Tecnotree Oyj

accelerate our ambition 2025 the execution of our ambition 2025 strategy and also to deliver a second to none customer experience the desired user experience faster time to market actually the time to market has dropped drastically when it comes to the loyalty feature, when it comes to the DCLM, when it comes to call center functionality. We have retired more than 40 percent of the legacy product offering. During the migration, we did not migrate line to line. We have done a lot of product rationalization for GSM, non-GSM, and fixed line as well so we have reduced the number of product by 40 50 and also we have we have reduced the customer onboarding time mainly for the post paid in corporate customer and also we have increased the loyalty adoption we have one of the biggest loyalty platform right now in uganda

Hello, good morning for all. And I hope you enjoyed this short introductionary video. And thank you for all joining to this TechnoTree Q3 2023 results publishing session. My name is Timo Holopainen and I act as a moderator during this session. For the start, a few practical details related to this webcasting. This session will be recorded and recording will be made available in our website for those persons who are not capable to join today. And I hope that this recording is okay for you all. The session has the following parts, and the duration of this webcasting session is 45 minutes, and we hope we can reserve last 15 minutes for the questions and answers. First, our CEO, Padma Ravichander, will present the key operational highlights, and then our CFO, Indires Vivekananda, will present the numbers in more detailed level. After this, we have this question and answer session. And please note that you can write down the questions on your screens on the box and all the time during the session. And I hope that we will have plenty of questions and we target to answer as many as possible during the questions and answer session. So with this short introduction, I once more welcome you all, and I will now hand over the presentation and speech to our CEO, Padma Ravichander. So please, Padma.

Well, welcome to Q3 Financial Results of Technotree. I'm happy that you're able to join us today. Thank you, Timo, for the introduction. I want to definitely tell you that we have had a record quarter in terms of order intake and a good amount of deliveries have happened to our customers this quarter, enabling us to have a stable growth going forward. We recorded 31 million euros in orders and a 34% growth year on year in terms of order backlog, totaling to about 78 million in order blocks. Much of the new orders have come from Middle East, Africa, and Europe this time. I will talk a little bit about the quality of the orders shortly. We also grew 7% in our revenue. to 21.4 million. A lot of the revenue has definitely come from annual recurring revenue and some new licenses we have been able to place with our customers. We have had an healthy operating result of 23% growth despite tough situations in the market. in terms of geopolitical situation and the inflationary pressures that we are seeing in various economies. We continue to post a very healthy operating result of 6.2 million and our EBIT margin was 29% this quarter. We did have a constraint in terms of cash collection. A large amount of that is mainly due to hyperinflationary pressures in some of the regions that we operate, but also in terms of foreign exchange and the ability to convert cash in some of the geographies. We are continuing to work on this particular aspect of our business. And later on in my presentation, I will talk to you about a strategy where we are trying to strengthen and bring in more stability in terms of our revenue monetization, as well as in terms of our cash collection process. So just wait till I get to that side of the presentation. In terms of shareholder equity, we have done exceedingly well. Year on year, 9% growth, and today it stands at 81.6 million. in terms of share owner equity. I also want to highlight a number of new wins that we have had. One of the biggest wins we have had is Telenor Denmark and Sweden. It is based on the work that we have done with Telenor Finland. We are consolidating and improving the quality of value added services for Norway, Denmark and Sweden. based on the existing relationship that we have with Telenor in Finland. So that's certainly a good door opener and a healthy rebound of an existing customer. We have several other wins. All of these wins that you're seeing here, both in Asia-Pac, Middle East and Africa, are all for large telecom operators. who want to move to a digital platform and operators wanting to migrate from being a telco to a techco requires them to improve their stack and standardize their ability to offer new services and new technologies on their platform. And Technotree certainly has had a good share of that new business coming in. The other important highlight I want to bring to your attention is our investment in cognitive scale acquisition definitely brought in 114 patents for us. And we are now monetizing those patents. We have been recognized by Market and Markets, which is a very leading analyst firm in North America. We are ranked number four for autonomous AI ML capability, just behind Google, Microsoft, and Amazon, and Meta. So basically, just above OpenAI. and in NVIDIA. So it tells you that we are definitely being considered among the leaders in the North American market for both autonomous AI ML capability, as well as embedded sense of fabric on our platform. We also won the diamond badge from This quarter, we won the diamond badge for API certification. We are number one in the world in terms of TMF, TM Forum API standardization, and we are also recognized for customer experience in the Excellence Awards by TM Forum. We have also a number of other recognitions, top two in the world in terms of revenue monetization capability. This is by a Canadian analyst for our billing and charging products on our platform. and also diversity and inclusion recognitions globally. So it's been actually a very, very busy quarter for TechnoTree in Q3. I spoke earlier about last, I think the last quarter, we talked about strategic investment focus areas. And today I wanted to give just an update on how these three areas of focus, business expansion, corporate and financial focus, and investment in new product and technologies has continuously bared good results for us. And I will give you a report card just in my next slide on how focus on these three areas has definitely improved our ability to attract new customers, win new orders and increase our revenue. While I give you the report card, I also wanted to tell you that we will continue to strengthen these three key areas of investment going forward. Definitely focus on more strategic acquisitions, lead our presence in North America, particularly in the United States and Canada, and strengthen our existing presence in Europe. We will also have a very focused expansion target in APAC. We are building a good pipe of opportunities there, and there is an opportunity for expanding our footprint in APAC and in Europe. In terms of corporate financial focus, we will definitely consolidate our investments in the cognitive scale, the AIML and the sense of fabric integration. We currently are focused in applying the AI ML capability, not only for our telco stack, but also on our FinTech stack to bring credit rating capability, goal optimization capability, and also for healthcare in our moments platform. We will continue to focus on using AI ML internally within the company to transform our own business model. I'll speak a little bit to that as well as we go forward in this presentation. Finally, we continue to invest in embedded AI on our telco stack. A lot of our existing customers and new customers really see this as a differentiating value proposition from us and are very keen to work with us to better their own customer insights, experience, and goal optimization and lead generation capabilities. We will also continue to invest across Cloud, IoT, and OSS capability to strengthen our platform and deliver a techno tree marketplace to our customers. In terms of what we have achieved in Q3 in these key focus areas, if you look at the acquisition of cognitive scale, this acquisition alone and embedding the sensor AI ML fabric into our platform very quickly and rapidly has yielded us several new customers with new opportunities in the area of healthcare. One of the African clients in terms of an MNO opportunity, We've had fintech opportunities coming our way. We have new tier one telcos in Canada, Brazil, South Africa, Denmark, Sweden, and Norway, all being brought to the table because of some of the AI ML KPIs and KRAs we are able to demonstrate today. to help their lead generation and help their business monetization capabilities for their own businesses. Then if you look at our investments in AI, ML, cloud, the BSS vast consolidation areas, our investments in R&D for healthcare, FinTech and OTT, you can see that many of the customers now, the telco operators want these services and capabilities in these adjacent markets and see this as a differentiated offering and potential that Technotree is able to bring on the platform so that they can easily integrate their enterprise offering to their customers with these technologies. Certainly, all in all, These investments are starting to bear fruit and also diversifying our customer portfolio. AI ML alone, I want to stress, is not only bringing new customers to the door because of the excitement around the sense of fabric, but it's also helping us deepen the relationship with our existing customers, who want to add this on top of the existing platforms to increase their own business acceleration and productivity gains within their companies. In terms of the delivery footprint that we were able to achieve in Q3, more than 50% of the orders that we have backed in Q3 have annual recurring revenue, which is more predictable. In other words, customers are paying upfront and then they are also paying either a monthly revenue or a quarterly revenue fee for us to continuously improve the stack operationally and from a business perspective. We celebrated 11 deliveries in Q3. It's quite an impressive track record for Technotree. I've been here myself 13th year this year, and I have to tell you, we've never had this many parallel deliveries happening simultaneously. That is mainly because we've had a product-led thinking to our platform, and we have automated more than 250 use cases on the platform. But most importantly, more than 70 percent of the 250 use cases are all configurable. Very quickly, they can be deployed into any market, configured very specifically for client requirements, using our low-code, no-code capability on the stack. And thereby, our ability to go live is a lot sooner and a lot faster. And they are able to experience the digital capability of the stack very quickly. Today, as we stand, we have 352 product features that have been added in Q3 alone on our digital stack. When you look at the quality of the backlog, I would say roughly the whole backlog is about 78 million. And in that, if you add the 9.9 million and the 32.4 million, more than 60% of the backlog is annual recurring revenue. Some of it is new revenue, some of it is existing orders that we have to retire. And then we have some new orders and then there is existing delivery backlog that is sitting in the pipe. If you also look at this global map, you can see that our delivery is now expanding in the geographies that we work and our annual recurring revenue across these geographies are also expanding. Now, what does this all mean to our customers? You saw in the video today, one of our very important key customers talk about business impact the TechnoTree platform has played in their markets and for their customers. Definitely the product-led approach is optimizing a lot of time to market for them. They are able to get to their customers lot faster with lot more newer and competitive services. New product updates, which used to take weeks for them to perform, are delivered in five minutes on the stack. The overall cost of owning the digital stack has been reduced because a lot of the technology that we use are open source and they're not license prone. Then the billing process, when customers have hundreds of millions of subscribers, to complete a bill cycle would used to take days are now done in a matter of hours, five to six hours. The bills are out to their customers and they can start collecting the revenue. So in terms of technical benefits, of course, it's open source, which means the TCO comes down. We are the number one company with 59 standard APIs, which means integrating our stack to other applications in the customer site becomes very easy and standardized. All our operators operate on a single code base, which means we can maintain the code and our R&D costs are more efficient. We have reduced the integration time by 66% on the stack. And we have several new modern features for zero touch deployment. This was one of the key features we exhibited during COVID. We didn't have our people traveling, but we still continued our delivery. And we are continuing to improve these types of capabilities in terms of self-healing, zero-touch deployment, AI ML-assisted dashboards in which very high amounts of recommendations are made to the customers before a problem arises, how that particular problem could be solved or how a customer request can be addressed by the stack even before the customer is about to make the request to the operator. Many good business benefits have also been added into the stack. What has this all done to us? It certainly created a different mix of customer profile for the company. It was not long ago, maybe five years ago, when the two leading customers, Claro and MTN, represented more than 80% of all the revenue that the company earned. And definitely for both investors and customers, our customers who come first, This was definitely a risk in terms of dealing with technology. Today, I'm happy to say we have diversified the portfolio and we have more than 28 customers on our stack. And what I call the legacy customers, which is our really old customers who have been with us a long time, continue to buy from us, continue to use our platform, are less than 50%. in terms of revenue that they bring in compared to the new customers that are using the techno tree stack. The other important observation on the second part of this bar chart that you can see is that our annual recurring revenue on the stack is definitely increasing significantly compared to license and traditional project delivery models. So this is definitely a good trend in terms of a healthy outlook and growth for techno tree. Finally, I talked about the business model transformation. It is quite evident when you look at our results that the one concern that we have, and it's an economic and global concern, and we are not isolated in terms of the geopolitical situations that are emerging, particularly in the Middle East and in Europe, and continue to cause concern for all corporations. in terms of cash and availability of cash, foreign exchange, inflationary pressures, etc. But we are relentless in terms of how we can before I go there, telecommunication is an essential service. Whether there is war or there is peace, everybody needs to communicate, everybody needs to interact and be more digital than we have ever been before in terms of how we engage with each other. So clearly it's an essential service and the opportunities for us to improve the quality of that service is definitely there in terms of growth potential and it's one of the industry industries that is growing quite rapidly in terms of the industry growth of about 14 average aca gr even in these tough times but however if you look at some of the challenges we have faced with our business model is that our business model the way we used to do deliveries within from technotree for large clients would take 20 24 months for small clients would take anywhere between eight to 12 months. And during that process, the cash collection takes a very long time. You know, you get drip feed of small amounts of collection and then you have, you know, long gestation period before the product goes live and then the customer is able to start paying us. We, with the high level of productization, I talked about 250 journeys out of which 70% is fully automated and configurable with low code, no code. I talked about quarter on quarter, we are increasing the number of features. This quarter alone, we have 300 plus new features we have added to the stack. All of these things have made the stack highly productized, highly automated in terms of how we can deploy it and stabilize it at the customer environment. Now we are changing our business model in a way where instead of going through the traditional process of understanding the customer requirement, modifying the code to meet the requirement, doing the integrations, testing it and delivering it over 12 to 24 months, we launch our stack. into our customer either as a cloud service or as an on-prem service within six months and we go live we collect cash immediately and recognize revenue then we have a new business model which is a very agile business model it's called devops where we provide a customer success team that works closely with the customer and their businesses to continuously inject new types of services that the customer has to take to market. And therefore, that team will continue to work in the customer environment in this automated low-code, no-code environment to offer new services that they can take to market and monetize. So their own ability to become digital becomes faster. Their ability to offer new services on the stack becomes more predictable for them because every two months they can deliver new features and our ability to monetize. In other words, collect cash when we go live and start on a monthly recurring revenue capability for the DevOps service, the customer success service. that we offer also stabilizes. And the other important thing is today, because of this long gestation process of 12 to 24 months to deliver a project, we are not able to take on multiple projects. With the highly productized product, we are now able to have several more parallel projects. I talked about 11 deliveries this quarter. We are aggressively looking at growing that capability of number of deliveries going live in a year more predictable and more faster. And technology today is at a place where this can happen. And therefore our revenue growth should improve the quality of the revenue should improve and because of this productization do once deliver many times the cost of building and serving a customer reduces which means our profitability should improve but most importantly very quickly after six months we get into a monthly recurring revenue plan which means that should help us be more predictable in the way we collect cash. And it's also easier on our customer because they wouldn't have a large capital outlay and different types of capital outlay coming out. They will have a a significantly smaller capital outlay they will make upfront and the rest of it would be monthly OPEX that they would have to pay to us. So the capital investment reduces and it becomes more an operative expense which is more manageable on a monthly basis for the customer. So this is the concept of a monthly recurring revenue model. It is good for the customer because it accelerates their automation and their ability to become digital and monetize on the stack and build their revenue. It certainly stabilizes Technotree's ability to deliver more customers at the same time and increase our revenue, but more importantly, also make our cash collection more predictable and standardized. We're also using a lot of our own AI ML sense of fabric to achieve some of this transformation. I hope in the coming months and years and quarters, we can talk more about this model of working. internal transformation we are going through. And I wanted to just give you a sneak preview of what we are trying to do in terms of stabilizing the business. I will stop here. I will welcome Indresh to continue to give you the financial outlook. And then we can take on some questions. I'll come back and summarize and we can take on some questions. Thank you, Indresh.

We have done 21.4 million in this quarter, which is about 7% higher. And as YTD in this year, we have done 56.2 million. As you can see, I've given a comparison in the last four years, which has been the highest in the last four years at 56.2. The EBIT, which is the earning before interest and taxes, we clocked 6.2 in this quarter against 5 in the previous year. And YTD, we are at 16 million, which is also substantially higher than in the previous year, but slightly lower than what we achieved in 21 and much higher than what we achieved in 2020. Financial expenses and taxes, they continue to hurt the company. This quarter, I had to take nearly 3 million of financial expenses and taxes compared to 1.7 in the previous year. That brought my net income to 3.2 million against 3.4 in the previous year. And year on year, we are at 8.8, slightly more than what we achieved in the previous year. The cash collections from my business operations was at 11.9, which was substantially lower than 21.9, what we did in the last year. We have collected forty three point four, which is almost similar to what we did in twenty, twenty one, twenty two and substantially higher than what we did in twenty one and twenty twenty order received. As Padma explained, we had a very good quarter this year. Thirty one million is the new orders. What we got in the current quarter and totally we had sixty two point six. We had to do a lot of catch up in this quarter, which we were able to do substantially in this quarter. The order backlog, which is the orders which are on our hand to be delivered, we are at 78 million, which is substantially much higher than any of the period we had any time in this country. The earning per share, we are talking at one cent in this quarter and about three cents YTD, which is same as what we did in the last year. Now I will come to the revenue and the collections over a period of three years, quarter on quarter. As you can see, we are doing pretty well on the revenue side of it. This is the highest revenue we had in any quarter in the last, three, four years. However, the cash collection seems to be highly volatile. As you can see, you have different towers. In certain quarters, we get very high cash collections and in certain quarters, it will be slightly lower. And this is probably what Padma was explaining in her last slide, where we need to stabilize this and bring it to a more uniform level. Then I'll go to the focus on the operational cost optimization, as we have already know that foreign exchange is one of the major impact that affects my income in the company. The operating result, on the other hand, we are doing fairly okay. We are at 29% in this quarter at 6.2 million, while the net income is slightly lower than what we achieved in the previous year and what we achieved slightly lesser than what we achieved in Q2 of the current year as well. The risks continues to be that the central bank restrictions in some of the geographies where we work, even though the customer will be willing to pay, but there are bank restrictions for him to repatriate the money. And again, unstable geographical and economical situation in some of the customer countries where we work. We called out Nigeria as one of the countries where there is a huge currency volatility and in certain hyperinflationary economies where we work. This mitigation is an ongoing activity. We keep talking to the bankers. We are trying to get some swap facilities. We did get a little bit, but we are moving ahead with that and hopefully we'll be able to mitigate this or minimize these forex issues. Then on the asset ratios, that's the current ratio. We have a healthy 5.3 times my current ratio. And this is something where we are all interested in the account receivable aging. As you can see in the graph, I have a 30.9 million euros to be received. And we did have a provision of 2.6 times this receivable. Twenty six percent of my receivables are not due and 34 percent of my receivables are less than 90 days, which means that 60 percent of my receivables are less than 90 days. However, the cost of concern is 17 percent. What I have over one year on which we have made a two point six million provision. and at this point i want to call out that in the last few years we never had an occasion to write off any debt from the customers as all of us know we have customers who are the entire one customer telco operators but the problem is collecting from those countries which we are slowly mitigating and wherever it is absolutely necessary we think that this could further get delayed we make adequate provisions as per the accounting standards Now I'll come to the balance sheet. The balance sheet we have intangible assets. These are the products which are both internally developed and some of which we have acquired. Trade receivables continues to be 33 million. Other receivables, mainly these are all the real estate deposits, advanced taxes which are to be recoverable in future or adjustable in the future period. We also received 14.1 million convertible debentures in this quarter and we have non-interest bearing liability and interest bearing liability also. This is the debt which we took for acquiring our US business. We have a trade payable of about 12 million to be paid to our vendors in the normal course of business. Now, as I said, the scheme was launched on 22nd June. 431 notes amounting to 100,000. Each 100,000 euros was subscribed. 14.1 million has been collected to date as per the agreed terms. A consortium of shareholders have agreed to invest in 200 notes. We made a stock exchange release this morning and the remaining 90 notes is expected to be received as per the agreement by completing the scheme. On the prospects on risks, we had given a guidance. We have not changed the guidance, but we have narrowed it further as we come closer and closer to the year end. On the revenue, we had 7% to 15%. We are tracking now to 9%, so we are keeping the guidance between 9% to 13%. The operating profit earlier, we thought it will be between 10% to 20%. Given the good performance, what we have done in the first three quarters of the year, we are confident to narrow it down to 15% to 20%. The cost rationalization, what we have spoken about is on track and we expect the cost rationalization by 5% to 7%. Cash recovery, this quarter we did face some challenges. However, we are not reducing the bottom guidance. We are still keeping from 12% to 14%. Assumptions are continued growth, short term impact on EBIT, benefits of cost rationalization and foreign exchange rates to be expected approximately at the current levels. Key risks, we have the geography specific inflation. We have customers in hyperinflationary markets, customer diver vacation and geo-expansion. As we say, we follow the sun. We have right from Asia back to the Latin America. We have customers in different countries, different cultures and different geographies. Cost optimization plan. We are planning to do more of remote deployment in certain countries. Even traveling becomes a little bit challenging as we mature our products. So we'll enable it to do more of remote deployment, which may bring down my traveling cost and also ability to deliver faster. are looking at investment to retire the large order book and productization investment in aml fintech ott which are required for diversification from bss pureplay we are going to move into that product maturity resulting in faster deployment cycles which i already explained improved margins through value-based pricing clear inorganic growth and diversification strategy on the cash collections. I've already called up the risk of what we have and the mitigation is to focus more on the organic and inorganic growth in developed economies in North America and EU and Middle East. Improved product readiness to reduce the payment cycles and empowering the treasury to do more financial instruments. So this is what I had Padman now I'll hand it back to you for your comments.

Am I? Okay, I hope I'm audible. So finally, I'd just like to leave you with these thoughts. in terms of wide techno tree. I've covered a lot of this. The size of the market in terms of growth, it's a $60 billion industry for OSS and BSS. And as I said earlier, it's tracking at about a 14% CAGR. There is a lot of favorable tailwinds for operators to become digital service providers in these markets with flexible cloud and infrastructure models, and also opportunities for them to embrace AI ML to move from being a telco to a tech co. And therefore, there's a steady amount of capital investment that's being set aside for this transformation. journey to continue and we stand to benefit from it. In terms of customer demand, we are already seeing a transformation within the company where we are attracting a good amount of new customers from new markets. And with our traditional customers, we are able to upsell more capability because of the automation of our stack. And also the AIML capability, the Moments capability, the FinTech wallet capability are all requirements for an operator to become more digital and to address the billions of subscribers that are already on our stack from a B2B to X perspective. I think our opportunity for revenue monetization and also increased annual recurring revenue growth are definitely possible based on the customer demand. In terms of differentiated technology stack, I talked about the product first led thinking that we have institutionalized in the company today and ensuring definitely the TM Forum Diamond Batch recognition as world's best in terms of standardization of the stack. is a very telling testimonial of how the product productization and the R&D investments are being deployed in the company and how that is helping us differentiate our stack with many people journeys, the patents that we in AI ML and then the configurability with local no-code type frameworks so that we can deploy faster and go to market for our customers faster than our competitors are all very good differentiations. Finally, we do have a very attractive revenue growth potential. We are growing quite according to the growth opportunities that are seen in the market or telecom addressable market. Our market cap has also grown significantly over the last five years, and we have added a number of new customers to our portfolio. And finally, compelling margins is what we've been able to deliver to our share owners, a 36% EBIT over the five years in terms of EBIT growth, and a 40% year-to-date revenue growth in ARR, are all very telling about the product maturity and the company's overall strategic focus in terms of building out more and more shareholder equity. If you look at the shareholder equity in 2018, it stood at negative 7.7%. And we have now grown to 81.5 million in Q3 of 2023. So with that, I'd like to conclude and pass it on back to Timo for answering any questions that you may have. Thank you very much.

Okay. Thank you so much Padma and Indires for very insightful information. And as Padma said, now it's the time to go to this question and answer session. Padma, I leave you the decision power to who will answer the questions that you yourself or Indires. And we try to take as many questions as possible. And maybe at the first comment a little bit to comment in the discussion that we should be more active in the different forums like the Indires forum. And we can say that we are very happy that there is interest and discussion around the company. And that's very good. And we have reacted that, please note that we have started these webcasting sessions after every quarter we will want to join with you and share the information that what we are doing, what is the situation. In addition, we went to the NASCAD Open Doors event. We were presenting over there and we were ready to take the questions. We had to stand over there. So we did that. In addition, I will comment later on that we will go to the investor fair in Messukeskus that is coming in November. And we have a Padma speaking there again. And as well, we have a stand over there and we will be there and answering to your questions and welcome you all to discuss with us on the stand. But saying this, then maybe we can go to the questions and now we can start from Valtteri Rossi from Danske Bank. And the first question sounds like that in the 2023 year to date revenue from new customers has exceeded revenue from the legacy customers. Please, could you clarify what do you mean about legacy customers?

What we mean is our traditional customers. I thought I covered this in my presentation, Timo, not long ago, I would say even four years ago, more than 80% of our revenue came from our top two customers, MTN and Claro. And today we have 27 to 28 new customers on the stack. And I truly believe that we have changed that revenue mix quite significantly with the new logos that we have acquired.

Okay, thank you. And the other question is that orders at record level we have orders at the record level again how much of it is from core business bss deliveries and how much is for the largest two customers actually that that

The new orders are new customers, mostly. There are some orders with our existing customers, both Claro, MTN, Intel, Mauritius Telecom. There are other customers. Telenor is an existing customer of ours in Finland. But a lot of the orders are from new customers that have joined TechnoTree with wanting the digital transformation to happen. We also have orders from North America for healthcare and for FinTech, which are all new customers for our AI ML business. Now we are getting orders for MVNOs who are small operators. They are sub-brands. Some of it are operators that have set up sub-brands through licensing of spectrum licenses. Others are new entrants into the market. And these require everything. They want our digital stack. They want our fintech wallet. They want it to be on cloud. They want the AIML capability to target and generate good leads on their platform. And they want moments type capability to have OTT play to the B2B to X capability. So we are seeing a good mix of opportunities in our order pipeline.

Okay. Thank you, Padma. Still one from Valtteri. Now we see the growing annual recurring revenue. And it's now 24.3 million. So can you clarify a little bit more that where this current revenue is coming from? What are the sources? Is this the traditional BSS or where it comes from?

A lot of it is traditional BSS revenue. And it's a mix of old and new customers.

Okay, thank you. Then we have some questions from Roni Beurenheimer from Indires. And the first one sounds like that The cash flow was again rather low in quarter three. Could you elaborate what were the factors behind this and how confident are you that you can improve this during the quarter four?

So I'll request Indres to maybe elaborate that he did in his presentation, but maybe more clarity, Indres.

Sure. Thank you for the question. As we explained, the geographies where we operate has banking problems. The customer is not a problem. Customer is a $14 billion company company. And the countries where we operate, we do have a problem. So what we have done is we have adopted a couple of things. One, we have tied up with a a European bank who are going to give us some sort of a swap facilities where I can repatriate faster and I do a forward contract with them so that the risk of foreign exchange mitigates. The other one also we are exploring with some of the customers where there is a delay to get some sort of what they call as a SLBC standby letter of credit. SBLC is the standard term they use. to see that whether we can repatriate the money faster. The problem is not with the customer, but with the thing. And also, as we expand our business into different verticals like Europe, North America and the Middle East, the product mix of the revenue mix as it comes down from these difficult countries, my cash flow also will increase substantially. So this is the plan what we have as far as the cash flow is concerned.

OK, thank you for for clarification. I think so. Then we have an additional question from Roni, that you have received only 14 million euros out of the 43 million you were supposed to receive from CCD. So, can you elaborate a little bit on what is behind the transaction of transferring these debentures to other parties? And when do you expect to receive the rest of the funds related to CCD?

Again, I'll defer this to Indrish. Indrish, please go ahead.

OK, so thank you again. The total subscribed amount was 43 million and 14.1 million was received in this quarter. The agreement the board has given time to some of the larger subscribers to defer their payments for a time which is agreed between the board and the subscribers. While I cannot exactly give when is this money is going to come, but I can say that substantially these monies will come in the near term.

Okay. Thank you. Then the other receivables, not account receivables, have expanded dramatically this year. What is behind of this expansion of receivables, other receivables especially?

Padma, may I take that as well? Sure. Please go ahead. Okay. So these pertain to about three broad buckets. One are some of the taxes that we pay in some of the geographies where we need to pay the taxes in advance. So these are all adjustable or recoverable back over a period of time. The number two is the delivery is what we in the last couple of months where the billing milestone will be different from my revenue milestones. So these will be billed in the subsequent quarters and collected. And the third one is some of the real estate offices what we opened in this year where we had to give a deposit which is a customary in such countries for about 10 months rent as a deposit. So these are all put under the other receivable. That is why you see an increase in the current year compared to the last time.

Okay, thank you. Thank you for clarification. Then one more question. Personal decreased significantly from the end of the previous quarter. Is this purely from cutting the recruitments or how this reduction has realized?

No, we have not resources. There have been some people that have decided to move on. We have been extremely efficient. As I said, we've moved more into productization. We haven't announced any cuts, employee cuts as such, but we've optimized the consumption of resources. And in some situations where employees have left, we have not replaced them.

Okay, thank you. and can you can you then compare the cash flow profile of the deals done with the annual recurring revenue model versus a licensed model just shortly maybe uh indrish do you want to yeah

The question is about the revenue mix between the ARR and the other models. So I think there was a question which one of the there was question on 24.3 was current year ARR. how much it was earlier period. Just as a comparison I can give last year in the first 9 months the revenue from ARR model was 19.9 million and whole of last year it was 25 million and current year in the first 9 months itself we are moved into a 25 million revenue in the ARR model. So that should give us an indication that we are moving more and more into this ARR and MRR model compared to my license and the other delivery revenue.

Okay. Thank you, Indires. Then there are additional audience questions. And the first one I think we discussed in the last quarter a little bit. We had a similar question. Do you see possibilities or disruptions or transformations on upcoming co-live of SpaceX?

Upcoming go-live.

Sorry, I didn't get the last part of the question upcoming go-live of SpaceX Okay Who is interested to see whether we can collaborate with SpaceX in our business My heart is coming disruptions I'm not ready, you know I'm not

I don't have an answer on that. I cannot predict. But I don't believe we are using SpaceX technology in our transformations today. Mostly our cloud deliveries are done for large customers as on-prem cloud. They have a dedicated cloud provider like a Microsoft or an Amazon. And for smaller customers, they use public cloud capability. But we have not... we've not worked with SpaceX.

Okay, thank you. Then, then about the call lives, we already heard that there is plenty of call lives in quarter three. So how many call lives do you expect on quarter four?

I don't want to make any forward looking statements, but we are hoping to complete a few for sure. As you can see, there is a heavy order backlog. And there is a clear plan to retire some of that those orders, hopefully.

Okay, thank you. Then some questions related to guidance. Should we think the cost realization of X percentage of revenue or costs?

It's a percentage of my cost to the revenue. As my revenue grows, my cost also grows, but we want to benchmark against the cost what we incur against the revenue. And this reduction, what we are planning is a percentage on that.

It is definitely that which has improved our EBIT and our operating profit. So we are definitely very, very conscious of how the cost curve grows relative to the revenue growth.

Okay, I think so. I think we could take now the last question. So in quarter two, you were asked about technology long-term vision. is the light of the development during the quarter three, in the light of the development of quarter three. Could you please comment on this a little bit more, Padma? Where will technology be in 2030?

Well, I hope very strong, very global, and one of the best products in the world for customers who want to have a digital stack to conduct their business. So I think Technotree continues to grow, continues to be cautious, but we are definitely spreading our wings and looking to newer markets, newer horizons for our growth. And I'm very optimistic that the team, the management team and the employees of Technotree are putting their best foot forward to serve the customers and to create long-term relationships and partnerships

that would definitely put the company in a position of strength so um i i i think of a stable but promising growth for technology okay thank you for you both uh about mine in the rest for for for this webcasting and it's time now to conclude this quarter three 2023 results webcast and thank you thank you very much uh for being active and participating and joining this webcast. And I want to inform you once more that we will be in investor fair in Helsinki, November 14th, and we hope to see you there then. And please stay tuned and follow our investor relation webpage and social media channels as well until November. And our quarter four and full year 2023 results will be published on 15th of February 2024. See you then latest if you didn't manage to come to investor fair. And I would conclude and say that have a nice rest of the day and enjoy the coming week, coming weekend. And thank you. Thank you again and goodbye.

Thank you all.

Thank you.