Tracxn Technologies Ltd (TRACXN) Q3 FY23 Earnings Concall Transcript

Tracxn Technologies Ltd (NSE:TRACXN) Q3 FY23 Earnings Concall dated Feb. 08, 2023.

Corporate Participants:

Rishi Jhunjhunwala — Investor Relations with IIFL Securities Limited

Neha Singh — Chairperson and Managing Director

Prashant Chandra — Chief Financial Officer

Analysts:

Bhargav Buddhadev — — Analyst

Vivek Sethia — — Analyst

Amit Chandra — — Analyst

Samir Goswami — — Analyst

Pratyush Agarwal — White Oak Capital Management — Analyst

Ayush Vimal — — Analyst

Presentation:

Rishi Jhunjhunwala — Investor Relations with IIFL Securities Limited

Good evening, ladies and gentlemen, thanks for joining us today on the Third Quarter of fiscal ’23 Earnings Call for Tracxn Technologies Limited. On behalf of IIFL Institutional Equities, I would like to thank the management of Tracxn for giving us the opportunity to host this earnings call. Today, we have with us Neha Singh, Co-Founder, Chairperson and Managing Director; Abhishek Goyal, Co-Founders, Vice Chairman and Executive Director; and Prashant Chandra, Chief Financial Officer with us.

With that, I’ll hand it over to Neha and Abhishek to give their opening remarks and we will then open it up for Q&A. Please use the raise hand option to ask the question or you can also submit your questions in the Q&A box at the bottom of your screen. Thanks and with that, over to Neha.

Neha Singh — Chairperson and Managing Director

Thanks a lot, Rishi. Welcome, everyone. Thanks so much for joining us today for our second earnings call for the third quarter and the nine months, which ended on December 31, 2022. We are very excited to present our results. In terms of the format, we would like to run through a short presentation and share some of the highlighted for the period. I will also give some commentary along, which will be helpful in the overall understanding. And we will follow that up with a Q&A session.

Hope you are able to see the slide deck. Request you to go through the standard disclaimers for this presentation. Quick recap on our business Tracxn is a data and software platform for the private market globally. If you look at the public market, it has created multiple large companies, many of which are highly cash-rich profitable companies. As private markets are becoming large and important, it will also create platforms like these and we are building a global platform in this space. Our customers include venture capital funds, private-equity fund, investment balance, as well as M&A teams and innovation teams, and large Fortune 500 corporations. Also, it’s a global platform. So, nearly 70% of our revenue is international, and we have customers in over 50 countries.

I would like to first summarize — start by summarizing the financial performance for Q3 of the current financial year. Just to note in our first analyst call on the bottom-line side we had used adjusted EBITDA and PAT one feedback which we had received post our call was that the investors did not want to exclude the non-cash expenses like the ESOP charge, as these are ongoing cost of doing business. And more broadly speaking, they expected us to move to the raw bottom-line numbers of EBITDA and PAT over time. So we have incorporated this from the second earning call itself, which is from this one onwards. So in this deck, we will be talking about EBITDA and PAT.

Just to note this is no new information because we had already given these numbers as well as the competence earlier. So only thing which has changed is that in the narrative and the charts, when we talk about this, we will be referring to the EBITDA and PAT numbers. A big thanks to also some of our investors for this feedback and we’d request you to please keep it coming. To set the context, we are one one business, one legal entity. So, you’ll not see terms like standalone or consolidated. All the numbers, that I’ll talk about is for the business overall.

The revenue from operations for Q3 FY ’23 was INR20.3 crores, which is a 23% year-on-year increase. Total income was INR21 crores, which is a 25% year-on-year increase. This is the annualized run-rate of INR84 crores. Coming to profitability, EBITDA was INR0.8 crores. Just to add this EBITDA includes all the non-cash expense like the ESOP charge as well. PAT for the same period was INR1.4 crores. Just to note, the PAT that you will see in the financials is INR6.2 crores, because this also includes an extraordinary item of INR4.8 crores reimbursement of the IPO expense to the company. So this was expensed in the previous quarters and reimbursed to the company in the last quarter. So the PAT and the EBITDA numbers that you will see in this as well as the subsequent slide is only adjusted for this IPO reimbursement.

Moving on, the EBITDA margin was 3.9% and the pat margin was 7.1%. The other interesting aspect is that the business also generates free cash flow, which has been increasing. In the first nine months of FY ’23, the business generated positive free cash flow of INR7.8 crores, which is an increase of 149% on an year-on-year basis. Cash and cash equivalent stood at INR55.4 crores, which is an increase of 27% on an year-on-year basis, or an increase of INR11.7 crores in absolute terms on an year-on-year basis. So in this quarter, we saw continued revenue growth, investments in growth initiatives, and continued increase in free cash flow as well as cash and cash equivalents.

To summarize, the YTD numbers or all the financials for the first nine months of the current financial year, the revenue from operations was INR57.8 crores, which is a 25% increase on an year-on-your basis. Total income was INR60.1 crores, which is a 27% increase on an year-on-year basis. In terms of profitability, EBITDA was INR1.9 crores for the same period. PAT was INR4.1 crores for the first nine months. Again, the PAT that you will see in the financials is higher of about INR8.6 crores, because it includes IPO expense, which was previously expensed and reimbursed to the company in the last period. So the EBITDA and the PAT number that you’ll see in this slide, as well as in the subsequent slides have been adjusted only for this reimbursement. Just to note, this bottom line number that you see includes all the non-cash expenses as well. Moving on, the EBITDA margin was 3.2% and the PAT margin was 7.1%.

In the subsequent slides, I’ll be covering each of these metrics that we talked about in the summary slide in more detail. Starting with revenue, revenue from operations is essentially revenue from platform subscriptions. So 100% of our revenue is subscription based. There is no services or one-time implementation component, so that’s a fairly high-quality revenue. Also, please note that this is the accrued revenue. So though we do prepaid billing and collections, like most other financial data platforms that you might have used. We only recognize revenue for the time duration falling within the reporting period for which the services were made available. As discussed earlier, the revenue from operations for the first nine months of FY ’23 was INR57.8 crores, which is a 25% year-on-year increase. Total income was INR60.1 crores, which is a 27% increase, which is — I’ve also given the historical data for the last three financial year reference here.

Moving on, EBITDA for the first nine months was INR1.9 crores. If you exclude the non-cash ESOP expense, this was INR5.7 crores. We are just giving it because we had given the split also earlier. This INR1.9 crores EBITDA is an increment of INR3.6 crores on an year-on-year basis. That is from a negative INR1.7 crores to positive INR1.9 crores. In terms of margin, the EBITDA margin for the first nine months was 3.2%. This is an expansion of 7% on an year-on-year basis. So this continues to be an interesting aspect that you see in our business, which is the margin expansion that happens.

On similar lines, PAT for the first nine months was INR4.1 crores. If you exclude the non-cash ESOP expense, this was INR8 crores of PAT for the first nine months. This INR4.1 crores of PAT is an increment of INR4.8 crores on an year-on-year basis. That is from negative INR0.7 crore to positive INR4.1 crore. In terms of the margin, the PAT margin for the first nine months was 7.1%. This is an expansion of 8.6% on an year-on-year basis.

One of the key reasons for the margin expansion is that significant portion of the incremental revenue goes into the bottom line. To be specific, if you look at revenue from operations for the first nine months of this year, and compared to the same period last year, we added incremental revenue of INR11.5 crores out of which 32% or INR3.6 crore went into incremental EBITDA. Again, this is not one-off. Even if you look at the last two years from FY ’20 to ’21, 84% of the incremental revenue from operations went into increased EBITDA from FY ’21 to ’22, 77% of the incremental revenue from operations went into incremental EBITDA.

So to summarize, since the cost to serve incremental customer is limited, a significant portion of the incremental revenue moves into bottom line. The exact percentage of this varies across different periods, primarily based on the investments done across various growth initiatives during these periods. Coming to expenses, our total expense for the first nine months of FY ’23 was INR56 crores. This is the 16% increase over the previous year. If you see this is higher than what you had seen in the previous year, because of some of the growth initiatives that were undertaken during this period. We believe that these will help us accelerate revenue growth in future by helping us expand our sales effort as well as penetration within certain customer segments. I will also cover these initiatives in detail in the subsequent slides.

On the right hand side of the slide, we have also given the breakup of the expense across the key components. The key components are the same as what you had seen previously. Just to summarize, first is that bulk of the expense is team cost. So for the same period, 88% of the total expense was team cost, which has been in the same range across the last two years as well. So in FY ’21 and ’22, this was 88% and 89%, respectively, of the total expense. Also, to note, all our team is in-house. There is no outsourceD or contract workforce that we have.

The second largest line item is cloud hosting, which accounted for 3.4% of the total expense. as we do a lot of data processing and analytics, So this is one significant cost head that we have. This is followed by rental expense. The other interesting aspect is that we do not have a large paid marketing expense line item because we do not have a large paid marketing spend, neither digital nor offline, which is typically required for customer acquisition. The reason for this is that because we are a data company. we produce a lot of content and hence are able to use it to get a lot of organic traffic. So we are able to acquire leads fairly efficiently, which is reflected in our expense breakup.

So I wanted to take a couple of minutes to cover some of the growth initiatives and other initiatives, which I referred to in the previous slide. So one interesting initiative on the data side is that we are expanding financials and captable data sets of private companies on platform. For instance, financial and captables is one of the data points that we have for private companies among many other data sets. And today we cover financials of private companies across 15 — over 15 countries and captables of companies in over 10 countries. These data sets are particularly in demand by certain customer segments like private equity and investment banking among other segments.

Just to give an illustration, an investor is looking to scan an upcoming space like a specialty hospital chain or a T2C or an internet first brands in a particular country. Then in addition to seeing interesting companies and market landscape, they would also like to see, find out the ones which have, say, crossed INR50 crore of revenue scale. So since we now generate sufficient cash flows, we have invested across this initiative where we basically increase the throughput across these data engines. We believe that this will help us accelerate revenue growth in future, particularly in customer segments like private equity and investment banking.

Another interesting growth initiative is press mentions. We ideally want that whenever media, be it print or digital is talking about data about private markets or startup landscape or innovation landscape, they should quote data from Tracxn. This gives us a lot of brand mentions in a very relevant and targeted customer segment. So for this, we have done multiple initiatives like launch reports with media, data contributions. We have also signed up regular columns in some newspapers, etc. So this has resulted in multifold increase in the press mentions that we got across various respected media outlets. And we believe that this goes a long way in building a brand as a data company, and also it helps our sales conversion and hence our revenue growth.

Scaling of the inside sales teams spanning various geographies. So this is one initiative that we had talked about earlier. And since we now have good set of referenceable customers across various countries and have good lead pipeline, we have scaled the sales team also, which spans across various regions, which is basically inside sales, but they cover various regions. Just to note, most of the scale-up that we had planned to do in this team, this year has been already done. Another minor point is that like most companies, we are also encouraging more and more of our team members to start working from office. We had expanded office capacity for this during this period, which has led to some increase in rental and other overhead costs.

So to add, bulk of the increments which is needed for these initiatives, be it on the team size increase or the capacity increase or the rental increase is already done. We have seen — the other thing is that we have also seen that these initiatives are typically followed by an optimization phase, either through process or people optimization or through automation. We believe that this should also contribute to increased revenue momentum in future. Also we expect bulk portion of the incremental revenue to continue going back to the bottom line within the next two to three quarters.

Moving on, interestingly, despite these investments in various growth and other initiatives, the company generated positive increasing free cash flow and also increased cash and cash balance both on an year-on-year as well as on a sequential quarter-on-quarter basis. The company generated free cash flow of INR7.8 crores in the first nine months of FY ’23, which is a 149% increase or an increase of INR4.7 crores over the same period last year. Cash and cash equivalence ended at INR55.4 crores, which is an increase of INR11.7 crores on an year-on-year basis. We’ve also added the data on the free cash flow in the last three years, and you can see that this has been consistently increasing across the last two years as well.

In the subsequent three slides, we cover some of the other KPIs that we also track closely for our business. On the first slide, we cover the number of customer accounts, number of user accounts. So we closed December ’22 at 1,187 accounts and 3,391 users, both of which for 15% year-on-year increase. In terms of other KPIs, contract price or the invoicing amount for the first nine months for FY ’23 was nearly INR60 crores, which is a 20% increase over the same period last year. The last graph talks about the number of entities profile, which is a proxy to the amount of data that we added on the platform. So today we track more than 2 million profiles, including private market companies, funds, etc., globally.

In terms of some of the interesting characteristics, so 68% of the revenue in the first nine months of the current financial year was from outside India. If you look at it, this has been in the same range of about 70% across the last three financial years as well. These customers pan over 50 countries. The top five countries within this show similar spread to where you have the large corporates as well as private market investors. The top five countries for us by number of customer accounts are U.S., India, U.K., Singapore, Germany. This covers most of the key updates from the recent period. I will also take a few minutes to summarize some of the key aspects of our business. Quick recap on our journey. We launched the platform in FY ’13. Over the time, we’ve expanded our offering as well as the global footprint of customers. We got listed on NSE and BSE last year. We enjoy a significant cost advantage due to the cost arbitrage of make in India and sell globally.

The cost advantage is primarily due to three key reasons. First, though, we have global data and data on companies across countries, our entire data production and technology platform is built from India. Secondly, though, we have customers in over 50 countries, our entire sales primarily happens from India over video calls like these. Thirdly, we don’t spend much on paid marketing both digital as well as offline as a means to acquire customer, because we are a data company, we are able to do a lot of content marketing to acquire customers organically. Hence, we believe these things give us a significant and a long-lasting cost advantage.

Another key aspect is our experience Board and team. We’ve had a formal Board for over five years, which has ensured that the company has been fairly high on compliance as well as corporate governance. We have had PwC as the auditor for the last seven years with no qualifications across all these years. Apart from the promoter, we have had, Vivek Mathur from Elevation as an investor nominee, and we have four independent directors, which bring in very rich experience of having worked across various large corporates as well as private market funds.

In terms of our team, we have a fairly built-out and strong senior management team across VPs, AVPs, CXOs. Apart from that, we’re fortunate to have got the backing of key set of investors during our journey as a private company, as well as in our IP process. A key aspect of our business is a very robust, scalable and automated technology platform, which is essential in building a global data platform. At a backend, we track millions of companies. We use big data, machine learning to mine large data sets and bubble up new interesting companies every day, and we continue to invest across this technology infrastructure.

Lastly, one very interesting aspect is that we play in a very large and growing market. If you look at public market, it has created multiple large million-dollar-plus revenue companies. Cumulatively, these companies generate over $30 billion of revenues annually, and most of these companies are fairly profitable companies as well as generate large amount of free cash flow. Private markets have also becoming large today, for instance, the private market AUM has crossed $9 trillion globally according to industry report. Hence, it’ll also create large data platforms, and this is the space that we play in. Subsequently, we have some slides with the detailed financial statements, which people can go through in more detail.

Thanks. That’s all the key points that I had to cover. I will pass it back to Rishi for any Q&A that the group might have.

Questions and Answers:

Rishi Jhunjhunwala — Investor Relations with IIFL Securities Limited

Yeah, thanks, Neha. Thanks for the presentation. I would like to now request the audience to please raise their hands in case they have any questions. Or you can also put it in the Q&A box right at the bottom of your screen. The first question is from Bhargav Buddhadev. Please go ahead.

Bhargav Buddhadev — — Analyst

Hello, can you hear me?

Rishi Jhunjhunwala — Investor Relations with IIFL Securities Limited

Yeah.

Bhargav Buddhadev — — Analyst

So my first question is, if you can let us know what has been the ESOP-related expense in the quarter so that we get a comparable EBITDA growth number? Because in the presentation the EBITDA growth number looks very low because, I guess, it’s not comparable on a Y-o-Y basis.

Neha Singh — Chairperson and Managing Director

Right. So the ease — I will probably pass it to Prashant to give the ESOP expense for this quarter.

Prashant Chandra — Chief Financial Officer

So for the quarter the ESOP expense was about INR1.34 crores.

Bhargav Buddhadev — — Analyst

So the 5% Y-o-Y growth, which you’ve written in the presentation for the third quarter on EBITDA, if you adjust for ESOP-related spend, how much would it be? Because I guess in this quarter you have ESOP spend, which was missing in the same quarter last year, right?

Neha Singh — Chairperson and Managing Director

No. So we would have ESOP spend across all the quarters. Yeah, probably, Prashant, you can answer.

Prashant Chandra — Chief Financial Officer

Yeah, so the ESOP expenses also in the quarter previous year as well, I think it was more in the range of about INR80 lakhs or so. In this quarter it is 1.34 crores. So for both the year-on-year ESOP expense is inclusive.

Bhargav Buddhadev — — Analyst

So it’s mainly because of the ESOP-related spend that the EBITDA growth on a Y-o-Y basis looks lower, right?

Prashant Chandra — Chief Financial Officer

That, and also there are some in terms of the expenses that they had themselves so there were some teen increase which has contributed to the increase in the employee related expenses.

Neha Singh — Chairperson and Managing Director

Yeah. So I’ll just add to this. So basically the way to look at it, ESOP expenses, for us ESOP is not one-off. You will not find sort of a bulk grant or anything that is done. It is sort of a part of the appraisal process. So instead of — so we don’t have a cash bonus, for instance, in place for the employees, and instead of that, you actually give part of the appraisal as ESOP. So the ESOP as a percentage of your total employee expense that has probably been in the same range, and that across the quarters. So that is one, on the ESOP cost. The second thing is that the — basically the EBITDA margin that you see that is based on some of the like growth initiatives that we talked about, which has happened during this period, which would’ve contributed to how much of the incremental revenue has contributed to incremental EBITDA in this period. Hope that anwers the question, Bhargav.

Bhargav Buddhadev — — Analyst

Yeah, yeah. Secondly, are the new ESOPs also going to be issued at face value? Because now that we are a listed company, just wanted to check, if the incremental ESOPs should also be issued at face value?

Neha Singh — Chairperson and Managing Director

So just to say the ESOP pool, and so it’s the same as what is there — what was there in the DRHP. We have not created any new ESOP pool post listing. So it’s the — so the recent one was basically the same one, which was there in the DRHP, which was there pre-IP as well. So it’s just the same ESOP pool, which is there. The second in terms of the strike price. So that is actually going to be in the same policy. So that is, for instance, INR1. And the way to think about it is basically when we give — so for instance, a person is having a salary of say, INR15 lakh and when we are giving a part of their appraisal, say, INR1 lakh to INR1.5 lakh in ESOP. So it is basically given in cash terms, right. So basically, whatever ESOP worth off INR1 lakh to INR1.5 lakh is given as ESOP. So the actual strike price does not matter because it’ll be converted based on what’s the value of that. Hope that answers the question, Bhargav.

Prashant Chandra — Chief Financial Officer

Yeah, it does answer. It’s just that shareholders get diluted. So, that’s the only reason. No problem.

Neha Singh — Chairperson and Managing Director

But this is not new pool. This is the same pool that was already there earlier.

Bhargav Buddhadev — — Analyst

Yeah, but number of shares do increase, right? Once the ESOP gets listed.

Prashant Chandra — Chief Financial Officer

Yes.

Bhargav Buddhadev — — Analyst

So coming to your customer and user growth, it’s been now at about 15% Y-o-Y during the quarter. This number looks a tad on the lower side, given that we were highlighting that it’s a huge market opportunity. So why is the user count or the customer count growing at just about 15% on a Y-o-Y basis? Is it that we need to now spend on paid marketing, or how should we accelerate this growth number?

Neha Singh — Chairperson and Managing Director

Right. So coming to the customer growth, so if you look at it, the customer growth is 15%, but if you look at the correct — maybe to look at actually the revenue growth. So that has been — if you look at across the last three quarters, it has been — so like 23%, 28%, 23%. So that is probably the right thing to look at it, because the ASP is also been changing. If you look at it the ASP has actually increased. So from the last financial year, the ASP was INR6.5 lakh, if you look at the recent quarter, it’s just INR6.9 lakh. So there’s also growth, which has happened in terms of the account side. So I think the right thing to look at it is basically on the revenue growth because the ASP has also been expanding in the same period, right? That is one.

Second thing on the customer acquisition. So I don’t think we currently have need to move to paid marketing. Actually, there’s a lot of top of the funnel that we are seeing in the existing channels that we are working on through a lot of content marketing, through a lot of public pages or through a lot of other things that we are doing on the partnership front, etc. So we see a lot of sort of leaps, which is there. And that is also one of the reasons that we’ve also scaled the sales team, because we are seeing sufficient leads across different geographies, which we are actively working on.

Bhargav Buddhadev — — Analyst

Okay. Great, I’ll come back in the queue, and all the very best.

Rishi Jhunjhunwala — Investor Relations with IIFL Securities Limited

Anyone who wants to directly ask a question, please raise your hand. In the meantime, I’m going to just put forward some of the questions that have come in the Q&A box. So the first one is from Pratyush Agarwal, what is the positive USD impact on revenues, contract price, Q-o-Q and Y-o-Y?

Neha Singh — Chairperson and Managing Director

I believe this would — this refers to the Forex impact on the revenue group. So, just to actually summarize, we haven’t given the split of the revenue growth across Forex or existing or new, maybe we’ll give that on a later time, but just to get a sense on how Forex impacts our business. So one is that the Forex does not — if the currency depreciates or if the Forex becomes more favorable, it is not that it is going to have impact on just one quarter for us, because the way we book the Forex rate is based on the day that the customer was bid. So, for instance, if I have a customer who’s paying me annual upfront, and if I raise an invoice for them today, it’ll be booked on the exchange rate as on today, and we will accrue that revenue over the next four quarters based on the forex rate that existed today. That is one.

So similarly, even in the current quarter, we would have some part of the revenue which would’ve converted at Forex rate, which would’ve existed three quarters back, for instance, right? So the impact of the — so if for instance, the rupee depreciates, we do get the benefit, but the benefit will not be just in this quarter. It’ll be — part of it will also flow into the subsequent quarters.

Rishi Jhunjhunwala — Investor Relations with IIFL Securities Limited

Okay. The next question comes from Vivek Sethia [Phonetic]. Vivek, go ahead.

Vivek Sethia — — Analyst

Hi. Thanks, Rishi. Good evening, Neha. So I had a couple of questions, firstly, with regards to — I mean, I have some data keeping questions mainly. The first is, if you could give employee breakup for this quarter and the previous quarter as well, in particular the sales strength, sales team strength?

Neha Singh — Chairperson and Managing Director

Sure. So we had given the breakup of the employee cost as of end of June. We plan to give it probably also by the end of Q4. But the broad head, I want to break up of about 800 people that we had at that time. So about 440 is on analyst data operations. These are people that work across various data teams, modules like financials, captables, transactions, company data, sector focused analyst team, etc. Then we have an 81 member product and technology team, which is across engineering as well as product. Then we have a 220 member team across sales, marketing, and customer success. So this is your GPM team, which works across the entire funnel. From top of the funnel being marketing, sales, and as well as customer success, which helps in onboarding as well as customer expansion. And then there were 59 people that worked in business support.

Vivek Sethia — — Analyst

So, can you provide us with the latest numbers for the sales team for this quarter as well as for the previous quarter, the strength of the sales team?

Neha Singh — Chairperson and Managing Director

So we haven’t given that breakup, but my sense is that that the team’s strength — the sales team’s strength would have crossed 150 at the end of this Q3.

Vivek Sethia — — Analyst

Okay. And what are the total number of employees?

Neha Singh — Chairperson and Managing Director

About more than — about 850 plus.

Vivek Sethia — — Analyst

So it’s same as the last quarter.

Neha Singh — Chairperson and Managing Director

No, there is growth even from Q2 end that you see to Q3, there is actually growth in this team as well. So on a sequential basis, Q2 to Q3, the headcount has increased and primarily in these two teams. So one is your — the team that covers this data point, which is financials and captables, and the second one is the sales team.

Vivek Sethia — — Analyst

Okay. Okay. And secondly, I wanted to understand your user-to-customer account ratio. So what I see is there are 32 customer accounts that have been added during the quarter and 26 users that have been added during the quarter. So — and prior to that, like whatever historical data that has been provided, the ratio has been around three, like for every customer account, there are three users. So if you could explain this addition in this quarter?

Neha Singh — Chairperson and Managing Director

Right. So the user account would be from two ways. One is basically growth in the existing customers, and the other one is basically new customers that get onboarded. If you look at it bulk — a lot of the customers — a lot of the users would be from the existing accounts, which would have grown. So hence there would be a difference between these two.

Vivek Sethia — — Analyst

So, if you have onboarded, say, for example, in this quarter, you have onboarded 32 customers. So just on a comparable basis of like 3:1, the ratio that usually has prevailed over the prior quarters, like shouldn’t there have been addition of 96 to 100 users in this quarter? Like why only 26?

Neha Singh — Chairperson and Managing Director

Right. So this can be because of two reasons. One is basically — so every customer has probably some user to begin with. Plus second is that there might be some change in the users that would’ve happened in the existing base as well. So I think that…

Prashant Chandra — Chief Financial Officer

They would’ve reduced the account.

Neha Singh — Chairperson and Managing Director

They would’ve reduced, yes, that might be one this thing. Or the second thing is that if someone buys, we also have a package, which is API package. So there the number of users would be high. So the ASP is fairly high, the number of users would be low.

Vivek Sethia — — Analyst

Okay. And this breakup that you’ve provided, like 68% of the total revenues come from international, like outside India. Could you more specifically give out some more details like, how many of these are coming from, say, Americas region and others? Because the breakup that you had provided in your RHP and DRHP, according to that, if I see the realization, the realization from Americas and other international countries are far higher in comparison to that of India. So if you could provide that subset of international revenues wherein how much is from Americas and how much is from other countries?

Neha Singh — Chairperson and Managing Director

Right, right. So, in terms of the revenue, you’re right, like 68% is international, and the remaining is India. Out of this by revenue US is the largest part of this, which in the last financially accounted for 27% and followed by EMEA and rest of APAC. My sense is that, we will give that split again at the end of this year. That split would’ve varied marginally, not a lot. That’s one. The second point is actually correct. So the realization of international is actually higher. So if you look at the ASP on an overall basis, it will be INR6.9 lakhs, but if you compare the India and the international, the international is nearly 1.5x, the realized price is 1.5x, then what it is there for India. So that is correct. That is a function of how much users typically these customers end up buying, and hence the pricing for that as well. So yes, that is slightly higher. But that split has probably — should probably be in the similar range across regions.

Vivek Sethia — — Analyst

And just wanted to understand about this reversal of the IPO expenses that you’ve done in the P&L, could you explain like, what is that actually, because I couldn’t understand what is that?

Neha Singh — Chairperson and Managing Director

Sure. So, as part of the IPO, because it was an OFS IPO then the entire expense had to be paid by the selling shareholders. So part of the expense is basically expensed by the company initially and reimbursed to the company on successful completion of the IPO based on the shareholder agreement, which is there. And this is actually directly done from the escrow account itself. So when the IPO proceeds come directly from the escrow account itself, this basically the reimbursement happens. So like last quarter, we had anyways talked about even the numbers that we had given last quarter was basically taking this into account because we are expecting the reversal to happen in the next few months. And that has happened in this period. So it is — basically, you should look at the EBITDA and the PAT number net of that, because this is a one-off sort of expense and the reimbursement that has happened.

Vivek Sethia — — Analyst

Okay. And just one more thing on the operating level side of things, because, I see that excluding this reversal of IPO expenses, the incremental EBITDA margin has come down to 32%. So whereas it was 60% and 70% in the first two quarters of this year. So, like how do we see this going forward?

Neha Singh — Chairperson and Managing Director

Right, right. No, no. So that’s interesting question. And this is, I think, what is also interesting in our business that we should expect that bulk of the incremental revenue should continue going in the bottom line. There has been minor — so for instance, some of the growth initiative that we have done, which we have talked about, which have led to some cost increment, that is why you saw this come as 32%. And what — as also mentioned that basically it should normalize in the next one to two quarters, and we can expect bulk of the incremental revenue, which is more than ideally 50% to continue to move into the bottom line.

And just on that point, despite sort of these initiatives that we have done, both on a sequential as well as on a year-on-year basis, the cash and cash equivalents have increased and the free cash flow has sort of increased.

Vivek Sethia — — Analyst

Could you explain a bit more about those initiatives?

Neha Singh — Chairperson and Managing Director

Right, so these are the couple of the ones that I talked about. So one is basically investment in data. So, for instance, from some of the customer segments like private equity and investment bank, one of the requests that we used to get is request for financials and captables. We think that investing in this will help us go more deeper into this customer segment, as well as increase our sales conversion in these customer segments. So this is sort of one initiative that we have done. So, what that means is basically the number of the coverage of financials that we have across 15 countries of — over 15 countries across these data points, we’ll increase that within this year. That’s one.

The second thing which we talked about in the last call, which is just the continuation, is the expansion of the sales team. And third a minor operational thing. So for instance, like your rental increase and increase in some of the other expenses, which has happened, which is, sort of more operational also in nature.

Vivek Sethia — — Analyst

Just one more question I’ll ask. So as you said that, you’ve expanded your sales team, apart from just expanding the strength of your sales team, what are you planning to do or what are you doing to promote your business? Like, say for example, if you see PitchBook, PitchBook has been doing, sales and marketing expenses, whereas we see in our P&L the expense is negligible, the promotional expenses are negligible. So just wanted to understand apart from — like just to understand apart from increasing the sales strength like what else are we doing to promote our platform?

Neha Singh — Chairperson and Managing Director

Right. No, so that is — actually — so we are doing actually a lot of things on the GTM front. So if you look at the life cycle of our company we’re in the 10th year. The first five to six years were disproportional investment in technology, building the data platform, etc., because that’s the core IP of a data company. If you look at it in the last couple of years, more investment has gone or more initiatives have been on the GTM front as well. Like even if you look at in the team size and the expenses that have sort of increased that are a lot in the GTM side as well. And we continue to actually do a lot of things on that front. Just to give an idea on the top of the funnel, we have a very large sort of organic leads pipeline, which gives us lot of organic leads every month and every day.

We have over like 1,000 plus press mentions, which has been there. We have newsletters that we do. We have partnerships in some of the countries, right, for generating leads across corporate as well as private market investors across all these geographies. So that’s one on the top of the funnel. The second thing is the sales conversion, which is where the sales team comes in, which is they basically do demos over video calls and close the accounts. So that’s the second funnel.

Plus there’s also work that is going on in the customer success team, right, which is basically helpful in onboarding and growing the accounts. So for instance, even if you look at the ASP that has increased marginally. The number of accounts that we see, the large accounts, for instance, which are say more than INR40 lakh that has also increased. So there’s a lot of work which is being done across all the parts of the funnel.

Vivek Sethia — — Analyst

Okay. Okay. Thank you, Neha. Thank you so much.

Rishi Jhunjhunwala — Investor Relations with IIFL Securities Limited

Thank you. Next question is from Amit Chandra [Phonetic]. Amit, please go ahead.

Amit Chandra — — Analyst

Yeah, hi Neha, and thanks for the opportunity. So my question is on continuation with what Vivek was asking. So we have a fairly large sales team, if I see our revenues compared to that, we have a very last sales team. And we have done the investments over the last three years. So what steps we’re taking to increase the sales efficiency? And also, in terms of the current sales team or the current employee base, what kind of revenues this employee base or this sales team can actually generate, right, over the next like three to four years? So that’s a more longer term question.

And also in terms of our inquiries to conversion issue, how it has paned over last maybe one year? Because I know like last year was a very good year in terms of like investments from the private equity side. But this year the investments have been very, very muted as compared last year. So what impact we have seen based on the conversions? And also in terms of pricing, how we are different from the competition, maybe from PitchBook or the other players who are there?

Neha Singh — Chairperson and Managing Director

Sure. Thanks. I’ll just take up some of these. So one is on the sales part. So on the sales, I think efficiency, this is something that we do sort of track very closely. I think right now a lot of work is also being done on just increasing the top of the funnel, which is just getting more leads to the team. So, that is why you would typically have the sales team — so bulk of our closure actually happens through inbound wherein the customer has already seen some of the content, is familiar with some output. And then, we are able to convert the customer more easily.

So a lot of the effort is also going on in both of these things, which is basically how do you increase — continue to sort of increase the top of the funnel as well as continue to maintain the conversion efficiency that you have seen in the sales team. So that is one on the sort of the sales part. The second is how large can — will we require. So currently I think we have probably done most of the hiring that we require in the sales team for the next at least this calendar year. We don’t foresee much more increase in capacity within this team. I think this team can sufficiently deliver the growth that we have planned. So that’s one on the how large can it become.

Coming to the second question, which is how has the funding winter [Phonetic] impacted conversion? So interestingly, we haven’t seen a lot of impact on the conversion. So our conversion, what it was there earlier, it has probably remained in the same range. The way we measure conversion is if you give a demo to a customer what percentages are they able to convert? So that has remained in the — that has probably decreased marginally, but not significantly. So there is a little bit of impact, which is there on the slowdown overall because last year, obviously, for instance, if you look at the last year’s growth versus this three quarters’ growth, there’s a little bit of slowdown, which is there, but there’s no incremental, no additional impact that we see within this, right? So that is one on the conversion side.

Coming to the last one, which is on the pricing. So currently, if you look at our average pricing per account is I think the more comparable is the average realized pricing per user. So for us it is about INR2.4 lakh per year per user. If you compare it to some of the other platforms, it is probably higher by 1.5x, but not sort of very high. There are some data platforms, which is very shallow, which is probably one-tenth our pricing. But probably we calling them mid-price point segment, I would say.

Amit Chandra — — Analyst

Yeah, no. So, the competitor, which is much larger in size, maybe 30 to 40x bigger than us, so on that base, they’re able to grow 35%, 40%, and they have a user base which is much larger than we have. And we are almost competing in the same market, which is the international market. So is it the platform that makes a difference or is it their deep pockets in which they’re doing a lot of promotional activity that is differentiating factor? Or is it the parentage or it’s a part of Morningstar, so that is the major differentiator?

Neha Singh — Chairperson and Managing Director

Right, right. So just to address that, so I think the large — the countinue sort of growth that is — this market is also seeing terms of players that’s just testimony to the fact that how deep the market is. So that just shows that like private markets have become sizeable. So that’s sort of interesting to see. Coming to the second point, what is the difference? So I think there is — in terms of the data, there’s probably a little difference I would — I mean, there’s a little bit of headstart that they have. Obviously, people have because of some years, but I think the more effort that we see is on the GTM front, which is how many customers actually have seen our content or know about us or know about the data that we have across different industries. And as well as how is the conversion and how are we able to work with the customers for their ongoing expansion.

I think there is lot more juice that we see in this side. And that is why — that’s the natural evolution also of a data company. Like initially you have to sort of invest a lot in this and subsequently where in you have sort of reference the customers across all these geographies, you can then double down on your — all the GTM initiatives, which is what we have been also doing. So I think, I see that more of a difference in the GTM front, which is where we’re also spending a lot of effort in terms of the initiatives that we are doing.

Amit Chandra — — Analyst

Okay. Thank you, Neha, and all the best.

Neha Singh — Chairperson and Managing Director

Thanks.

Rishi Jhunjhunwala — Investor Relations with IIFL Securities Limited

Thanks, Amit. The next question is from Samir Goswami [Phonetic].

Samir Goswami — — Analyst

Yeah, am I audible?

Rishi Jhunjhunwala — Investor Relations with IIFL Securities Limited

Yeah.

Samir Goswami — — Analyst

Yeah. So my question was also regarding Slide 11, the 32% incremental EBITDA, which the revenue that we have added. So clearly this is reverse of the trend that we have seen in the last few quarters because of the additional investments. So now that it is in the pace, how should we think about this ratio going forward?

Neha Singh — Chairperson and Managing Director

Right, right. So I think this was more of, I would say this was — if you look at also the cost impact, this was little higher than what we would’ve seen on the normalized basis, and that’s why we also talked about some of the other initiatives we did. So on a more normalized state, you can actually expect this to increase. The percentage of incremental revenue going into bottom line should increase. And that we should start expecting to see within the next two to three quarters. We expect that this will again, become to come back to bulk of the revenue getting added to bottom line. Hope that answer the question.

Samir Goswami — — Analyst

Sure. Yeah. So, majority of the initiatives are in the base now, is it?

Neha Singh — Chairperson and Managing Director

Yes, yes. So if I were to say, like majority of the increment that we had to do in terms of the headcount etc., most of it is done.

Samir Goswami — — Analyst

Sure. Okay. Okay. And if I look at your customer addition, it has after being weak last quarter or last few — H1 has started increasing. So how should we understand the market is easing in terms of adding new customers? How should we think about this?

Neha Singh — Chairperson and Managing Director

So in terms of the — you mean to say like how does the — how are we seeing in the market, right?

Samir Goswami — — Analyst

Yeah, yeah. What is the market outlook?

Neha Singh — Chairperson and Managing Director

Right. So in terms of market, obviously if you compare to 2021 level, there’s a little bit of slowdown, which is there, and which is also factored in the numbers. For instance, last year we grew at 45%. This year if you look at the last three quarters, it has been close to 25%. So this is already something that we have factored in. Going forward, we don’t see an incremental sort of impact. We actually see probably things getting better from what we are seeing in terms of the new customers, which we are working with, or the conversion that we are seeing. Or thirdly, even in the expansion with the existing accounts that we have seen, right?

So for instance, a good indicator of this is, for instance, the ASPs actually increased during this period as well. So that’s just a factor that you can actually grow within the existing accounts. So it’s not that people are sort of cutting back a lot. So there is obviously a little bit of impact which is there, but this has already been factored in the last three quarters and probably we see things to be like getting better. It can be because of two things. One is, if you look at the private market, though, there’s a little bit of slowdown, but the private market funds, if you look at it, they’re sitting on an all-time high dry powder, right?

So though they might be a bit slow in deploying this year, they will probably end up deploying in the next two to three years. So that is one on the private market side. And the second thing is that, we are a small percentage of the market, like a single-digit percentage of the market. So, we are also able to grow within that. So, I think based on that we see to be probably staying — the market to be staying the current or probably increasing.

Samir Goswami — — Analyst

Understood. Thanks. And how has the churn rate changed in last few quarters? Is that increased? If you can provide some commentary around that, that would be very helpful. Thanks.

Neha Singh — Chairperson and Managing Director

Sure. So in terms of the churn rate, we have given only the annual one, which is about 74% because how many accounts by number which were due for renewal within this year in the annualized basis and how much end up renewing. We haven’t given the updated ones on a quarterly basis, we’ll probably add some more metricses when we do the annual roundup. But my sense is that this is — there might be some difference in it, but it may not have changed a lot. There might be some difference from last year to this year, but it may not have changed. So I don’t have the exact number for this. Maybe we’ll give these numbers when we do the annual roundup.

Samir Goswami — — Analyst

Sure, sure. And just a bookkeeping question INR1.3 crore is the run rate we should expect from the ESOP expenses year or should we expect this increasing in the next few quarters?

Neha Singh — Chairperson and Managing Director

So the way you can look at the ESOP that as a percentage of your total employee expense would probably remain in the same range. So if you look at it historically, it has remained between 7% to 8% or around that range. And you can expect it to remain in the similar range. So we don’t plan to give or we haven’t historically given like a one-time lump sum ESOP or anything. It’s just a part of the salary. We don’t give cash bonus. So part of which is actually given in this form.

Samir Goswami — — Analyst

Sure. Okay. Okay. That’s it from my side. Thanks. All the best.

Rishi Jhunjhunwala — Investor Relations with IIFL Securities Limited

Thanks, Samir. Next question is from Pratyush Agarwal. Please go ahead.

Pratyush Agarwal — White Oak Capital Management — Analyst

Hi, Neha and Abhished. Can you hear me?

Neha Singh — Chairperson and Managing Director

Yes, we can hear you well.

Pratyush Agarwal — White Oak Capital Management — Analyst

Yeah. So, Neha just two questions. So one I see this enterprisewide access plan and unlimited API access plan on your website, right, which are billed at INR300,000 and INR60,000. So, how many users would we have who are taking these plans?

Neha Singh — Chairperson and Managing Director

So, nearly all of our customer is on the subscription basis, which is basically your user base pricing, which is basically single user starts with like a $6,600 to $13,000 to more than 20,000 based on as the number of users increase. Most of it is platform subscription. We also have a API plan for some investors who want to build sort of their proprietary models on top of the data. So we do — and this is at a higher price point, so we do have some customers, but I would say of the overall revenue this would be a small percentage.

Pratyush Agarwal — White Oak Capital Management — Analyst

Right. So these would be low double digits, something like 10, 20 customers? Or just to get a sense of, I mean…

Neha Singh — Chairperson and Managing Director

Yes, that should be low double-digit.

Prashant Chandra — Chief Financial Officer

It will be single-digit.

Neha Singh — Chairperson and Managing Director

High single or to low double.

Pratyush Agarwal — White Oak Capital Management — Analyst

Okay. And just to understand this customers and users added, so I mean this 32 and 26 number we see, right? So is it more of a function that the gross additions were higher, but the churn sort of pull down this number? Or is it that the gross addition itself were lower?

Neha Singh — Chairperson and Managing Director

So, I think it might be — it is probably a functional that — so if you compare on an year-on-year basis, so if you compare to the same period last year the increment would have been slightly slower. As you can see, which is also in line with the revenue that you see in the quarters. So I think it would be a combination of the gross addition. There would be a little bit of sort of decrease in the existing, but I think that the number is sort of fairly sort of close in that sense. So even if the downgrade that would happen, it would be of very small number is my sense if that answers the question.

Pratyush Agarwal — White Oak Capital Management — Analyst

No, I didn’t get that probably. So is it — so just to give an example, is it like the gross additions are 70, 80 and the net is 32? Or is it like close enough the gross and the net? That’s what I’m trying to understand.

Prashant Chandra — Chief Financial Officer

My sense is that grass additions would be higher and then net editions would be lower. That would be the case because new acquisitions have been falling a similar pattern. That has not significantly changed from what I know.

Pratyush Agarwal — White Oak Capital Management — Analyst

Sure, sure. And so you mentioned about the increase in ASP, right? But if I see your sort of transparent pricing on your website, the per user cost and even some of the other group costs have not changed significantly, right? So first question is sort of what is the driver for the increase in ASP? And second, at least for the medium term two, three is how do you sort of think about pricing?

Neha Singh — Chairperson and Managing Director

Sure. So the ASP, the realized pricing that you see is per account. What that corresponds to is, one or more users. If you look at the user by ASP that has only marginally changed from like INR2.3 lakh to INR2.4 lakh. If you look at the ASP per account, that has changed from INR6.5 lakh, INR6.9 lakh, if you look at last financial year, and if you look at the latest quarter. So, the increase in that is basically based on, it can be that the existing accounts are sort of upgrading, right. So it can be that the existing accounts are buying more users. That is why your ASP realized pricing per account would actually increase. That is one.

To give you small examples. So for instance, the number of accounts for that payer say more than 40 lakh that would have doubled. It’s on a — slightly more than double. It’s on a small pace, but that gives us a trend across all this price movement, we are also seeing upgrades that has happened, and that’s the reason for this moment. The second point is on, how do we see this going forward. So, we don’t — so the trend that we have seen is that a lot of the incoming customers typically start small and grow over time. So my sense is that you’ll not see a lot of sort of increase within that, that happens. It’ll probably be range bound. It’ll probably increase marginally, but it’ll be range bond because a lot of the incoming customers actually start small and the older ones sort of grow over time.

Pratyush Agarwal — White Oak Capital Management — Analyst

No, no. My question is more on the absolute pricing proceed over time, at least at the medium term next two, three years.

Neha Singh — Chairperson and Managing Director

So currently we don’t plan to do any price revision, or a price increase or a user-based price increase immediately. We might reconsider that probably next year. One of the reason is that for us the cost to serve incremental customer is very minimal. So we are also focusing a lot on sort of making more and more people familiar with that. So like selling to more number of users, increases the more number of licenses within the existing accounts rather than increasing the user pricing.

Pratyush Agarwal — White Oak Capital Management — Analyst

Sure, sure. That’s helpful. And just a final question on language, so you mentioned some of the initiatives, right, on going into newer geographies and so on. So is our platform solving for language — for different languages, or are we sort of focusing on English-focused geographies first?

Neha Singh — Chairperson and Managing Director

So our platform is actually — so that’s an interesting question. Our platform is actually global. So two things. One is we have coverage of companies across different countries, which includes many non-English speaking as well. So you can — if you want to look at, if there’s an investor in say, Germany, who wants to look at German-based companies through the platform, they’re able to do that, or in any other one. So we have coverage of companies across all the countries. That’s one.

The second thing is that even, for instance, like we do, we also have regulatory filings. Like we capture a lot of regulatory filings of these private companies. There also a lot of the filings are available in non-English speaking — non-English language, for instance, wherein we are able to do language translation, we are able to standardize this data, right. So I would say both on the data front as well as on the additional like regulatory data front, we capture companies and data, which is from non-English languages as well.

Pratyush Agarwal — White Oak Capital Management — Analyst

Sure. That’s very helpful. Thank you. And best of luck.

Rishi Jhunjhunwala — Investor Relations with IIFL Securities Limited

Next question is from Ayush Vimal. Ayush, please go ahead.

Ayush Vimal — — Analyst

Yeah, thanks for taking my question. Hi, Neha. I just wanted to understand qualitatively, what are the key reasons why we are experiencing a 25% churn rate? What are the key reasons why probably customers drop out at the time of renewal?

Neha Singh — Chairperson and Managing Director

Sure. So if you look at the customers sort of retention that has been broadly across the last three financial year has probably been in the same range. Last year it was close to 74%, probably been in a similar range by number across the last three financial year. Just a point to note, this is by number, and this is not by revenue. We’ll probably give the revenue also later point in time. But this is just by number. How many customers basically are there and renewals, annual renewals and how many renew in that year.

There are a couple of reasons why this may happen and why this this percentage. One is — to talk about the top three reasons. So one is, there might be some peripheral customers that we might acquire, which — for which it is not a continuous use case. For instance, if there’s a corporate that we acquire, which is a smaller corporate who’s doing M&A, for instance, within this year and may not have an active M&A team, for them it may be a letter one year kind of use case, right? So that can be one user because we do not do — because lot of our conversions actually inbound, we are also attracting these set of customer segments, right? That’s one.

The second thing is — the second thing can be, they’re looking for or sometimes they say that — or sometimes they’re just starting to use the platform. So for instance, bulk of the customers more than 50% of the customers that we acquire haven’t used any platform before that. So that’s the typical second reason that we see that people are different phases of the usage adoption cycle. So some people have been able to figure out, some people are not able to sort of start using it after one or two quarters. That’s the second.

Third is small reason might be that sometimes they’re looking at coverage in a particular industry or a geography we may not have at that time. And sometimes what we do is that we sort of also track them. And whenever in the next two to three quarters, when we have the coverage in that industry, we’ll go back to that customers. So these are the top three reasons. And interesting in our case, it’s not that we are also able to acquire a lot of customers that we lose, because the data is sort of fairly unique and whenever we have sort of better coverage or we have a better use case, we also go back to them.

Ayush Vimal — — Analyst

Sure, thanks for that. Does this number — does this churn number also include customers that we’ve probably acquired to give a free trial to and some of those customers who drop off? Or we don’t include that number in the overall customer accounts?

Neha Singh — Chairperson and Managing Director

We don’t include that. This is only paid, this is only people that would have had any sort of paid billing in any financial year.

Ayush Vimal — — Analyst

Got it. Another question that I have the idea of asking this question is to really understand how truly global we are from a customer perspective. You have a sense, and I I know you won’t have an exact number, but you have a sense of the proportion within the 70% international revenue of clients who are taking Tracxn solely to analyze opportunities outside India?

Neha Singh — Chairperson and Managing Director

Yeah, so that’s a great question. So, for us bulk of the users that are situated in a particular geography are using it to find companies within their geography. So there are two types of investors. So typically even if you look at India, there are a lot of India dedicated investors, plus there is a few large global investors. Maybe the large late-stage funds that are investing across geographies. But most of the investors are actually, they raise funds for investment in the particular geography only by the mandate. So most of the people that we work with, say in U.K. or in Germany or in U.S., are typically looking at local data only from the platform. So most of the customers that we would have are actually looking at data of the local company. And you can also see that spread on the data on our platform. Like even if you look at the spread of companies, which is there on the platform is actually across all these countries.

Ayush Vimal — — Analyst

And just one last question the pace of customer accounts increase over the last nine months has been fairly subdued. So you feel that this is primarily because of funding that’s around, or do you think probably this can be taken as a sustainable rate going forward?

Neha Singh — Chairperson and Managing Director

So there is obviously little bit of slowdown if you compared to last year and this year, but we think that obviously this can be more and we are actively that’s why working on all these initiatives that you see on the marketing front, on the conversion front, etc. that we continue to do and we obviously think that this can become much faster.

Ayush Vimal — — Analyst

Sure. Thanks. That’s it.

Rishi Jhunjhunwala — Investor Relations with IIFL Securities Limited

Thanks, Ayush. We’ll probably take one or two more questions from the Q&A box that are pending. There are a lot more questions there, but what I would request people is to basically reach out to Neha, Abhishek and team or to us, and we will ensure that some of those unanswered questions get responses. So we’ll just take one or two from the Q&A box and request everyone to reach out after the call, given that we are running over time. So, Neha and Abhishek, there is one question which has been asked by multiple people, and it’s more basically to understand the trajectory of revenue growth and EBITDA margins in the near term in FY ’24, how do they think about what we are targeting even if you don’t intend to give a guidance? But otherwise just to understand how that could potentially look like and is it panning out the way in which you had anticipated it, say even a couple of quarters ago?

Neha Singh — Chairperson and Managing Director

Sure, I’ll take that question. So essentially, in terms of the EBITDA margin, we think that this business is a fairly high margin business, which you can see probably from the profile of any — some of the large financial data platforms that exist either for other — like for the public markets or other data subscription platforms which exist. We believe that because we also have the cost arbitrage difference, which is there because we are sort of based in India and then selling data globally. We should ideally aspire for a higher margin than some of the other sort of platforms. So on a comparable, there’s no comparable, which is there on India basis, but there are companies which is there overseas, which can be sort of one indicator of what is the kind of margin that you can aspire for. That’s one on the margin side.

The other thing for our business, the way to look at it — so give a margin is might be difficult, but the way to look at it is how much — given the revenue trajectory, how much of the incremental revenue will continue to go into bottom line. So that we aspire and that should be bulk of it. By bulk I mean like more than 50% within the next two to three quarters. Hope that answers the question.

Rishi Jhunjhunwala — Investor Relations with IIFL Securities Limited

Fair enough. I think, this is good enough. We are already 15 minutes over time. So, we will wrap this up and thank you so much Neha and Abhishek for giving us the opportunity to host the call. I’ll just pass it on to you guys for any kind of closing remarks. Thank you.

Neha Singh — Chairperson and Managing Director

Yeah, thanks a lot Rishi, and thanks everyone for joining us today. I hope you had a good understanding of the recent business update as well as we’ve been able to answer some of the queries that you have. Please, if you have any follow-up questions, please do reach out to any of us. I’m, at neha@tracxn.com or you can reach out to Abhishek or Prashant. Or you can write to our team at investor.relations@tracxn.com. Thanks again for joining us and hope you have a good rest of the day.

Prashant Chandra — Chief Financial Officer

Thank you, everyone.