Q3 24/25

Jan 30, 2025

Summary

Q3 revenue rose 15.2% YoY and EBIT margin improved to 10.5%. Management expects a strong Q4 and FY26 scale-up from TNQ Tech, while AI deal conversion and U.S. policy remain uncertainties.

Ladies and gentlemen, good day and welcome to Datamatics Global Services Limited Q3 and FY 2025 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star + Zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Pratik Jagtap from E&Y Investor Relations. Thank you, and over to you, sir. Thank you, Mano. Good afternoon to all the participants in the call today. Welcome to the Q3 FY 2025 earnings call of Datamatics Global Services Limited. The results and presentation have been already mailed to you, and it is also available on the website of Datamatics. In case anyone hasn't received a copy of press release or presentation, please do write to us, and we will be happy to send you all. To take us through the results today and to answer your questions, we have with us the top management of company represented by Rahul Kanodia, Vice Chairman and CEO, Ankush Akar, SVP and Chief Financial Officer, Mitul Mehta, EVP and Chief Marketing Officer. Rahul will start the call with a brief overview of the quarter on business, which will be then followed by Ankush, who will take us through the financials. We will then open the floor for Q&A session. I would like to remind you that anything that is said on this call, which gives any outlook for the future or which can be construed as a forward-looking statement, must be viewed in conjunction with the risks and uncertainties that we face. These risks and uncertainties are included, but not limited to, what we have mentioned in the prospectus filed with SEBI and subsequent annual reports, which you can find on our website. With that said, I now hand over the call to Rahul sir. Over to you, Rahul sir. Thanks, Pratik, and a very warm welcome and wishing everyone a very happy new year. Thank you all for joining our Quarter 3 FY 2025 earnings call. I will briefly discuss some of the key quarterly performance highlights while Ankush will provide an update to you on the financials. After which we will open the floor for a Q&A session. Our total revenues for quarter 3 stood at INR 425.5 crores, giving us a revenue growth of 15.2% on a year-on-year basis, and a 4.6% on a quarter-on-quarter basis. Our revenue growth has been healthy across Digital Technologies, Operations, and Experiences. Our EBIT for Q3 stood at INR 44.7 crores, and we improved our EBIT margin by 84 basis points to 10.5%, driven by a focus on cost optimization and disciplined execution. Artificial intelligence continues to be a strategic priority for us. Agentic AI is gaining popularity. We have started building innovative and customized Agentic AI solutions for our customers and have also incorporated this technology into our platforms, FINATO and TruBot. Last week we were at Davos during the World Economic Forum and engaged with global industry leaders to share our AI vision. The sentiment across the industry is highly optimistic about the potential of AI and with a strong focus on achieving impactful outcomes. Our business continues to progress according to plan. This quarter, we expanded our client portfolio by adding 12 new customers, including one AFC customer. We have expanded our operations in the Philippines with the inauguration of our fourth delivery center in Cebu City. Our integration of Dextara is going smoothly. We have successfully cross-sold Salesforce services into five of our customers, and we acquired TNQ Tech on 31st of December 2024. TNQ Tech manages digital content for scientific journals. TNQ Tech brings along a modern technology platform and several patents in content enrichment. Besides, it increases our presence in the European market. With this acquisition, we will serve nine of the 10 largest publishers in the world, solidifying our position as market leaders in the Digital Experiences space. I take this opportunity to thank all our stakeholders, including employees, customers, and shareholders, for being an integral part of our journey. With that, I will now hand over the call to our CFO, Ankush Akar. Ankush, over to you. Thank you, Rahul. Welcome, everyone, and thank you for joining us in quarter 3 FY 2025 earnings call. Let me start with the financial performance for quarter 3 FY 2025. Our quarter 3 FY 2025 revenue stood at INR 425.5 crore, reflecting a growth of 4.6% on quarter-on-quarter basis and 15.2% on year-on-year basis. Our cost optimization efforts and disciplined execution helped us improve our EBITDA. Our EBITDA for the quarter stood at INR 54.6 crore, which grew by 11.9% on quarter-on-quarter basis. Our EBITDA margin for the quarter stood at 12.8%. Our EBIT for the quarter stood at INR 44.7 crore, which grew by 13.7% on quarter-on-quarter basis. Our EBIT margin for the quarter stood at 10.5%. Our PAT after NCI stood at INR 74.3 crore. Our PAT margin for the quarter was 17%. Our tax rate for the quarter was 15.3%, compared to 19.9% in the last quarter. Our EPS for the quarter was at INR 12.58 per share, compared to INR 7.18 per share in the last quarter. Exceptional items during the quarter represent exchange gains arising from the buyback of equity share capital held by an overseas subsidiary and expenses incurred on the acquisition of TNQ Tech. We have acquired 80% shareholding of TNQ Tech on December 31, 2024, and the remaining 20% will be acquired by July 31, 2026. Current quarter includes revenue and margin only for one day. Full impact of the acquisition on our consolidated revenue and margin will reflect from the next quarter. In terms of segment, Digital Technologies contribution to total revenue was at 41%, Digital Operations contribution at 42%, and Digital Experiences contribution at 17%. We continue to maintain a healthy balance sheet. As on December 31, 2024, our cash and investments stood at INR 512 crore and debt stood at INR 186 crore, resulting in net cash and investments of INR 326 crore. This is after payment for the acquisition of TNQ Tech. Our bill DSO was at 58 days as on December 31, 2024, as compared to 58 days as of September 2024. In terms of geographical footprint, U.S.A. remains our largest geography with 53% of our business coming from here, followed by India at 23%, and rest of the world including U.K. and Europe at 24%. Our client concentration remains healthy with top five, 10, and 20 clients contributing to 22%, 36%, and 50% respectively. With this, I will now pass on the call to operator to open the floor for questions. Thank you for your patience and continued interest in Datamatics. Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. A reminder to all participants, you may press star and one to ask a question. The first question is from the line of Hemant Shah from Seven Islands PMS. Please go ahead. Yeah. Thank you for the opportunity. Am I audible? Yes, Hemant. Okay. Just one question. What are the expenses with respect to the acquisition of TNQ Tech for this quarter which we have provided? We had an intermediary firm that helped us strike this deal and the fees paid to that firm are the expenses that you are referring to. Okay. What would be the quantum, sir? How much did we pay them? It's INR 5 crore. Okay. I'm just trying to assess the one-off expense. That is one. Second, with respect to this TNQ now we have acquired, through Lumina Datamatics, right? That's correct. If you can just provide some perspective with respect to market reach, strategic positioning, with respect to the integration of these two companies going forward. Secondly, this is absolutely a mirror company like MPS what we see, only the domain is different. I think you are more focusing more on the science publications. MPS is I think is into almost every publication, right? If you can just throw some light with respect to the integration and how do we differentiate ourselves with MPS? Sure. As far as the integration is concerned, we acquired this on 31st of December, so that is not even one month. Today we are on 30th of January, so it is just about a month old. So far we have had good engagements with their leadership team, but the integration process is now beginning. As such, there has not been too much integration in the last 30 days. But yes, it is beginning to do that. Fundamentally, so far it is going smooth. In terms of the strategic advantage to us, one is by virtue of this acquisition we now service nine out of the top 10 publishers worldwide. So that consolidates our position as a dominant player in this space. TNQ has a very good technology platform which augments our platform as well, so it expands the reach and the coverage that our technology basically provide and then we can take the same thing to our customers. The third is that they have several patents with them and that gives us an edge as we take this platform and the patents to our customer base. Finally, of course, being part of Datamatics there is a lot of technology that we have within Datamatics and we will certainly bring all of that to the table in the customer base that TNQ has. So that will give TNQ a significant advantage as well. So that is in a nutshell. Of course, finally it gives us a larger presence in Europe. Our presence in Europe was not as deep in this space, but with this acquisition we have a much bigger footprint in the European market. Okay. Wonderful. How do we differentiate ourselves with MPS, sir? Or we are in the absolutely similar line of business, right? Well, it is similar, but I think what does differentiate us is the technology that we bring to the table because Datamatics is a very strong technology house and it is the technology that we bring to the table that makes a difference. Okay. But that means going forward, we will be having better margins for this Lumina plus TNQ put together? They have come with a strong technology platform already, so they have very healthy margins. I think going forward, what will happen is we will be able to provide more value-added services. So it is more from a value-add point of view rather than squeezing margins, because they are a very efficiently run company already. Okay. Wonderful. Secondly, if I may ask, I think the total revenue combined entities, Lumina plus TNQ, I think last year it is almost INR 700 crore. Approximately. Yeah. The profitability is, I think, 127 crores, right? I do not have that last year's. Last year's, TNQ was not part of our operation. But they are very profitable. I think that segment is running at about 24%, 25%. 24%, 25% EBITDA. Okay. Correct. So, where do we see, Rahul Kanodia, the Lumina plus TNQ going forward for the next three years? This is where we expect definitely a good growth. Yeah. Personally, we feel that cross synergies and cross-selling opportunities are really there to unlock true potential of the combined entity. Yeah. I think we are in a good wicket given that we are consolidating our position as a dominant player in that space. This is a very sticky business, so I think it will maintain stability and stickiness with all the large customers. In fact, all our customers were very positive with this move, so it only reinforces our position with all of them. I think we are well-placed. Okay. Fair enough. All right. I will come back in the queue. Thank you. Thank you. Before we move on to the next question, a reminder to all the participants in the conference, you may press star and 1 to ask any questions. The next question is from the line of Harsh Chaurasia from Vallum Capital. Please go ahead. Hello, am I audible? Yes. Yeah. Good afternoon, sir. I had one question update. I think in Q3 FY 2023, we announced a largest TCV win, which was around $85 million, as I remember. Out of that $85 million, we mentioned that there are three large wins, which are accounts of $70 million. You mentioned the execution cycle for around 3-5 years and the rest $15 million would be coming in 1-2 years. There was one more deal in the same financial year, which was the Delhi-Meerut Metro. Since, if I take the FY 2023 numbers and I just annualize the FY 2025 numbers, the incremental revenue addition is just INR 217 crores. If you can just give me an update or throw some light on that. Is that deal running late or what is happening on that part? If you can just give me an update. Sorry, there's a lot of background noise, so I could not hear your question clearly. Okay. Sorry. What I wanted to know Am I audible? You are audible, but there is a lot of noise in the background. Your voice is getting overwritten by Echos and echos and noises. Okay. This is better. Okay. Sorry for that. Should I repeat my question again or you just missed in between only? I picked up snippets of it, but if you can repeat that will be helpful. Yeah. Basically what I wanted to understand is between Q3 FY 2023, we announced an $85 million TCV win, which accounted for $70 million large deals, which was about to be executed in 3-5 years, and the rest $15 million was about to be executed in 1-2 years. I think in FY 2023 only, we also had Delhi-Meerut Metro station deal. The deal tenure was for 3-5 years. What I wanted to understand is since then till date, so it is almost around 6-7 quarters, but the incremental revenue is INR 217 crores if I annualize your FY 2025 number. I wanted to know what is the update on that deal. Is it running late or what is happening on that side? Yeah. I am not specifically recollecting the numbers that you are sharing, but nevertheless, there is one large deal that I remember we signed, and at a very early stage, we had some challenges on payment terms with the customer. In fact, we were the ones who actually terminated that contract. That was, I think, in November 2023, if I am not mistaken. $35 million thereabout. There was a $35 million deal, which we did sign, and then we exited that deal consciously because of the payment issues that we were having. That was one. The Delhi-Meerut project is going smooth. We continue to service them, and it is very much on track and we are going quite well actually. Along with the Delhi Metro, we had also signed around the same time Kolkata Metro, RVNL that is, and that is also going smooth. I wanted to know, just one more question on, just to understand Datamatics more better. If you can just give me a broad bifurcation between your total revenue mix. How much would be the discretionary and how much would be the legacy? Sorry? And legacy. Discretionary. I don't- I'll just tell. Basically, discretionary is the deals which are like Salesforce, we are working with hyperscaler or digital transformation deals and legacy, which are like automation, like the old publishing type of that. The overall bifurcation between those. I would not have that data because we do not break it up that way. Okay. But mostly, most of our revenues are coming from Digital Technologies or not discretionary, I am just using the words which we typically use, is Digital Technologies and then the legacy systems. But most of our revenues now are from the digital space. So we are now no longer bifurcating between what is my digital technology share. Okay Digital Technology is the predominant share of revenue. Okay. Thank you very much, sir. Thank you. Thank you. A reminder to all participants, you may press star and one to ask questions. I repeat, you may press star and one to ask a question. The next question is from the line of Grishma Shah from Envision Capital. Please go ahead. Good afternoon to the management team, and thanks for taking my question. Curious to know if you could highlight how Dextara has done. I believe it would now be more than 12 months that Dextara is part of Datamatics. Over the last 12 months, how has Dextara performed? And particularly in this quarter, what has been the growth for Dextara? Yeah. Dextara has been with us for nine months now, three quarters. We've been able to cross-sell, as I mentioned in my address, about five new customers of Datamatics we've been able to cross-sell Salesforce services. By and large, the company remains stable. Our sales cycle on an average is about nine to 12 months. It takes that long to really generate business. I think we are well-placed. The team is stable. We've had no attrition challenges there whatsoever. I think we are well-placed, but it's been stable. The growth has not been as aggressive as we thought it would be, and that's important to call out. But we are not having any major problems with that. Is Dextara on path to do 30%-40% kind of growth rates which you used to do before we did the acquisition? Is it on that stellar growth run rate, or we will take some more time as we are integrating? No. We will take some more time. The integration exercise is fairly almost done. Another 2, 3 months and it will be over. The integration has gone on very smoothly. They have not clocked that 30% growth that we were expecting. But I think next year should be a better year because the pipeline is looking quite strong. Okay. The other question is on the revenue growth. While the revenue growth has been decent this quarter, given that the first 2 quarters of this year we have struggled with our growth rates. But margins have not inched up as anticipated. What is the outlook on that? Also some color as to how the core business is going to shape up over the next 12 months, given that we are in the beginning of the year. How are the conversations happening? If you could provide some color. The margins have improved a little bit, if you notice. Yes. Yeah. Having said that, we always have a spike in Q4. You would know that from our previous calls. Then for that, we ramp up in Q3. The ramp-up that happens in quarter 3 tends to dampen the margins a little bit as the benefits are accrued in quarter 4. But margin has been retained at a decent level, so I am not too worried about the margin front. Having said that, yes, we are taking steps to do more and more automation and tighten our belts, and that exercise of course, continues. Your second question was? Sir, if you could provide an outlook as to how each of our 3 business segments are shaping up now that you would have started the conversations for the year, beginning of the new calendar year or so. How are things shaping up? They are all looking good. We are right now in the process of doing our planning for the next year. Our year, as you know, begins April 1. Before the end of this quarter, we will certainly have all our plans in place and see that. The only sort of unknown element there is a little bit of the U.S. market. Although it is looking very positive and very upbeat, with the new administration in place, one has to look at their outlook towards outsourcing, and the policies around that is a little unclear. That is something that we still are observing. Generally, the mood is positive. Okay. We have kind of moved in a very good revenue range this quarter, sequential growth of 5% is also good and 15% sales growth year-on-year. Both ways the numbers look really good. Is this kind of a run rate or the absolute number that we intend to clock over the next few quarters, or there were certain one-offs in this quarter? No. We will maintain a certainly a healthy growth going into the next quarter. As I mentioned, the pipeline is looking good. Obviously, this December ending quarter is always a little soft quarter because the world goes to sleep, there are Christmas occasions, Thanksgiving week, and all of that. Given that, I think we have had a good performance, and I think we will continue a very healthy trajectory going forward. Q4 also. Yeah, Q4 should be also strong. Hello? Sir, the participant got disconnected. Okay. Before we move on to the next participant, a reminder to all participants to press star and one to ask any questions. The next question is from the line of Riddhi, a shareholder. Please go ahead. Great. Some of my questions were already answered. Very embarrassed. Yeah. Some of my questions were already. Yeah, sure. Congratulations on good numbers, first of all, sir. My first question was actually regarding the EBITDA margin only, which you just answered. I have another point of view on this question that from last three quarters, we have seen 13%, 12% EBITDA margins, whereas before that we haven't seen such low margins for three years. First of all, what is the reason behind this, and can we actually look forward for good mid-teen margins from next year? Yes. We are in the process of becoming a little more efficient, tightening our belt. You're right that the last three years have been better. I think as we tighten our belt in this quarter, we will see better margins in the next year for sure. Okay, thank you so much. The second question would be, sir, we all know the global cues regarding the sector, AI and everything, the problems created by China and U.S. also. I would like to know the management outlook on this and whether it will impact our company's operations and financials. The release from China of the new platform will not impact our margins or our performance. They certainly launched a very good product, no doubt. But there is a fair amount of skepticism right now. The largest consumer market is still the Western world, and the Western world is very wary with China, with their IP rights and things like that. I do not know where that will go. As far as AI is concerned, as I mentioned, even with my visit to Davos, that it is a very optimistic outlook. Everybody is very excited about that, very positive about that. But the projects are still small. Customers are still experimenting with AI. Nobody has gone down the path of large projects and a big bang. They are all flirting with it, they are experimenting with it, they are testing it, and small projects are being done. I think it will be another 12 to 18 months by the time we see some sizable projects coming down the path of AI. Okay. Thank you so much. That's a new frontier of technology, and therefore, every company has no choice but to focus on that area. Thank you so much. Definitely, we believe that there is space in this sector for everyone. Last question would be, sir, that it's a very good positive point for our company about the partnership with Microsoft, Google, and Salesforce. I just need to confirm and reassured as a shareholder that will this be continued for future? How many years, and is there any plans to get dismissed or anything like that? Yeah. We are in dialogue with them for joint business and joint go-to market, and we've had some fairly decent traction with both of them. Both Google and Microsoft are leaders as far as the AI space is concerned. For the next 2, 3 years easily, I see a stronger relationship building with them because the joint go-to market will deliver the results. Plus, they are the leaders in AI, and that's what we are focusing on. We do see a significant improvement in that engagement. Yeah. Mind you that this is a technology partnership. It is where we get access to some of those cutting-edge technologies before it really hits the market and goes to a wider set of enterprises. This relationship would give us the access so that we can build solutions for our customers on this. Also jointly go to market with Microsoft and Google to some of the larger enterprises. Okay. Thank you so much, and all the best for the coming quarters and years. Thank you so much, sir. Thank you. Thank you. Thank you. We have a follow-up question from the line of Krishna Shah from nVision Capital. Please go ahead. Yeah. Sorry, sir, I got disconnected. I also am keen to understand how are each of these three segments shaping up for us? And with the new acquisition getting consolidated for the full quarter, what kind of run rate are we expecting from that acquisition? The acquisition will consolidate next quarter. This quarter, we've not had any impact of that because we acquired around the 31st of December. Going forward, roughly the revenue stream of that company is about INR 285 crores or thereabouts. So that's what will get added on to our numbers next financial year. Therefore, if you look at that, we are talking about roughly INR 2,000 odd crores in revenue in next financial year. On an overall consolidated basis, we've not yet baked in our growth strategies and growth plans, so that is still coming. Okay. So overall, on a consolidated basis, roughly INR 2,000 crores of sales for next year and INR 285 crores, particularly from this acquisition for the entire year. That's what you're saying? That is correct. Roughly adding about $10 million on a quarterly basis. Okay. You mentioned the margins are 25% at the EBITDA level. Does it flow down equally well at the bottom line? Yes. It flows down equally well. Yes. Okay. Can you give us some color as to how each of our segments are looking for the next financial year or calendar year, given that we've seen some challenges across two of the segments for sure, how things are shaping up? No, I think the Digital Technologies and Digital Experiences are looking good. Digital Operations with this acquisition will, as it is, get boosted. I think we are in a good place across the board or across all three of them. Okay. We also had some of our top clients scaling down. Are they back? Are they doing more business with us now, or do you see that possibility coming over? Yeah. Some of them are scaling up with us, and we see that happening already. Some of them did move some work to the captives. but we also see them parallely working with us and in fact, increasing their wallet share with us, so I think we're in a decent place. Will it also be fair to assume that FY 2026 would be a good year of consolidation and growth compared to one more M&A or you are still looking out for acquisitions? Certainly, a lot of energy will be spent on the integration of TNQ Tech. Sure. We don't have any hot deals on the table, but yeah, we are in touch with companies. We continue our dialogue. You never know what comes through. But yeah, the focus will be more on the integration rather than going out and making several more acquisitions. Having said that, of course, we remain in touch with a few companies to keep exploring the market. Okay. Fine, sir. Thank you and good luck. Thank you. Thank you. A reminder to all participants, you may press star one to ask questions. The next question is from the line of Jyoti Singh from Arihant Capital Markets. Please go ahead. Thank you for the opportunity. Just wanted to understand on the TNQ Tech side. Currently, we are having 13% revenue contribution from Europe. As you clearly mentioned, we will be enhancing more on the Europe side because of the TNQ Tech. Going forward, what are the expectations on the revenue contribution side? It will going to increase? Also any bigger client that we got access to TNQ Tech on the Europe side? Yes. We were already working with a large client and their wallet share was larger than ours. With this acquisition, we have further consolidated our position with that large client. Did we acquire any new logo versus the acquisition? Not really. It was more of a consolidation strategy rather than a new logo acquisition strategy. Their presence in Europe, in this space, particularly Digital Experiences, was stronger than ours. We were more focused on the U.S. They were U.S. and Europe. This gives us a stronger presence now in the European market. Okay. Sir, just wanted to understand with the synergy of TNQ Tech, are we seeing any visibility to acquire more clients in Europe on a larger scale basis? Because we have a stronger presence in Europe, of course, the acquisition of new customers naturally goes up. Of their revenue, 47% comes from Europe and 53% comes from the U.S. Of the INR 285 crores that I mentioned earlier, you can roughly estimate about 53% from the U.S. and 47% from the European market. It does give us a much stronger presence in Europe. Okay. Thank you, sir. Sir, another on the number side, this time, exceptional item one time on consol basis, so obviously it will not going to be in the upcoming quarters. Can you guide us on the top line and bottom line, what are the expectations or how optimistic we are? Yeah, as you see, we had a good quarter, Q3, and Q3 is always a slow quarter, relatively speaking, globally for all companies. Given that, I think I am quite optimistic about quarter four, and then the next year as well. We do not typically give a very specific guidance around quarter four numbers, but yes, we are really optimistic about quarter four. Okay. Thank you so much, sir. Thank you. Thank you. A reminder to all participants in the conference, you may press star and one to ask a question. We have our next question from the line of Sanjay, an individual investor. Please go ahead. Thank you for the opportunity and congratulations on good revenue for this quarter. Again, this is the highest-ever revenue given by the company. You can confirm that, but I think it is the highest-ever revenue. The question is about seasonally Q4 is the strongest quarter. Is that situation still stays? Are you seeing the deals and the closures will be happening in Q4, or there will be some spillover will go into Q1 and the revenue may get impacted? No, I do not see revenues here spilling over from Q4 to Q1. Deal flow will continue. It is an ongoing, everyday situation. Okay. Yeah. There is no such pattern that you might see between three and four quarters in quarter four. But revenues, I do not see any major spillovers. Sure. But as a seasonality Q4 is going to be the strongest, right? Better than Q3. Traditionally for us, it has always been the strongest, and yes, that will continue. Got it. Also, next quarter you will also have a spike because of the TNQ consolidation of that quarter. Oh. We generally do have a quarter 4 spike anyway. There will be an impact in the margins because of the TNQ revenue, or it will be in similar lines? No, it will improve a little bit, for sure. It is only one quarter. It will not be huge, but there will be a positive impact. All right. Thank you very much, and all the best. Thank you. Thank you. A reminder to all participants, you may press star and one to ask a question. The next question is from the line of Dikshant V. from DB Wealth. Please go ahead. Hi. Congratulations on the great numbers, sir. The first question is, out of the two acquisitions that we have recently made, what was the contribution of these two acquisitions to our top line? The first one, Dextara, contributed about $7 million to the top line on an annualized basis. TNQ has not impacted our top line because we will consolidate it in Q4. Q1, technically there was a consolidation of one day, which was really insignificant. Oh, okay. On our core business, what has been the growth that we have registered for our core business? All the growth you see is all the core business, because TNQ does not impact, because it will come next quarter. Dextara is a Salesforce. We already had a Salesforce practice, and that, as I mentioned earlier in one of the earlier questions, that it remains stable with some growth, not the 30% growth that we were expecting. By and large, whatever growth you see is the core business of Datamatics. I think you understand the line of thought process here is that what we are looking at is the 7%, 8% growth that we are seeing. What would be the contribution of the new acquisitions versus the stable business that we are having, sir? That is the whole thought process here. Could you just shed some light on this, please? We had talked about a projection of about 4% impact with the Dextara. 4% organic growth totaling to about 8% for the year. That is what we had given in our earlier projection. Annualized basis. Annualized basis, yes. Not the quarterly basis. Yes. If you look at the quarterly numbers, quarterly growth or the year-over-year is about 15%. And quarter-on-quarter is about 4- 6%. 6%. We are talking about a 4% impact on revenue top line through Dextara acquisition, which is now 9 months old, which is 3 quarters. TNQ Tech, that acquisition, the impact is not yet felt on any of the top line or the bottom line with a very marginal impact, if I have to put, which is for 1 day. Got it. Which is negligible. What you will see from now onwards, is Q4 onwards, you will see a TNQ Tech impact on the quarter numbers. Sir, what kind of growth do we think that TNQ can build us, like in a year time? TNQ will add a top line of roughly about $40 million in a year. And about $7 million will come from Dextara. So if you do purely from an inorganic, if you want to put it, then those two numbers you can add to the top line of Datamatics. Yeah. Again- Understood. Sir, would this be margin accretive to us, as in that, would we be seeing better margin or trajectory or do we think that the margins would be the same as TNQ is being amalgamated with the company? No, it will be accretive. There will be margin improvement. Oh, okay. Overall, what do you think are the growth drivers for us right now? Because we have done some inorganic acquisitions and the management has told us that we are still looking for more opportunities. So what is the growth driver for us going forward, how we can go from a single digit to double digit number? I think the key element would be really the investments that we're making, and we are hoping that some of them will start giving the results. The focus that we have on hyperscalers continues, and the engagements with all these hyperscaler big tech companies should give us results fairly soon. Also, the renewed focus, in fact, we are right now in the midst of re-looking at our strategy and account penetration, and some of those account penetration should give us a better market. Then finally, of course, we've also increased our penetration in the European market. So the increase in presence in Europe, account penetration and the hyperscalers, I think as a combination will give us the upside that we're looking for. Okay. Sir, a follow-up on this is, right now we are from a lot of peers in the same domain, we are seeing some sort of up cycle being. People are preparing for an up cycle, and an up cycle is being seen. Sir, do you think that in, let's say, 6 to 8 quarters from now, we can see a top-line growth of 20%+? A lot of it depends on some of the newer technologies that are now coming out into the world, particularly around AI. I think the jury is still out as far as that technology platform is concerned. I think in the next 6 to 12 months, you'll get a much better visibility as to what's happening in that space. A basis that we will be able to be more confident about talking about those kind of growth numbers. Sure, sir. Sir, last question is on U.S. versus Europe. Sir, do you see better spending happening in Europe still, or is it much more of a competitive market than U.S.? Because the economy of U.S. versus Europe, there are quite significant differences, right? Yes. The U.S. is much more vibrant as a market, certainly a much faster decision-making, larger deals. Europe is having their own set of economic challenges. I wouldn't say it's more competitive, but they are having a lot of pressure because of the current soft economy that we see pretty much across Europe. In that sense, it is a softer market than the U.S. Our focus is therefore going to be more on the U.S. than in Europe. Of course, having said that, it's still a better market than India or the Middle East or some of the other parts of the world. Of course. Sir, just a last follow-up is, sir, current, if you can just give even ballpark figures, what are we expecting post-amalgamation? What would be our revenue share from U.S. and Europe? With any sort of timeline that you feel comfortable. Yeah, I think right now our U.S. share is about 53%. Europe is about 23 odd percent. So together, I think that's 75%, 76%. 23% is India. Yeah, 23% is India. That should go up to upwards of 80%-85% with the acquisition of TNQ. Europe and U.S. will both increase. The major part of this will be U.S. or Europe? 53% of that is U.S., and 47% is Europe. Yeah, major part will be U.S. Broadly from a revenue mix perspective, the U.S. will remain in the same range of 53%-54% at overall level. Our Europe mix will go up with the TNQ acquisition, and that is what we will see from the next quarter. Are we looking to acquire more? As I said, we continue to be in dialogue with some companies. Nothing serious. Right now, our focus will be more on integration of this company rather than acquisition. But yeah, we continue some dialogue here and there. Awesome. Thank you so much, sir. Wish you the best. Wish you the best to the investors. Thank you, sir. Thank you. Thank you. Thank you. We have a follow-up question from the line of Hemant Shah from Seven Island PMS. Please go ahead. Yeah. Thank you again. I have two questions again. We have been spending, I think, a lot in terms of technology since last maybe 1.5, 2 years, right? Yes. Is this spending of last maybe 1.5, 2 years, going to yield positively in terms of EBITDA margins going forward? And what would be the quantum which we are burning actually? Yeah. We have mentioned in earlier calls that we are burning roughly about INR 40-50 crores a year Okay on the technology. That right now continues. Okay. We are still very hopeful of seeing the ROI on this investment, because these are investments on all the latest technologies that we've been talking about, the whole area of Intelligent Document Processing, IDP, robotics, and now Agentic AI. All of these technologies are critical for future growth, because that's where the wave is. Not being at the forefront of cutting-edge technology, you can be relegated and become obsolete very fast. That will continue. Now I think some of these technologies are maturing. Even Generative AI for the last few years has made a lot of buzz, but it's beginning to mature, and you can see that maturity coming in. Yes, we are still very hopeful of getting a good ROI on those investments. Wonderful. Rahul, this spend is going to continue for even the current year, FY 2026 as well? Same quantum or I think as you said, the maturity level has reached. I think the quantum would be lower. No, the investments will continue. Hopefully, we will get better deals, more deals and larger deals, but the investments will continue. Okay. Because this area of technology is moving very fast in multiple different directions. If we slow down, then we will certainly fall back, and we do need to keep pace with the current market. Particularly the U.S. and China are way ahead as far as this technology is concerned, and it is important that we somehow keep pace with those guys. Okay to adopt it. Okay. So what would be your expectation of the ROI on this spending, Rahul Kanodia, if I- I think another one year will give us a very good picture. In 12 months from now, we will be in a very good place to know because by then it would have really matured, and we would have started seeing a decent deal flow coming in. Yeah. Why I am asking is because this is going to play a very critical role in improvement of the margin overall, besides TNQ, right? Yeah. That is right. TNQ and Lumina Datamatics are the two entities which are yielding almost 23%-25% EBITDA margins. And the other part of the business, which is almost INR 1,500 crore of the business, which is yielding negligible margin, I would say, on a standalone basis. So I am just trying to do a math. If the margins are going to improve, what would be a good margin where you will be satisfied, technologically as well as I think even after adoption of the AI in your whole organization? If you look at the mid-teens, certainly very, very doable. Okay. Because if I do a pure, clear math, we have done an EBITDA of INR 250 crore last year, INR 246 crore precisely. TNQ is going to be added for the next year, and which is yielding 25% EBITDA. Okay, on a top line of Indian rupees is around INR 290 crore, which is almost INR 70 crore. So INR 320 crore is the EBITDA which is coming actually on a turnover of INR 2,000 crore, which is already having an EBITDA margin of 16%. On and above that, what kind of delta we can expect by the spend of this AI which we have been investing? That's what I'm saying. A lot of the AI projects and the technology projects today are still small pilots. We're still experimenting. The larger deal flow has not yet started. But certainly, when we compare ourselves with some of our other competitors, we are absolutely at the cutting edge of where technology is. I'm very optimistic about the deal flow coming in as this technology matures. We're still waiting for the larger deal flows to come in, but we are seeing the maturity coming in already. The customers are now, two years they've all sort of flirted with it. They get a better sense of where it's going and how to deploy it. I'm quite optimistic as to next year should be a good year in that space. If you're asking for a very specific number, I don't know because I don't have a pulse of who's going to take what decision. No, sure. I understand. No, wonderful, Rahul. I mean, I think you are on the right direction. Thank you so much. Thank you so much, and all the best. Thank you. Thank you. Ladies and gentlemen, that would be the last question for today, and I now hand the conference over to the management for closing comments. Over to you, sir. Thank you everyone for being on the call with us today. I once again wish you a very happy New Year and look forward to meeting you in the next quarter. Thank you for being on the call. Thank you. Bye-bye. On behalf of Datamatics Global Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.