Latent View Analytics Ltd (LATENTVIEW) Q4 FY23 Earnings Concall Transcript

Latent View Analytics Ltd (NSE:LATENTVIEW) Q4 FY23 Earnings Concall dated May. 09, 2023.

Corporate Participants:

Asha Gupta — EY LLP Investor Relations

Rajan Sethuraman — Chief Executive Officer

Rajan Venkatesan — Chief Financial Officer

Analysts:

Mohit Jain — Anand Rathi — Analyst

Karan Uppal — Phillip Capital India — Analyst

Vimal Gohil — Alchemy Capital Management — Analyst

Ashish — ILAMC — Analyst

Harshil Shethia — AUM Fund Advisors — Analyst

Amit Kumar — Nuvama — Analyst

Sameer — ICICI Prudential AMC — Analyst

Prolin Nandu — Goldfish Capital — Analyst

Sagar Dhawan — Valuequest Investment Advisors — Analyst

Vivek — Consulting — Analyst

Sumit Poddar — Tikona Capital — Analyst

Richard Shah — an individual investor — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to the LatentView Analytics Limited Q4 FY 2023 Earnings Conference Call. [Operator Instructions]

I now hand the conference over to Ms. Asha Gupta from E&Y Investor Relations. Thank you, and over to you, ma’am.

Asha Gupta — EY LLP Investor Relations

Thank you, Faizan. Good evening to all participants in this hall. Welcome to the Q4 FY 2023 Earnings Call of LatentView Analytics Limited. The results and presentation have already been mailed to you, and you can also view them on the website at www.latentview.com. In case, anyone does not have the copy of press release or presentation or you are not in our mailing list, please do write to us and we will be happy to send you the same.

To take us through the results today and to answer your questions, we have the CEO of the company, Mr. Rajan Sethuraman, who we will be referring to as Rajan; and we also have CFO of the company Raja Venkatesan, whom we will be referring to as Raj to avoid the confusion while doing transcription. We will be starting the call with a brief update of the quarter, which will be given by Rajan, and then followed by the financials given by Raj.

As usual, I would like to remind you that anything that is said on this call that reflects any outlook for the future or which can be construed as forward-looking statement, must be viewed in conjunction with the risks and uncertainties that we face. This risk and uncertainties are included but not limited to what we have mentioned in the prospectus filed with SEBI and subsequent annual report that you can find it on our website.

Having said that, I will now hand over the floor to Rajan. Over to you, Rajan.

Rajan Sethuraman — Chief Executive Officer

Thanks, Asha. Thank you all for joining the earning conference call. I’m sure that all of you would have taken a look at the press release and the numbers by now. So we had a fairly strong year in terms of growth. We actually grew at about 32% in rupee terms. And from a year-on-year perspective, for the quarter, we had a 20% growth from the same quarter the previous year.

However, you will also note that this quarter has been a bit muted for us, and we actually ended at slightly less in comparison to the previous quarter I just want to call out some of the happenings at our end, so that you’re able to understand the context around these numbers. Traditionally, quarter four has always been a slower quarter for us in comparison to quarter three because quarter three is when typically most of our clients have year-end budgets that they want to exact.

And typically, we see a good uptick in quarter three. And quarter one is the start of their fresh fiscal year and engagements take some time to get going as they get into new initiatives. So this year, there’s been no exception on that front, and we have seen some amount of sluggishness on account of that. What we are also witnessing is that newer deals and initiatives are taking more time to come through.

And this is especially true for some of the larger initiatives that are there in the pipeline, and they are taking much longer than what we are used to in the past. And that has meant that some of the new projects that we have kicked off has started only towards the end of the quarter or they are still in the pipeline awaiting confirmation. What we also saw is that with some of the clients where we were executing fixed fee, fixed — onetime engagement.

Traditionally, we would have been able to find more follow-on work. But because of the general market uncertainty and the environment the number of follow-ons but that portion of work has been less than what we are used to. And that has also contributed right to the revenue profile that we have seen for quarter four. All of this has also meant some amount of margin implication for this quarter that has recently ended. I will have our CFO, to give you more details about the margins that we had for quarter four ahead and some of the other factors that have played out.

Having said this, I did want to also call out some of the highlights that we see from our end. This quarter saw us onboarding Chief Growth Officer for our U.S. business, Prashant Ramanujan. has come on board and he will be focused exclusively on building out the practice in the U.S., working with our Chief Client Officer, Krishnan Venkata. We also won the ET Human Capital Awards, the silver award for the rewards and recognition category, and this kind of puts us in a good position from a talent and a supply perspective.

We welcome a couple of new advisers to our advisory council John Copeland and TV Kumaresh joined us as part of our LatentView council. Both of them come with several years of experience hitting a panel big work for their respective organizations. And both of them are also tacked on the other table working with the [Indecipherable] such as McKinsey has been clients identify the right kind of pain points and opportunities that they can tackle through the part of data and analytics.

We continued our investments on several fronts, notable or the investments that we continue to make in the European market, we added several people to the front end, right, on the growth on the business development side in Europe. We also added people to not only the growth and sales team in the U.S., but also to the client servicing and an manage. And that’s one thing that we believe we need to continue to do.

So in spite of the slight sluggishness that we currently witness in the market, our take is that we need to do the right things in terms of the investments that we need to make at the front end and also in terms of capability development, value proposition, assets and accelerators — and we continue to be visible in the market through our own exclusive marketing events like our Round Table event that we conduct in the West Coast and the East Coast and also participation in other external industry events.

While at this point in time, there is still market uncertainty and slowness on account of that, the uncertainty will resolve itself in a few quarters, and we do want to be well positioned to capitalize on the demand upswing that will happen at this point in time. And therefore, right now, we are not taking the — the foot off the pedal, right, in terms of investment standpoint. In time as we look into the new year, — what gives us confidence is that all of the renewals have been completed.

And except for one client whose fiscal year to June, all the other renewals have come through. And when I look at the confirmed revenue plus high probability extensions that we have, that already exceeds the revenue that we have done in the last fiscal and — on top of that, there is a $50 million pipeline that we are working in terms of converting– of course, the speed at which we can convert and add in more opportunities into the pipeline, will determine what the revenue trajectory will be for the subsequent quarters.

And that revenue trajectory will, in turn, have a bearing on the markets as we play out over the quarters. However, as the management team, we are aligned with the philosophy that we should continue with the investments and that when growth returns, we will also see that the margin trajectory is back on what these are originally intending. So yeah, broadly, that’s the commentary that we had in terms of the business update.

I will now pass it on to Raj to give a little bit more color on the financials.

Rajan Venkatesan — Chief Financial Officer

Good evening, all. Thanks Rajan. I hope you guys are able to hear me clearly. As Rajan explained, on a full year basis, again, we reported a fairly strong set of numbers growing at 32% on a full year basis, clocking a revenue of INR538 crores for the current fiscal. For the current quarter, on a year-on-year basis, the growth that we were able to record was 20.1%. While on a sequential basis, there was some bit of sluggishness and our revenues shrunk by about 3% for the most recent quarter compared to the earlier quarter.

In dollar terms, again, there was a 3% degrowth. So both the rupee as well as dollar degrowth versus was along the same lines. Rajan also already spoke about why there was sluggishness in revenues. But the good news is that all the contracts and all the order book that we have for the last year has already been renewed, which puts us in a strong week for the coming fiscal. We have not seen any leakages over there. And, therefore, that gives us a lot of confidence getting into 2024.

In terms of — the other income for the quarter that stood at about $150 million, where there was a decrease of about 31.9% on a quarter-on-quarter basis. This decrease to really look at it is attributable to an SEIS income or a service export incentive scheme income of about $20 million that was recognized in Q3. It was not there in Q4, and the rest of the decline is actually attributable to ForEx — foreign exchange gain on an inter-company loan that we had booked in Q3, which was again not there in Q4. But for that, there was a marginal uptick in the interest income that we had booked for the current quarter.

The EBITDA for the current quarter stood at about 30.1%. And in margin terms, the margin that we reported was 21.4%, a decline of about 800 basis points on a quarter-on-quarter basis. You will find in our investor presentation, a margin bridge that explains the margin dropped from the 29% that we reported in Q3 to the 21.3% that we’ve reported in Q4. I will go through some of the key reasons as to why there was a contraction in the margin.

As Rajan mentioned, one of the big learnings that we’ve had coming on the back of the pandemic was that at that point in time, we did not invest sufficiently when there was an imminent slowdown or there were some macroeconomic uncertainty, given that we are well-capitalized and have a very healthy balance sheet with a decent operating cash flows, what we’ve decided during this downturn is despite any sluggishness that we witnessed, we will not take our foot off the pedal in terms of investments in front-end as well as capability building.

Therefore, you will see that even in the current quarter, we added close to about 12 people in sales and BD roles, half of which were in the US and the remaining happened in the European region, which continues to be a focus area. This led to an impact of about 2% on the margins. We continue to invest in marketing activities. We organized four events, which were our own events and participated in three industry month. This, again, this level of activity was significantly higher than what we did in Q3.

We believe these trends are essential for us to build good visibility and a healthy deal pipeline going into FY ’24, the impact of the increased marketing spend was about 2%. The remaining 2.3% was largely attributable to lower revenue in the quarter as we continue to carry the same level of headcount to deliver the revenue. So 2.3% was the impact on the margin on account of lower revenue from this quarter.

There was also a one-time cost attributable to ETOPs excise, where there was a fairly large ETOPs excise that happened in the U.S., where there are employer Medicare taxes that you need to pay because these get counted as purposes in the hands of the employee and therefore, there is a Medicare tax that the employer needs to pay. But on the flip side, what this also does is this helps us with our EPS, where we get a benefit at a PAT level and what we believe is for the U.S. region, we will not have to pay any taxes in the current fiscal, owing to this carryforward losses that we have on account of the ETOPs.

Now, reasons as to why there was margin contraction in the current fiscal. Having said that, one of the learnings that we had is not to take output of the pedal, so we will continue to invest for growth. We will continue to invest in the market as well as marketing activities as well as capability building. So we believe that the coming two quarters, there could be a little bit of muted along the lines of what we’ve reported in this current quarter.

However, as growth comes back and some of these investments start to pay off, we should start seeing operating leverage kick in. But at this point in time, we don’t want to slow down on the investments, and that’s going to be the focus or that’s going to be the mantra for this year. Our PAT for the current quarter stood at INR342 crores, reflecting a fall of about 3.9% from Q4 of FY ’22. On a full year basis, like I already mentioned, operating revenue stood at INR538 crores, a growth of 32%.

EBITDA on a full year basis, again, was at 26.9%, which is in line with what our historical guidance has been where we will drop EBITDA margins of between 25% to 28%. So on a full year basis we managed to stay within that PAT. In terms of the geographical split of revenues, U.S. continues to be the dominant geography, contributing almost 95% of our overall revenues.

Europe, while it currently stands at 2.5%, our endeavor is to substantially increase the share of European revenue, and we want to get this up to between 5% to 8% by the end of next fiscal and our investments that we made in the geography are in line with the growth trajectory that we expect. Our balance sheet cash flows and cash levels continue to be healthy, overall cash, including the IPO cash balance stood at INR1,078 crores.

Of course, there is a question or a very eminent question that will come up on the utilization of the cash and the M&A. I will cover this later on in detail. But in terms of the people side, the good news is that we’ve added a couple of people on the pain the corporate development team, specifically to focus on M&A. Even during the current quarter, there was a lot of focus on building the pipeline of opportunities.

One of the focus areas that we’ve already identified as data engineering, so we will continue to go after data engineering assets in a big way. At this point in time, there are close to about three opportunities in the pipeline, which are actionable in the next couple of quarters. We hope to convert at least one of them in the coming quarters. But there is a fairly healthy amount of activity that is happening on the M&A side.

In terms of headcount, we added about 19 people on a net basis in the current quarter, taking our overall head count to 1,116 in FY ’23. We will continue to invest in the front end as well as on the delivery side. In terms of outlook, we — like I mentioned, we will continue to invest in marketing and people, right? And that will be roughly along the same lines as what we’ve done in the current quarter.

With that, what I would like to do now is hand it back to Asha, and we can open the floor for Q&A.

Questions and Answers:

Operator

Sir, should we start the floor for Q&A? Sir, should we start the floor for questions-and-answer?

Rajan Sethuraman — Chief Executive Officer

Yes, please.

Operator

Yes. Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Mohit Jain from Anand Rathi. Please go ahead.1

Mohit Jain — Anand Rathi — Analyst

Yes. Sir, two questions. One, our margin outlook was very different in Jan and during the last quarter call. So I’m assuming some of it has happened in Feb and March. So what deteriorated so fast? That’s one. And second, for FY ’24. Now do we continue to stick to the same outlook for FY 2020? Or do you think that outlook given in Jan is no longer applicable for 2024?. So that’s one. And second, I could not find any operating metrics for Q4 in the presentation. If you could share some of the key numbers that will be great.

Rajan Sethuraman — Chief Executive Officer

Sorry, your first question, Mohit was around the EBITDA margin?

Mohit Jain — Anand Rathi — Analyst

The outlook that we gave in Jan Concur, 25% to 28% — and there, I don’t think there was much mention on this kind of slowdown, which you have experienced in Feb and March. So what can toward dramatically? And then do we stick to the outlook for FY ’21? Or do we think that guidance is no longer replicable?

Rajan Sethuraman — Chief Executive Officer

So Mohitt, when we connected in the month of January, the guidance was – we will be at the lower end of the 25% to 28% range. You would have would note that in the investor presentation, one of the aspects that we’ve attributed the margin decline to as softness in the revenue rate. There were — on the back of the work that we had done in Q3, there was an expectation that there will be follow-on additional work that we will land in Q4.

One of the things that we have, in fact, witnessed is that there is a little bit of pluggages [Phonetic] in decision-making, some of the follow-on work that we were anticipating that we will sign on and we will deliver in Q4, did not materialize, which resulted lower revenues by about INR four crores, right? So that — the margin impact from the lower revenue resulted in about 2.5% decline in EBITDA margins.

The other incremental aspect that we also had to sort of factor in Q4 was the one-time charge into ESOPs, so these two factors put together resulted in about a 3% drop in EBITDA margins compared to what was the guidance in January. If you actually add a Phase II, you will get to almost a 25% mark that we were indicating at that point in time.

Mohit Jain — Anand Rathi — Analyst

Okay. And for ’24, is that the range you would like to hold on or that range was for FY ’23?

Rajan Sethuraman — Chief Executive Officer

So at this point in time, we believe that for the next couple of quarters, at least, we will be in the same range that we have reported in the current quarter because most of the investments that we have made are already in there. We need to add maybe a couple of more people in the front end in the US. But from a front-end standpoint, most of the investments we believe are fully baked in.

We will continue to spend, though, on marketing and other initiatives. What we believe is at this point in time, the next couple of quarters, we will continue to be in the same range. But once the growth trajectory improves, the visibility improves, we believe, that we should start seeing some level of operating leverage, but that at this point in time for us to put a timeline to it, it will be a little difficult.

Mohit Jain — Anand Rathi — Analyst

And from a deal pipeline, PCB standpoint, you are still looking at flattish first half?

Rajan Sethuraman — Chief Executive Officer

Yeah. The first half, I think, we’re going to see some amount of sluggishness and uncertainty. I did mention that, we have done all the renewals and the high probability extension already adds up to more than the revenue that we did last year. And then we have another $50 million of opportunities in the pipeline right at various stages.

The pace at which we are able to keep adding to the pipeline and convert as well will determine how quickly the revenue trajectory improves right, from here on and that will, in-turn, have a bearing on the margins because, in some sense, these investments are all made and we want to continue leveraging those investments have to drive more action at the front-end. But conversion and the pace with revenue trajectory improves what will have bearing on the margin trajectory.

Mohit Jain — Anand Rathi — Analyst

And when do you recalibrate that two, meaning if revenue doesn’t turn up, at what point do you recalibrate the margin strategy?

Rajan Sethuraman — Chief Executive Officer

So the calibration and the recalibration is an ongoing asset. At any point in time as we evaluate further expenditure and investments we do. Critically examine whether this is something that we need to go ahead and do at this point in time or whether we should defer it as more certainty or clarity emerges. What — the call that we have taken so far is that many of the things that we intend to do — they were all the right things to do, right, whether it is the front-end bandwidth or the capability build out or the asset build out of the marketing. But we will continue to watch in terms of the impact these things have and how it plays out in terms of conversion from here. So it’s an ongoing aspect. I wouldn’t say that there is this particular timeline where we will sit up and then evaluate what do we do from an there.

Mohit Jain — Anand Rathi — Analyst

Okay. And last on Q4 operating metrics, like I think as a financial if can include it in the PPD that would be great as financial point of view. But where — for example, where was the utilization for this quarter? Is it like close to 80% or has it dropped? Like, if you could share some of the numbers that will be great.

Rajan Sethuraman — Chief Executive Officer

So fair enough, we’ve already included a bunch of metrics which is explains concentration, the employee mix, all of that that’s already been included as part of the investor presentation. If you look at slide 16.

Mohit Jain — Anand Rathi — Analyst

Yeah. I’m there. Couldn’t find utilization actually utilization in on-site offshore — those things are missing, I guess. And for 4Q top five is also not given for FY 2023.

Rajan Sethuraman — Chief Executive Officer

The revenue mix by client shared already…

Mohit Jain — Anand Rathi — Analyst

Yes, yes. As looking at utilization and all so some of those metrics, on-site offshore and utilization that is. Otherwise, I will take it offline.

Rajan Sethuraman — Chief Executive Officer

Yeah, we can probably take this offline more. But in the past also, did not. It’s not slightly a number that we publish. Our utilization for the current quarter continues to be at the same level as historically. Of course, there was a little bit of an element of on-site related buffer that we are carrying now in iteration of the work that we are intending to sign on. So there, maybe there was an impact of about 0.9% for the current fiscal because of the additional buffer that we are getting.

Operator

Thank you. [Operator Instructions]. We’ll take the next question from the line of Karan Uppal from Phillip Capital India. Please go ahead.

Karan Uppal — Phillip Capital India — Analyst

Yeah. Thanks for the opportunity. A couple of questions on the growth firstly. So Rajan, you had mentioned in the last call that there are two clients in your top 10 where you are expecting some bit of a ramp down. So has it completely played out? Or you are expecting further ramp downs in your top clients without two of the top 10?

Rajan Sethuraman — Chief Executive Officer

Yeah. I mean there isn’t any ramp down. I had mentioned in the last call as well that the sufficient making with respect to new initiatives is taking a little longer. With both these accounts, we have actually gone ahead and completed all of the extension at this point in time. So there is ease book of work under the managed services kind of model that we were executing. All of that has been renewed — and in fact, we have seen some incremental additions as well, but those are incremental additions and not the big initiatives that are still in the pipeline.

In fact, only last week, for example, there’s a fairly large opportunity, right, $1.5 million in terms of total size, that they are already — they were almost on the verge of taking a decision, but then they indicated that they need another four weeks before they conclude and move forward. So we are seeing a little bit of that uncertainty. There is no ramp down in any of our top accounts.

Karan Uppal — Phillip Capital India — Analyst

Okay. And apart from these two, are you seeing any pressure in other top line at this point of time?

Rajan Sethuraman — Chief Executive Officer

There is one other account, and I mentioned that this is a client where their Fiscal is from July to June. While the organization is doing extremely well, and they have been in the news for all the right reasons, they are also looking at general market uncertainty and then they are trying to look at how they can get some cost efficiencies going for them. So there is a bit of a consolidation exercise that we are doing, so they have turned around and asked us whether we can take on some additional book of work, although it will be at a lower charge-out rate.

So this is — this is a discussion that we’re currently having with them we are trying to work out a model that will make sense to them, largely looking at how you can tweak the on-site offshore mix for that product that there’s a larger quantum of work that can be executed, but there will be consolidating and moving some of the work that they are currently doing with another partner, right, to us as part of the consolidation away. We will know for certain how this plays out over the next couple of months.

Karan Uppal — Phillip Capital India — Analyst

And if I understand the overall forward-looking statements, I just want to summarize it. So you are saying that all the renewals have come through and you are also expecting some bit of extra revenue from the extensions, but the pipeline is still wait and watch. So in the base case, are you expecting a flat growth for FY 2024, is that how we should read?

Rajan Sethuraman — Chief Executive Officer

Regarding Pessimistic Scenario because we are —

Karan Uppal — Phillip Capital India — Analyst

Sorry, I miss your point. Sorry, I missed your voice was breaking.

Rajan Sethuraman — Chief Executive Officer

Sorry. Yeah, I was saying that to say that FY 2024 revenue will be flat in comparison to FY 2023. I think that will be a very business type of scenario. As I mentioned, there is about $50 million worth of opportunities in the pipeline, and they are at various stages of discussion. And some of them are advanced, meaning that we are currently escalating 75% or even 90% probability and we expect that these will conclude in the next one, two months, and therefore, we might start seeing some revenue uptick even in the first quarter of this fiscal itself.

Now what I don’t know for certain is how quickly this will transpire and whether all of them will move at the same pace. So — and I said earlier that this pipeline and how it materializes into incremental revenue will have to see how it pans out. That’s what I meant. We are reasonably confident that our conversion — and therefore, the revenue trajectory will in no way be worse off than what we might witness in the industry. If anything, we should be able to do better than rentals.

Karan Uppal — Phillip Capital India — Analyst

Okay. Thanks for that clarity. Last two questions from my side. If you can provide any color in terms of the verticals which we are working are working? And secondly, on the margins, you will have tax in Q1. So, are you expecting margins to further decline from here on?

Rajan Sethuraman — Chief Executive Officer

Yes. So in terms of the vertical split itself, if you take a look at our investor presentation, we’ve given you the split by vertical. So technology continues to be the strongest vertical for us on overall revenue. Industrial contributed about 1.5%. Consumer and retail is 10.2% and financial services was 8.5%. That’s the split by vertical. Your second question was in terms of margin sustainability, right? So, like I mentioned before, the theme for this year is, of course, the investment for growth rate.

So the couple of — the first couple of quarters, we will continue to step up on the investments in the front end, right, because we want to set up — set ourselves up well for growth, which is there in the market despite the macroeconomic situation right now, and also the fact that bulk of our revenue comes from the tech sector, which is also witnessing some bit of sluggishness in the US, our intent is we will not slow down on investments.

And therefore, our margins could be in the range that we’ve reported in this quarter for the next couple of quarters as well. But however, there is — the investments are with the hope that you will see revenue growth that will kick in from Q3 at least onwards. And therefore, at that point in time, we believe operating leverage should start playing out and we should start seeing margin uptick.

Operator

Thank you. Mr. Uppal, may we request to turn the question queue for follow-up questions. [Operator Instructions] The next question is from the line of Vimal Gohil from Alchemy Capital Management. Please go ahead.

Vimal Gohil — Alchemy Capital Management — Analyst

Yes. Thanks for the opportunity. Sir, the question, if I can follow-up on margins. It does seem that the price has actually come on the revenue side more so rather than costs. simply because I’m sure the costs were preplanned from your end, you’ve always maintained that you will not fall back on investments. And I don’t think the use of cost that came during the quarter actually were a bit of surprise. So, firstly, it does seem that the surprise actually came in from the revenue growth.

So, — the second point is given the discretionary nature of the work that we do for enterprises, what are the chances that the confirmed growth that we have with the projects that could see some sort of a further delay because of the environmental conditions that we are in and especially in the high-tech vertical, where all your peers have sounded out a bit of a caution make some comments on both these angles? Thanks..

Rajan Venkatesan — Chief Financial Officer

Yes. Sure, Raman. Raman, you’re right. Definitely, the revenue trajectory is where we saw a little bit of a surprise at arenas sell, while the investments in the expenditure went along planned lines. As I mentioned when I made my opening remarks, the surprises were in the form of, in some instances, follow-on work that was expected at the end of ongoing fixed core projects materialize and plans decided to defer or do that later, continuing longer lead time for closure on larger new initiatives, right?

So both these things have meant that the revenue trajectory has been flatter than what we expected even when we ended quarter three, for example. So that has actually played out in terms of how the margin has been impacted for quarter four. Coming to the second question related to the discretionary nature of spending and therefore, whether the clients continue to spend on data analytic, what gives us comfort is that, all the ongoing book of work has been extended and renewed.

And in many instances, I would say that almost 70% of the cases initiatives are directly impacting either the top line or bottom line on optimization. And this is something that clients recognize as well. And that is the reason all of those initiatives have been renewed. However, given the general sentiment in the market, as you pointed out, new initiatives they are proving harder.

Basically, what it means is that the rounds of inquiry and scrutiny in terms of whether a big initiative will actually give the intended P&L impact that is what is going through the — resulting in longer lead times like for those initiatives. So we are not going to be immune to just the general sentiment and the multiple rounds of critical evaluation and considerations that organizations will enforce on any new initiatives, and that’s what we are witnessing.

But having said that, none of those large ticket initiatives have been shelved, nobody has indicated that we are not going to be doing this and this has now gone out of the window. What they are generally telling us that we need more time, and there’s going to be more rooms of evaluation, which is why we pointed out earlier that some of that uncertainty, we will also know only in a quarter or two in terms of how business is done.

So while — as I mentioned in response to the earlier question, we are confident that several of them will come through in the next — even in the next one, two months, thereby providing an uptick even in terms of the quarter one revenue that we have. The full revenue trajectory and how the entire year will pan out will depend on the pace at which is answered results.

Operator

Thank you. We’ll take the next question from the line of Ashish [Indecipherable] from ILAMC [Phonetic]. Please go ahead.

Ashish — ILAMC — Analyst

Yes, thanks for the opportunity. So you did mention about any opportunities in the space, especially for your company, once to take a two-year view, how would you put in some total? How would you plan the inorganic growth opportunities put together? How you as a company are seeing your revenues flowing for the next two to three years? And the subsequent question would also be on what kind of EBITDA margins could one look at?

Rajan Sethuraman — Chief Executive Officer

So let me talk about the general — the revenue trajectory and then the split between organic and inorganic and then I’ll request Raj to comment on the EBITDA profile and the margins. We have indicated in the past that we are confident of industry leading growth, and we are maintaining the same guidance at this point in time. What I don’t know is what the industry growth rate is series obviously impacted by all of the uncertainty and everything that we have talked about.

But at this point in time, we continue to be confident, right, that we can beat the industry growth rate by 5%, anywhere from 5% to 10%. So that is something that we will continue to maintain. Assuming that some of the uncertainties resolved and the growth rates have come back to what they were before. We were expecting that our growth rates will be north of the 20%, 25% like at UC typically. And that what doesn’t mean that in a three-year time frame, we will get to a certain revenue number and you and you can do the math on that.

From our perspective, we believe that in a three-year time frame, about 15% to 20% of our revenue could potentially come from inorganic if we identify and integrate the right kind of opportunity. That is the kind of model that we are working with, that about 15% to 20% of revenue at the end of three years would have come on the back of acquisitions that we do over the next three years. So that’s the kind of broad range that we have in mind. Raj, do you want to comment on that.

Rajan Venkatesan — Chief Financial Officer

Yes. Just to add to what Rajan said, I mean, in line with our historical growth rates, the endeavor internally at least is to deliver industry-leading growth on an organic basis, right? And maybe roughly be between 2.5 times to three times our current sites in the next three years because you spoke about a three-year view, right? So that’s the aspirational goal to get to a good — roughly 2.5 times to three times our current size in the next three years.

Now close to about 15% to 20% of that growth itself that will we will need to deliver to get to that number, we’ll have to come through in again. So that’s the broad split. In terms of the EBITDA margin profile, while historically, we wanted to deliver 25-plus EBITDA margins right. What we also mentioned during the course of this call we will continue to be in investment mode for us to be able to deliver industry-leading growth, right?

And so that could play out over the next few quarters. However, the long-term intent is to get back to the 25% EBITDA margin profile in the next — maybe we will be an investment more in the current fiscal as well as the next fiscal, but if you take a three-year view, the view will be to get back to the 25% EBITDA margin profile in the next — by the end of two years.

Ashish — ILAMC — Analyst

Okay. And lastly, on the INR1,000 crores of cash that we had, so would it be one acquisition so probably you will consume other entire cash for multiple acquisitions?

Rajan Venkatesan — Chief Financial Officer

It could be one large acquisition or it could be to medium-sized acquisitions as well. The current pipeline of opportunities that we have, we have a fairly sizable opportunity that is there. And there are two missing opportunities. So we are going after all types of opportunities in the market, whatever some of them could be transformative. Some of them could be tactical in the short-term. So both options are open at this point in time.

Ashish — ILAMC — Analyst

Okay. Thanks and all the best.

Rajan Venkatesan — Chief Financial Officer

Thank you.

Operator

Thank you. Next question is from the line of Harshil Shethia from AUM Fund Advisors. Please go ahead.

Harshil Shethia — AUM Fund Advisors — Analyst

Hello.

Rajan Sethuraman — Chief Executive Officer

Yes, Harshil. We can hear you. Go ahead.

Harshil Shethia — AUM Fund Advisors — Analyst

Sir, do you see any of our work being cut down in the long run due to AI as an past time line analysts, is that means a or something?

Rajan Sethuraman — Chief Executive Officer

Yes. I mean this could actually be a fairly long philosophical conversation. But the short answer is no. You would probably have heard from other people talk about this. So I believe that people — what’s being done by people is not going to be replaced by the – what’s being done by Ai. What generated AI and other some new technologies is going to do is to elevate the entire level flagship right, and therefore, it will then offer tremendous opportunity for people who can combine the power of generative AI do more sophisticated deep size, right into all the kinds of problems and opportunities that we try to attract.

So people who don’t Gen AI and AI will be replaced by people who use Gen AI. But I think there is several layers of peeling the onion and complexity that is required before one can be bold enough venture all of data analytics can be replaced by generative AI. I don’t believe that that’s going to happen. Given that we deal with complex subjects like human behavior, I think we still have a very long way to go in terms of what can be done.

However, we are also exploring how generative AI can be used to find the product need the [Indecipherable]. Typically, when you do data analytics work, one kind of approach you can take is a hypothesis based approach where you have a setup hypotheses related to something is happening, not happening. Our hypothesis around how things will turn over and what should you do about it?

And then you can collect the necessary data and do the analytics to prove and disclose the hypothesis and then use that as the basis for decision making. The other approach is what is called as a database approach, where you act without any a prior hypothesis etc and can you actually analyze all of the data in a variety of different ways to then surface what should be the insight and what should be the decision making type that driven by that.

So we are trying to generative AI into the database kind of our process. So whether it is a connected value position or whether it is a subscription analytic value prop, we are looking at how can generative AI I used to identify those needles in the hay stack, which may not be apparent and therefore, may not lend distance to a hyperbuiness-based approach. So I think that is where a big chunk of transformational kind of work can happen.

Because I imagine if you are a supply chain planner or not a way to work on Monday morning, based on everything that is happening with the insight that tells you what are the top two things are breeding that we need to focus on good peak in order to really make a big difference. And that’s where something like generative AI can be put to use. But of course, there are several steps along the period in terms of how we can make use even with the familiarity that we are developing around GPT and large language not. I think there is some difference to go as we start integrating that.

Harshil Shethia — AUM Fund Advisors — Analyst

Okay. Thank you.

Operator

Thank you. The next question is from the line of Amit Kumar from Nuvama [Phonetic] Please go ahead.

Amit Kumar — Nuvama — Analyst

Hi, I would like to ask – so we have seen this trend that private companies in the analytic space like Tiger Prudential [Phonetic] are already following this high-growth model in the past few years. And I see with your commentary, you are also trying to reach — you are also trying to follow the high-growth approach. So I just want to ask — can this be a reason for more margin pressure because everyone is now focusing on high growth and lower profitability. We would love to get your comments on that.

Rajan Sethuraman — Chief Executive Officer

Yes. That’s a great question, Amit. And obviously, there is a spectrum. And on the spectrum, you will have very deal of approaches, right? For example, I mean, one could actually take a view that any kind of data analytics work, irrespective of – that the work on-site offshore, whether it is low and high-end, complex, simple whether it is done in a my service model or whether it’s done a tap out [Phonetic] all model right all of that of that is change and then you can push just having a single-minded focus on growth.

At the other end of the spectrum, you could say that I’m going to do only high end, AI and GEN AI and that kind of work with a very high charge-out rates and which means that you are addressing — the addressable market except a smaller. We want to take a balanced approach. I mean we have been a very profitable company right from our very early days, and we believe that it is important to focus on the right kind of work, not just in terms of the profitability and the margins but also in terms of employee experience and the motivation for people, right, to be a part of consulting automization like us.

So we are taking all of that into cognizance, in terms of evolving what should be our model for growth. And we realize that sometimes there are adjustment keys to our wit house and other kinds of work, sometimes we could take strategic decisions in terms of what could be an entry point into our action. We also see that the whole of data analytics space itself is evolving. I have said in the past that analytics is still a very swing initiative in many organizations.

And it could become mainstream and it is already starting to become main street rate and some of the main region. But that will also mean a kind of an evolutionary pact in that ecosystem in terms of who makes the decision, what kind of initiatives, how big those initiatives are, what is considered primary right, between data analytics and data engineering for example. So we are taking all of that into account in evolving our approach towards what we believe is profitable growth.

So yes, growth is important. And we also believe that you will have to see it well and set it a price, and therefore, you should be willing to make those adjustments as you move along. However, we are also very clear that we will be high profitable, high-growth company. And therefore, we will choose a channel of growth that makes sense to us. You might hear certain industry — there are mutations that are going much higher trajectory of growth, but you will also see that many of them are probably in single-digits or even negative, at 2.9 something EBITDA. We don’t want to go there. We are choosing our channel of revenue growth and profitability based on what we believe is appropriate for flotation.

Amit Kumar — Nuvama — Analyst

Understood. Just one more question from my — so like we see even after the overall IT tax spending growing at a lower base, like in this quarter, in analytics because we have seen Microsoft and Google and Facebook, all the foreign companies are investing a lot in the AI themselves. Do you see — do you foresee getting wallet share of their, because now they are themselves building AI and analytics capabilities themselves. And we, LatentView has a good share coming from such big tech companies. So how do you see it playing out? Do you think they will still outsource more? And any change in the business model from their end that you foresee right now?

Rajan Sethuraman — Chief Executive Officer

Yes, absolutely. And I don’t have any hesitation in sharing belief it’s going to happen. While generative AI and tax PPT and BPT for those technologies are what is being talked about today, if you go back 10 years in time, there has been an evolution of several such technologies that have happened, right? And I want to talk about visualization, I want to talk about deep learning, machine learning, I want to talk about other things like [Indecipherable] logic and other stuff like that have surfaced in the past.

The interesting thing is that some of the large things like the ones that you mentioned, who are also our accounts. They are focused on cutting at research and be technology, not from necessarily a perspective that they are looking at how they can run their business and operations using the tech country, but how they can take and monetize their technology for growing or growing the revenue rate that they get out of the economy.

So if OpenAI and related LLM and GPT core technologies are being built on Microsoft. It is back up with an idea of how can those be integrated into the products and services that Microsoft offers to their client and not necessarily just in terms of how will they increase the efficiency of running their own business. And that is what we have seen plan out over the last several years. So why these technologies have merged, for example, our BI and the entire power app is a big thing as far as microphones concern.

They have some of the technology they have invented. But when it comes to applying Power BI and power our technology for running Microsoft’s own business, they are very happy to partner with vendors like us who understand the technology and who can implement it for them and who can help them use their technology in running their business, and differentiating between the revenue generating aspects of what they sell into the market, which is our product and services, but how they use these technologies to run their own businesses, whether it is their collections, whether it’s supply chain, whether it’s demand forecasting, whether it is customer experience and so on.

So that is where partners like us can come in. And they do expect this asset that any new technology that they build that there will be a partner ecosystem that will come in and understand the technology, and which has helped them sell and integrate that new technology into the products and services for their clients, and which will also help them apply the very same technology like for running their own business. I believe that is new technologies that you see now and what will emerge in the foreseeable future will also evolve.

Operator

Thank you. We’ll take the next question from the line of Sameer [Phonetic] from ICICI Prudential AMC. Please go ahead.

Sameer — ICICI Prudential AMC — Analyst

Thanks for the opportunity. Just two questions. One is on high tech, which is one of the highest big effect in for us. What we get a sale from bigger IT companies is that the sector, which is rating higher puts in theirspend overall and I’m not sure on the data analytics, so if you can share some color on this segment? How do you see it performing for us? That is the first question. I have a second question as well.

Rajan Venkatesan — Chief Financial Officer

Sorry, Sameer, did I — question your — get your question, right. I mean, you’re asking how the hi-tech segment is…

Sameer — ICICI Prudential AMC — Analyst

Technology segment, as we call it. Yeah. How is it going to perform for us because that is where we have seen a drop in terms of revenue on a Q-on-Q basis?

Rajan Venkatesan — Chief Financial Officer

Right. No, no, that is absolutely sector that will continue to be a fairly high-growth sector and will continue to contribute a significant chunk of our revenues in our three-year trajectory as Raj gave an idea of what we are shooting for it from a three-year perspective. And we believe that in the time frame, the technology vertical will continue to be a very, very important and strong vertical for us. That’s where we have built our jobs in terms of data analytics capability expertise that we have.

And if anything, the conversations that we are currently having, very interesting conversations, very interesting opportunities and huge cables. And with the evolution of technology, there will be more opportunities for applying the very same technologies within the technology vertical itself for helping these companies run their businesses very well and helping them surface the right insights, right, that gets them closer to their own customer base and cost some vendor. I don’t have any kind of doubt in our mind that the technology vertical will continue to be a strong vertical for us.

Of course, technology, the entire sector being in the limelight and being a very visible sector, whether you talk about the US and Europe, obviously, you will see a bit of volatility and reactions to sentiment and what is being possible within the market. And, therefore, some of that will, obviously place, right, in terms of new initiatives and what we decide to, but if you take a medium-term perspective, like the three-year view that as Raj talked about, we have absolutely no doubt in our mind that the technology, whatever which will continue to remain very strong.

Sameer — ICICI Prudential AMC — Analyst

So should we understand this is one-off quarter where you are seeing for sluggishness, but — going forward, this is you should expect contraction?

Rajan Sethuraman — Chief Executive Officer

Absolutely, yes, some sluggish now. But as I said, technology also bounces back very fast, right? And that is what we are expecting in two, three years, the quarter time.

Sameer — ICICI Prudential AMC — Analyst

Second, on the margin, if you look at — so we have done some marketing events — this event would continue to recur, right? It’s not one-off. It will be there in the next year as well in the same time period. And also when we — so that is one thing. And second, — when we say our margins will be in the same range, as this — so our margin drop in the current quarter, as you said, is also because of the work or the lower revenues, operating deleverage, as I say, so since from next quarter and the next few quarters, we would again be in the growth journey.

Shouldn’t we expect margins to actually move because of the operating leverage — and why are we — I mean, our guidance is to remain in the similar range. So is there some upside on that front is what I wanted to understand? And how does the wage hike play a role in this whole margin directory for the next few quarters? Thanks.

Rajan Sethuraman — Chief Executive Officer

Yes. So a question on the marketing on the events and the marketing spend. Absolutely, you’re right. We have to continue to spend on the right kind of marketing events. And this is something that we have gone into a great deal of detail in terms of what — how have we spent our marketing dollars in the last year and the year before what worked well, what didn’t work well and so on. So we see, for example, that our own exclusive events, like the roundtables that we understand the West Coast and the East Coast and some of the lunch-and-learn and the CFO pans that we conduct, they give us a better return on investment in terms of the margin dollar spend.

We also see that there are very specific industry events that can get us access to the right kind of decision makers people right. And therefore, these are even both internal and external, that we will continue to invest in — in the coming quarters and the coming years as. So we are not going to be taking that put the red. The good thing is that now we have a lot more granular data as well.

One of the things that we do for our clients is marketing attribution in help with media and smarting, we help clients with attribution model, in terms of how do they spend their marketing does. We are turning the same lens on us. And we now have more robust systems and cases in place that helps us collect better data at a more granular level. And therefore, we are using the same principles in terms of how we drive our marketing.

But having said that, while we might dial up and down on several type of event even the quantum of investments that we will make in the marketing, we are fairly convinced that we need to do the right thing. We can already see the results and impact of all of that in the number of leads and opportunities that we have been able to generate — and one of the very important things is that adding people to the front end means that we also need to be able to have the capacity at the back end of marketing and demand generation perspective, but leads to that that they can take on unit. So that will continue to happen.

Now coming to your other question on operating leverage, and if the revenue trajectory picks up, whether the margin will pick up as well, yes, absolutely, doesn’t happen. Now the pace at which the revenue trajectory improves, we’ll have a bearing on how to see the margin can pick up at this point in time, when you have done the modeling, we are thinking that it is going to take two quarters maybe more Q1, Q2, maybe a little bit into the second half for some of the operating leverage and the revenue — the healthier revenue trajectory starting to help us with the margins.

Now, if things happen sooner than that, then we could see an up-tick in margin sooner. But otherwise, it could take that kind of timeframe. So that’s what we believe at this time. The one other aspect that I would like to add on the marketing expenses while we will continue, because of the current level of marketing expense going forward as well. From a seasonality standpoint, what we’ve seen work well for us is, Q4, which is the Jan to March quarter as well as the Q2, which is essentially July to September quarter. Those are the two quarters in which our marketing activities in terms of even speed, right?

And this is also on the activity in Q4 that we do in anticipation of generating in a fleet and building the pipeline for the following fiscals. And Q2, in general, is just before the Christmas season. There again, we believe that some of the events are — the level of participation and also the stakeholder engagement is significantly higher in Q2. So there is a little bit of a seasonality element as well in the marketing spend, which we’ve seen in historical periods.

Operator

Thank you. We’ll take the next question from the line of Prolin Nandu from Goldfish Capital. Please go ahead.

Prolin Nandu — Goldfish Capital — Analyst

Yeah. Couple of questions, that refer to just a clarity on your three-year pathway. So what you are saying is that in three years’ time, we will be 2.5 times our size by both organic as well as inorganic growth with a 25% kind of margin. Is that the right summarization of what we are targeting?

Rajan Sethuraman — Chief Executive Officer

Yes. That’s the kind of target that we are expecting 2.5 times to three time level.

Prolin Nandu — Goldfish Capital — Analyst

Okay. So sometime in FY 2026 would be a three-year period, right?

Rajan Sethuraman — Chief Executive Officer

Yeah. That is correct.

Prolin Nandu — Goldfish Capital — Analyst

Okay. Sure. And now just to understand your business a little bit better, from your reading of the environment and as well as our own capabilities and the difference that we make to clients, right, in sometimes — why not take a part for a couple of quarters and let the environment settle and then at the growth that again. I mean, just given that the environment is such that if everyone is taking a call — why not do that, right? I mean, this is just to understand your business a little bit better.

Rajan Sethuraman — Chief Executive Officer

Yeah. So this is a very dynamic space, Prolin. And something like a GPT, for example, right? You have seen the pace at which it has come in and how quickly it starts getting incorporated and accumulated. So if you were to ask me this question on capability and value prop and asset building, even taking your foot off the pedal for a quarter or two can actually mean a substantial delay, like and how quickly you respond and when the market comes back.

On the front-end and the business development capacity and the capability, we have seen the same thing. I mean, this was one thing that we did during the pandemic, for example, we actually did what you’re suggesting or what you’re asking for, right? We took the foot out of the panel and then we said that, cash is king and let’s wait for some time and then see what happens and all that. But then the speed which demand bounced back quickly in the anything was in demand, right, was something which is a bit of a revelation to us as well, right?

And then we realized that, we should have actually not done that at the funding side. This is also a time when using the unbilled bandwidth being actually doable a bunch of build-out and assets redevelopment. This is also a point in time, where it is easier for us to hire high-quality talent because of the sluggishness that supply is much better. And therefore, we want to make use of all of that opportunity to do the right thing and set ourselves up.

Prolin Nandu — Goldfish Capital — Analyst

Very clear. Yeah that’s what I mean, this is a very dynamic environment. But at the same time, you mentioned that one of your clients is probably looking at vendor consolidation and we might have to probably take up some additional revenue, which might have a — maybe not a very favorable offshore, onshore mix and margin might be dilutive. So is this a one-off? Or are we looking at this — I mean, don’t you think that more such clients will also look at such kind of arrangement. And then this whole dynamic nature of the business, how should one look at this both slightly conflicting kind of a thought process here?

Rajan Sethuraman — Chief Executive Officer

Yes. I think — I mean, how much this will play out, and we will need to understand. I mean, for example, none of us would have anticipated the extent to which remote work and hybrid models and offshoring even in the nature of work that we do, which is very high trade problem solving. The uptake of the remote model was a bit unprecedented. And we saw our own onsite offshore ratios go from 1:2.7 all the way to 1:5.5, six like more than a doubling of much.

Now how the current dynamics plays out on the back of any efficiency gains that organizations are looking at — and also in terms of some of the newer technologies becoming available, we will know as things pan off. What is certain though is that I mean when you have high quality, you have good models in place, where you are managed services, construct is good and we have the right kind of government and service delivery excellence.

We have always seen that things come back to not, right, in terms of how we can effectively make use of the offshoring model assets. So while in the short-term, we might see some of the stuff. What we’ve also seen is that when you partner clients at the right moment and help them out then when the demand comes back, they are also more amenable because we would have demonstrated the capability of the team and the kind of construct that we have in place. So at this point in time, I’m not too worried how things will play out.

We are not seeing too much of this. I mean — in fact, some of the clients and the other conversations, they are actually asking for the inverse. I don’t have people on site, let’s actually try and get this work done offshore because we want to experiment. We want to do a few things, but we are also sensing but there is a bit of uncertainty in environment. And therefore, the incremental stuff that they are doing, they’re asking us whether it can actually be done using a model like that we are familiar and comfortable with

Operator

Thank you. The next question is from the line of Sagar Dhawan from Valuequest Investment Advisors. Please go ahead.

Sagar Dhawan — Valuequest Investment Advisors — Analyst

Yes, hi. Thanks for taking my question. So my question is on the nature of work that you do. So basically, specifically on data engineering. So as the nature of work that you do evolve over time and as data engineering probably grow in terms of the overall sales mix, how do you think about the margin profile in light of the changing mix of water?

Rajan Sethuraman — Chief Executive Officer

Yes. That’s a great question, Sagar. So I would say that the evolution that we have seen, right, has been along the following lines. In our earlier days, we weren’t even looking at data and generic has a significant source of revenue. In fact, we presupposed that the data that sort of needed to do the analytics and problem solve was already available and organized in the right shape and form.

But as we started going after some of the more challenging problems, such we saw that the data was not either well organized or it was dispersed or sometimes you even have to make attempt to bring in unstructured data from outside the organization. So that is something that’s been evolving for a while now. What I see now is that as organizations take on the more larger complex initiatives in pretty much all of those instances, there is a fair component of data engineering work that needs to be done.

You can approach it either on a use case by use case staples and then couple it together what data is seen at the fall for the particular problem or you can take a more broader view saying that getting all this data organized and in shape and form is the cost of doing business. It’s like implementing an ERP, for example, right, and therefore, take a more holistic integrated approach where you set up the right kind of data platform, set up right kind of the data ecosystem in which case it can be a fairly large transformation and initiative.

So if it is just lift and shift or if it has a little bit of lift and ship with some use case base approach, then it’s a more simplistic kind of a setup and the data engine work could be front end, lower as well. However, if you’re taking a more holistic integrated approach and we are looking at it at the transformation kind of set up, then typically, you will see that you need to have the right kind of architecture, you’re not just moving data tables, like you’re also doing code bases, you’re moving stored procedures, we are looking at what data can be rationalized, what table can be dropped out.

How do you set up a transformational kind of databases and model right on top of it. Even if you look at organizations like Microsoft, for example, with their new approach on the Azure tech stack. That’s what they are talking about, right, that we can actually integrate a lot of these things in terms of the technology that we are building so that you can implement the right kind of data ecosystem. So I see that there is a spectrum of work there as well. Our focus has been more on the complex end of the spectrum. And that’s what we’re trying to do now.

And I believe that there is a good chunk of work that needs to be done. Raj mentioned earlier that we are in conversations with several data engineering potential acquisition opportunity. And in most instances, we see that they are actually doing fairly interesting work for which the charge-out rates and gross margins are very similar to the high-end analytics works that we are doing and those are the kind of opportunities that we are pursuing.

Sagar Dhawan — Valuequest Investment Advisors — Analyst

Got it, sir. Thank you very much.

Operator

Thank you. The next question is from the line of Vivek from Consulting.

Vivek — Consulting — Analyst

Yes. Thank you. In waiting for my turn, I’ve seen that two topics I wanted to discuss are being covered fairly well. But these are comments given the times that we are in is late in to you looking very seriously at the opportunity of broadening and expanding their pipeline, given the fact that both revenue and profits are likely to be weak, given the environment that we are in.

And can you just throw some light on the numbers in terms of how many new names are appearing in the pipeline and is there a very big focus on that? Because anywhere in the long haul in three years, you are expecting to become three times or two times, whatever it is, but at least the focus in these weak times should be on building our pipeline. So that’s the first one. And the second one is conversation opens around AIG GPP etc are good for even salespeople because almost everybody clients and vendors are speaking about the potential for disruption coming from there.

Rajan Sethuraman — Chief Executive Officer

Absolutely. And Vivek, you are right. In fact, the entire focus over the last year, and I would actually extend it a little beyond that as the last 18 months has been to build the pipeline, right, on a three pronged approach. The first very important aspect of that, we realize that we need a more powerful front-end engine, okay, sales and business development people in the market and this is not just a pure hunter profile, but also account managers, unbilled people that we are ready to dedicate for our larger accounts where we sense the bigger opportunity and people who are able to watch the carrier meet the people that generate opportunities.

So this is one where we have been investing. If I, in fact, look at the last two years kind of a trajectory, — we have gone from having about 12 people in the front end between US and Europe. So having about 38 people, right today. So we’ve made substantial investments, and that is going to help us, and it’s all hardeners pipeline that we have building.

The second has been the investments that we’ve been making into on the marketing front. So there, again, there’s a combination of money that we are spending on the demand generation team, the inside sales team, we’re talking about our internal and external events. The sharper focus in terms of content and marketing that we are doing now, where we are really talking about specific things like that will appeal — we have a white glow list, for example, which is the set of accounts that we really want to go after and the stakeholders who we believe are the people with the first string and for the budget holders and the decision makers.

So the money that we’ve been spending on marketing again is with that intent in mind. A couple of years back, when asked what is our marketing spend as a percentage of revenue was less than per percent, but today, we have ramped it up significantly, and we believe that, that is an important lever to pull happen. The third one is the entire focus on offerings and value propositions.

So rather than go to market with capabilities skins and competency, we’ve gone to market with very, very specific value propositions. So we have been, again, investing dollars, whether it is a subscription e-commerce offering, whether it is a power platform offerings that we have or whether it’s the connected view that I talked about, right, on the supply chain front, other – for risk and analytic value proposition of the revenue growth marketing, for example, that all of these are very focused targeted value proposition that we believe address very felt real challenges and opportunities that are there in the market today.

So the combination of all of these is really what is resulting in the pipeline that we are building. And we can see that that the pipeline is starting to get bigger, right, and we are able to chase those opportunity. Of course, the environment was different, we could already have started by sensing a lot of the impact of that as rate from a revenue standpoint. Of course, we are seeing that uncertainty in the market, but we are not taking the foot off pedal in terms of building on the pipeline as.

Vivek — Consulting — Analyst

Thank you.

Operator

Thank you. The next question is from the line of Sumit Poddar from Tikona Capital. Please go ahead.

Sumit Poddar — Tikona Capital — Analyst

Yeah. Hi. Thanks for the opportunity. And thanks for sharing the update as far as – AI as threat in the most asked question. So let me just kind of invert the question. How are you using AI as an opportunity? Because if we look at analytics per se, primarily the clients would be using analytics through some predictive analytics and AI itself is actually based on the fund of having models in place. So as and when AI graduates, possibly it will actually turn out to be into — more into predictive analytics. So just to kind of understand what’s your strategy to use it as an opportunity rather than a either accepting as a threat or kind of denying it as a threat? How are we using it as an opportunity?

Rajan Sethuraman — Chief Executive Officer

Absolutely. So I think, again, this is a great question. And as I mentioned earlier, every significant evolution, right, on the technology front, we have seen that create more opportunity than opportunities that tie to take away. We firmly believe in that as I mentioned earlier that — it’s not like humans will get replaced by AI. It will be like people who don’t use AI and the newer technologies they’ll get resized that people who use stores new technology.

In fact, with every evolution, we have seen that the complexity and the lasting increases multifold, and therefore, it actually opens up a plethora of opportunities, like, if you have learn the technology and if you know how to bring it to put it to good use, right, for following the problems, right, that is try for. From our perspective, AI has been an integral part of the work that we do for several years now.

Even within the descriptive and diagnostic analytics work, when you’re trying to understand why something happened or what went wrong, you can actually use a part of deep learning, neural network or mission learning and the AI model to go deep into that. And definitely, there’s a use on the predictive under prescript analytic when you’re trying to recommend what should you do or what is going to happen and what should we do about it? So this has been an integral part.

I think at this point in time, easily 20% of the work that we do will already be leveraged the power of artificial intelligence and machine learning, deep learning and image become all that kind of good stuff. In terms of using generative AI and power cut GPD4 and these new technology bring. We have currently — there is a lot of experimentation and understanding that is going on. Our people are already making use of these to actually cut down the efforts that they spend on new problems that come under.

What we are not doing is to take code stuff that is directly generated by – in generative AI and then incorporate in that into model because some of us also expressed reservations around directly, including court because there is still some concerned around confidentiality and data privacy and the potential for back doors and all that. But just in terms of getting a – get this done on how you can solve a particular problem, right?

And the depart approach that you can take, our people are already making use of it in terms of simplifying their day-to-day work and how quickly they can come to a solution, right, that can be implemented for the client. The other big thing that we are doing is that we are looking at how generative AI can be incorporated into all the value propositions that we are building. I talked about connected view, for example, right? And this is the aim that getting a fully integrated view of the entire supply chain.

And with every passing evolution of technology, while you have better and better and more comprehensive systems of record that collect a ton of data, the ability to make use of the data to take decisions that is still a bit of a holy grade, like the last solution scale. And that’s where a technology like GPD4 GEN AI can come to the fort. And I talked about the earlier example of the hypothesis on approach versus a data-driven approach.

And we believe that generative AI and related technologies can actually be a huge help in uncovering insights that nobody is looking for, that nobody knows are there within the data and that is where we are focusing our efforts. And with that, we believe that the ability to come to very high-quality optimization and efficient making in all of the work that we do will be significantly aided by the parts of generative AI technology. So that is what our focus is. And we believe that, therefore, those value propositions that get powered by these new technologies will stand out amongst all other solutions are there available in the market.

Of course, it doesn’t mean that all of that is already in place. We are working on it, and we are understanding that better. One example that I will give, right? In fact, we were discussing this in the Board meeting today, and I talked about this. I mean, all of you know about AlphaGo, right, which won against the top rate and the go player. And the very same technology and model was then adapted to playing chess.

And one very interesting thing it did was to actually learn checks by forming up multiple copies of itself and place millions of games with its very quickly launches over a 24-hour period, and it became super good at playing kit, right. Now GPT-4 kind of technology is how are we to do that because today you know that when you’re using GPT, you need to treat you need to interact for it to get high quality with. In fact, there are now designations like front engineers, right, that are cropping up where all you need to be really good at what front you send to GPT-4, but if you get good answers.

Now the interesting thing that one can try is can you have two different installations or versions of generate technologies interacting with one another, right, in order to purchase the more pertinent solutions and the question are. So we do some of the things that we are experimenting with, and we believe that these will power the value proposition for the future.

Operator

Thank you. We’ll take the next question from the line of Richard Shah, an individual investor. Please go ahead.

Richard Shah — an individual investor — Analyst

Am I audible?

Operator

Yes, sir.

Rajan Sethuraman — Chief Executive Officer

Yes, we can hear you, but it’s a little gobbled.

Operator

Mr. Shah, we are not able to hear, sir.

Richard Shah — an individual investor — Analyst

Hello. Is this better?

Operator

Yes, sir.

Richard Shah — an individual investor — Analyst

Okay. Sir, you mentioned acquisition in our growth plan. So just wanted to understand whether the acquisition

Operator

Sorry to interrupt you, Mr. Shah, the audio is breaking from your line. Please check.

Richard Shah — an individual investor — Analyst

Sorry, one second. Hello. Is this better?

Rajan Sethuraman — Chief Executive Officer

Yes. Go ahead. You were starting to ask a question about acquisitions.

Richard Shah — an individual investor — Analyst

Yes. Whether the acquisitions would be regarding specific capability building? Or what would be the plan towards acquisition?

Rajan Sethuraman — Chief Executive Officer

Yes. So we were looking at the alignment of our inorganic strategy with the organic. So in the past, I’ve talked about how verticals, BFSI and retail, right, are the areas of focus, how Europe is a focus from a geographic perspective and supply chain and data engineering, right, area of focus from horizontal capability standpoint.

We have now looked at a certain set of opportunities. We believe that right now, the play — a big play is going to be in the data engineering space. In fact, we were just debating this earlier today. And Raj mentioned that we have onboarded two people into our corporate development team. We’re going to be focused on the M&A and the inorganic side.

We are also kind of narrowed down our focus to data engineering fit as the most important area. So the intent is that that in the next few months, we will actually try and surface as many data engineering opportunities that are there. We also have a bit of a revenue threshold in mind now $70 million are above that, up to $30 million, for example.

And that is the focus that we’ll have. So the intent will be that we will look at all opportunities that are there in the data engineering space in that revenue range in the geographies in which we operate, because Europe and U.S. and maybe a bit of back office in India. And those are the opportunities that we will evaluate and try and not look.

Operator

Thank you. The next question is from the line of Amit Kumar from [Indecipherable]. Please go ahead.

Amit Kumar — Nuvama — Analyst

Hi again. I just wanted to pass on the guidance on addition of revenue from new clients for the year considering the macro environment? And also, if you can and tell how the on-site to off-site mix would change for you, like you mentioned in the call earlier that now you are looking to change the on-site to off-site, so just some guidance on both these numbers would be?

Rajan Sethuraman — Chief Executive Officer

Yes, we are expecting that a good chunk of the revenue growth will come from what we call as either new logos or new group. The way we currently track within the organization is that any stakeholder that they are already working with, we call them existing group. And that is the one where I said that we have already renewed and we have good visibility right into the extensions and that is already a little bit more than the revenue that we did last year.

The bulk of the growth that we are expecting on top of that will come from either completely new logos and new accounts or new groups, so at this point in time, I think there is easily more than — close to three dozen different clients and stakeholders that we are in conversations. But I don’t think all of them will come through because in general, our approach is to focus and build a substantial large relationships. But at this point in time, there are a good number of opportunities in the pipeline across those different conversations that we are having. And we are expecting that in most years, we have added about anywhere between a dozen to about 18-odd hopefully not the clients. And we are expecting that, that will be very similar for the upcoming year as well.

Operator

Thank you. The next question is from the line of Prolin Nandu from Goldfish Capital. Please go ahead.

Prolin Nandu — Goldfish Capital — Analyst

Yeah. Hi. Thank you. I think the question has been answered. But just on this M&A part, one of the objects of our issue was to do M&A, anything taking quite some long time now, so just wanted to understand why is it valuation? And now they are in our favor, and that’s the reason why we can expect something in the next couple of quarters? And should we look at the cash balance and the size of the deal or are we open to probably add some short-term debt as well if the opportunity is there to acquire something?

Rajan Sethuraman — Chief Executive Officer

The combination of reasons why the M&A has taken time, right? The first one that you did mention was for the most part of last year valuation expectations still continue to be fairly high, right? Given the backdrop that a lot of these companies were growing at a fairly fast pace. The value in expectations were very significantly high between the five to eight times sort of revenue multiples, even though a lot of them were upscale. So from an inorganic standpoint, like Rajan mentioned, we’ve been very, very selective in the sense that we wanted to look at target which are in alignment with our strategic wheelhouse as well.

So these would continue to be in the area of supply chain, having a significant presence in Europe, data engineering, again, is a big focus area right, as well as consumer and targets that are focused on consumer, retail and banking and financial services from a vertical standpoint. So that was our lookout. And what we felt was a lot of the companies that were there in the market had fairly steep valuation expectations. Given the current backdrop where there is a bit of a slowdown, there is a little bit of uncertainty.

We believe that some of the values and expectations have started tempering down. There are more opportunities that are coming towards that promoters are willing to engage given this backdrop, and we believe that this is probably a right and opportune time to pick up a few assets. In terms of the size of the assets while the INR1,000 crores that we have on our balance sheet, we will look to deploy a majority of it towards M&A or inorganic expansion.

What we will also do, given that we are a listed company, we will look to use a little bit of our stock as well if the opportunity presents itself, people look to utilize our stock as currency. What we are also not averse to is there is a very large ticket size transaction, something that could be transformative right, which even if that means that we have to go beyond the cash balance that is there in the balance sheet, we could look at options to raise capital as well. So we are not averse to either or any of these options, if the asset quality is good and the asset will really be transformative in some sense for us. Does that answer your question, Prolin?

Prolin Nandu — Goldfish Capital — Analyst

Yeah. That’s very clear. Thanks a lot. That’s it from my side. And all the best.

Operator

Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for closing comments.

Rajan Sethuraman — Chief Executive Officer

Yes. Thanks, Faizan. I just wanted to wrap-up by saying that, some of the points that we talked about earlier, right that we believe that the opportunity ahead of us is as mentioned. We do acknowledge the current environment and sentiment of uncertainty and sluggishness, but as I mentioned earlier, the fact that our book of work has been renewed. And today, our confirm higher extension is already more than the revenue that we have done last year gives us a lot of confidence and hope, plus the fact that all the investments that we have made have started panning out in terms of the additions that we are seeing to the pipeline, though the pipeline movement is slow today.

We believe that we are doing all the right things. At this point in time, there is no intent to take the foot off the pedal in terms of continuing to do the — make the right investments and capability on the front-end, our marketing, on assets and everything. We will, of course, be calibrated with expenditure and the investment that we make. And as the management team, the leadership gets together on these important decisions, and we take the account that we go long. We believe that this uncertainty will resolve in the next couple of quarters, and we will start seeing the revenue trajectory coming back very sharply right at the end of it.

What is also exciting is all the developments that are happening in the space in terms of the new technologies and how everybody is really excited about the possibilities that lay ahead of it. But of course, I believe that some of that will mean a little bit of disruption changes to the kind of pain points and approach is that organization state, but that is what creates opportunity for argumentations like us because we are at the front-end, we are understanding these cutting it and as we are. And we believe that we are positioning ourselves well right to capitalize on opportunity for them. So with that, I want to thank you all for joining us today for this earnings update. And we look forward to staying connected. Raja go ahead.

Rajan Venkatesan — Chief Financial Officer

And I think you pretty much summed it up Rajan. So that’s it from us. Thanks, Asha. Thank you, Asha. Thank you Faizan. Take care.

Operator

[Operator Closing Remarks]