Nucleus Software Exports Limited (NUCLEUS) Q3 FY23 Earnings Concall Transcript

Nucleus Software Exports Limited (NSE:NUCLEUS) Q3 FY23 Earnings Concall dated Feb. 15, 2023.

Corporate Participants:

Swati Ahuja — Manager

Vishnu R. Dusad — Managing Director

Parag Bhise — Chief Executive Director & Executive Director

Tapan Jayaswal — Financial Controller

Anurag Mantri — Executive Director and P&L Head-Services

Brajesh Khandelwal — P&L Head, FinnOne NEO

Poonam Bhasin — Company Secretary

Analyst:

Rahul Jain — Dolat Capital Market Private Limited — Analyst

Jatin K — Alpha Capital — Analyst

Chirag Kacharia — Ashika Institutional Equities — Analyst

Arun Malhotra — CapGrow Capital Advisors LLP — Analyst

Imran Contractor — Quantum Investments — Analyst

Vaibhav Badjatya — Honesty and Integrity Investments — Analyst

Samarth Singh — TPF Capital — Analyst

Presentation:

Operator

Good day. Ladies and gentlemen, I am Felicia, the moderator of this call. Thank you for standing-by and welcome to Nucleus Software Quarterly Earnings Conference Call. [Operator Instructions]. We will have a question-and-answer session after the this presentation.

I would now like to hand over the conference to Swati Ahuja. Over to you, Swati.

Swati Ahuja — Manager

Thanks, Felicia. Good afternoon, everybody. This is Swati from Investor Relations team at Nucleus Software. A very warm welcome to all of you for this Nucleus Software earnings conference call for the quarter and nine months ended on December 31st, 2022.

For discussion, we have here from the management team, Mr. Vishnu R. Dusad, our Managing Director; Mr. Parag Bhise, CEO and Executive Director; Mr. Anurag Mantri, CFO and Executive Director; Dr. Ritika Dusad, Executive Director and Chief Innovative Officer; Mr. Brajesh Khandelwal, Vice President, NEO business; Mr. Ashwani Arora, Senior Vice-President, Global Customer Success Team; Mr. Tapan Jayaswal, Financial Controller.

As you all are aware, Nucleus Software does not provide any specific revenue earnings guidance. Anything which is said during this call, which maybe reflect our outlook for the future of which maybe construed as a forward-looking statements must be reviewed in conjunction with the risks that the company faces. An audio and transcript of this call would be shortly available on the Investors section of our website, www.nucleussoftware.com. With this, we are now ready to begin with the opening comments on the performance of the Company and post that, we would be available for the Q&A session.

With this, I now pass over to Vishnu sir. Over to you, sir.

Vishnu R. Dusad — Managing Director

Thank you, Swati, and a warm welcome to all of you for this investor conference call. As we are celebrating three decades of creation of intellectual property on Indian soil this year, allow me to indulge in giving you a perspective on the subject.

Three decades back, the banking and financial services industry in India started making bold moves adopting a completely new business model. This was the business model of retail lending, that would give boost to the lifestyle of middle-class of the nation and also make BFSI sector itself robust. Along with these bold moves, BFSI sector made another bold move, that of adopting home-grown information technology solutions. It was these pioneering moves by BFSI sector that we are praising.

Thanks to BFSI’s pioneering bold — sector’s pioneering bold steps, the sector as a whole has grown to the level that today nearly half of the industry’s loans are retail, as compared to less than 5% three decades back. Thanks to their confidence in homegrown intellectual property and in the company that created that intellectual property, the retail assets originated and-or serviced and-or collected using our platform in the range of INR40 lakh crores, or equivalent of USD0.5 trillion in India alone. The amount of payments and collections nearby our transaction banking products are worth USD15 trillion per annum on our transaction banking platform. Over 200 reputed institutions in 50 countries are using this intellectual property created on Indian soil within their businesses.

We would like to convey our gratitude and thank all of you, investors, from the bottom of our hearts for taking all the risks with us. We have been trying to understand and visualize our customers’ needs and come up with solutions that will fulfill those needs and in-turn, benefit our customers, our industries as well. We would like to assure you that you will continue to find us far ahead when it comes to fulfilling our customers’ needs and expectations. Thank you so very much once again for being with us on celebration of this major milestone in our journey and looking-forward to continuing to play a role in building the economy together. Thank you.

Parag Bhise — Chief Executive Director & Executive Director

Thank you so much Vishnu sir. This is Parag here. Good afternoon, everyone. I welcome you all to this investor call.

As we passed this quarter, it has gone more or less as per our expectation, both, in terms of financials, as. In terms of attrition, the key areas that we have been talking about. As we have been adding a few more AMCs, contract revisions were closed in this quarter and that is reflecting in our financials. This has been possible due to the focus an untiring efforts of our leaders and the respective teams we have put in and I wish to thank them for that.

I do wish to sound out here that there is a one-time retrospective effect in these revenue figures, due to the reason I mentioned. The attrition, as expected has significantly come down and we do expect that it more, that is stays that way. Another quick update I wish to place is that, we did complete five of our FinnOne NEO implementations in this quarter. We continue our focus on transforming our FinnOne and Cash@Will customers. As you know, FinnOne and Cash@Will are our legacy product platforms to our next-gen technology platforms, FinnOne NEO and FinnAxia, respectively. At the same time, and as we have mentioned in the past, we continue to enhance our project management capability by providing sharp focus trainings for project and program managers, so that they are prepared to take on these transformations much faster.

Thank you very much once again, and over to you, Swati.

Swati Ahuja — Manager

Thank you, sir. Tapan Sir, now, I would request you to put some light on the financial numbers. Over to you, sir.

Tapan Jayaswal — Financial Controller

Thanks, Swati. Good afternoon, everyone. Key highlights from financials are as for revenues…

Swati Ahuja — Manager

Sir, I’m sorry to interrupt you.

Tapan Jayaswal — Financial Controller

Hello?

Swati Ahuja — Manager

Sir, your voice is not clear, sir.

Tapan Jayaswal — Financial Controller

Okay. Is it better now?

Parag Bhise — Chief Executive Director & Executive Director

It is better.

Swati Ahuja — Manager

Yes, sir. Continue. Please go ahead, sir.

Tapan Jayaswal — Financial Controller

As for revenue — yeah. As for revenue, our consolidated revenue for the quarter is at INR169.3 crores, against INR130.1 crore quarter-on-quarter and INR121.6 crores year-on year. Overall revenue in foreign currency, including India rupee revenue is USD21 million for the quarter against USD16.6 million quarter-on-quarter and USD16.3 million year-on year. Product revenue for the quarter is at INR143 crores against INR106.2 crores quarter-on-quarter and INR99 crores year-on year. Revenue from Projects and Services for the quarter is at INR26.3 crores against INR23.9 crores quarter-on-quarter and INR22.6 crores year-on year.

Moving on to the expenses part, Cost of Delivery, including cost of product development for the quarter is at 59.9% of revenue against 76.5% of revenue quarter-on-quarter and 79.5% of revenue year-on year. In absolute terms, this is INR101.4 crores against INR99.5 crores quarter-on-quarter and INR96.7 crore year-on year. As for Marketing and Sales expenses for the quarter is 4.2% of revenue against 4.3% of revenue quarter-on-quarter and 3.8% year-on year. In absolute terms, this is INR7 crores against INR5.7 crores quarter-on-quarter and INR4.6 crores year-on year. As for G&A expenses for the quarter is 7.8% of revenue against 10.6% of revenue quarter-on-quarter and 12.3% year-on year. In absolute terms, this is INR13.3 crores against INR13.7 crores quarter-on-quarter and INR14.9 crores year-on year.

EBITDA for the quarter is at INR47.6 crores which is 28.1% of revenue, against INR11.2 crores, which is 8.6% of revenue quarter-on-quarter and INR5.4 crores year-on year.

Other income from investment and deposits is at INR8.2 crores against INR6.9 crores quarter-on-quarter and INR7.1 crores year-on year. Total other income for the quarter is INR9.3 crores against INR8.8 crores quarter-on-quarter and INR8 crores year-on-year. Total tax is at INR13.7 crores against INR3.9 crores quarter-on-quarter and INR1.4 crores year-on-year. As shown, Profit stands at INR38.3 crores against INR11.03 crores for the quarter and INR8.0 crores for the year-on-year. Other comprehensive income is at INR3.4 crores for the quarter against INR1.6 crores quarter-on-quarter and…

Swati Ahuja — Manager

Sorry to interrupt you, sir. Your voice is breaking. Please check.

Tapan Jayaswal — Financial Controller

[Technical Issues]

Swati Ahuja — Manager

Sir, I’m sorry to interrupt you, sir.

Operator

Dear participants kindly stay connected while we connect the management team back on the call. I repeat, dear participants, please stay connected while we connect the management back on the call. [Technical Issues].

Anurag Mantri — Executive Director and P&L Head-Services

Tapan, are you there?

Swati Ahuja — Manager

Tapan Sir, have you joined back?

Operator

No madam. Just a second, madam. Welcome back, sir. Please go ahead.

Tapan Jayaswal — Financial Controller

Yeah. Am I audible now? Is it clear?

Operator

Yes, sir.

Tapan Jayaswal — Financial Controller

Hello. Okay.

Anurag Mantri — Executive Director and P&L Head-Services

Yes. Carry on.

Tapan Jayaswal — Financial Controller

Total comprehensive income which includes net loss…Okay. So total comprehensive income which includes net profit and other comprehensive income is at INR41.8 crores, against INR12.6 crores quarter-on-quarter and INR7.6 crores year-on-year. As for EPS for the quarter is at IN14.32 as against INR4.12 in the previous quarter and INR2.77 in December 31st, 2021 quarter.

In terms of foreign currency hedges on 31st December 2022, we had USD3.7 million of forward contracts at an average rate of INR82.13. There is a mark-to-market loss of INR43 lakhs, which is taken to hedging reserve in the balance sheet. Revenue contribution from that top-five clients for the quarter is 35.8% against 28.5% in the previous quarter. The order book position is INR569.3 crores including INR548.2 crores of Product business, and INR21.1 crores of Project and Services business. In September 30th, 2022, the order book position was INR572.9 crores including INR538.9 crores Product business and INR34 crore of Project and Services business.

As for total cash and cash equivalents as on 31st December 2022 are INR533.8 crores against INR558 crores as on 30th September, 2022. This includes balance in current accounts of INR35.2 crores, various schemes of mutual funds, INR[33.2]crores, fixed deposits of INR38.6 crores, investments in tax-free bonds of INR71.9 crores, INR5.3 crores in preference shares. With regards to receivables, we are at INR127 crores against INR73.5 in previous quarter. During the quarter, there is a gross addition of fixed assets of INR1.12 crores, consisting primarily of INR0.58 crores on software, INR0.14 crores on vehicles, INR0.6 crore on plant and equipment and INR0.34 crore on computers.

Now, I will hand over to Swati.

Swati Ahuja — Manager

Thank you, sir. With this, we are now open for question-and-answer session. I will now hand it over to you, Felicia. Over to you, Felicia.

Questions and Answers:

Operator

Thank you, ma’am. I[Operator Instructions]

First question comes from Gun Singh from Counter Finance. Please go ahead.

Unidentified Participant — — Analyst

Hi, sir. Congratulations on the great set of numbers for this quarter. I see that our venues of amongst the highest we have achieved in any of our previous quarters and also, in terms of margins, we see that the margin for this quarter is around 28%, operating margin, whereas it was about, say, 7% for financial year 2020, and thereon, say on an average 15% to 20% previously. So sir, my question is regarding whether this is a one-off quarter in terms of revenues, as well as margin or can we say that this is the run-rate going-forward, and we can expect this to be a sustainable number in terms of revenues, as well as the margins? So can you please help me understand whether this is one-off or a sustainable kind of a thing?

Anurag Mantri — Executive Director and P&L Head-Services

Hi. Thanks for asking this. This is Anurag. We have been updating, informing you all about various initiatives being taken at our end. And certainly, we are not seeing this as one-odd, one-off quarter. This is the trend we are expecting to continue way forward.

Unidentified Participant — — Analyst

Both in terms of topline, as well as margins?

Anurag Mantri — Executive Director and P&L Head-Services

That’s true.

Unidentified Participant — — Analyst

So, is it fair to assume that, we can do say about INR700 crores to INR800 crores of topline for financial year 2024, looking at the current run-rate?

Anurag Mantri — Executive Director and P&L Head-Services

So, while earlier response was that, we have been talking about the measures and those measures are showing results, but I would like to also mention that we do not give any guidance at all, any inferences at all.

Unidentified Participant — — Analyst

Sir, not in terms of, say, revenues, but in terms of the operating margins that we are looking at right now. Can — I mean, was this some initiatives taken during this quarter or some fall in the say operational cost that we saw only during this quarter that led to this or, I mean, can we say that 28% is a sustainable kind of margin going-forward? Because, I mean, this is one of the highest-margin that we have ever achieved in this year, I would say.

Anurag Mantri — Executive Director and P&L Head-Services

As Parag mentioned, that this is also due to some cumulative effect, we have been talking about the AMC related discussions in the past. So that has led to this particular thing. And you are talking about the other aspects, so we continue to take a lot of optimization and improvement initiatives and that is something which we like to continue as well. But again, as I mentioned that any indicative aspect on this thing, we are not going to provide.

Unidentified Participant — — Analyst

All right, sir. Got it. So, if we remove the AMC effect of the cumulative, that you mentioned, can we get margins of about 25% going forward because of the initiative that you mentioned?

Anurag Mantri — Executive Director and P&L Head-Services

You’ve heard us already few times. You are talking about various — in fact, the guidance or indications, we will not provide that. Hope you appreciate this thing, I think, but as I mentioned that we continue to take multiple initiatives. And that is what I would like to update you at this point of time.

Operator

Shall I move to next question, sir?

Swati Ahuja — Manager

Yes, please.

Operator

Thank you, ma’am. Next question comes from Rahul Jain from Dolat Capital. Please go ahead.

Rahul Jain — Dolat Capital Market Private Limited — Analyst

Yeah. Hi. Thank you for the opportunity. Is my line audible?

Operator

Yes, sir.

Rahul Jain — Dolat Capital Market Private Limited — Analyst

Yeah. Just to understand the thought of someone speaking of the revenue guidance [Technical Issues]

Swati Ahuja — Manager

Mr. Rahul, your voice is not clear. Please repeat again.

Rahul Jain — Dolat Capital Market Private Limited — Analyst

Just a minute.

Operator

He has withdrawn his question, ma’am. Next question comes from Harish Toshniwal BottomUp Research. Please go ahead.

Unidentified Participant — — Analyst

Hi. Hello. Thanks for the opportunity. Am I audible?

Operator

Yes, sir.

Unidentified Participant — — Analyst

Hello. Yes. Yes. So thanks a lot, sir. Sir, I think, sir, a few questions. One is that, if we look at the last Q1 and Q2, on calls you mentioned that the price hike is going to be affected for most of our clients over a period of next one to two years, basically, H2 of FY’23 and obviously some part of H’24. The entire series we are going to see price hikes across different clients for us to reach the expected levels. So, just want to understand that when we look at this quarter’s revenue, you think that all the price hikes are now there in the number or are there more price hikes down the line? And — this is my first question.

I have one more question. And if you want, I can ask now or I can ask later, sir.

Operator

Yeah, participants kindly stay connected while we can’t be management back on the call. [Operator Instructions]

Management team, please go-ahead.

Unidentified Participant — — Analyst

Am I audible, sir?

Swati Ahuja — Manager

Yes. Please go ahead.

Unidentified Participant — — Analyst

Yes. So, I had two questions. One is that, in the last call, we mentioned that the price hike is going to continue over the next few quarters because it will take sometime for negotiating the price hikes across most of our customers. So one, I wanted to check that when we look at this quarter’s revenue, is it just a partial price hike, a part of the price hike that for few of the customers we have taken, but we are yet to see more price hikes in the coming quarters? That’s question number one.

And sir, the second question is on the growth part. Now, we have seen a lot of NBFCs, etc., have been growing even within India. Now going forward, how do we plan to tap that volume growth, because last call you mentioned that we are also tying up with system integrators to improve our growth rate in Europe, Southeast Asia, etc.? Because when we look at our margin profile also, I think being a product company, our margins in India etc. is more than 40%, 50%. It is the global business which is putting the overall margins down. So, wanted to get your sense as to what is the plan to improve the operating leverage out there and how should we look at it? So these two questions.

Brajesh Khandelwal — P&L Head, FinnOne NEO

Sure. Sure. This is Brajesh Khandelwal. Your first question is regarding continued AMC price hike. So, that effort is going to continue. Other precise details will not be shared but that effort will be continued. Your second question…

Unidentified Participant — — Analyst

Just one thing, Brajesh. Sorry. Just one thing on the part. Would not need any specific details, but just want to understand that, for example, if we have around 200 clients, then what percentage of clients, we would have initiated the price hikes with? Some sense because the only thing which becomes confusing is that when we look at this particular quarter’s revenue, I’m not asking for any guidance, but wanting some sense about that re-sustainability of this number. Are there any one-off fees?

Brajesh Khandelwal — P&L Head, FinnOne NEO

I can only say that we have been pursuing with our customers to get the right value for our offering and that effort will continue. I don’t think I’ll be able to share details beyond that. So that is response to your first question.

Your second question is on the increased potential on NBFC market in India. Yes, we are working with various prospects to engage them with our new product offering and that’s a continuous effort in fact and, so that’s how it is that going to continue.

Parag Bhise — Chief Executive Director & Executive Director

And as regard, I think you also wanted to mention about outside India. So two-parts to it. One is the transformation that I had mentioned. This is Parag, here. So, FinnOne customers and the Cash@Will customers, many of them are outside India. So that’s one part. And yes, we are making conscious effort to. now move outside India. The past two years, because of COVID, we are largely centered in India and also, most of the growth we saw was from India, the traction, I would say. So on both these fronts, whether it is our legacy customers outside India, efforts are on to convert them onto the new platforms, as well as the reach, we are now trying to make into. Into regions outside India. So, I hope that completes the three parts of your query.

Operator

Thank you sir. Next question comes from Jatin K from Alpha Capital. Please go ahead.

Jatin K — Alpha Capital — Analyst

Hello, sir. Congrats for a good set of numbers and thank you for taking my question. Sir, my question is, in your opening commentary you said that there is one-time retrospective effect in the AMC. Can you please elaborate more on this item? How much is the retrospective effect, and what was this amount? Why was this amount.

Anurag Mantri — Executive Director and P&L Head-Services

Okay. So we will not be able to really give the split or the details that how much has been contributed by retrofit and how much had been contributed by non-retrofit related business. We will just like to reiterate that there has been an impact because of these retrofit cases, which is part of — which is just one part of this particular increase.

Jatin K — Alpha Capital — Analyst

No, sir. Some… Even if I look at your revenue, it is now INR170 crores, versus it was INR130 crores last quarter. So it’s like INR40 crores increase. Can you give some idea how much is because of AMC, how much is because of retrospective and how much is our growth from new clients? So maybe some idea, even rough idea would be helpful, sir.

Anurag Mantri — Executive Director and P&L Head-Services

I’m afraid we will not be able to give you even an indication about that.

Jatin K — Alpha Capital — Analyst

But then, sir, that will keep investors in the dark as we have no basically, no idea, how is the company being able to grow so well in this quarter. So maybe some indication, because if you look at all of my previous participants, all we’re trying to get some indications on that front also, sir. I am just requesting you to give some indication.

Anurag Mantri — Executive Director and P&L Head-Services

So. What I will like to say is that, as far as the total growth is concerned, close to 50% has come from retrofit. So, that gives you.

Jatin K — Alpha Capital — Analyst

Yes. So retrospect was like one-time only that will not continue?

Anurag Mantri — Executive Director and P&L Head-Services

That’s right. But as we indicated that this is an ongoing process. So few of the business exchanges and discussions with the customers have been concluded, which has led to this few of the business discussions with the customers are continuing.

Jatin K — Alpha Capital — Analyst

And even if we take more AMC increase, that will also have this retrospective benefit even for more.

Anurag Mantri — Executive Director and P&L Head-Services

So the ones which, I will say discussion in-progress will definitely have some retrofit impact.

Jatin K — Alpha Capital — Analyst

Sure, sir. And would you like to comment as in, let’s say, if I have 100 clients, how much we have taken the AMC increase and how much are still pending?

Anurag Mantri — Executive Director and P&L Head-Services

That certainly I will not be able to share.

Jatin K — Alpha Capital — Analyst

Sure. No worries, sir. Thank you.

Operator

Thank you. Next question comes from Chirag Kacharia from Ashika Institutional Equities. Please go ahead.

Chirag Kacharia — Ashika Institutional Equities — Analyst

Hello sir. First time I have looked at your company and I have a couple of questions. We are into the business since ’90s and the industry has grown really well in India, particularly IT sector, even BFSI. Then why we are not participating in that growth?

Second, a lot of outsourcing opportunities have also come in this last three decades, but still we not meaningfully participating in that. I request you to share investor presentation for something, so investor community and even the analyst community can have some better idea exactly in which domain or in which expertise have in IT sector. So yes, sir, just this from my side.

Anurag Mantri — Executive Director and P&L Head-Services

So. Just to reiterate that we are in-product organization, so we handpicked outsourcing opportunity and that we have been doing for some time and we continue to do the same thing.

Chirag Kacharia — Ashika Institutional Equities — Analyst

Okay. And who are our peers? If you can name any global or local.

Anurag Mantri — Executive Director and P&L Head-Services

We do not share the competitor information in these forums.

Chirag Kacharia — Ashika Institutional Equities — Analyst

Okay, sir. And what is the size of opportunity in which we are right now in the services we are right now?

Anurag Mantri — Executive Director and P&L Head-Services

I would just like to mention that with the product capabilities we have both in retail lending and transaction banking space, we are definitely approaching some very exciting opportunities. But besides that, the quantum or an indication, will not be able to share.

Chirag Kacharia — Ashika Institutional Equities — Analyst

Okay, sir. Thank you. All the best.

Anurag Mantri — Executive Director and P&L Head-Services

Thank you.

Operator

Thank you. Next question comes from Arun Malhotra from CapGrow Capital. Please go ahead, sir.

Arun Malhotra — CapGrow Capital Advisors LLP — Analyst

Yeah. Good afternoon. Congratulations on a fantastic set of numbers. Just wanted to find out the use of excess cash which is lying on the balance sheet, because if this quarter is an indication we are going to generate large amounts of cash in the future also, plus the commentary, which you have given. So, any indications on the use of cash which is lying on the balance sheet?

Vishnu R. Dusad — Managing Director

Thanks for this questions. This is Vishnu Dusad. Our Board keeps looking at the most appropriate uses of the cash that our business generates. And from time-to-time, we have been doing buybacks and so on to make sure that there is right balancing between the cash that is kept with the company and that cash that is distributed with the shareholders. So, our Board will continue to apply its mind to the subject, and we’ll come back with the results.

Arun Malhotra — CapGrow Capital Advisors LLP — Analyst

Sure. Because, I just want to reiterate that the cash which is lying on our balance sheet is earning only 5%, 6% kind of return, and is also bringing down the ROE and hence, the valuations. So if there is no acquisition or use of cash which can lead to growth for the company, I think it would be more prudent for the management and the Board to distribute it to the shareholders. That would be my suggestion, which should be considered by the Board.

Vishnu R. Dusad — Managing Director

We will certainly take your suggestion to the Board.

Arun Malhotra — CapGrow Capital Advisors LLP — Analyst

Sure. Thank you, sir.

Vishnu R. Dusad — Managing Director

Thank you.

Arun Malhotra — CapGrow Capital Advisors LLP — Analyst

Thank you.

Operator

Thank you, sir. Next question comes from Imran Contractor, Quantum Investments. Please go ahead.

Imran Contractor — Quantum Investments — Analyst

Hello? Hello?

Operator

Yes sir. Please go ahead.

Imran Contractor — Quantum Investments — Analyst

Yeah. Yeah. My question is also regarding the one-time renegotiation of AMC which came into this quarter. So, I think they have given an indication that the 50% of the growth has taken place because of that. Is my understanding right?

Anurag Mantri — Executive Director and P&L Head-Services

That’s right. You have the right understanding.

Imran Contractor — Quantum Investments — Analyst

Yes. Yes. Thank you very much, sir. Thank you.

Anurag Mantri — Executive Director and P&L Head-Services

Thank you.

Operator

Thank you. Next question comes from Vaibhav Badjatya from Honesty and Integrity Investments. Please go ahead.

Vaibhav Badjatya — Honesty and Integrity Investments — Analyst

Yeah. Hi, sir. Thanks for providing the opportunity. So, on the AMC again. So, I don’t want to know any numbers or any details which you would not like to share, but this revision is, this retrospective effect is for the revenue from 1st of April or it is also some revisions for last year as well, which has come into this quarter? I just wanted to know that.

Tapan Jayaswal — Financial Controller

This is from this with this financial year itself.

Vaibhav Badjatya — Honesty and Integrity Investments — Analyst

Okay. So that’s for this financial year only. Okay. And secondly, obviously, last year we faced severe margin pressure because of this employee cost increment and that’s why we have to initiate this AMC renegotiation, which is very good at and it’s heartening that we have been successfully doing this. But in your assessment, have you been able to fully pass-on that cost that we — which we saw very sharp increase in FY’22 in terms of per employee costs. Have we been able to fully transfer it or you think that still there is a there is a long way to go in terms of whether our AMC contract will come back to similar profitability as they were before March ’22?

Anurag Mantri — Executive Director and P&L Head-Services

So just wanted to clarify that these two things had happened together but did they are not linked. Our initiatives to increase the CMV for our associates was in response to appreciate their knowledge and contribution and at the same time, our discussions with our customers for increasing the pricing is related to, we are asking our customers for value-based pricing. They have been in fact, most — many of our customers or in fact, all of our customers are growing tremendously on our platform and our discussions with them had been happening for some time over a period of time and this was a result of that.

Vaibhav Badjatya — Honesty and Integrity Investments — Analyst

Okay. So, yeah, I understand that those two might be unrelated or unrelated things completely. But on a net basis, one is a cost and one is price. So on a net basis, do you think on the,AMC contract on the profitability front, again, I don’t want to know the numbers, what is the margin that we’re earning on AMC contract and all of those things, but do you think that we will be back to a similar kind of profitability in AMC contract as we were before 2022 financial year or there is still some time to achieve that?

Anurag Mantri — Executive Director and P&L Head-Services

So we are back there and we will be continuing like this, that’s going to go my response.

Vaibhav Badjatya — Honesty and Integrity Investments — Analyst

Okay. Okay. That’s it from my side. Thank you.

Operator

Thank you. Next question comes Arishit from DU Research. Please go ahead.

Unidentified Participant — — Analyst

Hello, sir. Sir, my question was that, you mentioned two statements. One, you said that this quarter is a sustainable one, at some point of time that the revenue and it’s going to be a recurring event of price hikes and maintaining this margin what you said. And at the same point of time you said that 50% of this quarter’s incremental revenue was because of the renegotiation. So my question is that, if I adjust that renegotiation, then our sales would be more around INR155 crores and profit around INR30 crores to INR35 crores of operating profit. So, should we take that as a sustainable base and build for and basically look at it? Or do you think that there are further price hikes, which will help us support even the current year’s momentum — current business momentum. I just wanted to say, because your statements were slightly different in terms of what it can mean.

Anurag Mantri — Executive Director and P&L Head-Services

My response would be that we will be putting and we are putting all the efforts to ensure the sustained growth. That is what I would like to tell you. We’re going to give any indicative references.

Unidentified Participant — — Analyst

Okay. No, but when you say a sustained growth, you mean pricing or you mean volume, because a sustained growth in terms of this quarter had a renegotiation advantage. Ex of that advantage or on the base of this quarter itself?

Anurag Mantri — Executive Director and P&L Head-Services

So, the first thing is that this is going to be both on the pricing as well as the volume. The second thing is that I just mentioned that we are having this discussion…There is a disturbance from your side, I think. Hello?

Unidentified Participant — — Analyst

Sorry.

Anurag Mantri — Executive Director and P&L Head-Services

Yeah. Yeah. So what I’m saying is that, it’s on the both accounts. It’s basically on the pricing as well as on the volume as well and I would like to also add that, we — as I’ve mentioned that we have concluded few discussions with customers and we will be having some more discussions further on the same pricing-related discussions. So that’s going to continue and then, of course we are going to different geographies. So, that impact will also be there in quarters to come.

Unidentified Participant — — Analyst

Understood, sir. And when you look at this quarter, our India business has done very well. We have grown from INR60 crores to INR85 crores in India business, but most of those geographies has been largely flat and probably margins have also been flat. So this price increase part and the volume growth, if you can throw some color on what is happening in the global geographies? And some color on our strategy to tie-up with system integrators to penetrate that or how do you look at that piece of business?

Anurag Mantri — Executive Director and P&L Head-Services

So you are very right that the current quarter’s growth is predominantly because our market linked growth. But we were putting down, we are laying down various strategies to expand into — expand our presence in other geographies as well and we are hopeful that we should be able to really expand the business in those geographies also in quarters to come.

Unidentified Participant — — Analyst

Okay. And one last question, sir, from my side. We completed the buyback, last one on 22nd Feb, 2022, around February ’22 if I’m not wrong. So, I think one year is the — I just wanted to check that what is the SEBI restriction of the time gap between two buybacks? I mean, what is the timeline before which we can’t think of the buyback?

Poonam Bhasin — Company Secretary

Sir, this is Poonam. Actually, the restriction is of 12 months. So, before 12 months…

Unidentified Participant — — Analyst

Yeah.

Poonam Bhasin — Company Secretary

We cannot initiate the second buyback.

Unidentified Participant — — Analyst

Okay. And that 12 months will end on February 2023 itself?

Poonam Bhasin — Company Secretary

Yes. Yes.

Unidentified Participant — — Analyst

Understood. So, just one thing. So, I think this buyback was actually very helpful and I am not saying — obviously we need to keep some cash on our balance sheet because of the nature of the work, and at the same time for any inorganic opportunities. But this INR150 crores to INR200 crores of annual buyback, which at least, which is going to keep our balance sheet healthy, would suggest that the Board can consider that because that is a very healthy indication of the management and Company wanting to share the benefits with all the shareholders.

Vishnu R. Dusad — Managing Director

Certainly we will share the suggestion to the Board.

Unidentified Participant — — Analyst

Okay.

Vishnu R. Dusad — Managing Director

Thank you.

Unidentified Participant — — Analyst

Thank you, sir. Thank you.

Operator

Thank you. Next question comes from Samarth Singh from TPF. Please go ahead.

Samarth Singh — TPF Capital — Analyst

Good afternoon, and thank you for the opportunity. My first question is, again, about the AMC pricing revision. I think we were looking to get eight large customers on-boarded with the new AMC pricing, and I think as of second quarter, three of them had been onboarded, had come on-board. Could you just tell me, as of the end of the third quarter, how many customers have come onboard out of the seven or eight that we were trying to get by revised pricing? Hello?

Operator

Hello, sir.

Anurag Mantri — Executive Director and P&L Head-Services

Yeah. So, we will not be to really give this insight as well about the number of customers.

Samarth Singh — TPF Capital — Analyst

Okay. But is the payback for the revenue for nine months, is it reflecting all the price hikes that we wanted to get done this year or we will expect some sort of one-time revenue in quarter four as well?

Anurag Mantri — Executive Director and P&L Head-Services

So, as I shared that there are some discussions going on with our customers. Some have been concluded. Some are still going on. So definitely, we will be — we are hopeful to conclude those discussions in the next quarter. And if that happens, then definitely there will be a retrofit impact coming for those discussions as well, those conclusions as well.

Samarth Singh — TPF Capital — Analyst

So, just to clarify, so the next quarter being the current quarter, quarter four or you are talking about the quarter one of next year?

Anurag Mantri — Executive Director and P&L Head-Services

Yes, current, the Q4.

Samarth Singh — TPF Capital — Analyst

Q4. And is our order book reflecting the new pricing, the revised AMC rate because the order book doesn’t seem to have moved that much.

Anurag Mantri — Executive Director and P&L Head-Services

The order book, it includes the new AMC increase. It includes.

Samarth Singh — TPF Capital — Analyst

Okay. So are we, I mean, are we losing orders from some of the other geographies? I think there was only total increase of INR10 crores in order book, if I am not mistaken.

Anurag Mantri — Executive Director and P&L Head-Services

So, basically order booking number is inclusive of both, AMC, as well as non-AMC related new orders being booked.

Samarth Singh — TPF Capital — Analyst

Right. Right. Okay. Okay. and. And how many of our top 10 customers are on FinnOne NEO?

Anurag Mantri — Executive Director and P&L Head-Services

We actually do not provide product-wise customer details. We will not be able to share these inputs as well.

Samarth Singh — TPF Capital — Analyst

Okay. Okay, let me ask the question in a different way. We are working on two objectives mainly for this year and next year. One was getting the price revision, so that our pricing correctly reflects the value we provide to our customers. And the second one was, changing the composition of the product, which is sort of moving our customers from the legacy product to FinnOne NEO. And in the last quarter I think, Vishnu Sir had mentioned that two or three customers were — Cash@Will want FinnOne NEO and there will be a big push this year. So if not quantitatively, could you talk about it qualitatively in terms of how we are doing in the certain aspect of converting our customers to FinnOne NEO?

Anurag Mantri — Executive Director and P&L Head-Services

So, I think, the FinnOne customers’ momentum FinnOne NEO customer with transformation initiatives are progressing well. They are progressing well and they are as per the plans.

Samarth Singh — TPF Capital — Analyst

Okay and last question from my side. I think in the other geographies, which is Southeast Asia, Far East, Middle-East, we have seen some recovery, but it’s still trending below pre-pandemic levels. I think the issue [Technical Issues] integration. I think both…

Anurag Mantri — Executive Director and P&L Head-Services

Your voice is cracking. I couldn’t really hear you.

Samarth Singh — TPF Capital — Analyst

Am I audible now?

Anurag Mantri — Executive Director and P&L Head-Services

Little better.

Samarth Singh — TPF Capital — Analyst

Yes. So, I was saying, I’m talking about the other geographies, South-East Asia, Far East, Middle-East, we can see some recovery, but we’re still trending below pre-pandemic levels. And I think the issue we had highlighted the last of calls was issue of efficient and attrition. I think both issues have been sorted now. So is there a reason why we are not back up to historical revenue and profit level levels in these geographies?

Anurag Mantri — Executive Director and P&L Head-Services

So, while both the constraints have been — they are settled now. Immigration has also — has completely opened up and the attrition related challenges also got settled. So, what we are currently doing is that, there had been — so these two factors, the process — the implementation progression and all these figures are definitely impacted. They are being brought to the control now and with these two enablers being there. we expect things to move much faster in in the current quarter as well as next quarter. There is always a cascading impact. So the integration has been tackled. The attrition related things had happened, those things, but the transformation projects are getting in shape now, and once these are settled next quarter — this quarter onwards, the things will start showing the reflections.

Samarth Singh — TPF Capital — Analyst

And as part of this also, I think in the Far East we have done multiple FinnOne Cloud in your cloud implementations. So a part of that also that on the cloud platform, the implementation fee is lower, but we are on a higher recurring revenue. Is that a part of this lower revenue in the Far East as well?

Anurag Mantri — Executive Director and P&L Head-Services

In the Far-East, we have — predominantly, we have our Services customers, not — and yes, few of them are on the cloud, but definitely, not all of them. It’s not related to that. It’s basically related to some of the local business developments there. And of course, as I mentioned, that it takes some time for customers also to restart the engine. Far-East has been blocked by immigration perspective for close to two years. So things have started opening up and it’s going to take its own group and time before the things to start becoming to the normal. So, the trends are reversing. And as I mentioned, that you will be getting — you will be seeing a different type of improvement coming up, being reflected in the current and next quarters, is what I mentioned.

Samarth Singh — TPF Capital — Analyst

Okay. Tanks. I’ll come back in the queue.

Operator

Thank you. Next question comes from Rahul Jain from Dolat Capital. Please go ahead.

Rahul Jain — Dolat Capital Market Private Limited — Analyst

Yeah. Thanks for the opportunity. Firstly, our two bookkeeping numbers. One, what is the USD revenue you said for the quarter and what was the employee count?

Tapan Jayaswal — Financial Controller

Hello?

Rahul Jain — Dolat Capital Market Private Limited — Analyst

Yes.

Tapan Jayaswal — Financial Controller

Am I audible?

Rahul Jain — Dolat Capital Market Private Limited — Analyst

Yes.

Anurag Mantri — Executive Director and P&L Head-Services

Tapan, please carry on.

Tapan Jayaswal — Financial Controller

Okay. So, revenue number was USD21 million for the quarter and USD16.6 million quarter-on-quarter and USD16.3 million year-on year. This was the revenue number.

Rahul Jain — Dolat Capital Market Private Limited — Analyst

Right. Employee?

Tapan Jayaswal — Financial Controller

Yeah. As for the headcount, the headcount was 1,731.

Rahul Jain — Dolat Capital Market Private Limited — Analyst

Okay. Now my question is that even if we see the outside the AMC revenue, the jump is quite significant, close to 15%. So, was it led by a faster ramp-up of some past deal that was affected by attrition thing which we still have or this is general business traction that we have?

Anurag Mantri — Executive Director and P&L Head-Services

This is the general business traction. That’s the thing.

Rahul Jain — Dolat Capital Market Private Limited — Analyst

And this headcount number is still significantly lower than what we used to have, let’s say, eight, ten quarters back. So is there a reason why we would like to operate at this level or this is a net outcome while we want to have a much higher headcount number?

Anurag Mantri — Executive Director and P&L Head-Services

Actually, last year, we have invested significantly by — in on-boarding young talent, young minds. We continue to do the same this time. In addition to that, we are also working on the productivity improvements at our end. So, these two things going in hand-in-hand. We are talking about onboarding young talent in addition to the productivity measures.

Rahul Jain — Dolat Capital Market Private Limited — Analyst

Right. Right. But — so you’re trying to say this 1,730 number is an ideal number for the current business level and as the business grows, we may have some headcount growth?

Anurag Mantri — Executive Director and P&L Head-Services

That is right. That is right.

Rahul Jain — Dolat Capital Market Private Limited — Analyst

Yeah. And just to clarify on the retrospective effect on the numbers, so are we trying to say that there is a retrospective quantum which is taken as a lumpsum for the past period or the current AMC revenue that we might have booked during the quarter is a normalized run-rate from a go-forward basis?

Anurag Mantri — Executive Director and P&L Head-Services

There is a cumulative impact for sure.

Rahul Jain — Dolat Capital Market Private Limited — Analyst

Okay. So you mean to say, if somebody was revised from INR5 to INR10, that additional INR5 for one full-year is also accounted in this quarter, and now going-forward, he would be booked for INR2.5 on a run-rate basis?

Anurag Mantri — Executive Director and P&L Head-Services

Yes. That’s right. That’s right.

Rahul Jain — Dolat Capital Market Private Limited — Analyst

Okay. So, half of the quantum of growth, give or take, is coming from this factor. So number, the quarterly run-rate should be seen by adjusting that INR20-odd crores from the current revenue?

Anurag Mantri — Executive Director and P&L Head-Services

Yes, that will be the case. That’s right.

Rahul Jain — Dolat Capital Market Private Limited — Analyst

And accordingly, the profit, the PBT aspect should also be reduced by that quantum because there may not be any associated cost attached to it as well?

Anurag Mantri — Executive Director and P&L Head-Services

Yeah. That’s right. Your understanding is right.

Rahul Jain — Dolat Capital Market Private Limited — Analyst

Right. I understand that you’re not going to say about the numbers of such pursuit, but since you already have, I think last quarter you mentioned that there are two to three clients which are in this process of acceptance and they might have gone through this process during this quarter, maybe few more. But now, since you have people accepting it, how it changes in terms of convertibility aspect going-forward, because now you have reference, people who have adopted to the new run-rate. Does that increase your ability to convert on this factor significantly?

Anurag Mantri — Executive Director and P&L Head-Services

That is right. But more than the — having some customers being converted on a different price, tt’s not the major driver. The major driver is that we are leveraging the referenceability of the business value being delivered to the customers.

Rahul Jain — Dolat Capital Market Private Limited — Analyst

Right.

Anurag Mantri — Executive Director and P&L Head-Services

Hope that answered.

Rahul Jain — Dolat Capital Market Private Limited — Analyst

Yeah. I’m sure, so that was the case earlier also before you were pushing this aspect much more strongly. It’s just that, people are happy to get more for less and that’s what was the case in the past. And just to, if you could share one or two comment that might have come from these successful cases, where they accepted for the revised pricing? What they have to say on this? Are they — they just realized that yes, yes, it’s worth more and that’s why they are giving it or any incidents worth sharing on this front?

Anurag Mantri — Executive Director and P&L Head-Services

There had been a mixed response. A few customers’ response is already there in your question itself. When you mentioned that they were getting more in less, so few of them have responded in that fashion. Few of them, the response was much, much more pragmatic. But overall, all of them had understood the rationale and the approach. Depending upon their outlook, in few cases we could progress much faster, in few cases, it has taken longer time. But eventually, every one of them had appreciated this and got themselves aligned with this.

Rahul Jain — Dolat Capital Market Private Limited — Analyst

And last bit from my side. Just to understand, who would qualify for this kind of a revision? Is it the entire client base, or we can say that client with the material history, let’s say, any client who would have come to us, let’s say, five years or prior or 10 years or prior, would have been at a very poor base and those are the cases where we see a hope of a big revision, while it may not be relevant for clients with five years, six years vintage?

Anurag Mantri — Executive Director and P&L Head-Services

So, of course we are not going to the customers whom we have signed-up or whom we have onboarded very recently. In addition to that, we have a very comprehensive assessment process, and we run our customer portfolio through that comprehensive assessment process and that gives us the customers with whom we should be taking it forward. Of course, the longevity of the customer, the time at which the initial contract was signed, their growth, all these things are part and parcel of that comprehensive assessment process, but the overall process is much, much beyond that.

Rahul Jain — Dolat Capital Market Private Limited — Analyst

Right. And have we seen case of client attrition also?

Anurag Mantri — Executive Director and P&L Head-Services

Not really. Not really.

Rahul Jain — Dolat Capital Market Private Limited — Analyst

Okay. So, either they are negotiating. They are delaying or accepting, but there is no let go.

Anurag Mantri — Executive Director and P&L Head-Services

That’s right.

Rahul Jain — Dolat Capital Market Private Limited — Analyst

Okay. That’s it from my side and best of luck for the time ahead.

Anurag Mantri — Executive Director and P&L Head-Services

Thank you so much.

Operator

Thank you. That would be the last question for the day. Now, I hand over the floor to Swati for final remarks.

Swati Ahuja — Manager

Thank you, Felicia. Now we would like to thank all the investors for joining us today for this call. I now pass over to Vishnu Sir for his closing comments. Over to you, sir.

Vishnu R. Dusad — Managing Director

I would like to take this opportunity to thank you all for your continued interest in Nucleus Software and we reiterate our commitment to deliver value to all our stakeholders in decades to come. Thank you so very much.

Operator

[Operator Closing Remarks]