that the valuation which has been done, 26 lakhs or whatever, is the right one and it wouldn't impact us negatively in the future? I'm asking this question because we have done something may not be exactly the same, but something similar in the past and led to impairment, so...

So when we entered this transaction, there were a few things I wanted to say. One is that we worked with the bankers actually on this, so we didn't actually do it on our own. We had a banker in the mix. There was Axis Bank. That's our -- Axis Capital is our banker -- investment banker here. So it's one of the top bankers. So we actually work through them. So in that sense, we ensured that all the valuation and the deal and all that is extremely tight. Also to safeguard our interest, what we have done is obviously negotiated a lot of clauses, but the ones that are most relevant to this conversation is anti-dilution. So we have an anti-dilution protection there. Valuation was done by a registered valuer. The banker was Axis Capital. So this has been done in, I would say, the best possible way that we could have done this. So you should be -- I mean, can we predict future? No, but we have taken all steps to ensure that we have protected. So we have anti-dilution and OnGrid is actually a growing company. The reason why we did this transaction is that they are really growing. They are growing very, very well today. So we felt that it's a much superior asset actually for us to be holding a stake in, instead of trying to keep this in-house and somehow try to grow. And what that will also do is it freed up my cash, right? So I can now put this cash back into growing my core business, which is where I want to invest some money. So what we have done is just had a few angles to it. So we -- and I think what it does is, for shareholders, it gives you an upside eventually. This is -- as far as OnGrid goes, we'll get an upside in that transaction. And it's upside for all of us. So that's really the logic of this. Again, to assure you, we have taken all steps to ensure that we don't lose money in this deal.

Next question comes from Ravikanth Agarwal, an individual investor.

First of all, ma'am, I would like to just give you some background why there is so much of confusion getting arisen, because I have been following this company for almost 2 decades now when Subex was in its heydays. So in early 2000s -- please correct me if I have got my understanding wrong anywhere -- Subex used to be projected as a promising company because it was one of the few software product companies in India where the entire boom was in the services sector. So understanding that we got was that software product companies have long gestation period because they have to invest a lot of money into research and development, unlike services companies, which are like body shops, and substitute one with another without much into it. And in the space of BFM, so that's got tremendous success. Then post 2009, we went into the FCCB crisis and for almost -- we've lost almost a decade overcoming that. And in the meantime, what happened was that since we were so good in the BFM business, we almost saturated the market, and we were working with almost all the leading companies across the globe. So there wasn't much scope to grow horizontally, and there was only scope for upselling or cross-selling of services. So basically, we were like -- my understanding is that a software product company is like a pharma company which is into R&D and which is investing a lot of money into new chemical entities. And once they get the approval, they hit the paydirt and they make a lot of money out of it. Once, Mr. Vinod came on to the scenario, the understanding that we got was that BFM market is saturated, now the company is diverting on to other products and 3 products were put forth before us. First was the HyperSense platform, the no-code AI platform, which was launched with a lot of pomp and show and we were promised that it has a lot of promise; and your IoT and OT security business, where we came up with Sectrio; and third was IDcentral digital trust business, where Mr. Vinod had said that it opens up payments opportunities for us in to meet and diversify into retail business, FSI, so the horizon the -- canvas is so big that there is immense room to grow. Now, after the departure of Mr. Vinod, again, now we have divested IDcentral. And now again, we are talking about developing the core business. So we feel like we are back to square one and it is a case of gross capital with allocation. And we are certainly confused where the business is going. The actions of the company over the period of time, if you look at it holistically, it is self-contradictory. And another thing is that in pharma companies, though they don't disclose the name of the entity, they just gave it a code and they keep updating you what is going on, what new products are coming up, what is the potential, so that the investors have a fair idea. In our case, unfortunately, because see our employee benefit cost is almost 70% of our revenue, which is much higher than the industry average of around 35%, 40%, so we presume that the additional expenses that we are entering is going into R&D and development of new products. But we don't see that pipeline, and we don't see enough communication from the end of the company to give us the confidence, okay, fine, even if today we are struggling, we have a bright tomorrow ahead of us.

Right. I mean, I think I could not have articulated the way you did. So thank you for that, and you are bang on. I can't say that know you heard any part of it wrong.

No, no. So ma'am, I just want to get your perspective how it can be addressed from your end to give more confidence to your investors and you are seeing that primarily your investors are people like us who are retail investors, there is no institutional holdings. And I'm sorry to interrupt, but even our Chairman acts like a trader who keeps buying and selling the shares. Sometimes it feels like it borders on insider trading. But given his reputation and integrity, I would not go to that extent.

Yes. Well, I can -- here is what I would like to -- see, there are a few things [indiscernible] lot of things I will clarify or at least from my perspective. See that Vinod took some bets on IDC, Sectrio and HyperSense and all that. There are some [ factors that worked out ] and some factors don't work out, right, but in the spirit of innovation, we must make some bets. Just as I'm hoping that -- I'm taking some bets, right? So I think that it's in the course of business and it was -- the intent was always right. But in terms of IDC, I think it didn't work out as well as it should have worked out for us and at some point of time [indiscernible]...

No, no, ma'am. My concern is not one particular transaction, IDC. I meant when you are there and we have voted for you to be the MD and CEO, we have voted you with wholeheartedly and with enough confidence that whatever you do, you will do to the best of your ability because even you would not like to take a fail -- means, if the company fails, in a way you fail.

Absolutely.

So I'm not talking about this particular transaction. That is why I painted the larger picture why the investor feels confused and he's at a loss of words what is going on?

So let me give the [indiscernible]. Maybe I can help you -- I can paint the picture from the way I see it. See I feel that HyperSense was the right bet in the sense that that's an AI-first platform. And today also, if I think about -- so you talked about saturation in the market, right? Actually, the market is not saturated in RAFM. While we have worked, we do work with a lot of Tier 1s but the market is actually not saturated. And if you see today, even today, a lot of -- large part of our business comes from that aspect. And HyperSense is an AI-first platform and we are doing AI use cases. So if you look at just the telco AI market, just to give you some perspective, it's a INR 1.7 trillion market. And INR 14 billion is being added year-on-year in this space, telcos themselves. I'm only talking about telco. We don't even have to go out. So what's happening is that when you think about it, as you know -- you're thinking about it as RAFM, right? We do revenue assurance and fraud management. What we are for instance starting to do is contract assurance, business assurance, which are adjacency. So for you, it might seem like we are still in the same area, but we have been horizontally expanding our offerings actually, and these are all powered by GenAI. So today is the biggest cross sell or upsell opportunity that we see is actually in AI. And that's one of the reasons why I want to double down on it and I want to double down on telcos, because if you look at just their bucket size, it's humongous. They're adding INR 14 billion a year actually. So I think -- and in terms of the strengths of Subex, right, I think those have not changed. In fact, if anything, I think we haven't capitalized them well, in the sense that -- like you most rightly mentioned, right, I am already working with 150 telcos. Now I have the pipe, which means that I already have the distribution, right? I'm already in the telco, selling or cracking a new account is not my challenge, taking new products through that pipeline is a challenge. So what we are trying to do is build the product portfolio. And you are right, we are not resting on RAFM. In fact, we have added quite a bit to our portfolio. We have added enterprise billing in addition to wholesale billing. This is again an aspect that people don't know of, but we do actually billing. We do wholesale billing, now we also do enterprise billing. We have an enterprise network asset management product. We have added more bolt-ons to that, like signal intelligence and all that. So there are products that are getting added even as we speak. So as a product company, you are right. We are -- the portfolio, if anything, has gone up by 2.5x actually. Last 1 year, we have expanded the portfolio from 4 to almost 10 products. The product -- number of products that we are trying to introduce and experiment with, this is increasing today, and it will continue to increase. So you are right about that. I think this is something that we'll continue to do. So in terms of what we are trying to do, I think we haven't lost our bearings, we will continue to be a product-first company. We want to -- we have tasted past success in it, and I believe that we will take success again in this. We continue to be focused on telco. We continue to be AI first. And anything that's a distraction from this, I would say, mission is something that I will be a little bit hard on, and we will divest out of that, because I really want to make sure that we are very, very focused right now. There is enough headroom in telco to grow and there is enough headroom for us to grow. At our base, actually, if telco is adding INR 14 billion annually at my base, even at a 20% growth, what am I looking for actually? I'm not looking for that much. So I think I have enough headroom to grow right now. What we need to do is get our product story together. We need to get our act together. We need to make sure that we have larger control on other deals. I think that's what my focus is on, honestly. I don't know if it answers your question, but essentially, we will continue to get out of areas which I don't think we should be distracted by. And we will continue to consolidate in the area that we need to.

So ma'am, it gives me a lot of hope, but again, I will come to the point where the confusion arises. Like you made two points, like your HyperSense is a success, as per your comment. But -- and we have divested this IDcentral. Now the confusion -- why we are confused is because we have no idea what kind of investments have gone into development of HyperSense and what kind of ROI we are generating on it. Now if we have divested IDcentral, I don't know what proportion of my R&D budget was allocated to IDcentral and whether I have sold it at a loss, I have taken a hit on my balance sheet, or I have sold it at a profit or if we have taken a long-term call by investing into OnGrid, what are the kind of returns we are expecting from it. Plus we have absolutely no idea as far as the cost and return on investments are concerned. If the company could be a little more transparent, because since the nature, as I said earlier, is more -- a lot of our investment goes into R&D. But as retail investors, we have no tab that what kind the investments that are going into development of new products, what would be their payback period, what would be the kind of ROI that we can look forward to?

So I think in terms of -- see HyperSense is also, I would say the R&D budget or R&D investments in HyperSense has not stopped, right? It's an evolving product in the sense that you will keep adding new features. Every product has a road map. So we continue to invest in HyperSense, and that's a road map item. And that's the reason why we wanted to make sure that we are able to free up cash to invest more in the -- when I say core products, these are telco-oriented products. My divestment decisions are based on a very -- and I think I mentioned this before as well, right? The criteria is very simple. The IRR that I expect -- and you are right, IRR has to be greater than my cost of capital. It might -- if any investment meets that criteria, it will get more money from us. If it does not meet that criteria, we will get out of that. So that's really, net-net for me, that is the acid test. Every business must generate a positive IRR. If it cannot -- I cannot even recover my cost of capital, then I'm going to get out of that business. And I think in terms of investment, we made some investments, right? In IDC, obviously, we made a lot of investment. But I would not want to get into this. There is -- you will know this, you're all investors, you know this so much better than me, but there is a sunk cost fallacy, right, that I've already spent money on it, so I must actually keep investing more and more on it. I do not want to get trapped into that sunk cost fallacy, right? Sometimes the cost is sunk, it's gone. And we must now look forward and get out of it so that you don't put good money after bad, right, essentially. And I feel that the good thing about IDC was is that able to develop it to an asset that actually somebody was very interested in, and I actually think that they are really growing very, very well. And now we have tagged our asset to someone who is going much better than I could have [ done that ]. So for me, that makes sense actually.

Actually, ma'am, that sunk cost fallacy is working negatively for us investors. I'll give you an example because when the business restructuring was done and we enjoyed the transitory profit that the company generated and more than 20% profit margin. And when the stock hit a near-term price of around INR 74, we still stuck to the company hoping that I mean, AI is the future and the kind of initiatives that the company has taken. And we have given past to all the other promising opportunities that came by. Now after 2 to 3 years, now we feel that we have sacrificed so much, now why should we abandon the ship when there could be a fortune ahead. But somehow we don't get any clarity because of that. It is working the same way negatively for us.

No. I mean, honestly, this is something that, look, I have to kind of make decisions which are right, right? I mean there is no point in asking...

I don't hold you accountable for what has been done in past or which has not been under your tenure. I'm just giving you a perspective of the retail investors.

It is, but I wouldn't actually liken your situation to IDC and I wouldn't want you to think of us...

Ma'am, at the outset, I told you I'm not talking about any one particular transaction. I'm talking about the entire -- there is a lack of transparency in the communication, the company can provide a little more information, which would reassure the investors...

[indiscernible] transaction we were quite clear, right? We told you what is the share holdings that we have there, [indiscernible]...

Sorry to interrupt ma'am. Again, I'm not talking about one particular transaction. I'm talking in general.

Okay, understood. Understood.

Okay. One last question, ma'am. It is on a lighter note. Ma'am, given that the tech meltdown has started in U.S. and the way Intel has crashed and now everyone has started questioning the viability of the AI investment in $50 billion and $100 billion at companies like Google and other Magnificent 7 are making into, that the payback period is not clear and it might take 15 to 20 years for the returns to get generated and negative pessimism is now catching up into the stock prices. So don't you think we are a little late to the AI party?

No. Actually I think, look, the amount of capital then put in was humongous, right? So from that perspective, I think some amount of correction might be happening. But are we late to the party? No. Actually, I think this is actually just hitting -- if you think about it, GenAI right, it's on your WhatsApp today. You see that icon, right? It's come to your WhatsApp, when did it come? I think literally 1 month ago all of us got that, right? I think it...

Ma'am, it is all-pervasive, but it is not generating the kind of returns required to justify the investments.

I agree, but then I would say that we are not anyways making billions of dollars of investment in AI, right. We are riding on the investments that have already been made. So people like us, what do we do, right? Am I creating a new LLM, so I am not creating a new LLM. LLM has already been developed. What I'm doing is I'm using that LLM and building my product on it. So I think all the initial investments that were made that were humongous and they probably needed to be made for, honestly, for the industry to move forward. But the thing is I think we are only using what has already been built and we are building our products on top of that, right? So for us, the quantum of investment is nowhere near what has been done. And in terms of fraud, right, if I just give you an example, the fraud is so pervasive today, it cannot be fought by humans anymore. You cannot expect a fraud analyst to fight this anymore. It has to be fought with machines. Fraud is auto generated. It is being bought. Fraud is created by machine. It has to be [indiscernible] machine. And it's going to be -- AI is going to be all pervasive whether we like it or not. In terms of ROI, I think, again, it depends on the investment that you are making, but like I said, right, I mean, there's a bit of meltdown, there is correction maybe that's required. But frankly, this has truly moved technology forward, right? This is one of the most forward-looking technologies we have seen in over a decade, actually. And I still believe that this is going to be going to reap a lot of gains out of this.

So we can rest assured that whatever investments Subex make into, we will ensure a minimum IRR of 20% on our investments?

100% sure, that is my acid test. There is nothing, below IRR [indiscernible] never pass my muster. That's it. Nothing will pass...

So ma'am, you are still sticking to your statement in the last con call that '24, '25 is going to be a breakout year for Subex and we will be hitting double-digit growth in this -- in the entire year?

That is definitely the [ project ] I'm striving to, as is management.

Next question comes from Dipesh Sancheti from Manya Finance.

Okay. Firstly, I want to know where is the growth going to come from? And I just want to have some reassuring statement that, no, I think you should be brave enough to make judgments for the company and not just go for the profits. I mean, Vinod has done what he's done, but I think you should be able to -- it could be really fair to -- for us investors to actually back you for taking decisions which are going to be better for the company. So I think you should do what you want to do with Subex. Yes. So where is the growth going to come from? That's my first question.

Okay. Actually, it's reassuring to hear, but honestly, Dipesh, because sometimes it can feel like that you are running the quarterly treadmill, but some bets are a little bit forward-looking. You must think of it because I mean you can't go right or...

We can't hold you for legacy issues. So that is what we want to reassure with you, that's it...

Yes. So I think in terms of growth, where I think it will come from is I think -- so for us, and like I said, right, there are some levers of growth. One is if you look at what are telcos growth drivers, so if I attach myself to telco growth drivers, that is where I think the growth drivers. One is enterprise is a clear area of growth. The other is AI actually. So these two are big growth drivers for telcos themselves. And AI is not always to increase revenue, it's to get productivity, right? Like for instance, I'm myself seeing that internally, right, if I use, let's say, code co-pilot, I can actually reduce the coding effort by almost 30% or so. So that immediately gives me productivity. If it's give need productivity, imagine the productivity that can be passed on to your customers. So for us, we are going to continue on this trajectory of making sure that all the offerings that we have, the products that I spoke about, are AI first. And what I want to do is position -- so we are already known very well for fraud management. What I want to do is position us very squarely as the AI company that can detect fraud, the best-in-class actually. So best-in-class fraud management company. So I think there are all kinds of frauds that we can catch. So I very much want to position us not leaving the legacy behind, because obviously that's where we have cut our cake, but to make sure that using AI, we are able to do a lot more on the areas of fraud and insurance. So we are going to keep that same trajectory but we are going to grow actually horizontally. We already have the distribution, we have the CXO, what I'm going to do is the main growth is going to come from a lot of cross-sell and upsell. That's what we are trying to do right now, not to hunt down a new account every time, because as you can imagine, hunting is so much harder than farming. What we need to do, I think, today as well in Subex is to farm accounts where we are already sitting, and I think those are 100-plus actually. If I can farm those very well, I am sorted for growth. I don't need to look too far. So I'm trying to see how we can use this pipe that we have created to customers and take a lot more upsell and cross-sell opportunities into that. And to me, growth is going to come from there. So if some customer is using only one of my product, I want to make sure that they are using three of my products. So that's the kind of leverage I am looking for right now, at least in short term, that is the plan. That's how we are going crack this.

Okay. So you're trying to leverage what Subex already has and try and get that into the customers which are already existing customers and give them newer products, and that's where the revenue growth is going to come from. Is that some of what you wanted to say?

Yes, pretty much, actually. Like I already have so many customers. I have 150-plus. If they are using, let's say, only revenue assurance, can I also sell them fraud management? If they're using fraud management, can I then sell them a lot of AI cases on fraud that I have created. So there is a massive growth opportunity there I feel. So I think we are going to go into the customer bases and tap into that and see how we can upsell and cross sell because I think that's almost like an opportunity waiting to be untapped, right? So we need to kind of go and do that very, very well, while we continue to hunt new accounts. But I think for today, as I see we need to kind of do this because my cost of acquisition of customer is low in this case, right? But it's already here. That customer is already mine. So my cost of acquisition becomes low there.

Have you ever thought of going for spam call management because you that is what the TRAI has been talking about -- I mean, everybody -- I mean, that's the maximum frauds are happening, has the company done anything? Or is there any product of our company which we have developed or offering?

We do actually. We do flash calling and spam calling detection. So when you think of fraud management, we actually do this. You're right about that. We are actually doing this. We are working with a client in APAC for this flash calling. You are right...

Why aren't we doing this? Why aren't we introducing this to the -- there are only maybe three players in the Indian market? Why aren't we approaching the TRAI or the relevant authorities of other companies and showcasing our product that how effective our product is, like something [indiscernible] is also trying to do. It's going big into this spam call manager because it's harassing the customers a lot and it has been taken note by the who's who of the industry.

You are right. I think that's a good suggestion. We haven't thought of, or at least I don't know. I will check with my product teams. I don't think they have approached TRAI. But to assure you, we do spam call management, we do flash calling. We do a lot of other frauds, we do fraud detection along all these actually. That's a part of it.

I hope that you do that -- I mean, we take that more seriously. Okay. Just one more question. Are we aware of what Vinod is doing right now? Was there a non-compete agreement with him?

I don't know honestly. Yes, non-compete is there, yes, yes of all, for 2 years. For 2 years, we have not non-compete with him. [indiscernible] please don't hold me to it, but my best information is 2 years. I can confirm that. We confirm it.

Okay. I mean, maybe you can reconfirm maybe at a later stage.

I just reconfirm, because I would assume his contract would be similar to mine. So for instance, I have non-compete 2 years. So I'm assuming he has the same thing.

Okay. I mean, maybe in the next call or something if you can mention that.

I can confirm that, yes. I will be happy to confirm that.

Yes. And pre-Vinod and post-Vinod, how many customers have we lost?

We actually lost none, zero.

But I mean -- and have you lost any business from the same customer?

No, none. Nothing at all.

Next question comes from Sham Singh, an individual investor.

Ma'am my question is, in previous con call, you were saying that we are focusing on top line growth. But now in this quarter, we are not seeing any growth. Now what is actually happening in the company? I want to actually clear cut answer from your side, ma'am. Because we are investors really frustrating now. You need to understand our frustration at that time?

No, I completely understand your frustration. So like I was mentioning earlier as well, top line growth continues to be a focus and it will be my focus, but the reason why you are seeing lower growth compared to Q4 in Q1 is because Q1 is usually a little muted for us. Our business is just a little cyclic. So it has its own cycle. So typically our business starts picking up towards, I would say, as the year progresses, it starts getting better and better. So that's just the nature of the business that we are in. And usually, Q4 being very good quarters for us. Typically, Q1 looks quite muted in comparison. So that's why I was building you the corresponding quarter comparison last year as well. But typically, you will start seeing that pattern. If you go and see, you will see that, that would be usually the pattern. That's why looking a little muted right now, but it should start picking up as the year goes.

Okay. One thing more, ma'am. We are seeing on some various social media platform, you are saying that you have done this for this with Taiwan and we have been this activity for this Taiwan. But we are not seeing -- and are we doing those activity on charity basis? Because we are not seeing that growth on top line. Hoping you will take on that same?.

No. So what happens is when we land an account, typically, like I was saying, right, there are three components to our revenue. One is license, other is professional services, and then the third one is the subscription that starts kicking in. So any time we land an account, there will be some lag between when you start seeing the subscriptions. So we'll get immediate license revenue, we will -- then there is the professional services. That's an implementation of the product, right, because these products are heavy. They require implementation. So maybe we will go implement it. And our fourth factor recurring revenue or subscription revenue start kicking in. So like I was saying earlier also, this year we are looking to close some projects. So we will start seeing the MRR number starting to get better. So implementation often goes beyond a year. So when we land an account, between landing an account and actually seeing subscription revenue you will see a few quarters lag. So that's really just to explain why you don't see an immediate uptake in the revenue.

Okay ma'am, you better know about that. But ma'am, what you have to understand that we are staying into Subex because [indiscernible] before you on, we know results. But actually, what I am personally feeling now we are losing our actually confidence on the management. So you have to -- actually, you have to be more transparent now, because we are with the company for the last 5 years, but we are not seeing any growth in the company. And we are patiently holding your stocks. And one thing more, ma'am, your chairman had sold almost all of his holding. If he sold out his holding, then why a retailer or investor will believe on the management and the company?

I mean I can only assure you that -- see from my perspective, there is nothing that I want to hide, right? I mean what do we gain by hiding from you? You have, I would say that -- in our company as well, you are our ultimate bosses. I always say that we report to shareholders, right? I mean I don't even report to Chairman but I report to you...

Ma'am actually, I'm not questioning you, but we have actually -- we have already seen in past, chairman [indiscernible] sold out his holding about INR 5 or INR 6 and we are just holding the stock on management words. But if management is sold out [ his share ], then what we will do?

I mean, honestly, sir, I cannot comment on chairman's transactions or on what -- why he is doing -- I cannot actually comment on that. My apologies. But what I can tell you is that the management that we have is very committed. Right now, the management that is sitting here is very committed. It's also new management, right? The commitment remains, I mean, and again, I want to assure all the shareholders, please, if I'm not able to give you some information that's because I cannot make a forward-looking statement. It's not because we are trying to hide anything from you. I gain nothing by hiding anything from you right now because all...

Yes. Yes. Because why I'm saying that, because we are holding the stocks from last 5 years. We are closing -- I'm just personally this company, they personally very closely -- but actually, there should be some growth actually, ma'am. Where we have started 1 year [indiscernible] in previous year, in that quarter, we are almost INR 67 crores, I think. Now we are there, actually, there is no growth.

So actually, we did grow quarter-on-quarter. Last year, we have grown. In fact, yes, this quarter has taken a beating. But last year we did grow quarter-on-quarter and effort is again to be back on that trajectory. I completely, again, honestly, like I have said what I wanted to, but I can also tell you that the effort is to -- there is no growth not just for you. I mean what is it for any of us actually sitting here, we are spending our days and nights trying to grow this company. So there is no join any for any of us not to grow. So definitely...

Next question comes from Abhishek Kali, an individual investor.

Yes. Actually, I must appreciate the way you have handled the call today. I mean, again, not pleading for anything more, but one question, like the gentleman in the previous call had asked, right? If we have these order spillovers that are going into the next quarters, right? I mean the golden handshake is done. I'm probably referring to certain terms which you may like or not. But if the golden handshake has done, the sign on the dotted line is pending, right? Is that something that we can report that these have a tentative level or whatever the term you may want to use? Can we at least report that kind of a number? So we know that, yes, and it does happen, it's a business that the customer doesn't show up on the day of signing the dotted line. We have all gone through. We have asked customers done this to others as well. So no harm. But can at least a report of this nature be shared? I mean the data in the quarter that we have a spillover? Then secondly...

Will we revenue that shifted spillover revenue and all that or...?

Yes exactly. Quarter, quarter-on-quarter, I mean, like you said, the first question was around this point. And you said that I have something which is going to happen in next 15 days, but my quarter is done, right, for all the reporting purposes. But we know that the deal is almost done. The sign on the dotted line is going to happen on 14th of August, but yes, the work or everything that was done in May, June or April, May, June, right? So can this something be reported? I mean I leave it up to the management to decide on. Second thing...

So let me look into it, Abhishek, by law, low but I will definitely look into it. Let me see how we can do that. If he can come back and report to me.

The reason why I'm asking for us is, it gives us a ray of hope. Okay?

Okay.

Right now, everything is -- I mean you -- I mean that [indiscernible] a statement and a ray of hope.

Okay. No, let me evaluate first.

Right. Right. Point number two, if -- like you said, most of are MRR, right, starts when we start getting the subscription fees, and that usually kicks in when we have -- we are through with the installations and stuff like that. And then the subscription starts, right? I mean, we would have contracts with our multiple customers, right?

Correct.

So which are going to be completed in the succeeding quarters, right? Can we -- we know that after which our subscription is going to start in, I mean, once they are done with the installation, they will have to sign up for the subscription, right? So at least can we have the time line? I'm not talking about the dollar amount here. I'm talking about the time lines, that four of my projects are going to complete and then they will start making a, what you call, they will start contributing to the MRR in Q2, then some in Q3, then in Q4, right? See, what this will do is the work that is being put in by you guys, right, will start showing up. Right now we get nothing.

No. No. I understand your question. I think that potentially can be done, at least we can -- because...

Maybe we'll try and cover it as a part of our investment deck.

Maybe will try and cover this as a part of investor deck. Let me take this under advisement. We'll do that, try and report.

Perfect. And third thing, I mean like two other gentlemen said in the previous call, I mean it is a no-brainer that the chairman had the information and he acted on that information. And I'm not -- I don't -- have not met that person, the chairman individually to talk about his integrity and anything or everything, okay? HyperSense was a no show. After the launch and the fanfare it got, and then we started hitting problems. I am 100% sure that the chairman or the Board was aware. I mean Vinod being the CEO knew about it. And I mean, we are probably -- we are living in a fool's paradise if you are trying to tell the investors that the Chairman of the Board was not aware that HyperSense is not picking up in the way and we are hitting a roadblock over there. The timing of the exit, the amount of selling that happened from Anagha Investment Advisors, okay? That is the company which the chairman has a holding in, right?

That's correct.

So that company sold its holdings right at the time when we are starting to hit the road blocks. I mean, those guys are very smart, okay? I mean probably we are naive, we retail investors are naive and we are not aware as to okay, because you don't see the complete picture. I mean we are not that fool to not see to what has happened or go back, but the chairman knew about this. I mean it will, if you go and look at the price and the events, you were a part of the Board. At that time, I think you were the Independent Director, okay?

That's correct.

Look at the stock price, look at the events, look at when the announcement of okay, we have had -- we are now encountering some problems with HyperSense was coming into the picture and the timing of the exit of the chairman. I have voted in this AGM, I have voted against him being the chairman of the organization -- Board, not the organization, but the Board. I'm telling you and I'm being on record here. But this -- I mean, it gives me zero confidence as an investor for having that individual as a Chairman of the Board. He acted in his own interest and not in the interest of the individuals, minority shareholders. No, no, no. Let me finish. He had price-sensitive information and he acted on that price-sensitive information. I'm pretty sure we will not be able to prove it in the court of law anywhere, but this has what has happened if you look at the price and actions and the insider selling that has happened, especially from the Chairman and the companies in which he has a controlling stake in. I don't want a clarification. Nisha, Nisha, hold on. Nisha I'm not asking you to clarify on this, because you are not a participant in this activity. I just want you to hear the frustration which a retail investor has. I don't want a comment on this because every other person who had joined in the call has similar feelings if they participated with the fanfare of HyperSense or they were with the organization. And one gentleman who spoke before, Mr. Agarwal, if I get the name, remember the name correctly, I mean, he sounded like he knew more about the company than some of the people sitting inside. He had more history of the company and complete picture of what -- he painted actually the picture of the company. And I'm really thankful to him. Not probably the right forum technology but it is -- this is frustrating, Nisha. I mean, while I understand you are not directly responsible to this -- for this, but because you are in the chair. I mean, I'm just saying this to the chair, not you as an individual. I'm saying this to the chair, that the frustration is growing. And if you are talking about our sales not growing, okay? What have we done in order to increase the sales? This has been my question since ages. You have now said that we are focusing our energies on to one particular vertical, which we specialize in.

Right.

What have we done? Because our perennial problem stems from the fact that our top line doesn't grow. Yes top line, but it is no-brainer that once the top line grows, everything will start to fall in place. Expenses will grow a bit, but then my EBITDA and my PAT becomes positive. But what are we doing? I mean what is your sales team doing? And how are you dis-incentivizing them for not being able to deliver and you should -- you are also one of the members in that as to how your -- those guys are getting a rap on the hand for not being able to deliver on these things. Sorry I'm sounding a bit agitated here, but it is what it is.

No. No. You are right. And I think in that one, we have also given clear directions to sales, right, that to account farming. Do those shows new products are there in the pipeline. So we are also enabling them, to assure you. I feel that in sales cycle, typically, the longevity is very low, right? You are only as good as the last quarter. And this is something that I keep emphasizing with sales. So I mean I can tell you that, internally, we are being very hard. We are being very hard on sales also to make sure that they introduced, they do that. So I think I can assure you that there is no laxity here. It's not that people will not close deals quarter after quarter and they will still be where they are. That is not something that I have tolerance for. This is not something that I would even want as culturally for us to get comfortable. The truth is here not in a very comfortable situation and I keep telling people, don't get cushy right now. We are not in a comfortable position. And so the shareholders are not comfortable, we are not going to be comfortable until they are comfortable. So this is something that we are extremely cognizant of. Sales cycle I actually monitor very, very granular basis. In fact, I have a weekly cognizant and we kind of keep tracking everyday. Each and every deal I actually know like the back of my hand, which is the deal, what are they going for, so that's the level at which I'm tracking it because I completely understand the pressure on growth, right? And I also -- I'll be the first one to tell you, Abhishek, if there is no growth we will die, actually. So growth is non-negotiable in the company. So that's something that's clearly understood. So yes, I mean, we are doing the best we can. We have the best salespeople right now, at least I think the best, that we can have. And we are going to monitor them. And if it doesn't work, then we'll make the calls that we need to -- that's it. I mean I think nobody should be comfortable at this point of time. And that's something that's been -- remained very clear to the management.

Okay. May I make one more comment, please? I'm sorry if I've taken more time from the other speakers. But are we also saying to the KMPs who we have reported or called out on the exchanges that I mean they should have certain example that we are fully invested in the organization by not doing those insider selling while -- at the moment this trading window opens up. Because, I mean, if the management itself is not confident of -- see, I mean, give me a yes or no, this is a binary question, okay?

No, they are...

Hold on, hold on, Nisha. Just let me finish. If you know that your company is going to grow, say, 20% -- 15%, 20%, whatever. Let's take 10% as the number because it's a double digit and you have said I will give you double-digit growth in 2025. So I'm starting with 10%. So if we are growing 10% quarter-on-quarter, right, then why the management or the key management personnel are trying to sell their shares? Because they don't see that or -- I mean, they are trying to get an exit out of the company? I mean when Vinod sold and actually moved out of the organization and then he sold most of his stake. But we are seeing -- I mean, when the exchange filing comes, there is a repeated amount of insider sellings. Then those ESOPs. That is again one thing which I find it very hard to understand that, yes, you are entitled for a stock option, but if the organization has done poorly for 8 quarters, we are not seeing a positive path, then how on earth the company is allotting these guys an ESOP? I mean, there has to be some change at the CS, the company secretary should -- I mean, write something in the policy that unless and until we are PAT positive, we cannot have [ allotting ] ESOPs because actually it is a reward for your work and you get rewarded if we are PAT positive. We are not here as a charity organization, right? I mean these are the few frustrations which comes in. I myself being an investor, right? I mean, why would I even then be invested in the organization if the management personnel feel otherwise, right? Do you see what I'm trying to get to?

I get your point. I think just to -- and I understand your frustration. I think, see the ESOP, first of all, are -- it's a long drawn thing, right? ESOP is a part of our compensation plan, which you also offer to attract talent, right. So sometimes ESOPs are also offered in lieu of, let's say, giving up its salary. So those are the trade-offs that we make often when we are trying to attract good talent from the market. But if I can't pay them at par, then I would have to offer them some ESOP. That being said, when the ESOP is offered, the way our policy works is, it does not even vest for 1 year, actually. So there is a vesting period, there is an exercise period, there's a lock-in period. So there is quite a bit of hoops to cross actually before you can make any money out of ESOP. And the way ESOPs, you know because our position is the part of compensation, Abhishek. Basically, individuals sometimes they have to plan their finances, right? Somebody's daughter is going to U.S. for education, then any time ask us that can I sell it in order to fund education of my daughter. So then you cannot say no to those things. So it's not always to be seen in the light of insider trading, I would request everyone, that's not the only tend to use for ESOP, people also do this for planning medical emergencies, for sending kids abroad. There are a lot of other aspects that are there, which we are aware of when the request comes...

Right. Right and I completely get that point. See, the message, like you said, I mean, other people are also having -- would have the same challenges. We all have all those emergencies which we have to fund, right?

Correct.

Or what we have planned for. See the message it sends out to the investors, right, is right at the time when the stock starts doing good, there is an insider selling that happens and immediately preceding our quarter and then the quarter is a poor show, okay? Now you see these things in the light of a poor result, right? Had the results been excellent, right, I mean, nobody, none of the investors would have asked this question in the first place. I would have not asked this question. I'm not speaking for others, but I would not have asked this question. This question comes in only because of the one and only one problem that we have. And I think you are working towards getting a solution for it, right?

Yes. Just clarify, we do have a restriction of the quantity that anybody can sell it.

Yes, 100,000 shares. I know, 100,000 shares.

Yes. So we do have, I mean, checks and balances, and everyone trades only in a certain window, right, to be compliant [indiscernible] Abhishek, I understand the spirit of it. I understand the spirit of your question.

Exactly. That's the only thing. I mean I'm not commenting on any individual as to why you he or she sold. They have their needs and they sold it because they have the share. The message that gets passed on to the investor is what I was communicating. That's about it.

But I also request investors, right? I mean you must not always see everything from the lens of insider trading. You would have just emergency due to which [indiscernible] always request you to have balance.

Right. If I may say something in Hindi [Foreign Language].

[Foreign Language] Not everything is sinister, but not everything is ill meaning.

Agree, point taken. And I hope the best wishes that you will probably come out of the problem that we have -- and again, I'll hold you accountable for a double-digit growth in -- starting '25, '26 financial year.

Thank you, and I hope to live up to that expectation.

That would be the last question for the day. Now I hand over the floor to Ms. Nisha for the closing comments.

Thank you so much. This was -- I would classify this as one of the tougher investor calls I have done, but you're all entitled to hold us accountable. So, thank you so much for being here for being supportive of us. I speak on the behalf of management and everybody at Subex that we are deeply appreciative of your confidence and please stay invested. And then if you have any other questions that we haven't been able to take today, please do write to us, we always respond to questions. So if you have any questions, please write and you will get all the answers that you need. So with that, I will close it, and I look forward to speaking with all of you next quarter. Thank you so much.

Thank you, ma'am. Ladies and gentlemen, this concludes your conference call today. Thank you for your participation and for using Door Sabha's conference call service. You may disconnect your lines now. Thank you, and have a good day.