Earnings Call: Q2 2023

Nov 7, 2022

A very warm welcome to all of you, ladies and gentlemen, joining us on our inaugural half-yearly investor forum. I wish to welcome you all for this forum and look forward to having a deeper and a more meaningful shareholder engagement as we go on as a listed company. Just to set the context for today's investor forum, some of you may realize that it has been almost a year since hSenid Business Solutions had its successful IPO on the Colombo Stock Exchange, and we as a company thought it is high time we take our shareholder engagement to the next level, and hence, this investor forum. There are two objectives that we want to achieve here. One is we want to make sure that we give our shareholders and the broader investor community deeper insights into the business. Secondly, to commit ourselves to a consistent approach when it comes to shareholder communications. On the first point, it is all about going beyond the financial information or the published reported numbers, to go a couple of notches deeper and help you, as the investing community and shareholders, understand what drives us as a business. On the second point, what we are doing is to commit ourselves to talk about the same KPIs and business drivers about the business. Whether it is a good quarter or a bad quarter, you will hear us speaking the same language. Essentially, it is us committing ourselves not to cherry-pick on various numbers, but to be consistent in our communications and approach to communications with shareholders. At the end of this, basically, what we are trying to achieve is to ensure that there is better visibility and better clarity so that you see as clearly as we do the massive potential in the business and the market opportunity out there, and also our strategic plans and what we have in terms of execution plans towards capitalizing these opportunities. So from an IR program point of view, we will be conducting this deep dive on a semi-annual basis. Typically, at the end of the first half in November. Unfortunately, this time around, we had to move it to early December because of conflicting travel schedules. So we will have a first half review in November, and then the full year review at the end of the post-release of the financial statements. In terms of reporting performance, there is something that I would like to highlight upfront. It is the fact that we would like, as a multinational company where revenues are invoiced in up to nine different currencies in any given period, we would like to separate the effects of either favorable or unfavorable currency movements from the underlying performance. To do that, you will see us talk about USD constant currency growth rates wherever we talk about growth. For those of you who are not familiar with it, I will just spend a minute on that. What we are trying to do is to basically compare performance of the current period versus the past period in U.S. dollar terms, where all non-USD denominated currencies are converted to USD at the prevailing current period's cross-currency exchange rates. For example, if you're looking at first half FY 2023 performance versus the first half of financial year 2022, last financial year, we'll be using the same non-USD to USD cross-currency exchange rates of this particular period, that is end of September 2022, to convert those non-USD cash flows in the base period of the past year as well. That way, what we're trying to achieve is to make sure you only see growth rates on top of the LKR growth rates, which is obviously reported. You'll see growth rates which are purely reflective of performance and devoid of any favorable or unfavorable currency movements. That's it when it comes to some of the language we'll be using when speaking about these growth rates. In terms of our customary safe harbor statement, I'd like to draw your attention to this particular statement on all forward-looking statements that we make on this call. Once this is emailed post-call, you could leisurely read through it. In terms of the structure for today's presentation, basically, section one is the entire update, and I'm at the tail end of it. We will kick things off with Chairman's comments, where Dinesh will make opening remarks to the investor community and our shareholders, followed by a business overview by Sampath, our CEO. That'll be followed by a financial update from Raveen, Head of Finance, and you'll hear back from me on the strategy and focus areas in terms of what we are focusing on as a company. At the end, we will have a Q&A session where we would address your concerns. From a Q&A point of view, we invite you to either type in your questions into the Q&A box of the platform during the presentation, as and when you have your questions, we will address it at the end. Alternatively, you could click on raise your hand at the end of the presentation during the Q&A session, where we will help you unmute yourself and pose your question in person. That's it in terms of housekeeping stuff. I think we are good to start our inaugural investor forum. Let me now hand over the proceedings to Dinesh Saparamadu, Chairman and Founder, hSenid Business Solutions PLC. Over to you, Dinesh. Yes. Thank you, Nilendra, and a warm welcome to the hSenid Business Solutions first investor forum. As Nilendra mentioned, it's been a year. Last year this time, we were all very excited about the final stages of collecting all the subscriptions and kind of getting onto this mood of becoming part of the hSenid Business Solutions' future plans. First of all, let me thank all of you to being here today, and especially people who have been supporting us throughout our journey of 25 years. hSenid, as a group, actually celebrated 25 years this year, so it's actually a milestone for us as a company of being 25 years in Sri Lanka. Just to kind of give you a little bit before I get into some of the hSenid Business Solutions, hSenid started in 1997, and we started with three employees in an office down Ward Place. From there, our first business was actually an HR business. hSenid Business Solutions was our first. It was not called hSenid Business Solutions, it was called hSenid Software International. From there, we actually spin out hSenid Business Solutions, and you see the rest of the stuff that unfold. We are lucky enough to be able to win early customers in Sri Lanka as well as through our systems from Sri Lanka Telecom to SriLankan Airlines. Sampath Bank were some of our early customers. We actually learn from them, and we build a platform that we actually was able to take it outside of Sri Lanka. You will hear later, we have more than 1,400 customers in 40-plus countries all over the world currently. Coming back to hSenid Business Solutions, I just wanted to kind of touch base on maybe two or three salient points. It's just to talk about what our vision is and where we are going, and some of our key ingredients that we feel as a company that why we are doing this, and just give some inputs to that. If you really look at the HRIS space, it's actually one of the fastest growing from all enterprise software market. Even during a recession, what we are seeing is that throughout the world, HRIS companies or HCM companies are actually the ones that are growing. The reason for that is that this whole, the pandemic that actually accelerated the digitalization process. The digitalization process, that acceleration felt through most of the enterprises around the world. We will see that it's actually growing more and more in coming years. What is the part that hSenid Business Solutions is really looking for is that we want to be the centerpiece of that digitalization activities that are happening. We want to be what we call the own the employee of record. If you take a look at an HRIS systems, you have the employee record, then you may have other CRM systems or other system that actually link. The employee record is the most important one that links into the rest of the enterprise solutions. hSenid Business Solutions want to be that dominant player in owning that employee record. That's one of our main objectives, or our vision is to kind of be the employee of record in the next 5 to 10 to 15 years, because that's a long term we can actually see that employee record becoming the most important asset of an organization going forward. Second one is, from an overall perspective, we want to be the HCM or HRIS dominant player in the APAC and EMEA. The reason is, if you see in our last annual report, also we talked about it, there's no really a dominant HRIS player in these two markets, and we want to become that. How do we be part of that is actually being very focused on our customers. Something that we hear very often is that we chose hSenid because of the product, but we stayed because of the team. That customer-focused, being attentive to the customer is something that we truly believe. Both Sampath and I are still at a level of, we could say support, that you can escalate things to us even at this point. This is something that we started 25 years ago, and the reason we are very focused on the customers are the reasons why the customers are staying with us. That customer focus is very, very important for us. Second is the talent. I think most of you know currently, there is a huge demand for IT talent. Part of it was what I mentioned before, the whole digitalization process. Companies are racing to digitalize, automate, all that process. Talent becomes a very important aspect. For hSenid Business Solutions, our tagline was, "It's all about people." We truly believe it's all about people. It's the way that we build a culture, the way that we build our teams, makes the huge difference in how we actually build an organization. Talent is very important for us and I think this month itself, we actually took another bold step in creating an employee share option plan. We had our EGM a couple of days back to kind of make sure the success that we get in the company is actually shared, and employees actually become part of the organization. That was a huge step that we actually did, creating an employee share option plan and getting the key employees or the real contributors to the organization to be part of the organization as stakeholders of the organization. Last but not least, the road ahead. What are we looking for the future? I think we mentioned this in our prospectus as well as in the last annual report, we are looking at the long-term. We are taking a long-term view because we know that this is a company that we see that we are still at the very surface level of what we can do. The benefit of this will actually come in years to come. In that, we are actually taking very bold steps in areas of new experimentations. Experimentation in business model, experimentations in areas of technology. We are looking at how we can actually look at some of these AI, ML-based integrations, aggregations, looking at how we actually can take the data with our customers and giving them insights into that, where they would not have seen. That kind of technologies are getting built, or in the near future, you will see some of them coming, and we are well positioned to bring that kind of technologies and to overlay that throughout our customers that were already using our system. These are some of the areas that we really feel that hSenid Business Solutions is positioned and has the capability and the capacity to execute in the years to come. Like I said, it's about long-term view. I always say that we are here to build products, take care of our customers, that help our customers to win and grow. In that process, we as an organization also win and grow. With that, I will actually pass it back to Nilendra. Once again, thank you so much for being here and during the Q&A, I look forward to engaging with you all further. Thank you. Thank you very much, Dinesh. Sampath, over to you to start on the business overview and review. Thank you, Dinesh, for the introduction, as well as Nilendra setting the background. What I'll do is next 15, 20 minutes, I'll give you overall business overview just to understand how we are continuing our business in Sri Lanka as well as regional business. Hope you all can hear me. What I'll do is next few minutes, I'll give you overall business environment at HBS, hSenid Business Solutions PLC. hSenid at a glance, we are working on 10 billion plus TAM, total accessible market. That's a bigger market if you really look at this market purely on Asia-Pacific region as well as MEA region. At the same time, our exit ARR is $2 million at the moment. This is as per the first half results of 2023. At the same time, subscription revenue backlog is half a million dollars. This will add during next three, four months to our revenue streams. At the same time, currently, one of the most important point is we have cash, like $4 million cash. Even during recession, our collections are good, and things are moving in pretty decent manner. We are cash positive as well. On the other hand, like even Dinesh mentioned, we are working on the product piece as well. Hope you can remember during our initial IPO stage, we mentioned our investment will go to three different areas. One is product development area, global product enablement, and the further enhancing the product capabilities. Second thing is market expansion, develop our market presence in both the APAC region as well as MEA region. Third area is possible potential acquisitions and mergers and stuff like that. These are the three areas we are looking at. With that, actually, we even develop our seamless connection to third-party systems. Now the product is capable of connecting with any globally renowned ERP solution and any other third-party solutions. That is one of the notable thing we had during last few years as well. Same time, we are now geared to handle large and complex organization with some of the large manufacturing company automation as well as government sector automation projects. Now we can handle large corporates across globe in multi-country environment and a multi-industry environment. That product capabilities are already added to the product, and it's well-positioned to cater the global markets. At the same time, right now we are serving 1,465 global clients in 40 countries, covering 20-plus industries. Even though some of the industries are leading, like financial services, at the same time, retail, manufacturing, hospitality, these are some of the leading sectors out of 20-plus industry segments we are handling at the moment. We are now 1 million-plus global user base, and we continue to be very low churn company with less than 5% churn. Employee base point of view, we increase our employee base despite of many challenges post-COVID scenario and due to global financial issues. We are now 320 employee company, and we are with five global offices. Recent addition is Bangladesh office. We start our Bangladesh operation business development activities two years back, but we start our own operation, our own office, during this financial year. I'm happy to say, this is the second development center outside Colombo, now operating in Dhaka, Bangladesh. That's a high-level overview of the business. Nilendra, I need your support here. HCM software point of view, earlier also we mentioned actually our core product is PeoplesHR platform. PeoplesHR platform, we have two offerings. One is on-premise offering, on the other hand, cloud offering. Still on-premise and cloud gives equal portion of revenue roughly, because larger organization and especially African MEA region, some of the accounts are still on on-premise. On-premise area, we have roughly 813 clients at the moment, and with 24-plus years of history. At the same time, 37-plus revenue contribution come from this segment. Same time, cloud area, if you look at, we have over 500 customers at the moment, with 10-plus years of experience onto cloud technology. And right now, 34% of overall revenue comes from our PeoplesHR Cloud platform. At the same time, we are into related business as well. One of the notable area is PeoplesHR Tracking solution. PeoplesHR Tracking solution contribute 9% to overall our revenue. Also, we are doing this business more than 10 years, Sri Lanka, and couple of overseas countries as well. We enable all tracking employee, tracking related information, for time attendance requirement, security requirement, and access management and access control related requirement. The last area, the notable revenue point of view, PeoplesHR Outsourcing business. Outsourcing business is now again 12-plus years business. We have 37 clients, Sri Lanka and overseas, especially Asia-Pacific regional countries, and that also contribute 4% of the overall revenue. Product point of view, we are very strong in terms of our end-to-end product suite. First section is core HR and employee engagement. That start with employee master, employee lifecycle, organization structuring, self-service portal with mobile access and kiosk access. You can factory environment, you can establish a kiosk machine for employees to access their own records, managers to do approvals and stuff like that. Or you can get everything onto your mobile today with the language you require. At the same time, with the feature enablement for you to work as a supervisor and work as an employee. On the other hand, we support the whole bunch of industry relations solutions and reporting analytics suites. This include actually descriptive analytics to predictive analytics on one side, and ready-made HR dashboards for managers and senior executives to look at HR data, for data-driven decision-making purposes. At the same time, operational areas like grievances management, disciplinary management, reward and recognition, those are add-ons for especially factories and other organization to manage their employee very effectively. We have the strategic toolset starting from performance appraisal, talent management framework with competencies, training and development, probation evaluation, manpower planning. The happiness dashboard for employee engagement, enterprise dashboard to support the whole organization activities, analytical framework, and also this whole bunch is supported by do express tools where even companies can develop their own dashboards and publish within the tool. That's the beauty of the whole application. On the other hand, operational HR, like starting from attendance, leave management, payroll, it cover actually whole gamut of different solution to support the HR operation. Our message to our customers is hand over your whole operational activities, reporting activities to HR system, so the HR department, senior HR executives can purely focus on more employee engagement, working with employee for their development, and more strategic activities. System handled from recruitment up to retirement, entire cycle of HR domain. We are not just like HRIS company providing few areas. We are end-to-end HRIS company and present globally. Yeah. On the other hand, as I told you earlier, investments are heavily moving to product development as one core investment. We released actually do it yourself mode product that is called PeoplesHR Turbo, and especially some of the markets where we have a good presence. Turbo is one of the fast-selling product now in India, and then we are moving that product couple of other markets as well. This is a fixed product, go to a company where HR department can configure and start using on their own. Then we have the PeoplesHR Marketplace. That is B2B marketplace, where we will bring technology-driven, latest different application, HR-related different application to one common PeoplesHR Marketplace. This is a seamless integrated environment where, let's say, if someone want to let's say, AI-driven recruitment related application published on our PeoplesHR Marketplace, there's environment for them to do that and serve our existing client base. We enhance the value product point of view, we enhance the value add services to our existing client base. Marketplace, we are expecting a good journey in coming years. On the other hand, we just released the PeoplesHR Social. Earlier, it was named as Juraa. This is enterprise social network purely on HR aspect. Because we realize general enterprise social networks are not becoming very much popular. Because of that, we focus on HR domain and develop our own social platform for PeoplesHR. We are continuing with other R&D initiatives like bringing, let's say artificial intelligence, data analytics, robotics, RPA development. In fact, even today, we are winning from a different forum happening this evening, one of the internal application we developed on robotics process automation to enhance the capabilities of the application as well as increase the efficiency of some of the implementation activities. We will move to the next one. When you look at, as I told you at the very beginning, I mentioned our TAM is $10 billion, both in APAC and MEA region. We are well-positioned because if you really look at, like Sri Lanka is well positioned to serve both the regions. Simple example, last month, November, we all are traveling to do some business development work across region. We can reach any of these countries within a few hours. Four to eight hours, we can reach any of these regional countries. That's the beauty. We are well positioned to serve these APAC region as well as MEA region. On the other hand, when you look at Africa and APAC contribution business point of view, overall, if you look at last few years, 51% of our revenue comes from these two regions, APAC and MEA region, Middle East and Africa region. If you look at even currently, for staff, even though we are getting only 10% from the African region, that number will be very high in Q3. Our revenues are sometimes larger ticket invoices will happen in different quarters. Still we can maintain more than 50% of revenue comes from APAC and Africa region, overall business point of view. Because of that, our even 24/7 support center is based in Colombo. You have to start the day little in advance, you can close the day a little late. You enable managing all support queries across globe from Colombo office. We will getting into little detail on different areas. As I told you earlier, our business segments, one of the key segment is PeoplesHR On-Premise. PeoplesHR On-Premise still mostly coming from African region where low connectivity between countries and within the country. But we are well-positioned, even the government of Uganda project, we managed to sign the phase two during month of November. We are starting the project, we already start the project November itself. That will give us a good revenue stream in Q3 and Q4. This project originally commenced in financial year 2020, phase one we managed to complete year 2022, we started the phase two activities during last month, that is H2 FY 2023. We are expecting a good revenue on that segment as well. Still in other countries like even Kenya, Rwanda, Ethiopia, in these regions, we are getting business from on-premise area. On the other hand, if you look at the revenue growth as LKR point of view, last three-year CAGR is +25%, and its constant currency USD growth rate is +17%. That's the beauty. If you look at even if you compare FY 2022 first half and current year first half, we are growing actually 19% USD constant currency, and rupee level, it's 76% year-on-year growth. Second segment is PeoplesHR Cloud revenue. Cloud revenue also growing year-on-year. We are already hosting this cloud infrastructure with Azure, Microsoft Azure, AWS, Amazon, Google Cloud, and right now we are exploring other options as well, like Huawei cloud infrastructure. There's a strong demand from the SME segment, and we are anticipating PHR cloud revenue to grow because demand is increasing year-on-year. Also, there's a demand come from on-premise to cloud migration as well. We have seen in the APAC region and Sri Lanka, companies are migrating from on-premise solution to cloud solution. We are expecting a good PHR recurring revenue to grow during next few years. If you look at cloud revenue growth, if you last three year, it's 25% on LKR revenue point of view, 16% in USD constant currency point of view. At the same time, if you compare FY 2022 first half as well as 2023 first half, it is 23% USD constant currency growth. That's notable growth if you really look at cloud point of view. Third segment I mentioned earlier is cloud's tracking solution, PeoplesHR Tracking solutions. PeoplesHR Tracking solution, we track all employee movement, as I told you. Even during COVID time, we managed to track their temperature, directly pass that information database for managers to make real decisions, real-time decisions. At the same time, there's a growth we were expecting during this year. You can already see the growth moving from 2021 to 2022. At the same time, even the current year, there's a tremendous growth that is due to one reason, is liquidity challenges faced by smaller guys. Now we are acting as a distributor. Even the smaller guys are buying certain items from hSenid to resell for their clientele. We are expecting these numbers to grow in this area as well. If you compare the last H1 2022 and H1 2023, is almost 59% USD constant currency growth in this particular segment. When you move to PeoplesHR Outsourcing business, again, primarily we are working on the payroll outsourcing. Not only payroll outsourcing, when we engage with customers, we are working on form processing and various other third-party activities as well. We have deployed some of our resources at client site to handle HRIS and these payroll-related activities. We maintain confidentiality 100%. That is very critical aspect when you're handling outsource operation globally. Not only in Sri Lanka, we are handling regional customer base as well, countries like Myanmar, Cambodia, Laos, Brunei, Sri Lanka, Bangladesh, likewise regional countries as well. I think we have potential to grow in this segment as well. We have healthy mix of local MNCs and OCs clients in this particular segment. The advantage is we are one of the outsourcing companies that use technology heavily. When customer outsource their operation to hSenid, we can give them a technology interface for them to access their data and information on the system itself. That's the biggest advantage. Otherwise, moving manual documents here and there is a cumbersome process these days. It's a technology-driven operation if you really look at it. The revenue growth point of view, it's a 62% year-on-year growth compared to last year, and 18% USD constant currency growth happening in this area as well. Overall, when you look at ARR, last three years, our CAGR is growing 18% in the last three years. What is more important is our core recurring revenue growth. Our core recurring revenue reached 48% during first half of current year. That is a notable achievement if you really look at, because this revenue mix is growing if you really look at the overall revenue environment. At the same time, we hit LKR 730 million in exit ARR at H1, so that is with the net revenue retention ratio of 100%. Annual recurring revenue growth is compared to last year, first half is 63% growth compared to last year. One of the important activities we started a couple of years back, and we speed up during current financial year with the IPO funds. One is market development with the partnership development. Right now, we are very much focused. First time in history, we got a set of regional resources. We have one in Myanmar, two in Cambodia, two in Philippines, one in Singapore, one in Australia. A set of team, set of guys in Bangladesh. Another set of resources in India, Kenya, Uganda, and stuff like that. With that, we build our partner network. These are direct resources. With direct resources, we build a partner network as well. Right now, if you look at overall, we have around 50 partners APAC region, Southeast Asia, we have around 18. South Asia, around 19 partners. Amy said as well, in Australia and New Zealand, we have three partners. MEA region, Middle East region, we have one partner, but we are in the process of building two other partnerships during the current quarter. Africa, we have 12 partners. Partner revenues are growing at the moment, if you look at even our numbers. We have launched multi-tiered partnership programs and also this is supported by our own PeoplesHR Academy. We have a fully-fledged academy. When you onboard a partner, we have to train and certify our partner resources. PeoplesHR Academy handles two areas. One is partners, partner resource development. On the other hand, customer knowledge transfer to customer and development of customer HR department resources. One critical area is partner development and partner resource onboarding and develop their technical skills as well, because some of the partners are doing the implementation work and some of the partners are doing the level 1 support as well. Simple example, we have a partner in Philippine. Philippine partner is doing the level 1 implementation activities and the level 1 support activities as well. We are only handling the level 2 implementation activities and level 2 support activities. At the same time, we are targeting white labeling our product with some of these bigger guys in the region, and we are building partnerships with Acumatica, Microsoft Partner Network in the region. Both Acumatica and Microsoft are supporting us build this partner network. They're doing introduction to some of the renowned partners in the region. We are building a relationship with them. We are working with telcos. Through telcos to reach the region. Some of the regional countries we are planning to reach through telco as well. We are expecting good revenue streams through this partner network years to come. New deal booking point of view, channel partners, the new deal booking is increasing. Even this year, we recorded 59% of new deal booking through our channel partner network. Overall, PeoplesHR Cloud revenue, new deal bookings currently is 58%, but we expect when you complete the year, it is around 65%, because last year that value was around 65%. Regionally, Sri Lanka and APAC accounted to 60%-70% of new deals driven by PeoplesHR Cloud. The on-premise primarily come from Africa, as I told you earlier. Good news is this quarter, we got the government of Uganda phase II. That's a good value, roughly around $800,000 new business for H2 this financial year. Revenue realization will happen Q3, Q4, and part of the revenue during next financial year as well. That's a notable achievement for this quarter. If you look at first half of the year key achievement point of view, we signed two referral partnerships. One with the Robi Axiata, that is Bangladesh Telecom, and Sri Lanka Telecom as well. Both Robi Axiata and Sri Lanka Telecom will introduce their SME clients as well as other clients they are working with to PeoplesHR product range. That's another very good partnership we established with both the companies, Robi Axiata as well as Sri Lanka Telecom. On the other hand, we incorporated the hSenid Bangladesh Offshore Development Center. It is 100% owned company now. The investment happened from hSenid Software Singapore (Pte) Ltd. It's 100% owned company. Now there's a development center as well. We have sales team, pre-sales team, business analyst, development team, and support activities happening from Bangladesh as well. At the same time, we won an NBQSA award as well. We are again third time consecutively Gold Award in IT-BPM medium sector this year as well. Award ceremony happens first week of December, last week. At the same time, we are establishing the information security management system in accordance with ISO/IEC 27001 certification. We have already done the certification process audits and stuff like that, waiting for the certificate to receive. At the same time, we are in the process of obtaining ISO/IEC 27017. That is setting the guideline for information security controls applicable to cloud services and infrastructure and stuff like that. At the same time, we achieved the regional recognition from G2 and SoftwareSuggest awards. These are some of the notable achievements during this part other than some of the product development activities we carried out. Government of Uganda phase II starting happens in this quarter, as we mentioned during our last press updates as well. Key risk and mitigation plan, even our chairman mentioned some of the talent-related issues, like talent retention and recruitment challenges everyone is facing at the moment with migration activities happening with tech workforce in Sri Lanka. We are working with IT sector association SLASSCOM in building larger resource base. In that case, we are also contributing as mentors and trainers to build the large workforce, not only in Colombo, outstation workforce as well. We believe that will release the pressure we have at the moment for resources. That is a common problem the whole industry is facing at the moment. At the same time, we are broadening our internship programs because then we get more people to strengthen our pipeline. Successful people can move to development and quality assurance and other areas as well. Another way of mitigating the risk is actually establishing overseas development centers. We already started that from Bangladesh, Dhaka. We believe Bangladesh, Dhaka operation also give us resources and then development competencies to manage the current situation. We are well-positioned in overall to mitigate the risk with regards to talent retention and recruitments. On the other hand, the potential slowdown in new deal bookings, obviously, there's a global recession impacting these two regions as well. If you do a comparison, like the U.S., Europe versus MEA and APAC, MEA and APAC is the least disturbed two regions. We are well-positioned in these two regions. Because of that, we expect new deals, bookings happens through these two regions as we did in Q1, Q2, and then we are expecting a good growth in Q3 and Q4 as well. Same time, we are white labeling with legacy HR players in the region. We already got engaged with one player, and that project is happening very successfully, and we are eyeing a couple of other players to do that. We work as the backend technology service provider. Frontend product companies can use PeoplesHR platform as the backend solution. That way we can strengthen our new sales strategy, especially in APAC region. On the other hand, technology challenges, obviously continuous investment into R&D. Even at the moment, we are working on some of the critical R&D activity in terms of security, in terms of product enhancement, in terms of UI enhancements and stuff like that. Some of the products will release even in Q4 2023 financial year. We are already working on some other very critical technology, bringing new technology like AI. Obviously, data area, we are working heavily on some of these areas, like bringing new technology into the product range. Some of the products are already released to the market, like enterprise dashboards, the predictive analytics are already released to the market, and then some of the even intelligent automation-related areas. We again use PeoplesHR Marketplace as a tool to offer latest HR tech solution to our client because we are not believing we have to do everything. Globally, if there's a really good solution which benefit HR department and the company, our existing client base, we are bringing them into our PeoplesHR Marketplace because we are doing seamless integration with our PeoplesHR platform. We already like employee and employer related information and can channel through these products and services to our existing clientele. With that, I will hand over to Raveen. Raveen is our head of finance, to give you a finance update. We can take other questions actually end of the presentation. Thank you. In 15-minute timeframe, I will take you through the summarized financial summary of last three years, as well as the H1 of FY 2023. Starting with the revenue, mainly in our record, PeoplesHR key product line, that is PeoplesHR On-Premise, PeoplesHR Cloud, followed by the PeoplesHR Tracking solution and the HR outsourcing. That also run through the PeoplesHR platform again. In that case, main contributor of the portfolio is PeoplesHR On-Premise and PeoplesHR Cloud. In that case, if we look at the last three years' growth. It has been reported the 25% growth rate in reporting currency basis. Again, it is in USD. USD constant currency basis, it is 17% growth. When it comes to first half of 2023, the revenue growth is 76% in LKR basis. Again, USD constant currency basis is 19%. Likewise, the PeoplesHR Cloud, again, it has recorded 25% growth last three years CAGR. With the half of the year, again, it is 101% growth has been recorded for the PeoplesHR Cloud, and constant currency basis is 23%. The PeoplesHR Tracking solution, which sells the time attendance systems and the related employee tracking kind of software, tracking kind of hardware. It is basically 16% growth rate recorded, and in constant currency basis is 12%. Altogether, core revenue-wise, we have split it around with the core revenue and non-core revenue in the identification purposes. In core revenue segment, it is 23% growth has been recorded for the last three years, which is in constant currency USD basis is 17% again. For first half of the year, LKR 578 million has been recorded only from the core revenue segment, and that is 86% growth year-on-year basis, which is again 25% growth rate in USD constant currency basis. Moving to the other category, basically, this includes shrinking down products like mobile software and the staffing business. That is due to the company's product rationalization. In that case, when it comes to the total revenue, it has the main three years CAGR is at 10% and the USD constant currency basis is 4%. When it comes to the first half of the year, LKR 704 million revenue has been reported, which is year-on-year basis, 72% increment, as well as in the constant currency basis, 13% increment shows in the first half of the year. Moving to the cost of sales line. Basically, we have categorized 5 types of cost of sales to give you more understanding what kind of cost of sales can be in the software company. Mainly on-site and third-party implementation cost, infrastructure cost, we call as hosting charges as well, and the cost of PeoplesHR Tracking solution hardware items, and the mobile solution-related cost, and the staff-related cost, which include the implementation teams, payroll, and related payments. With that, basically the incremental FY 2019 to 2022 cost has been increased only by 8%. When it comes to the year-on-year basis, FY 2023, it has been increased by 68%. This is mainly because of the incremental cost in infrastructure. Basically, high demand for the cloud environment, as well as the security features that we have enabled for the client requirement and the ISO requirement. With that, it has increased by 290% FY 2023 first half. EBITDA again, with all that, EBITDA has been decreased around like 27% to 11% during the first half FY 2023. This is mainly due to the incremental in the cost of sales, due to high infrastructure cost and the incremental cost in the security needs. As I mentioned earlier, enabling the high security into the system, we have to pay the additional premium on that basis, and it has increased the infrastructure cost, which is most of the high cost of sales again. This is also increased by staff cost, creating expenditure and all. Also, when investing in some global sales force and acquisitions and the marketing expenditure, it has been increased. With that, recurring EBITDA, that is actually when you calculate recurring EBITDA, we have excluded the exchange gain and the interest impact from this area. It has been reported at 11% with all the incremental in the cost of sales and the administration, selling and distribution expenditure. This is a summarized income statement for last three years as well as the first half of the FY 2023. Revenue-wise, as I mentioned earlier, first half, we have closed with LKR 704 million reporting currency-based revenue, which is LKR 75 million EBITDA, and that is 11%. With the exchange gain and the net interest income, it has increased to LKR 272, which closed profit margin LKR 216 million with the 37% of profit margin, and earning per share is LKR 0.94. When you talk about the cash position from FY 2018 to 2022, it has been steadily grown like LKR 100 million to LKR 800 million. The new funds came into the company around LKR 692 million. With that, we closed the year with LKR 1.4 million cash balance. When it comes to FY 2023 first half, end of first half FY 2023, out of the IPO funds, we have utilized around LKR 73 million, which is around 11% of the IPO proceeds. Those have been invested in the market development initiatives as well as the product development initiatives. Still we have unutilized funds of LKR 690 million, and that includes LKR 350 million that has to be spent on the potential acquisitions still under negotiation, then the evaluation of that part. Cash flow generation up to financial year 2022, the operation cash flow and the net cash flows were positive. FY 2023 first half end, it has been converted into negative number. That is mainly because of the funds we have spent over the product development and the market development activities that use funds from the funds that we raised from the IPO initiatives. With that, mostly the business development and product development, some of these expenditure are in an OpEx basis. In our case, we have to identify this and it is affecting to the operation cash flow directly. In that case, operation cash flow is also showing as a negative number. There are some kind of working capital changes. Due to working capital changes also, this has been impacted by the working capital changes. In that case, we had identified that issue and established a process to improve the collection process, to strengthen the collection process, to make it to the plus and give net cash flow figures. With that, yeah, I'm very happy to answer if there are any questions at the Q&A session, if there are anything to clarify on financial side. What do you need, Andrew? Thank you, Raveen. Let me quickly spend the next 10 minutes, before we move to Q&A, on what we are really prioritizing and focusing on as a company. Sampath touched a lot about the core products and what we are doing there. I'll focus more on what we are doing new in terms of new markets, new products. PeoplesHR Turbo, as Sampath mentioned, is a DIY solution focused on the SME segment. Now, as a company, hSenid Business Solutions has been working traditionally in the mid-market segment and in large enterprises. I mean, with 25 years of experience and the robustness of the code and the software that comes with it, we've been very good at dealing with large organizations, complex organizations. Herein in the SME segment lies a whole new market and opportunity. In fact, we've gone through some learnings over the last nine to 10 months. We've reconstituted the PHR Turbo team. Now we function like a startup. There are eight members. It's not a separate legal entity, but a division within the company. We are completely thinking of it as a new venture, taking off the enterprise thinking and thinking of how to cater to SMEs. This is complete digital customer acquisition, digital lead generation, to digital implementation support, remote support, all that. Compared to a normal enterprise deal, which would take three to six months, we would have a client up and running in five to seven days. That's how much we've compressed the timelines, so that we can be cost competitive to cater at very attractive price points. Right now, we've been launched in India and Sri Lanka. India is a complete inside sales operation. It's all about getting on soft phones, calling people, having lead generation campaigns on paid search, on social media. Then the SLT partnership in Sri Lanka is completely different, where SLT takes care of the complete marketing and sales process to their SME customer base and mid-market base, and we do the technological implementation itself. This is for the Sri Lankan operation. Why India? Is it a crowded space? Yes, very much. It is very crowded. If you really look at the market opportunity there, for a Sri Lankan company sitting at the doorstep of India, understanding the Asian mentality, the price sensitiveness, it's a huge opportunity, and it's an opportunity waiting at our doorstep. Morgan Stanley put out a report early November saying that the Indian economy, which is $3.5 trillion, is going to double by 2030 to $7 trillion. If you look at the large Indian companies, they are globally large, and their growth is going to be limited by global growth rates, so mid-single digit at most. This doubling of the economy is going to come mainly from the MSME segment. The MSME segment in India is known to employ almost 40%-50% of their workforce. India has a workforce of about, give or take, 450 million-500 million people, and easily we are looking at 150 million-200 million people employed in this workforce. At the heart of the doubling of GDP, which SMEs obviously would have to grow at a much faster rate than large companies which are growing at low single-digit levels, there is digital transformation that's unlocking that. If you talk about digital transformation in an organization, like Dinesh was articulating at the beginning, laying out the vision, we sit at the stepping stone, that first step in terms of digitizing how you store, retrieve, manipulate your employee records. Employee talent is the most important talent for any organization nowadays, irrespective of your business model or the sector you operate. Therefore, we feel there's a huge opportunity for PeoplesHR Turbo in India. Right now, we are maintaining very healthy CAC metrics, customer acquisition metrics for the Indian market. Our return on ad spend is about 1.1x, we are making almost 10% or 110% of the customer acquisition cost that we make to get a customer. Right now, we have about 20 clients approximately onboarded, the average deal size of $500. That's an annual deal value of about $10,000, slightly more than $10,000. For us, it's all about making mistakes fast, failing fast, learning what went wrong, fixing ourselves, and moving on and improving. With the healthy traction that we are generating in India, we feel there can be a huge opportunity for the company in the years to come. Second is PeoplesHR Marketplace. There are two ways to look at Marketplace, as in two customer segments that we cater to. One is you can look at 1,500 organizations that are using PeoplesHR, and you have 1,500 organizations where you can sell various other value-added products and services. We usually categorize it into three areas: recruitment, learning and development, and compensation. We could tap with the pool technology providers, third-party product vendors out there in Sri Lanka, in the region, globally, and offer it as a value-added service, which is integrated to our HRIS to these 1,500 companies, and then we make a revenue share in the process. Secondly, we have nearly 1.1 million users, slightly short of 1.1 million users, using our system day in and day out. What this means is that therein lies a B2C opportunity, where if we can identify the right consumer offerings with maybe payroll deductions, with the data we have subject to consent requirements and data privacy requirements, there's a huge monetization opportunity there. In fact, right now we are working on a few B2C offerings. When the time is right, when we launch them, we'll keep you apprised of our progress. This is a very critical area and a huge opportunity in terms of low-hanging fruit that we believe that we have within the company. Finally, update on M&A plans. We've been going through a lot of iterations on our strategy formulation, and as a company, we've identified tier 1 and tier 2 markets that we need to really focus on. Our approach to M&A is now being refined, where we are looking at our objectives in terms of what we can achieve in these tier 1 and tier 2 markets, what will our organic growth deliver in terms of getting to where we want to, then how we can supplement that with our M&A approaches. M&A always will not be outright acquisitions. It may be just strategic partnerships, it may be joint ventures, and it might take different transaction structures and constructs. We are essentially targeting two buckets. One is legacy companies where we can buy them for their customer base, migrate the technology, or we are looking at early-stage ventures. We all know that there's a winter coming for startups in terms of funding globally. If there are solid startups who are in hyper-growth mode, who can't convert to sustainability mode because of the lack of funding, and if they are operating in niche HR value chains, we may be interested in them as well. That's it from a kind of overall update on M&A plans point of view. With that, I'd like to open up for Q&A. Again, let me remind you, we already have two questions on the Q&A. Let me remind you that you can send your questions on the Q&A function of the platform, or you can raise your hand, and we will help you unmute yourself and pose your question in person. We have two questions coming, both on Turbo and relating to the Indian market. First is, can you comment about growth of the Turbo product and India growth? I think roughly with about approximate 20 customer numbers at about a LKR 500 annual deal, that's about a LKR 10,000 annual deal value in terms of revenue we got booked already. Traction is quite good. We are always trying to push the curve and increase the trajectory of the growth. I think we should be able to update the investment community and our shareholders in the coming quarters as to how that moves into the future. Sampath, do you want to add anything onto Turbo and India in answer to that question? I think like Nilendra mentioned, things are moving pretty fast. We are doing a growth hacking exercises for some of the markets, like India is a key market for that. We are expecting a good growth during next two quarters as well. I think the India strategy, we may not plan to acquire to strengthen our Turbo market sales, digital marketing is the main model for Indian market at the moment. If you find, since then Nilendra is working on understanding markets and potential companies for acquisition. If we find a good fitting partner in India, we can look at that as well. I suppose we answered the second question as well. Any other questions from the participants? If you want to ask a question, please feel free to click on the Raise Your Hand button, that we'll be alerted and we can allow you to unmute yourself and pose your question. I think like both Sampath, Nilendra, and Raveen mentioned, we are very keen to kind of foresee how we are actually going to grow the business outside. A lot of time is now actually spent looking at outside Sri Lanka as our main growth engine. Yeah So let- Go on. Yeah, let me facilitate that. Asanka, you may be able to speak now. Hi, Nilendra. Thank you for the call. Can you hear me? Yes, loud and clear. Yes, sure. Can you elaborate a bit more as to that increase in cost of sales in the first half? What kind of infrastructure cost actually contributed to that? What was the underlying rationale for that jump in infrastructure costs? Is it for expansion? Essentially elaborate on that, please. Sampath, do you want to. Yeah, till the numbers are on screen, I will start the discussion and then we can pass it to Ravin as well. We looked at actually our current infrastructure environment, beginning of this financial year. We realized with the current demand and global security threat increases and stuff like that too, have a more sophisticated infrastructure environment on Azure cloud. We migrated certain cloud environment from another cloud to Azure. At the same time, we increase the security aspects as well. Now if you really look at the current environment is highly secure and high available environment on cloud. We had to do a investment, but good news is actually, we don't have to do this investment in next few quarters. At least we are planning to continue the same cloud environment with enhanced features for next at least a good 2-3 years. There won't be any jump like we are expecting. Obviously, cloud infrastructure cost will increase when we add more accounts. There won't be a huge jump in next at least a good 4-6 quarters in next two financial years. Thanks, Sampath. Secondly, I have, Nilendra, another question on Indian market. Given India historically is known as a market where software developers, that industry is fairly advanced, how is the competition from peers in that market? Asanka, I think it would be incorrect to say that it is not competitive. It is very competitive. It is fiercely competitive. However, if you really look at it, there's a bunch of companies that's very visible, that's spending a lot of ad spend. If you really look at India in itself is a world. You have complete different extremes in terms of statutory compliance and procedures and policies. For us, the fact that we've been around for so long, 25 years, been in India for now more than 10 years. We are payroll compliant, we are statutory compliant across all different states in India, which some even unicorns in India who've raised LKR hundreds of millions are not to this date. They have different strategies. They would like to focus on one state, get a critical mass there, and then go and end up in Singapore, Dubai, so on, focus on overseas growth. Some of the companies will focus on U.S., Europe, or market that we are not looking at right now. Yes, it is competitive on the face of it, but if you really target a segment, I think there's a lot of opportunity. For example, right now we are focusing on service organizations, and if you really look at the data, 80% of the leads we are generating and converting are tech companies. These are tech companies wanting to use our solution, and then they are pan-Indian, cross-Indian, and we cater to all their requirements in terms of statutory compliance and then payroll compliance. Excellent. Thank you, Asanka. I think there are a few more questions that have come up on the Q&A. One question is, "Can you give examples of B2C offerings now available in the market?" Sampath, do you want to take this, or shall I take it? Yeah. Primarily, the recruitment area, there are quite interesting solutions actually available on the marketplace. I feel like your question is available solution on the marketplace, to offer from B2B to C environment. Recruitment space, there are multiple solution available. Benefit space, multiple solution available. Even we are working with couple of other solutions like blockchain-related solutions and stuff like that. This will add a lot of value to customer. Also employee well-being, health and well-being area, there are a few solutions available. We actually categorize these solution into multiple categories, and then each category, we are adding multiple solution. One area is the recruitment space, another area is benefit area, third area is health and well-being area. Likewise, different categories, we are adding multiple solution into the current marketplace. Even employee assessment tools. There are a few solution in that space as well. Also, just to add something. If in case your question was what are the B2C offerings available for HRIS kind of players in the rest of the market outside, out there's a whole heap of things. For example, even financial services. Because an HRIS player, again, provided consent is there, data privacy requirements are met with, an HRIS software would be in a ideal position to come up with a credit score than any bank would, provided you have the records of payroll for 5, 10, 15 years. You'd be in a better position to assess credit, recommend financial services, be it insurance, credit cards, loans, so on and so forth. I think the B2C kind of space, possibilities are endless. There are a few that we are working on, and we'll keep you posted as we launch them and things materialize. If I may move on to the next question. "Are Sri Lanka existing clients converting from the more sophisticated SaaS HR solution to Turbo? Will you push this strategy?" Sampath, do you want to take it? Yeah, I think some of the enterprise customers are moving to our PeoplesHR Cloud. May not to Turbo, because Turbo is a do it yourself more product. Like sophisticated planned environment, it may be a little difficult for them to move to Turbo directly. Right now the trend is actually on-premise to PeoplesHR Cloud. Yes, there's a movement. Okay. If you have any more questions, you can send it in the Q&A or raise your hand so that we can give you an opportunity to pose the question yourself. Nilendra, there's one on the chat. Yeah, there is one more question. "At the time of the IPO, hSenid told that they're planning to move their regional office to Singapore to avoid the mandatory dollar conversion here. What's the update on that? Yeah. No, maybe I can take that. I don't think we ever looked at, not because of conversion. What we mentioned was that some of our regional work will be actually invoiced from the Singapore company. I think that's what we mentioned. For example, the work that we are doing in Singapore, work we are doing in Philippines, and stuff like that Are actually done through a Singapore company. Currently, Raveen, that's correct, right? There's no mandatory conversion for us anyway now for the IT sector, right? It has been removed now. Yeah From last month only. From last month only now, mandatory conversion. There's no on that. I think we also have another question on the ESOP. We actually set up an ESOP for employees of hSenid Business Solutions, like I mentioned. It will be effective from beginning of the year. The ESOP is set up in a way that we actually grant it on a four-year vesting period, and that it will be vested one-fourth every year. Then the exercise can happen from there, three years after that. Nilendra, I'm correct, right? That's right. Yes. On that. I think for me personally, I think it's a very important part, actually, setting up an ESOP because I do really believe that employees really needs to be part of this, and also they must be part of the growth of the organization. It's very dear to me of getting this ESOP set up from an organizational standpoint and also looking at future, because we need to look at, like I said, we are very much of a long-term, looking at how hSenid Business Solutions can be a very dominant regional player looking at the tech and EMEA. There's another question regarding the Uganda phase 2. It's already, as I discussed during my presentation, we already started phase 2. There's a team now already in Kampala, Uganda, to do the initial requirements study and the phase 1 to phase 2 gap identification. It's already started. If there are any more questions, you could send it on the Q&A or raise your hand that we can unmute your mic and facilitate you to pose your question in person. We'll probably give it another minute or two to see if there are any questions. One other thing I think I like to request is, I think there were many analysts who actually was joining this call. I think it's very good if you can actually start looking at the SaaS business models and how it is. One of the objectives of our session today was to actually educate and also to have a conversation on both SaaS businesses, software service business, and how those are being valued, the valuations, because I think that's a very important and key metrics that we will be reporting on, and also the constant currency, what Milen mentioned. As an organization, we want to be one of the organizations that are very much open with everybody to talk about our plans, talk about what we are doing, and if there are things that are happening which we need to bring out, we will be very transparent and open about it and talk about. That's the kind of organization that we want to build as a listed company. There's nothing more, no, Milen? Okay. Yeah, I think there are no more questions. I think we're at the one and a half hour point, we could probably wind up if there aren't further questions. Okay. Once again, let me thank all of you for joining the call today, and I hope we managed to communicate across to you how our core revenues are growing, even on a USD constant currency basis with at very high teens, if not, in the mid-20s, if you look at first half numbers. We invite you to continue to engage with us as we go on this journey and share in the value creation of the company. From an IR point of view, we will have this deep dive session for each half year period. We will have a subset of this information disseminated through our quarterly earnings presentations, which are emailed to you and as well as uploaded onto our investor relations page at investorrelations.hsenidbiz.com. Once again, thank you very much for your engagement and participation today. We look forward to keep improving and engaging with you in the future. Thank you very much. Thank you. Thank you, everybody. Thank you. Bye-bye.