Tecnotree Oyj

Good morning, everyone, and welcome to TechnoTree's Q4 and end of year 2024 results presentation. My name is Tom Skoponen. I am the head of investor relations taking over for Timo Holopainen. With us today, we have CEO Padma Ravichander and CFO Indiresh Vivekananda. I will be opening the questions and answers in the chat in just a few moments. We will be bringing up all the questions and answers at the end of the presentation. Without further ado, please, CEO Padma Ravichandran.

Good morning, everyone, and welcome to our Q4 2024 results presentation. Along with me is our CFO, Indresh Vivekananda. I will give the quarterly highlights and the guidances and a bit on the strategy and the actual results presentations of the Q4 performance of the company, and the 2024 performance will be guided by Indresh. Thank you. Can we move to the next slide, please? One more. As you all know, Technotree is a global expanding BSS provider. We are in the top 10 globally. We service over 1.2 billion subscribers worldwide. We have recently acquired a lot of tier one telcos, as you can see in this canvas. When I started the journey at Technotree in 2011, there was no more than two big customers, one in Latin America and one in Africa and it's quite interesting to see how the canvas has developed and today we boast with more than 90 plus service providers globally being supported by our technology and platform and our capabilities from our resources worldwide. We do have a follow the SAM model in terms of operational support and to support these customers and multiple network operation centers across the globe. Today, the stack is full with 4,200 features. And I'm proud to say this year, I think we had something like 20 concurrent go-lives for all the acquisitions of licenses we did in 2023. which will definitely turn into ARR models in the coming years for us. So it was a very, very pivotal year. I want to say 2024 overall has been pivotal, but we have handled it in an agile way with our SISU spirit. We started the year with deep forex losses, as you remember, in Q1, and because of the currency fluctuations in the NIDA. That continued with geopolitical situations and the slowdown in the market. We also had made commitments to exit markets that were highly sanctioned or were political risks. And we had to continue to execute those terminations adequately. And we also exited businesses that were non-telco that we acquired initially in 2022 we acquired the cognitive scale. So in multiple fronts, we had to hone in the business and ensure that we are focused on the segment that we want to serve and grow in that segment. What I am abundantly happy about is the outcome, despite having these challenges in front of us, the way we have pivoted through and navigated through these challenges in 2024. If we can move to the next slide. It's abundantly clear, despite these challenges, we were able to meet the guidances that we had given for 2024. In terms of constant currency, we had promised to deliver 2% to 7% of growth in revenue. We delivered 4% growth despite deep fluctuations, both in the Argentinian peso and in the Nigerian naira that started in Q1 of this year. However, these currencies have been stabilized and we have also been able to negotiate better terms with some of these customers and also move some of the operations to dollar denomination type of payments. On EBIT, we had promised 7-15%. We delivered 9% in constant currency. A lot of that benefit came from the deep cost-cutting measures we took in Q2. And I'll talk a little bit to that. And finally, the most important and most significant achievement, I would say, of 2024 is the free cash flow. For three consecutive years, TechnoTree has posted positive free cash flow. This was a resolve that we took. in April of 2024. And I'm proud to say that the entire management team worked extremely hard despite working in difficult markets with customer payments that are cyclical in nature and revenue invoicing, which is also fairly cyclical. The other big achievement for the year is in the beginning of, in the latter part of 2023, we made an entry in the telco space in the US market. And through 2024, we aggressively work to create a footprint in the U.S. market. All the CapEx investments we made with our prepaid customers in Africa and Middle East and the standardization of the stack as per TM Forum standards. The Relationship we developed with a tier one SI player in the US market all yielded us a fantastic result by winning a tier one Telco customer on our digital platform. So clearly we were able to prove that the investments that we made and the effort that we took to enter the American market was well rewarded. Finally, we announced, based on the slower revenue growth and the slower order intake growth, that we would administer cost reductions across the company. This was also propelled by the fact that we had 4,200 features and a fairly mature stack. We had promised to deliver 4.5 million in cost reductions, but the company actually exceeded that expectation and delivered 6.9 million of cost savings, which definitely helped in ensuring that we met the free cash flow guidance for three consecutive quarters. Can we move to the next slide, please? I now want to get a little deeper into some of the guidances given and the revenue performance and the EBIT performance. If you look at the typical revenue growth of TechnoTree over the years, I've taken a three-year view. It's very cyclical in nature. And what we plan to do, I think mid-2023, was convert our model into a more predictable ARR, annual revenue recognition model. And we started the journey in later part of 23. In 23 end, we acquired two customers in the ARR model. By the end of 2024, I'm proud to say we have 10 customers who are now on the ARR model. And the ARR model, if you look at the 2024 revenue has provided a more stable growth in revenue quarter on quarter, which is exactly what we had expected. Also, in terms of the growth in ARR business itself, you can see that in 2024, we had a lot of licensed revenue that we had taken in Q4 of 2023, which gave us a high revenue of 22 million in 2023. In 2024, we delivered the projects around those licenses that we had sold. Therefore, the project delivery revenue increased. And finally, the overall revenue in terms of constant currency also performed. And the ARR revenue growth is also shown here in the graph. The other important movement on revenue was the acquisition of a North American tier one telco. And if you look at our order backlog, the American business in terms of order backlog is growing. And in terms of growth in the telco revenue in America, we've seen a 40% uptake. And that is certainly rewarding for the efforts that we had put in to enter this new market. Can we go to the next slide, please? On EBIT performance, clearly the strong message here is the cost reductions that we administered in April of 2023. This was mainly because we wanted to give a free cash flow guidance for the company, and we wanted to ensure that the company has an operative cash, positive cash flow month on month. And that strong operational alignment ensured that we Even though we had a lower revenue overall in actual terms in 2024, our EBITS margins grew much higher and we recovered with a positive free cash flow. So the cost reductions worked in our favor as we also faced a bit of an economic slowdown in terms of revenue growth. Next slide, please. The last guidance was on free cash flow, and this is a very interesting chart. I have looked at three years of free cash flow that the company has been posting in the last three years, 22, 23, and 24. And as you can see, even as late as the last six quarters before Q2 of this year, the company posted negative free cash flow. And despite working in difficult geographies, despite having foreign exchange losses, exposures in markets like Nigeria, and continuing to serve some of these customers, we took a very strong stance that we will in H2 post a positive free cash flow between 2 to 5 million euros. And I'm proud to say that we were able to achieve this through the cost regulations that we put in place, the think cash, do cash policy that we implemented in the beginning of the year, the tracking of all payments all invoices uh and all due receivables have definitely benefited us and in addition to that we started notifying our customers that if we do not receive payments on time services will be uh you know stopped and these policies along with the arr approach of more predictable revenue more predictable invoicing has definitely definitely helped improve the free cash flow. Cash collection for the company continues to remain a challenge, mainly because we work in difficult markets where foreign exchange in dollar denominations are sometimes hard to find, and some currency fluctuations are still there in the African markets. Although all of LATAM now is in dollar denomination, we still continue to have seasonality in the collections, which Indireesh will explain more on the receivable side. But we have continued to lower our exposure to these currencies, and I will share with you the new metrics that we have been able to achieve in terms of foreign volatile currency exposure. Next slide, please. One of the other guidances we added during the course of 2024 was CapEx2Sales. The company had been steadily investing in creating a digital stack, in creating a moat by having more than 60 APIs that were standardized so that the integrations can be fast and our implementation cycles will be more rapid. And we also had invested a lot in creating out-of-the-box journeys, as you can see, 4,200 features. All of this paid us really well in terms of our entry into the North American market. But now I'm proud to say we are at a place where we can start reducing the capex. And as of the second half of 2024, we started reducing our capex. CapEx investments in the product stack because we have a mature stack. We have a configurable stack that can be configured by the markets we serve and the customer needs and profiling that we are trying to meet. However, the guidance is that by 2025, we reduce the capex to sales spend to 10 to 12%. I truly believe we are on a good step towards it. And we have taken sufficient impairment, as you can see, 6.1 million in 24 and adequate impairment in 2023 as well. So we'll continue the aggressive impairment guidance as well. Next slide, please. The next point that we had given guidance on for 2025 was to ensure that over the next three years from 2024 to 2025 to 2027, we will reduce the currency risk exposure to 10% to 15% from what it was, 45% in 2023. As you can see in this chart already, we have touched an 18% mark. We have converted all the LATAM contracts into dollar denominations. We also see that the Naira is getting more stable. The currency fluctuation of the Naira to the dollar has stabilized mainly because of the oil production increases and the stability of the Nigerian economy. And the predictions from the analysts is this should continue, but we will take no chances. We are prepared to continue to revisit the currency risks and take precautionary measures as required. Moving on. Finally, I wanted to touch upon why today, technology is investing in partnerships. As we enter the new mature markets of US and Europe, we find that the synergies that we are able to develop through partnerships One, for scaling our capability to deliver, and two, to attract new customers and create the spread of our products and services across the market. We need partners in these mature markets. And I'm delighted to say that we started with one partnership with HCL Technologies, which we announced mid-year last year. Several more partners are being onboarded and several assignments are underway. And as deals unfold and we are able to ensure that these partnerships bear successful revenue growth, we will continue to share with you the outcomes of these partnerships. why did we start these partnerships now today we have a stable stack which is tm forum certified in fact Even Gartner has recognized us in their magic quadrant for AI and AI capability. And working with these partners, we find that our ability to scale our delivery capability very quickly, as well as continue to grow our market share is quite promising. And I hope this bears good outcome in 2025 and beyond. Next slide, please. Now for our guidances for 2025. We have now presented these guidances in our report already. Given the fact that the growth in BSS market share has been advised to be at 0% to 2% by many of the analysts in the market, we are predicting a low to mid single digit growth as a percentage growth on revenue for 2025. uh that is in constant currency terms ebit margin we have said that the margin would be uh about 200 basis points of two percent growth in ebit overall and we have improved our free cash flow guidance from greater than 3 million to greater than 4 million for the full year 2025. the additional guidances we are given on dso days to reduce our collection and exposure for age receivables to 100 to 140 days we will continue to work on it it is definitely challenging with large tier one operators to push them to pay faster but we we have plans to improve that through our arr models um and the partnerships we have with their size The capex spend, as I've already explained, we have brought it down in 2024 and will continue to reduce the capex to sales spend to 10% to 12%. We announced a dividend policy first time in the history of TechnoTree, and we also issued a dividend. We plan to continue to comply to the policy that we have announced and hopefully improve it over the course of several years. Finally, reducing our exposures to frontier markets and bringing the risk on foreign currency down to 10% to 15%. Some very good steps have been taken in 2024 with Latin America and with the African markets, and we'll continue this journey and focus on ensuring that such risks do not unduly put pressure on our free cash flow. Finally, as a parting comment, what I want to say is while the industry is going through challenging times, I think technology again has been a champion in terms of sensing the market conditions and predicting how the market will shape into the future growth for BSS and telecom industry. One of the biggest revenue generating capability that is going to come to telcos is the whole onset of the artificial intelligence and machine learning capability. If you look at the market today, it is abundant with several generative AI models. Many of them are open source and freely available, challenging open AI and companies like that. There is abundance of compute power available thanks to companies like NVIDIA. But what is really not available in the market to make AI ML as an industry possible you know, game changer is the fact that there isn't real data available to drive these models and to move them from being explainable to more predictable and more intuitive. And there is the opportunity for telephone operators who today have massive networks globally and have large amount of data. You know, it's said that annually there is more than 180 zettabytes of data swimming along the network all over the place. And the access to this data lies in the hands of the telecom operators. So I really believe telecom industry is going to benefit and revolutionize how data monetization is used to move the telecom operators from being pure connectivity and network providers to providing innovation in AI going forward. And here, with our 137 patents, the acquisition of a very early growth stage of AI and ML company in the US, and several telco use cases that we have brought to bear on our digital stack, I truly believe that technology is poised for growth in the AI industry. Thank you.

Indresh, go ahead. Thank you. Thank you, Padma, for the wonderful presentation. So let me go to the numbers. And I'll try to be as compact as possible so that we leave sufficient time for the question and answers. Thank you. Can we go to the slides, please? So these are the numbers at the top level. I'll walk both Q4 and the year-on-year numbers. As you can see, the highlight was the free cash flow. In Q4 24, we had 400k free cash flow against negative of 600k in the previous year, which is a change of about $1 million in the net. Similarly, for the whole year, if you can see, the whole year, we had still a negative of 1.8. Because we had a terrible Q1 of 2024, where we had more than $4 million of negative cash flow. In spite of posting three consecutive positive free cash flow quarters, we still ended up the whole year at negative 1.8. But previous year, it was minus 9.7. So we made a substantial progress, but still we were on the negative side. In the constant currency, if you look at it, we had 18.5 in the Q4, which is 17% lower in terms of previous years, which was at 22.2. But our whole year, we were at 81.4 compared to 78.4 in the previous year. If you really look at the real revenue, not in the constant currency, but the real revenue what we earn, in Q4, it was 17.6 against 22.2 in the last year, which is 21% down. And on a whole year as well, 71.6 against 78.4. At this point, I want to just pause for a second and draw the attention, the difference between the constant currency and the real currency, which is nearly about 10 billion. One of the reasons for us getting a real revenue of 71 was we lost about $10 million in the exchanges. So if the currency side remained as it was at the end of December 2023, my revenue would have been at $81 billion, which would have been about 4% higher than the previous years. The EBIT, the earnings before interest and taxes in Q4, it was 7.4. In the previous year, it was 7.9, a 7% reduction. But in the whole year as a whole, we did about 26 million against 23.8 in the previous year, again, 9% high. EBIT in real terms, real currency, it was minus 10.9, 10.9 in this year against 7.9 in the previous year, a 38% jump, as Padma has already explained about the cost actions, what we took, that gave us a substantial benefit in Q4. But the whole year, we were flat at 23.8. Again, I want to draw one more attention. If we had currencies that remained same, I would have had another 2.2 million more in EBIT as well. Can you go to the next slide? Now, let's see what are the main highlights for the whole year, in our view. I want to talk again about the free cash flow we are able to achieve. ARR, a step which we took in the last year, which would give us stability in our performance. As we know that technology has a history of quarter on quarter variances, both in its revenue and in the cash collections. That's been the trend and the nature of business in which we are in. So we were looking at how do we normalize it to the extent what we can. One way of doing it was moving into an ARR model. We started doing it from 2024 beginning onwards. So as you can see in 2024, the constant currency, or rather in the ARR model, we are able to get a 10% higher revenue. Padma also spoke about CapEx2 sales. We are bringing it down. While it looks just a 1 million reduction from 23 to 24, I also want to draw to the attention that the plan of impairing these assets at a much faster rate. In 2023, we had a 3.9 million as impairment on these assets, where we took it to 6.1 in 2024. The intention is to do less capitalization and also try to impair it faster. The DSO days, I want to spend a little bit more time on this. It looks like 176 days and in 2023, 153, means a high of 15%. Is it really worrisome? Probably in the next slide, I'll walk through to see how it is. Hardened backlog, We had a reasonably good year. Unlike in the last year, just to cover the number, we had about 78 million of new orders. About 95 million was in 2023. There was a reduction in the order intake as well. But however, I still hold a healthy order backlog of about 80 million, which is slightly more than about one year of my revenue. Can we go to the next slide, Thomas? We talked about the DSO days. Looks very high, 173, very high. But let's look at the historical DSO days for the last three years, what I have provided. It goes up, comes down, again goes up, comes down, highly seasonal. But what I want to draw the attention is, out of this high receivable, nearly 40% of them are not in due, not in due meaning less than 30 days, which means that we had a lot of invoicing milestones which were achieved in the Q4 of 2024, which I have built, which has increased my receivable substantially, but 40% of them are not technically due or legally due. However, we still have a few large outstandings, which are more than one year. There are from three or four large We at least have operators. All efforts are made. These are all the very long-term projects which have been running for a couple of years. They are from a very large customer, so I do not see any risk in collection, but there have been a delay in collection. However, we have been making the necessary provisions, which are as for the company policy and which are as for the IFRS as well. The days-for-days are high, but the good thing or slightly positive thing is majority of them or nearly 40% of them are not into you. Can we go to the next slide, please? This has a comparison for the last three years, 22, 23, and 24. As you can see that in real terms, my revenue came down from 23 to almost a 22 level. I have already explained it. If it didn't have the exchanger thing, we would have had a 81 million revenue. And also, I point out one thing. While we moved to an era, it also affected my revenue in real terms to some extent. The earlier, probably in one of the slides with Padma Va through, it had the quarterly revenue, what we achieved year on year and quarter on quarter. If you had observed there, I had a high peaks and again a low peaks. towards quarter on quarter. But this year in 24, relatively, quarter on quarter, we have been stable. So when we move into an ARR model, it does affect the actual revenue for a couple of quarters or even a couple of years, and then it stabilizes. I believe 2024, we have achieved that stability, even though we had a lower revenue, but it's more a stable revenue. Similarly, we had a EBIT of 23.8, which was almost similar to the last years. And I want to draw attention of the other thing, the exchange losses, the real exchange losses when I revalue my assets and liabilities or when I bring the money in different currencies. Last year, if you had seen, we had about 10 million of exchange losses, which were able to contain it to about 3.7 in this year. that 9.9 was majorly due to the huge fall in naira which we saw in 2023 and in 2024 also in the beginning we had a higher foreign exchange risk and hopefully we believe that is more or less stable We also had a one-time provision of 7.3. Probably I will explain in the next slides the rationale behind it. And then the other thing about the taxes. As you can see, last year we had a 2.8, and currently the taxes also increased to 4.5. One of the reasons Technotree operates in multi-geographies, multi-tax zones, multi-tax jurisdictions, and there are a lot of efficiencies we can still improve upon, which we are working on, and I hope to bring down the taxes and the exchange losses are retained at a better level in the coming years. The net income, because we made that one-time provision of 7.3, it came down to 8.3. And if that had not been there, we would have had a fantastic event in the current year. The cash collection, again, cyclical. We collect some of them in certain quarters. In certain quarters, it is dull. We collected about 51 million in the last year. I already walked out. As explained, order received about 71 million compared to 95 in the previous year. Because of that, the order back loan is about 80 million, which is almost same as last year. Can we move on to the next slide, please? Now, I wanted to share a little bit more about the one-time large provisions, what we made of 7.3. As all of us know, TechnoTree did acquire a Middle Eastern customer through an acquisition the AirSquare Technoman did with the Lifetree India company in 2008. And this customer came along with that acquisition. We have been providing services to this customer till mid-2023. And after that, no revenue be recognized from this customer. And due to geopolitical risks, the war threats, the threats of war, financial sanctions, and techno-trace mature market entry plan, we decided to exit this customer in 2023 Q2. At that time, the total receivable from this customer was 15.6 million, and that was reduced to 10.6 by early 2024 or the beginning of 2024. We have been constantly discussing with the customer, negotiating with him to collect the entire money. We always believe that we need to collect that, and we did a lot of negotiation with the customer to collect the entire 10.6 million. However, the customer has now come to make a settlement at 3.3 million, paying the entire 3.3 million, and settled at 10.6. While we still make an effort to collect this, as a prudent and a conservative accountant, we have decided to make a provision for the 7.3 million. And this 7.3 million is disclosed as a separate line item below the EBIT as far as the IFRS 5 guidance, which talks about the discontinued business. So this is the rationale behind 7.3 million. And we have not given up. We are trying to collect it. Padma, we did have a history of this in some other customer. Do you want to tell us?

I don't know if some people who have been with TechnoTree as investors for a long time would remember our entry into the Lapgreen market. We had three operators to whom Lapgreen was the group owner. We had a 10 million USD receivable, which took us four years to collect because of the war and the geopolitical situation in Libya and so on and so forth. But we still collected about 6 to 7 million of the 10 million after four years. So, technotree never gives up in pursuing to make its collection happen. we have to ensure we have taken abundant caution and uh you know put the put the situation in in the right perspective from financial terms and i think taking the provision while it is difficult to swallow i think impacted our ebit it impacted our net income it was the right thing to do for investors so at this point we wanted to be very prudent and conservatives like

accounting good always allows to be. So that is how I have taken a provision and we haven't written it off yet because we haven't concluded with them. We are still asking for more, but what we know for sure we are going to get rest of the money I've already provided for in this. And I do not anticipate any further provision or write off against this particular receivable any further. Can we move to the next slide, Thomas? This is about the balance sheet, the assets and liabilities, what we have. We have been investing in the own developments. As you can see, there is an increase in the investment. But again, we are taking a faster impairment and we ensure that there is a proper impairment test done on all these intangible assets. We do have a process wherein every quarterly, the intangibles are tested very severely, and then necessary impairments are taken for that. We did have a small deferred tax assets to be received in one of the geographies. We realized that may not be any more available to us. We made a complete write-off of that deferred tax assets. And similarly, we did receive the balance amount in 2024, whatever was due on the completely compulsory convertible defenses the full amount has been paid up now and we also paid out there are certain interest-bearing liabilities that came to us along with the acquisition of cognitive scale in 2022 we paid out the dues which were run on that loan as well So this is where we stand. The shareholders' equity stand at 92.6 million at the end of the year. That's my balance sheet. Can we go to the next slide? One thing, Thomas, before we go to the question and answer, when Padma spoke about the guidance, I want to reiterate again that our guidance for 2025 are in constant currency as far as the revenue and EBIT margins are concerned. But on the skip, on the cash flow, free cash flow, it is on the real currency, not on the constant currency, which I think is something we are proud to plan and achieve. Yes, Padma, you have anything before?

No, I think that was perfect. Thank you.

So, Thomas? Wow, thank you so much, Padma and Indras. And thank you, all of you online, you 33 attendees at the moment. You guys have been very active sending us your questions. We appreciate your time and effort to be here with us this morning. If it's okay with you, Padma and Indras, I'd like to start the question and answer Please. And this section will be done in English. There is one question in Finnish, so I will provide it in Finnish, but also give a translation in English since this is a recorded event. So, please explain the one-time write-off of 2.9 million in Q2 and Q4, the one-time provision that made a total for 7.3 in the full year. Please also communicate the path aimed at reducing future receivables.

Yeah, I think probably I can take that part. Because that again spoke about the provision. I have shared enough information on that. Yes, this was a provision. What we did was we took it in two tranches. We provided about 2.1 against this in Q3, and the rest of them in Q4. Whatever was the impairment we had taken in Q3, when we retested it, we realized that the impairment was no longer required, so we wrote it back. In the somewhat substance in the net, we wrote up this 7.3, or we provided for in 7.3, the whole . I think I explained why this customer came to TechnoTree's lab, how we did provide them a service over a period of time, what are the issues we had, why we had to exit that particular customer, and what was the amount at the time of exit, and what is the current receivable, and what the customer is paying us right away, and the rest of the amount we have made a provision. I think I have provided the necessary explanation. If there are any follow-up questions, I'll be happy to take that. And I do not anticipate any further provision or write-off on this particular receivable. And one more point I want to highlight, any money that we received against this receivable was not taken as a revenue, but as against the receivable which we already had accounted for. And yeah, I hope that sufficiently answers.

OK. We'll try to keep all the questions and answers within two to three minutes just to make sure that we will go through all of these questions in time. Your cash flow guidance for the upcoming year seems significantly more conservative than expected, particularly with the forecasted reduction in investments. Could you explain why you are adopting such a cautious approach, especially considering the positive cash flow trends in the previous reports?

Maybe I'll answer and then you can add to it. First of all, technically, since the time we started giving guidance during my time, starting, I think, 2021 or so, we have met our guidance. So we are very, very particular that we set the right targets. And as a management team, we strive to achieve those targets. The cash flow guidance given, as Indrish clearly pointed out, is greater than $4 million in in real currency terms. Given the fact that we just came out of six consecutive years of negative free cash flow, and we took huge currency exchange losses, I think you said 10 million in 23 and another 4.6 million in Q1 of this year. And the Naira Y right now seems to be doing in a stable manner. There is no guarantee how these fluctuations may come up during the course of 2025. And having given a guidance of greater than 4 million in real currency terms is a significant milestone for us to achieve. knowing fully well that we serve globally very difficult markets. It's our niche capability to serve African markets and Latin American markets and certain difficult geographies that we continue to serve as a telecom service provider. So having put ourselves in that position, I felt it was extremely prudent to make a guidance that we can achieve or overachieve. It's still very early days in 2025, and given the current slow growth, that we are projecting on revenue, we will be very cautious. And if we see good improvement and good uptake and good progress in terms of our financial management and cash collection, there's no harm in improving the guidance at an appropriate time.

Yes, Padma. Just to add to that, as Padma already mentioned, in the last three years, there was only one quarter increase Q3 of 2022 when we had a positive cash flow of $5 million. And what happened in the next quarter was there was a negative cash flow of $6 million, which meant that in the last three, four years, we never had any two consecutive quarters of a free cash flow in this company. It's highly cyclical. We have overcome that to some extent by pushing some of the contracts into an error mode. However, even in 2024, Q1 was a negative cash flow. We were able to achieve free cash flow positive in Q2, Q3, and Q4, probably first time ever, three consecutive quarters of having a free cash flow. We are sure that we will achieve that as well. So that is the reason we are given a very conservative or a modest target of above 4 million. And as Padma said, it is the beginning of the year. As the years wears on, we will revise as and when required.

And it takes extreme agility in the way we do our R&D spend and in the way we manage our marginal cost of investment on our product stack to achieve this free cash flow. We need a lot of agility, a lot of ability to predict where the market is moving and what operational measures that we need to take in order to achieve it. So we are capable of doing it. We have proven we can do it and we'll continue to do it. improve our efforts towards meeting the guidance.

Thank you for those answers. And the next questions, I would ask that your answers be no more than two minutes, just so that we have time to go through all the investor questions. There have been significant growth in receivables, even after a $7.3 million write-down on certain accounts. Can you clarify how this impacts cash flow and the company's liquidity going forward, and what steps are being proactively taken to address this issue? I believe this theme has been rising up a few times on the call, but please go ahead.

Yeah, I can talk about the financial impact of that. Yes, there's an increase in our receivables. And I think I showed in the chart, 40% of my receivables are not in due. That gives me a little comfort about the quality of the receivable. Yes, there are certain long overdue receivables. I'm sure that as the period goes, when we complete those projects, we should be able to collect them back. And if you just ask me, how was it compared to the last year? In 2023, the same number, what is now 40%, was less than 30% in 2023. So to that extent, while the number of, or the value of the AR has gone up, but the quality of AR has also improved by one third. So that is where I'm looking that more, a little bit positive. And we also, as Padma, initiated many actions, Padma, for example, no payment, all that.

I also want to say that if you looked at the revenue growth, the reason why Q4 2024 revenue was lower than Q4 of 2023, we had a number of licenses that we booked in 2023. In 2024, you saw that the license revenue had come down, but the projects delivery business and the ARR business grew. And then once we deliver the projects and we delivered something like 20 go-lives or 20 or 22 go-lives over the course of the year, we started invoicing them. So a lot of invoices were generated during Q4 and later part of Q3 of 2024, which become due. And therefore, the receivable is still fairly young in terms of its aging. And of course, we will continue think cash, do cash operational models. We will continue the no payment, no work models. We will continue to issue dunning notices. We will continue to negotiate with our high relationship, high touch customers for better payment terms as we deliver better quality of service. And all of these dimensions are still operational.

Thank you. There have been concerns raised in the forum regarding the management's ability to meet previous growth promises and steps taken to rebuild investor confidence?

I think, as I earlier stated, I'll just mention it and maybe you can add a little bit, Indresh, is that we set guidances and we have met the guidances consecutively for the last three to four years, and we plan to do so in 2025 and beyond. We have come out, we have taken this company, it's one of, I think the only company in Finland that has come out strong out of debt restructuring and created a growing concern with revenue growth trajectory that we have been able to keep ahead of the market so i'm confident that we are taking a lot of strategic steps towards improving operational excellence increasing the revenue potential within the company and making a very strategic choices in terms of overall strategy, whether that's AIML, whether it's going towards adjacent markets to get growth on the digital stack, or whether it is adding the wallet to the digital stack to improve the fintech and the financial equity in some of the developing markets that we are serving. We have made some intelligent choices. And if you look at our entry into North America, The reason why we were able to enter and break into a tier one telco was the investments we had made in terms of capex in the prepaid markets of Africa. And today, as the mature markets turn to prepaid and subscription-based economies, the journeys, the maturity of the stack, the capabilities that are inbuilt in the stack, uh they're very very attractive to these customers they want these features we have these features they are grown and matured in our stack and they have been extremely well received in these markets so i believe that we have taken some calculated risks and the rewards have definitely uh been met uh by us so I'm positive about how AI ML strategy will unfold in 2025.

Thank you. Thank you, Padma. Given that operating profit has been strong, despite limited revenue growth, what is your strategy for balancing profitability with the ongoing investments needed for the company growth? How will you ensure that the current investment strategy translates into sustainable long term growth?

Can I hear, please? Okay. So I think, you know, as we move away from currency risk zones to more mature markets that provide, you know, revenue in dollar denominations. We need to ensure that our strategy to enter these markets and scale in these mature markets is correct. This is why we took an SI-led approach to get the scalability in growth and the penetration into the markets. We will continue to expand that partnership and that approach into these markets. It's also a more economical model of entering markets where the relationship today already exists with some of these SIs. We also look for other opportunities. I already talked about unlocking value. Telecom operators have a huge opportunity in 2025 and beyond to provide data monetization capability, mainly because of the data accessibility that they have on the network. to take the data and to apply these generative ai models train the models and provide very meaningful insights and predictions of how this data can be utilized in multiple industries across across multiple industries and adjacent markets and i believe our investments in aiml will fructify and support these operators to unlock the value that AI is going to bring into the future. And we are looking forward and extremely excited to continue to grow our business in these areas.

Thank you, Padma. And let's keep the next last four questions brief. Shareholders have expressed concerns about the modest dividend policy, especially in light of positive operating profit. Can you provide more clarity on the rationale behind maintaining such a conservative dividend payout? And if there are any plans to adjustments in the future?

So a trivia question, Thomas. In technology, when did we last dividend before last year? Let me tell you, it was in 2008. That's about 17 years back was the last dividend technology had paid. we are not a dividend-paying company. So last year was the first year when, as a company, the company took a decision to start paying dividend, even though it was very modest, very small, but we wanted to start it. At that point of time, we started, we made a dividend policy where we said that the dividend, our intention is to pay a consistent and a growing dividend. That's the policy what we have. And we want to ensure that the investors get benefit from the growth. The intention is that. And I think, Padma, you want to add anything?

It's to grow and improve it over time. But we have to start becoming consistent.

The next one was in Finnish. I know that we've answered it, but I just want to read it out. Please forgive my translation. The sale of the Iranian business asset left a significant amount of receivables still outstanding. Can you please provide an update on the status of these receivables and explain how they're being managed, especially considering previous communication that the full amount would be recovered in 2024? You briefly mentioned in the rush about this already, but if you could summarize in less than 30 seconds.

No problem. I'll take it. I think, yes, as I said that I had answered it earlier, but I'm happy to answer again. at the beginning of 2024 the total receivable from this come iranian business of the discontinued business motivation discontinued in 2023 june was at the beginning of the year was 10.6 million and against this 10.6 million we are getting 3.3 million right away we have kept that and the rest of the amount we are making we have reiterated The reason for making a provision is that is not the end of settlement. We will still go pursue and try to get more, but whatever we are getting is about 3.3 million and the rest of the amount I've already made a provision. I hope that clarifies again.

Thank you, Indresh. Last two questions with the five minutes remaining. Could you elaborate on why collaboration with system integrators are beneficial for TechnoTree?

I mean, very simply put, SIs are really systems integrators We developed a stack based on very standard APIs so that the integration aspect, if you take a telecom platform, it has several northbound and southbound integrations. And normally we have to scale our resources to, when we go into an implementations cycle of our product, to scale our resources to make these implementations happen, which means we have to hire local resources in different geographies or supply global resources to these geographies and make these implementations a success. When we partner with an SI, we reduce that risk and that investment that we require, which means we can go faster. We have trained these SIs to implement our products into the environment of our customers. They have the relationship. We move on to the next opportunity faster. So we get more coverage across the market and faster implementations. And they bring us opportunities. We bring them opportunities. It's a symbiotic relationship.

Thank you, Padma. Question, you said in Q4, increased productivity from AI ML has enabled us to consistently execute five to seven digital transformations per quarter, reinforcing our ability to scale revenue with efficiency. So question, how much revenue does one change project generate on average?

So in financial terms, if I were to say, our EBIT margin is 33%. That is all I can say, that's the overall. While I cannot segregate and give a profitability project-wise or customer-wise, our EBIT is about 33%. And we have given a guidance that next year, for 2025, this EBIT margin will improve by 2%. So I hope to that extent, it answers the question. Palma, you want to add anything on the... Perfect answer.

Thank you. And last question with under a minute to go. If in EBIT, we saw a great improvement, could you go through what drove this significant improvements?

You are okay. Sure. As I said that why did our EBIT increase? One of the biggest thing is cost savings. So initially we had projected our plan. When we announced in Q2, we did announce a cost cutting measures to the market. Then we had anticipated that about 4.5 million is what I'm going to save in rest of 2024. However, we were able to achieve a... more savings up to 6.9%. So that is the biggest driver for it. And we are also able to manage our FX losses better. It has favorable FX losses. And also, we have been pushing the customers to pay on time, improving our cash collections. And more than anything, also moving away from the frontier markets. In one of the slides Padmat did mention, today my exposure to the markets, frontier markets, is less than 20%. So that is also driving an improvement in my profitability and improvement in collections.

Well, thank you so much for all your questions in the chat. I know a lot of you guys were dumping also questions into the chat. Hopefully we were able to cover most of them in this Q&A section. Thank you so much for all your interest in TechnoTree. Please do come next week if you are in Barcelona to visit us at the Mobile World Congress. Thank you, Padma. Thank you, Indiresh, for your time and being here. Thank you to all the investors, media and shareholders who were on the call today. With that, I would like to end today's earnings call. Thank you so much.

Thank you.