To discuss the Intellect Design Arena Limited financial results for the first quarter of the fiscal year 2024-2025 ending 30th June 2024. The investor presentation and press release has been sent to you and is also available on our website. Our leadership team is present on this call to discuss the results. 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; Ms. Vasudha Subramaniam, CFO. Besides, some other senior members of the Intellect Management Team 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 a 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 Raise Hand, and we would unmute you so that everyone is able to listen to you. Once they have happened, I would like to remind you that anything which we say refers to our outlook for the future is a forward-looking statement. This must be read in conjunction with the risks that the company faces. With this, I request Vasudha to give her briefing. Over to you, Vasudha.
Thank you, Praveen. Good evening, everyone. I'm happy to review the financial highlights of Q1 2025 with you. Our total revenue for the quarter was INR 605 crores, with license revenue recorded at INR 125 crores and AMC at INR 121 crores. We had a gross margin of 57%. Our EBITDA was INR 121 crores, which is 20% of our revenue. Our PAT was INR 74 crores, and PBT was INR 98 crores. During the quarter, we have collected INR 556 crores, and our cash position, as at the end of June, ended at INR 813 crores. During the quarter, we had won 11 deals and have gone live on 12 digital transformation projects. Our DSO as of 30th June is 126 days, and excluding GeM, it is actually 101 days.
Moving on to the LTM metric on a comparative basis, our total revenue for the last 12 months was INR 2,318 crores, with license revenue at INR 458 crores and AMC at INR 463 crores. Our EBITDA crossed INR 500 crores, which is 22% of revenue. Our collections during the period crossed INR 2,300 crores, and our PBT for the period was INR 418 crores. So during this period, we had 152 deals, and we have gone live on 56 digital transformation projects.
You mentioned about the.
DSO has said.
Meaning about the GeM. We have excluded GeM from this.
Yes. So when I say comparable basis, we have excluded GeM in this. Now, talking about the composition of the currencies in the revenue, USD is at 37%, followed by INR, which is represented by 26%, CAD 8%, GBP is 14%, EUR 6%, and others constitute 9%. Now, to give more color about the new deal wins for the quarter, we had three new deal wins in North America. One with Vancity, Canada's largest community credit union. The second is on the insurance company. And the third is again on the wholesale insurance brokerage company. So we will hear more about it from the CEO. And there were three new deal wins in India and Bangladesh. One on the Indian public sector insurance company.
Second is the major one, which is a leading financial institution and a global investment management firm jointly created a strategic alliance for the wealth. And the third is the stock exchange in Bangladesh. In AMC, we had a couple of new deals. And in the Middle East, in Jordan, we had one deal. Talking about the accolades, we were ranked number one by IBS in retail core banking, transaction banking, and in retail lending. Yeah. And this is again another accolade on the analysts have reviewed us and for Datos Insights and Celent and others. Talking about the pipeline, we have crossed INR 8,500 crore during the quarter, which is, in fact, more than $100 million for the quarter, I would say. And on the Destiny Deals, we have about 86 Destiny Deals with an average size of about INR 52 crore.
The destiny deals are increasing from 73 in Q1 to 84 last quarter to 86 in this quarter. Out of the 86 new deals, 23 deals are having a value of more than INR 500 crores, and 28 are in the range of INR 30 crores-INR 50 crores, and 35 are in the range of INR 20 crores-INR 30 crores. Let me hand it over to Arun to talk about the Purple Fabric.
Welcome to all of you. So this I'll take slightly later, the Purple Fabric. Let me just comment on the business results first. So I think we finished our quarter on INR 600 crore plus revenue. There's a fifth quarter in INR 600 crore when we crossed INR 600 crore as a revenue. And I think our journey all the time in the last few years was INR 100 crore each time, INR 500 crore, INR 600 crore. Now the journey we are waiting for is INR 700 crore. So this period of INR 600 crore has resulted inclusive of GeM going away in Q3, but still we are able to sustain the watermark above the INR 600 crore number. Our focus is to get to INR 700 crore. So we are preparing the organization for INR 700 crore per quarter number. And that's what the entire eMACH.ai and Purple Fabric, which I was showing the slide, will drive towards that.
In the journey of INR 600 crores to INR 700 crores, I would say the wintering period for us has gone slightly longer. This quarter, we could have moved away from wintering season because one deal of INR 30 crores plus has been postponed in the last week of June. This deal was almost on. It is signed by the MSA, but the deal has not been executed just because the bank financial budget limits are over, and they will be signing this deal in next financial year starting January, which is our Q4 quarter. With that, we could have managed all the expectations of the investor from a quarter-to-quarter perspective. But overall, our traction is extremely, extremely high right now. As of now, our costs also contain around INR 480 crores range. And that is a range which we'll be maintaining in the next few quarters.
So the new revenue that is getting generated will translate into the 80% of it will translate into the margin of the organization. So that's an important point which you mentioned all the time that how is the margin improvement will be happening on a specialized basis today. This quarter, maybe it will not show the right number because of the single deal of INR 30 crore, which could have come to the margin itself. If you add that, the margin could have been better. During this quarter, we won very significant deals. So sometimes you may not know the intensity of these deal wins when we win in Canada or when we win in the U.S. or when we win in Australia. And I would like to invite Rajesh to say, when we say Vancity deal, we publish a press release.
But what does it mean to come into entry into the Canadian market, a credit union market, which is run by an over 40-year-old system, 30-year-old system to enter a new player in a market? So what went behind winning those deals? Because then what is the futuristic view of winning such deals in Canada Vancity itself, Rajesh?
Yeah. Thank you, Arun. I hope you can hear me. So let me just talk a little bit about Vancity. Vancity is the largest community credit union based out of Vancouver, which is the western zone of Canada. And it is the largest credit union in Canada. And this is a deal that we have been following through for the last 18 months. And this deal is very significant because, first of all, the deal is about a digital engagement platform for retail SMB and subsequently also for the commercial bank. So it's a complete digital experience, transformation experience deal. And this is a deal which will be where we will be doing the full managed services on Azure cloud. So that's the contours of the deal. But why is this deal significant?
It is because in the credit union space in Canada, there are a couple of vendors who are the providers for this digital engagement platform or lending platform and core banking platform. And winning this deal from one of those existing providers who had actually some time back, some time back tied up with Backbase and that implementation failed for them is a very significant milestone for us. And Vancity is a leader in this space. And therefore, there is a lot of buzz in the credit union space. And we have a couple of leads which have come up after our announcement of the Vancity. And we have now started going into the implementation part of this.
So this, along with the footprint that we have from an GTB perspective in Canada, makes us a full scale starting from credit union space all the way to tier one banks, a full space where we will have our products in the market. So that's about Vancity. But let me talk specifically more about North America. I think a couple of quarters back, we had talked about at least from an GCB perspective, we had talked about Europe as our strategic growth. And I think over the last couple of quarters, we have demonstrated that we have been able to build a good momentum in our Europe market. And when we look at Europe, when we look at Europe, we are seeing a very good pipeline being developed in Europe. And you will see the results over the next couple of coming quarters.
After Europe, we decided that we will get into Canada from a GCB perspective, leveraging our GTB footprint. That's what we've been doing for the last couple of quarters. I have actually been in North America for the last five weeks, spending time predominantly in the U.S. We have just announced. Some of you may have read it. We have just announced that we have hired Janine, who is going to be leading our GCB business in the U.S. market based out of North America. She and I spent a lot of time meeting prospects, consultants, partners, etc., to understand the contours of this market and deciding what would be a strategy to enter into the U.S. market. The U.S. market, as you know, is a highly regulated market, tough market, but also from a TAM and a SAM perspective, very huge market. So we are very positive.
We are looking forward to, in the next couple of quarters, into our U.S. market entry. Along with what we had, Janine, we are putting a team of people with Janine. Some of them we are hiring from the U.S. to get the U.S. experience. A few we will be transferring from India. So we're putting a team of people to go after the U.S. market. And we should see some momentum being built up in the U.S. market.
Janine comes from a very strong domain expertise. She has worked in Santander and PNC Bank. So we are looking forward to working with her as we take our journey back. So that was a high-level commentary about how GCB is moving from Europe as a strategy, went to Canada, and now entering the U.S. You will hear in the next couple of quarters and years to come about our progress in the U.S. market. Arun, back to you.
Thank you. Thank you, Rajesh. Actually, last almost 90 days since we met on 9th of May, which we announced the result, it's not even 90 days. I think all of us are on the road. So most of the management team is on the road in various countries, obviously, which resulted in travel costs to go up. But otherwise, I was on the road. I visited eight countries during this period, met close to 70 people from the customer side, from partner side, conducting multiple meetings in each country, the events which happened in IGTB, Oxford, in London, and then followed by Money 20/20. I think we've never been so busy in the last eight years and generated close to 120 leads, almost two leads per day is coming up our way in post-eMACH.ai April.
When we did a 300-person workshop in Chennai, after that, with the picture which I showed in the beginning, the entire magic of eMACH.ai is surfacing. At this point in time, I just want to invite Manish to see how it's panning out for him in winning the deals in Australia. These are all the difficult markets. Rajesh talked about the U.S. market. Manish, over to you.
You're on mute, Manish.
Oh, thanks, Vasudha. And Arun, thanks for giving the brief before this. Like I've been sharing in the previous quarters also, our best-selling product on corporate treasury continues to help us win in the marketplace. So we closed two more deals in Australia in this quarter, which is primarily to help banks, to help the corporates to raise better deposits, get them better investment products, and get them better managing their liquidity better. So two big deals, wins in Australia. After the previous quarter, we had two deals, one in Australia and one in the U.S. around liquidity. So liquidity, our flagship product, continues to help us create that, deepening the gap between us and anyone else because everyone else tries to extend that out from a core banking that I can also imitate and do this. We built the real competency around this.
Today, we've got about 54 banks worldwide which leverage this capability to extend this, bringing this efficiency to the balance sheet for the corporates as well as for the banks. That's been very successful. We also closed two deals on DTB in the Middle East. Both the product and the market are flagship for us. We continue to win on DTB in the Middle East. Like Arun said, the amount of time all of us were on the road, we've got across North America a number of good opportunities which are maturing. Next two quarters, we will share a number of them.
Unfortunately, one deal where we got signatures on the MSA is just the last signature where they had to postpone their budget spend from starting in September, the program which they were going to sign in June to start in September, to now start in January, and they will sign in January. Everything was done on that. So that's a significant one. Like Arun said, INR 30 crore, which got deferred. The deal is one. So we should show us in our Q4 from that perspective. In Europe, also, we've got good momentum in the UK and France going right now, Australia opening up. And there's been a big focus on developing Asia equally.
What Arun said, two deals a quarter, even Asia, which has not been very strong for us, was very good-looking and has good potential for us in the coming couple of quarters where we will show good results from there. Across the board, in all markets, right now, activity is at an all-time high. The opportunities, what we call in a P4 stage, number of these things are there. How across the next 2 quarters we bring that in, I think that's where the team is focused in. Thank you.
Yeah. So coming to the next area, Intellect AI, I think this Purple Fabric, you must be reading on the LinkedIn. I'm posting the message every day. So I've reached up to four messages: PF Imagine, Purple Fabric Imagine, Purple Fabric, Purple Fabric DIMS, Purple Fabric Expert Agent, Purple Fabric Triad, and two more are left. So in this slide, which I'm saying is that AI, which is a hot product, and so much generative AI is there. Our research teams had looked at this problem very differently. They looked at each persona. What is required for a product manager to look at in AI? What's CIO looking for AI? What operations managers are looking for AI? And what compliance managers are looking for AI?
So based on all the four personas, we designed one of the most comprehensive AI products in the marketplace where we signed up with all the five consulting firms over there, from Accenture to EY, KPMG, Deloitte, PwC. The beauty of this product is it is a comprehensive enterprise-connected intelligence platform. It is using a different set of technologies. It is giving a choice to the customer to look at it, what kind of LLM model one wants to use. Now, Banesh will tell you how many workshops and boot camps we have done in the last 90 days from May to now. Almost every day, there are two or three boot camps or webinars happening, which is driving a huge amount of lead generation. So over to Banesh on carrying forward this conversation.
Thanks, Arun. I think Arun's explained the overall Purple Fabric. Intellect AI has been actually working a lot on AI initiatives for a long time right now. I think what we've actually done is we are now able to implement AI using all the large language models, the LLMs. And the LLMs are evolving. Just about every couple of weeks, we see upgrades taking place by all the LLM providers. I think what our platform provides for a financial institution is the ability to govern AI initiatives. There's billions of dollars worth of money that is being put in AI by most of the financial institutions. Actually, all companies across the board are spending an enormous amount of money on AI. I think while it's on a hype cycle, I think very realistically, the time has come for a significant change to transforming operations and financial institutions using AI.
I think the traction is significant. We did about over a dozen different types of boot camps. Some of them are multiple discussions with certain clients. I think we're building a very deep pipeline of actually helping the clients implement AI initiatives with governance, with control on data, with control on security. At the same time, the different people and different personas in an organization can actually make a difference to how they can capture business outcomes from different AI use cases that we are putting together. We have over 55 documented AI use cases, another 80 odd that we are looking at right now. Now, if I look at the quarter, so our AI platform, which is at the heart of our insurance business, so Purple Fabric is what we have sort of positioned the name of this platform.
Purple Fabric, along with eMACH.ai for insurance, last quarter, we did 4 deals. This quarter, in this first quarter, we have done two deals. Two more deals were signed, but they just didn't make the cutoff for 31st of March. I must remind you that all of these deals are using a combination of eMACH and AI. And also, all of them are subscription deals. So from a financial perspective, you will have to see that these are longer-term subscription type of calculations on the financials. I'm also happy to say that our wealth and capital markets business, I think Vasudha touched on two deals, but just to talk a little bit more about it. This is an existing client that's actually doing the first implementation in Bangladesh of a commodity derivative exchange for which we are providing our—we have a brokerage platform called Capital Alpha.
We are actually implementing that for a very large commodity exchange setup in Bangladesh. The second is very exciting. It's the largest company in India, a joint venture with one of the largest asset managers around the world. The asset manager manages over 10 trillion in assets under management. I think we are seeing a phenomenal increase in wealth generation across the world. And more and more people are actually talking to us about how we can implement our eMACH wealth solution along with what we used to call embedded AI, but it uses a combination of Purple Fabric and the eMACH suite that we have to implement these wealth and capital market mandates that we won. We won three other ones. I think the contract's in progress. There's been confirmation that we've won them. One of them is the largest investment manager in Saudi.
The other one is the largest private bank in India, one of the largest private banks in India, not the largest, but one of the largest. And also, we've won the mandate of one of the largest global multinationals that's wanting to scale up their wealth business. So I think the wealth and capital markets are a fantastic pipeline to look at. The eMACH resonates, the AI embedded resonates. And I think over a period of time, that combination of eMACH and AI, which is eMACH.ai positioning, is a better position for the future. Thanks, Arun.
Thank you, Banesh. I think so I talked about it last two years back when I was looking at partners and distribution strategy. I think this year, we started the journey with making our applications partner-ready. And eMACH.ai plays a critical role in being partner-ready systems. So from an investor perspective, what does the eMACH.ai mean? Why are we so excited internally and why do we want to—so how do we simplify the language of eMACH.ai? It's an element for a typical investor because the technology should say huge excitement because it's an open finance platform. So today, the word open finance platform, which is a first-principle thinking—we call it first-principle thinking—means we ask a question, "Why does a bank exist?" Which is because events happen in the life of a finance—any of their customers.
So if we design a system which is based on the first-principle thinking from events in the life of a retail customer or a wealth customer or an SME customer or a corporate customer, and then look at the services the bank provides, and which gets connected to other applications, which is through APIs on a cloud, and make it personalized, headless, and provide intelligence to it, it removes a lot of complexity which a bank has built over a period of time. They can wire the entire application based on customer desirability. And that's why Rajesh, when we selected in Canada, because we found that digital experiences, if it is based on first-principle thinking, we are mapping customer desirability to the business outcome, which we call organizing the thinking space, expanding the performance space, and impacting the business outcome.
This is where we are able to put 329, decompose all banking business in just one single book where all the elements of the banking have been put onto the single banking chart. So now, once we put this chart in front of the customer, he has a choice to put the entire chart where what he needs. So we are not selling the full product. We are selling what he needs. And if he needs portfolio management only in the wealth management system, he can say, "Portfolio management is required. I can do it." If he requires only a relationship manager office because he has an existing Avaloq install and he wants RM office, we can give RM office. Or this can be extended to the existing system, and coexistence is possible in the existing application. That's what we are able to disrupt.
Now, that makes my GSI, the Global System Integrator, very interested in our technology. We have conducted almost one session every week for each of our Global SI on eMACH.ai because then they can use my specific microservices, a set of microservices, to include in their value proposition which they are offering to their current customers by doing and accelerate their journey. When the budgets are less, they can expand that space substantially because there are 329 microservices. There's 500+ events and 1,700 APIs. Along with that, we built up iTurmeric, which I explained earlier. It's a completely codeless platform for composability and solving four key issues of transformation. For any transformation, you need integration. You need UX. You need workflow. You need data.
Now, all of it is wired and comes from a single platform, reducing the cycle time for delivery to half as well as the number of defects to less than 10%. Almost 80% defects are not there because of the codeless platform. Combining with Purple Fabric to build intelligence agents along with the operational process, it is a truly partner-ready technology. We took some longer time to get to partner-ready. In 2022, you were asking a question, "Why don't you go to partner-ready?" We wanted to ensure that they have the right toolkit, the right methods to get into the partnership model. The new leads which have come normally, we used to add some 50 leads per quarter. This time, we add 120 leads in a single quarter because most of the additional leads come from our partnership network.
We have close to INR 600 crore funnel with the partners which we are working on. Some of the detailed conversations are happening where partners are getting certified themselves on iTurmeric or Purple Fabric and going together in a few deals over this period of time. We are seeing this is a very disruptive technology. The opportunity going forward is significantly large. Because of that, though the first quarter resulted not in line with the expectation of the industry of about INR 30 crore slip on the contract, but 15% growth, what we talked about last quarter, we are fully intact on that number. That's what the current state of business is. At this point of time, I just want to leave for question and answer. I have seen more than 200 people join in this investor conference. So we can have a good conversation based on understanding of what we are doing in eMACH.ai in this technology space.
Thanks, Arun. Now, the forum is open for a Q&A. In case you want to ask a question, please click on the raise your hand. I repeat, please click raise your hand, and we will unmute you, and you can ask the question. Now, first, we have Mr. Samir Dosani. Mr. Samir Dosani, please unmute yourself.
Can you hear me?
Yes, Samir. Please go ahead.
Yeah. So a couple of questions. One is Rajesh on U.S. business. We're trying to foray in the U.S. as a geography. If you can just highlight which are the areas that we are targeting and how is the competitive intensity because it's very difficult to sell software, banking software in the U.S., we've seen in other players. So what is the competitive intensity, and when do you think there will be initial signs of some progress here? And whether it will require any investments on your part? The second question is for Vasudha. I mean, when I look at your funnel and deal wins that have been phenomenal, but when I look at your last 12-month revenue growth, obviously, excluding GeM, also has seen some deceleration, right? We have come down to 12%.
So do you think this can accelerate given your deal wins and whether you hold your management guidance on revenue? And the third is on GenAI, very simply, if you can just indicate the number of projects, in some way, can you give us some metric to quantitatively track that this is the number of projects that you have worked on versus last quarter, this was the number of projects we have worked on? So we can track that. So these are the key broad questions.
Sure. I can take the first question. So I think from a U.S. perspective, as you rightly said, so first of all, it's a very good question. I think as you rightly said, U.S. is a competitive market. It is also a highly regulated market where you can have federal requirements, state-level requirements, etc. So you need to make sure that your platforms are certified and attested. However, having said that, the market opportunity is very large. And what our market study has indicated to us is that there is a lot of legacy, and what we bring to the table, eMACH.ai, can really disrupt the U.S. market if we get our act together. So the opportunity is huge. And so that's the landscape. Starting from a strategy perspective, I would say that's the competitive information.
So I wouldn't like to discuss it on this call, but enough to say that we are in the process of identifying what would be the segment and what are the key products that we will take into that segment and discussing and internally debating the GTM strategy for that. So over the next couple of quarters, we should have that in place, and we will go into the market. It's also important for us to put a team of people. So there is some amount of investment that we are making from a U.S. team perspective. I also said we will be transferring some of our people from India.
So there is some amount of investment which we will be doing, both in terms of team as well as in terms of making a platform ready for the U.S. market. Just a little bit more color around the U.S. market, what we are seeing is that some of the Indian competitors and peers are able to enter this market. With that and our architecture and the eMACH.ai that we bring to the table, we believe that if we get our act together, we can really disrupt the market.
Now, let me take up the second part of the question, and Arun might add on. Yes, true, it is like 12% in the first quarter. As we said, this is the first quarter, and we always want us to be measured on a yearly basis, not on a quarterly basis. We still stick on to the guidance of 15% excluding GeM, and that we are highly hopeful that it will happen. It so happened that, like Banesh mentioned, there were a couple of deals for which the contract got signed, of course, the cutoff date, and for which we could not accrue the revenue in Q1. It so happened, and there are some other deals with a high value that we could not accrue this quarter and which got deferred. We are still hopeful of the strong pipeline that we emphasize and that we'll be able to meet up to the guidance.
I'm just tracking the last 12-month revenue, not QoQ . I think that is the metric. I'm sure that is what one has to track. Yeah. Sorry.
That's right.
Okay. Okay. And GenAI level, any?
Banesh, how many projects you are working on?
So just to get this right, right? So we track our pipeline in a platform across all our product lines. Our Purple Fabric pipeline today has almost got, when I last looked at it, it's got about 35 discussions in progress. Remember, AI is at a very early stage. So we have a very rich pipeline building for Purple. We call it Purple Fabric, as you just heard from Arun. And I think that pipeline will be looked at. We will obviously have a pipeline like any other pipeline discussion we would have. It's not just a GenAI. It's more than just GenAI.
35 projects currently. How much was it like six months ago? Any thoughts?
35 discussions are in progress with various clients. Many of those.
Six months back. Six months back, how much was the number? Is something we can mention that.
The platform has only just been done. I would say this pipeline has been built over the last four to five months where we actually have used Purple Fabric to be able to get people to use GenAI. We've been working on the LLM for many years. We've been investing in it. The LLM has made a difference in which AI is managed.
Got it. Got it. Sorry, last, if I may allow a follow-up, so this investment in U.S., was that impact of a margin improvement trajectory, or it was already built in? If you can comment on that, Vasudha. Thanks.
That's what we are currently discussing. Let me be in a board meeting also what kind of new numbers to be put, if additional investment is required or not. We are seeing, based on the more traction and winning, we can be able to articulate how many additional salespeople will be required. So it's not about technology investment. The more investment will be required in go-to-market investments.
Okay. So you're saying it will be higher gross margins, or will it initially have some lower margins like business, do you think?
Obviously, it will be lower margin in the beginning. Purple Fabric requires investment. So definitely, we cannot say it will and the revenue will not be front-loaded. Revenues are back-loaded in Purple Fabric, where subscription-based revenues are there. So that is one point which is to be clarified.
Sure. Sure. Thanks. Thanks. Thanks for that.
Next, we have Mr. Rahul Jain from Dolat Capital. Rahul, please unmute yourself. Rahul, you're there?
Yeah. I hope I'm audible.
Yeah, Rahul. Please go on.
Yeah. So basically, I have a couple of questions. One question is that what I'm observing from the last couple of quarters is that the growth in our implementation revenue has not been pretty much catching up the growth that we are observing on the license revenue. So is there any specific reason why this trajectory has gone down to 6%-7%, or does it include any L1, L2 services related to GeM for which probably it has a percolation impact there?
Yeah. So I think that's not a—with a codeless platform, our implementation revenue will be expected to come down. So we don't want to generate any—because that's not the most profitable business for us. Implementation business, we were doing it. We want to get it done with the partners, or we want—so that's the intentional approach which is being looked at from a perspective of creating more efficiency. And this growth of implementation may not be that high, and we would like to push license and SaaS revenue more.
And so when you say that also because there are partners also, is there a number that we could say that the number of deals that is going to third party versus implementation versus, let's say, a year back or two years back, any data that we could share?
It's too early right now. As of now, we are not saying that we have won too many deals with the partners. We have won 2-3 deals we are working with the partners. So that data is not sufficient to be shared. When it is ready, we'll share with you.
Great. And during the quarters, what we have also observed is the software expenses have, I mean, the main cost of services have basically increased during the quarter. Is it more because of the lot many things that you spoke about, the lot of action that you did, but eventually did not culminate into revenue, or these are general investments that have went into the quarter?
SG cost has gone up. So we acknowledge that SG cost has gone up for two reasons. One is generative AI. Some of the investment has gone, and consumption of the cloud has been baked into this. Some of the bundled cost with a cloud cost also got embedded into it. So these are two areas which are there. And the third, INR 30 crore investment, the deal which was there almost to close, which got postponed by the financial constraint of our client. But all the initial work has been set up for that. These are three reasons for our SG cost to go up.
Right. Right. Any input on the ideal tax rate that you are expecting for this year and next year that would be of help?
We can take it as 24%, Rahul.
For FY2025?
Yes.
Okay. Thank you. That's it from my side.
Thank you, Rahul. Please click on raise your hand. Please click on raise your hand in case you want to ask a question. Next, we have Mr. Mehul Panjwani from 40 Cents. Mehul?
Yeah. Thank you so much for the, yeah. Am I audible, sir?
Yeah. Yeah. Please go on.
Thank you so much for the opportunity. This is actually not a question, but a request to the entire management team because we are doing so much high-end work, and we have very promising products, and we are focused on disrupting quite a lot of traditional banking technology. So my request is that as shareholders, we should know what is it there in our product that is going to disrupt the market? Because just in your introduction, you mentioned that we are here to disrupt the American banking software market. So my request is that if we can have a couple of hours of session where we only talk about technology and not financials so that we know where our company is going.
Because right now, it is very because for a layman, it is very difficult to understand that because anybody can claim that, "Okay, I'm going to build a disruptive product." But whether we are really disrupting the I mean, and it is see, because I've been following this company for a long time, and I have been trying to understand a lot, and I also have a technology background. I was working in the IT industry, but still, I'm not able to figure out anything. I just go by whatever I Google and whatever I can make sense out of. But if you can if we have two hours of session for our fellow shareholders, whoever is interested, and you can demonstrate that, "Okay, this is what traditionally banks do, and this is what our software will do for them," then we also can be our champions through our network, etc. But more importantly, to understand our products. Yeah.
Okay. Thank you for this advice. We should do it. Malik, we should organize a two-hour session for the people. The two sessions, I would like to have two sessions. One on eMACH session and another is on Purple Fabric session. Two hours on Purple Fabric, two hours on this in the next one month.
Thank you so much, Arun. Yeah. I really appreciate it.
If you want to look at it, just if you want to really experience the power of Purple Fabric, in two days' time, we have conducted a session on Boot Camps where you can put the application wiring for a use case by a salesperson, not even a technology person. If a salesperson could be able to build up a Purple Fabric Expert Agent in two days of Boot Camp, so that is a simplification of the disruption. So for certain people, we are organizing a Boot Camp on Purple Fabric on 29th and 30th August. But for the individuals, that is for the company, but we'll organize a Boot Camp. So sometime we can see if you register and are willing to look at it, time to be spent of two days of understanding what AI is going to disrupt the market, what does it mean.
Definitely, sir. I would be really looking forward and eager to attend this kind of a boot camp because everybody's talking about AI, but I don't know. A handful of companies will be really doing actual AI work.
That's right. Because there's so much noise there. How to find the voice from the noise is a challenge for most of the investors.
Absolutely. Absolutely.
Yeah.
Okay. So I look forward to this two hour session first, and then obviously also boot camp as well. So I will be in—I will request Mr. Malik as well to—I'll send a mail out after the meeting. Yeah. Thank you so much. Yeah.
Thank you, Mehul. Next, we have Mr. Vivek Kumar from Bestpal. Vivek, please unmute yourself.
Sir, am I audible?
Yes, Vivek. Please go on.
So if I take a 3-4 year, I know I'm asking a quantitative question, but okay, leave this year. If I take a 3-4 year, we will go back to our 20% because you've been investing in a lot of eMACH, before. If you've come from your Investor Day 1, 2, which is exactly where you explain how the company is going to pan out and what you're going to do with your products. And you're across products, across continents, across countries, and across—like you are into insurance. Now you have AI and different business verticals. So can we count on 20% growth to be taken over a 3-4-year period? But this is purely quantitative question. I'm not.
Definitely. I think 15% we are looking this year. 20% is designed for. Up and down will happen. There could be 25%. There could be 15%. There could be 20%. 20% is the organization is designed for. Designed for long-term 20%, not one-time 20%. That's why these investments are required in a technology company like us, multi-product company, multi-geography company, because of ensuring that can we sustain this growth over the next five years or not. Otherwise, we'll end up in acquiring the companies and aggregating the companies. That's not what we want to. It's a pure organic company.
Second one is on your partnerships and if you can go deeper. You have explained clearly on the three verticals by the three vertical heads. So similarly on partnership, how it is shaping up because we have started and how is the distribution? You remember in the last two conversations, you were saying our next one, two years is about DDD distribution, distribution, distribution. So if you can tell us more about how it is shaping up and how confident and.
The confidence is now. We have started. The distribution partners have started chasing us. Earlier, we were chasing them. So the reverse flow has happened. It started to happen. We need to demonstrate to them that there's money for them. If we make $1, if they can make $2 from us, then they are in the game. If our technologies are not able to help them making $2, so we need to demonstrate to them that in the next few years, they can build up their own practices of $10 million, $20 million, $30 million, $40 million dollar practices around eMACH.ai. And that's a process of building confidence we are going through. And that's the way Rajesh is traveling, Manish is traveling, I'm traveling. And meeting each partner, their senior executive, their CEOs, their business head of the country to explain what eMACH.ai and how it is disruptive.
The question Mehul asked, same question. We need to explain face to face. It cannot be explained on Zoom call. So that's what we are in the process of doing it. And that process will continue for another two more quarters. And then we get into some few deals to execute. One deal we executed with one of the large partners. It is going live in the Philippines, which is a very good success story. Obviously, one success story of winning the deal and making the client successful speaks a lot of volume and partnership game.
We will be having much more better.
Yeah. Then the acceleration will happen only after 2, 3 quarters. We will see the acceleration.
Yes, sir.
Okay. Thank you, Vivek. In case anybody wants to ask a question, please click on raise your hand. Next, we have Mr. Jayprakash Parekh. Jayprakash? Please unmute yourself. Mr. Jayprakash? Are you there? Looks like Mr. Jayprakash is not there. Now, Mehul has asked the question again. Yes, Mehul, please ask your question once again. You wanted to ask some more questions, I believe. Please answer, Mehul.
Yeah. Yeah. I have unmuted myself. Thank you so much. Arun sir, one question from the follow-up on earlier question you are answering. So who are the partners? How many partners do we have? And can you just share some details about who are the partners?
We have all the five partners: Accenture, PwC, EY, KPMG, Deloitte in consulting partners in global system integration. We are working with HCLTech, Coforge, Tech Mahindra, Wipro. Yeah. L&T IT, Hexaware, Persistent.
Okay. So one follow-up question on this. Sir, the deals which we have won are through which partners? So far because we have won very few deals, right? That's what I understand.
Yeah. We just want to keep it confidential. That may disrupt the confidentiality equation with the partners, so.
Okay. Okay. Any particular reason why we do not have TCS and Infosys as partners? Is it because they have their own banking product?
That's right. That's right.
Okay. Okay. Thank you so much, sir.
Okay. Praveen, it's almost on time. Praveen, what happened?
He seems to have logged off.
Okay. Please go ahead asking the question. Unmute yourself. Vipin?
Yeah, please.
Mr. Vipin A brahim, you are there? Mr. Vipin A brahim?
I will ask this question that the revenue 15% which was mentioned, is based on the reported numbers of last year or after adjusting the government contract?
After adjusting the government contract.
Okay. All right. Thank you.
Very good.
Thank you, Vipin. Arun, there's no new. No. In the situation, ask any question. Mr. Vivek Kumar wants to ask one more. Can we?
Yeah, sure. Just one more. We have another four minutes to go.
Yeah. Okay, Vivek, can I ask a question again? Unmute yourself.
Yeah. Yeah. Yes. I'm unmuted. So. Sir, just continuing on the partnerships. So if we think that they pay off and what percentage of our deals will be through partnership in 2-3 years, or four years, whatever, I don't know because when will we feel that this is done and we have succeeded in our distribution and what percentage of deals would.
The target is.
Is that close to something like that? Sorry.
Close to 20% deals should go through the partners.
We have only two minutes. I have one more question. Can I ask, sir, or?
Yeah. Sure, sure.
Two minutes, but one more thing is there.
Sure, sure. No, no, we can continue.
So you caught us back. You said there are three wide movements: this BaaS and GCB Digital with the core banking and insurance. And you spoke about the last two, but the initial BaaS thing, any update from Manish Ji?
We did one deal in the U.S. last quarter with a fairly large top 20 U.S. bank. That worked well.
So you have 25% in the U.S. market?
Yep. It's focused on.
I think we launched the BaaS in the U.S. market. Mainly, Manish, BaaS we have launched initially in the U.S. market because that's more technology-savvy market.
Thank you, sir. Thank you very much.
Thanks, Vivek. Arun, we have a last question from Mr. Rohit Balakrishnan from iThought PMS. Rohit, please unmute yourself and ask a question.
Yes, sir. Good evening.
Rohit?
Yeah. Hello. Am I audible?
Yeah, Rohit. Please go ahead.
Yeah. Sorry, I was on mute. Good evening, sir. Good evening, Arun sir. Good evening, everybody. So very encouraging to hear the commentary that what you're seeing in terms of your leads and the kind of traction that you're getting. Sir, I mean, not immediately, not in this year or not in this quarter or next 2, 3 quarters, but let's say 2, 3 years out, all what you've been trying to do, I think, is you're trying to invest ahead of the curve. But given the business model, as you have also mentioned in the past, that incremental margins are going to be very high at some point of time.
I just wanted to understand, I mean, how far are we from that inflection point where 20%-22% margins where we can go beyond that and get to maybe closer to 30% or even 30% and beyond? Because many of the companies that are there in the space, even in India listed, they have those kind of margins. You also talked about that these kind of margins are not unachievable. Just wanted to hear your perspective. How far are we from those kind of margins?
We cannot specify because it's a continuous investment in this area. But the question is, margin as of now, our market share is more important than margin share right now. But the business model which you are seeing and looking at for competitors, the potential of the margin as soon as we cut down the investment can be 40%. So that's not a big issue to bring the margin at 40%. But the question is whether we want to cut down those investments or we want to take a global leadership and keep on investing. So that's the only point of concern.
If partnership network, what we are trying to build, it starts paying off, this time period can be shorter. If these 12 partners which we identified, if they start producing results quarter on quarter, it can come to 30%+. We can get it much quicker in the next 6-8 quarters. We can get into that kind of a number. But as the time pans out, I think we expect it should be 30% in 6-8 quarters as a management team. But market sensibilities, we need to see how the time pans out.
Also, no, that's very helpful. No, sir, I think that's pretty much it. That's it from my side. Thank you very much and all the very best.
Thank you.
Thanks, Rohit. Arun, that's it.
Yeah. Thank you very much.
I don't have any further questions. The time is also over. Thank you very much, everybody, for participating in the call. In case you have any follow-up questions, please do write to us. Thank you very much. Thanks to the management team also. Thank you very much. You can log off now.