Recording in progress.
To discuss the result. We have with us today Mr. Arun Jain, Chairman and Managing Director; Mr. Manish Maakan, CEO of iGTB ; Mr. Rajesh Saxena, CEO of iGCB ; Mr. Banesh Prabhu, CEO of Intellect AI; and Ms. Vasudha Subramaniam, CFO. Besides, there are some other senior members of Intellect management team who are present in the call. Now, I hand over to Vasudha to take you through the financials, and later Mr. Arun Jain will give his comments on the same. This would be followed by Q&A session, where your questions will be replied by the senior members of our management team.
Once the Q&A starts, you can ask a question by clicking on the "raise your hand," and we would unmute you so that everybody is able to listen to you. One safe harbor. I would like to remind you that anything which we say, which refers to our outlook for the future, is a forward-looking statement. This must be read in conjunction with the risks the company faces. With this, I request Vasudha to give her briefing. Over to you, Vasudha.
Thank you, Praveen. Good evening, everyone. It's a pleasure to be before you as we step into the 10th year of innovation, growth, and resilience. Your continued support is invaluable as we navigate the dynamic landscape of fintech industry. Well, let me delve into the numbers to share our progress and financial insights. Our Q4 revenue stood at INR 612 crores, and excluding GeM, our revenue was INR 603 crores. We made an EBITDA of INR 137 crores and INR 155 crores without GeM. Our margins for Q4 would have been higher by INR 18 crores without GeM.
Our days sales outstanding was 122 for Q4, and without GeM, we are in less than 100 days range on the DSO. On the cash front, we have collected INR 570 crores during the quarter and had a cash balance of INR 776 crores as of 31st March 24. I would now like to take you through the full year metrics. We recorded a revenue of INR 2,513 crores for the year 23-24, generating an EBITDA of INR 549 crores and a PAT of INR 334 crores. This PAT is without considering the one-off exceptional item relating to MAT credit, a write-off of INR 12.5 crores. Cash collection during the year had crossed INR 2,300 crores. We had 152 deals during the year, and have gone live on 54 digital transformational projects.
Let me now share our last 12 months metrics, which gives a comprehensive view of trends and our sustained performance over a longer period. The growth in the LTM revenue compounded annually for three years is 19%.
The year-on-year growth in LTM revenue was 12%, and excluding GeM, it remained 14%. Similarly, the three-year CAGR for EBITDA was 15%. The YoY growth in LTM EBITDA was 22%, while it was 27% excluding GeM. It is important to note that our YoY growth in LTM of PBT was 27%, including GeM. Over the year, as we closed our Q4, our funnel size is improved from INR 7,000 crores in Q3 to INR 8,000 crores in Q4, and we see consistent growth in our big ticket deals, which we call as Destiny Deals. During the year, we had deeply involved into a lot of events across the globe in Toronto, Amsterdam, London, Paris, Dubai, and Nairobi, besides others. We commence the year 24-25 in having 300+ global experts with Intellect coming together to converge on ideas and innovation.
Who is moving the slides? Stay on the slides. She's speaking.
So she's talking with eMACH?
No, no, no.
Yeah.
On middle side, left or something?
No, no, no, sir. It's all covered. No, it's P&L in left.
Okay, okay.
We had a series of structured sessions as part of eMACH.ai Summit. This helped us a lot in sharpening our thinking process and expanding the customer canvas, country canvas, product canvas, and distribution canvas. With this, I'm handing over to our chairman, who will provide a lot more insights on the business performance and growth journey. Thank you.
So I think the quarter what we are looking at is actually eMACH.ai. We are speaking about eMACH.ai from last four quarters. It's gaining momentum because of first principle thinking, what we have brought in as one of the most disruptive technologies in the financial space. There are still a lot of deals, which is the pipeline is increasing, is translating into the revenue. In our number, we were designing the business for 20% growth. We achieved 14% without GeM. There's a shortfall from that perspective on the expectation between 20% of what we have designed, and this time it's 14%. That's where some of the delayed deals or carry-forward deals are coming into picture.
But if you look at the pattern of new deal signup, which is accelerating, so one is on the past total number, but total deals, which is win is eight deal wins in North America. Deal wins. Eight deal wins in North America. So this is one important point. North America last year when I was speaking on annual, it's not annual day. It's annual business plan, annual board meeting. So annual board meeting, I was speaking about that we have to emphasize on North America. As such, North America started giving some results in a single quarter, eight deal wins, and out of which six deal wins are in AI business. It's a credible performance of North America. It has both areas. So one is around CBX deal, which is around digital contextual banking experience deals, and AI deals.
These are two main lines of business, which is eMACH.ai is driving the growth. One is digital growth, and second is my AI growth. Composable and contextual growth. Both the places, we are finding the outcome over there. There's one large deal in Europe on core banking, which is very, very important after OTP. The momentum of core banking is continuing in Europe. We announced OTP last quarter. This quarter, another bank, VakifBank, is announced. Two deal wins in Middle East and Africa, which is around DTB platform, which is again continuing the momentum of DTB as a leadership. There are three deals in India, which is around one is around DTB. All three are DTB?
All three are DTB deals as of now.
There was one or two deals, which got postponed for next quarter. There are three deals, which is all three deals are DTB deals of the last quarter win. Then there are two deal wins in APAC and ANZ. One deal in Vietnam, and second deal is in ANZ. They are two large deals, which are signed up in APAC. It's a very balanced beauty of the model of expanding into so many countries is to create a basic foundation on which we can grow the business year on year. Some of the deals, which is announced, we have shared this time the size of their asset size in their deals to indicate the size of the bank. They are choosing the right enterprise-grade software.
During the board meeting, we were having a lot of presentations on security, risk management, and enterprise-grade software in a new world because with a lot of moving parts, which are there on security, on the cloud, on the open sourcing, the biggest challenge is to ensure that it's safe for the bank to run on that platform. Technology becomes a critical edge over there. We are finding people who are running a lot of legacy systems are getting some regulatory notices because of the weakness of the basic architecture, where the leakages of the data happen because of that structure. Today, these deal wins are based on almost 42 elements in cloud management alone. They are close to 40+ elements in the security elements alone.
A lot of time when you ask a question whether fintech can compete with us or what is the role of you in fintech, I think the cost of managing continuous open banking platform in terms of the level one, level two, level three security has gone up high. The bank risks are multiplying. Though it's giving an easiness for operating, but managing the risk becomes substantially large. And these deals, which is being I am talking about 16 deals, they have gone through the scrutiny of almost close to 150 architects before they have signed the deal with us. This phase is becoming on one side, we say fintech is a competition. On the other side, we are finding fintech is becoming more difficult for winning the enterprise-grade deal, and they are getting pocketed into the small area for driving the business growth.
Going to the next slide. The transformative open so this is Gartner, Deloitte, and private bankers. I think this entire report on composition technology, Intellect is getting big traction with all the analysts. It's not about just the product what they are looking at. They are looking at the architectural strength of the product, decomposition of microservices, decomposition of API, and the ZIP coding of API so that it can be reused so we don't create the forest of APIs within the banking system, which is resulting into the pipeline of the Intellect is going up quarter on quarter. We started the year with INR 7,000 crore. We are ending the year with INR 8,200 crore. Number of deals, if you look at it, has moved from 70 Destiny Deals to 84 Destiny Deals. The details of the deals are there in the next slide.
Deal win, that accounting is over here. I'm not getting into each one of them. But this quarter, one important point is the greater than INR 50 crore deal. There are three wins in that area of greater than INR 50 crore deals in this quarter. We lost one large deal because of political environment between India and Canada. The rest of the deals are okay as per the right traction is there. Company is paying INR 3.5 per share as a dividend, which is 70% compared to the last year. It was INR 2.5 per share. This time, board decided to have INR 3.5 per share for expanding the procurement space in GeM. What we have learned, we have moved to applying AI technologies and composable technology. ITurmeric and AI.
I combine them together and launch from banking system to large corporates and governments where they have a need of a procurement system, where the major competition is Ariba, which is quite expensive for many markets. We could be able to build in just six months' time, the team has been able to build up corporate procurement exchange, government procurement exchange, and account payable exchange into three products, which have come up. They are AI-based products and digital-based products. We already are signing two deals in CPP space in this month. We are expected to sign two deals in CPP space and one deal in APX space. We have started evaluating at two places in GPP. Two proposals are there in GPP space, which is government procurement. So the team, which was released from GeM, is now getting into proper profitable business.
Whatever the learning we got, where we have all seen the number of GeM and without GeM, it's getting into the profitable business. Whenever we will be signing the deals over there, they may have an investment period of another two, three quarters, but after that, it may result into good traction. Other important point, which I want to work on, is this next picture, which you are seeing, eMACH.ai Summit. This is the power of Intellect: 300 people, 300 leaders from 31 countries, two boot camps, one purpose. It's the largest congregation. For nine days, this leadership team started beginning the year with a new agenda of eMACH.ai to become the disruptive platform for the world. Every one of the leaders has gone through the two boot camps of three days each. One is on AI, the Purple Fabric, and the second boot camp is on iTurmeric.
The workshop was organized on three spaces called organizing the thinking space, expanding the performing space, and impacting the business outcome. So 300 people, when we brought them together, we need to come with the common thinking space where we are looking at it, how do we create the disruption in the world. Then you expand by simplification of the process and systems, expanding the performance space by frameworks, and then impacting the business outcome. As I mentioned, the two boot camps and main summit. Three days, three days, three days. Over here, i Turmeric MACH Composable Technology Boot Camp. It was very, very interesting that my salespeople in the field. Somebody some feedback?
In both the sessions, it was a hands-on session where the ease of the platform got worked out by simplifying the system so much that a sales head of the UK and sales head of Australia could be able to build up a loan repayment API and a UX screen on themselves after two days of workshop. That was proof of putting that how these two platforms, Purple Fabric platform and iTurmeric, can reduce the cycle time and the efforts for disrupting the market. The eMACH.ai world is changing the paradigm from product-centric organization to consumer desirability products, from coding to composing, and from enterprise siloed knowledge to enterprise-connected intelligence. We are contributing in four different ways.
We are participating in a deal which is transforming the enterprise in core banking space, in lending space, in wealth space, in payment space, in DTB space, in card space, treasury, trade, supply chain finance, custody, GPP. This could be a complete deal of transformation. Using AI, we are using to transform operations for the bank. We are transforming experience using relationship manager office, corporate SME, retail banking exchange, which is a contextual exchange, CBX. We are able to expand the capability of the bank by helping them for one organization platform, customer onboarding platform, virtual accounting platform, accounts payable platform, and corporate procurement platforms. These are four different ways my sales team is going and leveraging our systems. There are three levers of growth we are leveraging around customer canvas.
Today, we have a rich set of top 50 accounts on which we have focused attention to grow those accounts. They are the leaders in their own geography. We are saying Magnificent Seven and Expand 18 and Focus 36 are the three agenda points which we are driving on customer canvas. We are deepening country coverage. Whenever we are present, we have chosen 11 countries where we want to deepen our country coverage. While the rest of the countries, we want to work through the partners. We specifically choose the right product proposition and grow across country and across customer. This year, the focus is clients go more products. GCB products should go to GTB clients and vice versa, or AI should go to all the GCB and GTB products. That's the approach for growth opportunities.
This is a few glimpses of the eMACH.ai Summit, which we had for three days. We spent a lot of time. I spent a lot of time, and we spent a lot of time in global events and launching eMACH.ai. You might have seen in the LinkedIn. We had in Dubai, Paris, London, Design Thinking Residential Program, Dhaka. We are going country by country. I'm traveling to London again next week and then to New York and then to Canada. Every week, there's an agenda for launching this. There's a large traction on global events on Sibos, iGTB Oxford, Money 20/20, GTR. There's big traction on creating awareness of eMACH.ai. Next. Sustainability agenda. We are looking at sustainability as a core value. Last year, we published the first report of sustainability report. This year, the sustainability agenda is moving at the next level.
Our campus is purely 100% what do you say? There's no zero discharge from the campus in the last one year. There's no single wastage. Single wastage item is going out of the campus as a waste. All are recycled or reused, including water, food waste, or any other waste. There are almost 15 initiatives in sustainability which are happening from social transformation to employee sustainability awareness to employee participating. We had a sustainability week in February where 5,000 employees took a pledge of sustainability in a formal manner. Sustainability is one of the we are using GRI framework and BRSR framework for doing the sustainability, which is the next slide. Exciting times. A lot of exciting time for all of us. I think Banesh, Manish, and Rajesh, all three CEOs are on the call.
Fortunately, Manish is traveling to Chennai this time, so he can be present from the Chennai headquarters. We can now open the platform for questions and answers.
Praveen, you can open up for question and answer.
Yeah. Please, in case you want to ask a question, please click on raise your hand. In case you want to ask a question, please click on raise your hand. Please click on raise your hand. First, we have Mr. Vivek Taurani from WestBridge. Vivek.
Hi, sir. Are you able to hear me, sir? Am I audible?
Yes.
Please go ahead.
Thanks for the opportunity. Sir, Arun Jain, you were saying it's palpably exciting in your press release. So if you can guide us about the next year's growth in terms of because during the last from the time you were listed till today, one thing that has been consistently right is your sales guidance. Even though margins because of the investments or something like GeM going away or something like Ukraine war coming. So even though margins are clouded, you have invested in eMACH.ai. Even though margins and PAT didn't go according to our trajectory, sales at least over every two, three years, your sales guidance was perfectly on the tee.
If you can guide us because you said this is Intellect 3.0 and all your products, and now that you have I'm not the one to say whether all the investments are done, but I think eMACH.ai and investments are mostly large part is done. Can you throw a light on whether there will be acceleration in sales growth which can lead to huge operating leverage? And we can see that in both PAT and margins in a sustainable way. This is my first question, Arun Jain.
Yeah. There are two kinds of growth we are measuring right now. In AI platform, the growth number, the penetration in the accounts will be large, like six accounts deal in last quarter. The translation into financial number will be smaller because those AI deals will be using a platform. So financial numbers versus deal numbers will have a different kind of correlation. But deepening those existing deals will help in ensuring the growth momentum is sustained. Second is what you are looking at, how you are providing your operating leverage. Operating leverage is happening. We are seeing that in last quarter without GeM, we have not gone down the number. So last quarter, when we discussed the numbers, almost INR 70 crore revenue went away, which got filled by the 7% sequential growth from quarter to quarter, from last quarter to this quarter.
Looking at guidance right now, I think we are still navigating the guidance. We have designed the company for 20% growth. But looking at the total IT industry going towards a slowdown from the perspective of all the counterplayers, we are still dwelling whether, excluding GeM guidance, if I remove the GeM revenue from the $303 million revenue, around $30 million if I remove from GeM, it's around $273 million revenue. On that base number, we are looking around 15% guidance could be there.
For the whole year, next year, right?
For the whole year. It may not be quarterly balanced, but whole year it can be.
Over the next two, three years, are you confident of greater than 15%, 20%?
Yeah, 20% is a designed element. Sometimes it can become 25%. That's a kind of ups and downs can happen. Last year, we lost three big deals which could have transformed the entire landscape. One is one of the largest banks in India. They've gone for a very small company. Second is one large deal in Canada. Third is another deal in Europe. If these three deals would have come in our way, we could have been a very different-looking company. These deals are in the range of $100 million+ . We signed one OTP, $100 million+ , but there are two more deals of $100 million+ which we just lost because of political reasons where we are almost there.
The second question is in the last two quarters back, you said three wide movements are there in terms of core banking, in terms of digital core banking, and then BaaS in terms of GTB and AI. If you can elaborate on how these three wide movements are actually how confident now we are on winning deals and any competition and in terms of core banking, where are we now? Are we winning? We are more confident of winning more. If you can these three wide movements that you mentioned two or three quarters back, if you remember.
Yeah, I think all three are perfect on the dot. You can start. Manish can start, then.
Across all of that, you would have seen all three from after doing OTP. VakifBank was another next Europe big transformation. In AI, Arun already talked of the six deals. We have two deals on BaaS, one in the U.S. and one in Australia. So expanding out multiple of these sub-accounting platforms. All three patterns have happened. Rajesh, you want to cover?
Yeah.
If I can.
Specifically, let me talk about core banking. I think from a core banking perspective, the last year was a very good year. We closed many deals. I think we closed more than eight core banking transformation deals in the last year. As I look at the pipeline, the pipeline continues to be very good. It's a deep pipeline. We are in multiple stages. What we are also seeing from a core banking perspective, I think we talked about this as eMACH.ai. What we are seeing is that we are now getting called by tier one, large tier one players, regional players, etc., which is also putting pressure on us from a pre-sales perspective. We are seeing that graduation of how we are getting into larger densities. The core banking field, if you study, is right now, there are many opportunities.
We believe that we are well poised to take advantage of that.
You just mentioned that $100 million deal of some bank you have lost in India. So whatever the reason, is it just because of competition, or are you seeing any trend that you want to highlight?
India was not $100 million. It was $50 million size of the bank because of low costing, low pricing by the competition. So very low pricing.
Overall, we are content of 20% over the three-year period given we are now most of the investments have been done in the products and platforms. Can I take it?
The investment will be required. More investment will be required in AI right now. The Purple Fabric, which I am mentioning, with the generative AI, we are finding big traction. Purple Fabric is the one platform where we are bringing five different knowledge banks in the knowledge vaults or knowledge depository to create connected intelligence at enterprise level. We are talking to all the big five consulting firms to look at it, to deliver expert agents and co-pilots on top of AI. This is an area where we may require another investment. Like we had last year, INR 140 crore of investment in the last two years, we are doing INR 140 crore from INR 120 crore. So our investment bucket is $20 million. So it may come to INR 160, INR 165 crore for the coming years, the investments. But it's not a large investment.
It's just a INR 20 crore, INR 25 crore more investment from that perspective. Other products are ready to go to market. Operating leverage can start coming this year.
Sorry, Arun Jain, just why I am pressing on this is because now that you have started investing in distribution and you started also partnering with many system integrators, that's why I was expecting to be more confident on our growth. So that is why I was just pressing on this.
We all love it. But let's wait. I think it will take well. We take the system integrator route to start kicking in. We've had few wins this year. They need to also feel confident once we deliver it. In a 12 to 18-month period, the indirect distribution will suddenly start adding significantly over there. That's the right journey we have started. Maybe I am meeting the right CEOs of all these SIs now. So now they are coming to us, which was the reverse way. So I think that wheel has rotated. How will it translate into numbers? Since this is an investor conference, not a business plan conference, we are conscious about it.
Thank you, Arun Jain. Thank you very much.
Who is next?
Can we have Rahul Jain ask the question, please? Can you mute Rahul Jain, please? Rahul, you can ask a question.
Yeah, hi. Is it audible?
Yes, Rahul. We can hear you. Yes.
Yes. Just one clarification to start with. When we said 15% guidance is what I heard, is it on the Adjusted basis for our revenue of GeM in this year, or is this on the reported basis that we expect to deliver for fiscal 25?
Adjusted basis. I mentioned clearly $273 million.
Yeah. Can you hear me?
Yes, it's better now.
Okay. You want me to repeat the question?
I mentioned the answer is on Adjusted basis, yes, Rahul.
Okay. Sorry, I could not hear. Secondly, in this quarter also, when we see this adjusted working that you have shared, it kind of implies the INR 9 crore revenue that would have come from GeM in this quarter also. There is a INR 27 crore life-for-life cost. So if my computation is right, can we understand how it should shape up now? Does this INR 9 crore will normally give or take a very small number going forward? This INR 27 crore worth of cost can be repurposed in the subsequent quarter, or how and when are we going to take the benefit out of this?
This INR 9 crore of GeM additional revenue, this was a backlog of some CR getting booked in the last quarter. So whatever we completed till December, those actual billing happened during Q4. So that's the only backlog. Nothing future related.
And this INR 27 crore cost that we are saying, can the same cost be repurposed for other projects, or how long do we expect it to stay?
This INR 27 crore cost, which has been, GPP and CPX, what we have launched is directed towards that. They have a good plan to look at it next two quarters to start generating revenue over there.
Right, right. Just one last bit on the general view in the market. You already highlighted about the macro thing. But so far, at least what we have observed is that in the software industry, the pain is not as huge that we have seen in the case of services business. So do you think there is some kind of an adoption curve which is now taking shape, which is supporting the momentum and can ensure growth to continue for this fiscal and beyond, or it's too early to conclude that kind of a thought?
This growth is coming from the pipeline, the funnel which we have, the 80+ Destiny Deals we have. So that's the reason for the growth numbers more than any market scenario. This is more grounded basis.
Basically, you are attributing this to strong execution, which if we are able to continue, we should be able to deliver this.
Sure.
Okay. Great, sir. Thank you so much. That's it from us.
Thank you.
Thank you, Rahul. Next, we have Mohit Jain. Mohit, please ask the question.
Yeah. Sir, congratulations, reasonable quarter. So first is on the US. I saw you have announced eight deals, but it looks like eMACH.ai had its first win there. So is that correct, and what are your plans for US? And then I have two follow-ups on Gen.
Banesh, you would like to answer the six deals you won. What is the traction in the US on your AI space in the US?
Also beyond insurance, if you can talk a little bit about if core banking is going there or some other products that you are going to offer beyond insurance.
Sure, sure. We'll come to that. Let's hear the AI, and then we hear our CBX product in Canada and US. That's a second product line where I'll ask Rajesh or Manish to discuss about the Canadian market where we are getting momentum in North America.
So just to update you, Mohit, I think the fact that Intellect AI very early had adopted an AI-first approach to our business on the insurance side is now building a good pipeline. I think we've done six deals. We've got an excellent pipeline to complete over the next quarter, and we have quite a few contracts out there. It does take time to close some of these contracts. But we are well in progress with quite a few deals as we speak. Clearly, I don't need to sort of remind everyone that everybody's aware of the amount of activity taking place in the AI space.
I think some of what we've done as investments over the last few years on AI has actually resulted in a very good platform that Arun has already talked about, which is giving us the connected intelligence from an enterprise perspective, which is quite unique.
I think a lot of the product focus now would be to start leveraging those capabilities for our clients across the intellect businesses in both GTB and in the GCB business lines. So a pretty good pipeline for the insurance businesses coming over the next few quarters. Similarly, also, we have closed out some good wealth deals, but they're under contracting, and they're quite significant. So hopefully, we'll get traction on that too. Again, we bring a lot of AI capabilities for wealth advisors in the market. I think we expect that to also do quite well in the next couple of quarters.
Okay. And this was through a partner, the eMACH.ai, or was it through our own sales team?
Our own team. At least for insurance, our own team. But we have a very strong relationship with both the large cloud providers in the U.S.
Great. And the second was related to GeM. Now, we have given ex-GeM numbers for the first time. So the recurring margin is whatever you have shown in Q4. Now, that is the new normal for Intellect, or how should we take it by 25? 26% is what you're looking at.
Yeah. Calculating very quickly, ex-GeM number. But I think 23%, 24% because some investment will be required. So around 24% numbers we're looking around.
Around 24%. And sir, your tax rate, now that we had this exceptional item, and I assume you have moved to the new regime, so now should we assume 25% as a standard tax rate going forward?
Should be good. Yeah.
The ETR across the globe will be 23%. Maybe for India, it's 25%. So we'll optimize it to 23% at a consolidated level.
Right. And ma'am, last on receivable days, you have also given DSO. Now, that's the new DSO number for Intellect, or how should we read it going forward? Because I was assuming from Q1, numbers will be ex-GeM only.
Yeah. So what is the old pending is there in GeM, we will be reporting separately because there is a pending money sitting there. If we are looking at non-GeM business, receivable will be less than $100.
80, yeah.
89, 90, I think you have reported around there.
Yeah, 90 days, which is there.
You can take it as less than 100 days.
Less than 100 days, definitely less than 100 days.
At the consolidated level?
At the consolidated level. But GeM, we will keep it separate. We'll park it separately to collect the money. It's taking its own time in the Government of India to collect.
They are also DSO. I think this should get over in six months or something like that.
If the government pays in time and it's over in six months, then logically, it should be over in six months' time. But you need to keep your fingers crossed.
Got it. Thank you, sir. All the best for 2025.
Yeah. Thank you.
Thank you. Thank you, Mohit. Please, I request everybody, in case you want to ask a question, please raise your hand. Please raise your hand. As of now, it doesn't seem to be anybody, any further question.
Okay. That's very good news. I think we communicated well on some more. Yeah, four questions are there.
Three, please.
Yes, please. There are three more questions that are there.
Next, we have Mr. Nemish Shah. Nemish , please ask your question.
Yeah, hi. This is Nemish Shah from Emkay Investment Managers . Again, I had one clarification with respect to GeM. If I just compare the Q3 numbers that we have provided with GeM and without GeM, and compare the Q4 numbers, in Q3, we had a cost base of around INR 67 crores in GeM, which has come down to about INR 27 crores in Q4. Just wanted to understand, were we able to deploy costs of about INR 40 crores? What is this INR 40 crores differential cost with respect to GeM? If you can clarify.
Yeah.
Q3, we also had GeM in the sense that GeM got ended only by mid of December. So until such time, we had GeM costs. We had third-party costs related to GeM and all. In Q4, we conservatively made some provisions for some of the costs. It's not a provision against the doubtful debts, but for some of the liquidated damages, we made some provisions. As it is in Q3, we had GeM at least till December 5th. That is the reason for the difference.
He's asking however we deployed INR 40 crores.
That's what in CPX.
CPX, I think. Yeah.
That was largely third-party outsourcing cost.
Yes. We had a third-party source. Yes.
And so this INR 27 crores, is that any third-party cost related to that, or is that largely on our books?
INR 27 crores did not include any third party. It included some of the employee costs. We retained them for redeployment. That cost is also getting included. Secondly, we also, as I said, we made some provisions on some liquidated damages, and because of which our ETR for the quarter is also a little high because that's been disallowed for the purpose of income tax. We also had some CapEx-related costs on account of GeM. All these three constituted this INR 26 crores. There was no third-party cost involved in this quarter.
Got it. Going forward, not the entire INR 27 crores will continue. It will be lower than that, if my understanding is correct.
Yeah. It will be lower. Yeah.
Got it.
We may make some investments, but it will not be the entire amount.
Got it. Yeah. Yeah. That's it from my side. Thank you.
Thank you, Nemish. Next, we have Mr. Umang Shah from Banyan Tree Advisors. Umang, please ask your question.
Hi, sir. Am I audible?
Yeah, yeah. Please go ahead.
Okay. Sir, are we seeing any lower competitive intensity from Temenos, considering they have some own issues that they need to look at on the PR side?
Rajesh?
Actually, it's a very interesting and difficult question to answer. But when we look at it from a market perspective, we are seeing Temenos still very much in the fray. We have not seen as if the intensity has got lost. This is from the ground market feedback.
Right, sir. Right, sir. That's useful, sir. In terms of Thought Machine, I wanted to understand that Arun sir made some comments about how new-age fintechs don't have the kind of security features that we do. Would you include Thought Machine in that, or would you say that at least on the security front, all the three firms are on the same level?
Rajesh, you want to answer?
Yeah, please go ahead. I can add, Arun.
I'm saying Thought Machine has a framework. So basically, Thought Machine provides a framework to the bank, not a full core banking product as such. So their strategy is slightly different from Temenos and Intellect. Our strategy is to provide a full, complete, domain-focused product where on Thought Machine, a lot of things have to be worked out by the implementation partners. So implementation partners make a lot of money on Thought Machine. Once they have to build a solution, then the partners provide the security framework and other things on the top of it. So on the box, on the cloud, ready product to be used, I think we have invested the money into that. In Thought Machine case, it's a customer who invests that money into them.
Right, sir.
Yeah, Rajesh, you want to say something?
No, no. I was just saying yeah, I was just going to echo the same point saying that Thought Machine is giving us a simple framework. The framework, either the bank IT team or an SI has to build on that framework. So if you really compare between Thought Machine and Intellect, we come not only with the underlying eMACH.ai architecture, but we bring the deep domain, the banking domain. That's what sets us very unique from Thought Machine.
Very useful, sir. Thank you so much.
Thanks, Umang. Next, we have Mr. Mukul Varma from Varma Associates. Mukul, you are there? Mukul, are you there?
Sir, Mukul left, actually.
Mukul left, actually. Okay. Next, we have Mr. Nitin Sharma.
Hello.
Hello.
Hello.
Am I audible?
Okay. Yeah, please go ahead.
Good evening, sir. I just wanted to check on the buyback front. Last time when I raised this question, you had said that you're in discussions at the board level. So can we look at something on that front in the coming year? I think this year, by this year, you'll be in excess of INR 1,000 crores cash on books.
Yeah. Once we are crossing INR 1,000 crore, then definitely we can look at it. So we should be, as you're right, guessing the right number.
Sir, just one more thing. With the RBI getting very harsh on Kotak Bank, Paytm, and other banking institutions for amount of technology spent because of either the business going up and the technology is not commensurate with the software they use. How do you look at it, sir? How does that kind of generate more business for us, or is it something where they will have to go back to their existing vendor to set this right? Because I heard the phone call of Kotak Bank where they said they are already investing INR 1,700 crores in technology, and they are going to invest much more to get things on track to start online onboarding through their 811 and credit cards. Does it?
I appreciate your reading the right news in the system. In the beginning, I mentioned there's some leakage in the old system. It's like an old building. Legacy application is like old Bombay buildings or old Delhi buildings, where leakages happen from somewhere. Now, to fix those leakages, either you refresh or you fix by the quick and dirty fix tools. Logically, these two incidents happen in India. The more incidents are bound to happen in the US and Europe. Then only, I think the people will pay attention to the legacy migration, accelerate the legacy migration. Still, people are not fully believing it into what the new security standards of the world are.
It will take another, I would say, another 12 to 18 months to understand that legacy core and legacy lending platforms are fundamentally built on the technology by hollowing the core, by doing patchworks. It's not going to solve the problem. They need to go first principle thinking of understanding what customer events are, what services the bank is providing to them, what APIs do they need. Today, they are getting into very quick and dirty. In Indian banks, I'm still saying that the cost of technology, the RFP, still they're not understanding the difference between what enterprise-grade software means for the banking. So we are facing those troubles to communicate the story of what enterprise-grade solution means to the banks and why banks require enterprise-grade software of that nature with almost so many gates required and so much investment required.
We are investing close to 1,000 people in R&D each year. 1,000 people in R&D, I'm mentioning to some US person, is at $100,000 per R&D cost. It's a $200 million per year cost compared to any other vendor in America or Europe. Which company can? That's a huge number for us to invest into making the enterprise-grade software. But people are still on the sidelines, not in the center of the stage to make an impact. But it will come somewhere, sometime.
Got it, sir. Thank you. Thank you. All the best.
Thank you, Mukul. In case you want to ask a question, please click to raise your hand. As of now, we have Mr. Nitin Sharma from MC Pro Research. Nitin, you are there? Please ask a question, Nitin. Mr. Nitin Sharma? Looks like not there. I'm not able to unmute. Mr. Nitin Sharma, please ask a question, Nitin.
Hello.
Yeah, yeah.
Yeah.
Hello.
Yeah, please go.
Thank you. So on your three new platforms, the CPX and APX , you mentioned that discussions are ongoing. Help us understand, are these discussions focused only for the overseas market or in the domestic market as well?
Just repeat the question.
PX and all, is it just only on the overseas market or?
Nitin, louder.
The GPP and CPP?
Yes, yes. So the discussions that you mentioned, are they focused only on the overseas market or in the domestic market as well?
Yeah, they are starting from India market and then going to overseas markets. GPP is focused on overseas market as well as some of the Indian states are also looking for procurement solutions. So that's marketed on. Now there is a central government portal, and there is a momentum of state government also wanting a government procurement portal. But this time, we'll not be getting into the investment mode. We'll be selling the license. So we'll be getting the money upfront from government rather than getting into the partnership-sharing model with the government. And corporate procurement portal, we are finding a large space of procurement in India as well as in Asia-Pacific and Middle East before we jump into Europe and America. It's the same strategy what we do for any other product. First, we use India, go to Asia's nearby countries, and then go to Europe and America.
It's a three-year journey when we move into this direction.
Understood. Thank you.
Okay.
Okay? Okay, Nitin? Yeah. Thanks, Nitin. I think Vivek wants to ask some questions once again, Arun, if you can.
Okay.
Yeah. Vivek, unmute yourself.
Yeah. Arun Jain, am I audible?
Yeah, yeah, yeah.
You mentioned the previous participant that clients are going for Band-Aid solutions. So if you can give qualitative, I'm not asking about growth rates and all, but qualitative commentary on competitive intensity across markets and which products do you think people are ready to invest in and you are more positive to drive growth over the next two or three years? Because even the last phone call, you mentioned the same thing that in India, people are not really going for the enterprise-grade solutions. So if you can give us where you think our products will find acceptance and where the growth will come from and qualitative commentary with regards to how competition is shaping up across our products. Across our products in the sense, at least whatever you want to mention. Thanks, Arun.
I think Europe is definitely a market which is very sensitive to the architecture change. So when they are going through it, what Rajesh was mentioning, an OTP deal, it took us 18 months, 21 sessions of various architectural sessions before they selected us over the Thought Machine. That rigor of selection, wherever they have a rigor of selection, we are getting selected. Whenever the rigor is only RFP-based or rigor based on the pricing-based, our reference ability becomes weak from that perspective. So our win ratio in those areas where the and it's there in Europe. It's there in Canada. It's there in some portion of the U.S. Not all the U.S. banks, but I would classify the U.S. into two categories. One is architecturally focused, and the second is Band-Aid-focused banks. You can see them differently.
And there where they are looking at architecture, they are looking at AI. They are more exploratory. They can be looking at understanding the technology first. I would not say exploratory. They are understanding the technology better. They invest in their strong architecture teams, and then they select the solution. So they are the virtual account system in the U.S. So one of the largest banks in the U.S., one of the top 20 banks in the U.S., they selected an entire embedded finance platform from us. They took us almost, again, 24 months to evaluate. So these are the long-cycle deals. Now, we will have a this is our third or fourth deal in the U.S. in embedded finance. Once we have three, four once we cross the hump of five deals in the US in embedded finance, then the acceleration will happen.
BaaS, who can we see as our competitors in BaaS? Because you've said that, Manish ji?
They are primarily local vendors over there who are single monoline. The good advantage we right now are able to establish is it's part of a full corporate treasury enterprise platform. They could start with a point solution on just managing virtual accounts, on how to manage the payables or receivables better. But a full treasury needs a deposit product, a liquidity product, a receivable product. So the architecture validation through some of these is happening. Once you break through and win with these through architecture, really, then the competition eliminates because it's all legacy in the U.S., like all of us know.
Over the next few years, you'll see these Band-Aid things, people having some people realizing that they have to invest in enterprise grade. And anything that you think will force them, or it's going to?
I think there are two patterns I'm looking forward to. One's a positive pattern that some of the banks are making those investments and will generate confidence in the rest of the market like we have seen. The second is the number of accidents is happening. Sometimes that accident accelerates the wave much faster. At that time, are you ready or not ready? Do you have proven live sites? I think that makes a difference. We are following that journey right now.
Thanks very much for the answers, Arun ji.
Thanks, Vivek. Arun, we have one last question from Mr. Rohit.
I just lost a question. I have to.
Yeah.
Yeah. I have to rush.
From Mr. Rohit Balakrishnan from ithought PMS . Rohit, please quickly ask your question.
Hello. Sir, am I audible?
Yeah.
Good evening, sir. My question was on platform revenues. This quarter was around INR 56 crores. First, does this include the INR 9 crore GEM, or is this excluding that?
It includes.
Okay. So if I were to exclude that, so we are around INR 45 crore or around that number, INR 46, 47 crores of revenue. How do you see this revenue shaping up, sir, over the next, let's say, 8, 10 quarters? I mean, just your color would be very useful given we are seeing good traction in eMACH.ai . But at the same time, in the past, you said you will do what your customer wants. Just your comments on this, how do you see the platform revenue sort of coming in? And just connected to this, as a result, then the margins as well because those are expected to be higher margins.
Yeah. I think we can have more predictability three years from now, not quarterly. The question is right.
In three years' time, this business has to be a $50- $75 million business in platform revenue. Should be there comfortably. So we are targeting $100 million, but $50- $75 million should be the platform revenue in three years' time. That's a better way to look at the platform revenue right now.
Sure. That was the only question. Thank you. I have to just leave right now. Thank you.
Thank you, Rohit. Thank you, everybody, for joining the call today. In case you have any further questions, please do write to us. Thank you. Now you can log off. Thank you.