Subex Ltd (SUBEX) Q1 FY23 Earnings Concall Transcript

Subex Ltd (NSE:SUBEX) Q1 FY23 Earnings Concall dated Aug. 10, 2022

Corporate Participants:

G V Krishnakanth — Company Secretary and Compliance Officer

Vinod Kumar — Managing Director and Chief Executive Officer

Analysts:

Pratap Maliwal — Mount Intra Finance — Analyst

Dipesh Sancheti — Manya Finance — Analyst

Jagtap — — Analyst

Amit Mishra — — Analyst

Chirag Kachhadiya — Ashika Institutional Equities — Analyst

Mahesh Kumar — — Analyst

Hemal Kapasi — — Analyst

Ashish — — Analyst

Ramesh Pillai — — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to Q1 FY ’23 Earnings Conference Call of Subex Limited. [Operator Instructions]

I now hand the conference over to Mr. G V Krishnakanth. Thank you, and over to you, sir.

G V Krishnakanth — Company Secretary and Compliance Officer

Thank you very much. Good afternoon to everyone who have joined earnings call for the quarter ended June 30, 2022. Now I’d like to introduce the members of the management who are present for the call. Along with me, I have Mr. Vinod Kumar, Managing Director and CEO and Mr. Sumit Agarwal, Chief Financial Officer of the Company.

I would like to start the conference call by going through the Safe Harbor clause. Certain statements in this call concerning our future growth prospects are forward-looking statements, which involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements including, but not limited to fluctuations in earnings, our ability to successfully integrate acquisitions, competition in our area of business, client concentration, liability for damages in our contracts, withdrawal of tax incentives, political instability, unauthorized use of our intellectual property and general economic conditions affecting our industry.

So, with this, I handover this call to Mr. Vinod Kumar to take it forward. Thank you.

Vinod Kumar — Managing Director and Chief Executive Officer

Thank you, Krishnakanth. Good afternoon, everyone. I thank you all for joining the call. As you would have seen from the Q1 results published, the revenue for the quarter stood at INR83.3 crores, the PAT is INR5.5 crores. We have clarified in the notes that during the quarter ended on June 30th, an amount of INR8.66 crores was provided on a conservative basis as doubtful debt towards receivable from one of our customers. Even though we are provided, we are confident that we will recover the above amount. So, while the EBITDA is INR7 million, the normalized EBITDA if you consider this one-time provision, will be INR9.4 crores, that will be about 11.4%.

The cash and cash equivalent at the end of the quarter stood at around INR100 crores. So, overall, the quarter has gone in line with our expectations. We had also completed the restructuring of moving the assets from Subex Assurance LLP to Subex Limited and the effect of this change has happened in this quarter.

In the last call, we covered the recognition that we have got around HyperSense AI from industry experts and analysts like Gartner. We are seeing various enterprises slowly understanding the value of multi-persona AI/ML platform. Let me explain the problem that we are solving with HyperSense AI. Just about every enterprise understands the need to embrace AI/ML, that is artificial intelligence and machine learning, for a variety of reasons, and all CXOs wants their enterprise to be artificial intelligence, AI/ML oriented. However, the reality is that only about 15% of the AI models built ever get into production.

So, if you look at it in the first place, there are very few team members who can do AI/ML. And on top of that, 85% of all these team generates never get into production. This is the current global scenario. In some sectors like telcos, the situation is even worse. There are three main reasons for this particular situation. One, the data scientists are doing the — using Al to generate results — business results. It is difficult and time consuming. The second reason is that data scientists are hard to find. And the third is that there is a tough gap between the business and the data science team.

Now all of these three issues are solved by this new category of solutions called multi-persona AI/ML platforms. First of all, such place for — such platforms make data science Al or AI/ML easier. Secondly, due to the no code, drag and drop functionality, such platforms enable normal people with minimum training to do data science. We call such people citizen data scientist. Thirdly, a lot of focus is going into explaining the AI results, which helps in better collaboration between data science and the business teams. As you can appreciate the only pragmatic approach to build an AI enterprise is to adopt a multi-persona AI-ML platform.

Enterprises are realizing it and slowly adopting it. Subex multi-personnel AI-ML platform is called HyperSense AI. We are arguably the only such provider with a specific focus on telcos. Now we are in various stages of engagement with telcos around HyperSense AI. There are two areas that we are focusing when it comes to telcos. One is, their own internal use, that is how you can leverage HyperSense AI to solve telcos’ need for AI and ML. Another important aspect is that with 5G, almost all mainstream telcos are building a portfolio of digital services that they can offer to enterprising. AI services will be a very important part of that offering. AI will be integral for monetizing 5G technology, and therefore, every telco, who’s building an enterprise portfolio, will need to have a platform around which they can build this AI service.

As I have the eluded earlier, Subex, with this HyperSense AI, is probably, at this point in time, the only provider of a multi-personnel AI/ML platform to telcos. So, our recent announcement with Jio platform is also around this, where we would be supporting Jio platform to create an AI offering, underpinning our platform. We have set up the training and support capabilities to back and scale such engagements with large strategic partners.

Now coming to our core business around fraud RA and partner settlement, we are doing reasonably well. The upgrade cycles are slowly starting on the back of 5G technology rollout and related upgradations. As we have been communicating, we are slowly moving our customers to our HyperSense space platform whenever there is an upgrade opportunity. If you look at our overall activities, we are putting all efforts around our core to build a solid business around AI with strategic partnerships and enablement. We are in the early cycle of adoption, but it will get adopted and we are well-positioned as and when the market opens, particularly the enterprise segments with widespread adoption of AI platforms.

On Sectrio and IDcentral, our focus is on adding more customers. Coming to IDcentral, there have been a reduction in the AI polls, particularly from our crypto-based customers. But we expect this to change as we onboard more customers in the mid-tier segment in the quarters to come. Further, we are also on-boarded the first telco customers for IDcentral in Africa. Now, this is a very interesting use case where many regulators are stipulating specific criteria for onboarding customers digitally and we are seeing this growing trend starting from Africa. So, this is again a segment which we are focused with our IDcentral portfolio.

Now the ROC-based, which was our earlier platform-based deliveries are coming to an end and from Q2, most of the deliveries will be on HyperSense platform. So, we will see a shift to subscription-based revenue starting quarter two.

So just to summarize, the focus continues to be on building the new areas, with the right kind of partnerships, this is our future, and we will make it work for all stakeholders. Your continued support means a lot to us, and I also thank for the same.

Thank you very much. And we will now open up for questions.

Questions and Answers:

Operator

Thank you, sir. [Operator Instructions]

The first question comes from Pratap Maliwal from Mount Intra Finance. Please go ahead.

Pratap Maliwal — Mount Intra Finance — Analyst

Hi. Can you hear me, please? Hello?

Vinod Kumar — Managing Director and Chief Executive Officer

Yes, Pratap, go ahead.

Pratap Maliwal — Mount Intra Finance — Analyst

Hello, sir. I had a question regarding the recent news that we had regarding our tie-up with the Jio platforms. So, could you just help us understand what is the nature of that tie-up and what is the monetization schedule? When can we maybe expect revenues to start flowing in and what is the nature of the tie-up and how the revenue will actually flow to us and when they will start, please?

Vinod Kumar — Managing Director and Chief Executive Officer

Okay. So as I had indicated, most of the telcos are looking at creating a portfolio of services around AI, particularly, to monetize 5G, because 5G along with the connectivity, 5G will create a lot of new opportunities for such telcos in the enterprise segment. Now, we have got this engagement with Jio, thereby, we will be supporting them in their AI service — in the creation of Al services.

So just to take an example, Jio would carry a plethora of services around connectivity, analytics, security, etc., and the Jio services around AI, we would be a platform which will be supporting that. Now, this is something which we have similar discussions going with several telcos around the world and we hope that we will have many such announcements for several markets announced in the quarters to come.

Now, with respect to the monetization, we have already clarified that HyperSense AI is a subscription-based pricing based on the consumption of the platform. So, when Jio starts offering this to their customers, based on the consumption, we will have a revenue share agreement between Jio and Subex. Now, Jio, we are expecting, I think, the specific timelines we are yet to determine but as soon as Jio starts offering some of these services and when our platform gets used by their customers, we will start seeing the revenue coming from this engagement.

Pratap Maliwal — Mount Intra Finance — Analyst

Okay, sir. Thank you. Another question I had was, in our disclosure, we’ve seen that there’s been a provision made of INR86.6 million doubtful debt on one of the receivables as you pointed out, sir. So I just wanted to ask what has actually caused this? Is it maybe in the geography was the client and I just wanted to understand that if it is INR86.6 million, then this seems to be around almost 10% of our revenue. So would it be maybe fair to assume that it’s perhaps a Tier 1 telco or a major client of ours? And maybe what actually led to this eventuality, could you please clarify?

Vinod Kumar — Managing Director and Chief Executive Officer

Okay. So this is, as I clarified, it’s a provision that we’ve made on a conservative basis. We’re quite confident that we have resolved this matter. The reason for this is there’s several reasons came together. One was some — the Forex issue that was faced by this particular customer, and the geography where the customer operates that was one. There was some change of the management and because of some of these challenges, we had some delays on the deliveries as well.

So overall, I think all these things resulted in a delay in receiving the collections from this customer. And as a part of our corporate governance, we have a particular process, whereby if it delays over a particular period in time, we will take a provision on this. So I just want to reiterate that we are reasonably confident that we will get this collections done, but it is taking time and as a part of the corporate governance, we felt that it is better for us to make this positioning.

So it’s just a one-time activity and it is from one of the customers in the larger Middle-East region.

Pratap Maliwal — Mount Intra Finance — Analyst

Okay. So can we maybe expect the entire amount to be reflected in the next quarter itself? Or would there may be a phased recovery of this amount?

Vinod Kumar — Managing Director and Chief Executive Officer

We’re expecting it to be a phased recovery. But some part of it would definitely come in the next quarter. Yeah.

Pratap Maliwal — Mount Intra Finance — Analyst

Okay, sir. So one another question I had was regarding the we had a recent call out of a deal win for fraud management on HyperSense. I believe the figures were $3.5 million for over five years. So, sir, shall we understand how does the revenue actually tackling, have your — firstly, have we booked any portion of the revenue in the current numbers reflected, and secondly, how the revenue model changes versus if this was a previous work deployment versus the current deployment? How the revenue actually model changes? Could you please help us understand?

Vinod Kumar — Managing Director and Chief Executive Officer

Yeah. So this is HyperSense, and therefore, it is going to be a subscription basis. So earlier, if you look at, if you are ROC-based deployment, this whole three — the bulk of the $3.5 million would have been recognized within the 12 to 18 months timeframe. Now that has got changed and this will get now recognized over a period of five years.

Now while — so because it’s a subscription based rather than a licensing-based model. So that’s the major change that happened. But the most important thing is that this particular thing, we have a HyperSense already deployed. And once we start — once the customer, this is timely around the HyperSense thought management side of things. But once the platform is done, we will work with the customers to move other cases outside the Fraud Management onto these platforms, which will come with a different commercials, because the platform can be used for a plethora of use cases. And that is exactly what we are trying to do with most of our customers.

So, while from a recognition of revenue perspective, for that 12 to 18 months, which will get spread to five years. But the opportunities are there. Unlike earlier platform, which allows us to move more and more use cases on top of this platform, which will come with additional subscription outside this $3.5 million that we have formed.

Pratap Maliwal — Mount Intra Finance — Analyst

Okay, sir. And have the revenue started flowing in and when may be…

Vinod Kumar — Managing Director and Chief Executive Officer

No, it will start flowing once we start the — once we complete the deployment. We have started the deployment and it will –sometime during the next quarter, it will — some part of it will get commissioned, and then the revenue will start kicking.

Pratap Maliwal — Mount Intra Finance — Analyst

Okay. Thank you, sir. I’ll get back in the queue. Thank you.

Vinod Kumar — Managing Director and Chief Executive Officer

Thank you, Pratap.

Operator

The next question comes from Dipesh Sancheti from Manya Finance. Please go ahead with your question.

Dipesh Sancheti — Manya Finance — Analyst

Yeah. Hi. Am I audible?

Vinod Kumar — Managing Director and Chief Executive Officer

Yes, Dipesh, go ahead.

Dipesh Sancheti — Manya Finance — Analyst

Yeah. My first question is actually for the Jio platforms only. I think it has been already answered. Now I wanted to just understand, our revenues from Indian market is around 2%. We are having Airtel, Vodafone, Jio now. So, practically the entire telecom market — Indian telecom market as our customers. So going ahead, what revenue share are we looking from the Indian market?

Vinod Kumar — Managing Director and Chief Executive Officer

Look, I think as you can — if you look at our core business, which is primarily aimed at the telcos at this point in time. So far, our opportunity exist when there is an upgrade cycle, that is when we upgrade our existing installations to support the new let’s say technology, or when we have a new product and when we have a new sale to the to the telcos. That’s what our revenue stream is, other than the normal annual — annuity base support revenues.

So now with HyperSense, this changes. And we do have the ability to on a constant basis provide new services to our customers. So, I think, while for the near term, I would say that the percentage of revenue will be around on our core areas. But as we start, taking the solutions to the enterprise segment through our telco partners, we will see that changing by and by. So this is for our core.

But our new areas of IDcentral and Sectrio, the focus is predominantly the Indian market or that is probably one of the two markets that we are focused on. So, as those revenues grew up, we will see a larger portion of the overall revenue coming from the Indian contribution.

So, to summarize, overall, in the short term, we will see that percentage of revenue will be around that, but it will start growing as the enterprise business and the new product business starts growing for Subex.

Dipesh Sancheti — Manya Finance — Analyst

So, as I understand, as new technology, like 5G, Blockchain, will develop in India, that is a time Subex will actually kick start with getting more revenues from them? Is that summarizes okay?

Vinod Kumar — Managing Director and Chief Executive Officer

Yeah, because we have seen the same opportunities elsewhere also. But as a percentage, because of the new areas that Sectrio and IDcentral, we are only focused on India. So, once that starts revenue — that starts generating revenue, then the overall revenue from India will start increasing as a percentage.

Dipesh Sancheti — Manya Finance — Analyst

And when do you expect that to actually kickstart?

Vinod Kumar — Managing Director and Chief Executive Officer

Look, I think, for this year, we will see that it will be there about in the 3% to 5% range. But as we start significantly scaling the Sectrio and IDcentral revenue that will change. That will be towards the — towards next year onwards.

Dipesh Sancheti — Manya Finance — Analyst

And if you can just throw in some numbers, like as investors, we really want few numbers to come out that what is the expectation of how much revenue are we expecting? There’s nothing binding, but point is if there is a revenue guidance, which is — which can be expected from these telcos, then it’ll be easier for us to judge how our investments should go.

Vinod Kumar — Managing Director and Chief Executive Officer

Dipesh, I understand where you’re coming from, but we are not giving any specific guidance, Dipesh. So, I think, what we can provide you is the fact that this is definitely — this is multi-persona AI platform is a growing segment, really growing segment, very, very fast-growing segment, early days of adoption. And this is not just with telcos only, right? This is going to be adopted by across every enterprises and telco will be a provider of such services to every enterprises.

So, we are aligned with telcos and other major players who are going to be a provider in this space of AI thing. It’s a huge market. So, I think as you would slowly see, they will start announcing this relationship — partners — strategic partnerships in various markets, and we are aligned with large partners which will have a much higher reach. And that’s our focus. So, I wouldn’t need to want to provide a specific guidance at this point in time, but I just want to paint the picture of what — where we are taking, Dipesh.

Dipesh Sancheti — Manya Finance — Analyst

Okay. And also, we’ve seen the Sectrio customers, we have even SBI. So are we looking at tapping at other banks, Indian Banks, specially?

Vinod Kumar — Managing Director and Chief Executive Officer

Yes. On Sectrio, we are only focused on three markets at this point in time. India, Saudi Arabia, and UAE and Saudi Arabia and Mexico, these are the only three markets that we were focused at this point in time and India is a very, very key market. Based on some of the key wins that we had in the — both in the government and enterprise segment, we have increased the reach out and we are started seeing the RFPs coming out, based on the work that we have done in the last few quarters.

And we as we go along, we will start announcing the customers that we are winning. We are expecting, as I mentioned in my briefing, the current effort in both Sectrio and IDcentral is to add customers, so that we can establish as a key player when it comes to OT-IoT security in this and identity analytics in this — in these markets.

Dipesh Sancheti — Manya Finance — Analyst

My last question, actually, it’s a hypothetical one…

Operator

I’m sorry to interrupt, Dipesh.

Dipesh Sancheti — Manya Finance — Analyst

Just the last one. The — generally, it is seen that Jio takes a stake into all its technology providers. It has been seen throughout the Jio’s journey. Is there any talk, is there any possibility going ahead, since we are — we just removed our promoters from the promoter list? Is there any possibility ahead?

Vinod Kumar — Managing Director and Chief Executive Officer

Look, at this point in time, we are in the early days of building these partnerships on and ensuring that we — from a portfolio standpoint, we have the — we are providing the right support to it. So, at this point in time, there’s nothing. Our focus is around — at this point in time, our focus is to take this Al services jointly to the market and make a big success out of it, Dipesh.

Dipesh Sancheti — Manya Finance — Analyst

Thank you. Thanks so much.

Operator

Thank you, sir. [Operator Instructions]

We have the next question from Jagtap, [Phonetic] an individual investor. Please go ahead.

Jagtap — — Analyst

Hello?

Vinod Kumar — Managing Director and Chief Executive Officer

Yes, Jagtap, go ahead.

Jagtap — — Analyst

Yeah, good afternoon. See, we have observed in last eight quarters that before every quarter results, Subex is announcing some partnership. But it is not updating investor in subsequent quarters what is the revenue generated from such partnership? Last year, we have announced Snowflake partnership. So, what is the revenue generated from Snowflake partnership in last one year, that is never updated in subsequent quarters? What is the reason for that? See, all these new announcements every — just before the quarterly results divert attention in the investor call into new areas, where you don’t have numbers. So what is the reason for bringing all these things? That is the first question.

Second question is, there is a reduction of 15%, that means INR18 crores from cash and cash equivalent in last three months. What is the reason for this large reduction in the cash and cash equivalent? These are the two questions.

Vinod Kumar — Managing Director and Chief Executive Officer

So first, on the partnership, I don’t think that at this point in time, we are providing the breakups of revenues from individual customers or individual partnerships. The idea of this partnerships is not just from an investor standpoint alone. This is — these partnerships are announced from a market, from a trade perspective as well, because we wanted to announce this partnership so that it helps us to go and build a portfolio together and take it to the customers. So, this is something which we are, I mean, in this particular case, both Jio and Subex decided to announce this partnership because we wanted to…

Jagtap — — Analyst

I’m not talking about Jio, because Jio, you will not have a number today. I’m asking about Snowflake, which is announced last year.

Vinod Kumar — Managing Director and Chief Executive Officer

So, I think, all these partnerships are announced so that we can initiate the go-to-market activities. And that is what the partnerships are. And the timing of that is not based on when we conclude the partnerships, and it’s got nothing to do with any other matters. So that’s point number one. And we do not provide any customer or partner specific revenue contributions. And at this point in time, at least, we don’t have any plan to provide that. Whatever we are providing at this point in time is a region-specific and overall the product specific details is what we are focused on.

Coming back to the cash reserve part of it. I think one of the — we did have some spend that was going on back then the capex side of these things, because we have initiated the — we have expanded the new offices. And also, there’s a bit of a timing issue on some of the collections coming into moving from June to the July timeframe. So those are the reasons why there’s a short movement of the — and there’s some collections have moved from June to July timeframe. So those are the reasons why there have been a reduction of almost close to about INR18 crores when it comes to the cash equivalent. But those things will come back as we get into this quarter, Jagtap.

Jagtap — — Analyst

But are you going to update next quarter that whatever money is drawn from the cash and cash equivalent, you’ve written that to the cash and cash equivalent?

Vinod Kumar — Managing Director and Chief Executive Officer

We will provide the details of what is the cash equivalent at the end of the next quarter. And that’s something which we are reporting as a normal thing in our investor deck. So that will get reported and that should give you the view of how things are.

Jagtap — — Analyst

Do you mean to say that there is no revenue from Snowflake in last one year?

Vinod Kumar — Managing Director and Chief Executive Officer

Sorry, can you come again?

Jagtap — — Analyst

Do you mean to say that there is no revenue from Snowflake partnership in last one year?

Vinod Kumar — Managing Director and Chief Executive Officer

We have leveraged that partnership. And not only with that, all the partnerships that we are leveraging to significantly progress HyperSense. And the HyperSense success we have today, they have already had seven customers already in HyperSense. And we are leveraging our cloud and other partners significantly to make progress on this matter. At this point in time, while we have announced a few things based on the go-to-market strategy, we are also working with several other hyper scalars to ensure that we have very tight relationship with most of them. And as you will see going forward, we will start announcing the other ones also.

So, HyperSense, these partnerships are the primary go-to-market avenues for us to take HyperSense to the market. So most of the revenues that we are getting from HyperSense are related to the common efforts between our effort and some of these partnership efforts, Jagtap.

Jagtap — — Analyst

That is same thing I am asking, is there any revenue from Snowflake? Yes, or no?

Vinod Kumar — Managing Director and Chief Executive Officer

I would not — as I already clarified, we will not be providing any specific information on any partnerships or any customer related things, which is not — we are unable to provide those details, because of the confidentiality that we’ve signed with customers and partners.

Jagtap — — Analyst

We are not asking customer. We are asking whether revenue generated from partnership or not?

Vinod Kumar — Managing Director and Chief Executive Officer

No, that’s what I’m clarifying. We would not be able to provide because of the confidentiality that we have signed with the partners as well for the specifics of this relationship.

Jagtap — — Analyst

So, these INR83 crore whatever revenue there, what percentage is from old business and what percentage is from new business?

Vinod Kumar — Managing Director and Chief Executive Officer

If you talk about the new business, if you’re talking about the IDcentral and the Sectrio part of it, we generated close to about $250,000 from these two lines of business, from $250,000 will translate to — $250,000, I mean, that adds what, $250,000 is what we generate — $250,000 is what we generated from these two product lines in the quarter one.

Jagtap — — Analyst

So, it is less than 4%?

Vinod Kumar — Managing Director and Chief Executive Officer

Yes, correct.

Jagtap — — Analyst

Okay. Thank you.

Vinod Kumar — Managing Director and Chief Executive Officer

Thank you, Jagtap.

Operator

Thank you, sir. The next question comes from Amit Mishra, an individual investor. Please go ahead.

Amit Mishra — — Analyst

Hi. Hello, Vinod. Am I audible?

Vinod Kumar — Managing Director and Chief Executive Officer

Hi. Yes, Amit, go ahead.

Amit Mishra — — Analyst

Yeah. Congrats on showing growth in the quarter in seasonally a weaker quarter, so good performance there. But bottom line is still we need to see like how we get, because margins gone down quite a bit. I have just one — few questions are already answered. I’ve just a specific question on Jio platform partnerships you announced recently. Our PR says that JPL will offer its cloud 5G core to telcos globally along with Subex HyperSense. So, I want to see how it will be operationalized, because JPL being subsidiary of Reliance, itself is a telco, won’t there be a conflict of interest with other telco clients when you take JPL JV with Subex HyperSense, while dealing with 5G on it’s consists of sensors, data and everything. So, I want to see like, what’s the plan? What’s the roadmap for this? Is it just a specific course? Or it’s open to other enterprises…

Vinod Kumar — Managing Director and Chief Executive Officer

Okay. Look, I think it’s a JIO platform strategy question that we’re asking, or maybe I will not be the right person to answer that. But on the question, in general, we have cases I can point to…

Amit Mishra — — Analyst

Vinod, sorry, just let me read again, this is from the PR, so I want to be very clear…

Vinod Kumar — Managing Director and Chief Executive Officer

So, I’m clarifying…

Amit Mishra — — Analyst

I just — yeah, I just read from the PR, it says that JPL will [Technical Issues] its cloud native 5G code to telcos only. So I just want to specifically understand that. Yeah.

Vinod Kumar — Managing Director and Chief Executive Officer

Yeah. So if you look at globally, that trend has been set by a company called Rakuten — Rakuten RC, it’s called Rakuten Communication platform, which is an operator in Japan, and Rakuten have had wins across the board for their platform. So, I think things are getting more and more opened up and people are looking at leveraging some of these platforms and the cloud native nature of such platforms to both reduce their operational costs and have good curve go-to-market.

Now, so therefore, I think our focus, while we are supporting our customers similar to Jio in ensuring that when it comes to AI, we’re providing a robust platform and all the enablement so that they can create whatever it is required as the right service offering both for their potential telco customers and also for the enterprise customers. So that’s where our focus is and — our focus, as I told you, that — we are — our focus is a lot of enablements like, with today, we have enabled in some telco’s, we are enabled more than the entire technology team on our platforms where they are able to generate use cases without any support from Subex using our platform.

So that is precisely where we are going, and this is where I think our focus will be.

Amit Mishra — — Analyst

Yeah. I understand, but I see conflict of interest JPL being subsidiary of Reliance with other telcos. Okay, I understand the solutions can be taken to other enterprises outside telco ecosystem. Okay. And second question is on IDcentral. I saw you provided some number on the presentation, and I saw ARR of $46,000 in this quarter. So it has been like dive, six quarters, I think the ramp up has been very slow. So, I want to hear like future roadmap there, like what sort of expectations you have, not guidance, per se, but what sort of expectation and are there like, it’s very competitive in India and we are — the markets we’re operating in and some bits on Sectrio, because there is not update except the clients on Sectrio. These are two focus areas — new focus areas, so we want to hear more on these things.

Vinod Kumar — Managing Director and Chief Executive Officer

So, on the — let me start with IDcentral and IDcentral, as I mentioned, some of our — we did have a dip in the number of API calls that we had in this quarter on account of the low activity from the crypto customers. But by and large from an MRR and ARR standpoint, I guess that that is getting bridged, because we have started also onboarding telcos — telco customers, where the ARR is significantly higher. If you recall, our MRR used to be something like — on average used to be $850 to $1,000 per month, but from Telco customers, we are talking about upwards of $10,000. So, therefore, that is a nice segment. And we have had the first success. We have gone in production in one of the customer and we have a lot in the pipeline in a similar one.

So, it is competitive. And I guess where the focus is on to ensure that we are able to provide at the right cost and much higher accuracy so that we can swap the customers from their existing providers to our customers. We started with smaller tier customers, we are getting into the mid-tier customers as we see, and it was stabilized. And we will — our intent is to get into a get to a kind of $100,000 MRR is our near time objective. And with the Telco addition, that is — we still hope to get to our internal timelines that we are kept for ourselves for getting the $100,000 MRR.

With respect to the Sectrio, as I told you…

Amit Mishra — — Analyst

It was — just very quickly, Vinod, why I asked on position in IDcentral is recently, L&T Infotech, they partnered with Saviynt to deliver Intelligent Identity Solution. So, I think other players are also, like existing competition is there and new players coming in with specific partnerships. So, if we, like ours has been a bit slow, I would say. I understand we have made progress. But are we losing the grip in the market? Because, like we have to scale up quickly this year, each and everyone to…

Vinod Kumar — Managing Director and Chief Executive Officer

Look, I think, it’s a — yeah, it’s a very large market. So, I guess there will be a lot more new players coming in. We are taking the right steps on our — directionally, what we are looking at is to, as we said that, we are looking at getting the account aggregator — getting into the account aggregator side, and prices. Eventually, we want to leverage the telecom data to solve identity analytics and take it to the next level. That’s directly where they are going. But I think it works, because those setups are being done and we are in the approval process to get the working done with TRAI and others to ensure that we are there when that approval happens so that we can bring in the telecom data to solve the identity issues for the country.

So that is the big change that when will happen because we understand that data very well and we are well-positioned to take advantage of that. Till that time, we are improving our technology. And we are building our API’s, I mean, the suppliers have been there for a much longer time, so they’re much more API with different databases. So we are on an ongoing basis, building the API’s which need to be prioritized for our existing set of customers. And with the telco addition is there, I think, we will have a different telco customer addition, we will have — internally, we will get together wherever we want. That’s not to say that there will not be competition, very intense market, but we — with the telco advantage — telco data advantage, we think that, we will have a good stay and we will be able to compete on that.

Now, if I could — Amit, if I could move to the question on the Sectrio side, I think we are in the process of building the large RFPs in the country. As I said, we have — some RFPs have come in quarter one and decisions will happen in quarter two, and we will see that we will have some interesting additions as customers as we get into quarter two from the Indian customer segment, because those are things that the RFPs will get concluded in the course of next year. So, we are definitely leveraging the initial wins we have and also significantly leveraging the Make in India angle, particularly when it comes to infrastructure — providing security solutions to the infrastructure segment.

So, things are going well, and as I told you, by quarter two, we’ll have some interesting additions as customer base.

Amit Mishra — — Analyst

Okay, thanks. Thank you.

Operator

Thank you, sir. The next question comes from Chirag Kachhadiya from Ashika Institutional Equities. Please go ahead.

Chirag Kachhadiya — Ashika Institutional Equities — Analyst

Hi, sir. I have a couple of basic questions, like what exactly our role in the client ecosystem in telecom related capex and the other offering which we do to the client in various industries?

Vinod Kumar — Managing Director and Chief Executive Officer

Okay. So in the telecom segment, we offer — we work — lot of customers we work are in the range of revenue management, where we talk about fraud management, revenue leakage prevention, and partner billing. So, these are the three core solutions that we have. Recently, we introduced the whole analytics platform with this AI/ML platform, which we’re talking about HyperSense AI, that is something which is the growth area for that we have identified for us. And at this point in time, we are in various POCs, and again, the announcements that we have on the partnership with Jio platform was around that area. So, this is what we do on the telco segment and the core segments.

On the new areas, we have two areas, one is security, where we are working on the OT and IoT security area. And identity analytics, we are looking at solving the basic identity issues when it comes to digital customers and digital customer onboarding like the e-KYC, starting with e-KYC, transaction monitoring and things like that. These are our current set of products. The larger umbrella all these products can be put together in the larger umbrella of Digital Trust. So, that’s the space that we work in Digital Trust, but some of the products, I have already listed some of the specific product areas that we focus.

Chirag Kachhadiya — Ashika Institutional Equities — Analyst

And sir, the reason to change this promoter category to public, you can guide why is this change?

Vinod Kumar — Managing Director and Chief Executive Officer

So that the promoters moved, I mean, the original promoters moved out way back in 2012, and then post that, there were some technical reasons why they had very little to do with the company after that timeframe. And there were some technical reasons why this could not be done till now. So, it is pretty much at that angle. So, the promoters, the original promoters that have been not connected with the business from quite almost a decade, they are not being connected with the business. So, it is just some technical reasons why we couldn’t remove them till now and that has been cleared now and therefore, we are moving them into a separate category.

Chirag Kachhadiya — Ashika Institutional Equities — Analyst

Okay. And sir, I want to know like your order book mechanism. What is the percentages of annuity and what is less than 12 months order which we do with client, the bifurcation I want?

Vinod Kumar — Managing Director and Chief Executive Officer

So, the annuity at this point in time will be almost 65% to 70% of our total business will be annuity-based business. But interestingly, we are changing into a subscription model. So, I guess that from a licensed to a subscription model, so subscription in a way is a kind of repetitive business. So, if you look at managed services and the annuity will get replaced by the subscription business. So we are going through a transformation from a license and support — subsequent support to a subscription-based model, where in a year’s time, most of our revenues will be subscription-based revenue which will be ARR-based revenue.

The second question I did not fully understand, but if your question is that is our contracts below 12 months. Most of our contracts that we sign with customer on an average will be around three years, but in some cases, it will be as long as five years in some cases it will be also sign up two-year deal. So, on average, it’s — what we sign is a three-year deal with customers.

Chirag Kachhadiya — Ashika Institutional Equities — Analyst

So, who are the other players who do similar job like we provide to clients? I mean…

Vinod Kumar — Managing Director and Chief Executive Officer

We don’t have any competitor in the country. our — we have different competitors when we go through the individual product lines. We do have a product — a company called Mobileum, who competes within the revenue management side of things. When it comes to HyperSense AI, there are many players who are — and the Gartner has listed recently to about 15 to 20 players who are in the multi-persona AI/ML platforms. But as I noted earlier, we are the only one with a telco focus at this point in time.

When it comes to Sectrio, OT/IoT there are about three, four large players, and again, none in the country. On the analytics we have a lot of players locally, as well, there are about three, four players, which we — which are playing in the IoT analytics side.

So, across the globe, we can’t talk about a single competitor that we have, but in different product categories, we have different competitors.

Operator

Chirag, sir, I’m so sorry to interrupt. Can you please join the queue for more questions? I’m really sorry.

Chirag Kachhadiya — Ashika Institutional Equities — Analyst

Okay, fine.

Operator

Thank you, sir. The next question comes from Mahesh Kumar, an individual investor. Please go ahead.

Mahesh Kumar — — Analyst

Yeah, good afternoon. I have question related to total contracted backlog and backlog for 12 months. If you see last quarter, March quarter and this quarter, there is a decline and there is no growth in the total contracted backlog. So, what is the reason for that?

And second one every quarter, you are telling performance is as per expectations, but we don’t know what your expectation. Unless we know expectation, we will not come to know what is expectation. On every investor call, you are giving a very rosy narrative about the products and services, but it is not backed up by the numbers. What is the reason for that? This thing happens continuously for eight, 10 quarters, the trust on the management will diminish. So how you’re going to address this issue?

Vinod Kumar — Managing Director and Chief Executive Officer

Yeah. So, Mahesh, I think the first point is that all the three areas that we’ve identified are new areas, which are high growth segment, but it’s not an existing well-established area. This is brand new areas, right? So, it takes time for both for the market to be established and thereafter establish in that market as a leader thing. So, if you look at OT/IoT security, of course, the loT — we started with IoT security. It did have some impact because of the COVID, because the — IoT projects got delayed. We pivoted to OT security which is evolving as a very important subject kind of tech.

Identity analytics is again with digital onboarding, it is a growing area. And AI/ML platform is a growing area. So, while I really appreciate from where you are coming, saying that when will that — when will these new products start giving contributing a sizable revenue to it. We are confident, Mahesh, that as we go along, these things will play out as we are expecting.

And coming to the point of last couple of quarters, my narrative has been that financial results have not been in line with my — our expectation. This quarter, it is different. This is what we are expecting. And also please bear in mind that we are going through the transition of the license to a subscription model where it is getting — the contracts are getting executed from a revenue standpoint of over much longer duration than earlier. So, multiple transitions are happening at this point in time. So, I guess, I presume that once we get into a steady state when it comes to the subscription revenue, then probably it will be a better position for us to provide you at least some sort of expectation saying that quarter-on-quarter growth, we are expecting so much. So, all these transitions are what is affecting at this point in time.

But I think what we are very, very clear is based on the POCs and the partner — and the interest that we are getting from transition — from strategic partners. Directionally, we are in the right track, and we are logged on to some of the high growth areas in the future. So that’s t where I would want to respond to that. But I understand from where you’re coming. And hopefully, I think, we have started providing more details into some of the new areas like IDcentral, we are providing with a number of customers, the MRR. We are listing the MRR. And also, we have started the API pulls. We will start similarly for some of the new areas, which will give you the confidence of how some of the progress that we’re making in this new areas, Mahesh.

Mahesh Kumar — — Analyst

When you’re going to reach this steady state what you mentioned just now?

Vinod Kumar — Managing Director and Chief Executive Officer

We’ve just started — like in the HyperSense, we have just started — we have secured now seven customers we have started deploying. And as I told you, by the end of this quarter, most of our ROC-based deployments are coming to an end. So, most of the new deployments going forward will be on HyperSense. So probably by the next two quarters, we will get to a stage where most of our revenues will be subscription-based revenues. And thereafter, we should be able to get a view that, okay, now most of the revenues or bulk of the revenues are subscription-based revenue. And then you’ll slowly see the growth from there.

Mahesh Kumar — — Analyst

Yeah. I will still request that you should do some expectations or guidance, it may be pessimistic, nobody’s going to punish you for that, but we are not able to judge how the Company is performing. If you see the IoT — if you see the Sectrio, we don’t have any new logo added in the last quarter.

Vinod Kumar — Managing Director and Chief Executive Officer

Yeah. So we have not added any new logo, because I think as I told you, we have — we are working on the RFPs. And you’ll see that addition happening in next quarter. So, we have not had any new logos added in the Sectrio for quarter one. And our expectation is that we will have some very, very important logos added in quarter two, and that’s what we’re started doing. So that transparency is there that we are providing which are the customers we have added and probably very soon, we will start providing the details of the, from the revenue standpoint also for some of these new areas. So the next will be the HyperSense AI. But at some point in time, we will start reporting the number of users that we have on HyperSense AI, that was that some of the key area. Our vision is to have 100,000 users for HyperSense AI by 2024. But we’ll see how we explore on that. So far things have happened — things have started well, but a lot more work needs to be done, Mahesh, on that side.

Mahesh Kumar — — Analyst

So, please give some guidance. It may be pessimistic. We’re not able to judge performance. Please consider that, because without that, it’s very difficult to analyze the Company and to take action whether to remain invested or exit the Company.

Vinod Kumar — Managing Director and Chief Executive Officer

Okay. I hear you. I’ll come back to you, Mahesh.

Mahesh Kumar — — Analyst

Okay. Thank you.

Operator

Thank you, sir. The next question comes from Hemal Kapasi, an individual investor. Please go ahead.

Hemal Kapasi — — Analyst

Hello?

Vinod Kumar — Managing Director and Chief Executive Officer

Yes, go ahead, please.

Hemal Kapasi — — Analyst

Sir, I just wanted to know that in the — our last investor presentation, you had mentioned that in Sectrio, we have started deploying for SBI. So, there were 5,000 I think installation is to be done in the initial stage. And then we were expecting that if anything goes okay, then we might install another — around 3,00,000. So, what is the status of this deal?

Vinod Kumar — Managing Director and Chief Executive Officer

So, we’ve added — we’ve — there are two sites, one site has gone into production. Obviously, we can’t provide more details of that. So, one site has gone to production and the other site, we’re expecting — there are two sites that we’re deploying. The other site, we expected to go into production during the course of this quarter. And thereafter, we will start expanding into other areas.

Hemal Kapasi — — Analyst

So, we are the only Company for which they are taking demo or there are other players also for whom SBI is doing the same exercise?

Vinod Kumar — Managing Director and Chief Executive Officer

So, these are not demo, these are real commercial deployments. So, it’s not demo that we are talking about. We’re deploying and it’s getting into production. And for this particular range, we are the only provider.

Hemal Kapasi — — Analyst

Okay. And have we got any queries from them, or they are going ahead with our product?

Vinod Kumar — Managing Director and Chief Executive Officer

So, I think it’s not that a demo or a proof of concept. It’s a contract that we have got for deployment across the entire thing. As I said, we have got one site has gone into production. There is another site that we are taking into production during the course of this quarter. And subsequent to that, that we will roll out to execution [Phonetic]. So it’s not a demo or something. We’ve got the contract for the full rollout.

Hemal Kapasi — — Analyst

Okay, sir. Thank you very much and best of luck.

Vinod Kumar — Managing Director and Chief Executive Officer

Thank you.

Operator

Thank you, sir. The next question comes from Ashish, an individual investor. Please go ahead.

Ashish — — Analyst

Hello. Basically, I just want to understand as to where is the Company’s policy of switching from a new contract model to subscription-based model and at the same time, launching new products, which is basically creating problems and not able to manage both things together. That is one, which we want to know also within telcos are the…

Operator

Ashish, I am sorry to interrupt. Can you please come to a noise free area?

Ashish — — Analyst

Just one second. What I mean to say is…

Operator

Can you speak a little louder, please?

Ashish — — Analyst

Yeah. There is a there is a problem, which I feel is companies facing in terms of launching new products as well as moving on to subscription-based model, which is creating problem on revenue generation. So, is that true? And also, within the telcos, are we concentrating majorly on only Asian and African telcos. And we do not have any major, big players of U.S., Europe, and Japan, and China? Thanks.

Vinod Kumar — Managing Director and Chief Executive Officer

Okay. So, first question, I think it is not a problem. It is a phase that one need to go through when you’re moving from a license to a subscription model. And when a lumpy revenue gets distributed over the years, and that we are going through that same process. So, it’s not a problem. It’s a process that one needs to go to. And directionally, I think, it’s the right decision to move into a subscription model as most of the world is moving into. And therefore, we have embraced on that. So, we have — from a timing perspective, I think the timing is right, that the telco segment is also moving into that area.

With respect to our customer base, we do business in over 100 countries. And most of the — I mean, if you look at the top 75% of 75 telcos, out of the top 100, 75 telcos — the top 7 will be of customers. So we do have customers across the board, in AT&T, Verizon, T Mobile, Sprint, BT, Telefonica, most of the large brands in Europe and U.S. will be our customers. We do not operate in the market of China, Japan and Korea, because of language challenges and things like that. Those are the markets that we have not entered into. But the wider Europe, North America, and any — Middle East and Africa and APAC are our strong regions. We have customers, most of the large, large telcos are our customers for one or other range of products.

Ashish — — Analyst

What is our market share in developed markets there?

Vinod Kumar — Managing Director and Chief Executive Officer

So, we’ve a — market share in the developed market, I think, if you look at, we are doing very well. If we look at our market share of the total revenue, I will say that Europe, Middle East and Africa would be the majority, followed by America and APAC and then will be India. So, most of our customers are in Europe, Middle Ease and Africa.

Ashish — — Analyst

No, my point is, sir, excuse me, my point is developed market size, out of that, where do we stand? How much is our share in that market?

Vinod Kumar — Managing Director and Chief Executive Officer

Okay, all right. Okay. So, if you look at the mainstream players, I mean, between us, we have what 30%, 35% of the market. And in the developed markets, I would say that probably in North America, I would reckon that we would have maybe about, let’s say, I’m talking about the mainstream players, we would be about, let’s say 40 — 60-40 by us and 60 to our other competitors. And the Europe will be I would say slightly more, maybe again, 65-35, because they are based out of that region. So that’s how I would put the market share between the two top competitors in these two markets.

Ashish — — Analyst

So, does that mean that all IT providers in the telecom sectors are facing the same problem what you are facing in developing revenue?

Vinod Kumar — Managing Director and Chief Executive Officer

Look, I think we are a product company. We’re not a services company. So, I think that dynamic is there. So, the product companies we look at, we are one of the product companies from this part of the world who is got a very good market share, global market share and a global presence. A product company, a telecom product company from the country, we have got a reasonable coverage across North America and Europe and compared with any other provider from this part of the world.

Ashish — — Analyst

And switching from a license to subscription model and that should stabilize — it would take another two years, more?

Vinod Kumar — Managing Director and Chief Executive Officer

We will take two years to convert all our existing customers into that model. But as I said, all new implementations that we are having, it’s on our HyperSense subscription models. So, you will see that starting Q3 onwards, most of our revenue, let’s say, the bulk of our revenue, new revenues will be on subscription model. So that’s not to say that every customer of ours will be converted. We have about 250 installation, so it’s not possible for us to upgrade everybody to subscription model, it will take time. But most of our revenues will move into subscription model, starting Q3.

Ashish — — Analyst

Starting from?

Vinod Kumar — Managing Director and Chief Executive Officer

Starting Q3 — Q2, Q3. This quarter is where most of our old platform-based implementations are coming to an end.

Ashish — — Analyst

So, if I say sir, that one year license fee agreement — license fee gets distributed for how many years in the subscription base?

Vinod Kumar — Managing Director and Chief Executive Officer

Well, it’s not as straight calculation like that, but you could argue, I mean, I gave the example of this one contract where we just announced for $3.5 million. And $3.5 million, we would have recognized bulk of it over 12 to 18 months’ time, that is getting spread over five years. So, that’s the impact that we are talking about.

Ashish — — Analyst

So, basically, a revenue stream of two years is getting distributed in five years or six years?

Vinod Kumar — Managing Director and Chief Executive Officer

More or less, on an average you could say that, yeah.

Ashish — — Analyst

So, unless and until more number of clients or more deals are cracked [Technical Issues] increase the revenue numbers in the next two to three quarters?

Vinod Kumar — Managing Director and Chief Executive Officer

Yes, but we also have the ability to move more additional use cases on top of this platform, right? So, the platform we are moving into this model not because of our existing. With this new HyperSense we have now the ability to reach many other parts of the organization which we could not do that with the earlier platform. So, while it is true that if you talk about fraud management or revenue assurance, the one year or the 18 months revenues getting spread into five years, but this also gives us the opportunity for us to get more use cases on top of this platform, which was not the case earlier. So, today, we are talking about the CMO, CTO, many other parts of organizations to bring other than use cases on top of the platform and based on the compute of the platform we will start generating additional revenue from an existing customers which was not the case earlier.

Ashish — — Analyst

And sir, we — I had asked couple of conference call back about each categories of product, which we are venturing into the new products, you had talked about the market size, but about the possible world competition, because we are into the international market. So, who are the major competitors to us in this products, new products? You had said that you will share after a couple of quarters, but that is not coming.

Vinod Kumar — Managing Director and Chief Executive Officer

Look, I think…

Ashish — — Analyst

We need to know as to whom are we compete against.

Vinod Kumar — Managing Director and Chief Executive Officer

Right. Okay. Look, I think we are providing the individual product categories in the investor deck. I think that with respect to the — I request you to kindly if you can just share this with the Investor Relationship, we will provide you the category wise competition, please. So, in the investor deck, we have provided the product categories that we are working, of course, the competition is not something that is covered, but if you can just send a note to our Investor Relationship, we will provide you that information.

Ashish — — Analyst

Because I suppose that will give a very clear picture as to where do we stand and what are our chances of gaining more market share.

Vinod Kumar — Managing Director and Chief Executive Officer

Sure. Of course. Yeah. You can — I mean, if it is helpful for you, kindly send a note to investorrelations@subex.com and we will provide you the clarification on that, yeah.

Ashish — — Analyst

Okay. Thanks for your time, sir. Thank you.

Vinod Kumar — Managing Director and Chief Executive Officer

Thank you.

Operator

Thank you, sir. The next question comes from Ramesh Pillai, an individual investor. Please go ahead.

Ramesh Pillai — — Analyst

Hey, hi. Just two questions. One is specifically around the updates provided for IDcentral. So over there, the revenue, it reflects $0, so the query is, is it more of a POC around the last year, which was provided? And second, the API was — we see a drastic reduction of $4 million to $1.6 million. So, did we lose any customers? These are the two.

Vinod Kumar — Managing Director and Chief Executive Officer

Okay. So I think I clarified multiple times on API pull thing. So, the API pull came down on account of — we are catering to several crypto customers and there was a reduction in the activity from our crypto customers and therefore, the API pull came down.

I think with respect to the revenue, I think, we are talking about the revenue — our revenue is listed quarter wise. So, it’s not that with zero revenue. And so, it is the first shot in the investor deck slide provides the details of the revenue. So, we have — most of the customers are, I mean, all the customers listed are revenue base customers or commercial engagements at the end.

Ramesh Pillai — — Analyst

Okay. Maybe again, it’s a typo, because it’s $0. One last suggestion, can we have in the investor deck that everything is in streamlined as an USD and INR is getting used interchangeably. So can we keep it normalized, just a suggestion.

Vinod Kumar — Managing Director and Chief Executive Officer

Sure. We will normalize it to one currency. Just on that revenue, it is 000, it is say that the numbers indicated are in thousands. So, that’s how it is mentioned.

Ramesh Pillai — — Analyst

Understood. Thanks.

Operator

Thank you, sir. Ladies and gentlemen, that would be the last question for the day. I now like to hand over the floor to the management for closing comments. Over to you, sir.

Vinod Kumar — Managing Director and Chief Executive Officer

Thank you. We thank you all for taking time for attending this call and your continued interest in Subex. You can always reach out to us at investorrelations@subex.com if you need any further clarification. Thank you. Stay safe and take care.

Operator

Thank you, sir. [Operator Closing Remarks]