NowVertical Group Inc.

Good morning and welcome to Now Vertical's earnings call for the second quarter of its 2024 financial year. On the call today are Sandeep Mendirata, Chief Executive Officer Christine Nelson, Interim Chief Financial Officer, Nikhil Tadani from our investor relations firm Sofit Capital, and myself, Andre Garber, Chief Development Officer. Before markets opened on the 15th of August, we issued our Q2 2024 results press release, MD&A, and financial statements, which are now posted on our website at nowvertical.com forward slash financials. This call is being broadcast live on August 19th, 2024, and a replay will be available on our website after the call. During today's call, we will make statements related to our business that may be considered forward-looking. These statements reflect our views only as of today and should not be regarded as representative of our views at any subsequent date. These statements are subject to various risks and uncertainties that could cause actual results to materially differ. All figures discussed on today's call are in US dollars and will be on an IFRS basis unless otherwise noted, and we will refer to specific non-IFRS metrics such as adjusted EBITDA. Please refer to the cautionary note in our presentation and to the non-IFRS and other financial measures section of our MD&A for more detail. With that, excited to turn over the call to Sandeep Mandirata.

Sandeep? Thanks very much, André, and I welcome you all on behalf of our team from Now Vertical. I'm very excited to be sharing our Q2 2024 results with you. Along with that, we will also give you some insights on all the changes that we have been bringing about in the business and some of the key highlights related to our clients and all the things that are happening around the integration strategy that we are working towards. So with that, let me just give a quick refresher for our investors who may be joining our story completely new. And just a reminder to the investors who have been following our story for some time now. This is just about our positioning in the market and what we do. So we are positioned within this artificial intelligence market that's growing rapidly and expanding rapidly in various industries. And this is probably one of the biggest evolutions within the technology industry in the last decade. The challenge here for the businesses is that they all need to adapt these technologies, data and artificial intelligence technology fairly quickly. All of the CEOs and the CXOs are under immense pressure to deliver the return on investments on these technologies in next three to five years and demonstrate that competitive edge. However, the challenge lies in some of the complexities, these large enterprise complex structures within these large enterprises that they have to deal with. One of them being the growing data complexities that has been the case for last couple of decades now with all the digitization that's happening. Every business has been dealing with these growing data challenges. On top of that, we have now got the new artificial intelligence complexities, the technology complexities around it. And you have to put it all on top of the data so that it really delivers the business value to the business. And then you've got the organizational complexities. None of these changes, none of these transformations are easy for any of the organizations to go through. And when you are a large enterprise complex business, it's even more difficult. So these are some of the challenges which then result in some failed projects and very underwhelming results from the investments. And this is exactly where now Vertigo is positioned and we come in to help. What we do is we help our clients transform data into tangible business value with artificial intelligence. And we do it fast. And the confidence in that statement that we made is coming from all the implementations, all the good work we have done across many industries or many of these large enterprises across the globe. So we have done it many times and we can bring in all of that repeatability, the reusability, the subject matter expertise and the experience of taking our clients onto that complex data and AI journey. What this has equated for now Vertigo is more than 250 clients worldwide. And many of these are global brands, household names, large enterprises that you see on the screen here. More than 100 of these clients are enterprise clients, which are really large brands that you would recognize. And many of these relationships with these large enterprises have been for more than three years, five years, and there are clients that have worked with us for more than 10 years, which demonstrate the trust that clients put in our capabilities and the value we deliver to them. What we are working towards now, which is, you know, something the integration strategy that we set ourselves on the path for in the beginning of this year. We said there are going to be these four pillars of action that we are working towards on priority. And this is to turn now Vertigo into one brand, one business. It's the vision that we are working towards. We have made significant progress in all of these pillars. And if you want to deep dive into any of these progresses and how we have been making those progress, where we stand, there is a webinar we delivered on 12th of July last month. And this takes you through the details of what the progress has been in each one of these pillars. And I was also joined by some of the other leaders from the markets in that webinar. I highly recommend watching that webinar if you want to drill further into the details of where this strategy is right now and what progress we have made. About Q2 results. This is the financial update. I just wanted to share some highlights on the financial metrics. Christine Nelson, who's our interim CFO, she's going to take you through some more details on each one of these metrics. But what we had said in the beginning of the year was that we are going to turn now Vertigo into a profitable, sustainable business. And we are going to turn this into a platform that's going to be then poised for growth in the future. And this is what I'm really excited to present to you, which is the revenue is growing. I'll beat slowly in this quarter as compared to the last year, but it's going in the right direction. The profitability is going in the right direction. We have demonstrated 12% PIVETA growth over last year in this quarter. The income from operations, which is one of the key metrics. That's what we said we are going to improve. We are going to improve all parts of our business. And this is what is already beginning to demonstrate in our metrics. 191% increase in the operating income as compared to last year. And another thing that I was very well aware of, which we had to keep an eye on, was the liabilities that we are carrying. And I'm glad to announce that we have got 14% lower liabilities now as compared to last year. Some of these metrics, revenue, profitability and operations, we have already excluded the Allegiant Defense numbers from these metrics. And Christine will show you the comparison as well with and without Allegiant and what does that look like on our metrics. I will also take you through some of the business highlights. One is the unified proposition strategy. Significant work has gone into this area. We have now gone live with our website and we have consolidated our solutions and services. And then some of the key wins. What we are really proud of, I will share some of the clients and business highlights there. Just want to remind you that if you want to ask any questions around our performance and specific to Q2, please put them into the Q&A symbol in this webinar. With that, I will hand over to Christine to take us through some of the key metrics in Q2. Christine, you're on mute.

Thanks, Sandy. Hi, everyone. So revenue was 12.3 million this quarter, which was a 12% decrease over 14 million in Q2 2023. Now, specific reason for this decrease was the divestment of Allegiant Defense, which we sold in May 2024 and had a gain of 3.5 million on our income statement. And also the divestiture of Athenaeo Social, which happened in May of 2023. So you'll see on the next couple slides, both including those two businesses and excluding them. So just in order to compare apples to apples, we've presented figures excluding them. So you can actually see, okay, what's going to be a more realistic view of a run rate going forward. So excluding Allegiant Defense and Athenaeo Social, our revenue went from 9.3 million. To 9.4 million in 2024, which is a 2% increase year over year. So that 9.4 million is what we are considering our base run rate that we're going to be building off of going forward as we continue to work on our organic growth. Next, we'll talk about adjusted EBITDA. So adjusted EBITDA is one of the most important metrics that we use internally by management to measure the successes of our business units. These figures are also all disclosed in our MD&A and along with a reconciliation of exactly how you get from EBITDA to adjusted EBITDA. So please refer to that for more details. But year over year, we're seeing everything's turning in the positive direction. So we're including Allegiant and Athenaeo, adjusted EBITDA increased by 18% from 1.5 million in Q2 2023 to 1.8 in 2024. And then excluding those, so basically comparing apples to apples, you're looking at 1.4 million in 2023 to 1.5 million in 2024, which is a 12% increase year over year. And so everything is turning in the right direction. We're also really happy to see the overall EBITDA percentage margin increasing as well. So 11 and 15 in 2023 up to 15 and 16% in 2024, which is closer to where we want to get to in the future. So this is really proud of these metrics and just goes to show the hard work that we've been putting in. So next we'll talk about operations. So on the left, we're looking at operating income. So this is revenue, gross margin and after admin expenses. So we've seen an increase of 125% from Q2 2023 of 0.3 million to 0.7 million this quarter. And if you're looking at, now when they're not presented on this slide, sorry, if we excluded Allegiant and Athenaeo from operating income, you would actually be seeing an increase of 191% from 0.2 to 0.4. And then on a year to date scale, we're looking at last year we had a loss of 0.7 million and this year we have a gain of 0.9 million, which is a 226% increase year over year. Now, a major reason for this increase in our operating income is a reduction in admin expenses. So quarter over quarter, year over year, we decreased by 10% going from 6.5 million to 5.8 this year. And then on a year to date scale, we decreased by 14% going from 13.9 million to 12 million in year to date for the six months ended June 30th, 2024. Now this is reducing our overhead costs and our admin expenses has been a major focus of management with our objective to move to an operator first model. I know you've heard me say this before, but we have amazing talent in all of our local markets around the world. And so we've just been focusing on capitalizing those and reducing our overhead corporate costs as much as possible and just utilizing the talent that we already have within the business units. And these decreases in minimum costs we're very proud of and we're going to continue to work on reducing these further and making the business more efficient. Okay, next we'll just briefly touch on our liabilities. So as Sandeep mentioned, another focus that we are focusing on is improving our balance sheet and going from June 30th to last year to this year, we had a 19% decrease in our overall liabilities. Now a big portion of this of course is due to the divestment of Allegiant Defense in May 2024, which allowed us to reduce our long-term debt and improve our balance sheet position. But just in general, we just wanted to show our focus is definitely on improving our balance sheet as well. And I'll hand it over to Sandeep who will speak briefly about the improvement in our deferred acquisition liabilities. Thank you.

Thanks, Kusim. One of the other things I wanted to mention is if you would like to understand certain numbers around the Allegiant Defense sale, then we have got another video. It's just a nine minute video on our website under the about us section in news and media page. You can go through some of those numbers and it will give you the details of how we have done that deal. One of the things that was standing as a pretty heavy stress on the business when I took over as the Chief Exec was the deferred acquisition liabilities. And I shared some of these numbers in our May webinar with everyone. This liability in 2024 in the beginning of the year stood at $5.1 million, which was a massive stress. I'm really glad to present that as of today, our liabilities have been spread out very nicely and evenly across three years, 24, 25, and 26. And the great news is we have been able to bring down our liabilities from $5.1 million in the beginning of the year to now $2.1 million in 2024. And out of that, we have also been able to pay $1 million of that liability. So we have been able to reduce that stress quite substantially on the business. $2.4 million of the liabilities now defer to 2025. And it's again spread across the four quarters, which really gives us the runway and the time to improve our operations. And as you can see from the numbers Christine shared, the income from operations is already improving. And that will help us take care of these liabilities without having to go and raise the funds or dilute the equity in any way. The 2026, there is small liability that we have deferred to 2026 as well. So this is a much cleaner position for our balance sheet, as well as the cash position, the immediate cash position in 2024. So really glad to have that. And just wanted to share this with you how this liability now is landscaped. One of the business update we would like to touch on is the website, which is empowering our go-to market. We have done a significant amount of work in going across the business, understanding all the solutions, services, products that we are delivering for our clients and doing all of this good work for them. And that's so valuable and condense that into our solutions and services catalog, which is now live on our website. Each one of these solutions and services are high value solutions and services for our clients. They deliver business value, they deliver tangible technology value, they build the capabilities for our clients over a period of time and help them get ready for the AI evolution and transforming themselves to gain that capacity. And that's a really important competitive edge. And here's just one of the examples of how one solution could be applicable in, say, the Latin market and help reduce the number of wasted contacts by 60%. And the same very similar solution can power a 2% revenue uplift in one of the other industries, which is media and the events industry. And this is the power of the solution that we are bringing to majority of our clients and some of our new strategic accounts that we want to bring to our portfolio as well. So this was a significant effort in the right direction of building that one brand and one business vision for Now Vertical. Some of the other highlights within Q2 is really glad to share that we have been able to secure 71% of our revenue already against our 2023 revenue. And this 71% is excluding the Allegiant revenue. So just to remind you, $51.7 million US dollars was our revenue in 2023 and $17.8 million US dollars was the Allegiant revenue. So if you take that out, you were about $34 million. And what I'm sharing here is we have already secured by the end of Q2 2024, 71% of that 2023 revenue, which is $34 million. So this is such a positive news for the team and for our business. Another great news, which I'm so thrilled to share with you, is we have been able to close and convert 100% of our contracts that were up for renewal in Q2 2024. And this is upwards of $8 million US dollars. Some of that revenue will be delivered in 2024. Some of the revenue is going to be delivered in 2025. And we have been able to close every contract that was up for renewal, which reflects the level of trust our clients have in the value we offer with our solutions and services. And at the same time, great work that team has done to deliver that quality of our services and taking care of our clients in the relationship and the engagement. So wonderful news to share. These are some of the big wins in Latin America in Q2. So we have been able to onboard five new enterprise clients that add to our strategic account portfolio, which is phenomenal. And they have brought in some really solid revenue along with those wins. And that's happened across three different industries. So that was one phenomenal win I would like to share with everyone from Latin America market. One of the wins that we are really proud of in the North American EMEA is in the financial forecasting modeling, which is really in our sweet spot of the solutions that we offer to our clients. And this is one big deal, which is upwards of $1 million already for the rest of the year. So it's just in the next six months, we will be we will be billing our client about $1 million. And the interesting part on this particular deal is we have won this against one of the big fours who were incumbents in this very large media company that we are working with. At the same time, we have got more prospects in this client already. So this is this is the power of our solutions, which are really high value solutions for our strategic accounts that's really coming to life. And this is one of those examples of how this translates into really good revenue stream and relationship for Naverco. Another win came in from the products group. We have signed a multi-year deal, which is spanning across three years now. And this is by embedding the products into our solutions exactly the way we wanted to position our products. And this is the win, which is again in the, you know, coming from the now privacy product that we have. And it's just another reflection of the utility of this product that we have got for the large enterprises. So that's some of the deals that I just wanted to share, which is bringing all of our strategy to life and all of our focus on these solutions and services to life for us. With that, I'll open it up for any questions.

Thanks, Sandeep. We've got a few questions that came in online and some that came in offline as well. I'm going to try and order them in the order going from, you know, customer demand and income statement towards the balance sheet and liabilities and things of that nature. So the first question that came in relates to the two KPIs that were mentioned back in July, growth and strategic accounts and cross-sell revenue. Is there any color you can provide on those? How are those evolving? And what percentage of total revenue comes in from key accounts?

Yes, very good question. This is going to be our focus and I'm glad you are picking up on these key metrics that we are measuring ourselves on. So these strategic accounts, they contribute to significant revenue for us. In different markets, you will have different proportion of those revenues. But overall, give or take, we get about 70% of our revenue from these strategic accounts. And at this moment, we have got 66 strategic accounts in the Latin market. We have added five more accounts in Q2 in the market. And we have got about 35 strategic accounts we are focusing in the North American and the US market. And these strategic accounts, they give us roughly 70% give or take of the revenue overall. Our focus is to increase the revenue from there. And the way we want to do that is by cross-selling the solutions and services. The catalog that I mentioned, we have now worked on and we have got a very good grip on what are those high value solutions and services that our clients are really looking for. So we are enabling both our markets and our accounts team with those solutions and services so that the cross-sell revenue can also be measured. Of course, like I said, we are building this foundation first, we are creating the right capabilities. This is going to be our long term measurement and we will keep measuring this over a period of time. And this is just the beginning of that journey. But the examples that I shared with you on the big wins, they are all in that direction of improving our revenue stream from the strategic accounts, improving our revenue of the cross-sell from the solutions and services.

Thank you. The second question is talking about demand again. In the context of the AI boom that we are in right now, could you put the 2% organic revenue growth into a little bit more focus? How are things trending and how much of this revenue growth was due to inter-rechanges of the company?

I think a lot of, I would say the focus that we are bringing to the new deals and the wins that we are having and how we are reshaping the positioning of our solutions and services to our clients is definitely bringing about a change. It's bringing the change in the mindset of the teams that are dealing with the clients. It's also giving at the same time, better visibility to our clients on what are the different ways in which now Vertical can help. And earlier we could be taking only one small footprint of the solution to them. But now that we are joining all of our solutions and services together, we are now taking the -to-end journey of a particular lifecycle, be it a data lifecycle or the customer journey lifecycle for a marketing team. We are bringing the whole suite of solutions to them that are also embedding our products so that the value of the benefit that we deliver for our clients is higher.

Thanks, Sandeep. We have a few more questions about different segments and geographies. The first question is asking about Orbi. Can you talk about some of the sources of strength there and what's the outlook for that business?

Very good question, actually. And this is an extensive work and exercise we have done. I was in Buenos Aires for a few days. I was in Sao Paulo as well with our team in Brazil. And there are so many different things to highlight here, but I will just keep it to a very summary level at this point in time. Argentina has got, say, almost one-third of our revenue comes from Argentina. It's a little less now. But there's a significant revenue that comes from Argentina. At the same time, what I have also been able to identify is that we have got very strong service delivery capabilities that is enabled by some of these hyperscalers, the technologies like Google technologies and Microsoft Azure, if you like, AWS, many of the data governance-related capabilities, the ability to bring some of the data into the data. And we can also bring some of the proof of concepts or the minimal viable products to the clients very fast. These are the capabilities that are scalable. You can serve five more clients, 10 more clients. You can pick really large engagements and transformation programs. And you can scale that service delivery capability in Argentina. So that's one of the strengths I would like to highlight. And we are doubling down on our activities and initiatives in Argentina to make it a powerhouse of our delivery center, along with India that has been there as a delivery center for some time. And it also presents another ability for us to serve the North American clients in that similar time zone and serve the UK clients in a similar time zone from India. So there are these benefits that we are going to leverage going forward for our clients.

Thanks for that, Coler Cindy. The next question is drilling a little bit into the segments that we have disclosed. So the question is asking about Acrotend and the other segments, which seem to have declined year over year in the first half of 2024. Is there any more context you can provide around that? And how do we reconcile that to any organic growth that might be expected in the core business in 2024?

I'm not concerned about some of the drop in the revenue that we may have seen in Q1 and Q2. And if you look at our Q2 results, they are already much better. You know, if you look at even our North American and our business, we are back up on our revenue and the profitability. Q1, yes, was lighter, but I had shared some of the analysis on that. Our Q4 in 2023 had seen some changes in the budget cycles with our clients and recaptured some of the revenue in Q4 and then Q1 was much lighter. I know the way we are closing some of the pipeline and what we have already got in our pipeline, it's not going to be an issue in terms of demonstrating some growth in some of these business units. Our focus remains making the business units and all the operations more profitable and getting rid of just the business unit mindset to becoming more now vertical and markets mindset. And this is already shaping up quite nicely and you will see better results from both of these markets.

Thanks, Dr. Sulekhar. The next question is asking about the expected organic growth in the top line. Is 10 to 15% a year a realistic goal?

Like I said in the beginning, you know, we are in a rapidly growing market, so there is no reason we cannot have double-digit growth on our top line and improve, continuously improve our bottom line as well. And that's going to be our focus anyways. But what we are doing right now is restructuring the business, preparing the business to take on that kind of growth in this really rapidly growing market. You know, we know that we are in the right market. We know now we have structured ourselves, we are structuring ourselves quite nicely. We also know the solutions and services catalog that we have put in so much effort on. That's the right -to-market strategy for us. So all of these are the right steps in the direction of making sure that we can bring in that double-digit growth. And I think, you know, we would like to be at a point where we can give some guidance on what the growth is going to be for some of the future quarters. But I would like to be cautious right now, do the right things as the foundation, and then bring in some of that guidance.

The next question is asking about, you know, any challenges that you might be seeing outside of Latam to revenue growth. Is there any color you can provide on that?

A challenge, if I get the question right, I think it's a challenge in terms of the growth outside of Latam. Yes, revenue

growth.

I think, you know, the markets that we are operating in, North America and EMEA, you know, especially in the US and in the UK, these are growth markets. These markets are really screaming for a lot of these innovative solutions, the technology capabilities that is going to change the business models of many industries. So I'm absolutely convinced that there is a lot of potential for us to grow outside of Latam also, you know, right now. And in fact, there is some explosive growth that must come in in the future quarters for us. All I'm saying is, you know, this is all about making sure that we prepare now vertical for that kind of growth, and we are then operating as a platform and a business that can take on the explosive growth.

Changing tracks a little bit, we've got a few on the balance sheet and deferred liabilities. So the first question in that group pertains to, are you working to defer any liabilities for 2026 onwards, since in 2024 and 2025, you have to make some payments? The second part of that question is also in a Finios collection of is a Finios collection of 2.2 million secured, or does that depend on the evolution of Finio after the sale?

I'll let Andre talk about the Finio part. Do you want to take that opinion question, Andre, first, please? Sure.

Yeah, no problem. Thanks, Sandeep. So yeah, it is secured. It's just a secure deferred payment schedule. Okay,

wonderful. Now in terms of deferring some of the liabilities from 2024 and 2025, I think what we will, of course, we will see if there is any further possibilities of deferring those liabilities, but what we are also putting in as a commitment is any of these liabilities that were related to our acquisitions of the assets in the past, we would like to stay on track and get rid of those liabilities and fulfill those liabilities properly to all the sellers, because that's just the right thing to do. But what we may be looking at is, you know, we have got the lenders, we have got the debt on our balance sheet, and as any business should strive to look at reducing the cost of capital, restructuring those liabilities or the debt, those would be the initiatives that we would be looking at for sure in the future, so that we reduce that stress on the business within the liabilities and the debt.

The next question, I suppose, is more of a comment than a question. By deferring the liabilities, have you issued or not issued millions of shares? I guess just any context or, you know, your thought process

around that. I think one of the major things that has happened is the actor friend sellers, including myself, we have invested ourselves to buy the equity into the business and got rid of a lot of that liability. And while doing so, we have even bought a lot of those shares at a very good premium as compared to the market value at that point in time. So yes, there is a lot of conversion of the cash liabilities into the equity that has happened.

The next question is, there's a few that are operational in nature and a few that go back to revenue. So let me tackle the revenue one first. What percentage of the revenue today is AI software related?

I think the AI software itself is not a huge revenue composition or huge revenue stream for Nowvertical. All of these AI related solutions and services and some of the solutions also have got the AI products embedded in there. They are the revenue stream for us. So we do not any longer position ourselves as a software business or an AI software business. We are a solutions and services business and these products are embedded within our solutions and services. So when we go and deliver a particular solution to our client, AI is just one part of it. You have to do so many other things. You have to prepare the data, you have to get the right data in the right place. You have to transform the data, you have to structure the data and you have to safeguard the data. You have to give the right access to the right people as well. And you have to bring in the right agility in that data. And then you put in the layer of the AI in different processes here. So AI software as such is not really a revenue stream that we are measuring. It's the impact on the AI solutions and services that we measure.

There's a few operational type questions. So let me switch to those. Your business is very dependent on acquiring and retaining top talent. Could you please explain your incentives for talent acquisition and retention?

Very good question. And this is going to stay as one of the key priorities and one of the pillars of our operations, if you like, in many different areas. And what we are already doing is there are... So first of all, Now Vertical is not a new business as such. Now Vertical has acquired businesses that have been running for many years and they have gone through some of these challenges and they have creased out these problems already. So there are parts of our business that bring in very robust processes on talent acquisition. They bring in robust incentive structures for these talents. And some part of the business, one structure works much better than the other. So, so far, we have created some of the frameworks, including the delivery partner framework that we have, where we work with many of the smaller businesses that gives us access to more than 1500 consultants in this data and AI space. And at the same time, like I was discussing, Argentina has got a phenomenal capability, although the attrition is a bit higher there, but it presents a wonderful opportunity for us to bring in the right talent that is completely tuned into the modern technologies and leverage that within the business.

Similar vein, what's the current number of consultants?

We've got more than 500 consultants across the two markets.

Thank you. Which publicly traded companies are the most comparable to yourself?

I think. So go on, Andre. I can just answer that, you know, we have had some third party research come out on Now Vertical that does name our comps. I'd encourage you all to look for that research and find how they're naming our comps.

Yeah, but just to add a bit more color to it, you know, we are competition is of different segments. It's a very, very wide spectrum. You know, sometimes we even compete with the big fours and their consulting practices, their technology and delivery practices. We also compete with the large SIs, the system integrators, if you like. We sometimes are in competition with the outsourcing partners of the clients and sometimes they are very niche service providers, either in a particular industry or in a particular geography. And we understand that landscape really, really well for us to operate in. So there are many different kinds of segments that you would see which are comparable to Now Vertical in different ways. But here we are creating such a brilliant niche. I think where Now Vertical is very different than many of these other businesses are. There are a lot of businesses who try to be everything and anything for the clients and the markets, but as we are creating our niche in that data analytics and AI space, we know what are the industries that we are really good at. We know the kind of functions and the technologies that we are really good at and we are carving out that niche here. And that's the reason I gave one of the examples where we have recently won against an incumbent big four business. We have won a large client, large contract with the client. And that was just a testimony to the value that we bring to our clients.

Thank you, Sandeep. The next two questions focus on scalability of revenue. So maybe I can ask them together. Given the focus on solutions and services versus software, can you comment on the scalability of operations going forward? And I guess the second part of that question would be to grow your top line by 10%. Do you need to grow headcount by 10% as well?

Very good question. I think for just to grow the top line by 10%, would we grow our headcount by 10%? The simple answer is no. We always have got different kinds of efficiencies that we are able to bring in, and you don't have to grow it, you know, in line with the 10% growth overall. But in terms of the growth for, I think that the growth can come in from different segments for us. You know, the challenges could be around, say, how do we address a particular market with what kind of solutions there? And we are enabling our commercial activities and the go-to market in those markets, for example. On the other side, you know, if we have to ensure that we are scaling and we are enabling ourselves to deliver the revenue that we have already won, I talked about, you know, those delivery capabilities within Argentina and India. And again, we have touched upon some of that in our webinar on 12th of July, so I highly recommend watching it and it may give you a good color on that.

Thanks, Sandeep. I don't see any more questions in the queue here. Oh, actually, I think we might have this one coming. There's another one that just came in for gross margins. Why is your gross margin percentage so much higher than your competitors who are bigger companies, and can gross margins continue to improve?

That's a good problem to have, I guess, and we will continue to have that problem. Benchmarking against the industry is one of the key things that we would look at. And I think, you know, there are certain things in the gross margin that you would see because we have got the reselling of the software revenue stream as well. Sometimes in the quarters when we are reselling a lot of the software, the gross margins could peak in those quarters. And overall, what we are going to be working towards is to keep our gross margins around 50 to 60%. I think 50% is a really good benchmark. We would strive to go up to 60% as well, and then continuously improving our EBITDA margins. That's something that we are absolutely committed to work towards. So I won't have that as a concern as such, but there may be some seasonality. There may be some seasonality on what revenue stream is coming into what quarters. Sometimes that can shoot up the gross margin.

Thank you for that Sandeep. I see no more questions on the queue here.

Okay, wonderful. On that note, I just want to summarize this for everyone. You know, we are bringing in more and more focus into our data analytics and AI space. You have seen the Legion of Defense being divested from. We are improving our margins, our EBITDA is improving. We are focused on reducing our liabilities, and we are focused on improving our operations. And you are seeing that in terms of the income from the operations growing. Having said that, what is most important is we keep our focus on the go-to market. We are ensuring that we are very relevant for the future roadmaps and the growth prospects that our clients are presenting to us and what are the challenges they want us to solve. That's where our consolidation of the solutions and services is happening. So these are the summary pointers that I would say that are the highlights from Q2 and what we will be working towards in the near future as well. With that, I thank you all for all the support you have offered us and going through such a transition in the business. I just also want to make sure that the whole leadership team is completely committed and invested just like you in the success of Now Vertical. So thank you very much.