Tracxn Technologies Limited (TRACXN) Earnings Call Transcript & Summary

Good evening, ladies and gentlemen. Thanks for joining us today for the Q3 FY '25 earnings call of Tracxn Technologies Limited. On behalf of Systematix, Ambrish and myself, would like to thank the management of Tracxn for giving us the opportunity to host this earnings call. Today on the call, we have Ms. Neha Singh, Chairperson and Managing Director; Mr. Abhishek Goyal, Executive Director; and Mr. Prashant Chandra, CFO. I would now like to hand over the call to Neha to give her opening remarks and take us through the PPT. And after that, we will open up for the Q&A session. [Operator Instructions] Thanks. And with that, over to you, Neha.

Thanks, Sidharth. Yes. Welcome, everyone. Thanks so much for joining us today for our earnings call for the third quarter for the financial year FY '25. We are very excited to present our results for this quarter. In terms of format, we would like to run through a short presentation and share some key highlights for this period. I will also give some commentary along, which will be helpful in the overall understanding. And we'll follow it up with a Q&A session. Request you to please take note of the standard disclaimer for this presentation. A quick recap on our business. So Tracxn is a data and software platform for the private markets globally. If you look at the public market, it has created multiple large companies, many of which are highly cash-rich profitable companies. As private markets are becoming large and important, it will also create platforms like these, and we are building a global platform in this space. Our customers include venture capital fund, private equity fund, investment banks as well as M&A and innovation team of large Fortune 500 corporations. Also, it's a global platform, so nearly 60% of our revenue is international, and we have customers in over 50 countries. I would like to begin by summarizing the financial performance of Q3 FY '25. To set the context, we have one business, one legal entity, so you'll not see terms like stand-alone or consolidated. All the numbers that I talk about is for the business overall. Revenue from operations for Q3 was INR 21.4 crores, which is a 1.2% increase. Total revenue was INR 22.9 crores, which is an annualized run rate of INR 91.6 crores. Coming to profitability, EBITDA for the quarter was positive INR 0.4 crores. Add to this, this EBITDA includes all noncash expense also like ESOP charge. EBITDA margin was 2.1%. PAT for the same period was positive INR 1.4 crores and PAT margin was 6.6%. Coming to some of the other key metrics of the business. Our customers' account continued to grow. Our number of active accounts have reached 1,699 as of end of Q3 FY '25, which is a 39% increase on an year-on-year basis. Deferred revenue for Q3 FY '25 was INR 38.7 crores, a growth of 17.4% on an year-on-year basis. I will also quickly summarize the YTD numbers for the financial year or the 9 months of the current financial year. Revenue from operations was INR 63.3 crores, which is a 1.4% increase. Total income was INR 67.6 crores, which is a 3.3% increase. In terms of profitability, EBITDA was INR 1.6 crores for the first 9 months and EBITDA margin was 2.6%. PAT was INR 4.4 crores for the first 9 months and PAT margin was 6.9%. The business continued to generate positive free cash flow. So the free cash flow for the 9 months FY '25 was a good INR 13 crores. Cash and cash equivalents stood at nearly INR 91.4 crores, which is an increase of 30% on an year-on-year basis or an increase of INR 21 crores in absolute terms on a year-on-year basis. So that's a fairly large increase. In the subsequent slide, I'll be covering each of the metrics we talked about in the summary in more detail, starting with revenue. Revenue from operations is essentially revenue from platform subscriptions. Bulk of the revenue is subscription based, so it's a fairly high-quality revenue. Also please note that this is accrued revenue. So though we do prepaid billing and collections like most of the financial data platforms you may have used, we only recognize revenue for the time duration falling within the reporting period for which the service was made available. As discussed, revenue from operations for the first 9 months FY '25 was INR 63.3 crores, and total income for the 9 months FY '25 was INR 67.6 crores. We've also added historical data for the last 4 financial year for reference here. We continue to have profitable operations in Q3 FY '25. EBITDA for the 9 months was INR 1.6 crores. Please note that this includes the noncash expense also, primarily ESOP expense. If we exclude this noncash expense, the adjusted EBITDA will be INR 5 crores for the first 9 months of FY '25. PAT for the first 9 months was INR 4.4 crores. Again, if we exclude the noncash expense, the adjusted PAT will be INR 9 crores for the first 9 months of FY '25. Coming to margins. EBITDA margin for the 9 months was 2.6% and PAT margin for the same period was 6.9%. Just a point to note here, in the PAT calculation, you will see a tax component, which is a tax component set off with deferred tax asset. So this is a noncash component. So though we don't have to pay taxes as we have accumulated losses, but this noncash expense is included in the PAT calculation. There was some deferred revenue provision also in last quarter due to periodic assessment of deferred tax asset. These are only accounting in nature and hence, have been excluded from the PAT calculation for a like-to-like comparison from the previous period. Another metric is what part of the incremental revenue is going into bottom line. In FY '21, '22, this metric was close to an 80%. In FY '23, this was 31%, and then it was 43% in the last financial year. In the 9 months, incremental revenue was offset by an increase in costs as we are aggressively investing across various growth initiatives that we'll talk about later in the slides. But just a point to note that despite investments in these growth initiatives, we continue to have profitable operations as well as generate free cash flow, right, in the first 9 months of the financial year. Coming to the expenses. Our total expense for the 9 months was INR 61.8 crores, which is a 5% increase over same period last financial year. On the right-hand side, we have also included the breakup of this cost across the key components. The key components are the same as what you had seen previously. But just to summarize, first, bulk of our expense is team cost. For the 9 months, this was 88% of our total cost. This has been in the same range across the last 3 financial years so in FY '22, '23, '24, this was 89%, 88% and 88%, respectively, of the total expense. Also note that all our team is in-house, so there's no outsource or contract workforce. The second largest line item is cloud hosting, which accounted for 2.9% of the total expense as we do a lot of data processing and analytics. So this is followed by the rental expense. So interesting point to note that we do not have a large paid marketing line expense line item because we don't have a large paid marketing spend, either digital marketing or offline base, typically required for customer acquisition. The reason is that because we are a data company, we produce a lot of content and hence, are able to use that to get a lot of organic traffic, right? So we are able to acquire these fairly efficiently, which is reflected in the expense breakup. Another interesting point in all that, if you look at the last 3 financial years from FY '21 to the current quarter, the headcount increased by only 8%, right? So this was 624 3 years back to 673 at the end of last quarter. The total expense increased by 37%, but the revenue has nearly doubled in that period, right? So it's great to see that the revenue has nearly doubled, while the headcount increased only by 8% in the same period, right? So this is a great testimony to the operating leverage of the business. Moving to the number of customer accounts and users. We have seen a fairly high volume of growth in the first 9 months of FY '25. We closed December '24 at 1,699 accounts, which is a 39% growth on a year-on-year basis. The number of users were 4,626 users, which is a 31% growth on an year-on-year basis. And you'll be glad to hear that last quarter, that's Q3 FY '25, was the highest net addition in terms of the number of accounts and the highest net addition in terms of the number of users as well. Moving to some of the other financial metrics. The company generated positive free cash flow of INR 13 crores in the first 9 months of FY '25. If you see, this is an increase of INR 6.3 crores over the 9 months previous financial year. Cash and cash equivalents stood at INR 91.4 crores, which is a very healthy increase of INR 21 crores on an year-on-year basis or a 30% increase on an year-on-year basis, right? So we continue to generate good free cash flow as well as continue to add cash in the last quarter. Similar to the previous quarters, I'll also take a minute to talk about the markets. So in terms of market activity, both 2023 and 2024 were muted years for the private market. In terms of global funding, 2023 calendar year was the lowest across the last 7 years. In India also, this was 60% down in 2023 over the previous year. Last calendar year, which is 2024 was slightly better in terms of the dollar invested, but it was only the second lowest across the last 7 years and was down 60% from the peak. In 2024, the overall funding saw an uptick, right? But the deal volume or the total number of deals in 2024 was significantly lower than even in 2023, right? So the deal volume in the private market in the last calendar year, which is 2024, was the lowest across the last decade or 10 years, which we have seen, both at the global level as well as in India. In some good news, at least the late stage saw some recovery in activity. So one proxy for the late-stage activity, if you see the number of new unicorn start-ups that got created or the number of private companies that got valued at over $1 billion. In 2024, there were 96 new unicorns that got created globally and India saw 6 new unicorns. So this was better than the previous year, which was 2023, showing slight recovery, right, but it was only the second lowest across the last 7 years. The M&A activity was also very muted in 2023. M&A deal volume in 2023 was the lowest across the last decade. Last year, last calendar year, which is 2024, the M&A deal saw some recovery, right? However, it was only the second lowest across the last decade. So if you look at the IB fee, the investment banking M&A advisory fee in 2024, it has shown better recovery as it has come back to what it was about 5 to 6 years ago. So though 2024 saw some recovery, it was the second lowest across the last 10 years in terms of global M&A activity, and we're still awaiting further recovery in the coming months. Coming to some of the business metrics, we do see green shoots. So here, we have given the revenue split by India and international geographies for last financial year, which is FY '24 and the 9 months FY '25. So though the overall growth rate looks muted because of the international markets continues to have softer macros, but you will see that we have seen very healthy growth accelerations in regions where we have been investing in growth initiatives in the recent quarters. Most of the vertical sales team had been launched in India first, as we had mentioned earlier, right? And there, we have seen sort of healthy growth acceleration. The India revenue accelerated from 14% in FY '25 to 16% in the first 9 months of the current financial year. Again, this is primarily due to various growth initiatives, including the launch of vertical sales team, which we will cover in subsequent slides in more detail. And seeing the success of these initiatives in India, we plan to scale the vertical sales team to other top countries and replicate the strategy internationally as well. Coming to our customer account growth. Here on the left-hand side, you see the Q-on-Q trend in terms of the total number of customer accounts. And on the right-hand side, you see the number of net customer accounts that got added in each quarter. So if you see across the last 3 financial year, we have added an average of 30 to 60 net new accounts on a quarterly basis. This pace of volume addition had increased starting Q4 of last financial year when we added 88 net new accounts. In the subsequent quarters, it increased even further when we added over 100 new net accounts across Q1 and Q2 of the current financial year, which is FY '25. And you'll be very glad to see that this momentum has further accelerated. So in the last quarter, we added an all-time high number of accounts, higher than the previous 2 quarters and much higher than what we used to add a year back. In terms of numbers, Q3 saw 184 accounts getting added, which, as mentioned, is a new all-time high. On the user side also, this quarter saw the highest number of users getting added. We added nearly 500 users on a base of 4,120. So that's a growth -- that growth has also accelerated. Coming to the deferred revenue, we saw a very healthy expansion in Q3 FY '25. So the deferred revenue for the first 9 months FY '25 was INR 38.7 crores. This is a 17% growth on a year-on-year basis. Earlier, we talked about the fact that how India revenue has accelerated, but we are still to see this growth accelerate in the international segment overall. So to the question of what is our outlook on the growth in the international markets. Here, we see some encouraging signs. So typically, what we have seen is that we first see volume growth and the value growth sort of follows. For instance, in India, the account growth accelerated from 20% last financial year to 55% in the first 9 months of the current financial year. And subsequently, we also saw the revenue growth accelerate from 14% last financial year to 16% in the first 9 months of the current financial year. Interestingly, we are seeing volume growth also accelerate in the international markets. So the account growth in the international market has increased from negative 5% last financial year to positive 21% growth in the current -- in the first 9 months of the current financial year. Similarly, we also expect that we should start seeing value growth from this segment, right, which should make the overall growth rate looks much healthier. Another point to note is that most of the reason that we have seen this acceleration in the international account growth has been generic sales and marketing initiatives like the increased organic traffic, launch of Tracxn Lite and some horizontal sales initiatives that we have been doing. We are yet to launch the vertical sales team for these geographies, right? And this is what actually saw most of the account acceleration in India. And once we launch that in the international markets and in the key geographies, we expect that this volume growth should further accelerate. Coming to the platform engagement metrics, they continue to look very healthy and -- following the historical upward trend. So if you look at the platform usage, which here in terms of number of exports and my analyst data queries that we have sent, has grown about 2x across the last 2 years. Engagement has grown both at the overall level as well as at the per user level. So this is a very healthy trend that we continue to see. Apart from these, we have been investing very heavily across various growth initiatives. These spans across go-to-market funnel of sales, marketing, account expansion. We continue to see very good results in these. The following slides give an overview of some of the initiatives we are seeing good results, and hence, we expect further acceleration to happen, right? So I'll take a couple of minutes to share some of the growth initiatives we are aggressively working on, and we are very excited to share the results that we have been seeing from those. So one of the very interesting growth initiative that we've talked about previously is scaling our organic traffic, right? So this continues to be a big focus area for us. So being a data company, we are able to use a lot of data that we own to launch large set of public pages that generates a lot of customer traffic. For instance, someone is searching for fintech companies in Singapore or SaaS companies in North America, they come across our pages, and they're able to generate leads through that. So if you see at the organic search traffic, we got across all the pages. This was 16 million in the first 9 months of FY '25, right? So 3 things regarding this. One, that this is a very large traffic funnel that we've been able to build. Second, this has grown rapidly, if you see across the last few quarters. For instance, this has grown about 3x across the last 3 years. Thirdly, we continue to work on this aggressively, and we expect it to increase even further. For instance, the current traffic's annualized run rate has already reached 21 million, right, which is much higher than what we had last year. Another very interesting growth initiative is the launch of Tracxn Lite. We launched Tracxn Lite last year for product-led growth to increase the awareness about the richness of the platform amongst potential customers. With Tracxn Lite, users are able to get access to the entire platform when they sign up, though with obvious some limitations such as restricted daily limits for profile views, exports and certain platform modules. So you'll be very happy to know that within the first year of launch, we have signed up -- we have over 1 lakh sign-ups for Tracxn Lite, right? So this is a fairly large number of users that we've been able to sign up. Also, the pace of acquisition has been increasing on a Q-on-Q basis. Another interesting aspect is that users who sign up have been actively engaging on the platform as well. So the monthly active users have now crossed 23,000, right, which is a multifold increase from the 5,000 we had in the beginning of the year. So this is very large users that are getting familiar with the platform, which helps us building a very good acquisition pipeline as part of the users express interest and upgrade. Just to give an update on the recent quarters in terms of metrics, as we compare Q1 versus Q4 of the calendar year 2024, which is last year, the number of organic sign-ups have more than doubled, right? So if you just compare Q1 to Q4, the number of organic sign-ups have more than doubled. So it's nearly 2.4x, right, to be precise. The average monthly actives have more than tripled, right? So this is a 3.6x increase. Average number of users hitting the credit limit have more than tripled, right? And because of this, we have also been seeing an increase in number of upgrade requests, demos, et cetera, that we have been getting through these, right? So overall, this continues to be on path to become one very large acquisition channel, right? It just got added in the last 1 year. We've also set up a specialized team for select high potential customer segments. A good example of this being universities. As we had mentioned previously, we had set up a specialized team with cumulative experience of over 20 years selling to universities. Majority of our relevant customer segment comes from the top universities globally, which is also a great avenue to educate them about data platforms like ours. So here, we are seeing very good initial results from this initiative. This was one of our initial vertical teams that was set up, and it has been about a year since launch. So we also wanted to share some results, and we're very excited to hear all that. The number of customers in this segment have more than tripled in just the last 12 months, right? And the revenue from this segment have increased more than 2x, right? The revenue has more than doubled in just the last 12 months from this segment, right? So essentially, we have added more number of accounts in 1 year since launch of this vertical team than we have historically added across the last 9 years. Also because of these focused team, they are able to do much more targeted outbound and yet very high potential logo customers as well. Recently, we have also been working towards including Tracxn in relevant courseworks for courses such as investment banking, impact investing, venture capital and private equity courses, which has led to further increasing engagement. So this is a very good testimony to the vertical sales team approach, which is very effective. In segments where we already have customer base, setting up these focused teams can significantly accelerate the customer acquisition rates. Additionally, it helps us increase both revenue and market share in these segments. And as we expand this approach to other segments, we anticipate a similar boost in growth across multiple customer groups. We've also set up a specialized sales team for start-ups. So for this segment, we see a very high volume of inbound leads, right? So even though start-ups are served by the same platform, they have slightly different use case and workflow requirements. Some of them, for instance, use Tracxn for business development, fundraising, competitor analysis and market research. So it's a very high-volume segment, but at a lower price point than the investors. Cumulatively, this can be a very sizable segment served by the same platform. So traditionally, we had not catered to this segment. But more recently, we had set up a separate go-to-market strategy for this segment as we've been getting very high and increasing volume of inbound from this segment. An interesting aspect is that nearly 50% of the revenue from new accounts in this segment is from international customers. Another recently launched specialized team was for accelerators and incubators. So this was just set up a few months ago. And under this initiative, we are focusing on customers across private incubators, government incubators, universities and corporate accelerators. So we're seeing good initial results with this team in India and plan to expand this to other key geographies as well. Another vertical team that we had mentioned last time was that we were planning to launch for investment banking team, right? So we also have update there. So this got recently launched. So this team sells to investment banks, both through inbound and outbound reach-outs. We've also augmented the data coverage to improve conversions in the segment, which includes increased coverage of private company financials, investor database, further outreach efforts, et cetera. And we've also launched additional features for this segment. One of them, for instance, like when a company is looking to -- company can actually mention that they are looking to hire an investment bank on our platform. So this helps in building a sales pipeline for the investment banks. So in this segment, we are seeing very good initial success, so though it has been only like just over a quarter since launch. The logo penetration, for instance, in India has been increasing on 1% on a month-on-month basis in this segment. The pace of customer acquisition in this segment has almost tripled with a dedicated team. And now we are planning to continue to scale this for the domestic as well as for other key geographies. So based on the success that we saw in the initial vertical teams, we have accelerated the launch of more teams and are launching 7 additional vertical teams in this year itself. So these are specialized team for customer segments such as venture capital funds, corporate M&A teams, corporate sales teams, et cetera. We believe that we have cracked a very repeatable playbook through this architecture and setting up new units should help us have material impact. This helps us accelerate pace of customer acquisition as well as market share penetration in these segments. And we expect that other recently launched teams will have significant impact in the coming months, bringing us to our desired growth trajectory. Yes. Moving on, another interesting growth initiative that we have been working on is expanding our coverage in financials and cap table data sets of private companies on the platform. So these data sets are particularly in demand by certain customer segments, especially private equity, investment bank, among others. And we've been investing to increase the throughput in these data production engines. Talking about financials. Today, we cover financials of private companies in over 20 countries globally. The number of detailed financials on the platform have increased at a fairly rapid pace. So last year, in 2023, we increased the number of financials on the platform by 5x, right? And you'll be very excited to hear that we have multiplied this even further. So in the last calendar year, which is 2024, we've increased it by another 6x, right? So that makes nearly 30x in just 2 years. As of December '24, we had over 1.5 million companies with revenue data and over 560,000 companies with detailed financials available on the platform. One thing which is obviously very interesting is that we've been able to add these data sets at a great pace without increasing headcount much. So this, again, is a great testimony to the level of automation and intelligence that we've been able to build as part of our infrastructure, which enables us to do this at this pace. Coming to cap tables. So cap tables are requested by investors to see the detailed shareholding, valuation, latest as well as historical share price of private companies. Today, we track cap tables of private companies in over 15 countries. End of 2023, we had over 39,000 companies with cap tables. At the end of last calendar year, which is 2024, we had over 313,000 companies with detailed shareholding available on the platform, right? So that's a huge surge of nearly 8x during the last calendar year. We had also launched new legal entities, database last year. So this helps investors to screen through legal entities registered in various countries for specific high-growth metrics like revenue threshold, growth rate, profitability, employee count, et cetera. So this data has also increased at an amazing pace, as you can see from the numbers. At the end of 2023, this number was only 11 million. We've increased this database of legal entities to 63 million during the last calendar year, which is 2024. Major countries by coverage include U.S., U.K., Japan, India, Australia, Brazil. We're also seeing very good customer usage with legal entity page views increasing on a Q-on-Q basis on our platform. Additionally, there's also a lot of focus on adding more data points to the existing legal entities, which enables us to increase penetration in some of the new and existing customer segments. So we've also started building deeper coverage of regulatory data on private companies and legal entities. Some of the data points that are live and in pipeline include loans and charges data, legal case data, patent data, FDA approval data amongst others. So these are particularly important for existing and new customer segments and use cases like deeper due diligence, KYC, et cetera. And we believe these data sets will help us increase penetration in the existing and new customer segments. For example, clinical trial data is very crucial for health care and life sciences companies as well as health care-focused investors, right? And this is also a fairly cash-rich customer segment. So we are working on building a good coverage in these data sets. Another set of initiatives underway as for improving paid customer engagement as well as account expansion to enhance the growth of revenue from existing customers. So a separate team has been set up to increase the penetration of paid licenses within existing accounts, thereby moving from reactive upgrades to getting upgrades done more proactively. So this has led to account expansion through user addition as well as increased data on the platform. One of the initiatives that is working well is curbing login sharing within the account. We've also seen some initial success with initiatives such as city trip, on-site onboarding sessions, et cetera. Additionally, we've also started proactive reach outs to underpenetrated accounts. So we are working on initiatives to boost engagement, both at the user as well as account level, and these includes setting up specialized engagement teams, regular touch points, setting up personalized dashboards, alerts on customer investment mandates, right, and analyzing the user behavior to help them use the platform more effectively. Another interesting growth initiative that we've talked about is press mentions. As we have mentioned previously, whenever media talks about data on private companies or start-ups or emerging technology sectors, we want them to quote data from Tracxn. We've been working on initiatives such as launching reports with media, data contributions, regular columns in some of the newspapers, which has resulted in a multifold increase in the number of press mentions that we've received across various respective media outlets. Last quarter, we had some very prominent partnerships as well in addition to these. The first check report 2024, which is a co-branded report with the Southeast Asia-based venture fund called Jungle Ventures. 50 Future Unicorns of Karnataka by Economic Times. This was released in the Bengaluru Tech Summit 2024. We were also the knowledge partner for ET Startup Awards, which is a very prominent private market event hosted by the Economic Times. So the advantage of press mention is that a lot of people discover our data for the first time through media and then they come to our website and generate a very high intent lead. Also, we believe that this goes a long way in building a brand as a data company and also helps our sales conversion and hence, revenue growth. We have been an AI-first company and continue to harness GenAI for the key initiatives in data production. So a great testimony to the use of automation and intelligence in data production is that we've been able to multiply our data sets while reducing the manual intervention and shrinking headcount. So in 2024, for instance, you'll be very excited to hear that we increased the coverage of data points on our platform by over 5x, right, while the data production headcount in the same period reduced by nearly 10%. So we are seeing both, right? On one hand, we are seeing great acceleration in the pace of data addition, right? And on the other hand, we also require a much leaner team to be able to do that, right? So GenAI continues to be a key focus area for us. I mean, trusting ways wherein we are leveraging AI is in company profiling, transactions data, data updation, improving data accuracy. We are also extracting relevant data points from unstructured data and documents, which enables us to add more data about private companies. We are also training the models on our internal historical data to achieve high accuracy in select modules such as identifying upcoming companies, industry classifications and more. Even on the GTM front, we are using it for refining lead profiling, sentiment analysis of interactions and optimizing engagement strategies and more. In the coming years, we expect significant more optimization in the data production units, while we expect the throughput of the system to accelerate even further, right? So potentially, there can be more than 10% shrinkage in the data production team size than what we saw in the previous year in the coming year. So we are very excited about the possibilities with GenAI technology has and its potential for us to accelerate building global private data. Here, we have some of the other KPIs for the business. The first graph talks about the contract price or the invoicing amount. For the 9 months FY '25, this was INR 68.6 crores, which is a 3% increase. On the second graph, we talk about the number of entities profile, which is a proxy to the amount of data added on the platform. So today, we track more than 4 million profiles, including private market companies, funds, et cetera, globally. In terms of some of the other business characteristics, 61% of the revenue for the first 9 months FY '25 was from outside India. These customers span over 50 countries. The top 5 countries within this show a similar spread to where you have large corporates as well as private market investors. The top 5 countries for us by number of customer accounts are India, U.S., Singapore, U.K., Germany. Additionally, we also serve a very diverse and rich customer segment across investment industry, including venture capital funds, private equity funds, investment banks as well as corporates across M&A teams, innovation teams, et cetera, and others like government agencies, universities. So this gives a fairly large addressable market to tap into. So this covers most of the key updates that we had in the recent period. I'll skip going over the subsequent slides, right? You can please feel free to check it out offline. And subsequently, in this slide deck, we also have some slides on the detailed financial statements, which you may go through. Thanks. That's all. I will pass back to Ambrish for any Q&A that the group might have.

[Operator Instructions] So we have a question in the Q&A tab. It's from [ Viraj ]. So what is the contract liabilities number on the balance sheet in Q3 FY '25? It was INR 29.93 crores in the second quarter of 2025.

I'll probably pass it to Prashant for this question.

Right. So I mean, like when we talk about the contract liabilities and so which essentially means the deferred revenue. So as of now, we have about close to INR 39 crores of deferred revenue, including the adjustment for the [indiscernible].

So we have our next question from [ Vidit Shah ].

So my question was around the revenue decline that we are witnessing in the international markets. So I understand that the customer growth has been very handsome and robust out there. The revenue decline, is it largely because we are -- the customers are renegotiating contracts at a lower price than what they were last year? Or is there a lot of churn in customers and the new customers that are coming in at a lower price point?

Sure, Vidit, thanks, I'll just take that up. So yes, that's correct that if you look at the bifurcation in India and globally, if you look at it, so India, the growth rate has accelerated like from 14% last year to 16%, right, in the first 9 months. And overall, the -- probably the international part has been a bit slow. One of the main reasons continues to be global macros, like even if you look at a lot of the other trends in the market, like if you look at the overall funding trends to overall investment trends, the deal volume, for instance, this is last calendar year 2024 was like one of the lowest across the last 10 years, right? Even the dollar invested was the lowest across the last 7 years, right, which has impacted not just us but all the players in the market, right? And so coming to the reason, I think it's both. So we saw some of the -- like especially in the corporate segment and in some of the large accounts, we saw the negotiation happen whenever it comes for the next renewal, right? And that's -- one of the main reasons is that the activity has been lesser. Like if you look at some of the large funds, which had been writing a lot more checks, they were writing much lesser -- doing much lesser deals, right, last year. So whenever you have the upgrade discussion, people are always saying that I'm probably going slow this year and probably I'll restart doing more of the investment from like next year onwards. So we saw some impact in terms of shrinkage of accounts in the last months. Probably churn happened in some of them, like in some of the cases where the corporates were impacted, right? There we saw some. But I would say in some of the renewal discussion, there was some lessen in terms of the number of users that people would do mainly because of the fact that they were investing less, right? Having said that, I think if you look at the outlook in the international markets going forward, we expect that to accelerate. And one of the reasons for that, so there are 2 reasons. One is basically, even if you look at the pace of account addition, that has already increased. So last year, FY '24, for instance, this was negative 5%. So -- and if you compare that to 9 months of the current financial year, this has accelerated to positive 21%, right? And even in India, when we saw the growth of accounts accelerate from like a 20% to 55%, we actually saw also the revenue accelerate, right? So that is one of the things that we expect that to happen. The second thing is that we are yet to launch a vertical sales team in these geographies, right? So India has proved like very -- across different segment that wherever we have launched it, it has helped us to accelerate the customer acquisition, retention, everything, right, across that. So we -- and we are replicating the sales team, vertical sales team also to the key geographies internationally. And once that happens, we expect that it should -- both the customer acquisition should increase as well as the retention. Let me give you examples for 1 or 2 things that we have done, like even if you take a segment like university, right, wherein we used to have customer segment. But once a vertical team was set up, there were a lot more initiatives that was being done in engagement across this. To give you 2 examples. So one is, for instance, we started doing on-campus activation sessions wherein we would -- like a customer account person would go and address like a large batch to be -- to activate them to start using the platform. Secondly, we've also integrated traction in the coursework for very prominent universities. So that gives a very long-term moat, and this actually also helps us increasing engagement retention in those segments. So we expect that once we also extend the vertical teams to these international markets, this should help us increase the retention as well as in these segments, right? So hopefully, that answers the question, [ Vidit ], of both how the international is and how do we see that going forward.

So that speaks a lot about the customer accounts and the user account numbers. But just from a realization point of view, what are we looking at? I mean, so will this only be renegotiated 1 year later? So given that we have 1-year contracts and now we've renegotiated at the rates that we are currently at, I think, INR 2 lakh per customer. Now will this be renegotiated upwards only after 1 year? Is that how we should look at it? And will that still be dependent on how private markets are? Or are we looking at certain strategies where we can get better realizations even in the near term?

Right. Yes. So in terms of the -- so typically, nearly 65% of our contracts where revenue is annualized upfront. So it's primarily -- most of it is annualized upfront and remaining them is majority quarterly upfront. So that is correct that whenever we have the negotiation, the next renewal typically happens after a year. And what we have seen is basically for some of these accounts, they have already been 1 or 2 renewal cycles. So we expect lesser of these to happen going forward.

Okay. Understood. So -- but the increase in realization will only happen once we see an uptick in the overall macro -- private market investment end of year?

So, no. So like even if you look at in India, right, like in India, the macro had been -- so similar to how it has been globally. So it has been slow. But still, we were able to accelerate the growth to 16%. And hopefully, we'll end the year at higher than that, between 16% to 20% is where we should end the year. So this is because of a lot of the initiatives that we have been doing. So despite the macro, I think that once we sort of scale the initiatives that is working well in this geography, we should -- we already are seeing some impact like in terms of the volume growth, and we should start seeing more of this in the coming quarters as this flows into, firstly, the revenue. And the second thing is that as we also extend this to the key geographies.

Okay. Just the last one from me. So now that the verticalization strategy, we are shifting towards the international market, does that mean that we see an increased amount of other expenses as travel to these markets increase? Or will marketing and sales largely be done out of India as it is today?

Right. So in terms of the expense increase, we don't expect sort of a significant change to that. We are hiring the teams like we are hiring some of the sales team. So you may see some linear sort of increase in the expense that is there. But whenever we are catering to the sales team internationally, there is no increase in the travel, for instance, because even, for instance, in India, a lot of these closures happen remotely because, for instance, our initial price point is less than $100,000, which for most customers, they are fine with closing over remotely, over sort of video calls. So we don't see that expense to be increasing. But in terms of the overall expense, we'll have probably a linear increase only because of some of the teams that we'll continue to sort of invest in. But having said, we'll still continue to generate free cash flow. We'll still continue to add cash and cash equivalent, right, to the bank. So for instance, just in the last 12 months, we added over INR 20 crores of cash and cash equivalents. So that we'll continue to add, but we'll continue to sort of also invest in scaling these teams, but it will still be linear.

Moving on to the next question we take from [ Saugata Roy ].

Hello, am I audible?

Yes, [ Saugata ], yes, you're audible.

Neha, quick 2 questions. One on the customer addition. Can you give me a split of the 184 customers that you've added this quarter between India International and within that in terms of buckets of banks, educational institutions, VC funds, private equities? That's the first question. The second is in terms of ARPUs for this quarter for the newer accounts, how do they compare with ARPUs, let's say, a year back or 2 years back? And what is the difference in ARPUs between international and India?

Yes, sure. So thanks, thanks [ Saugata ] just to answer that, in terms of the new customer acquisition, so if you see, obviously, since the growth rate -- so we have seen acceleration in customer acquisition across India and international. So if you just compare the growth rate of the accounts, overall, the account growth, it is about 40% on a year-on-year basis. And if you split across India and international, India grew at about 55% year-on-year, while international grew at 21% year-on-year, right? So there's still growth, which is there across India and international. My sense is that the split would be sort of in a similar sense, like how the accounts have sort of grown in this region, right? Second, to your customer segment, so this has also been similar to the spread that we have. So about like half of them are investors, half of them are other corporates and companies. So the acquisition has probably been in the similar range, but we'll probably -- we'll share more data at the year-end when we have a good split on the customer segment, right? So that's on the customer segment. In terms of the ARPU, so today, if you look at the average price per account, right, which is what we measure is about slightly less than INR 5.5 lakhs. And if you compare at this ASP to what it has been across the last 5 to last 4 years, so this has been in the same range of between INR 5 lakh to INR 7 lakh per account per year, right? So in FY '21, this was INR 5.8 lakhs. In FY '22, this was INR 6.5 lakh. Next year, it was INR 6.7 lakhs, right? And last financial year, this was INR 6.5 lakhs, right? So now it has become slightly lesser, but it is still range bound between INR 5 lakh to INR 6.5 lakhs, right? And one of the reasons why you see this decrease is because in the last 12 months, obviously, we grew from like 1,200 account to 1,700 accounts, which is like a 40% increase. And most of the users start small, right? So most of the users start with like a single user or a 2 user pack, right? Most of the users start small and then grow over time. So that is why it is slightly more skewed than what you would have on an average, right, the ASP, but it's still being fairly range bound, right? And in terms of how this compares to India and globally, so if our average price point is about INR 5.5 lakhs, international is double than what it is in India. So if India, it's nearly INR 4 lakh per account per year, the international realization is about INR 8 lakhs, right? So obviously, that's slightly higher, which is there.

Understood. So just a follow-up to this and so that I get this right, are we saying that the 184 that you have added for India because the growth has essentially come from India, has been at that INR 4 lakh per account range?

No. So INR 4 lakh would be the realized pricing. What you would have is only -- so they may start smaller, but the only -- the other thing is that you'll only have realized revenue for the time duration for almost...

No, no, no, I'm not talking about the realized revenue. I understand, I'm talking about the contract value. So at the end of the day, if you're signing a contract in this quarter, 65% of your contracts are annual, right, at the end of the day, which means that they will pay you quarterly maybe, but essentially -- or maybe pay you upfront depending on what the contract is. But there is a contract value to that. I'm talking about that price. So what is that price for this quarter, which is the quarter that has gone by for the 184 accounts? And what has been the dip in the realization in percentage terms between, let's say, 8 quarters previously or 4 quarters previously? That's what I was asking.

Right, right. Yes, sure. So if you look at it, the average pricing is about for 3 users, while the new user acquisition happens typically at single user. So a single user realized pricing is about INR 2 lakhs, right? So most of the -- like 85% plus of the revenue, which we acquired is typically start with like a single user or a small user pad. So it will be close to that in terms of the contract value, yes.

And does this essentially get uptraded only after a year, which is a follow-up to the question that was asked earlier as well? Or do you see cases where during the year, there is an uptrade where new users are added by corporates?

So in some cases, they come back and we are able to upgrade them. Bulk of the upgrades, user-based upgrades happen during the period. And if there are any pricing increase or there's an inflation that happens at the end of the contract period.

Got it. Got it. And just the last question, at least for me, is that just tell me what is the difference between the contracted revenue that you have put up, which is INR 25.1 crores in your PPT versus the realized revenue, what's the difference? And I think I probably have asked this before as well, but just so that I'm clear.

So the contract revenue, so I can probably give one version and maybe Prashant can add. So the contract revenue or the invoiced revenue is essentially whenever you are billing, right, you would either do like an annual upfront. So it's all prepaid for us. So it's either annual upfront or quarterly upfront, right? So that's your invoiced amount, right? The accrued revenue is basically as and when it happens. So for instance, if there's an annual contract, then for this quarter, we will only have in the accrued revenue, whatever in this -- whatever days in this quarter fall and the remaining will be part of the deferred revenue, right, and that is why you also see...

No, no, this I understand. I was just saying -- that I understand. I'm just saying there is a INR 25.1 crore number in the PPT, which is contracted revenue. What is that?

Prashant?

[indiscernible] I mean I'm not sure INR 25.1 crore only revenue speak we are speaking of around INR 21.4 crores, which is for the quarter, right, generally the contract price...

Let me just quickly tell you which page this is on. I'm just looking at the page just give me a second, because this is something that is there in most of your presentations. So if you look at Page 34.

Okay, the contract price, yes.

There is a contract price here. What is this and I'll come to INR 25.1 crore as well.

Yes. So Prashant, this is the contract price, which is...

This is the contract price.

Yes.

INR 68.6 crores. Yes. So this is the billing amount or the invoice amount, inclusive of any advanced billings of the pro forma bills that we have raised till the quarter end, right, the contract...

Which means that -- understood. So basically, this is the invoice amount. And what you recognize is the revenue for the quarter, the invoice value could be for the period after the quarter as well, right?

That's correct.

So that's the difference between contract revenue and your accrued revenue?

That's correct. So the contract price is basically the entire invoice value. So let's say, if we do an annual billing, the contract price will include all the subscription charges for the entire year, which is the invoice amount which will get recognized only on the basis of the time that has elapsed within the quarter.

So the reason why we were saying INR 25.1 crores in your previous presentation, your 6-month number for this is INR 43.5 crores and it's INR 68.6 crores now, right? So the difference is INR 25.1 crores, which is the contract revenue. This is the invoiced amount you're saying?

That's correct.

So we take up the next question from [ Aitareya ] from the Q&A tab. So could you please provide some color on trends in customers upgrading from Tracxn Lite?

Right, yes. Yes, thanks a lot for the question. So Tracxn Lite, just to add, we launched a year back and the main idea was that people should continue to get familiar with what is the data which is there on the platform. To give you context, historically, if you look at it across the last 10 years, about 4 lakh users may have signed up on the platform at various points in time. But currently, we did not have a way to continue to show them what is getting added. To give you an example, like the business development of the sales team would probably give them access to the platform about for like 3 to 4 days, but that's about it, right? And whenever now we used to show the platform to users, they would say, "Oh, I did not know that you have this data, you have this data, you have so many data about like companies in so many countries, et cetera, right? So that was very interesting for people to hear. And so that's why we realized that we should launch a platform so that it helps people to get -- to see the data, to get familiar with it, right? And it's a very sort of proven sort of product-led strategy to be able to sort of get a lot of people in the leads. So that was the endeavor -- that was the idea of launching Tracxn Lite, and it has been fairly successful, right? Like so just in the first 12 months, we added more than 1 lakh organic sign-ups. Also, they've been using the platform a lot, right? So monthly actives have been more than 23,000. And so what we currently capture is basically how this funnel has been growing, right? So if you look at it on a Q-on-Q basis, our whole -- the number of users that we've been able to sign up has doubled across the last year. So that has increased. The number of people hitting the credit. So we have sort of limited credits for a free user on Tracxn Lite, right? So number of users hitting the credit limit have more than tripled, right? And this actually flows in terms of the number of demos, which -- so the sales team gets demos from various channels. This has also become a fairly sizable channel, and we expect that this should sort of continue to increase. So I think we will have -- so currently, we capture how many users are signing up every month, how many users are actively using the platform, how many are hitting the credit limit, et cetera. We also capture, say, the number of demos, which is there, but there are a lot of other initiatives like the sales team would also be doing sort of outbound, et cetera, which is also touching these. So because we don't have sort of segregated, but the overall funnel of the leads, which has been passing, that looks very encouraging. And that is why this is probably only a year old, but we expect that this will also become like a very good acquisition channel for us.

So we take up next 2 questions from [ Prudhvi ]. So first one is, though the customer accounts increased, the revenue growth is pretty flat. Is there any decrease in the per customer revenue? If yes, what's the plans to increase the same? And second question is, going forward, it is being said that most of the SaaS platforms are going to be replaced by AI agents. How is the company plans to navigate that?

Yes. Thanks a lot for this question. So just to address that. So one is -- so just on the volume growth front. So I think we have sort of started seeing -- so overall, it looks -- it does not look that high. But if you look at in segment, the regions wherein we have seen volume growth, the value growth has actually followed. So to give an example, like in India, where the number of accounts grew from 20% to 55% growth rate in the first 9 months, the revenue accelerated to 16% in the first 9 months, and we expect to end the year between 16% to 20% growth rate, right? Overall, you're not able to see because of the pressure in international because the macros continue to be soft, right? But we expect that, that -- you should also start seeing acceleration in that in the next 1 or 2 quarters. Coming to the ASP part. So the ASP has decreased marginally, but it has still been range bound, right? So as I mentioned earlier, the ASP currently is slightly less than INR 5.5 lakhs. But if you look at across the last 4 years, it has been between INR 5 lakh to INR 7 lakh range, right? So yes, it is a little lower than what you would expect in a steady state. One of the reasons being the -- one of the reasons is that the pace of acquisition is fairly high, right? So like the customer base has increased by nearly 40% across the last 12 months. So that is why you see this ASP to be slightly lower than what you would have in a steady state, right? But it has still fairly been range bound only, right? Across the last 4 years, it has been between INR 5 lakhs to INR 7 lakhs.

So moving on to the next question from [ Kennelle ]. Can you please share the average number of employees for third quarter?

Yes. Thanks a lot for that question. So [ Kennelle ] just to answer that, we -- at the end of Q3, which is December last year, we ended the team at about 673 total headcount. And if I were to split that across the key departments, the tech and product where we saw some growth in terms of the headcount, they contributed to about 115 people. The analyst and data operation team was about 330 people. Sales and marketing and customer success was about 170 people. Business support was about 60 people, right? So that's about 673 to end the year.

So moving on to our next question from [ Prasad ]. Every quarter, promoter stake continuously going on. And second question is on company planning to use the reserve for any buyback of shares.

Yes. Sorry, the first question is in terms of the promoter stake. So the promoter stake has actually been increased in a sense that the number of shares, if you see, the promoters have been increasing. So promoters have been actually buying. The overall percentage might look lesser because some of the ESOP shares are getting vested and the number of overall share count has increased. But if you look at the average -- the absolute number of shares across the last 1 to 2 years, that has been increasing on a Q-on-Q basis. So that you can probably see from the data. So the next thing is on the buyback or the use of cash. So yes, we have -- we continue to add a lot of cash every quarter. Across the last 12 months, for instance, we added nearly 20 -- more than INR 20 crores of cash. There are 2 -- there are 3 basically broad options between buyback and dividend in addition to inorganic. So between buybacks, because of the change in tax treatment, now the buyback is sort of less feasible to be able to do. Dividend is something that we want to do. But because we have accumulated losses, until we eat away the accumulated losses, we may not be able to give the dividend. But we'll definitely explore one of these things to be able to give part of it back to the shareholders in addition to investing some of the other things in various initiatives that we are working on.

So next question we take from [ Prasad ] -- sorry, we took that. Next from [ Prudhvi ]. So going forward, it is being said that most of the SaaS platforms are going to be replaced by AI agents. How is the company plans to navigate that?

Right. No, no, that is -- so thanks so much, firstly, for the question. So that's actually correct in that sense. If you look at the moat of the software business, that is fairly -- that would probably be going down as development becomes much more easier. But we are more of a data play. So we are more of a data subscription. There, you have a lot of -- you have more moat than the SaaS companies because your secret sauce is actually behind. right? To give an example, in a SaaS software, if you are working for a -- if you have like an HRMS software, for instance, right? And if you want to replicate a software, essentially, if you take the screenshots and the workflow becomes your IP. If you take the screenshots of the different screens, that's the workflow IP, which is there of the software. But for a data business, actually, a lot of it is actually behind the scenes. To give you an example, if you go to a search engine, you type for a query, you'll get a set of results. Even if you copy the results, the actual secret sauce is behind, right? Similarly, for us, you'll see a transactions, which is updated every day, every hour in the platform. But how it is updated and how we are able to do that, that's like actually behind the scenes. So for us, AI is actually a great enabler to be able to sort of produce data at a very fast pace and produce global data, I would say, right? So for instance, we today capture filings in -- of private companies in very -- in non-English languages as well in a lot of countries. And we are able to extract it, standardize it, put it onto the platform for everyone to sort of understand, which is much more tougher to do in the private markets because the data is unstructured and the number of companies is multiple times than what it is there for public markets, right? And we are able to do that at a great pace. So probably today, in the private markets, we are able to generate data at probably one of the fastest pace, I would say, right? And so we've been using sort of AI to be able to do better -- like accelerate our data production engines to have better accuracy, to use our internal data to actually give us higher accuracy from the existing models, right, to be able to do that. And so for us, I think this is a great enabler. And one testimony to how we are able to leverage AI and automation is if you just look at last calendar year 2024, right, so the number of -- if you look at the pace of data addition, that has increased multiple times, right? So for instance, the number of companies have increased by more than 40%. The number of -- all the other data points like financial, et cetera, have increased by more than 5 to 6x. While at the same time, the headcount for the data production has actually shrunk by 10%, right? And this year, we are expecting that, that shrinkage will be higher than 10%, right? So that's a great testimony to the fact that we are able to sort of increase the pace of data addition while we are shrinking the data teams, right? And that has to also do with not just our implementation use of these things, but also has to do with the DNA of the company and our organization structure, right, which is also enabling us to leverage all the advancements which is happening in AI. To give you an example, if you look at all our senior management, right, the founders, the CXOs, all of them have actually a very strong technical background as well, right, typically from top IITs or from very good colleges who are having good technical background in addition to having their -- wearing their department hats, right? And the other thing about our organization and how we are able to leverage it much more effectively is also to do with our organization structure, like unlike in a lot of companies wherein the AI team is like an isolated department, in our organization structure, these teams actually report to the different views, right? So they report to actually the same manager. So this just effectively helps them to be much more agile in using these. So to give you an example, the team which is producing -- which is capturing transactions data globally from various sources, they are having a team which is using sort of GenAI today to be able to accelerate that, right? So for us, I think what GenAI means is that we are able to produce data at a much more faster pace, much more leaner way, and we are able to generate global data, right, sitting out of India at an India cost structure, we are able to generate global data, thanks to that. So for us, I think it's a great accelerator.

So moving on to our next question from [ Ashwini Kumar Singh ]. Can you provide some revenue and customer account growth guidance for FY '26?

Yes. So thanks [ Ashwini ] for the question. So in terms of going forward, we expect that -- at least this year, we expect that at least the India view would end up between 16% to 20% growth overall. And the international, that is probably going to be slow and -- but slow this year, this financial year. Going forward, next year, we expect that to accelerate. We have seen that in past, some of the countries wherein we have been working to sort of increase data coverage, reach out to customers, et cetera. There we have already seen some impact, like Germany has grown at more than 10% for us. So next year, I think we expect that it should go back to the sort of the higher growth trajectory than what we had probably a couple of years back. And the customer count will continue to increase. So that volume addition, we continue to see very high acceleration in terms of the volume addition, thanks to all the initiatives that we are doing. And like you will also see acceleration in the revenue next year.

So in the interest of time, I think we will have to close this call now. In case you have any further questions, you can reach out to the management at [email protected]. I will now pass it on to Abhishek and Neha to give their closing remarks.

Yes. Thanks a lot, Ambrish, and thanks, everyone, for joining us today. I hope you were able to get a good understanding, and we've been able to answer some of the queries that you had. If you have any follow-up questions, as Ambrish mentioned, please feel free to reach out to any of us at [email protected] or you can reach out to Prashant or Abhishek or write to us at [email protected]. And thanks again. Have a good rest of the day.

Thank you, everybody.

Thank you.

Thanks.