Subex Limited (532348) Q3 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q3 FY '26 Earnings Conference Call of Subex Limited. [Operator Instructions] Please note this conference is being recorded. I would now like to hand the conference over to Mr. Pratik from EY, IR agency of Subex Limited. Thank you, and over to you, sir.

Thank you, Karthik. Good morning to everyone, who have joined the earnings call for the quarter ended December 31, 2025. I would like to introduce the members of the management who are present for the call. Ms. Nisha Dutt, Managing Director and CEO; Mr. Sumit Kumar, CFO; Mr. Harsha Angeri, Head, Corporate Strategy and AI; and Mr. Ramu Akkili, Company Secretary and Compliance Officer. I would like to start the conference call by going through the safe harbor clause. Such statements in this presentation concerning our future growth prospects are forward-looking statements, which involve several risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. These risks and uncertainties relating to these statements include, but are 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 intellectual property and general economic conditions affecting our industry. With this, I now hand over the call to Nisha Dutt to take it forward. Over to you, Nisha.

Thank you, Pratik, and good morning, everyone, and thank you for joining us today. I'm happy to report that in Q3, Subex maintained its steady path towards sustainable recovery. The process that we have been talking about over the past few quarters is now beginning to translate into visible outcomes. But before I get into the numbers, let me start with an important governance update. We have successfully onboarded 2 independent directors, aligned with shareholder expectations. We concluded the induction process and held our first Board meeting, with the reconstituted Board yesterday. It was a very constructive session, healthy dialogue, diverse perspectives and strong engagement. I'm confident that this strengthened Board will add significant value as we move forward. Now coming to the Q3 performance. We delivered a 2.7% sequential top line growth with a normalized EBITDA margin of 13.1% and a PAT margin of 10.8%. Our continued focus on operational discipline is clearly reflected in the bottom line. Importantly, we have sustained profitability at both the EBITDA and PAT levels and reinforcing the stability that we have been building. And I think that this quarter's performance is not incidental. It's the outcome of strategic groundwork laid over the last 12 to 18 months. The implementation cycle is now in full swing. Our order book remains strong, supported by both new logo additions and renewals. A notable win this quarter was fraud management engagement with a leading European operator, which further strengthens our footprint in the market. One of the standout achievements in Q3 was successful commercialization of FraudZap, a product that we took from concept to customer within just a year. So this feat reflects the increased agility and sharper execution across our teams. This capability is also evident in our order bookings and pipelines, both of which remain healthy as we enter the final quarter of the fiscal year. These outcomes are driven by strong product discipline and prudent capital allocation. We are prioritizing AI investments with clear customer value and commercial pathways, which has enabled a systematic conversion of POCs into production deployments. I'm also happy to share that, a European customer is currently funding proof of concept of our GenAI agents. This is again very, very encouraging for us that telcos are now embracing the new technologies. Engagement from some of the largest Europeans in North America and Europe, I think, is a strong validation of the maturity, credibility and enterprise readiness of our AI capabilities. Importantly, these proof of concepts are not exploratory experiments. They are being done with clearly defined success metrics and structured pathways to commercialization, and we are seeing systematic conversion into paid engagements. So several of the AI use cases that we are delivering are already live in production environments. This reflects a meaningful shift in our revenue mix. Subex today is delivering mature enterprise-grade AI solutions embedded directly into customer operations. As we all know, LLMs and AI models are reshaping industries globally. In response to this, a structural shift, both in our customers' priorities and in how we build and deliver the product, you must have noticed that last quarter, we undertook rebranding of Subex. This reflects our transition into a more AI native operating model. We wanted to ensure that our identity ensures that our transformation is clearly articulated to all our stakeholders. Our tagline, new possibilities, now possible underscores a tangible outcome-driven impact to our solutions. True to our customer-first ethos, we unveiled this brand at our user conference in November in Athens alongside our customers. So the user conference was really a great platform for us to engage deeply with our key clients, gather voice of customer insights, exchange perspectives on evolving telecom landscape. These conversations are instrumental in sharpening our product portfolio and ensuring that our road map remains tightly aligned with the market needs. On talent front, we have strengthened our leadership team with the appointment of a new Head of HR and new Legal Counsel, reinforcing our focus on organizational depth and governance. Finally, as discussed on the last call, I know this has been -- we've been talking about it for a while, but we had intended to host the Investor Day. But due to scheduling constraints, we were unable to finalize it this year. But we definitely plan to hold it in the next financial year, and we will definitely share details in due course. Next, I shall cover the consolidated financial results for Q3. Revenue for the quarter stood at INR 70.79 crores, as against INR 68.9 crores for the previous quarter. Normalized EBITDA for the quarter was at INR 9.2 crores against INR 7.3 crores for the previous quarter. Normalized PAT for the quarter was at INR 7.68 crores as against INR 3.9 crores for the previous quarter. PAT for the quarter was at INR 2.9 crores, as against INR 2.8 crores, including exceptional item in the previous quarter. And the new Labor Code impact is quantified as INR 4.5 crores for past service liabilities, and the same has been represented as exceptional costs in the results. And now, those were the results. And as always, now I'll wait for the real action to your questions and comments.

[Operator Instructions] The first question from the line of Sanjyot Khare, an individual investor.

Really good to see turnaround. Congratulations to your team, good operational performance and the feedback about the good branding and good to see a change into the logo as well as website. It looks really nice. So my question is, we have seen a good number of deal wins in last 3, 4 months, and that's really a great and congratulations on that. So my question is, are we going to see the conversion of that? I mean, the revenues will start converting from Q4 or it will start from Q1 for these big deals won in the last 3 months? Because generally, your Q4 is generally a heavy quarter, I mean, seasonally. So I just want to check that. And second question is about, there a lot of updates happening in geopolitical side. There was a tariff agreement is happened with EU and Europe -- EU and U.S. So now are we seeing that the market is opening up? And are we seeing the conversions or the discussions are happening and the deal momentum is getting better?

So no, thanks, Sanjyot. First of all, I mean, we are also very encouraged by the deal conversion that -- and we have seen some momentum in the last few quarters. In terms of revenue conversion, the way it works is -- so we have -- there are 2 distinct lines emerging. So in sense of our traditional RAFM products, which are more HyperSense-based or rock-based, there we see the revenue conversion happening a little later, because as you know, that model kicks in when we complete our implementation. So the SaaS revenue or the subscription revenue kicks in a little later. So I would say 3 quarters after the deal is announced. Small part of revenue is taken when we initiate the project, obviously, which is more around the setup cost and some of those milestones. But the bulk of it comes out after our implementation, which typically takes 3 weeks -- sorry, 3 quarters or so. So that's first part. But on the second line, where we have things like FraudZap and where we are doing more AI-led implementations, there we see a more immediate gain in the revenues actually, because it's more straight line and we start seeing the impact as soon as pretty much sometimes as early as the same quarter. So that's why we are trying to accelerate our AI line of business, where we feel that revenue conversion can be faster actually. So that hopefully answers some of your questions. In terms of geopolitical side, this has been an interesting time. We are seeing conversions now from the U.S., but we do have very small, very mild exposure to countries, like Iran and Venezuela and all that. So that is where we have some exposure and sometimes our money and our revenue gets stuck. But I would say that, that's extremely controlled right now and it's a minor exposure. So we are seeing the good and the bad both. So the good is that, if you have tariff agreements in place, the trade becomes much easier, but there are still pockets of geopolitical uncertainty for us as a business, where either there are currency challenges, or the country itself is completely on a blackout mode. We are unable to actually speak to the customers there at all. So we are seeing the good and the bad both. But I would say that as it stands, the exposure is extremely controlled because we have a governance framework, and we ensure that we never actually exceed our revenue or our exposure in these countries. So in that sense, I would say that it's contained, but yes.

Sure, Nisha. So on the business dialogues perspective, you are getting more business. Are we seeing traction now from the Europe and U.S.? Is it getting better?

It's actually getting better. It's been -- you must have seen in the last few deals that we announced, it was actually Europe and U.S., a lot more. And those countries, anyways, as you will imagine that with these continents, our risk profile goes down significantly when you do business here. So we also want to make sure that we increase the pie here versus the more riskier geographies. So -- but yes, that pie is definitely looking much better for us now.

[Operator Instructions] Next question comes from the line of Mahesh Kumar, an individual investor.

I have a first question related to FraudZap. And you have recently launched and got a customer also and price seems to be right for the market. So what is your estimate for the revenue from the FraudZap till 2030?

That's -- you asked a very interesting question. So for us, I think, again, Mahesh, to be honest, it's early days, so I'm unable to kind of really answer that question. But what we were wanting to do is we definitely wanted -- that said, I wanted to challenge the team to see, if they could develop something very, very quickly, which is white-coated pretty much. But more importantly, can we commercialize it, take it to market, have a paying customer. All of that has happened within a year. So that gives us the confidence that there is market out there for this. And more importantly, this market is coming from developed economies, which is even better for us, right? So I think I can answer this question a lot more confidently to you maybe in the next 2 quarters because we are planning...

But you might have done analysis? When you are going to market.

We have done analysis. But of course, we have. But what we want to do is establish...

What analysis I have done for FraudZap, the total addressable market is $1 billion to $2 billion. Okay? Out of that, which Subex can obtain is around INR 6,800 crores. Now, if your conversion rate is 2%, 5%, 8%, by 2030 revenue should be INR 540 crores.

So see, FraudZap is currently the way it's built, just also to clarify for you and the other listeners. So FraudZap is built pretty much like, I would say, a platform on which we are able to do different use cases. So currently, the use case that is active is device fraud. And if I look at, let's say, device fraud as a market, it's $4.5 billion or $4.2 billion actually to be precise.

No, that is the total addressable market.

Right.

The Subex conversion rate is very low. So I am taking 2% only.

No, no, I am coming there. I'm coming there. So basically, device fraud market is around $4.2 billion, right? And all of $4.2 billion or even if you look at device fraud as a market, that is not addressed solely by FraudZap. There are many competing offerings in the market. Of course, I think the way we are going about it is quite unique. However, the -- even before we launched FraudZap, we were also solving device fraud through regular or I would say, more traditional AI/ML models, those means, right? So mobile money itself is $2.5 billion. So if you look at TAM, it's large, but there are other solutions in the market. But for us, where we are going, it's a live solution. It can actually be used even in MVNOs. So that's where we are trying to go that can we do non-CDR fraud actually with this? So market sizing has been done. Conversion, again, because this is our first conversion, we were hoping that -- I mean, typically, if you see our conversion rates hover anywhere between on HyperSense, I mean, and traditional products, our conversion rates hover between 25% -- 20% to 25% on the pipeline. So the reason I'm unable to answer the question is, because we are in the process of building this pipeline. And once we build this pipeline, we'll be able to certainly say, let's say, that next quarter, what is logically going to be my conversion on these products and hence, what's the market that I can go after. You are right that we did do the math before we built. Obviously, the business case was built. But as you know, right, business cases have to be made real actually in the real market so...

No, no. But -- see in the previous calls, you have been telling, see, I will build the product only when there is a revenue possibility, okay? So you can't build a product without doing this analysis.

Of course. Of course, which we have.

Yes. So that is what I'm asking. What is your analysis? What is the revenue estimation by 2030? See, I have done only analysis for the telecom fraud. I have not gone into adjacencies. So when I say $1 billion to $2 billion, that is only telecom fraud, which is a handset fraud, dealer fraud and related fraud.

That is correct. You are absolutely bang on. Those are the top frauds actually. We want to build all these fraud on FraudZap.

Yes. So these are the fraud, where your FraudZap is fitting right.

Correct.

So that market itself is $1 billion to $2 billion, total addressable.

Correct.

It is not $4 billion.

Actually, it's higher than that. It's actually higher than that. But our thing is that is that, I feel that if this can be stood up as a stack. See, today, if I look at our fraud product market, I mean, what Subex is doing, right? I think we should be able to leapfrog that. And if I were to say that, in a few years or not even a few years, a few years looks like a very long time line in this days and age. I think in a couple of years, we should have a few million dollars behind us on this. So this year, we are going to aggressively take it into market. And the reason I'm really hesitating from giving you some guidance here is, because I really want to take 1 or 2 quarters, take it aggressively to market, see our conversion rates, see how real we are actually on this product.

See, unless you have...

But good thing is we already -- and in business case was made, we are already in revenue positive, right? In that sense, I think all our plans are coming through. But can we go after the new growth drivers, address new TAM? That is what the purpose of this is actually, FraudZap.

No, no, see, unless...

Can I unlock markets, which I would not be able to unlock.

See, unless you have aggressive target for the sales team, they will not be able to achieve.

Of course, of course. I mean, this is I mean...

Because see, I'm estimating that in the first year itself, you should have at least 20 customers out of total 2,400 customers.

Okay.

So that is what target you should have. And second question is related to FraudZap for adjacencies. Now in the past calls, you have told you will not venture into fintech and all those areas because that is not your core area. And now you are saying you want to venture into adjacencies?

No, no. When we say adjacencies, it's Telco Fintech. We mean Telco Fintech. It's not the reason why I hesitate from going after BFSI as a segment, which also has a lot of fintechs is because there are stock compliances and its very compliance heavy sector domain. Where we are going is Telco Fintech, because -- I mean, think about device fraud, right? When we think about device fraud, we think of it as transaction monitoring actually. At the core of it, what are you doing? You're doing transaction monitoring. Where you are giving Intel to, let's say, you go into U.S. and you try to buy an iPhone, we are trying to tell that customer, right, or the seller at that point of time, whether you can give this credit to this customer or not. That's essentially what you're doing, right? So it's some sort of transaction monitoring. And that transaction monitoring can be very easily scaled to a Telco Fintech and other places, which we have actually already done in some of our other -- through some of our other deals. So that's how we think about this. So Africa AI deal that we recently announced is actually a Telco Fintech deal, the one that you must have actually got maybe you discussed the news...

That is North America. FraudZap is North America.

Sorry, we didn't announce that. Okay. My apologies. We didn't announce that, but we do have a Telco Fintech deal in Africa, for instance. So we do Telco Fintech...

The announcement.

So my point is that, at the core of this, this is transaction monitoring. So what we are doing is transaction monitoring and I feel that is horizon scalable. So that's where we are going. When we say that we want to go horizontal Telco Fintech. All telcos have wallet pieces. So can we scale it to that? Yes. Have we scaled it? Yes, we actually have a contract there as well.

No, why I'm saying because there is no growth for the Subex for last 10 years. Unless you become aggressive on going for a FraudZap, which has a utility in the market, the growth will not come.

I completely agree with you. The reason we are not going to stop this FraudZap.

See, all the products you are agreeing.

No, no, I am absolutely agreeing.

But there is no aggressive target for the sales team. Growth is not coming.

No, no, you don't know that, Mahesh. No, no, you don't know that, because we do set very aggressive targets. We have a GTM plan in place of how we will take this to market. We actually have sales guys have been given the target. There is a GTM in place. We know how we are going to take this to market. And we are going to very aggressive -- and this is not where we stop. We are actually going to build more products on this on FraudZap, and we are going to build more products beyond FraudZap as well. So we have a whole product road map and GTM road map. So that I would -- rest assured, this is definitely going to happen actually. We are tracking net new pipeline. And we have road shows running even as we speak, we have road shows running in Middle East right now. So we are doing road shows. So there is a lot of work that's happening behind them. Obviously, when we invest in a product, we want to make sure that -- and even the pipeline that has been converted, right, within a year of launch of FraudZap and to the revenue that we announced. That has not happened because we were not doing any activity, right? As you can imagine, sales takes time, but we did and we have been in this pursuit for a while. We wanted to make it clear and we had. We have and we do have roadshows running. Sales guys have been given way more aggressive target than you are even telling me 20. Actually, the targets are very aggressive. They are stringent. But we do want to go after this. And we are taking a very -- like I always say, right, we are going to take a very frugal investment approach. We are taking a GenAI first approach, unlike the past product builds which we have done, where obviously, it takes a lot more engineering to build those products. Here, we are actually able to build products basis just GenAI. And this has been the proof for us, right? So rest assured, please...

I'll just make the last point and join the queue. See, my last point in this question session is, see, your assurance of that target and everything will be proven when there is a double-digit growth in the top line. See this assurance, we have been listening for 2 years, and there is no growth. You show the double-digit growth. I will not ask this question again. Okay?

Point taken.

Yes.

Valid point.

We have the next question from the line of Abhishek Kale, an individual investor.

Nisha, on our revenue bifurcation, right, could you please elaborate or going forward, put a number against the RA and FM or all -- because we have the bifurcation as per the business verticals, right, to support the -- if we can further bifurcate or have it at a more granular level, say, what is coming from my RA and what is coming from my FM, if it is that significant, if it is insignificant, then you may choose to exit that part. Then another question is on the lost revenue recovery Sectrio. What's the update on that?

Okay. So Abhishek, in terms of -- I'll answer both. In terms of RAFM, we'll go and evaluate, but a lot of our deals are actually integrated deals. So we sell both RA, FM together to our customers. So it's an integrated deal. We do more of those than just RA or FM. And that's the reason why we sort of report it together honestly.

No problem.

In terms of recovery, we are pursuing recovery right now. Actions have been taken, but I don't have any meaningful outcome in the sense that I have not recovered anything yet. So we are -- in the market, we are taking legal recourse. So we are in that process right now.

Okay. And I think I'm asking a follow-up question from what the first participant asked is regarding when the revenue kicks in. So you shared some very high-level info. Could you please elaborate a bit more on that? Because, say, when I take -- when we take an order, right, say, you said for FraudZap, the revenue kicks in immediately. But for a bulky solution like complete RAFM and/or BA solution, it would take a slightly longer time. So how much is our initial take that or cut that we take for installations? And then say, 6 months down the line when our revenue actually starts kicking, what percentages are we looking at? If you can briefly throw in the line, because we are seeing the order wins that is there, just to understand what kind of a revenue would start to flow in over the next quarters? I was trying to understand those numbers. So yes, please.

For RAFM deals typically 30% of our revenue comes over 4 quarters, so which is primarily implementation and license revenue. And once our implementation is done, that's when our subscription revenues kick in, which is more repeatable. So that's typically the -- again, it varies contract to contract. But if I were to give you a more broader guidance, then that's generally our rule of thumb. In terms of FraudZap, at least the first one, and I can only meaningfully speak about the one that we have closed. That's more a straight line. So in the sense that we will split it over -- if the duration is 4 quarters, then the revenue gets split over 4 quarters. So that sort of thing. So it's more straight line that we are doing. But again, we will also refine some of these models as we go forward, right, because we'll start learning how to price it, how to position it. So this is also a little bit of a learning curve for us, but that's how we are going to do. But this is definitely going to come faster, I would say, because it's a fast implementation. So core of FraudZap primarily is that we should be able to implement it very fast. So I think in that sense, the revenue for us should come -- start coming faster. And the reason we were also developing this product line is, one, because there is legit. -- there is a big market out there, even as, Mahesh was speaking about. The other is even I saw that our revenue velocity sometimes is on a lag, right? When you have heavy products, your revenue starts lagging a little bit. So we wanted to have both the portfolios where you have more, I would say, stickiness of the customer churn, lower churn, those kind of product line, which is I would think that ROC and HyperSense are that product. And FraudZap and other products, which are -- I would say, the revenue velocity can actually be increased, our coding velocity are everything. I would say that end-to-end velocity can be higher. So we are -- we wanted to bifurcate this for a while. And we have been working on that plan. So I think somewhere now it's coming through. So -- and that's really the strategy here, I guess.

Okay. Nisha, if I may ask another follow-up, please? The FraudZap, right, it's our newest product, right? Say, going forward, how much of our revenue mix would come from FraudZap, percentage terms? I mean, I think I'm talking about 2030 numbers somewhere. But what do you see as FraudZap's contribution to our revenue mix, percentage terms? Nothing forward-looking.

I actually feel it's -- like I was telling Mahesh also, I feel that I will be, honestly, Abhishek, able to answer this maybe in another quarter much better, another quarter or 2 quarters because it just feels a little bit early to comment. I want to see this revenue mix starting to shift actually. And then I'll be able to -- and team has to hit my milestones, right? I also feel that, I want to make sure that team is hitting all the milestones that I've set for them. And once they start doing that and we start seeing some, I would say, we are running a treadmill, so to say, right? Once the treadmill starts moving, then we know what is the actual mix. But idea definitely is for us to start mixing this revenue. Revenue mix has to change for us. That's the goal though definitely. That's the goalpost.

Next question comes from the line of Ajay Desai from Subex Limited.

Congratulations to the new management for such a good set of numbers and strong operational performance. Now, I think along with this, what as an investor, we will be looking out for a lot of time dedicated, particularly from CFO and IR team towards the value creation for the shareholders and a lot of work needs to be done to attract mutual funds and other PMSs and all to really see -- means not immediately, but at least in the next few months, a lot of visibility and other stuff.

Completely agree, Ajay. Actually, I know this has been a long-standing ask of the investors. I'm completely aware of, I'm very, very cognizant of that. And I have always kind of also held back a little bit because I always felt that we need to have the performance before we go to the market. And now I truly feel that we are on our way -- well on our way, and we have picked up our fundamentals to a large extent. Growth still eludes us a little bit, but we are working on that. Just like we worked on the bottom line, we do have a solid plan in place for how do we turn around the top line as well, so through investments. So I think somewhere we are on our way, and we are going to start the road shows. And you have seen IR team is with us on this call. We have been in discussions with them on how do we hit the road and what do we target. So that's something that's getting crafted. That plan is getting crafted even as we speak.

So effectively, what I'm saying is that we need to approach all the sell-side brokerage houses and start getting a few reports published from their side, which then eventually those reports and the coverages should reach to the PMSs and fund houses who handle small cap funds and all. And eventually, they start participating into our journey. So for them also, it's a great entry point without diluting anything. If they start taking it from secondary market, we will start having reflection into our market capitalization. And that's just a suggestion. And second is a lot of work from CFO, particularly CFO's team and the IR team basically.

Agree, Ajay. Absolutely agree. Thanks so much. This is always good to hear constructive feedback. So we are going to take this on. We are actually making plans, but we will keep you posted. You will see us a lot more in the market now.

The next question comes from the line of Jitendra Bhutoria, an individual investor.

So I just wanted to know that, we have invested in that UAE subsidiary. So how that investment has started contributing to the revenues? And secondly, post that investment, within September only, it's only a quarter only. And the second one is the Sectrio, where we were to close that last contract, where final negotiation was there, although the expenses on that were minimal. But still, I just wanted to know whether that has happened or not, the last contract closure?

So I can just answer Sectrio and I'll ask Sumit to maybe speak about the Middle East subsidiary, which was actually primarily it was recapitalization of our subsidiary. But in terms of Sectrio, we are -- as you have seen, there are no expenses around that. Everything is closed. I think just the last final legal documents and we are exchanging legal documents and we are dotting the I's crossing the T's. Everything is closed actually. The only one part which even Abhishek asked earlier, on one of the contracts, there is some recovery left for us. So there, we are taking legal reports and we'll try and go and recover our money. So -- but I think everything is done now. It's behind us. Do you want to comment, Sumit, on the Middle East?

Yes. On the Middle East, again, last time also, we have communicated. So this is more about the recapitalization of that unit. And Middle East, if you see our revenue composition, the EMEA segment is -- includes the Middle East segment, which is substantial as a revenue contributor. So all the couple of deals which we are just renewing it, it's also coming into the Middle East. So it is more about the ongoing business with the entity and this capitalization basically strengthened the balance sheet of this entity, and that's how we have done it. So it's more about the supporting the working capital and other aspects around.

That's right. But when do you expect that this capitalization which has been done for the Middle East subsidiary, will start contributing? Or what is the extent of contribution which you expect going down maybe 2 quarters?

As I told like the deals start renewing in that entity, because this is one of our important entities to deal with the Middle East contracts around. So the deals, you will keep hearing some sort of announcements keep coming. So any deals which is associated to the Middle East region, it largely goes to that entity. And as the business grows, this entity is a strategically important entity for us. So it will also grow as such here.

No, that I understand, but still some ballpark figures where because I expect, what generally as an investor, I expected that with this capitalization when the capital allocation has been done to the subsidiary, the contribution to revenue should -- the math should show actually. And that's what I'm asking that when could we expect those mathematics numbers from this ongoing subsidiary, which you are talking about?

Maybe like -- because our -- as you are aware, so first, we do order booking and then the revenue translate. And Nisha did what we call try to explain how the revenue dynamics work here, okay? So from an order booking side, I can just say, it can take another, let's say, 4 to 5 quarters when the real business will start flowing into that. And it will obviously result into the top line growth eventually after a few more quarters. So that's how it will do it. Obviously, all the actions are on to get these entities also start functioning around on this.

[Operator Instructions] Next, we have a follow-up question from Sanjyot Khare, an individual investor.

So my question is about how is the situation now? Is it at the -- I mean, on the hiring front as well as the annual increments? Is it for financial year is already done or you are planning that in this quarter?

So our increment cycle is actually Q1 of...

It's effective from Q2 -- so we do the entire incremental post, incremental cycle or process around in quarter 1, which will get effective from Q2.

Q2.

So that's how our salary will increase or increments, whatever happens will be there. What was the other question?

For the financial...

Sorry, hiring. He was also asking about hiring. Hiring goes on, but obviously, I would say that it's a tough talent market right now. So market is a difficult, a little bit tough, but we have also sort of embraced in Subex, we have started saying that we'll hire talent where it is. So instead of trying to concentrate too much in one location, we will find people where they are and hire them there. So that as of strategically, we have started doing that. That should make it a little bit easier, I would think.

Sure. And my next question is, I mean, in last 6 months, like for the first time in last 4, 5 years, we have seen so many orders coming in, almost it was more than INR 140 crores kind of orders you have announced. And I know you are not comfortable to give any guidance for the financials. But at least considering the order win and even are we seeing that at least next financial year, we'll grow at least in double-digit. I mean, it's not -- do you see that based on whatever business we are having, the growth will happen?

Growth, I mean, I think at the back office, honestly, it should happen. I mean, I don't see why we should be lagging because I think products are in good shape. The pipeline looks good. We have been able to do deal closures. So everything -- revenue, I always think of it as a, Sanjyot, a lag indicator, right? Our lead indicator is are you able to close products? Do you have good products? Do you have -- I mean, products that work? Do you have a healthy pipeline of products and sub-pipeline and closed orders, right? So all these metrics for me, at least the ones that I track to see how my following quarters will do are looking good or looking -- it could be much better always, but I think that we seem to be in good shape right now. So I think for the next few quarters, as we start next fiscal year, definitely, I've been challenging teams. And I know I've said this many times in the call, and I will continue to say it that I always challenge them that I want a $10 million quarter. So I think that's still something that I'm going to go very aggressively for, so.

Sure. That's great. I mean, that's what we are hoping for. I think the concern for all investors are same like the growth is now -- it started happening. The green shoots are there and the order wins are there. The convergence definitely will start happening. So it will be great if you start at least from the next quarter or at least maybe up to a year bold, but at least some guidance if you start giving at least that will really give some confidence as well as a good thing for our investors. Like other company gives it. So probably you can just look into that because good things are happening, why not share it, I mean.

You're right. You're right. You're right. Actually, I mean, we have been sharing that with you, but I also think that you are spot on. I think I kind of agree that we'll speak to the Board. We'll see what is -- if there is more guidance that we can provide. I'll take some periods.

The next question comes from the line of Sham Singh, an individual investor.

First of all, congratulations for the good set of numbers. We know that the market conditions for the IT sectors are quite good right now. So what is -- what figures in your mind? How much quarter will you take to give us double-digit growth?

So I mean, honestly, that is what we are also wanting, Sham. This has been my -- I mean nothing stops the team. I think we have the right team. We have -- like, I was saying earlier also, we have the green shoots in place. We have all the right set of lead indicators. We just need the conversions now into revenue, right? We seem to have the orders. We have the pipeline. Everything is in place. We just need to convert it. I very much hope that, this happens for all of us actually. So I remember the year 1 that I came, it was a double-digit growth. And since then, we have sort of tapered off. But then we have been working on the bottom line to ensure that we still have a good set of numbers. The next challenge for us is to the top line. Actually, that I would think is the only challenge left now. So as we continue to repair the bottom line, but I think top line has to be repaired. So definitely hoping for it. Hopefully, if everything goes well, then we should be able to aspire to something in a few quarters. We are getting...

Okay. I had given one suggestion to -- I had given last suggestion last time to your EY investor team, I think Mr. Pratik, that once you conduct the actually investor meet, then you should conduct it offline as well as virtual, so that the person like us who won't be able to join and so that they can also join that meet.

Okay. That we'll discuss definitely with EY and make sure that we put some systems in place where we are able to do. We are able to also stream and you are able to join, whenever we end up doing that, we'll take that into consideration, for sure.

Next, we have a follow-up question from Mahesh Kumar, an individual investor.

Yes, Nisha, my first question is, apart from new product development, what are the other growth initiatives that you are taking at Subex?

Okay. Is that the question? Okay.

Yes.

So I think one is new product development in terms of growth vectors. Obviously, new products. The second one that we have done is, we have also gone after MS actually as a business, Managed Services. And we have a team whose job it is to expand our MS pipe and get us newer MS. So that's the second vector that we are actually aggressively chasing. And most of our deals recently that we have closed in the last year do have an MS component, a strong one. For instance, even the one that we announced, if some of you remember, which was around a $6 million deal, that has MS kind of component. A lot of deals are now starting to show up. But again, I think a lot of work needs to be done there. The third one is we also have set up almost like an innovation lab. I think I've spoken about it in one of the calls, but we have an innovation lab, which what we are trying to do is, I almost think of our strategy, and again, you must have heard this many times, but our strategy is sort of H1, H2 and H3. I don't even go as far as H3, but H1, Horizon 1 and Horizon 2. So for Horizon 1, we are reinstituting MS. We are building new products. And we are also reinvigorating some of our older stacks like ROC, bringing AI to our older stacks like ROC so that all the customers that are sitting on ROC today, right, the older version of the platform can still use all the AI capabilities. So that's something that we are doing on Horizon 1 basis. The second and new fraud vectors that we are trying to tackle, right, like device fraud, subscription fraud, SIM swap. All this is, I would think of it as Horizon 1. On Horizon 2 is where we have established this innovation lab, and we are trying to work on newer areas of fraud that are coming up and one of the examples could be like an account takeover, right? That requires good R&D because account takeover is a very wide field. And again, it's not just relevant to telcos, it's also relevant to OTTs and some other things, all digital journeys pretty much. So we are trying to invest in that, the Horizon 2 initiatives to make sure that we just don't eat today, right? We also need to eat tomorrow and the day after tomorrow. So we are trying to create that pipeline of growth initiatives for us that can feed us for the next 1 or 2 years, but also what do I take to market. So I want some velocity in that. So these are the growth drivers that we have identified internally. And in terms of...

See, these growth drivers -- go ahead, go ahead.

In terms of building our products, we are actually embracing GenAI and byte coding, which we are taking even to our core engineering. So I want to get efficiencies even in the core engineering. We have, for instance, revamped our SDLC for those of you who understand technology. We have done GenAI-based SDLC, which means that a lot of our product building now will happen GenAI first, which is to make sure that, again, efficiencies, right? It goes to efficiencies. But more than that, I think of -- I think less of it in terms of cost, but more importantly, I want to hit the market faster, right? So that's -- those are the growth vectors that we have identified. There are more...

Yes. See, all these initiatives are basically focused on product and new product and building internal efficiency that is basically cost reduction.

No, no. It's MS market expansion, right? Our products, when I take FraudZap, it's net.

Are you expanding into new regions where currently you don't have customers? That is the region expansion.

I actually don't think there is any region, Mahesh, that we don't have customers. So I'll tell you our basic we have EMEA, right? We have Europe and Middle East. We are covered in APAC. We have coverage in the North America, and we have coverage in Middle East. I mean, yes, I've spoken about it. So all the 5 regions are -- Africa, sorry. So all the 5 regions are covered for us. So there is no market that's untouched, but we are seeing differences in markets. Markets behave differently, though, you are right to that extent. That what a North America market needs and Europe needs is quite different from what Africa needs today from us, right? So we are also sort of differentiating our strategy in terms of where we need to go more aggressively on services versus where we need to go more aggressively on products. So that is the stratification that's happening actually. We have been doing that internally. But there is no market per se that is untouched. I would say that we are even covered to Australia, right? Yes, some of the untouched markets are, I would say, far Pacific like New Zealand and all that we haven't covered. So there are some areas, but...

Are you present in Korea and Japan?

No, we are not actually. That's again something that we are aggressively looking at. The only thing is that some of these markets, there are language constraints. And also, we noticed sometimes that there is a competition issue in these markets in the sense that they like to in-source a lot. But we are headed to MWC in 2 weeks, and we are planning to meet some of these customers. In terms of targeting and opening a new market, one thing is that at Subex, our portfolio was never able to speak to MVNOs, which is actually a growing market. This is one of the biggest growing markets within -- I would think of telcos, MVNOs are a big segment, which we weren't catering to at all. And today, with FraudZap, we are able to go to MVNOs. So we have opened a new frontier for us in that sense. So I would say that, that is a net new for us. But yes, I mean, some of the markets are -- I mean, some of the countries are untouched. But in terms of region, we have good coverage actually. But yes, we can always do more.

See, apart from this, is there any acquisition of small competitor, which will give you growth immediately on the platform.

See, acquisition can happen in 2 ways, right? I mean, so one is, obviously, we do have some surplus cash. As most of you have noticed, we are sitting with INR 150 crores or something of cash. And so we do have some surplus. So we will look at some tuck-in, tuck-in acquisitions. But the point is that, if you make a smaller tuck-in acquisition, it's unlikely to give you the top line, right? That's not a top line acquisition really, because top line acquisitions are lot more expensive. So what tuck-ins can do is it can give you -- I think the newer technologies or bolt-on products that you are -- so your own development cycle of products can reduce or it gives you a Rolodex into a market that you are trying to crack. So for me...

See, it gives you entry into a market.

Market, you're right, market access or a technology access. That's all I can unlock with the surplus cash that I have right now. I will not be able to buy any top line right now because I just don't have that kind of money.

See, INR 154 crores, you cannot buy top line.

Correct.

Even if you take 2x sales, it is not possible.

Not possible. Correct. You're right.

But instead of that, if you get access to market, where you can sell more to the existing customers of the target company.

Absolutely okay. So that's where even we are going. Either you get technology, which we would take time to build or you go after the -- I think of it as a Rolodex or get customer access, access to a market, which is not open to us right now. So those are the 2 vectors that even we are looking at. This is something that we have also discussed at the Board level. So we will be sort of in the market, we'll be looking at this. So tuck-ins are very much a part of our playbook now.

Okay. And is there plan or thinking to take this PrivaSapien product to the market or integrate in the Subex product?

So PrivaSapien, we have been talking to them for a while. This is something that -- so PrivaSapien itself has become a little bit more India-focused actually because of the DPDP Act. So they are becoming a lot more India-focused, but we have been talking to them that is it possible to take their product, bolt it on to our stack and take it. It's a very interesting area. That's why we continue to stay invested, and they are also doing very well, by the way. But we are trying to -- honestly, I don't have an open lead right now. Harsha, if you want to add anything?

Yes. So I think, Mahesh, the key thing is they are focused on 2 parts. I mean they -- it is responsible AI. They do both on traditional AI where they protect the data, right? For example, if I build an AI model, the data should not be biased, et cetera. And then, of course, they're also doing the LLM, GenAI kind of firewall security and so on. So in general, like, Nisha said, it's an area of interest. We have had workshops with them to understand their portfolio and so on. So they -- I mean, they are doing well, and they are getting good traction because of DPDP Act on the banking sector. So that's kind of what we have understood. So the conversation with the CEO has been to talk to telcos, especially in India and that is something that's on the cards, which we will do. But on a global basis, like I said, today, we are RFP driven per se, we are not hearing too much where people are coming and asking, but this is a growing area. It's evolving pretty fast. And so we are constantly in touch with them in terms of any opportunity that comes, if we can position along with them, we will certainly do that.

So at least telecom market, we should explore globally, because we have more than 300 installations.

So telecom market, Mahesh moves a lot on RFP, so which means that by the time it comes to us, the requirements are already defined. And in that definition of requirements, we have also been talking to our customers, but we are not seeing RFPs come with explicit ask for what they are offering right now. So we haven't seen that. Although, we have been taking it to market and speaking to our customers, but we haven't seen an uptick yet actually.

Because all countries are coming with data protection policies, no?

That is correct.

That's where this product fits...

In DPDP, they have really done -- they've started doing very well because of DPDP in India. But for whatever reason, we are not seeing it from the other regions yet.

See U.K. also has a similar policy. European Union is also having similar policy.

That is correct, but we haven't seen it translated into requirements yet.

So they may not be having access to the market. That is where Subex can give access because Subex already has touch points there.

No, no, that's what we are doing. That's exactly what I'm saying that, that is exactly what we are doing. We are talking to our customers, but we haven't heard telcos actually talking about what we have to offer or data privacy yet in that sense. What data privacy they are talking about, we can cater our products are anyways privacy by design, right? We do a lot of PII information that we deal with. So we take care of some of the privacy issues by design. But the AI drifting of models, AI security, that is something that we haven't seen an explicit task yet, but it's a fast-evolving area. So you're right that. So that's something that...

It will be a regulatory compliance requirement.

Mahesh, sir. I'm very sorry to interrupt you. Could you join back with you, please?

No, this is the last question. See, this is a regulatory compliance market. So by default, you will come, like Regex is there. Similarly, things will come for AI also.

For sure, for sure. You're right. And that's why...

So that's why we should have that so more stake in the company and the product well integrated with solution or come up with the new product.

I think with the valuation that they are going after, going at, we may not -- we'll see if we are able to increase our stake.

Next is a follow-up question from Jitendra Bhutoria, an individual investor.

See, I would like to know that we have made that investment in OnGrid, 104 shares, we took 0.75% of that equity of that company.

Right.

Now what is the valuation of that company as on date, or whether we are planning to increase the stake or divest our stake in that company?

No. So this was -- if you remember, OnGrid, Jitendra was when we sold our business to them, right? We sold IDC to them and we did an all equity gain. So we are -- we continue to hold shares there. They are actually also doing very well. So luckily for us, both OnGrid and PrivaSapien continue to do well. What we'll do is in Q4, typically, when we close our Q4, we'll do mark-to-market and fair market valuation then. We generally do it at the end of the year where we ask for all their financials, although we are always in touch. But we typically will do a mark-to-market and stay record the gain from that transaction into the books at the end of the Q4. So you'll will be able to get better clarity in Q4 of what our gains have been, but they continue to do very well.

But I just wanted to know whether that OnGrid has done any further dilution in their equity because our 0.75% would have been much lower if they have done some QIP or maybe raised further the cash.

No. Actually, they seem to -- they are positive. They are cash rich, they are positive and they are profitable. No dilution has happened. In fact, they issued bonus shares also recently.

Okay. That's great. And we are holding maybe more shares instead of 104.

Yes, correct.

There are no further questions. Now I hand over the floor to the management team for the closing comments.

No, thank you all for joining the call. Again, I think please keep asking us questions, they keep us sharp. A lot of good questions, I think, this time on FraudZap and everything else. So we'll keep you posted. Again, we are looking to close the year well and embark on the next year. We are in the process of doing our AOP and budgeting and figuring out which product goes to which geography. So a lot of those questions, we are also in the process of answering right now, which we will do this quarter. But again, I look forward to all your support. Thank you for always being there, always showing up, keeping us sharp. So if you have any further questions that we haven't been able to answer today, please write to us. But as it stands, I think -- thank you for your support. I think we are on a good journey here, and we are very happy to have you on this journey with us. So thank you, and I look forward to speaking to you again next quarter.

Thank you, ma'am. 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 disconnect your lines now. Thank you, and have a pleasant day.