Good afternoon, ladies and gentlemen. A very warm welcome to the Aurionpro Solutions Limited Q2 And H1 FY 2024 Earnings Conference Call. From the senior management, we have with us today Mr. Ashish Rai, Vice Chairman and CEO, Mr. Vipul Parmar, Chief Financial Officer, and Mr. Ninad Kelkar, Company Secretary. Before we begin the call, I would like to mention that some of the statements made during the course of today's call may be forward-looking in nature and may involve risks and uncertainties, including those related to the future financial and operating performances, benefits and synergies of the company strategies, future opportunities, and growth of the market of the company, services and solutions. At this moment, we request all participants to mute their lines and be in listen-only mode. A Q&A session will be conducted towards the end of the opening remarks by the management. At that time, you may click the Raise Hand icon from the toolbar and unmute your line to ask the question, or you can type your questions in the chat box. Please note that this conference is being recorded. I now hand over the conference to Mr. Ashish Rai from Aurionpro Solutions. Thank you, and over to you, sir.
Thanks, Ashley. Good afternoon, everyone, and welcome to this Earnings Call for Q2 FY 2024. We are, of course, very pleased with the continued growth momentum in H1 across all the major business lines. These results and the exceptionally strong demand pipeline that we have at the moment provides us great validation of our chosen long-term strategy to create a differentiated global products and platforms player. This strong financial performance also now gives us the ability to keep stepping up our investments in both ground-up R&D as well as selective M&A, as you would have seen. While we continue to maintain our industry-leading EBITDA levels and PAT margin levels, right, at 22% and 16%, as we've said before.
The excellent performance this quarter is really the result of the hard work, disciplined execution of more than 2,000 Aurionpro team members, right? Our focus on expanding the sales channels that we've talked about in the past, it has worked very, very well for us, and we continue to expand our strategic partnerships with global fintech majors as well as other technology partners, as well as do some selective acquisitions to continue to enhance our solution footprint where that makes sense. I'm sure by now you've received the investor deck that details our performance in the quarter. Allow me to briefly focus on the key slides from the investor presentation. So moving to the quarterly financials.
Revenue for Q2 stood at INR 211 crores, which is a growth of 37% on a year-on-year basis. EBITDA stood at INR 46 crores, which is a growth of 32% year-on-year. And PAT, as you would have seen, is at INR 34 crores, which is a 36% growth on a year-on-year basis, right? PAT margin for the quarter stood at 16.1%. If I move to the half-yearly numbers, revenue for H1 is at INR 410 crores, and PAT is at INR 66 crores, which is a 37% and a 34% year-on-year growth on those numbers, right? The business performance, as I said before, I mean, it being strong gives us the ability to keep on increasing the investments that are going into R&D.
We have talked in the past about our model of using the excess to fund R&D and then keep the EBITDA margins at the levels that we are targeting, and I'm glad to report that we have kept it at those levels, at 42 and 16. If I move to the banking and fintech cover the segments briefly. The banking and fintech segment. So one of the things that we've talked about in the previous quarterly calls is banking and fintech, we had a lot of product build to do, and then we were expanding the sales channel out to get the growth, right?
So as you can see in Q2, the business really climbed up in terms of growth rates, which is a result of us executing on some of the new wins, as well as the core business getting the capacity needed to accelerate revenue. So, the banking and fintech business grew about, slightly less than 30% for the quarter. Lots of successes, especially on the lending side. Our subsidiary, Integro, had, so one of the wins that we announced is in the Philippines market, very competitive, large win with a very large bank in the Philippines. We've had a lot of success in terms of upgrading our clients, so going deep into the accounts and focusing on account mining is bringing real results.
All the other things that we announced in terms of expanding our solution footprint is acquisition of Interact DX. This product, I am very positive with Aurionpro's sales channel, especially outside of India, and how relevant the solution is to the client base that we service. I feel very, very positive about us being able to expand the product as we go into the future, right? If I cover the other major division for us, which is Technology Innovation Group. TIG also had a pretty good outing in Q2. Now, one of the things that I've talked about in the past is we wanted banking to accelerate. We wanted TIG to get more and more selective on the business that we were taking on. TIG grew along nicely year-on-year. That's about a 45% growth.
Again, success on the transit side. We had entries into Mexico that we announced. We also announced entries into Australia with a partner. So I think a fair amount of success in terms of being able to expand the transit business. One of the new offerings that we had around hybrid cloud, we had a very good success in taking hybrid cloud services to Philippines. We will increasingly use the managed cloud and managed services offerings that we have together with our software as we go into new clients, right? So I think this is a great point for us in terms of being able to expand the hybrid cloud services globally. This again, with a top auto finance firm, a very known global player's subsidiary in Philippines.
Web Werks partnership doing, again, we are expanding pretty strongly, continuing to build on our strategic partnership with Web Werks, and we continue to do a lot of work with central and state governments in terms of some of the key flagship programs that the governments have. The demand pipeline overall is exceptionally strong at the moment for pretty much all of our major bets, and we expect to continue adding new logos as we roll into the second half, right, which we'll announce as we go. Overall, we feel that we are comfortably placed to achieve the growth guidance for FY 2024, which is the 13%-35% growth guidance that we've, we've given in the past, and maintaining this growth trajectory well into the next year.
I hope this has given you a useful overview of the overall business context and our strategy and performance. I look forward to addressing any questions that you may have.
Thank you, sir. We will now begin the Q&A session. Participants are requested to raise their virtual hand or put their questions in the chat box, and we will now be taking your questions. We have the first question from Mr. Sahil Sharma. Sir, please could you unmute-
Hi.
yourself and go ahead with your question.
Can you hear me?
Yes, sir-
Yes.
We can hear you.
Congratulations for a great set of numbers, and also congratulations to Ashish, sir, for becoming the CEO of the company. Your base business, sir, I think, should grow by 30%-35% every year. We have also done a couple of acquisitions, which, you know, together probably might have closer to INR 20-25 crore of profits. With some synergies, could we expect closer to INR 220-230 crore of profit next year, profit after tax?
Sorry, Sahil, can you repeat the last part? Next... You're talking about next year?
Hello, am I audible?
Yeah. You're audible, Sahil. Are you asking about next year?
Yes, sir.
Or this year?
I was saying that... Yes, sir, FY 25.
FY 2024 is this year.
Twenty-five.
FY 2025. Okay. Yeah. So look, Sahil, so first of all, thanks for, yeah, thanks for the congratulations and all. I think, you know, the team did pretty well in the quarter. We feel... So the guidance that we give out for the full year, as I said, we have multiple users of capital, most of which we build into our strategic plans, right? So acquisitions being one of those. So to some extent, we were expecting to do some M&A. Now, M&A, you know, the philosophy that we have at Aurionpro in terms of doing M&A is we will do a deal only when we see, one, it fits an identified gap, second, it adds immediate value to the shareholders.
I mean, we are not in the business of doing M&A. We will do it only when it makes a huge sense from a value standpoint. In that sense, both these acquisitions are one, immediately accretive to the EBITDA. Second, they make a huge amount of sense from a future value standpoint in terms of how much can we expand both of these businesses, sell to the same client base that we have globally, load the products from the same channels that we have, as well as be able to expand on these in India as well, right? Where both of these products, which were the core markets for both of these products. I will not really get into the business of giving future guidance at the moment. So we typically give a guidance for the current financial year.
You know, when we walk into the end of the year, we will try and position for the next year. But by and large, I would say, incrementally these will be, I am very positive these will be extremely value-adding to the Aurionpro shareholder, right? Both in terms of growth as well as in terms of profitability that we do. Culturally, both the businesses are a great match for us, right? Overall, very bright future, will not give numbers.
Thank you so much, sir. Thank you.
Thank you, sir.
Thank you. The next question will be from Mr. Suraj Jain. Sir, could you please unmute yourself and go ahead with your question?
Hi, Ashish, and congratulations for your CEO position. I have a couple of questions, and I just want to know regarding your recent order wins, because in the presentation, I can see the order book you have around INR 810 crores. I just want to know any order wins in last two quarters? And just and I can see the increase in the goodwill. Is this because of the recent acquisitions you have made?
Yeah. Okay. So thanks for the question. Look, the coming to the goodwill, goodwill is entirely due to the Interact DX acquisition, right? So, that you would see in terms of the entries that we published on the balance sheet. On the order wins, we do publish where there are material order wins from time to time. We've had a fair amount of success on both sides of the business. So one is on the lending side of the business, we've had multiple wins that we've talked about, which allows us to really expand the business as well as a fair amount of momentum on the existing client base in terms of upgrades, et cetera.
On the transaction banking side, again, we had a number of significant upgrades with the existing clients, as well as we're getting into some very strong pipeline where we will announce, I suppose, some wins as we get into the second half of the year. Transit again had a phenomenal outing. So Transit, we since we built the sales channel out in Americas, we have gone significantly outside of the initial win in the U.S. We've expanded to Mexico. The win that we announced, it's a multiphase, it's a multiphase project, and we just announced the first phase, but we will build on it. We've announced Costa Rica, we have announced Australia.
We've also expanded into many other geographies, which again, as and when we fructify those partnerships, we will talk about it. And we announced the expansion with Web Werks as well on the data center side, right? So I think there is, in general, the demand environment seems to be very benign for the offerings that we have. We seem to see a fairly large number of deals in the market. I keep emphasizing the point that we need to be highly selective in terms of taking on new business, and not get very excited in terms of driving growth rates beyond, you know, what the enterprise can deliver. So, we will try and be selective. We will try and take on projects in a way that we can keep the delivery reputation of the enterprise.
This is a long, long journey. We don't want to get short-term greedy when we try to accelerate growth rates. We will sort of acquire just enough business to keep hitting the guidance numbers that we have and maybe go a little bit over, but not significantly. Hope that helps.
Okay. I just want to know the bifurcation of order book between the two business segment, banking, finance and the Technology Innovation Group. And I just want to know one more thing-
So bank-
Like, where do we stand? Yeah, please.
No, no. Sorry, sorry, go on.
Yeah, I just want to know regarding the business of data center right now, where we do stand in the data center business and what kind of investment you are looking into the data center business?
Okay. So the first question is straightforward. It's about 40% on banking and 60% on TIG, the order book. The second one, so look, data centers, we first of all don't intend to put too much capital to use in the business, right? So we are not in the business of building data centers of our own. We are in the business of, one, we have an extremely high-quality design team, so designing the data centers as well as program managing the builds for our partners. And that is what we will focus on, right? We, like Aurionpro always does when it gets into a business, we are building our own IP.
We are building, we are productizing a key part of data center delivery, that we will, I suppose once the R&D is finished, we will announce in the next few months. So we will continue to look at the business in terms of what can we productize that creates, one, a differentiated offering in the market. Second, improves the economics for us as well as allows us to scale well, right? So data center for us, we have one of the highest quality teams when it comes to designing and building a data center. We'll continue to do that with our strategic partners. We will probably sign on more strategic partners as we go, as well as announce a few productized offerings in the space, which allows us, which allow us to sort of drive better economics. Right? That's essentially the approach to data center business.
Yeah, and one more last question. Due to those recent acquisition as we're having inorganic growth, do we see any impact on the margins as you are... Most of the calls you have said that we are going to maintain a margin of 22%. Is this margin going to impacted or is it going to improve because of the inorganic growth?
So, again, this is something that I've said a few times in the past. The goal that we try to keep for us is do an EBITDA between 20%-22%. We believe at that level, we're probably in the top 5-7% of the industry in terms of EBITDA margins. We believe our shareholders are fairly pleased with that margin level. As the economics of the business improves, which it is improving, we will use the excess over 22 to keep increasing the R&D budget. There is a lot more ideas than capital when it comes to R&D, so we will keep stepping it up every year, right?
I think our long-term goal is to stay in the 20-22 bracket, unless, you know, sometime in the future, you know, you hit an inflection point where we say the economics are so good and the R&D needs are so less that we start stepping it up, right? That's essentially the goal....
Yeah. Thank you, Ashish. Thank you very much.
Thank you, sir.
Thank you.
The next question will be from Mr. Vivek Gautam. Please, unmute yourself and go ahead with your question. Mr. Vivek, could you please unmute yourself and go ahead with your question? I think he's having some problem. We'll take the next question from Mr. Agam. Mr. Agam, please unmute yourself and go ahead with your question.
Hi, sir. Congrats on a good set of numbers. So, quick question on the Technology Innovation Group. So, on this segment, so can you briefly talk which segment is dominating currently, and which can be the driver for next at least couple of years when we have two, three verticals?
Okay, so-
The second question on the-
Yeah.
Export geography-wise revenue breakup. So will this mix be the same, with India dominating the geography-wise revenue breakup for next at least couple of years? You can talk on that.
Yeah. Okay. Thanks, Agam. So, look, on TIG is essentially at a high level, three parts. There is the transit business, where we believe we have built out probably one of the most integrated end-to-end offering stock stacks in the space, right? From the electronic hardware, we have some software to the actual, you know, hardware use in terms of, etc. So we built up a strong end-to-end offering. This TIG as a whole is growing at about 50%, give or take. Transit side is growing faster than the 50%. The second part is the data center design and build business, which again, we've seen incredible amount of investments and investment plans going into going into pretty much the next several years in the space.
So we have one of the highest quality businesses in that space in India. We're expanding it globally. That business is again growing faster than the TIG growth rate of 50%. The third slice of TIG is the smart cities business. This is a business we've been in for some time, and it's not significantly growing at the moment, right? So that is essentially the story in TIG, three slices. The two... The growth being driven at the moment by transit and data center and smart cities business, we are a credible player in the space. It's not grown at the moment.
On the geography-
The other part about geography... Yeah, yeah. The other part about geography, look, at the moment, roughly we are 60/40. Forty global, 60 India. Our medium-term plan is to accelerate the size, the global pie, right? Which sort of explains the sales channel buildup as well as the rechanneled buildup out in U.S., in Middle East, in Southeast Asia, that we've done over the last 12 months. To be honest, the global business has been growing fairly well for us. But the challenge is the India business has been growing incredibly fast, right? So the mix, we have actually not been able to move the mix materially over the last 12 months.
I think the point at which we will really be able to move the mix is where the growth in India slows down a bit. We do not see any signs of it, honestly, given how well the economy is doing, the investments in the data center space, the investments in the transit space. So, banks as well are in pretty good health and have been investing in technology. So, I think our longer term goal would be to increase the size of the pie, the global portion of the global pie. I think it will happen when we see a little bit of slowdown in the growth rates in India. I think medium term, our goal would be to get to, you know, 60/40 in favor of the globe rather than India. In the short term, I think we'll stay where we are.
Okay. Quick, one more question. Your sale of equipment and product licenses, so that would be majorly towards tech innovation, or that will have, BFSI also? Or that will be majorly tech innovation?
It's both the sides. It's both, it's both the sides. So basically, the way to look at it is, equipment and licenses is more the one-off versus the-
Okay.
The recurring and the near recurring services, right? So, it happens on both sides of the business.
Okay. So, sale of software service, you mean, is the recurring, right?
What is happening is we sell licenses in two modes. Increasingly, we are selling subscriptions, right? That would not show up in the one-off license. But we do sell enterprise licenses as well on the banking side. That will show up in the equipment and license sales.
Okay, okay. So how much portion can we-
So it's more of one-off-
Recurring.
One-off versus non one-off.
Okay. How much portion can we assume? We have done what, this quarter, INR 277, INR 133. How much out of this would be recurring?
... So recurring and near recurring, which is, you know, the ongoing services, et cetera, which get, that's almost close to 80% of that mix, right? Recurring is in the order of about 55%-60%, 55 or thereabouts.
Okay.
Thank you, sir. Could we request you to come back into the queue? We'll move... Sir, we have a few questions in the chat box. I'll just read one of them. The question is from Mr. Maruti Nandan. There is a considerable increase in the employee cost compared to the previous quarter, from INR 69 crore to INR 80 crore. What is, what's the reason for the same?
Okay, good question. So, look, I think, one, what is happening is just the organic growth in the numbers. So we have added a fair amount of capacity. One, you know, so we, we've been adding for some time, right? So I think what really happened on employee expenses is, one, to just to support the growth, the employee base was increasing. Second, in the last quarter, we have invested quite materially in terms of building out future capabilities. These are sort of R&D expenses that are not, at the moment, supported by revenue, but will be very soon as you go a couple of quarters out. We opened up a new dev center in Pune, as we announced. We've got increasing presence in a few other places as well.
So, we've been adding on, the R&D, which probably doesn't so much translate to revenue, but we believe we have the bandwidth to add that. So in terms of doing a new product build that we will announce soon. The other part of increasing the employee expenses is the addition of some ESOP costs. So we did announce in the past that board had approved a creation of a ESOP scheme, right? And we are beginning to see the cost of that coming in again in the quarter, right? So that's about INR 4 crore in the last quarter.
So as you can see, the point that I always make, right, we believe the economics of the business will keep on improving as we scale. INR 4 crore of ESOPs is a fairly material amount, which we were not. You know, we would have affected the EBITDA margins in the past, but now it's sort of on top of the 22% margin that we delivered, right? So I think employee expenses have gone up. The revenue related one is fairly linear. The other two components are, you know, not at the moment reflected in revenue, but, you know, you can understand what they are.
Thank you, sir. We'll take the next question from-
Is that clear? Actually, maybe let me just get a clarification. Is that clear enough?
From chat box. From chat box.
Oh, it was from chat box. Okay, fine. Okay, let's carry on.
Yeah. So the next question is came from Mr. Dashil. Sir, please unmute yourself and go ahead with your question.
Hi, hope I'm audible.
Hi, Dashil.
Hi, hi, hi, hi.
Yes, Dashil, you are on-
Congratulations, sir, on a great set of results. So just wanted to ask our new acquisitions how much contribution would they have had in this quarter? In terms of-
How much what?
Revenue contribution.
Oh, contribution to the quarter.
Contribution.
No, so there is zero contribution to Q2. Yeah, there is zero contribution to Q2.
Okay.
I think the way to look at the acquisitions is, after we sign the acquisition, it takes us some time to close the acquisition before it starts reflecting up in the numbers. For the Interact DX acquisition, we will see the impact in Q3. For the OmniFin acquisition, you'll see a partial impact in Q3, depending on when we close, and the full impact in Q4.
Okay. Okay, okay, sir. So any ballpark on how much would they improve our bottom line by? Or would that, could you just give us a rough range of what would the current run rate be of per quarter?
You know, I think both the businesses are operating at EBITDA levels, which are higher than Aurionpro's overall EBITDA level. I think that's, that's something we can do. We've not disclosed specific numbers, so, I don't think that makes sense. So I believe as the revenues on those businesses scale, we will be able to hold or improve the enterprise EBITDA margin. So we will hold them to the same framework, eventually that we use for rest of the Aurionpro, which is where we say, bring the EBITDA to 22% and aggressively invest in R&D to expand the product line. Right? So they, they're both at higher than 22% at the moment. In terms of cost structures, we anticipate them to operate at pretty much the same structure they are at right now. There won't be really major differences other than the Aurionpro model of investing a little bit more aggressively in R&D. I don't think there'll be much impact on the overall cost structure of these two businesses.
Okay, sir. So, sir, our aim of 30% growth would be organic and whatever inorganic would be added, right? There's that one clarification. And, how much current spend would we be doing on R&D, over the full year, maybe on a per quarter, whatever you could, you know, just help me? And any new other acquisitions are there-
So the first part, I got. The second-
Yeah, yeah, yeah. Sorry. I'll just,
So, so-
Just bear.
Yeah, look, okay, sorry. So let me just recap the question, right. So the first part was about what is the contribution in terms of profit?... that we can. Sorry, can you just repeat that?
Yeah. So I was just asking, sir, the currency, like, our, our 30%-35% growth that we're targeting, that would be our organic and Interact DX , BSF Omni will add on to it, so we, our growth rate total could be higher than 30%. That was my first question.
Yes.
Second question, how much R&D spend would be maybe we doing currently? Like, what would be our average quarterly number in terms of absolute, absolute number? And are there any other M&A in plan that, you know, might be coming in the next one or two quarters? Yeah. Thank you very much.
Okay. Okay, cool. So good set of questions. Profit, how much? I think, you know, with the range that we've given, for the year is 30%-35%, right? So the band is just so wide that I don't think, you know, the band is wider than the amount of profit that these two entities can contribute, within this year, especially given the limited time period that we have overall, right? So a 5% on our overall scale, depending on how you're calculating, is probably a INR 40-45 crore number. Right? So, I don't think... I think what will happen is, with these acquisitions, the ability of the enterprise to deliver to the high end of the range improves quite significantly.
And beyond that, you know, if we were to really give out fresh guidance, we typically wait till Q3 results to revise any guidance for the full year, right? So we'll stick to the guidance. I think the ability to deliver to the high end of the guidance has improved because of these acquisitions. I will really not say anything more than that on the profits. R&D, we are now clocking about an average of about eight odd percent in terms of the top line, in terms of investing in R&D. It does vary quarter to quarter, so Q2, it did go up quite a bit because of some new product developments that we saw an opportunity to do and then we set out to do.
Typically for the full year, you can expect it to be 7.5%-8% at the moment. Next year, I think we will step it up again. The M&A plans. So this is what is happening on M&A. I will, of course, not talk about any specific M&A opportunities at all. That's not the way things work. But this is how we are looking at M&A. I think what has happened is, one, we, as we get financially healthy, we constantly get a choice to either build against the gaps that we see in our portfolio. You know, so you see an opportunity in the market, you see the solution footprint that you need to tackle that opportunity, and then you've got two choices.
You say, "I build against that gap," or, "I go and acquire someone who's already done that investment." In cases, we will find that there are sort of product outfits out there who have built out products which are good, at least to serve as a base for us to finish our product footprint. So we will constantly be looking at opportunities there. When it comes to deal making, we are very, very stringent in terms of what value we will buy at. We so we are not out there shopping for deals. I think what has happened over the last year is we've become a very, very attractive shop for especially founder-led tech companies to come in and partner with us because people...
We are now better known in the industry. People see the investments we made in the sales channel outside. They see the template that we use to run the business. Overall, it's modeled on sort of best practices we've seen elsewhere with most of the global software majors, right? And people see value in that, how we build our products, how we manage our products, how we sell them, how we partner with the clients, right? So increasingly, we've become an attractive partner for some of the younger tech companies to come in and say, "Okay, why don't we pursue the rest of our journey together with Aurionpro instead of outside?" Right? So we will keep getting approached. When we get approached, and it fits with our strategic framework, we will do the acquisition.
Otherwise, you know, we don't have much FOMO when it comes to deal making, you know, we're doing quite well.
Oh, okay. Okay, thank you so much, sir.
Thank you, Dashil.
I'll join you.
Yeah, thanks. Request participants to please limit themselves to two questions. Sir, next question will be taken from Mr. Mitul Mehta. Sir, please unmute yourself and go ahead with your question. Mr. Mitul, please unmute yourself and go ahead with your question. Okay, we move on to the next question.
Yeah, yeah. No, no. Yeah, can you hear me?
Yeah, got it. Yeah, sir, we can hear you.
Yeah.
Please go ahead.
Yeah. Hi, Ashish, good evening to you, and congratulations on a good set of numbers. Can you hear me, sir?
Hi, Mitul.
Yeah.
Yes.
Can you hear me?
Yes.
Yes. Good. Hi. So now, Ashish, you know, one is a slightly medium term, and the other question is, of course, a little more longer term, let's say over three years, you know. You know, if you can help us to gauge the... We all know that the enterprise software market globally is a fairly large market. It's a hugely scalable model... larger MNCs have demonstrated the scale in that business. We are currently at about INR 450 crores. Our focus is right now more Asia Pacific. You know, you've always gone on record and said that, you know, eventually we want to break into U.S. We are building sales channel, we are, you know, investing there, you know, adding people on the sales and marketing. So can you, you know, give us some direction on that as to when we finally get there? That is one. Second, between the two business, which is more scalable, according to you? I mean, the TIG or the enterprise software business.
Okay. Hi. Thanks, Mitul. Great question. So, look, when do we finally get there? We are already pretty much there. It's a question of scaling the business. So you are right. I think this is a vast ocean when it comes to enterprise software to financial institutions, right? I mean, banking, insurance, non-banking lenders are some of the biggest spenders when it comes to technology. We have... And you are totally right, we are largely Asia Pacific, or rather largely core Asia, and Middle East in terms of our existing footprint. First, I believe those in core Asia, we will scale the business quite rapidly. That is number one. Second, we build the channel out.
We start doing, especially in terms of our payments product. We have started; we made one sale a couple of quarters back. We will sort of improve upon it. Banking on the lending side, collateral as well as limits, I am fairly positive we will start seeing logos come over the next four quarters. Right? So we are in fairly advanced discussions. This is the problem with this business: enterprise software is very long sales cycle. So typically, sales cycle is 18 months or so. We are targeting large banks. Just by nature of our model, we can't go after the smaller banks at the moment, right? So that sort of moves us towards the high end of the range in terms of the sales cycle. Right?
So we are in advanced discussions. We will close it. The second thing is we are also a prominent partner to multiple global fintech majors in terms of licensing our technology to them. We announced Finastra. They are themselves looking at our solution set and taking it global. We are in sort of discussions with other majors where we can't announce the names yet. Right? So it's not even discussions, we are, you know, sort of agreed with other majors. We can't announce the names. Right? So you will see the channel sort of go out, both in terms of these partners distributing our technology as well as our direct channel distributing technology. We started on this whole thing seriously, honestly, about, I would say, seven or eight months back. Right?
I would say a reasonable expectation should be start seeing the first results in 18 months. I mean, you could get lucky and see it in 12, but a reasonable expectation should be 18, right? So in the next four quarters, you should see it. So that's essentially the long, sort of, winded way of getting to when will we get there, right? The second part, sorry, on TIG versus banking. Look, the way we chose our segments, Mitul, right, it was. I've been sort of quite clear about this earlier. We only chose segments we believe have very, very long demand runways, have a very large target market, and we have a shot at global leadership, right?
I'm not saying it's the global leadership happens next year, but we have a shot at it over a medium to long term, right? So, you know, in that context, both are just such large oceans that I don't think it really matters that we start picking favorites. Right? I think we will stay committed to scaling both the businesses at the clip that they can support. The more important thing is to scale at a level that you can have the stamina to run for, you know, five, 10 years. Not scale rapidly for four quarters and then start stumbling on delivery reputation. So for us, the question really is how fast or slow should we be scaling the businesses?
The fact that you can scale both the businesses, as well as some of the India businesses, I don't think we have any doubts about it.
No, sir, you know-
I mean, hopefully that-
Yeah, I'm sorry if I'm a little repetitive, but, you know,
Yeah
... bank, banking, still, you know, we are sort of at INR 450, and obviously we are growing. Our base is small. As we grow bigger, the base would increase, and therefore we have to maintain growth on that higher base. You know-
Mm-hmm.
So therefore, I ask you that, obviously, you did mention that we are still, like, 11 months away after we sort of break into US. So if you can just talk about some of the deals that, that happen typically in those markets. I mean, how big are those deals versus the deals that we do in the Asia Pacific? And so, you know, you get some color of, you know, the intensity of the business that we could get in the developed countries.
Okay. So two points. Point number one, Asia is our core market. We don't need to be outside of Asia, sell a single cent outside of Asia to keep growing at 25%-30%. The market is large enough for us to, for a fairly, sort of long period of time, continue to support growth rates of 25%-30%, just from Asia. We, we've not needed to sell outside to grow at that level, so we won't go to U.S. and Europe to support a 25%-30% growth rate. So that is number one. Number two, deal sizes typically in U.S. and Europe are larger for two reasons. One is, a lot of our pricing is based on the size of the book and the size of the bank, right?
The bank, there just are larger banks in Europe and U.S., so that increases the deal sizes. Second is the core realization, even on the same book sizes, is probably 50% higher, right, in terms of license yield that you get. And I think PS rates and all are also better, but then PS rates come with an increase in cost as well, right? So I would not attach too much importance to it. So overall, I would say deal sizes could be anywhere between 50% and 100% bigger in U.S. and Europe, or maybe even slightly more than that if it was an exceptionally large bank. And we don't need to do those deals to keep growing at 25-30. I think Asia is large enough.
Honestly, we are probably CLO, probably the number one player in Asia, but we are still hugely under-penetrated, right? So we can expand into a lot of spaces where we're not there right now, right? Now, with OmniFin and Interact DX coming in, which are, again, we've not been selling it in Asia that heavily, we can step up the engines in Asia to deliver even stronger growth on those products, because they can go to a much wider segment than our bigger, you know, CLO and collateral products, right? So I think there is just a lot of growth runway left in our core markets, and we will continue delivering it. And then U.S. and Europe, you know, over time will start delivering, but taking time there is not really a big problem.
Is it possible for you to just break up the Asia PAC market, where we are presently in our core market, in terms of size, versus—I mean, with and, of course, the competitive landscape?
Look, we are prominent in Singapore. [crosstalk] We are- Ballpark breakup in terms of which country, how much percentage? I think that would be very hard to do, right?
No, in terms of overall market size that we...
Okay.
I mean, overall market size.
Overall market size?
Okay.
Yeah, look, if I look at some of the larger global players, right, including, some of the businesses that I have myself run in the past, banking software businesses, I mean, you've got businesses running $500 million-$1 billion software businesses just in APAC, Middle East and Africa, right? So, the markets are large enough. Now, of course, US and Europe are much larger markets, but the markets are large enough. For us, we are quite prominent in Singapore. We're quite prominent in Malaysia. We are reasonably good sized in Indonesia, Thailand, Vietnam. We are increasingly much more stronger in Philippines. Middle East, again, we've got an expanding business, although we are admittedly still quite thin there. And we just started our operations in Africa, which will start bearing fruit at some point in time, right?
So these are all fairly large markets. I'm not quite sure what the sort of motivation-
Yes, I know.
to your question is, but if the
Absolutely.
If the question is... [crosstalk] Sorry? No, no. Are you talking on the phone or... Yeah, okay. So look, I'm not quite sure what the motivation of the question is, but if the question is: Is the demand in Asia large enough to grow for the next two, three, four years? I think the answer is a vehement yes. Of course, the global market is a lot bigger, and we will slowly sort of increase our share there.
Thank you, sir. So we have one more question from the chat box. The question is from Mr. Ganesh Shetty: Can you please throw light on the OmniFin integration and cross-sell opportunities?
So, thanks, Ganesh. So OmniFin is essentially a full front-to-back lending system. We've so far been prominent on the CLO, the corporate loan origination side. We've not had a material offering, first on the LMS side, so which is at the back end. Second, to the retail and SME and the digital lenders, right? Which is where OmniFin complements our stack quite well. OmniFin is very successful in India. It has an extremely high quality team when it comes to, you know, people who build the products. Abhijit, who's been running the business all this while. And culturally, they are a straight-on fit with the engineering-led culture that Aurionpro has as well, right? So they fit in beautifully with us.
We will be able to, one, take OmniFin solutions to both banks as well as non-bank lenders in every one of our markets. We've not yet closed the acquisition. We will, but, you know, we started looking at where the opportunities are, and we are highly encouraged with what we see in Southeast Asia. We are highly encouraged with what we see in Middle East, and we are very, very encouraged with what we are seeing in Africa. So we will be able to take the same solution to multiple markets. Of course, there is probably a, depending on the market you're talking about, there is a little bit of fine-tuning needed to, to be, you know, completely fit for purpose, but it's not really a major thing to do, right?
Second part, we will be able to probably expand the relationship with the 45 existing clients that OmniFin has with other Aurionpro offerings that can go to those same clients, right? So, in terms of synergies, I think there is fairly significant, both in terms of being able to take OmniFin to other larger markets, as well as being able to capitalize on the current base that exists. We've not quantified this. But this would be, this would be fairly substantial. It will become a part of our organic growth plans next year. And we were planning to be a full spectrum lending shop anyways, right? So OmniFin sort of helps us gain many years in terms of the product build process, by really shortening what could have been 3-4 years of product build to, you know, two months, right?
I think that, that is an enormous value add to the business.
Okay, so we'll take the next question from Mr. Vivek Gautam. Sir, please unmute yourself and go ahead with your question. Mr. Vivek, please unmute yourself. Okay, so we move on to the next participant. Mr. Maruti Nandan, please unmute yourself and go ahead with your question. Mr. Maruti Nandan, please unmute yourself. So we move on to Mr. Rajiv. Mr. Rajiv, please unmute yourself and go ahead with your question.
Hi, thanks for the detailed investor presentation. I have a couple of questions. So, what about the Murex upgrades? Do we have any Murex upgrades lined up for this year and next year? And what will be the revenue generation from that, if so? Thank you.
Okay, thanks, Rajiv. So look, I think upgrades is too fine a slice. What I would say is Murex implementations in general, I think our relationship with Murex is very, very strong and is expanding quite nicely overall. So we will certainly get involved... And our, you know, where we get involved in the value chain is also a lot higher than it was earlier. So earlier, you know, we would pick up upgrade projects. Now, we are getting involved in fresh implementations as well. So I would say we would- we should be expecting to do multiple new, fresh implementations in addition to some upgrades, as well as the run-the-bank sort of teams that we have in various places, right?
I think Murex business would expand. I would expect over the next 4-6 quarters quite significantly.
Do we have any end of the vendor, like, the upgrades are to be done probably by this year or next year, which Murex is pushing to?
Look, there is a lot... So Murex is a very large client base, right? So there is always a lot of conversations going on. Till we sign something, I can't talk about it, but we do have a fairly large number of conversations going on.
Okay. Thank you. Thanks, and all the best.
Thank you, sir.
Thank you.
Sir, we take the last question from the chat box. Profitability of OmniFin and R&D spend.
Okay. Is that a question?
Yeah, it's a question.
Yeah. What is the profitability of OmniFin and R&D spend?
Okay, yeah.
Okay. So I think I covered this earlier. So, OmniFin at the moment, at EBITDA level is, has a profitability slightly higher than, our enterprise, profitability. So overall, as we integrate the business, I feel very good about keeping, at the enterprise, profitability level, which is EBITDA at 22, and maybe slightly better than that. What was the second part of the question?
R&D. R&D.
Our R&D spend, I think we will basically. So look, okay. Let me answer it this way. OmniFin has a sensational team, in terms of the team that has built out this product and has been implementing it clients. And this is a group of people who are more or less the best in the business as far as lending teams in India go, right? I mean, like, with no qualifications, right? So, I have enormous respect for the current model that exists in OmniFin in terms of continuing the product builds in R&D. To the extent that it makes sense to sort of harmonize that with the R&D approach that Aurionpro has, you know, in terms of, sort of, routing the excess out into more product builds and sort of having a continuous roadmap, we will harmonize the two.
But honestly, I mean, they've got a pretty sensational model, even now.
Thank you, sir. That was the last question for the day. If you would like to give some closing remarks.
Yeah. So, thank you everyone for taking the time out of your days to join the earnings call. We continued what we said we will continue to do, so there is no real news there. We will continue to, you know, keep expanding the R&D, you know, both M&As as well as fresh ground-up R&D that we said, right? And you will see more and more product releases coming out over the next couple of quarters and well into the next year. We feel very good about holding on to the guidance number of 30%-35% that we are at right now.
If I know there is some interest in whether that goes up because of the acquisitions, and we will come out and probably cover that bit at the end of Q3. Till that time, goodbye, and I hope to see you again next quarter. Thank you.
Thank you, sir. Thank you everyone for joining the earnings call. You may now drop off the lines.