Tecnotree Oyj

and I welcome you to join this TechnoTree Q4 and 2023 results publishing event. My name is Timo Holopainen and I will be the moderator for the session. We will record this and make the recording available on our website later on today. Today's speakers are our CEO, Padma Ravichander and CFO, Indires Vivekananda. In this session, First, Parma will present the key operational highlights and update the strategy topics. Then Indires will present the numbers on more detailed level, and he will as well talk about the prospects we have for this year. After these presentations, we have a question and answers part, and we answer as many questions as possible within the time limits. And you can always write down the questions on your screens during the session. So with this short introduction, I will hand over the presentation to our CEO, Padma Ravichander. Please, Padma, go ahead.

Thank you, Timo. Good morning, everyone. Good morning. Welcome to TechnoTree. Really delighted to be here today to present our final results for 2023. I'm gonna give a little overview on strategy and a financial update, and then talk a little bit about our prospects. And then we will receive some question and answers. That will be the format. Of course, Indresh will present as our CFO the financial results. TechnoTree has done exceedingly well in 2023, despite tough economic situations, geopolitical situations overall. As you can well see, the net sales grew 9% to 78.4 million, but in constant currency terms, it was a landmark event for the company as it reached 107.2 million in constant currency of 47% rise. Even at 78.4 million, the net sales is the largest net sales the company has ever had in its history. The order intake was also extremely high, again, a record historic height of 95.4, growth of 11%. Order backlog is very healthy and has a very diverse amount of capabilities in terms of our delivery options at 80.2 million with a 16% year-on-year growth on the order backlog. With all the focus on cost and cost optimization and product led approach, the company was able to do an EBIT of 23.8 million, a 30% year on year growth on EBIT, despite tough market situations, mainly because of a product led approach, as I said, and focus on costs. The shareholder equity grew a healthy 8% to 86.5 million in the process. The cash flow grew 6% to 62.3, but despite the currency losses, we did have a growth in cash inflow. If you were to look at the cash inflow in terms of constant currency terms, you would say that the cash would have actually hit 84.1 million with a 40% year-on-year growth. It's quite unfortunate that the currency fluctuations in 2023 economically were very high. If you look at the key highlights of the company, we added 12 new logos across the globe. The new logos that we added came not only from our existing regions and markets that we work from, but also new markets in Europe and North America. Telenor, for example, Radian, UnitedHealth, are all opportunities that came from Europe, North America, and of course, TELUS from Canada. So our footprint is definitely expanding. And while we added 12 new logos, we also delivered top 14 deliveries. This is just the big deliveries that we made for both existing clients and new clients. And when you look at the mix, some of the new clients like Radian, United Health, Commium Gambia and Claro Peru, we won the orders in 2023 and we delivered the results in terms of licenses and services within the same year, which shows that our speed of delivery, our productization quality has steadily improved over the years and reached a level of maturity that we are able to bring to market our transformations very, very quickly. We also had a number of industry recognitions Of course, we were ranked top four by market and market for our AIML in the U.S. One of the most important recognitions, I would say, is Gartner recognized us as a challenger, and we are part of their magic quadrant from a telecom DSS player perspective. Gartner's recognition as an industry analyst is very important in this landscape. because they very carefully watch the growth of potential newcomers and existing players in the BSS market. We also continue to enjoy top position with TM Forum. We have 59 APIs defined and certified by TM Forum. We are the number one diamond badge holder, and we have cloud-enabled 25 real-world APIs available that have been already implemented as standards across various customers of Technotree. In addition to that, We also were selected for Customer Experience Excellence Award and we continue to enjoy a lot of recognitions from a diverse set of groups. For example, the Nordic Diversity Council has recognized us as a top performing mid-cap company out of Finland for diversity and we have been steadily being dedicated to focus on ESG by which one of our data centers is completely green cloud enabled and offers zero carbon footprint in terms of a data center facility. I would say one among the first in the world from that perspective. Talking a bit about the competitive advantage of TechnoTree, if you look at what Gartner says, the size of the market is about 11.2 billion CAGR, and the growth expected is 2.1%. But the whole dynamics in terms of what is happening with the competitive landscape of the market is that the market itself for BSS will be redistributed between new and traditional vendors. And continuously, the capability to buy products or buy services is being decoupled by the BSS players as they move more into cloud technologies They are wanting to become from telco to techco by introducing capabilities within themselves to offer new types of services. And in addition to that, many new vendors are launching new digital services that they want to aggregate and have a greater ecosystem play in the market. Given these capabilities, Technotree has been poised with its digital stack to provide fastest time to market in terms of platform standardization. We have more than 1,000 built-in features that can be delivered out of the box and ready to be deployed. I already talked about the fact that there are many new opportunities where we have one within the same year and have been able to deliver these opportunities within the same year, which means definitely out of the box capability and speed of deployment has been a competitive advantage for the company. The growth in our AI ML business has also been very rewarding for the company. We enjoy 137 patents and last year we registered an additional 30 patents in augmented AI. We do continue to offer very competitive and disruptive pricing capabilities for different types of customers and markets. And we have very strong partnerships with Microsoft. We are a gold standard vendor in terms of an ISV partnership. And with many of the cloud players and other partners like MongoDB, we enjoy a very advantageous partnership to offer attractive prices. and bundle them within our offerings to our customers. When you look at the competitive landscape, Technotree is the fastest growing company when you compare us with the infrastructure BSS players like Techem, Ericsson. And when you look at our competitors, we still enjoy a higher percentage of growth overall in terms of revenue. As I earlier mentioned, we are recognized as a challenger in a growing market for BSS. The market itself is changing in terms of the buyer needs of the CSPs. They are going more towards a services-oriented market And in this competitive landscape, Technotree's capability to offer differentiated products and services in terms of wholesale BSS opportunities, in terms of ability to monetize the network capability faster and sooner, our ability to integrate other industry vertical offerings like e-health, sports, education services, our ability to componentize our stack on the cloud and offer try and buy microservices capability, as well as our multi-country presence are all competitive advantages that are helping us take business away from traditional players in the market And as you can see, the emerging players are growing in the business and the whole business dynamics in the market in terms of product versus services is changing and steadily the number of new logos we are able to add as Technotree has been evolving. Last year, 2022 was seven new logos and we enjoyed an addition of 12 new logos this current year. We are also able to cater our digital stack not only to telco market, but to adjacent markets like government, energy, utility, private networks that want to offer differentiated services and platforms going forward from a digital capability perspective. In terms of diversifying our revenue streams, I spoke about this in Q3. We continue to look for alternative ways in which CapEx and OpEx capabilities can be bundled by our customers to ensure that their overall spend in terms of modernizing technologies, getting ready for becoming more cloud-enabled, more subscriptions-driven, and having capability to offer more AIML-enabled services is provided. And from that perspective, today we have four different types of revenue models. One is the traditional licenses plus delivery models, which is a combination of CapEx and OpEx. where you purchase a one-time license and then the delivery is offered as professional services followed by managed services to continue and manage and monitor the operations. Then we do offer a Cloud-based service, which is a try and buy service. of our capabilities, a lighter weight stack if required. Additionally, this Cloud-based service we offer as a one-stop shop, whether you're a large CSP with multiple operations under your wings or whether you're a startup MVNO going greenfield into a market, or if you're a tier 2 or a tier 3 player, trying to increase the number of subscriptions that you provide in the market to have a higher share of wallet, our cloud services capabilities cater to all these types of customers. In addition to that, we also with Technotree Moments and Diva Wallet, we are able to offer transactional based businesses and ecosystem play where for saturated markets as we enter emerged markets like us canada and europe it's not so much of increase in number of subscribers it's increase in number of subscriptions for a given subscriber and in these cases it is bundling other types of services on top of the platform more than telco services is what is going to help them find new revenue streams and new models for business growth and definitely adding intelligence to those kinds of capabilities and offerings will ensure that you are providing the kind of capability and outcome that the customers are looking for. Outcome-based and goal-based optimization using large language models and intelligent campaigning capabilities in our platform offer different types of transactional and revenue share models to our customers. All of these various offerings are definitely packaged and productized and bundled in different types of technology offerings. If you look at technology edge, it's our large digital transformation product today embedded with sense of fabric and intelligence catering to tier one telcos that are really embarking on monetizing 5G capabilities and other digital capabilities on their stack. If you look at TechnoTree Switch, it is a highly integrated stack ready to provide you digital transformation, but very quickly and rapidly. focused on MVNOs, smaller players in the market that want to quickly enable digital capability on their platform and digital services to their customers. TechnoTree Moments offers ecosystem play end-to-end. It's a B2B2X where we tap into our billion subscribers that we believe are already on our platforms and help our customers CSPs offer beyond telco, other types of subscriptions, whether it's in the area of health, sports, education, e-commerce, social commerce, through their partners and their service providers. Technotree Diva Wallet is integrated into our staff so that you can offer loyalty, you can offer voucher-based discounts and very intelligent credit scoring capabilities on the platform. And finally, the sense of fabric through the acquisition we made in AIML today is fully integrated into our stack and we've actually delivered live operations for some of our customers in LATAM and North America, and most recently have also introduced this capability to our customers in the Middle East. We continue to with all of these capabilities, we continue to enjoy a very, very high order book. As you can see, year on year, our order book growth has been growing continuously. And we our strategy is in line with how the industry, especially the telecom industry, is moving from a. a pure product play to a product plus services play to a cloud play and to an AI ML play. So we are geared, our strategy is in line with the way the market is growing and the healthy order book is reflective of the opportunities we are getting because of the off, because of the capabilities that we are bringing in the straw in the, in the stack. In addition to that, we have continued to focus on the ARR model. I talked about it. In Q3, we have a very healthy mix of ARR in our order backlog, which is going to give more predictability in terms of revenue collections and higher demand for growth, particularly in cloud and AIML-based products. services. And finally, a very strong EBIT comes from a growth, from a focus on OPEX, where we have really focused geographically on cost restraints and also a very automated product-led approach in terms of our product offering itself. So if you were to look at the ARR growth that I just talked about, compared to 2022, the order backlog had about 35% of ARR revenue. At the end of 2023, that grew to 48% in terms of the ARR mix. If you look at the 80 plus million of order backlog, more than 40 to 50%, both new projects and existing projects a good amount of ARR revenue in our backlog. We also added in 2023 1,000 new product features on the stack. This definitely creates entry-level barrier to our competitors in terms of our level of product-led thinking. We are seeing in newer markets, particularly in postpaid markets like Europe and North America, it gives us a first mover advantage in terms of the capability that our stack is bringing to these new markets. There is a very good reception to the demos that we are providing to our clients in these markets in terms of the capability of the stack, which is extremely rewarding for us for the work that the team has put into the products. We are also able to deliver digital transformation at scale. We are focused in... in predictability of delivery over the course of 2023. If we were doing 10 to 15 parallel projects in 2021 and 22, I'm proud to say the maximum number of parallel customers being served by TechnoTree in 2023 was as high as somewhere between 33 to 35 customers were simultaneously being served by our stack and our people. and very marginal increase in terms of headcount. That talks to the stability of the stack, the predictability of our services and features, and the strength of the functionality that is available in the stack. Finally, last year, we had a new project initiative, an internal business transformation mission that we set out. The project is called Think Cash, Do Cash, and we are heavily focused on reformatting the way we deliver our services to our clients to quickly take a product-led approach to launch the stack for our customers, and then through a DevOps mechanism, offer the new features and services that they would require in their markets. And we believe through this process, the number of invoices we can ship out month on month to our customers will increase and our ability to collect cash faster increases. than what we have been able to do in 22 and 23 will strategically improve. We are very confident that this process is going to make our cash flow much healthier. If I were now to talk a little bit about the market, as I stated earlier, many analysts have predicted, in fact, Gartner predicted a 2% annual growth from 2022 to 27. The business models itself among the CSPs is seeing a shift. Definitely, they are moving away more from a product-led approach to a combination of products and services. This is really led by the fact that they need to move to a Cloud-based infrastructure and pay-as-you-go models for many of the services. Customers today, it's not just IT departments, our customers are transforming to businesses themselves wanting to engage and understand what type of monetization capabilities and goal-based capabilities they can harness from our stack to improve the business that they are in. Also, I think from services monetization, monetizing the network is becoming a very important growth segment in the industry, not to mention the fact that 5G monetization is top of mind recall for most of the CSPs who have implemented 5G the last two, three years, but not have been able to create monetization journeys and platforms and experiences that could accelerate revenue growth for them. So I think in terms of growth accelerators, definitely AIML stands as a big growth engine, as you can see here. The IoT market in terms of aggregating a number of edge computing capabilities and providing end-to-end digital experiences is also rapidly growing. There is also growth in the industry in terms of, of course, cloud services, fintech services, and B2B2X monetization capability. What we're finding in the emerging markets as well as emerged markets is the healthcare offerings combined with enterprise capabilities of the telecommunication operators is rapidly growing. And we are seeing this in Africa. We have won a large capability for technology moments in Mexico to automate and provide e-health services in the country. So these capabilities are definitely in the rise. So what are we doing ourselves? Our focus in 2024 is going to be in five areas. The first area is definitely going to be cloud. We at TechnoTree want to be the one-stop shop for all cloud requirements of our customers, whether they are big customers with a cloud transformation in order to absorb more data, more AIML capability on their infrastructure, you know, in their services or whether they are small MVNOs that want to have a subscription model in terms of how they consume billing and CRM services, Technotree will be able to have different strokes and different types of flavors and capabilities for these kinds of customers. On the AIML front, I think we will focus on integrating the sense of fabric into all our journeys today. The company enjoys about 350 journeys out of the box. All of them will have intelligence and goal based outcomes and business outcomes. enhancement outcomes integrated in in because of the sense of fabric through the technotree sensor certified product we will ensure that data governance protection and guard rails in terms of how data is consumed in a secure fashion will be ensured for our customers and we believe that this is a very the security compliance on aiml is a very unique offering coming from technotree overall And finally, in terms of automation of operations, adding intelligence in terms of having predictable operations and operations that scale as the business grows, we are adding intelligence into the entire stack to ensure that such operations are feasible. I already touched upon the business model transformation. Think cash, do cash is first and foremost for TechnoTree. We are offering multiple types of revenue streams that give faster time to market, whether it's a cloud offering, whether it's a traditional license sale offering, or it's a greenfield company that wants to launch a billing or a CRM product and get quickly to market. we believe we have multiple avenues, multiple entry points into our digital stack to transform your businesses while our revenue streams are also in partnership with our customers growing. The market expansion, clearly, the focus is Europe and North America, and we are already investing in terms of both marketing and sales activities in these regions. and we believe more will come. We'll also look strategically for acquisitions, both in the customer and in organic growth capability to expand into these markets. From an operational and corporate finance perspective, Indresh, of course, will talk more to it. We will continue the OPEX control that we established in 2023, which yielded us very good profitability. We will focus on risk mitigation strategies to contain the forex losses. And we will continue to focus on think cash, do cash to ensure that we return healthy cash balances into the company. I'd like to now invite Indresh to double click on our financials and give you a more detailed view of the financials. Thank you.

Thank you Padma. Good morning everyone. I'll straight away walk into my slides. The first slide I'm giving you the data about the last quarter compared to the 22 last quarter and also the annual performance for both the years. The highlights I would like to call as already Padma has spoken about is consistent growth in revenue. And as we already shared, we had the highest recorded history of revenue at 107 million at constant currency and at 72.7 at the reported currency. We are able to improve our EBIT substantially on account of our higher revenue and also cost containment. Unfortunately, we had a high impact of Forex losses, which we have very conservatively accrued for. Cash collections have improved. Cash inflow again at constant currency would have been 84.1. However, the impact of exchanges brought it down substantially to 62.3. Significant increase in our new orders received leading into a record high order backlog. In the absolute numbers, I have provided the net sales in the last quarter was 22.2, which was 10% higher than the same quarter in the previous year. EBIT was 7.9, which was 28% higher than the similar quarter in the last year. Financial items where we accrue all the exchange losses, we had a 5 million cost recorded in Q4 against 1.4 in the previous year. we were able to optimize our tax pens to 400,000 euros in the last quarter against 1.5 in the previous year. Because of the higher appropriation for the exchange losses, our net income was a 2.4 for the previous quarter at 11.2 for the whole year against 11.6 in the previous whole year. The cash inflow improved substantially from 11.2 in the previous year's quarter to 19.8 in the last quarter. And as the whole year, we recorded 62.3 million of inflow at the reported currency against 58.8 in the previous year. We had a very healthy order intake of 33.6 in this quarter and about 95.6 overall in the whole year. The order backlog, the amount of orders what we have to retire in future at the end of the year was at 80.2 against 68.9 in the previous year. The earning per share rounded off is at one cent in both the years for the quarters and for the whole year it remained at 0.4 in both the years. While we just spoke about last quarter, I'm providing here a chart since 2021 to show the consistency in our revenue growth and also the collections. The revenues in Q1 21 was 11.2. That was the beginning of this chart. And in the Q4 23, we clocked 22.2, which was almost double of what we had done three years back. Similarly, the cash collection, we are at about 11.8 in Q1 of 21 and we recorded 19.8 million in Q4 of 23. Again, it shows that we did have a very high quarters in some quarters and a little bit lower in the some quarters. I think that is one of the reasons where we are looking at this year, as Padma mentioned, think cash and do cash. The same data for the similar period I'm providing for EBIT and the net income. As you can see in the Q1 of 21, I had an EBIT margin of 27%. And in the last quarter, we reported a 36% EBIT growth. This is possible mainly due to a higher revenue and also a better management of the cost. While the revenue grew by 9%, OPEX was able to hold at a flat level, resulting in a higher EBIT growth. We continue to closely monitor the OPEX to enable consultant growth in my EBIT. Again, net income, which is after affecting our exchange and taxes, cost, 21% was in Q1 2021, but we had to come down to 11% in Q4 of 23. Just as a comparison, in the previous quarters, we had 15% and 19%, but the currency loss affected us. The risks here are we have a very high currency devaluation in Nigeria and Argentina, high inflationary trends in some of our customer countries. Mitigation, we continue to contract negotiation with customers for currency risk mitigation. Most of our contracts are in Euro and USD. We have a healthy mix of Euro and USD thing and we contractually are eligible for to be indemnified for such large currency risks. We are also planning to expand or we are continuously expanding our customer base into more economically stable markets like North America and Europe. We are also looking at arrangements that we do have with the leading financial institution for hedges and swaps. I'm going to talk about the current ratio, which is the how much assets I have for the liabilities, what I own. it is at a very healthy level of 5.4 times of my liabilities I owe in the assets. 20% reduction in overall DSO days from 2022 to 23. This was a focus last year as well. We increased our focus on ARR business model for predictable revenues and collections. Increased production causing the faster deliveries. Exploring facilities for currency swaps and forward booking of key Forex in the markets. Increased productization driving faster deliveries. I've also given the account receivables aging. As you could see between last year and the current year, there's a considerable reduction in the DSO days. The DSO days, again, we have a minor reduction in the Africa region, but we have a substantial reduction in the Middle East and APAC. And Latin America also, there is a substantial reduction. Now, moving on to my balance sheet, we have a substantial R&D for product and portfolio enhancement. We are a product company and we need to keep in pace with the technological advancements and we need to invest in our products and technology. We have the rise in the other receivable, mainly on the real estate deposits, advanced taxes, recoverable and adjustable in future period and advances for certain corporate activities. Further, the CCD subscription we have received in the year at 21.1 million. Again, a final update on the CCD. The scheme was launched in June 2023. Overall, 43.1 million CCDs were subscribed for. 21 million has been collected by December 2023. 2 million has been collected in January 2024. A consortium of subscribers have agreed to subscribe to the remaining CCDs for 20 million, which is as per the announcement we made in the last quarter. These are all my updates on the financial matters, and I hand it over back to Padma for her comments.

Thank you, Indresh. Thank you for that update. We now move to the section of prospects and risks. In terms of risks, of course, the constant evolving market demanding disruptive technologies and differentiation and the high competition that we face in this market only continues to grow. We continue to ensure that we have good amount of investments in R&D to stay competitive. And our realization so far is the bets that we have placed in terms of R&D dollars have provided us an entry level barrier from our competitors and has definitely helped us in terms of strategically positioning ourselves with competitive advantage with our customers. In addition, because we localize some of our services in emerging markets and other markets where we serve close to the customer, we are able to provide very disruptive and competitive pricing strategies. It's not just price per unit. It's also the bundled price. It's the long-term pricing capabilities that we bring to the table and so on and so forth that has ensured that we are able to de-risk the competitive issues that we face in the market. And we'll continue to evolve this practice as we go forward. In terms of our footprint in economically vulnerable countries and emerging markets, technology is USP has always been working in emerging markets. Our growth story came from there and we continue to grow in these markets. The good news about these markets is the high rate of subscriber growth that these market enjoy, double digit growth as compared to emerged markets. But then we need to definitely watch how the geopolitical situation and currency fluctuation conditions evolve in this market. It's not something new to Technotree. For the last two decades, we have worked in these markets in Africa and Latin, and we will continue to focus on renegotiating our contracts. In fact, most of our contracts are on either Euro or dollar terms, and we have the ability to negotiate the Forex prices at the time of invoicing, as opposed to the time of contract issuance. In addition to that, many of these customers are long-term customers of TechNotary, and hence our ability to to work with them on a trusted advisor basis in terms of getting a better discount or a better pricing on Forex continues. We also work with banks and other institutions to get better facilities in terms of indexing the currency fluctuations. In terms of receivables and currency, non-availability of euros in these markets also are quite restrictive for us. And in terms of mitigation, constant evaluation of currency hedges continues within our finance functions. We also, the improved productization means faster time to market and we reduce the number of payment cycles that the customers have, which is definitely very, very useful. And finally, we increase the models of ARR type revenue where we take not very large amounts out of these customers, but they pay on a monthly subscription model basis. Therefore, smaller amounts of Forex in terms of dollars or euros is what they have to look for in terms of transfer to Technotree for pricing. And additionally, we are definitely focused on growth in North America, Europe and other developed markets, which we believe will offset this pressure. So the prospects for 2024, very similar to what we announced at the end of March. 2022. We expect a revenue growth between 2% to 7% and an operating profit at between 7% and 15% overall. The company will continue to focus on increasing license revenue as well as the new ARR model and product-led approaches for subscription-based services, and also look for new delivery models where we are combining operations and incremental deliveries in a DevOps mode close to the clients. This will ensure that the company will have more predictable and stable revenue models going forward. The telecom industry, obviously, from Gartner and other analysts, is showing a 2.1% growth. So we will continue to stay growing above market conditions going forward. And while the geopolitical situations continue to be unstable, a 2% to 7% growth compared to the current situation, we believe, is the right place for us to be at this point in time. And We expect that the foreign exchange rates remain approximately at the same conditions going forward. However, we will monitor the conditions and continue to improve the prospects quarter on quarter as the 2024 year unfolds. Finally, I think what we have been able to deliver to you today is strong financial performance, a stable financial position for the company, strong current assets, and a very diversified receivables portfolio. As you can see, we are not dependent on the traditional two customers or three customers that brought in our receivables. Our receivables mix across markets, across geographies, and across customers is definitely diversifying. In terms of growth, we have shown a very healthy organic order book growth and a diversified customer base with 12 new logos being added this year alone. And the types of customers that we are adding are also diversified. It's not just tier one customers or postpaid markets. We are entering prepaid markets. We are entering MVNOs. We are trying to service private network providers that have spectrum licenses and so on and so forth. And we believe there is a sizable potential set of opportunities for us in the emerged new markets of Europe and North America. And we are very excited about those growth opportunities. In terms of focus on operations, our product stack is highly modern, readily used, deployable with standard APIs, is Cloud ready, and we believe we cater to the demand that is happening and changing in the markets that we serve. and we have been able to demonstrate high profitability while delivering top-notch capabilities on our digital stack. We are confident to deliver the prospects that we have promised to deliver for 2024 and probably do better than that. Thank you. It's time for some question and answers. Turn it back to Timo. Maybe, Timo, you could help us with the Q&A.

Okay. Thank you both, Parma and Indires, for the good presentations. And we all got a lot of insightful information. So, as you said, it's time now for the questions and answers. So, let's start with the questions from Roni Beerenheimer from Indires. And the first one is that the epithelium eventually was higher and cash collection slower than your guidance indicated. Why didn't you change your guidance range?

I think I'll allow Indrish to answer and then I can add some.

Sure, sure. The actual EBIT was higher by about 1.5 million at the high end of the guidance and the increase was marginal. And that was the reason why we thought it is not necessary to provide any additional guidance. And on the guidance on the cash, normally company provides the guidance on the revenue and EBIT at the beginning of the year. And then we focus on think cash to cash As we evolve, the guidance will get a better clarity over the course of time. And as Padma has consistently mentioned, cash is the central to our strategy for the year. Padma, any comments on that?

No, I think you've covered it all. I really believe that, you know, we do have a healthy order book. And we believe retiring that order book quickly, collecting cash from both the existing outstanding receivables and the new orders that are in place will ensure that we are able to meet the prospects that we have laid out for ourselves. And as you said, Indresh, we will continue to fine tune and give better guidance as the year unfolds quarter on quarter.

Okay, very good. Then the other question from Roni is that view on cash collections this year. Are you able to increase your collections this year?

How do you see it?

Absolutely. Absolutely. The whole focus this year will be on, as we have coined an internal transformation project called Think Cash and Do Cash. So that is a focus on all our activities are focused towards achieving that. So Padma, you may add to the focus what we have internally.

Yeah, so as I said, we have been transforming the business and this business transformation is not just Technotree trying to do a business transformation. This is also led by the market. If you look at, as I said earlier on, Gartner definitely believes that there is a new dynamics in terms of BSS software. The whole software licenses and the service components are being decoupled. More and more of the Customers are moving to Cloud mainly because they need very large data processing capabilities for AI ML, but also they need better infrastructure to provide 5G monetization capabilities. They also want to become tech-cos where they're going beyond voice and data and telco services to adjacent market ecosystem play services for which they do need to have differentiated revenue models. The ARR spans of growing the business, whether it is licenses plus ARR, whether it is licenses plus ARR plus revenue share or subscription-based services, these models are continuously being explored. We are seeing more and more of these requirements coming up, especially in the cloud space from our customers. And as I said, as TechnoTree, we have invested correctly and heavily in some of these technologies, and we are poised to take advantage of these types of models. And I believe that would bring a certain amount of greater predictability in terms of accounts receivable into our company.

Okay, thank you. Definitely sounds good. Think cash to cash. So it's a good thing. So next question comes from Valtteri Rossi from Danske Bank. So how do you see long term prospects in the BSS market as your own view on market growth of 2% is significantly lower than previous commented? What is driving this slowdown?

It's hard to tell. I think, as I said, the market is going through an internal transformation. I think the CapEx availability due to high interest rates has definitely diminished. I think there are ARPU issues where Higher ARPUs are no longer the capability. I mean, buyers are not interested in it. And therefore, CSPs are having to lower their ARPU, reduce their OPEX. So they are under pressure to deliver higher quality ARPUs. of services at a lower competitive price, which means they have to look at really out-of-the-box alternatives in terms of how they price services. And definitely, they have to ensure that they are not losing out to competition in terms of their subscriber base because the subscriber base is definitely in developed markets more saturated than emerging markets. And the game there is adding more subscriptions to existing subscribers, bringing a higher quality of experience, customer experience, adding more non-Telco services into the mix whether it is energy services, health services, education services, gaming and social media services, into the mix of service offerings on the platform. And then the ability to have network integrated into the services, especially with 5G slicing capabilities, increase the performance capabilities on a given experience. These are the kinds of asks that are in the market. The ability to provide your stack on Cloud, we are already seeing an uptake on Cloud requests and Cloud-based BSS offerings in our order book. Definitely the ability to have AI ML integrated both in terms of goal-based capabilities and our business outcome-based capabilities and more intelligence in terms of how you attract and retain customers without and better churn prediction capabilities. of ensuring that you offer certain services so that you prevent churn of existing subscribers and finally humanizing the whole experience, the digital experience with generative AI type capabilities where you are making it less transactional in modality and more conversational in modality in terms of how you engage with your customers. Finally, the other area I think is to reduce operational costs. One is to go Cloud, three is to increase personalization and humanizing the whole digital experience. And third area is optimizing operational costs by introducing higher level of predictability, automation, and a secure way of managing your operations with less human interventions, with autopiloting, autoscaling, robotic process automation type of services on the platform. adding more intelligence into the way you run your operations so that it's more error-free, more predictable, more scalable, and more cost-effective. So these are the trends we are seeing in the market, and Technotree is well-poised to take advantage of these opportunities.

Okay, thank you, Padma. Very good and comprehensive answer. So the next one, your largest two customers were 49% of sales in 2023, which implies that they have decreased their spending. Do you expect them to invest in your products this year or are these sales expected to decrease in 2024 as well?

I think if you look at the unit spend of these customers, I wouldn't call it a decrease. I think it's definitely what has happened in terms of our revenue mix. We have a lot of new customers that we have added to the portfolio. I think in the last three years, we have added more than 25 new logos. definitely then the percentage of revenue coming from our traditional two customers will come down and it was a very strategic intent to grow our business both in terms of customer base and market base beyond the two customers to give those customers also the the the power of the product led approach that technotree has embraced um of course these two customers are very strategic they continue to invest in technotree We are their trusted advisors and partners. And I believe there is a strong growth potential for the company with these two customers. And we have added many new tier one customers as well as Saudi Telecom, Orido, Zain, Telefonica, Talano, etc. And we believe we will establish similar capabilities with the new customers we have acquired as well and more to come.

Okay, thank you. Still one more on the customers that you mentioned earlier. 12 new customers. Could you once more clarify which regions they are from and will it be more efficient to collect invoices from these new customers than it has been recently from your traditional customers operating in countries like Nigeria?

Definitely, I think that's a very good question. I'm really happy to say that in 2023, the footprint of new customers is global. We added new customers in Latin America, ATP. We added new customers in US, United Health, Radian. We added new customers in Canada, Telus. We added new customers in Europe, Telenor. We added new customers in Asia-Pac, Telecom. We added new customers in Africa, Pan Africa, Betel. We added new customers in Middle East as well. So we've had Omnia Jordan and then there are others that I can think of. So we've had a very healthy portfolio of new customers across the globe that Technotree has been able to attract and garner. And I really thank the sales team and the marketing and pre-sales organizations that have worked very hard along with our delivery organizations to impress upon these new clients the capability of technology. In terms of, of course, collection and predictability of receivables, I think there are two factors to it. One is to deliver a very good product. Second is to deliver the product very quickly and move into an ARR model. so that the predictability in terms of monthly revenue recognition or monthly receivable collections becomes more automated. And thirdly, I think it is, you know, as we enter developed markets, the situation will definitely improve.

Okay, thank you. Then a following question, how much of the order book is going to be delivered this year? What does it consist of more specifically? What kind of sales? Can you elaborate a little bit on that?

So the order book mix has a good mix of cloud-based deployments. It has technology moments. It's got orders for digital stack transformation, both for small operators, MVNOs, as well as large tier one customers. It's got a good mix. And then there is definitely ARR revenue on existing customers that continue to use our services for further enhancement of their performance digital platform or for operations and maintenance. I believe we will definitely retire some of the current projects that we are running. That's part of our think cash, do cash initiative. We will definitely retire new orders because as I said, we have more than 350 journeys and 1,000 features out of the box, highly standardized with PM Forum APIs. We are confident that we can start quickly and bring these customers faster on board and provide them digital transformation. And then definitely on the managed services offerings, we believe that we will continue to unfold the DevOps model across these customers. So there's a healthy mix of opportunities for us in the backlog.

Okay, thank you. Then there is a question related to CCD and interest. Can you tell a little bit what was the funds received from CCD used for during the Q4 And as well, then following that, people are interested that who paid, in fact, the CCD 7 million in quarter four. Can you tell something on that?

Well... Yeah, well, I had already presented in my presentation that we had announced a 43.1 million of CCD scheme. And in the Q4 of last year, we announced that out of that 20 million, well, there is a consortium arrangement for it. Other than that, we have confirmed that all the remaining money has been received. I hope that answers the question on that. The second question, how is the CCD money used so far? Out of that, I have used about 9 million for the R&D product improvements so far. That is what we have shown in our cash flow also. Hope that answers the question from the investor.

Yeah, thank you. Thank you, Indras. Yes. So we still have time for two questions and for Indires first. What is the advance for acquisition in cash flow statement?

Okay. So in the markets, what we operate, as you know, that there are many small partners who have very critical IPs for our stack. And there are opportunities to do certain M&A activities with them. And we will be announcing them as soon as it becomes appropriate. We continue to be active in this area, watching for suitable opportunities that align with our growth strategy.

Okay. Thank you, Indires. Then one more, I think so this is the last question this time, but how much of the product development costs are activated in the balance book?

Okay. The total cost that are capitalized in the year is about 11 million. And we also have about 2 million worth of softwares, which we have brought into our product stack from our partners.

Okay. So thank you, Padma, Indires, and thank you for all audience. It's time now to conclude this 2023 result webcast session. And thank you as well for active participation and all the questions. So I want to inform you all that we have an AGM meeting 25th of March in Hotel Mestari and we welcome all shareholders to be present over there and you get additional information there. And please as well stay tuned and follow our IR website and social media channels as well. We follow the social media channels as well internally. And have a nice rest of the week and enjoy the coming weekend. And thank you all and goodbye.

Thank you very much. Thank you.

Thank you.