Q1 21/22

Jul 29, 2021

Ladies and gentlemen, good morning, and welcome to Happiest Mines Technologies Q1 FY 'twenty two Earnings Conference Call hosted by Nomura Financial Advisory and Securities. 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. Please note that this conference is being recorded. I now have the conference over to Mr. Rishit Parikh from Nomura Financial Advisory and Securities. Thank you, and over to you, sir. Thank you, Lizane. Good morning, ladies and gentlemen. Thank you for joining us today on Q1 FY 2022 earnings call of Happiest Mines Technologies Limited. On behalf of Nomura, I would like to thank the management of Happiest Minds for giving us the opportunity to host this earnings call. Today, we have with us Mr. Ashok Souda, Executive Chairman Mr. Joseph Anantaraju, Vice Chairman and President and CEO of BES Mr. Rajeev Shah, President and CEO of VBS Mr. Ram Mohan, President and CEO, IMSS Mr. Venkat, Managing Director and Chief Financial Officer Mr. Aurobindo, President, Operations and Deputy CEO, PES Mr. Sunil Gujjar, Head of Investor Relations and Mr. Praveen Darshankar, Company Secretary and Head of Legal. I would now like to hand over the call to Sunil for Safe Harbor statement and to take the proceedings forward. Thanks, and over to you, Sunil. Thank you, Rishit. A very good morning to all. Welcome to this conference call to discuss the financial results for the Q1 ended June 30, 2021. We trust all of you are keeping well and staying safe. I am Sunil from the Investor Relations team. Ashok will begin the call by sharing his views on the business environment in the context of pandemic and our results. Venkat will then speak about our financial performance and operational highlights, after which we will have the floor open for Q and A. Before I hand over, let me begin with the Safe Harbor statement. During the call, we could make forward looking statements. These statements are considering the environment we see as of today and obviously carry a risk in terms of uncertainty because of which the actual results could be different as outlined in the earnings release, which is also available on our website. We do not undertake to update those statements periodically. Now let me now pass it on to Ashok. Over to you, Ashok. Yes. Thank you, Sunil. Good morning, friends. While our hearts are do bleed for the suffering that COVID has brought, in our industry, we are grateful that demand is back to normal in spite of the pandemic. We as a company did a fair contribution ourselves to help fight against the pandemic. Amongst other things, we have been driving our own vaccination progress at our workspaces. And as of today, well over 50% of all Happiest Minds have received at least one vaccination. We provided financial support to a leading medical institute in Bengaluru to establish a research facility to fight COVID. We've procured ICU ventilators for COVID patients at a hospital in Bengaluru. We contributed towards the meals to the Akshay Patna Foundation for packed grocery kits for the kids for the marginalized and low income segment of society. Overall, we have collected over 2 crores from Happiest Minds, our own promoters charitable trust and supplemented by our Happiest Minds team. Coming now to the IT services industry. We continue to benefit from ramped up technology initiatives of enterprises pivoting themselves to the future. At Happy's Minds, we stay focused and continue to deliver with agility high quality outcomes for our customers in their digital journey. As can be seen from our quarterly performance, we have been able to set the stage for a very good growth this fiscal. We are able to attract and retain high quality talent as we onboarded a net addition of 310 Happiest Minds in this quarter. The Great Places to Work has ranked us as number 21 in India's Best Companies to Work, cutting across all industries and also 63 in the Best Places to Work in Asia in its 2021 list. If we look at the India list, though Great Places to Work does not make an announcement, we're clearly the best also in IT Services. One of our vision statements is, Happiest Minds to be known as the company with the highest standards of corporate governance. This vision has guided us over the years, and it is heartening to see that we were recognized as a winner for the Golden Peacock Business Excellence Award of 2021. On 29th August 2021, which is exactly a month from now, we complete a decade of existence as a company. We are grateful to our customers, all of our Happiest Minds, our Board members, our vendors and our investors who have walked with us in this journey. We will move forward to the next phase of the journey with a 10 year vision statement. I hope to share with you the highlights of this new vision with you in our next quarter report. With this, I conclude my commentary. Thank you. And over to you, Venkat. Thank you, Ashok. Good morning to all of you, and I trust all of you are safe and well. Happy to report that we have begun the new financial year on a strong and a solid footing. Operating revenues in U. S. Dollar terms for the quarter was at $33,200,000 showing a sequential growth of 9.6% and a year over year growth of 41.4%, Solid numbers. Would like to add here that our growth numbers are right on top in comparison to other comparable mid cap companies who have declared the results up until now. All our business units, COEs, geos, focused verticals have showed good growth driven by a very strong demand environment. In rupee terms, our total income for the quarter was INR254 crores versus INR224 crores in the previous quarter, showing a sequential growth of 13.5 percent and a year over year growth of 35.8%. Coming to margins, EBITDA for the quarter has been steady at about 26.1 percent in comparison to previous quarters. In absolute terms that was INR66 crores compared to INR59 crores in the previous quarter. Cost pressures on account of wage increases, attributions have been covered up by margin increase on account of revenue growth and continued high utilization. Now when you look at our EBITDA, key numbers that go into that are, we had a gross margin impact of about 170 basis points quarter over quarter due to increased people and other direct costs. By looking at the employee related cost simply, one should also take into account the year end reversals we had in the last quarter, that is Q4 of FY 2021. Improvement in our other income was about INR 6.2 crores, which includes fair value gain on investments of about INR 4.2 crores and a credit of INR 2 crores on account of the settlement of an earlier reported employee discrimination suit in the U. S. So we had reported about this suit with lots of details, adequate details in our BRHP and the prospectus earlier during the year. Coming to profits before tax, the same before exceptional items stood at INR57 crores for the quarter that was 22.6 percent of revenues. If you compare this to the earlier quarter, it was INR 49.22 percent and in the previous in the same quarter previous year it was 21.8%. Our financials this quarter has an exceptional expense item line item and this is on account of the fair valuation of warrant liability that we carry on our carry in our balance sheet. This warrant liability is on account of payable that we have towards the acquisition for PGS and it's in the form of an earn out and carried as a warrant. This amount of RMB7.25 million that is the warrant liability original value on a stable basis achieved with a certain revenue and profit targets by PGS Inc. Business over the next 3 years. Now this liability, when we had originally acquired the company, was fair valued as per the end AS standards and recorded in our books at about RMB5.1 million. So what is done is we use the Monte Carlo simulation method and look at the probability of payment basis forecast and it got valued at $5,100,000 and recorded as such in the 30 one(three) financials. The same accounting standards require us to revalue or evaluate this liability on an annual basis, I would say, basis the performance and prospects of the acquired business. The performance and growth of the acquired business, which is the easiest thing, has been good, but rather it is in line. And so to that extent, we have to change our expectations and the valuation of the probable payment. This quarter, we did that and the increased fair value of warrant liability was about $860,000 and that's about INR6.1 crores, which we have taken as a charge to our P and L. So what happens is the original liability flows directly into the balance sheet, was recorded at about $5,100,000 and we are revaluing it on an annual basis, basis performance That was done. And the change in this carrying value is then charged to the P and L. So even if it's a debit or a credit, any changes in the original value has to flow through the P and L. And that's what we have done. And this asset has an impact of approximately 2% on PBT. I would like to add that there is a positive aspect to this because the performance is better, the probability of payment is higher and which is why the valuation or revaluation has happened. Coming to our PBT before exception after exceptional item, it was INR 20.2 percent INR 51 crores, which shows a Q o Q increase of 4% and a Y o Y increase of 25.3% 3%. Coming to our PAT, our improving profitability has meant higher effective income tax. We ended the quarter with a PATR of INR 36 crores, which is at about 14.1% of the total income. If I adjust the exceptional item that I referred to earlier, our PAT remains at the same 16% that we showed in Q4 of last year. Despite the exceptional item, we are at almost the same absolute levels of profits after tax as in Q4, that is our absolute numbers of profits for Q1 are almost in line with or similar to what we did in Q4. Now when we are comparing our path for Q1 FY 2022, I would like to caution you that one should be mindful of the fact that instead of a tax expense, we had a deferred tax credit of about INR 9 crores in the year in the same quarter last year. So which is why you see huge swings on the tax provision numbers Q1 of last year versus Q1 of this year. Now I'll cover some highlights of the quarter. We ended the quarter with 180 customers, active customers, and it's an addition of 7 new customers. Our average revenue per customer has increased to $751,000 and this is a metric that keenly follow and track. Increase in $1,000,000 customers was by five numbers, which has been high in the last two years. Additional $7,000,000,000 corporations to our clients list. Our financial return ratios of ROCE and ROE continued to be healthy and high at 30.7% and 24.7%, respectively. As we have been disclosing earlier, we have very healthy free cash flows. We continue to have that at about 99% of EBITDA, and that's about INR 66 crores for the quarter. We ended the quarter with cash and equivalent balances of about INR607 crores. Coming to people, we closed the quarter with 3,538 Happiest mines. Ashok mentioned that, that was a net addition of 310, a significant number in the current demand situation that we have or the supply situation that we have. Utilization continues to be a steady 82% compared to the 82.6% in the previous quarter. Attrition has shown a uptick, and we have moved slightly up to 14.7% on a trailing 12 months basis compared to the 12.4 percent that we had disclosed in the earlier quarter. We are able to retain attract and retain talent pool and that is something that we have been happily able to do, which has led to the 310 net additions that I talked about. We continue to make progress on our diversity and inclusion ratios, which at the end of the quarter was at about 25.2%. And coming to the dividends, we had declared a dividend at the 10th AGM held on July 12, 2021, and that has been paid out, which has been a payout of about INR 44 crores in cash. In summary, a great quarter with high revenue growth, improving operational metrics and profitability. This quarter has nicely set us up for a good year, and our efforts will be to maintain this trend. Improving vaccination numbers around us and also amongst us, slowly blunting the possibility of a 3rd wave and hopefully return to work from office soon enough. I hope I have been able to give you a good overview of our financials. And all of these numbers, including detailed metrics, operational metrics, awards and other aspects of our business over trends have been put on our website. And I request all of you to go and have a look at that. I open the floor now for Q and A. Thank you. Ladies and gentlemen, we will now begin with the question and answer session. The first question is from the line of Rishit Parekh. Please go ahead. Hi. So congratulations on a strong growth, right. You keep surprising 2nd quarter in a row, right. Now just I wanted to delve a little bit further in terms of growth, right. I think since the IPO, we've talked about scaling some of our large accounts, right, accounts which have got $1,000,000,000 plus revenues in general. But if you look at the growth, it still seems to be driven by the non top 10, right? And if you look at the tail, we're still expanding on the tail given the customer addition data that you provide, right? So could you just help us understand the strategy to scale up these customers, the 53 accounts that have $1,000,000,000 in revenues? How do we scale these customers up to $5,000,000 $10,000,000 $15,000,000 accounts? So that's one. And then I'll come with a follow-up questions. Joseph, do you want to handle this in terms of our customer profile? Yes, Ashok. I was going to add Anything Rajiv can also add? Sure. So as you would see, Rishit, the number of $1,000,000 customers has gone up this quarter by 5. Again, our revenue per customer has increased consistently over the last 3, 4 quarters and it's currently at $751,000 for Q1. And we also added $7,000,000,000 customers during the quarter. And as we mentioned, this has and the revenue from $1,000,000,000 customers has increased from 37% to 39%. Atal, I'll put layout some of the numbers, which shows the trend moving in the positive direction. And this is being driven by a very focused effort, which around getting our domains, sales and delivery to work closely together to strategize on our customers, making the account development plans as the basis for coming up with account strategies, understanding our customers better and building relationships, which are leading and obviously the focus is on these $1,000,000,000 customers to make sure that we get a larger share of wallet with these customers. Rajiv, do you want to add anything, Rajiv? So I think that just to cover most of the data points. In addition, I think over the last 12 months or so, we continue to invest in hiring dedicated set of account managers who look at the entire portfolio of APS mines from all three service lines as well as COEs to take single ownership to drive change in the customer environment. So the investments on the account managers supported by the large account development plan and looking at the customer on a global scale, I think we'll continue to drive growth in the current accounts. I'll just add one point here and you've got some concern about the profile of the accounts. You see the important thing is we also don't want overdependence on the top 5 accounts in that sense. And if you see that percentage for us it's come down from 14.5% to 13.1% in this quarter as compared to the whole of last year. And this is in spite of a very healthy growth even in the larger accounts. So that's reflected by the fact that the overall growth rate is so high. Our top 5 has come down from 33.3 to 30.2. And we think that those are really healthy ratios, which then get reflected by an increase in the percentage for top 10 and top 20. Okay, fair enough. So the way to think of it is that we still continue to see customer addition at the tail end Because I think in the past, right, there have been instances where we had to get rid of some of the tail, right, to sort of focus on more quality. The concern here is that we don't end up getting in a similar situation again is the only point, but otherwise all well. Okay. So that's one. If you look at the last 4, 5 quarters, right, I think growth has largely been driven by IMS. IMS has been substantially higher. If you look at it from an organic standpoint, right? Obviously, excluding PGS, stronger DBS contribution, right? And it looks like obviously we've been pretty strong in Security Solutions. If you could just provide a little more color on what are we doing that's driving that growth and how should we think about that in the medium term from a mix perspective? Will it be always IMS driven or will we continue to sell some of the other solutions which will have a more balanced mix? Venkat, do you want to take that? I'll probably add a little bit. Hello, Venkates? Yes, Ashok. Yes. I said, would you want to take that and then I may add something to what? No. This is on the growth driven by MSS. Yes. Yes, because we have had some significant additions, especially in the Middle Eastern markets, which has gone up significantly if you look at in the last 2 or 3 quarters. And those additions have largely, I would say, largely come from IMSS except for one account, which is being handled by DBSs, which has come in the last quarter. So that's been the increase that you're seeing on a quarter on quarter basis. But if you look at each BU and the way they've grown, each of them have been growing nicely over the last 3, 4 quarters. So it's been secular if you see the trend over the last 4 quarters, Prashant. Yes. Just to add to that point, Venkat, as he mentioned, security has grown very well. And if you see from the last year, it has grown from 7% to almost 11%, and we are making a good stride on security. This is because of new services, which are being launched and also a significant increase, which is happening with respect to cyber security and identity management. So that has fueled the growth as well in terms of security and we continue to I'd like to just give you a perspective here. You raised the point that is our growth going to be future IMSS driven. Actually, you really need to see this number in not just percentage growth quarter by quarter, which is obviously highest for IMSS on the lowest base amongst the 3 businesses. But if you just see the absolute increase, then you find that PS has grown as fast as or in fact a little more than IMSs in the last quarter. So in absolute terms, it's still the major driver for growth. DBS may have grown a little less, but the prior quarter, it had the highest growth by far. So the takeaway from these numbers is that actually we've got steady growth from all of the 3 business units, contributing exceedingly well to in a sense our overall targets, and it is not going to be driven by just one deal. Every one of them has a good pipeline, every one has a good potential, and every one in varying times continues to do a higher percentage growth than the other. Okay. Understood. And just one last question before I sort of open it up for the queue. One, any contribution from incremental contribution from PGS this quarter? That's 1. And second is, why would so we've seen a sharp increase in other expenses this quarter. If you could just help us understand why that happened? That's all the questions I have. Thank you. Sure. I guess Rajiv can take the PGS and then Venkat you can come in on the expenses. So Prashay, if you look at the VGS acquisition, we were already they were already a customer for us, and we were billing to them. So if you adjust for the intercompany billing, the net additional revenue was about RMB2.9 million this quarter. So any from a QoQ standpoint, was there anything incremental? Because I think last quarter, we still had about $2,000,000 So you're saying essentially $1,000,000 of additional. So $1,000,000 additional, correct? Okay. Okay. Fair enough. So I think that, Rishit, just to add to that from the PGS perspective, I think there were 2 critical drivers for us to do that acquisition. 1 is to go after the market to with an open source solution to expand the footprint. The second one was leveraging FPS Minds asset to drive growth in the PIM core or PGS accounts as well, right. We've been able to accomplish both. So on a standalone basis, we've been able to drive PGS growth in opening new accounts as well as introducing PGS into our existing accounts of FPS Mines. And at the same time, leveraging the assets of FPS Mines to really drive overall growth with account as well. So I think that has really helped us. So there is on an absolute rate, yes, there is a growth from $2,000,000 to $2,900,000 But I think overall growth for the customer has been significant. Okay. So just to clarify, this is the effort that we've put in to cross sell and not just onboarding of revenues, right? Is that correct? So to that extent, it should be considered organic. Is that what you're sort of hinting at? That is correct. That is correct. That is very much correct. Okay, understood. And just the last question on other expenses, then we'll open it up for others. Yes, Anishit, go ahead. No. So the question Why was there a sharp increase in other expenses this quarter? I think it went up from 18.5% to 19.8% as a percentage of revenues. Are you talking about exceptional expense or other expenses in our Other expenses, other expenses. Other expenses, I'll have to give you a detailed breakup, but it's largely on account of yes. In Q4, because of the there were some reversals that happened because you make provisions during the year and that got reversed. That's about INR 3 or INR 4 crores impact. The rest is all catch up expenses sometimes of something like a software, Microsoft screw up or something that happens. Subcontractor costs which have gone up. Subcontractor costs which is about INR 26 crores has gone up to about INR 35 crores. So that also gets classified or categorized on broader expenses in the SEBI format. Okay. But it should be in the employee benefit expenses. We typically put in subcontractors there, right? This is just the other expenses from INR42 crores to INR42 crores. So contractor has gone into other expenses and employee benefits are only our employees. Okay. In the classification. Okay, perfect. So we can assume that this can be at a stable level from year on, right, at these levels. Which is why I drew your attention to the EBITDA numbers before the exceptional item, which is continuing to be at that number of 26%. So if you look at it, it was 25.6% in Q1 of last year, 26.3% and 26.1% this quarter. So while we have been cautioning you saying that there could be reversals, given that the cost benefits that have come out of work from office, if they reverse, we will see some reduction, but we have been holding it to the 26.1% 26% plus this quarter as well. Okay, fair enough. Thank you. Yes. Lisan, can we open it up? Sure. Thank you. We'll lead the next question from the line of Vimal Goel from Union AMC. Please go ahead. Congratulations to Team Happy SMART for a splendid results. Sir, my question was on contacting Cosmos. So basically, you said that this quarter there were INR 26 crores worth of subcontactor cost, right? That's right. And last quarter, if I remember, they were around INR 19 crores. 15.15 as of June 30th quarter. June 30th, okay. INR15.15, INR26.9 INR35,000,000 for this quarter, June 30. INR35 crores is just a contact contracting cost? For the current quarter. INR 35 crores, okay. That's right. Okay. So subcontracting cost has almost jumped. If I look at INR 35 crores as a percentage of sales, that has jumped by almost from 9 odd percent of sales in the last quarter that is Q4. It has jumped to 14%. And subcontractors Yes, 35 upon 224. Yes. So if I were to look at, I mean, just going by the strategy, would we continue to sort of look at subcontracting as a delivery medium or we are looking to reduce subcontractor cost going forward and replace it with maybe on-site where the delivery cost could be cheaper? Mostly on-site. Yes. So, Vimal, this is mostly on-site. Given the current travel restrictions that we have and sometimes the visa issues, when there is a requirement in Middle East or the U. S, we have resorted to taking people locally from specialized service providers to deliver on our business. So I would be concerned if that really hits your on-site offshore mix in terms of revenue contributions, which it does not. So we are able to develop or build on the offshore part in line with the on-site part that we have been delivering on. So that's one thing. The second thing is I would request Nanda to add here because it's got an interplay with the requirement and the skill sets mismatch and all of those. Yes, it's Nanda here. Actually, a couple of things have happened. Like Venkat mentioned, the on-site demand has increased. So we have increased substantially the number of people we have hired locally. And at the same time, the business is increasing on a rapid basis for which we'll also have to acquire talent quite a bit. And to acquire talent, we have ramped up our talent acquisition team and that is through a lot of this partner basis which are kind of tense. So as the situation eases out, we'll be reducing quite a bit from those teams. On-site will continue to happen, but again as the travel situation and visa situation eases out over a couple of quarters, we should be able to even bring control over that. And also, Vimal, when we acquired PGS business, it had a substantial element of subcontractors, which we are now slowly we are onboarding them, and we are converting that to our own roles. So that's also progress of integration which is in play right now. That will also happen for quite of these partners who are getting built in customer accounts or projects at that point of time. So over a couple of quarters, maybe 2 quarters or so, we try to convert them into full time employees. Okay. So But the other thing, we need to also consider keep in mind is that whenever you subcontract, especially on-site and even offshore, the key number to look is the margin that you make on that specific person, right? And that there's enough focus out here to ensure that it doesn't go out of line with the margins that we're getting from our own people. Right. I'm okay, fair enough. Thank you so much for the detailed explanation. I'm still not clear about the subcontracting cost in the preceding quarter, but I'll take that line. But just on the growth outlook of FY 2022, almost 10% growth in this quarter. Even if I were to sort of annualize only this number for the full year, even then we would reach very, very close to almost 20% growth for FY 2021, which is your stated organic guidance. Now, I mean, would you want to sort of consider changing that 20% number? Because see, some of your peers have also started growing at that pace. And you have categorically said that we will grow at 2x the market rate. So is it that we are being slightly conservative? If yes, what is the source of that conservatism? So, Limal, while I'll request Mr. Souta also to add here, I'll just start saying I just want to correct the statement that you made. What we said is we would like to do a long term 20% organic growth. So it was just not for the year FY 2022. So while we are we may be ahead or whatever for FY 2022 given the current numbers and if you do your extrapolations, what we were seeking to communicate was a trend for the longer medium term to a sign some kind of a longer term number on an organic basis, Kamal. Sure. So from what you're comparing, some of the other companies are there saying, hey, there seems to be a huge demand explosion out there. And if you are able to meet the supply requirements of that, we'll be able to grow 20% for the next year. It is more of a shorter term or an immediate term kind of, I wouldn't say guidance, but kind of directional statement that they have been given. Our directional statement is larger, medium term to long term. Sure. So actually Venkat's answer is really saying here we actually haven't given any guidance except long term. But one thing is fairly evident that we are running on the basis of the fact that the business is growing, certainly in context of demand being exceedingly good, there is the net addition. I think that is actually your best expectation of looking at where we think we are heading. We are not giving any formal guidance. But those numbers are the highest we've ever had. And even if we sustain just the current net addition level right through the year, we do increased our numbers and therefore, the total billable numbers vary significantly. The other aspect that I want to highlight is I think different entities use different definitions of organic growth. To my mind, the right way of looking at it is we did the acquisition of PGS in Q4 of last year. So right through this year, for the 1st 9 months, we should treat the PDS numbers as inorganic. Some people may actually choose to say, okay, after 1 quarter, it's become organic. And then only in the last quarter, we will add that element down also as organic growth. So sometimes those percentages can get confusing based on that definition. But I think the best guideline you'll have towards where we are heading is not things like pipelines and stuff like that because the pipeline is a it's a very mixed thing. You don't know what is the probability of somebody getting an order and how long that pipeline will stretch. Whereas the net people addition is a here and now number, which you can look at and start projecting our growth. Great, sir. Thank you so much for sort of improving my understanding on that. Sir, just one more question. You said that there are there were some reversals in the last quarter in the other operating expenses, which were not there this quarter. So if you could just help me understand what again in slightly more detail as to what are these reversals and are there any other costs that you would want to highlight in the other costs that have come up in this quarter? No, not really, Vimal. It's essentially, we paid variable pay basis certain targeted profits that one achieves. So you have to make those provisional numbers. We keep on accruing for it on that basis every quarter closes. At the end of the year, you get a fit on that number and then you have to true it up or correct it. So that's what happens. So that will be INR 1 or INR 2, INR 3 crores numbers number impact. 2nd large item that comes to my mind is Microsoft licenses. You start calling off licenses or prove it up as we do because of the such high number of additions that we have, we have to make certain estimates. And then once the quarter closes, you get to know what the exact impact is. So there will be some reversal on account of that. So that you typically tend to see this a little bit of these reversals in the last quarter of the year. And last year, we have always been saying that on the variable pay, we did not have the provision or payment for the 1st two quarters of last year. So if we look at it, that was something. Given the whole pandemic situation, the entire industry was kind of trying to see how to optimize on the cost situation. But the reduction of variable pay was not accrued nor was it made was it payable. But then as things stabilized, we realized that Q3 onwards that the demand is picking up despite the pandemic and the work from home situation is working to it's seemingly working well. So what's happened, Vimal, is those are those little cost elements, which one does make certain estimates and then throws it up by the end of Q4. So we are also now trying to see how to make sure that that's also straight lined as far as possible. Right. So sir, just one clarification. The variable expenses that we have, those are the part of other operating costs, is it? No, no. Variable pay for employee goes into employee benefit expenses only. Okay. Fair enough. And the last question, how many account managers, specialist account managers have we hired over the past 1 year? That would be my last question. I'll come back in the queue. Joseph, you want to take it? Yes. Yes, sure. So we the approach we've been taking, Rimal, is while we do bring specialists or like account managers on board, we also have some of them look at leveraging their connect and their existing customer connects to get some of some new logos as well. So but overall, in the last 1 year, we would have brought on board at least 7 to 8 people with account management, strong account management capability. So 7 to 8 people? And we continue to look out for people and we will yes, we will continue to look out for people and bring them on board. And we want to operate in a flexible manner. If you do bring an account manager on board and we see that they're generating strong prospect pipeline, we will let them run over that because end of the day, we want to look at how the person how we allow the person to grow as well as the benefit we get to the company. And I could add because we are really trying to see how we are expanding our capabilities in terms of bringing in new business. So I would also add that the way we've been adding domain heads is really very important because that's the thing which then increases the capability of the field to go and close business. And we've done a lot in that area. We've got we had added retail last year. We are in the process of adding certainly 1, I would imagine, in this quarter itself as a health care domain measure. Head. 1, Avan, if the second one is also lined up, that's fine because I think we've made the offer to. Yes, Ashok. Yes. You've got made the second offer also? Yes, Ashok. Okay, very good. So we'll add 2 more domain heads. That's really a really crucial part of our both of our strategy as well as our growth drivers for the future. Great, sir. Congratulations once again and all the very best for the rest of the year. Thank you. We'll move on to the next question that is from the line of Mr. Arun Kapoor from Morgan Stanley. Please go ahead. Hi, this is Varun. Congratulations on very good results. Just wanted to understand a couple of things. One, in terms of your client tags, dollars 31,000,000 customers, so that's fine more than what you had last quarter. What is the trajectory that you guys are looking at from this perspective? How do how are we thinking about doing this from a next 2 to 3 year perspective? That's my first question. 2nd, in terms of verticals that are there, I see a big dependence on or the increasing concentration in Edutech. That's been a bit of a contentious sector, least from Asia aspect. But in terms of edutech, high-tech and retail, the 3 big sectors that you have, how are you thinking about your concentrations on these? And where do you see good growth from an India aspect that we can or are we also starting to look out more towards the global players to power our growth ahead? So these two points, please. Sure. I'll just take the first question and pass this on to both Venkat and sorry, to Joseph and Rajiv for the part on the specific verticals. You asked us how we are projecting the growth of our $1,000,000 customers. And all I would say is that we don't project it, just to be clear. Otherwise, we'll be giving you a forward looking number. We have targets. We've got goals where we're saying that our our average sales per customer must keep going up, and you've seen a very healthy trend on that. We are pleased with the increase that we got in the number of $1,000,000 customers. But I don't think that, that in itself is always going to give you the picture of growth. If, for example, our number of $500,000,000 to $1,000,000 customers also increased significantly, Plus the $1,000,000 customers moved increasingly into $3,000,000 to $5,000,000 range. I think that's as important for us as saying, hey, how much is that $1,000,000,000 number, Rana? So overall, all of those parameters have shown a very healthy trend, and we hope to be able to sustain that. So on the verticals, let me get both Joseph and Rajiv to get back to you. Sure, Ashok. Thanks, Ashok. And just to add one more point to what Ashok made. The Executive Board and even the senior leadership, they all have objectives on So it's a very focused effort. And so it's a planned effort going on. Now talking about Edutech, you mentioned that are we going to go global. So as you would see, majority of our revenues come from in fact, all our customers in the Edutec space are in U. S. So they are all global players. And what we're seeing is that this is a vertical where there's lot of investment going on, whether it's K-twelve, higher ed, professional courses or even corporate learning. There's lot of investment going on for several reasons. 1, I think the pandemic has really made many of these institutions realize that they've not adopted some of the digital technologies. 2nd is a major push away from paper. There's a lot of data and AI technologies getting consumed and the user profile is changing and the demands from users are changing. It's more on mobile, on your devices. And therefore, they have to make the investment and we're seeing quite a lot of investment happening over there. Even in India, you'd see there's a lot of investment happening in the Gtech space. Hi tech continues to be a vertical that continues to attack a lot of investment because it provides the basis or the bedrock for all the other industries to do their digital transformation. And our focus on prioritizing services will help us over there. Another point I wanted to make before I hand over for retail strategy, that if you look at all our verticals, even though the percentages may change, we've had all our verticals show some growth to good growth. So it's across the board that we are seeing traction with customers. So Ravi, over to you to talk a little bit about retail. Yes. So the retail world, once again, the same thing as Jose said that all of our revenue comes from all across the globe, hardly any revenue coming from India from the retail space. So quite diverse U. S, Europe, Middle East, we continue to grow based on our PGS acquisition. But at the same time, I think that COVID has really helped in a way to retail customers relook at their business model itself. So closing of physical stores, personalization, digital investments, investment in smarter technologies, etcetera, I think has really helped customer relook at the entire business model and our continued focus on digital side supported by the strong COEs that we have, I think that we continue to see larger growth and that I guess reflected in the numbers itself as far as overall personnel revenue coming and increasing significantly from previous quarters as well. Of course, we should add that this year, in this quarter in particular, the sharp increase in retail as a percentage is largely due to the FPGS addition also where a number of their customers went that space. And therefore, it looks like maybe Edutech and Hy Tech have all gone down a bit. In reality, it's just one adjustment taking place in percentages. As Joseph pointed out, every single vertical has actually shown a growth. Got it, Joseph. Thank you very much. Thank you, guys. Thank you. We'll move on to the next question. That is from the line of Mr. Vimal Goel from Union AMC. Please go ahead. Thank you once again. Sir, my question was now on over a period of time as in when we are sort of we sort of keep entrenching into our clients. And what are our thoughts on going deep into consulting? We've been very strong as we know on the IT services front, digital services front. But are we looking to sort of push the pedal on consulting and moving up the value chain with especially with our existing clients? And if we are going to do that because how are we sort of going to compete with the likes of your own stated competitors like EPAM Globant which are leaders in this space and are growing exceedingly well. And would you be able to do that at respectable profitability level, Some thoughts on that. Can I request you to put this question up to us in the next quarter also? I'll tell you why. See, we have a very significant part of our sales comes from what we call as consulting led, just like we have IP led, it's 10%, which is much higher than any other company. In consulting led also, we see a large percentage. However, the difficulty in talking about this is that everybody's definition of consulting led will be different. So I think it's important. We are doing a very detailed exercise to classify the nature of our consulting led business into different categories. And we will based on that, once we've got that definition here amongst ourselves, and we are debating it even with the Board, we will start including it even into our fact sheet, which we don't do as of now. And at that time, we'll set ourselves goals for that area also. So basically, the number is much higher than you might think. So it's not going to be new competition that we will be encountering as a result. That is great to hear, sir. Thank you. Thank you so much for the clarity. That's all from my side. Thanks a lot. Thank you. The next question is from the line of Dipesh Mehta from MK Global. Please go ahead. Yes. Thanks for the opportunity and congrats for strong performance. Two questions. First about, can you provide some detail about deal intake, kind of deal intake which we are seeing? How the deal size are changing for us? Whether we are seeing material uptick in our size of the deal and tenure of the deal perspective? So if you can provide some perspective about how the demand environment is setting up. 2nd is about the BFS. If I look over last couple of quarters, BFS remains soft quarter. So if you can provide outlook on that particular? Thanks. Sure. I think I can get all the 3 BPO heads to respond to that question. And Rajiv, of course, will touch specifically on BFSI because it's a part of the DBS BU. And Joseph, do you want to start again? Yes, Ashok. I'll tee off Ashok. So as I mentioned earlier, Mesh, the demand is strong across as Ashok also indicated. I think we're fortunate to be in an industry where the demand has been increasing in spite of the pandemic, right? And this is cutting across all the verticals that we have and it's also reflected in the fact that even though percentages may vary, all the verticals in absolute terms have shown little to a large growth. And again, if you look at geos all cutting across all geos, we are seeing increased growth. I already talked about from a PS perspective, EdTech and High-tech. If you look at media entertainment is another area that we are focused on. And here we are seeing lot of investments going into streaming services, into using more of analytics. If you look at industrial and manufacturing, a lot of the focus has been on increasing connectivity, implementation of IoT architectures and again using data. One common theme you'll see across all the industries that we are operating in is the need to use analytics on top of data. There's also a lot of automation that's happening and we have that's the reason 2 years back we created our digital process automation CoE in addition to the analytics AI and the IoT COE, which are our engines of growth. So with that, I'll hand it over to Rajiv. Thanks, Joseph. So I think that from the demand growth perspective, I think that we are continuing to see higher and higher traction as well as the size of the SoWs that we signed as well as the engagement that we have, I think that continues to grow. At the same time, as I highlighted earlier that I think that a lot of customers had a chance to rethink about their own business model, which has created a significant set of opportunities for us to look at the digital transformation. So overall, from the size of the deal as well as the pipeline and our ability to do look at the entire ecosystems from product development to expansion from digital bridges services to infrastructure management security, where the customer is looking at transforming the entire digital ecosystem. So I think we are well placed for acquiring larger and larger piece of the customer spend. Specific to BFSI, I think your observation is very valid and it's been somewhat steady at a number. Over the last 18 months or so, when we started getting into BFSI, our approach to the market was to partner with digital ready platforms and how can we take those digital ready platforms applications to the customer environment. And that has proven successful as far as utilizing the existing assets that we can partner with to take into the customer environment, be it in the mortgage area mode, be it in the lending area, be it in the retail banking area and it was really the approach that we had taken. Now we have really proven ourselves and investing in hiring the domain head along with additional set of capabilities, additional set of business analyst, consultative skills. And I think you will see that number continue to grow for us as well. But your observation is valid that it's been remaining steady. And I think that's the approach that we took as far as just taking the 3rd party application, which were digital ready to implement in the customer environment. Okay. Ram, since you don't have verticals per se, you may want to focus on this aspect of the question, which was on, are the deal sizes growing? Yes. Just to add to that, Ashok, on the infra side and the security side, we are seeing an increase in the deal size. Now what is happening is some of the projects which we took from the migration perspective in the infrastace, specifically cloud migration is moving into annuity based management deals. And similarly, in the security area where we took some projects like IDAM implementation or a GRC is now moving into more managed security services. So consistently, we are seeing an increase in the deal size as we are moving forward. And also one other significant thing which has happened is the size of the percentage of fixed price projects have also increased from last quarter to this quarter, if you see from 22% to 26 percent, which is also a very good indicator that we are moving more and more into annuity based fixed projects. Thank you. The next question is from the line of Janal Jain from Omkara Capital. Please go ahead. So yes, my question was along the Educate EduTech vertical, which as we see is our the largest component of our revenues. So as the pandemic opens up and as we see vaccinations progressing, how do you see the edutect vertical moving going forward? Are these numbers currently that we have sustainable or if things open up, should we expect a a decline in revenues coming from the Editego vertical? Joseph, will you take this? I was on mute, sorry. So Jalan, the way we would look at it is that I suppose the reason to ask this question is if schools open up and students start going back to school, would that reduce the need for digital investment? But I think most of the institutions have realized that you will continue needing a mix of digital and in person. Even if you're having students in classrooms, there's a fair bit of activity that happens whether in terms of assignments or assessments that are digital. Many of them have even in classrooms, they move to additional form of learning on and therefore, that investment that's been made already is something that universities and schools will want to leverage. And our discussions with the edge tech companies that are customers and prospects is that they have multi year road plans based on discussions with the end users, the colleges and the schools of how they want to use technology to improve both student experience, remediation for students, helping students on a better path and also to run their get a better understanding of their school or university and run that better. So we expect the investments to continue into the medium term future at least. Okay, fair enough. Thank you and all the best for the year. Thank you. Thank you. The next question is from the line of Nikita Mehta, an individual investor. Please go ahead. Very good morning to all. Congratulations for stellar performance. I'm totally wise to this area. So anyway, I am quite convinced what you guys are doing is excellent in terms of business. One thing which comes to mind is the share pricing. So based on whatever I have been following in this company, I have been invested in this company, and this is the 2nd phone call I'm attending. So my question is, in terms of the exceptional high pricing and fluctuations, so do you feel it's a normal thing or there can be some problem in that area? Nikita, this is Venkat. We do not our position on this would be that we do not comment on the price movements on our share price because frankly, we are focused on the business, putting out results, which we believe are helpful in creating long term value for the shareholders and also building a growth company here. So really no comment on the share price, Nikita. Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Venkataraman Narayanan for his closing comments. Thank you. Thank you all for attending our conference call for the Q1. It was really insightful the questions that you've asked. Request all of you to please go to our website and check out the investor presentation that we have. And do write to Investor Relations at HappiestMinds for any further questions, and we'll be happy to answer them. Thank you. Ladies and gentlemen, on behalf of Nomura Financial Advisory and Securities, that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.