Pelatro Plc

Ladies and gentlemen, good day and welcome to Palo Alto Limited H2F525 results conference call posted by Winstra Securities Limited. As a reminder, all participant lines will be in listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Did you need assistance during the conference call? Please signal an operator by pressing star and then zero on your touchstone phone. Please note that this conference is being recorded. Before we begin, I would like to point out that this conference call may contain forward-looking statements about the company which are based on the beliefs, opinions, and expectations of the company as on date of this call. These statements do not guarantee the future performance of the company and it may involve risks and uncertainties that are difficult to predict. I would now like to hand over the floor to Mr. Rajneesh from Confidely Partners. Thank you and over to you, sir.

Thank you. And good day, ladies and gentlemen. Rajneesh here from Confidely Partners. On behalf of Ventura Security and Confidely Partners, I warmly welcome you all to Palato Limited H2FI25 earnings conference call. The company is today represented by Mr. Subhash Menon, Chairman and Managing Director, and Mr. Sharad Thegle, Chief Financial Officer. I would now like to hand over the call to Mr. Subhash Menon for his quick opening remarks and brief introduction about Palato Limited. Thank you, and over to you, sir. Thank you very much. Good afternoon, everybody. Thanks for joining the call. We have – the plan is for us to take you through the business of the company, some financial details and other relevant aspects over the next 15 minutes or so, and then we will throw the floor open to questions. We have put up a – we have uploaded a deck, a presentation on our website, and also it has been put up on the NFC website as well. Hopefully you all have had an opportunity to download and check that. But in any case, even if you don't have that in front of you, it doesn't matter. I will be, you know, I'll anyway be discussing and explaining those points in detail and details. I'm joined by my colleague, Sharath, who is the CFO of the company. So with that, let me start. Palatro's business, since this is the first call, I would like to explain a little bit about our business so that you all understand what that is. We work very closely with telcos. Those are our enterprise customers. And at this point in time, Palatro... works only with telcos. We help them in a particular area called customer engagement. For that, we have got a platform which also has a few, I mean, this platform has a few products on it. So it's a suite of products. It is not necessary for them to buy all the products from us. They can buy one or two. So currently we have five, six products which forms that one suite. But all the products operate to reach one end objective, and that is to increase revenue and reduce churn. They do it from different angles, but the objective is the same, reduce churn and increase revenues. Now, the way we do that is by using technologies which you must be familiar with, like, you know, Gen AI, artificial intelligence, machine learning, and these days, agentic AI, and a lot of analytics, different algorithms. So we use all these technologies, a variety of them, to process all the data that we collect. So essentially, our solution, our software sits within – Sharath, are you able to hear me properly? I'm just checking.

Yes, yes. I know that.

Yeah, it's quite clear. Okay, fine. So we have – we collect all these – all the data that flows through a telecom network. And, you know, if you want to understand what data I'm referring to, just think about all that you do with your phone. You could buy things. You make phone calls. You send messages. You download. You browse. All of that that you do on the telco with your phone, we call all of them as transactions. So call for you is a transaction for us. A message you send is a transaction for us. So we collect. It's not just monetary transaction. It's just any activity. So we collect all the data, which is huge amount of data, Then we process all of them. So you can imagine tens of millions of subscribers doing all these, you know, every minute, every second. So that's why the volume is very high. We process all of that. So we use big data technology. And then we analyze all of that using the technologies I mentioned earlier. Then we come up with insights. We come up with findings. Then we help the telcos to actually go after these subscribers and, you know, trying to upsell, cross-sell, make them happy so that churn is lower, et cetera, et cetera. Now, we don't have any privacy issue or, you know, data security issue and all that because all the data that we use belongs to the telco who is our customer. So it's first-party data. Our solution stays within the telco's ecosystem, environment, network. So there is no, you know, security issue or privacy issue there. And the telco uses our platform to actually understand, to get these insights, then send appropriate campaigns and all that. At this point in time, we've got almost 40 networks, and that's across about 34-odd countries. We have our technology, some of our technology is patented because we do bring about significant differentiation in what we do. I would like to now pause. I mean, so this is the business. I can explain more about the business. It's called Customer Engagement. It's fundamentally helping telcos to engage very deeply with their subscribers and with the objective of cross-selling and up-selling and keeping them happy so that the revenue of the telco increases and the churn reduces. And we work on telco data, first-party data, for this purpose. I would like to, you know, now request Sharath to give us a quick overview of some of the financials. And then we'll get on with the rest of the business.

Yes. Thank you, Ashwin.

So, hello. This is Sherif working with Sanatro. So, I would like to take you all through some of the key numbers that we have reported for the year. So, Sanatro has achieved a total consolidated revenue of 85.77 crores for the financial year 2024-2025. Resulting in an EBITDA of 19.82 crores at 23% of revenue and a FAT of 11.89 crores at almost 14% of revenue. The year-on-year growth in revenue was around 56%. Out of the total revenue, around 38.4 crores was achieved during the first half that ended on 30th September, which we had reported. The revenue for the second half was 47.33 crores, which is a 23% growth over the actual revenue number. The corresponding EBITDA and FAT numbers were 8.67 crores and Rs.

5.03 crores for H1 and Rs. 11.14 crores and 6.86 crores for H2 respectively.

While the half-year sequential growth of revenue was at around 33%, the EBITDA grew at 28% and FAT at 36% during the second half over the first half. So this higher growth in profit as compared to the growth in revenue brings out the fact that Alatro has achieved a non-linearity in growth.

In other words, the company has now reached a stage where to achieve a higher revenue, we need not incur a proportionate incremental cost.

A non-linearity of this kind is an aim for almost every product company that, I mean, every product company desire to achieve this, and we are happy to highlight that we are currently seeing this in our company. So our endeavor is to keep on improving this non-liability until we are at the optimal level of having that. So these are a few points that I wanted to highlight from the financial side. Over to you. Okay. Thanks, Sher. So now that you understand our products and what I would like to touch upon a little bit from the services standpoint, we provide managed services around our products. We don't do any services. We are a pure software product company. That means we don't do services, bespoke services and all that. But we do help the telcos to use our products better. And that essentially means that the telcos will be able to, you know, take our support in configuring, in, you know, in running the product properly and in essentially taking better results out of that. So these kind of things, so we help them in these kind of aspects. That's what we do in managed services. So fundamentally ensuring that the product is working at its optimal level within a telco and that they're getting the best out of that. This is what we do by way of services. So those are the products and the services that I just explained. We've been growing very nightly with respect to the number of customers. I already told you how many customers we have at this point in time. We believe that Palazzo will grow quite significantly in the years to come, and the reason is very simple. We've got some – the set of products that we have are very critical for our customers. As I told you initially, it reduces the products, helps them to increase revenue and reduce churn. Both are very, very critical objectives of a telco. So given that – we are in the revenue stream of the telco and of any telco that we work with. So there is a high level of relevance for what we do within the telecom industry. We are a thought leader in this space. Over the past few years, we have replaced a lot of our competition and we have built up a very good client base of some very, very large telcos. In India, we work with Vodafone Idea. Then we work with Singapore Telecom Group, with Axiata Group, with Urdu Group, with a variety of Intel in our group, with various groups around the world. We work with them. We're currently working in multiple continents as well. So we have a very end-to-end platform. The products are very advanced. They use advanced technology. So with all that, the kind of strength we have with respect to the product, the kind of leadership we have with respect to the product ensures that our customers are happy with the product and we keep growing. I would like to touch upon the kind of growth strategy that we have. We have got a three-pillar strategy. One is geographic expansion. We keep looking at new countries to go into. So that's one way of growing. You go into new countries, which means you sell to new telcos. The second is we expand more and more within one customer by selling. Once you get into a customer by selling the first product, you can always try and sell a second product, a third product, a fourth product, the services that we have, all that. So we deepen the relationship within every telco, and that helps us. to increase the ticket size within every telco. So that is the second pillar of growth. A third pillar of growth is acquisitions. And this basically we believe will help us to expand our product base and also to further deepen the relationship we have with our telco customers. We have currently identified one acquisition, that of the business of a company called SL Technologies. We are in the process of completing that transaction. Hopefully in the next one month or so, we should be able to conclude that. Once that is done, the product offering of Palazzo will expand quite significantly because they come in with three or four products of their own. They also serve the telco industry, so exactly similar sort of client base. So we will then have more products for the same client base, which means our relationship, we can cross-sell more products to the same customers. So our second strategy of getting higher ticket revenue from each customer will be further enhanced by that, by the acquisition strategy. So that's the overall strategy. So I've told you enough about that. I would request my colleague, Sharad, to touch a little bit upon our revenue model and then hand over for questions.

Yeah.

So our revenue model, the revenue can be basically split into two major parts, one being a repeat revenue and then a one-time revenue. So the repeat revenue can be further split into recurring revenue and reoccurring revenue. So when we say recurring revenue, like we mean monthly or quarterly recurring revenue, fees that we charge to customers, I mean, which could be a monthly or a quarterly license subscription fee, ALP, managed services, or even revenue gain share. So when it comes to reoccurring, it is mainly change request, which is nothing but customization request from customers. So the difference between recurring and reoccurring revenue is that recurring revenue is mostly and limited contrasted, whereas re-offering are ad hoc requests and then ad hoc revenue from the same customer. When we come to one-time revenue, it's mostly our perpetual license subscription and the implementation fee that goes along with that. So that's broadly the revenue model that we have. Yeah. Okay, so with that, we have told you about the business, about what we are doing, our strategy, our revenue model, some bits of our financials, and stuff like that. So we can throw the floor open to questions at this point in time without further ado.

Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session. If you have a question... please press star and 1 on your telephone keypad and wait for your name to be announced. If you would like to withdraw your request, you may do so by pressing star and 1 again. Ladies and gentlemen, if you have any questions, please press star and 1 on your telephone keypad. The first question comes from Samad Pachikar from Krishna. Please go ahead.

Thank you for the opportunity. Sir, my first question is regarding what our relationship is with the CIVICS because the current set of promoters was also the promoter in CIVICS. So what sort of relation do we have with CIVICS and why

There is a separate company serving the same client base which the Subex had. So what's the reason behind that? Can you highlight that? Okay. Yeah, I did indeed, you know, found Subex several years ago. But I actually sold my stake and exited from Subex in 2012. That's like 12 years ago. And then I co-founded Palatro, and I've been building that. So I have no relationship with Subex any longer. Neither has Palatro. And we actually sell very different products. We don't compete with Subex, and Subex does not compete with us. So that's why.

We've got nothing to do with Subex.

Okay. Go ahead. Now, secondly, on the balance sheet, then I see there is a consolidation of around 18 crores. So, what is the amount?

Is this for the development that we are kind of patented here, or it is for that? Yeah, so let me answer that.

Yeah. So Goodwin on consolidation is basically coming from our subsidiary in Singapore. So it is basically the accumulated debit balance in P&L as on the date of acquisition. The acquisition happened on 8th June, 2024. So the debit balance mainly represents the extensive interest towards development of products. that has been capitalized as could be as on the date of the acquisition.

Yeah, okay. Thank you.

Thank you. The next question comes from Surya Khalagarla from Tulip Capital. Please go ahead.

Hi, sir. First of all, congratulations for publishing a very good set of numbers. I wanted to understand, like, why we are restricting ourselves to only telco companies, why we can't focus on any other segment or sector, and do you have any plans to diversify to any other sectors? Okay. Actually, it is for traditional reasons that we are in the telco sector. I have always worked in the telco sector, so I naturally started there and got going there. There's tremendous opportunity in the telco sector at this point in time. There's a very long way for us to grow, a lot of growth possibility. That's why we're focusing. Now, we can, of course, look at the new sector, but then that would also mean domain expertise to be built. Now, one of the key reasons why Palatro is very successful in the telecom sector is that we have very, very good domain knowledge with respect to telecom. Now we have to build a similar thing in other sectors and so we had rather be a specialist than be a generalist. That's why. So this is why telcos love us as well because we speak exactly their language when we go there and they help us to, that helps us to win customers. So we don't have a plan at this point in time to look at any other sector because we believe there is tremendous opportunity in this sector itself. Got it, sir. But can you touch upon the addressable market and telco segment and about the peers in the segment? Sorry, I didn't get you. You want me to talk about the adjacent market? Addressable market, like what's the total scope and how much market share we have, something like that? Oh, the addressable market. Okay, sorry, I was hearing adjacent. Okay, the way I would like to look at it, I mean, there are, of course, consultants who have come out with the size of the market, which runs into very large numbers. Okay. I don't like to look at it from that perspective. I'd rather look at it from our perspective of what we believe is the addressable market. So at this point in time, there are about 400 odd telcos out there to whom we can sell. Now, this means that the amount of whatever products that we can sell, whatever ticket size that we can have, That is what is going to define the actual opportunity size or market size or adjustable opportunity. That's how we look at it. Now, at this point in time, we believe that that size is probably, I mean, currently our average ticket size is about 2.5 to 3 crores per telco. I would think that we can easily go to 4 crores or maybe with the addition of multiple products, maybe we go to 5 crores. So at this point in time, I would think that Our potential ticket size in the telco is 4 crores, a little over 4 crores. But since the last time we checked, we've added a new product. So maybe I can factor that in. So maybe we can say 5 crores per year per telco is probably what we would look at. So if that is the case, then it's about 2,000 plus crores of market opportunity. We have a long way to go from that perspective.

Thank you.

Thank you. The next question comes from Sridhar Jadhav from JM Financial. Please go ahead.

Hi, sir. Am I audible? Yes, you are.

Yeah. So comrades on good set of numbers. I just have a couple of quick questions. So on standalone basis, the numbers are flattish. So on revenue and PBT on standalone basis, the growth is not, significant growth is not there.

No, I didn't understand.

On what is the growth not there, you say?

Stand alone numbers.

Oh, stand alone. Okay, okay, okay. All right. Sharad, do you want to take, because that is actually a business call, so do you want me to answer that, Sharad? Yeah. Yeah, okay. So let me address that, although it's a financial question. See, We have got this parent and subsidiary, the parent in India and the subsidiary in Singapore and we may have more subsidiaries in the future as well. We do not really look at this with respect to standalone company and subsidiary and the group and all that. We simply go by where the customer is happy to contract. If the customer says that they prefer Singapore and we also prefer in many cases we prefer Singapore because of you know, foreign exchange transactions and stuff like that. It's much easier and our IP is well, data of Singapore well protected there and all that. So we may have more and more customers signing up with a subsidiary. So it really doesn't matter whether it comes in the India invoices or the product is the same, the business is the same, the salespeople and the people who run the business, it's all the same, it's like one group. So we don't have a differentiation like that and we honestly do not care whether it comes in standalone or in consolidated, sorry, or in the subsidiary. So our request to all of you is to actually disregard stand-alone. Stand-alone really for us only matters to the extent of, you know, if dividend has to be declared, then there has to be profits in stand-alone. That's about it. But beyond that, we truly don't care about stand-alone. You should measure us from a consolidated standpoint only because that's how we look at others.

My next question is on console numbers. So if I compare console versus stand-alone, standalone was 60 crores console is almost 85 crores and PBT in console is 15 crores versus standalone 8 crores so that incremental 25 crore revenue from standalone to console is driving 7 crore PBT that's like almost 28% PBT margins so is it safe to assume that your whatever revenues that you are booking for overseas client comes up with very high EBITDA margins compared to domestic business

So, let me try and answer this.

Now, standalone revenue when you look at, the revenue also includes intercompany revenue between the holding and the subsidiary company. So, it may not be an apple-to-apple comparison when we compare the standalone EBITDA and consolidated EBITDA. As Mr. Menon mentioned, so we'll have to look at the consolidated numbers which are the standard for us and I mean which actually give out the actual check.

Understood, understood.

It is not just that. It is not that the overseas companies, the subsidiary caters to overseas customers and standalone, the Indian company caters to Indian customers. It's not like that. The Indian company also has overseas customers. It purely depends upon where it makes better sense to contract with the customer's preference and all that. So, I repeat, please disregard every aspect about standalone. Just focus on consolidated if you want to understand the business.

Understood. Fair enough. I understood the intersegment which is masking the numbers. Answer one more question. So what would be the tentative guidance for next two years?

We are not giving a guidance. No, we are not giving a guidance. What we can tell you is that we will have very healthy growth and non-linearity will continue, which means profitability will grow faster than revenue growth.

Understood, understood. And sir, how is the financial health of the Singapore subsidiary initially because making losses? So any color on that front?

Yeah, go ahead.

Yeah, so Singapore subsidiary on a standalone basis as well is profitable now with addition of customers, et cetera. So, yes, I mean, we expect it to be healthy from here. We expect more customers to get added to Singapore than to India, so that will continue to improve.

And so what are the plans for this new fresh acquisition of S-Tel? So you will merge it or you will let it continue as your subsidiary and you see any cross-sell opportunities there? So what's the plan with this S-Tel technology?

Okay. So in India, we are not buying the company S-Tel Technologies Private Limited. We are only buying the assets in India. They have a subsidiary, they have a, you know, sister concern in the UAE. That one we are acquiring as a company. So there is a business asset transfer happening on a slum sale basis in India, and there's acquisition, there's a share acquisition happening in the UAE. But of course, vast majority of the business is coming out of India, so a large chunk of the revenue will come out of India. Now, that business asset, once we buy, will become a division of Palatro. It will not be a subsidiary because it's an asset acquisition. It will become a division of Palatro. And we will continue to have a – we will then have a new subsidiary in UAE. So that will be there. But most of the business, as I told you, is out of the Indian entity of Estel. And that will come as a slum sale to us. And that will continue as a division of Palatro. Now, there is tremendous opportunity to cross-sell because the customer base is the same telco space. So there are some common customers, but there are customers who are not common at this point in time. So we will be able to sell SL products into the current Palazzo customer base and Palazzo products into the current SL customer base. That is absolutely possible to increase our business on both sides. And as we keep moving forward and winning more and more telcos on this side or that side, every time we win a new telco on either of the two sides, it becomes a growth opportunity for the other side.

Sounds great, sir. And sort of a... One last question at the time.

Can you join back the queue?

Oh, sure.

Okay, I'll join back in the queue.

Thank you, sir. I request the participants to list it with two questions in the initial round and join back the queue for more questions. The next question comes from Keshav Kumar from MAPL Value Investing Fund. Please go ahead.

Hello. Yeah.

Please go ahead, sir.

Yeah, first of all, good afternoon. Thank you for the opportunity. Before going to the business and society questions, I had a few questions on the balance sheet. In H2S4 and 25, I can see a right in the price, property, and existence, as well as the right to use assets. So if you could explain what it's done. Okay. The increase in property, plant, and equipment is that we have invested in some equipment. I mean, as well as we have acquired an IT for the purpose of providing. So that is the reason for increasing property, plant, and equipment. The increase in right to use asset is basically we have taken up a new lease for office, which is the ATL lease, and the office space that we have currently taken is larger than the one that we were previously occupying. So, as a result, I mean, the lease payments as well as, I mean, the monthly lease payment as well as the period for which the lease has been taken is accountants are, and as per India, accordingly, right-to-use assets as well as the lease liability is created. I understand. So, previously, how many seats would we be having, and what is the number now? Okay. So, our previous office space was accommodating around 150 seats. Currently, we have double the capacity. It's around that.

I understand.

Okay. So now coming to the business understanding question, the number you provided of 5 crores approximately for a telco customer that is possible annually, that seems a small number compared to the size of the telcos as well as the kind of service we are providing. So if you can please explain this. You are referring to the market, the available market size that was given, right? Yes. You said customer for us can do 5.5K. I understand. I understand. Now, see, if you go and check some analyst reports on the business that we have, you will see that the market opportunity is a few billion dollars, very large. I can easily give you such a number and justify it as well. But that's never been my approach. That doesn't make sense to me. What really matters is what we are able to do. And I would like to go by the historical evidence for that. Now, I can say that I will sell 20 crores per year per telco. But what does the history say? So if you look at my over the past few years, what have I built it to? I started with zero per telco. We are now at about two and a half to three crores per telco. So when I give you the market size and opportunity, I'm not telling you what could be the potential opportunity 15 years from now. I'm telling you what is the addressable market as we sit here today. And this will keep growing for two reasons. One is that we will have more and more products, which means the addressable market will increase, plus our own pricing will increase and, you know, things like that will happen. So because of that, there will be a double benefit which will increase the market size. So what I was trying to give you is a very realistic number that we can look at at this point in time for you to understand where we stand. So do we have enough runway is the question. We have got a very long runway. So over the next five years, I can go at 25%, 30% or 40% every year and still be nowhere near that saturation point. And that's all I'm looking at. I'm not looking at the next 10 years. I'm not saying that's going to be the growth rate. I'm just telling you that for a growth rate of that nature also, I've got enough market opportunity. Then why should I bother whether it's 2,000 or 10,000 crores? Of course. And I believe the portfolio of services we have right now, those can run at 5.5 crores. So if you can explain, where are we in terms of that number at? Are we right now at 2 crores, 3 crores per customer, or are we already at 4 to 5 crores on the package? I'm having a bit of difficulty hearing you. That's why I'm requesting you to be. So are you asking about number of telcos we have with? Is that what you're asking? So I'm trying to understand. If I look at our current portfolio of services, I believe we provided the 5.5 crores number for that. So if you can explain across us, Customers, where are we in that range right now? Are we already at 2 to 3 crores per customer? Is it much lower or are we already at 4 to 5 crores per customer? Okay. So I said we are 5 crores is the potential. We are currently at 2.5 to 3 crores per customer. Understood. But we have the services already to reach that number of 5.5 crores per customer. Oh, yeah. We have the solutions at this point in time to reach 5. Absolutely. Okay. When we reach five is a different question, but that is how I calculate. I really don't believe in throwing all these analyst numbers and all that, which, you know, they have got these reports and they say it is a $20 billion market and all that. It really doesn't make sense, you know, I mean, looking at it like that. It's very understanding. So now coming more to the domestic customers, I see that we are only serving Vodafone right now. So what is stopping us from serving Airtel and JL? But it's merely their readiness for, are they looking for a replacement? Because everybody has some product other than of this nature, okay? We are not in a, we don't have greenfield opportunities, we only have brownfield opportunities. So, they should be ready to replace their existing thing. We should be interested in the price points that they are talking about. So, various things have to align. That's all that's happening. But they must already be having the engagement order. So, is it like they are ICOs So are you saying it's in-house or is there some other vendors they are using? Some telcos do have in-house, but that's very few and far between. So I'm not quite sure about these two telcos in India. You know, so we have not, we're not quite focused on them at this point in time.

Okay.

See, we don't look at this from a country perspective at all. We look at it from a global perspective and the opportunities are plenty all over the world. I understand. I understand. And so my last question will be in terms of the product development extension. If you can just explain to me what would that number be for the last one or two years? And it seems if I'm not wrong, we are extending it, right? So you want to take that? This is the software development extension you're talking about, right? Yeah. Yeah. Go ahead. Okay. Sorry, I couldn't get the question clearly. No, his question is, what is our software development expense on an annual basis, and are we expensing it? Okay. So, yeah, we are definitely expensing our software development expenses. So our, I mean, the software development expense is around 75% of our total. So that would be our development expense. I couldn't hear you clearly. You said 75% off? 75% of our total expenses accounts to our software development expenses. Wow. Okay. And so my last question is how much of our revenue is one-time sales versus the revenue? Yeah, it's just the last question. How much of our revenue is the one-time sales versus the revenue? Maybe you could please... please download that deck and see if it's given very clearly there. Understood. You will find that in our website. Thank you.

Thank you. The next question comes from Deepak Poddar from Safia Capital. Please go ahead.

Yeah, I'm audible, sir. Yeah, hello. Okay, okay, okay, great. Thank you very much for the opportunity. So first, I just wanted to understand on your leverage part, I mean, the non-linearity in your revenue that you are seeing. So can you throw some more light? I mean, so what sort of leverage we are talking about here? I mean, when revenue grows by some percentage, your cost will grow at a lower percentage. That will kind of drive your EBITDA margin. So what sort of optimal level of EBITDA margin that we are looking at? I mean, that's what you mentioned that we We are looking to reach optimal level of – and in how many years we can reach that level?

I can – I mean, I'll address this in a rather qualitative manner. So, really, this is – the balancing act here is with respect to how much we want to invest in the business, how much we want to, you know, save on that front and things like that. And – and the natural gap between increasing revenue and increasing cost. So between all of that, we will get to the optimal thing at some point in time. So in my mind, an optimal EBITDA will probably be somewhere between 30% and 35%. And by when would we reach? Well, that becomes the guidance, right? So just please wait and watch it.

Okay, I mean, what, I mean, next five years is what we want to reach.

I would, no, so you're asking whether next five years 30 to 35%, right? Yes, that's right. I would say eminently doable.

Doable, right? I mean, in next five years. And in terms of growth, I mean, qualitatively, if you can just throw some light, I mean, currently what the rate we are growing, I mean, we can grow at the same rate going forward, right?

excluding... It's a bit... We don't want to get to growth numbers and stuff like that. Historically, we have grown faster, but I don't want to be commenting on that at this point in time.

Okay. In terms of your revenue mix, I think your one-time revenue is currently 13%, whereas recurring and reoccurring revenue is close to 87%. How do you see that mix going forward?

Ashar, do you want to address that? Okay. So, our focus will be in increasing the recurring revenue because that will give a better predictability on the revenue front. However, if there are opportunities where we get one-time revenue, we would take that as well. So, I mean, as I said, the focus will be to increase the recurring revenue, but it is very difficult to give a prediction on that because I think there could be license revenues which could change the structure.

Understood. That's it. And just one last small thing. Who would be peer for us? I mean, competitor? Who would be operating in the same field?

There are about a dozen players who are competition. Some are small players and some are large players. The smaller ones are the likes of Conviva or Flytext and all the Exocast evolving systems, etc. Now, the large ones are Adobe, Pega, Salesforce, FAS, those. So, overall, about a dozen players. But, you know, some of them do many other things as well. I mean, it's not just this that they do. They do other things as well.

And none in listed space, right? I mean, in India?

None. None. I mean, they are illicit. If you look at Tega, they are definitely illicit, but then they do a hundred other things. A hundred, yeah, of course. Somebody who does only our products, none illicit space.

None illicit. Okay, I got it. That's very clear. I think that's very helpful also. All the best. Thank you so much.

Thank you. The next question comes from Ankur Gulati from Genuity Capital. Please go ahead.

Thanks a lot.

Can you just give us more example of your product? How exactly are telcos using it so that as a name and we can understand? Unfortunately, I'm struggling to contextualize it right now. Okay. Let me give you some more details. So our flagship product is called Campaign Management Solution. What it does is it collects all, I mean, The data is the same for all our products because it's all the transactions that go through the Telco network. So the campaign management solution collects all the data, processes all of that, and creates the profile of each subscriber. Now the profile will show whether this person makes international calls or domestic calls, whether this person downloads music or movies, whether this person purchases something using their phone or not, I mean, a variety of things. You know, whatever the behavior of the person is using the phone, that becomes the profile of the person. Now, based on the profile, the telco will now decide as to what products they should promote to the subscribers. What should they try to cross-sell? What should they try to up-sell? So, this is exactly. So, if they see a particular person has a 5GB pack, and if they see that in the first 20 days of every month, this 5 GB is getting exhausted. Now they can go and try and push a 10 GB pack to them, or an 8 GB pack, something like that. So this is just a simple example. That's campaign management. Now loyalty management is the next product. You all know what loyalty management is, where people, when they use, based on usage, they get loyalty points, then they can redeem the loyalty points, et cetera, et cetera. Then we have got what's called a CDP. That is a customer data platform. which helps them to actually collect all the data and stitch the data so that identities can be confirmed. So a particular subscriber may come in through a particular device and perform an action. They may come in through another device and perform a different action. Maybe they'll go to the website of the telco and perform an action. Now, all those things need to be stitched and connected so that They can then realize who that individual subscriber is and then pitch accordingly. So that's what that is. So everything is about collecting the data, processing the data, analyzing that, understanding that, coming up with a profile, rewarding them for their action by way of loyalty points, or sending them campaigns to promote different products.

That's what we do.

I have all these quick calls apps. Do you guys get data of the commerce users app and that helps you profile the subscriber better or you only get data which the telco gets? Currently we work with first party data which is just the telco data. We can work with other data as well if we have access to that but right now it's only first party data. So help me understand how are you, I mean the telco at the end of the day can only sell their products, right? They are not able to push They can sell non-Telco products if they have got relationships with vendors of non-Telco. Well, to whatever extent they can. I mean, maybe they can sell insurance to their customers if they want to. Or they can share that data profile with the insurance companies, right? That is what we do with respect to data monetization solutions. So we have got something called a data monetization solution. So there what happens is The telco has the data. So, let's take Vodafone idea. They have got 250 million subscribers in India. So, they have got the data. They have got the profiles of these people. Now, if a bank wants to target those people, if a Reebok wants, if Reebok or Nike wants to target, or Shoppershop wants to target those people, the telco can actually provide access to those people to send those campaigns. However, that will be done in an anonymized manner. Yeah, that's fine. So, hypothetically, just on this, if my SMS shows that I have a negative bank balance, you guys can share that data with any of these lenders and they can approach me for a loan. Yeah, it will be in an anonymized manner. They can get any of these vendors to use the Telco data. Okay, perfect. Now, second part, can you give us more details on the contract terms? What is the typical general payment and commission incentives and so on? Typically, we have three to five-year contracts, and we get paid at the end of every month or at the end of every quarter. But do you have four or five-year long contracts? Yeah, three to five years. It's generally either three or five, mostly five. And if there are other incentives, I mean, if you hit certain milestones, then you get more... share of whatever... We have some contracts where we have a revenue share, so based on how much incremental revenue we generate for them, we get a percentage of that. Okay. Third, if I look at your one-time revenue, is it fair to assume that if you make, let's say, 5 crores of one-time revenue in one year, that gives you... Sorry, I lost you.

Okay.

If I look at your one-time revenue, that's basically the revenue on onboarding, right? So if you make one rupee of... No, no, no. One-time revenue is not onboarding revenue. One-time revenue is a perpetual license revenue or an implementation revenue, like that. And is there a longer tail or a multiple to that? I mean, if you make one rupee in this year of one time, does it usually give you 5X over the next five years or something of that sort? Okay, you're asking as to how much we will get by way of revenue from customers. That is very difficult to say. Definitely every new customer will generate more revenue in the long term, but we can't put a number like that to it. Just can't apply a multiple, right? Because at least for the last two years in the patent case. That's very difficult to apply a multiple like that. Yeah, last thing, I mean, what you're doing for telcos, you can do it for all these e-commerce guys or the E2C brands, but you are saying you don't want to get into that right now. At this point in time, we are very focused on telcos. We've got enough business there, tremendous opportunity and growth and all there. And we are a specialist in telcos. So we are rather, say, focused on that.

Got it. Okay. All the best. Thanks.

Yeah. See, one of the – see, I told you in my – as in response to my earlier question – We compete with some very large companies like Salesforce, SAS, Pega, Adobe. How do we compete with these guys? They're very large. They've got a lot of wherewithal and, you know, marketing and name and fame and all that. The single most important element or USP that we have against all of them is that they're very telco-specific. They are not. They're very general. They're generic players. And they can never, ever hold a candle to what we can offer by way of products.

Yeah, understood. Okay. Thanks. Thanks a lot.

Thank you. The next question comes from Manoj Sharma from Fin Avenue Growth Fund. Please go ahead. A repeat question comes from Manoj Sharma from Fin Avenue Growth Fund. Please go ahead.

Hello.

Yes, please go ahead.

Yeah. So, congratulations on the number and for the acquisition as well. So, let's ask you a question. My first question is on the November investor PPD, I can see Etel as a client in lot of geography. But today, I can't see Etel as a client on the geography side. Can you throw some light on that?

Yeah, this was a trial that we were running with Airtel at that point in time, and right now we are waiting for some contract confirmation and stuff like that from them, so that's why we have not kept them there.

Okay. And secondly, in U.S., do we have clients from the European side

In Europe, we have one customer in Bulgaria.

That's what we have.

So, there is no further plans?

Not as yet. Europe is not a market that we are focusing on today. We don't even have sales presence there.

Okay. And my question is regarding the acquisition part. So, we are acquired as well because I think it operates in financial service sector as well, right? So... we are planning to serve banking sector in future or how we are looking for the Estal company?

You know, Estal has a mobile financial services business that we are buying. That is for the telcos. It's not for the banking sector.

Okay. So, you are buying for the telco sector only? Yes.

Yeah, that's right. Yeah.

Okay. And my final question. So, I think companies like you in India have in-house platforms. So, how we can capture the big clients and scale up gradually?

I'm not understanding the question. I mean, you are asking about the regular sales process. What is the question? How do we capture big clients? I mean, we have some very large customers outside as well now.

So, can we offer Jio? Because I think Jio is an in-house platform, right? So, can we give Jio as a service? You know, because I think we are We have products that we can cross-sell to them. So we have tried to do that for Airtel or Jio.

No, we have not tried much with Airtel or Jio here in India. Honestly, the price point that a company like Jio will expect is very, very, very low. That is my, you know, that's after 25 years of experience in the telecom industry.

So I'm not even sure whether we would like to go to Jio at this point in time or not. All right, then.

It is there. Okay, sir. Thank you, sir.

Thank you.

Thank you. The next question comes from Avinash from Profit Mart Securities.

Please go ahead.

A repeat question comes from Avinash from Profit Mart Securities. Please go ahead.

Yeah, Subhaji, this is Avinash. Congratulations on a very good set of numbers. In fact, I had the pleasure to talk to you, you know, during the IPO time, if you could remember me.

Yeah, yeah, yeah. Thank you.

Yeah, Subhaji, now one thing I wanted to understand, I was just seeing that your operating cash flows, I mean, you know, very strong operating cash flows. So I just wanted to understand, is our business a pretty good business? When do we get our payments from the customer?

Do we get some of it upfront or in the system completely?

Tell me one thing that normally how much time does it take for you to implement, like typically a new company comes in, you know, how long does your company take to actually commission that with your service which you said, you know, where you analyze the data, you know, of the customer. How much time does it take for you to operationalize and, you know, tell the customer that this results, you know, have this.

Okay, I will handle one part of the question. It takes us about four to six months to implement a solution in a telco and operationalize it. The question on the financial side of it, I would request Sharath to answer. Yeah. So on the collections front, so I like the billing, I mean, it all depends on the contract. So there are monthly billings, there are quarterly billings, et cetera. And the DSO that we have achieved for 24-25 was around 85 days. So as compared to the previous year, which was around 145 days. So that shows that the data, I mean, the sales outstanding days has been improving constantly. So while, I mean, 85 days may or may not be, like, constantly increasing, but we expect to achieve at around 100 to 110 days or 100 to 120 days in the longer term. It is a very healthy DSO for our kind of business. Okay.

Ravinash, your voice is not clear, sir.

Ravinash?

Ravinash? There is no response. The next question comes from Jimmy Gavithara from SPKS MARC. Please go ahead.

Hello. Thank you for the opportunity. Am I audible? Yes. Yes.

Actually, one small question regarding the exponential growth that you are talking about. Will we require any fundraising in the near to medium term for the sale or our working capital will be stressed for that?

I would like to – let me answer that. First of all, I don't think I use the term exponential. I said there will be significant growth.

Yes, yes, significant, significant, yes.

Yeah, yeah. Financial is a completely different thing. No problem, significant growth. Now we know, for our organic growth, we don't need to raise money. We are quite profitable, we continue to be quite profitable, so that and our cash flow will be adequate for organic growth. If at all we need to raise money, that will be for inorganic growth. Okay, okay. And one small query regarding margins, it was in the 28 to 35% range if I'm not mistaken.

What was the operating profit margin which was asked in some past question but I wasn't able to hear clearly.

Okay, Sharath, can you give the full year EBITDA and profit percentage? Yeah, so yeah, full year EBITDA margin was around 19.82 crores. That was around 23%, 23.1. So that was the EBITDA margin and the tax margin was around 14%, which was like 11.69 crores.

Okay. And so how much margins can we expect going ahead?

How much operating leverage can be kicked in? So we had answered this question earlier and the answer given was... I wasn't able to hear. I will repeat that. No problem. So we think that an optimal EBITDA level will be somewhere between 30 to 35% at some point in time. Okay. Thank you. That's all from my side. Thank you.

Thank you. The next question comes from from other partners.

Please go ahead. I have a few questions. The first one is you said you have 40 customers and the addressable opportunity is to reach out to 400. And most of the expansion will happen in a brown figure. Just wanted to get a handle that how many people or customers are we engaged with as we speak for business growth? That is one. Second is, what is our right to win? You said that you are a telecom-focused company, but I'm sure others are also offering similar services. So when a customer evaluates you, what merit do you offer vis-à-vis others? These are two big questions. Okay. So your first question is with respect to – sorry, I forgot the first question already – I said how many customers are you reaching out to? We have... Now I remember. Now I remember. So, we have at any point in time, we will have a strong pipeline of at least about 35 to 40 customers, potential customers. So, that's the number. Now... The second question that you asked was with respect to... Was the right to win. Suppose you reach out to... Yeah, so the USP, so basically the first and foremost thing is the quality of the product or the features and functionalities that we bring to the table. So this is where we invest very heavily in R&D and keep improving our products. So that's the most important thing. So when we put our product in front of a customer, they should see that it is much better than what the competition has to offer. That's one thing. The second thing is the very, very deep domain expertise. I'm not prioritizing or anything. All of them are important, but maybe the first thing is slightly more important than the rest. So the next thing is the domain expertise that we bring to the table. And the third thing is the reputation we have in the market by way of what kind of support are we extending, what kind of reference our customers will provide. So these are primarily the things that a customer looks at. So when they see that the product is really fantastic, very good, all the capabilities are there, and that we are a very reliable partner with very deep domain knowledge, well, that's it. Those are the USPs that they look for. Just extending these questions, when a customer replaces a vendor to you, What is the time of, what is the disruption time for that because you will get into their ecosystem and somebody has to move out. How much time does it take for the transition to happen? That transition is pretty much the same as our implementation period of four to six months plus maybe another couple of months. Okay. And the last question is out of the 40 new customers you are reaching out to, what is the historical rate of conversion has been set? Conversions. Well, I mean, we are a very, very focused sales approach. We don't have 25 sales guys running all around town and all that. We have got just a handful of sales guys because we believe that is the most successful model in this industry. So typically, I would say we win about three out of ten contracts that we run after. Thirty percent, sort of. Yeah, thirty percent, yeah. And how much time it takes for you to get the customers converted? And some of them come back later. So the sales cycle is about 10 to 12 months. And some telcos, what happens is we may lose them now and after three years we may win them again. That's possible as well. And what are the instances of customers leaving us out of like 40? What is the customer turn? Some customers will be obviously moving out of us to other vendors. What that number would be like? As of now, we have not lost any customer. Lovely. I think this is great. Thanks a lot. Yeah. Welcome. Thanks.

Thank you.

This is not to say that we may not lose anybody in the future. I just want to clarify that. That's the disclaimer I would like to give. At this point in time, that's what it is. Yeah, please go ahead. The next question.

Thank you, sir. The next question comes from Sankit Saad from RAIF. Please go ahead.

Good evening, Subhash sir.

Congratulations on a good set of numbers, and thank you for the opportunity. So I just have a few questions. Most of my questions have been answered. So first is that is there going to be any strategic acquisition that you are planning for the coming 12 months? Okay. Good evening and thanks. We have identified one acquisition that the details of that business acquisition is in our room. is in the deck that's on our website, the investor deck. So kindly go through that. This is the business of a company called Estel. We hope to conclude that in the next one month. Yes, yes. So, yeah, apart from that, actually, I had already gone through that.

Okay, sorry, I didn't realize that.

Yeah. Apart from that, that is difficult to say, right? We keep talking to a lot of companies. It depends upon whether something comes to our liking and they should like us as well. So it's very difficult to predict when the next one will happen. Are we constantly on the lookout? Answer is yes.

Okay. All right.

And one more question which I had was, so in India, we are focusing primarily on Vodafone. So two small questions regarding this. How much of the total revenue comes from Vodafone in our consolidated statement? And do Vodafone users have been balling as, you know, what I could read from the news. So has that impacted our revenue in any sense, or do we get, like, some sort of fixed revenue from Vodafone? Okay, we have a fixed monthly revenue from Vodafone, so it has got no relationship with whatever happened out there. And we, the percentage at this point in time is probably about 13 to 14%. Okay, all right, not bad. So are there any, if you could just name a few clients which are probably in your bidding pipeline, you know, so to say, who you are trying to acquire in the coming 12 months? Pipeline is confidential. I'm sorry, I won't be able to share that. So we certainly don't want a competition of ours to get to the transcript of this and have that information. Fair enough, fair enough. And on the deck, it said that there were 36 customers in 2024. Could you comment on how many there were in the closing of 2025 financial year? Kindly look at our deck on our website, and you will see the progression over the past few years. Oh, okay. I wasn't able to find the 2025 plan, but I'll go through it again. 2025 is not over. That's actually calendar 24 we have given. Oh, okay. All right. Got it.

Perfect. That's all from my side. Thank you, sir. You're welcome.

Thank you. We have a follow-up question from Trader Jadhav from Dave Financial. Please go ahead.

Hi, sir.

Sir, at the time of IPO, we had mentioned that we also plan to look at banking sector along with telecom. But now we have again pivoted the path to our focus only on telecom. So any views on that? Because banking is also much relevant with lots of customer data, credit cards, other banking products. Yeah, we had indeed thought about it at that point in time as a potential sector to look at. But at this point in time, we are, you know, we're seeing tremendous opportunities in the telecom space itself. And over the past one year, you know, things have really moved up quite a bit for us in the telecom side. So we thought we'll take it a bit slow on that side and continue to focus on telecom. And, sir, what would be the customer concentration? So top five customers would be contributing to how much revenue? Sharath, would you have that number? I don't have that any. ballpark as a percentage, like top three would be 50-60%? No, no. The top five, if you ask me, I mean, I'll hazard a guess here, it is probably in the region of about 30-35%, not more than that. Understood. And so, I am aware we are declaring dividends. However, having said that, we are sitting on a cash of 30-35 crores.

So, the idea is to go for an acquisition in near future. How are we looking at it?

We have announced an acquisition, right? We still have to pay for it. We have not paid. Okay. You will close in.

Yeah.

That's all from my side.

Okay. Thank you.

Thank you. That was the last question. I now hand over the floor to management for closing comments.

Okay. Thanks, everybody. Thank you very much for your active participation. If you have more questions, feel free to contact us. I mean, if you want to set up meetings or something like that, we can have independent and separate calls if you would like to have that. We are available at all points in time. Thank you very much for your support and for the participation in the call. Thank you.

Thank you.

Thank you. On behalf of Ventura Securities, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.

Thank you.

Thank you, sir.