Intellect Design Arena Ltd (INTELLECT) Q2 FY23 Earnings Concall Transcript

Intellect Design Arena Ltd (NSE:INTELLECT)Q2 FY23 Earnings Concall dated Oct. 28, 2022

Corporate Participants:

Praveen Malik — Vice President, Investor Relations

Venkat Saranu — Chief Financial Officer

Manish Maakan — Chief Executive Officer, Global Transaction Banking

Arun ain — Chairman and Managing Director

Rajesh Saxena — Chief Executive Officer, Retail and Central Banking

Banesh Prabhu — Chief Executive Officer, Intellect SEEC

Analysts:

Mukul Verma — — Analyst

Krishna Thakker — Anand Rathi — Analyst

Sugandhi Sood — — Analyst

Vivek Charoria — HNI — Analyst

Harshil Shethia — AUM Fund Advisors — Analyst

Ravi Mehta — Deep Financial — Analyst

Rahul Jain — Dolat Capital — Analyst

TVK Kumar — Best Paul — Analyst

Presentation:

Operator

Greetings and welcome everyone. Thank you for joining us today to discuss Intellect Design Arena Limited Financial Results for the Second Quarter of the fiscal year 2022-23 ending 30 September, 2022. The investor presentation and the press release has been sent to all of you and is also available on our website. Our leadership team is present on the call to discuss the result. We have with us today Mr. Arun Jain, Chairman and Managing Director; Mr. Prabal Basu Roy, Advisor to the Chairman and Director on the Corporate Board; Manish Makkan CEO iGTB; Mr. Rajesh Saxena, CEO iGCB; Mr. Banesh Prabhu, CEO of Intellect SEEC. We have Padmini Sharathkumar, she is a Chief Talent Officer; Mr. Venkat Saranu, CFO; Mr. Andrew England, Non-Executive Director. Besides some other senior members of the Intellect management team are also present on the call. Mr. Venkat T will present you the deck and then the comment will be made by Mr. Arun Jain.

One Safe Harbor: I would like to remind you that anything which we say which refers to our outlook for the future is a forward-looking statement.

With this, I handover the mic to Venkat. Venkat, over to you.

Venkat Saranu — Chief Financial Officer

Thank you, Praveen. Greetings. I will very briefly walk you through the investor deck. I guess the investor deck and the PR are already with all of you, it’s also on our website, it’s on the stock exchanges as well. As we’ve articulated in several of the earlier investor conferences and call, as a AP led product and platform organization. Our results are best viewed on an annualized basis. On that note we will start with reviewing performance for the last 12 months which ended on September 30th. For this period our revenues grew 27%, moving from INR1,640 crores last year to INR2,087 crores this year. So on an annualized basis run rate we crossed the INR2,000 crore mark when we closed this quarter.

Gross margins moved up by 23% against revenue growth of 27% largely kept up moving from INR931 crores to INR1,166 crores. The EBITDA margin moved up by 9% moving from INR417 crores to INR455 crores, while the profit-after-tax has remained flat, almost around INR314 crores to INR311 crores. The gross margins as the slide shows is fairly constant and the EBITDA percentage is 22% against 25% last year. Collections during the quarter have been healthy. So the last 12 months collection is around INR1,905 crores.

Going into the granular of the revenue in the past, in the technology day one and two sessions, which we’ve hosted in 2021, we spoke about our progression from a products organization to a platform organization and perhaps eventually to a marketplace. So the platform, so the most gratifying metric that we would like to share is the stupendous growth in platform revenue, platform revenues have grown 62%. They were from INR276 crores to INR448 crores in this fiscal.

License revenues have remained flat. AMC revenues, which are driven by progressive Go-Lives and installations coming onboard have grown by 11%. Licensing revenue is the other key metric that — and I feel that organization like Intellect like to benchmark itself, that is again grown healthily, north of 20%, grown by 22% from INR929 crores to INR1,132 crores. The other one is the annual recurring revenue metric, which we have been presenting in most of the recent investor meets, which is an assurance of future revenue streams. That’s, again, grown well by 35%, moving from INR587 crores to 794 crores.

Now in the full year, the last 12 months, we had 41 wins of which 14 wins were specifically in the last quarter. Specifically in the last quarter, our revenues were at INR528 crores, which represents a 17% year-on-year growth compared to the second quarter of last year. Gross margins against the 17% growth of revenue moved up by 5%, moving from INR262 crores to INR276 crores. And EBITDA there was a drop of 29%, dropping to INR84 crores from INR118 crores and PAT we closed at INR46 crores against INR79 crores last year.

The gross margin as a percentage of revenues is at 52% against 8% last year and EBITDA is at 16% versus 26%. As I mentioned, the collections have remain healthy, they are at INR472 crores in this quarter. The resultant day sales outstanding has been at 128 days, of which, the DSOs for India-based customers is at 164, while for the rest of the world it’s 150. Again, looking at the granular view of the revenues, the platform revenue growth continues to be robust. It grew 33% from INR90 crores to INR119 crores. Licensed revenues are at INR68 crores versus INR86 crores rows in the corresponding period last year.

AMCs, as I mentioned, for the last 12 months, it’s grown at 10% based on the Go-Lives, we had 14 Go-Lives digital transformations, which went successfully live the quarter. So the AMC moved from INR81 crores to INR90 crores. Licensing revenues grew by 7%, while the annual recurring revenue has grown rate 22%. As I mentioned a while back, we had 14 wins this quarter, of which nine platform based wins, which means more than half of the wins of this quarter are coming from the six platforms that we launched in the two. As I mentioned, there have also been 14 new digital transformations where our Mac compliant architecture, our accelerators, our own technologies such as iTurmeric and Canvas have helped us deliver at least 25% to 40% faster go-Live cycles.

The revenue mix — the next slide gives the revenue mix in terms of the currencies. As you all know, the rupee has significantly weaken, we have a significant Indian rupee earning, which impacts the conversion of that into dollars. Similarly, the weakening of the European-based currencies, such as euro and the pound, where we hold significant revenue streams also has impacted our dollar denominated revenues this quarter. Looking into the future, the pipeline growth has been continuously very strong. There’s a 36% increase in pipeline against the corresponding quarter last year, moving from INR4,800 crores to INR6,500 crores. In the recent quarters, more than the overall pipeline itself, which itself is growing, we continue to benchmark ourselves in terms of the Destiny deals, which are the key deals, as in the next slide, it’s above INR20 crorse of value, which we track, the entire leadership team focuses on them.

So that growth both in terms of the number of deals as well as the customers, the market logos that we get involved with, and as well as the average deal size. So, as you can see, compared to a year ago, the number of deals are grown up from 54 to 66, with more deals growing in the higher tier of deal size, which is over INR50 crores, INR30 crores to INR50 crores. Obviously, we not articulated in this slide, but in the subsequent commentaries, you would hear that some of these deals are pursued with Marquee logos and we are at advanced stage of evaluation or negotiation in several of these deals.

As I mentioned, there are 14 wins this particular quarter, of which nine were with Intellect platforms. As we have mentioned in the two technology sessions, about our architecture, the four core technologies of Intellect, the accelerators and the rich report that we have of 300 plus package business components or user journeys. The open architecture with 900 plus APAs, which allows us to practically work with any ecosystem, integrate with any other technology partner or customers, the banks would be using and the speed with which we’re able to complete this integration, which is traditionally a big pain point in our implementations. These demonstrated capabilities and the referenceabilities that they provide help us accelerate the deal wins.

Like I mentioned, nine of the wins are in platforms. One is a foresight, which is a major insurance client in the U.S. has chosen [Indecipherable] of underwriting, which a combination of magic segmentation, risk analyst and exponent. You would’ve heard the entire data, our senior colleague Deepak presenting about the entire data cycle in the technology daily sessions. So right from that stage of data uptake to data enrichment, to triangulation, to presenting decision grade information to the underwriter for faster and sharper quotes.

So the entire cycle, the entire value chain of underwriting, with an unparalleled accuracy is provided by this platform. We mentioned as a focus on upcoming promising geography in one of our earlier quotes, that is bolstered by one more win for the Cash Cloud. Cash Cloud was also a recently announced platform, where we also have had signed a partnership with Microsoft Azure. That we won the second dean in Saudi Arabia, we have a win in Egypt, for our lifestyle banking, where we had a award-winning a Lighthouse kind of an implementation in the Middle East. So that is drawing more traction as we move along.

ESG, ESG is obviously been the most trendy culture with a lot of investment bankers, a lot of financial institutions, investors, private investors, PE focusing on the quality of the ESG assessment of their target investments. To that end, one of the world’s largest sovereign wealth funds has chosen our IESD platform, which is again driven by data and AML technologies to implement this ESG assessment for all their investment evaluations. There are — we had also one more insurance company win in North America for our Magic Submission, which uses our Doc2API technology in conversion of structured and unstructured data into — which could be that is used by the personnel in the insurance organization.

I mentioned briefly about Saudi earlier, we have one more win in Saudi for a microservices organization for a tech management platform. This apart our products in the transaction banking and the consumer banking business continue to fire. So the core product-led deals wins. We had five such wins, one in among the top three U.K. banks where we already have a relationship that signed up for payments. Similarly, payments had its second biggest win with another Canadian bank, where we did have a very strong relationship that relationship has been further deepened by a win. UAE has always been one of our most successful markets. And we had one of the top three banks we won for a mobility upgrade. The consumer banking business also won a digital core deal in Africa.

Last year you would recollect that we had mentioned about three large central banking deal wins in and around Africa that winning streak is continuing with a digital core win during this quarter. And in India, we did mentioned two significant wealth platform deal wins last year and in the earlier quarters that referenceability has helped us with one more win in this current quarter. So these are some of the deal wins and I mentioned about the Go-Lives. So totally we’ve had about 14 digital transformations going live during this quarter. In the next couple of slides, we’ve given details of each of them.

And so that sort of summarizes very briefly in terms of the numbers, our performance during this quarter. More importantly, as we always measure ourselves as an IT-led organization, how we have performed over the last trailing 12 months, what is in store ahead, what has been the quality more importantly than the numbers that we’ve given to the topline, what has been the quality of some of those wins. Why are they promising and what message they can convey and what confidence they give us, and what has been our success story with some of the transformations and where do they put us in our growth path? So that is a very brief summary.

I would now hand over to our Chairman and Managing Director, Arun, to share his perspectives and give a larger view of the overall the market, the product technology scenario, and where we are in our journey at this point in time. Thanks.

Arun Jain — Chairman and Managing Director

Thank you, Venkat. Take the whole presentation deck at a very fast pace. So I’m sure the smart investor would’ve picked up all the numbers, which you’ve thrown in last 15. Looking at the numbers of the quarterly numbers, when you look at it, I feel that a lot of investor on the Street would be disappointed. I acknowledge that, that disappointment based on the numbers, which are there from the perspective of the quarterly results. But we consistently communicated that as a heavily focused license revenue company, which is adding portfolio of platform, it may result into few quarters where we will not be sure of the final number. And that was a kind of a perspective we always added to the communication with each investor conversation that we can only be design our business on analyze basis and on analyze basis, but Venkat put it 27% LTM growth, That’s the right metrics.

Now, this can get colored from the perspective of saying, this quarter is a trend which is coming from few quarters like this, or this can be construed as a trend whether we can trust a company for the future revenue or some analyst report on the Street, that could be coloring the perspective from investor perspectives. So let me just take you to the L1, next level detail of the results. The next level details of the result is — you switch off the presentation, no need of presentation. So, next level details says that we are shortfall by $6 million in a revenue numbers. So that’s an underlying equation of revenue and cost. If we would have a $6 million additional revenue, we would’ve been right number around INR570 crore and our cost EBITDA would’ve been INR125 crore plus would’ve been the number from the $6 million.

Now this $6 million consists of two elements. One element is when we moving from product to platform, there’s a like-to-like license revenue, so like-to-like license revenue, we won three platform deals as announced by Venkat. And these three platform deals resulted into like-to-like license revenue of $2.9 million is the number, which is coming like-to-like. So we major internally two year ARR of the platform as a like-to-like license deal to compare license deal versus platform deals. And this two-year ARR is what kind of amounts to $2.9 million and that’s how we calculate that.

Our internal business plans and revenue streams based on that two year ARR has a part of MIS. Unfortunately, on accounting principle, there’s a zero accounting or less than $100,000 accounting in the last quarter of out of $2.9 million in this for winning this deal. While the winning that deal contracting, everything has been done, which is a very, very celebrating movement, which we are celebrating. Banish and his team has done a wonderful job in getting this $2.9 million of a deal on this quarter.

Second thing is out of $6 million, $3.1 million is the two deal, which are closed but not contracted. And this $3.1 million is already in the bag, but not contracted. So it cannot be accounted in the quarterly results. So that’s a story of the numbers, from numbers perspective.

Now, if I look at it from a qualitative perspective, the teams which is working in Intellect, I think we are surprised, we ourselves got surprised more than what market is expecting or market is trusting Intellect as. What is the surprises coming? So we are calling this as a wide window moment for internally for this quarter. In last six months, our journey, which happened, it’s a wide window moment for us, which is making us move from 2.0 to 3.0. What we spoke about in technology day two is all coming true within a nine months of our technology day two. It’s very rarely happens when companies able to present something in December 9, 2021 and what market is looking for is what we presented that time.

So let me take you through each story of wide window moment, what we have. First area is we plan three units, one by one. We said DTB unit will go to the market first and take a product leadership where liquidity and DTB becomes our market leaders and take the market share. Then we said next two years, we’ll look at GCB will take the major winning spree. Last year you have seen the result, whatever the investment we made in GCB, core banking lending and winning the deal in central banking in quantum. All are driving towards the second wave. Third, wave was Intellect SEEC, which we’ve renamed it to IntellectAI. The IntellectAI was the unit where we looked at it as a Phase 3 of driving the revenue growth. And this year in last six months, the platform deals substantial growth is being visible in IntellectAI. We have merged wealth management unit also as a part of IntellectAI unit.

So that’s a combined unit is under leadership of Banish is delivering the results. So first wave was Manish, second wave was Rajesh, third wave is banish.

Now, when we look at it that our calibrated strategy is panning out in the same way as we projected in 2017. Again, that is a validation of our strategy that the company is performing as per the strategy, not by chance or not by the market tailwinds or market headwind. During this period, we had a Brexit, we have a Trum, we have everything happened during the period. But nothing has impacted the overall strategy and consistency of this strategy.

Now looking at what we are seeing in the marketplace today. When we are winning the large deal from a largest fund from Europe on AI for ESG, what it means for a company like us as a technology company. They are highly invested company where each company has invested more than $150 million to $250 million invested company in AI and data space. And against them, we are winning a deal on a complex topic like ESG, which is just an emerging topic and winning the deal against all American, against all European competition that signifies a wide window movement for us.

It has not resulted into single revenue for this quarter, zero revenue for this quarter, but it’s a lead indicator, which is like we crack the fabric data services AI algorithm of multi-cushion search, the movement of truth in the life when Google was there. So we look at it, when Google was doing a good search engine, they didn’t have any revenues, but they had a algorithm, which was great algorithm. And that’s a great algorithm, we call it the wide window movement. And that is not about ESG or Magic Invoice or Magic Submission, the three products we launch, but they are built on the same technology platform investments we made in last five years of our journey. And for each platform, the incremental investment is less than $3 million for a platform in last six months, this platform could able to compose. As soon as we see the opportunity of ESC within six months, we could able to pitch in for the largest fund house of Europe and win the deal against all the competition.

The second right movement is when we are looking for right window movement, is when we are getting a large core banking space. Now core banking space, we all know is the largest — biggest market space you must have read the market space size of $16 billion of a core banking space. This published by Temenos in their results at how big the market size. Till last years we were contender in that space. Now we are getting to the leadership quadrant of that space.

Now we are rubbing shoulder with Thought Machine, Temenos and Intellect are the three players which are rubbing shoulder on architecture, on APIs, on microservices, on cloud and on depth of the product functionality. We are competing with the largest player. Now, this space of $16 billion where the deal value multiplies, the size of the deal value in our pipeline are running into double-digit license numbers, double-digit million dollar license numbers and we are participating in those deals, which we never participate in our ten year journey. Those are our dream deals, or for dream deal for any company when you are rubbing shoulder with this player.

So we are in the backyard of the competition, where in Thought Machine, which is led ex. Google player in 2014, you must do a research on Thought Machine. The $550 million funding has happened on that particular company for building the core banking product. And still we are with head to head in four deals in Europe with Thought Machine and similarly on Temenos, beating Infosys, Flex, Oracle, TCS or Fiserv, the 10-player market. So that’s the second right window movement for Rajesh. Rajesh and his team is extremely, extremely busy in bringing the POCs and POVs and a lot of presale investments are going in almost more than eight deals in Europe we are participating over a period of time and that’s giving us a confidence of saying we can — on analyze basis, we can still do 20% of the growth numbers in rupee terms.

The third movement is our Pradeep creating a new opportunity window where we are seeing consumerization of corporate banking. We created a space called GTB in 2014 when we started the business, we created a space called global transition banking space and that space then we were able to displace multiple player from 2014 onwards. There was a player called Mices, there was a player called FunTech at that point of time.

Now this new space which we are creating called consumerization of corporate banking, just to understand from the perspective then, at least 15 startup in this space, which is called embedded finance. Maximum amount of money, which is coming in corporate banking spaces is in that space of embedded finance where corporate banking is embedded with a final account when the payment recon can happen. Like say Coca-Cola is a corporate account of HDFC Bank, then all the vendor suppliers of Coca-Cola will also be part of the virtual network of the bank. And how do they participate over there? That is a consumerization. Uber, when Uber is account and drivers of — Uber drivers are a part of the virtual accounts, that’s a embedded finance. And that is about consumerization because the drivers of Uber is consumers, while Uber is a corporate, and that’s the consumerization of corporate banking.

This is a new space which we launched in SIBOS, last two years we were working in this space. We signed up three customers in this space before, we are announcing consumerization of corporate banking, which is a third wide window movement, which we are experiencing. More than 25 leads got generated in SIBOS within a small event of three days. And we are changing the narrative, in this We are changing the narrative. And this is based behind one of the largest European deal from a UK bank where payment space, which is crowded by a lot of European players. Again, the payments — corporate banking payment space is one of the largest invested fund in all the startups and fintechs. We are able to win the deal for the largest — one of the largest UK bank on building the payment system for them.

So all this three lead indicator, one on consumerization of corporate banking. Second is Intellect digital core, which is built on completely microservices, API, cloud native headless architecture where more than 300 APIs are working on it, with more than 200 microservices, which we are combining core banking, lending and credit card. And third is entire data space. These are like three different large funded entities within one single ecosystem called Intellect Arena equivalent to almost three companies, each one has a potential to lead their own journey and fight the battles and they’re fighting, all the three are fighting because of the kind of a culture we created in the Intellect Design Arena where all the three companies can go together in this space.

All the deals — new deals sign up during this period are the indication 14 deals. So we are accelerating number of deals, incoming quarters. We are well-positioned to ensure that this license numbers can give us a good consistency going forward. And this is, I think, new for us. That one quarter will go bad. We were — I will not say we are sure of it, but any point of journey, we were expecting such movement where one quarter can go, $6 million can go in one quarter where one $2.9 million goes from a perspective of moving to platform and $3.1 million goes where the deal is closed, put boxed in, customer is convinced about it and everything is there and we’ll end up into not able to contract before 30th September because date auditors is 30th September to get a contracting done.

So that’s a story which I’m saying why we feel so excited as a management team over here. Now we are — window of opportunities, which has opened up with this wide window movement is phenomenally large. A lot of time we are spending in nowadays more than 10 to 12 hours a day of our R&D teams or our sales teams, pre-sales team building POCs. It’s a humongous amount of excitement in the — behind the scene. So if you look at behind the scene, if you get opportunity to see the BTS of Intellect, you will feel the pulse of what is happening at intellect.

And thank you for participating and attending in numbers for this call. So for us, it’s a journey which we are very excited about in spite of a slow down, or high inflation rates in the industry, how there is decision slowing down some impact is there. So we acknowledge that, that the slowdown impact because of high inflation in Europe and low growth indexes over there is creating our cost structures because of talent are going up more than what we anticipated or planned for. And tech structure, which is resulting into the — our lower PAT margins since tax rate is moving from 16% to 26%. So these are three factors we acknowledge, which are the market realities. But in spite of those three realities, we have three windows of opportunities, which are led by our wide window movement. Thank you. We can open it for-

Praveen Malik — Vice President, Investor Relations

Thank you. No, I think we can start the Q&A Arun.

Arun Jain — Chairman and Managing Director

Yeah, please.

Questions and Answers:

Praveen Malik — Vice President, Investor Relations

Now we are starting Q&A in case you want to ask a question please click on raise hand. I request you to click on please raise hand. First, we have Mr. Mukul Verma [Phonetic]. Please ask your question. Please unmute him.

Mukul Verma — — Analyst

Hello.

Arun Jain — Chairman and Managing Director

Hello, yeah.

Mukul Verma — — Analyst

Yeah, good evening, sir.

Arun Jain — Chairman and Managing Director

Yeah, Mukul.

Mukul Verma — — Analyst

Yeah. Sir, this presentation, when we give that pipeline, so we give a pipeline comparing it to year-on-year. Can we add — can we put quarter-on-quarter as well? So one more column so it gives us a clear perspective where we are moving quarter-on-quarter as well, although we are looking at the company from a yearly perspective only. But just to through a point like quarter-on-quarter how we are moving.

Arun Jain — Chairman and Managing Director

We can give, we can give.

Mukul Verma — — Analyst

That is one suggestion, so if we can do that. So we can know quarter on quarter, how many digital we have added just to give that perspective. And so, when you mention — so when you say that $6 million is something which could have come into the quarter two, but could not come due to non-contracting and the platform thing. So, we assume that this is a one-off quarter where profits have come on a lower end and on a yearly matrix we will grow at a 20% pace as we have been looking at what I wanted to know.

Arun Jain — Chairman and Managing Director

That’s right, exactly. This is a one-off quarter.

Mukul Verma — — Analyst

Okay. Great, sir. Wish you all the best. Thank you.

Arun Jain — Chairman and Managing Director

Thank you.

Praveen Malik — Vice President, Investor Relations

Thank you, Mukul. Next we have. Mr. Krishna Thakker. Mr. Krishna Thakker, I think he is from Anand Rathi.

Krishna Thakker — Anand Rathi — Analyst

Yes. Sir, I have two questions one of course is that $6 million follow-up. So as I understand $3 billion you guys will possibly report in third-quarter because it has already been signed. So we’ll get that extra revenue, but the balance $3 million is converted — or is spread over two years or three years. And then you will book only few thousand month or quarter. If that were to continue, do you think given our high license contributions, and I’m expecting as you migrate more towards platform, there will be more shifts coming ahead. So structurally your revenue growth for one or two years could be a little slower in this transition phase.

Arun Jain — Chairman and Managing Director

Yeah, that’s true. I think that’s exactly which will happen that whenever — but what we need to look at it, we need to publish a number for this kind of a deal. So that’s what we need to publish separate number that how many platform deals are getting signed and what is the kind of a ARR we are signing. So — but actual book number will be lower. So that’s what we are now thinking about it. As of now, we not made a decision how do we communicate this platform deals to the investor so that they make a right decision.

Krishna Thakker — Anand Rathi — Analyst

Okay. And so possibly 20% will not be the right number to look at from a growth perspective while you may do it this year, but from a longer time horizon maybe two year, three year, we should be more conservative than that.

Arun Jain — Chairman and Managing Director

Yeah. In dollar terms. Yeah, definitely.

Krishna Thakker — Anand Rathi — Analyst

And the second thing, sir, in terms of cost structures. Now, I’m assuming when we plug in your numbers, most of the costs are probably in line. It is only that revenue, which is flowing through to EBITDA and to pack.

Arun Jain — Chairman and Managing Director

That’s right.

Krishna Thakker — Anand Rathi — Analyst

Now, in terms of cost, have we built in all the costs or do you think this 3Q, 4Q because generally you plan ahead for the next year. So are there any incremental costs, which we should build in for the rest of the year? Or do you think costs will remain steady and therefore that additional 3 million will not come with additional cost in third quarter?

Arun Jain — Chairman and Managing Director

Costs are always built in on a actual basis. So cost we can accrue and forward the cost. Cost is all built into this, but the incremental cost of the salary increment, as you know, we do a quarterly salary increment, not annual salary increment. So those costs of the talent still will be there, but those numbers will not be significantly higher.

Krishna Thakker — Anand Rathi — Analyst

What I mean to ask is generally, like I’ve been following the company for a few years, so typically you build in the second half for potentially FY ’24, sometimes you hire more sales people sometimes, to that one time step up costs is that something we should expect in 3Q, 4Q, or do you think cost structure is currently perfectly sized?

Arun Jain — Chairman and Managing Director

Yeah, what I’m trying to say is the cost structures from this perspective as of now INR443 crore is a total cost structure, pre-EBITDA cost is INR443 crore. It may go by some 2 million, 3 million per quarter based on the new talent requirement and new platform for GTM. So those costs will be there, our POC cost. So these are the few cost numbers will go up, but they’re not in that significant number as what we had experienced, Q1 numbers, where travel costs and other costs, all of them went together. So now travel costs are now stabilized, infrastructure costs are stabilized. So it’s only that talent increase cost will be the hit on us.

Q3 we have a marketing cost also like SIBOS and other things will be there, few marketing costs, up to three will be there. But these are the — but those are natural cost, which is there in the business. So no extraordinary costs.

Krishna Thakker — Anand Rathi — Analyst

Okay. And last was therefore I mean, consecutively if my revenue growth is going to be 20%, earlier we used to have this outlook on margins of 23%, 24% wherever we end up. So should we assume that it is only a quarterly slippage and therefore 16%, 17% is not the recurring margin and next quarter we should be back to — from a fully perspective, when we project, we should look at 23%, 24% margin.

Arun Jain — Chairman and Managing Director

It’s difficult to give you exact number, but it’ll be 20% plus for the full year.

Krishna Thakker — Anand Rathi — Analyst

20% plus.

Arun Jain — Chairman and Managing Director

For the full year basis.

Krishna Thakker — Anand Rathi — Analyst

I think so your last 12-month average, including the bad quarter is 22%.

Arun Jain — Chairman and Managing Director

Yeah. Don’t commit to something here, we’ll try our best to have it.

Krishna Thakker — Anand Rathi — Analyst

16%, 17%, 20% should be the new base is what you’re saying, rather than going back to 24%.

Arun Jain — Chairman and Managing Director

Yeah, yeah. So, it can happen here, but we can’t commit right now. 20-20 is number, 20% to the fee growth and 20% margin growth.

Krishna Thakker — Anand Rathi — Analyst

Okay. Sir, thank you. And all the best.

Praveen Malik — Vice President, Investor Relations

Thanks, Mohit. Next, we have Sugandhi Sood [Phonetic] from [Indecipherable] ask a question.

Sugandhi Sood — — Analyst

Yes. Hello. Thank you for taking my question. I just had a similar question on the growth trajectory. And if you look at just the license AMC, SaaS revenue mix that there is a significant deceleration. Now I do understand, the extra color that you’ve given, but is there something structural that you are seeing in the market, maybe is on account of the pressures you are seeing in your — with your end customers or maybe just the natural trajectory that the business was to follow? Because there was this sudden surge in implementation revenue and that’s bound to decelerate. So could you give us some there?

Arun Jain — Chairman and Managing Director

Yeah, I think there are two things which I mentioned. One is license revenue of 3.1 if you look at it. So some acceleration will be less as for around typically $11 million, $12 million, $13 million is the license revenue we signs. License revenue growth in a — so you asked a structural question, structural question obviously is because of the high inflation, the market environment based on the structural delays happening on closing the deal. The last-minute closure cycle times are getting elongated. So that’s a structural issue we are facing and that’s a issue we are not in a different island than any other player in the marketplace. So we are past sitting in the same island of technology companies where some slowdown is happening on the technology investments as we move forward.

Second change is license AMC and implementation, those numbers quarter-on-quarter basis doesn’t mean much of it. Look at it from the annualized LTM basis, that will give us a good indication because AMC is growing 11%, which is — which we expected around 11% number. So that is a license number growth will be 10%, 11% as number, we expect our core value as a company, which we have changed our trajectory from Intellect 2.0 to 3.0 is our own platform. The platform is what is making a difference and the three wide window movements, which I mentioned are those three units in any business performing at the same time is very rarely I’ve seen in my life that three out of three units are performing, where we put a bet on. So that’s what I can respond to your question.

Sugandhi Sood — — Analyst

And in terms of implementation with iTurmeric, I understand that your implementation cycles have shrunk and is that — does that have a role to play because we’ve seen a very strong growth in implementation over the last 12 months or let’s say, five quarters. And is that something that one should factor in and that implementation again would have a linkage with the pace of new wins? So is that a correct interpretation? I mean in terms of your organic growth of revenues versus just the accrual of revenues over a shorter period, because of the faster implementation?

Arun Jain — Chairman and Managing Director

Yeah, I think very good point you picked up. First of all, I must congratulate you that you’re tracking the company so well that you are even looking at our implementation life cycle. So that become my competitive edge because my implementation cost for winning the deal will be lower because of iTurmeric I’m using for reducing the cycle time and this may result into the lowering of the implementation revenue. What we are trying to do now is that we want to participate in a more cross-selling proposition. So we identify 20 accounts where we are looking at to help them these accounts for digital transformation using our composable and contextual technology. And those revenue as of now get booked under implementation revenue.

We were looking at it whether we can create a line item called digital transformational line item. But yes, implementation revenue will come down because of cycle time is coming down. So if I have a deal of $1 million, which I’m $600,000 for license. So I’m — so customer has a finite budget of $1 million, now I’m able to do 65% to 70% on license and 30% to implementation. Well, earlier it used to be 50-50 or it used to be 45% for license, and 55% for the implementation. So very well picked up by you Sugandhi.

Sugandhi Sood — — Analyst

Sure, thank you for that color. And in terms of your deal, if I look at the data that you give around Destiny deals, I can see that across all ticket sizes, your funnel has seen very healthy attrition. But if I look at the pace of wins that has been more or less within the four to five for one quarter, excluding four to five range, and while the number pipeline continues to grow. So what is going behind? Are these deals taking more time to close? Are you work — is the size of deals or the nature of deals such. So could you just join the dots between the increasing number of deals in the funnel and the actual win rate? And considering that the commentary around competing with the top tier is very encouraging.

Arun Jain — Chairman and Managing Director

Yeah, I think, what happened now the decision cycle has got two angle to it. One is the environment issue, which delaying some of the decision. But second angle is with the cloud technology available, the way the client evaluate a vendor is changed substantially. Earlier, most of the deal we used to win based on the lot of presentations, lot of dance and drama on the board rooms, on the capability of the product. What is working in our favor is now on a cloud technology available customer is asking for proof of concept where they’re taking a real-time scenario and they want to run on a system. So they have a longer cycle time.

So when we first qualify under dance and drama session, so first of all, is a proposal session, then there’s a dance and drama session on the boardroom, on the technology and the domain. And now there’s an actual real play which happens — which takes another three to six months. And that’s where this deals are getting delayed. Rajesh can speak about it, how many — how much work he has to do for a single large deal. Rajesh you want to share something?

Rajesh Saxena — Chief Executive Officer, Retail and Central Banking

So I think from a deal perspective, if I can put a little bit of the GCB context to it. I think, Arun very rightly said that a couple of quarters and couple of years back, the deals that we were competing were relatively smaller and we were fighting with smaller players. Now, as you rightly pointed out, we have moved into the big boy category where now we are looking at some very, very large Destiny deals. And in these large Destiny deals which cuts across, maybe multiple countries, multiple product lines, etc., the process of winning this deal timeline that is required is much longer. And that is what is being reflected as you’ve seen in the data.

A number of opportunities are rising because we are now competing with, let’s say, from a core banking perspective Temenos or a Thought Machine. So the deal values are very high that we are chasing, but it is also taking us longer as compared to four or five quarters back when we were still competing with Finastras and Finacles etc. The game has changed a little bit for us, especially in markets like Europe.

Sugandhi Sood — — Analyst

Sure, that’s helpful. If I may just, one more question on the cost structure side. So you did mention, call out the ESOP number in your notes, but within the software development cost, is there — is that kind of the new base and we continue to grow? Are there any other one-offs? Are you including any employee costs for R&D? How do you allocate that between the R&D costs this software line item?

Arun Jain — Chairman and Managing Director

We are looking from last few years, our R&D budgets are $20 million, $20 million translates to INR120 crores, when it’s INR60. Now it’s around INR75, it translates into INR150 crores. So we are in that similar budget. So we capitalized, this quarter I think we capitalize around INR35 crore, so which is same number as close to $5 million, less than $5 million or $4.5 million we capitalized on the R&D cost. Rest of the cost, which is for technology upgrades we put into part of research and engineering group and which is we take the direct charge as and when it occurs. So this charge is around INR40 plus crore growth for this quarter. So that’s a total R&D spend, one of the lowest in the industry from that perspective.

Sugandhi Sood — — Analyst

Sure. Thank you, sir, for the answers.

Praveen Malik — Vice President, Investor Relations

Yeah, thanksm Sodi. Next we have Mr. Vivek Charoria. Vivek please ask your question.

Vivek Charoria — HNI — Analyst

Hi. So thank you for the opportunity. Sir on the cost structure, you mentioned that we should expect another $2 million to $3 million for the next two quarters. Will that be the new norm or should we expect say after Q4 for it to slow down a bit? And in terms of the headround, are we now at a 90 million run rate? I mean, now that we are moving some revenue from product to platform, I’m guessing that will take more time, but in terms of the headcount, do you think we are at the 90 million capacity?

Arun Jain — Chairman and Managing Director

Yeah, the headcount is almost there. We maybe still needing more headcount on sales and marketing side platform. We need to build up a capacity in the sales and marketing side. So that it’s not in headcount, but it’ll be in the qualitative, higher cost inputs will be there from the perspective of looking at it. $2 million to $3 million cost increase with a kind of talent, let’s see, how the market stabilize, then we can comment on it. But as of now, for next two quarters, this number is visible to us because of whatever the raise is, they get in first quarter and second quarter, third quarter and fourth quarter has to be in line with our raises are related to the first quarter and second quarter.

Vivek Charoria — HNI — Analyst

Sir and in terms of — so we were expecting previously to hit $100 million in the next 8, 10, 12 orders, do you want to now stretch that? And do we still hold onto the 30% margin target at $100 million or we need to scale that back by a few points?

Arun Jain — Chairman and Managing Director

Let me not comment on it as of now, because the market is too volatile right now and this fluctuations are too much right now. So this quarter will not be right time, maybe another three to six months, we can come back onto that number of two to three years. But $100 million — reaching $100 million in 8, 12 quarters, I think that is, we are quite confident about. On the margin side we just need to look at it the market volatility.

Vivek Charoria — HNI — Analyst

Sir, and you’ve mentioned that you’re still confident about hitting a 20% growth for this year, is that dependent on you on us signing a few big deals which are in the pipeline, as Rajesh had mentioned? Because if those don’t come through the numbers might drop down n significantly or are we reasonably confident that those will come through?

Arun Jain — Chairman and Managing Director

We’re not taking those into account in this 20% on rupee.

Vivek Charoria — HNI — Analyst

Okay. so so you’ve not taken those big deals, when we talk about a 20%. So previously we were talking about a 20% dollar growth run rate. I mean, has there be some change in the market or I mean because…

Arun Jain — Chairman and Managing Director

There’s some change in the market. I think we need to recognize that some slowdown is happening. So this slowdown has resulted into dollar number on — so we say, we always mention to you is that we had designed that business for 20%. Some last year we did 26% in dollar terms. But I constantly kept on saying a lot of time investor was saying why shouldn’t you grow more than that? We said 20% plus minus 5% is a kind of — it can happen because of the market scenario and that is what exactly which will happen in this year.

Vivek Charoria — HNI — Analyst

One more — sorry, go ahead.

Arun Jain — Chairman and Managing Director

So if win more deals, it can be much more closer to 20%, it may be closer to lower-end of the 15%.

Vivek Charoria — HNI — Analyst

Sir, just one more qualitative question. On the one hand we keep talking about the fact there’s a slowdown in the market and then we are pressing ahead with so much of investment. Don’t you think we might run into a wall where we’ve loaded up the cost structure, but the revenues aren’t coming? Or are you reasonable reasonably confident that with the headcount entries, I mean there’s enough business to be had? Because I mean I can’t square the two together where on one hand we’re talking about a macro slow down, on the other end we are increasing the pace of investments.

Arun Jain — Chairman and Managing Director

I think you should — I’ll give you the indication. There’s a company called Modern Treasury.

Vivek Charoria — HNI — Analyst

Yes. I mean, they signed up a deal with Goldman Sachs.

Arun Jain — Chairman and Managing Director

Okay. So there’s a company called Modern Treasury, they are getting a — Manish can share the color on it and there’s a company called Thought Machine. So if you just study these two companies that what are they seeing? The new investor which are coming at a valuation of Thought Machine at $2.7 billion for $50 million, $60 million revenue company, what are they seeing the market size in core banking space that what is the kind of inefficiencies are sitting on call with the core banking side in Europe and America, which is leading to that. Similarly, what are the opportunities in modern tragedies in there? Same space as consumerization. Manish, would you like to color on it?

Manish Maakan — Chief Executive Officer, Global Transaction Banking

Yeah, they’re also about $25 million, $27 million revenue and between $2 billion to $2.5 billion market cap. This is primarily because the TAM being very high and this is based on volume of transactions. The whole platform Banking-as-a-Service which we have launched. This is based on a transaction value, volume, multiple similar parameters. We are also competing in North America. The same market number of these individual fintechs are running. I think the difference between them and us would be they are borrowing someone else’s money and burning it out. We are organically funding and competing and winning against them.

Our base assets were strong that tuning it for the right market segment, we could do it at a much lower cost. Like Arun said, where we might look at is on a sales, marketing, some of the costs, but from a product readiness, the composable nature of our products is straight away. We are able to get in a segment where they’re more happening. And the TAM on — if you look and study the TAM embedded finance in general, both on consumer and corporate, the numbers are in trillion dollars. This is a new segment which is happening and this is where growth is happening very significantly.

Vivek Charoria — HNI — Analyst

Okay, sir. Thank you for that.

Praveen Malik — Vice President, Investor Relations

Thank you, Vivek. Next we have Mr. Harshil Shethia for AUM Advisors. Harshil, you there?

Harshil Shethia — AUM Fund Advisors — Analyst

Hi, sir. Sir, I want to ask, so our operating cash flow for the first six months is at INR45 crores, so — and it was INR94 crores for the same time last year. So what has happened in the first six months that our operating cash flows have reduced? I see that our DSO days has increased by 13 days in the first six months.

Arun Jain — Chairman and Managing Director

I think this operating cash flow coming down is basically on a bonus payout. So bonus payout is higher this year. So dividend is not a part of operating cash flow maybe. So operating cash flow is a bonus. Bonus payout for the last year we grew very well, close to 27%. We grew last year, so the bonus payout was higher than the previous year on that basis. Collection is same as INR460 crore last quarter and INR460 crore this quarter is in same line of business. And salary costs are higher in this year compared to the salary cost where they’re in the last year.

So yes, there is a marginal drop, but this is the two places salary cost increase and travel cost increase compared to the last year, where travel was not there last year same time. And the third is here.

Harshil Shethia — AUM Fund Advisors — Analyst

And sir, my question for the DSO days that it has increased so which was ex. India 95 days or two quarters back has gone to 115 days currently.

Arun Jain — Chairman and Managing Director

This fluctuates the quarter-to-quarter, I think this is — it’ll come back once we get a advance payment, we get some large deal payment, some closure of the project. So this is a — this 10 days here and there is fluctuating in a product business compared to the services business.

Harshil Shethia — AUM Fund Advisors — Analyst

Okay. So what would be a standard sustainable range of DSOs?

Arun Jain — Chairman and Managing Director

We try to look at it between one 115 to 125, which fluctuates on a overall basis. So it goes to 120 plus, it come down to 116. So if you look at it last 16 quarters, you’ll have this fluctuation in the same range.

Harshil Shethia — AUM Fund Advisors — Analyst

Okay, thank you.

Praveen Malik — Vice President, Investor Relations

Thanks, Harshil. Then next we have Mr. Ravi Mehta from…

Arun Jain — Chairman and Managing Director

I just want to clarify — Praveen, I want clarify some of the investor reports which is floating around unbilled revenue that unbuilt revenue is a fake revenue. I think some analyst has looked at it as if unbilled as a fake revenue and that is projected in an investor report. I want to — we got very hard with that kind of a non-knowledgeable people sitting in the analyst committee to say that unbilled revenues are not appropriate. Unbilled revenue is the nature of the business.

So if somebody has to write a report, he should talk to us that what is the nature of the business is there. Our nature of the business is that when we sign the contract, we have some commitment of business outcome based deal we sign. Based on that, we have a — when we completed the outcome, we bill the bill to the customer. But whatever the efforts we’ve put in during the building the solution for the customer, when customer is not achieving the milestone, it lies into unbilled revenue. Unbilled revenue is not a new phenomena, it’s always happen in many civil contracts when the building has to be constructed, there’s a huge amount of unbilled revenue will be sitting in books of the any working in progress business.

So, that is the one point since you mentioned about the DSO days, so I just want to cover up that point, because this was — I received some of the calls after the report got published that somebody’s looking unbilled, why won’t you give a clarification? I said I don’t need a clarification for anybody, when we are doing the right business in this area. Okay, next question.

Praveen Malik — Vice President, Investor Relations

Thanks, Arun. Next we have Mr. Ravi Mehta from Deep Financial. Ravi?

Ravi Mehta — Deep Financial — Analyst

Yeah, hi. Am I audible?

Praveen Malik — Vice President, Investor Relations

Yeah, Ravi, please go ahead.

Ravi Mehta — Deep Financial — Analyst

Yeah. Just two questions, one was on the pre-sale investment because looking at the larger views and also the POC inward in platform deals, what kinda pre-sale investments, if you can share some number vis-a-vis what we used to do? Because I think, the margins, what we see captures the pre-sale, which wasn’t that high earlier, so maybe some color around pre-sales investments.

Arun Jain — Chairman and Managing Director

So if you look at S&M investment, which is close to now INR150 crore for this quarter, so it’s around INR600 crore. So pre-sale is embedded into this particular cost of S&M and which is grown by INR7 crore from last quarter to this quarter. So that’s the kind of a pre-sale investment which is booked. So they are not capitalized on anything, they’re just expensed out.

Ravi Mehta — Deep Financial — Analyst

Sure. And also one more question was that in this quarter we signed nine platform deals out of the total 14, but the platform revenues, the subscription revenues are flat Q-on-Q. So just wanted to understand the cycle as to when you book a deal by when we see the revenue flowing into the subscription line item.

Arun Jain — Chairman and Managing Director

Typically it takes between three to six months to get flowing because when somebody start consuming the platform, the payments start from the day when he is consuming the platform. So the initial product business, which used to call in implementation, so we used to have two revenue streams earlier. We used to have a license booked on the day of looking at it. And if you have to make somebody live in six months time, then six months of the implementation cycle time. So in platform deal, we have reduced the cycle time of going live, in some situation two months, some situation three months, some situation four months. So depending upon various platform when it become live, the platform revenue get booked.

Ravi Mehta — Deep Financial — Analyst

And there won’t be any implementation component when the platform deal is going live maybe in two or three months.

Arun Jain — Chairman and Managing Director

In few cases it’s there, few cases is not there. So it’s not a — normally if it is a standard platform, no changes are there and just onboarding of the customers. So then there’s no implementation charge, but there could be set up charge for certain large customer, we may have a set charge for him when we are onboarding a customer and he has some specific requirement for building the — using the platforms. Like if largest financial services company of Switzerland, if they start using our platform, then obviously they take — we need to integrate their platform with their security structures, their cyber security issues, and we need to spend lot of time with it. That time customer pays us a setup fees.

Ravi Mehta — Deep Financial — Analyst

Sure. That helps. And just one small follow up to the clarification, you just to give prior to my question regarding those unbilled revenues and the DSO days, just wanted to check that the unbilled portion was increasing pretty sharply in last few years. So is that a function of the cloud business, the platform business? Is it a function of that?

Arun Jain — Chairman and Managing Director

Yeah, I think there are two line of functions of that. One function of this unbilled related to the contextual payments in it, where we sign a five year deal where we have to book the revenue based on the accounting principle on the date of booking the deal, and then the contacted payments are annual basis. So some of the deals in a cloud nature where we sold a license, we have accounted the deal on the date of booking the contract. That delays the — that increases the unbilled component.

Second is more and more customers are now looking for outcome-based deals, outcome-based deliveries. So major milestones payments are not equally proportion every three months. They are linked at the time of UAT sign off or when business is going live because of which the market situation is changing from that perspective. There are two factors which are resulting into higher unbilled revenue.

Ravi Mehta — Deep Financial — Analyst

Sure. That answers. Thanks, all the best.

Arun Jain — Chairman and Managing Director

Thank you.

Praveen Malik — Vice President, Investor Relations

Thanks, Ravi. We have next Mr. Rahul Jain from Dolat Capital. Rahul, you’re there, please ask your question.

Rahul Jain — Dolat Capital — Analyst

Hello, is my line fine?

Praveen Malik — Vice President, Investor Relations

Yeah, yeah, please go on.

Rahul Jain — Dolat Capital — Analyst

Yeah. Just two question. Firstly, on the business side, I mean, is there a way that we should now look next 12 to 18 month little different than how — what we were perceiving on the demand scenario? And what aspect of the business, in terms of the segments, multiple segment we operate should see a behavioral change in terms of the customer spend? Any color on those front. And a base case demand thought process if you could share, assuming that macro is uncertain, I can understand it’s very difficult to compute with a number for next year sitting today. But any base case number one can go for from a next 12 one perspective that would be an additional color. If you could give in any form that would be of help. Thank you.

Arun Jain — Chairman and Managing Director

Rahul, the three indicator when we say wide window movement for us. I’ll ask Banish to look at it, the opportunity that what he’s seeing in the data opportunity, data is such a big space emerging. So fortunately our technology day, Pathbreaking Day, December 9th, when we presented the technology day to all of you, I think you should go back to those presentation decks. We were expecting that to come true in next two years what we presented in technology day two in December. Within nine months, we are seeing that those are becoming reality. Those are from product to platform to market place that companies, which are struggling are those who stayed in their product business.

Since we took a journey almost 18 months back, we are able to see some windows of opportunities, but for many product companies will be in struggling phase right now. So Banesh can share the data opportunity, what we see. Because underlying platform of fabric data services and Doc2API ability to create new platforms, which can compete in a new emerging scenarios in next two to three years that capabilities are there. And Rajesh composability is there. So the product we are selling in a market is not the standard products with composable and contextual technology two frames, which you use, composable frame to create a new products and contextual frame for a data perspective, both the frames are panning out so beautifully for us. Over to Banesh.

Banesh Prabhu — Chief Executive Officer, Intellect SEEC

Yeah. Just to add to what I think, Arun was saying earlier, the data platform that I talked about at technology day, along with another colleague of mine, Deepak, I think the data platform is being a big differentiator for us in the U.S. where we’ve launched it from an insurance perspective. Now we’ve touched on the end-to-end life cycle of — just to take stock again. The insurance platform that we run for commercial lines insurance is fully on AWS on the cloud. It’s 100% subscription business. Now, within the subscription, customers are clearly paying a license component that is paid over a period of time and some of the subscription revenues are actually sticky for a lot longer period.

So what we’re actually seeing is a significant number of customers and we’ve had some very good traction in the last two quarters, both for the data platform that we use, which is using a product which we call Risk Analyst, along with our Magic Submission platform. This is where people submit, a lot of documents for commercial lines, different commercial lines insurance businesses. So Doc2API, which is the platform that actually is the core platform that extracts information from insurance companies documents. And these are pretty large set of documents, quite complex. This is not just extraction of data, but we have a lot of AI technologies that pull information.

So it’s actually achieving a operational efficiency for the client in such a way that it’s almost a low-touch operations model. So it’s quite efficient for a customer to take a submission from an email extracted and convert it to APIs, have data platform that we have, which is FDS, which enhances the data quality on the submissions, does some validations of the submissions, and passes it to the underwriter on the underwriter workbench, which is exponent to fulfill underwriting.

Rahul Jain — Dolat Capital — Analyst

Banesh, I think we are addressing more on the technology aspect of it. My question was more from the sense of that, I think our use cases are pretty much proven in terms of the kind of customer we have got onto those kind of product. Where my question is more — I mean, your insight would be more of help in terms of how we see some of these things become scalable? Because some of these product like Risk Analyst we’ve been hearing for more than five, six years now. So I know the market has evolved, your use cases has evolved from insurance offering to a much different set of offering. We do understand those things and I think you have, as an organization have delivered much faster growth than most of your peers in the space.

So I think those parts are well addressed in your bigger events and all. My simple question right now is that some of this right positioning of the product, be it on the cloud, be it on the otherwise on-premise model also, with these offering where we stand today in this current environment? Because this is probably as per various analyst thought process and all, probably the first down cycle in the potential down cycle of a banking sector that we may see ever since we came into public, right? So from that perspective, should we see anything to look into from next 12 to 18 months perspective versus whatever we have delivered on a last five years CAGR basis? Is that the number we can still stay as from our thought process perspective or should we see in a different light given the macros that we are facing right now?

Arun Jain — Chairman and Managing Director

So, Rahul, hold on for six months. I think this volatility is there today. So 30th September pound went down to 1.03, it came back to 1.16. So this volatility of 10% in the market we’ve never seen in the past. I think it’s really better to comment, we are able to see at least up to March right now on exact number what you’re judging. We see we are on a cutting edge and these technologies are required and we are seeing the momentum of the investment coming from the — in spite of the downturn of the startup investment. But in the spaces, what consumerization of corporate banking, the core banking investments are coming there. So it means the market are positive there, how exactly, how much percentage wait for six months? Maybe we can able to communicate to you during the annual cycle of the communication.

Rahul Jain — Dolat Capital — Analyst

Got it, sir. Thank you and best of luck for the time.

Praveen Malik — Vice President, Investor Relations

Thanks, Rahul. Arun over 6:15, can we take few more questions?

Arun Jain — Chairman and Managing Director

Just one more question, yeah.

Praveen Malik — Vice President, Investor Relations

Okay. Next we have TVK Kumar [Phonetic] from Best Paul [Phonetic]. Mr. Kumar? Hello, Mr. TVK Kumar, you’re there?

TVK Kumar — Best Paul — Analyst

Are you able to hear me, sir?

Praveen Malik — Vice President, Investor Relations

Yeah. Mr. Kumar, yes, please go ahead.

TVK Kumar — Best Paul — Analyst

So no, you told about this digital core banking that we are competing with Tamenas and Thought Machine. Have we won any deals or you’re very sure, what is the essence of what you are seeing in that? Are you sure that you will have a reasonable market share? Because you are saying this is a new thing that has opened up for us. So can you just throw more light on that? That was the thing.

Arun Jain — Chairman and Managing Director

Yeah, so I think, let me answer that for you. I think when we look at a large player looking, looking at a core banking transformation, and this could be a large player with multiple country business. They start with a long list, right? And that long list could be 10 to 12 of our peers store competitors who are in that long list. And as we go through the process, we go through various stages and what we are seeing, and that is what we summarized for you. We saying in a couple of — in four deals in Europe, we are right now in the last three stages. And what are we seeing there, right?

And what is very interesting for us is that we see Temenos there, we see Thought Machine and we see Intellect there. I think that’s where we are saying that we feel confident that large tier bank, and when you see large tier bank, if you understand their buying mechanisms, it goes through functional, it goes through technical, it goes through their architects, it goes through their cloud architect. So I think it’s a very thorough process and for us to make consistently from the long list to the short list and be in the last three for a couple of these very large deals gives us the confidence that our technology is the market leading technology.

And I think what we have said earlier, which is Mac, right? Microservices API and event, event cloud and headless is what is resonating very well for us in markets like Europe. That’s why we feel cautiously optimistic that in these deals we may not have won any deal because if we win any deal, this will have a significant impact on our revenues. But we feel reasonably confident that our product is well matched to our competitors or peers, these two competitors that I talked about in this market.

TVK Kumar — Best Paul — Analyst

So when we will know whether we have?

Arun Jain — Chairman and Managing Director

So we’re all waiting for it, yeah.

Praveen Malik — Vice President, Investor Relations

I wish we had that crystal ball.

TVK Kumar — Best Paul — Analyst

Okay. Yeah, that was my question. Do you have the crystal? Okay. Thank you. All the best.

Arun Jain — Chairman and Managing Director

Thank you, Mr. Kumar.

Praveen Malik — Vice President, Investor Relations

So thank you everybody for participating in today’s call. There might be few questions, which because of the positive of the time we were not able to take it. Please do right to us with your questions and we’ll answer you and mail you back. Thank you so much. Now we can disconnect.