Ladies and gentlemen, good day and welcome to Latent View Analytics Limited Q1 FY 2026 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Asha Gupta from EY LLP Investor Relations Management.
Thank you, Shubham. Good evening to everyone and welcome to the Q1 FY 2026 earnings call of Latent View Analytics Limited. The results and presentations have already been mailed to you, and you can view them on the website www.latentview.com. In case anyone does not have the copy of the press release or presentation, or you are not marked in the mail, please do write to us, and we will be happy to send you the same. To take us through the results today and to answer your questions, we have the CEO of the company, Rajan Sethuraman, to whom we will be referring as Rajan, and we have the CFO of the company, Rajan Venkatesan, to whom we will be referring as Raj. This is just to avoid any confusion while doing the transcript.
We will start the call with a brief update on the business, which will be given by Rajan, and then followed by financials given by Raj. As usual, I would like to remind you that anything that is mentioned on this call that reflects any outlook for the future or which can be construed as forward-looking statements must be viewed in conjunction with the risks and uncertainties that we face. These risks and uncertainties are included but not limited to what we have mentioned in the prospectus file we've prepared and subsequent annual report that you can find on our website. Having said that, I will now hand over the floor to Rajan. Over to you, Rajan.
Thank you, Asha. Thank you all for joining us for this quarterly investor update. You all have probably already seen the press release that we have put out on this quarter, so I'm not going to repeat whatever is there on the press release. I just wanted to start off by saying that we are very happy that we had a 10th consecutive quarter of growth, and we are starting to see some more positive signs in the external environment. I wanted to touch upon a few points that have transpired for us over the last quarter, and also some early thoughts on how the rest of the quarters in this fiscal are looking like. After that, I will pass it on to Raj to provide some additional commentary on our financials. First off, you would have seen that we won seven new accounts this quarter.
More on the fact that we had seven additions to our logos, I'm really happy about the quality of new clientele that we are bringing on board. On three of them, we see a fairly high growth potential as well, which could materialize and transpire even within the next 12 to 18 months' timeframe. In addition to that, our existing accounts also grew really well, especially in the financial services space. We saw that two new accounts that we have added on in the last six months are already showing immense potential for growth. If all things go well, we might very soon be able to share that we were able to go from zero to $5 million in one of those accounts within a 12-month period. There is definitely a lot of momentum in the financial services space and BFSI.
Last year, that was the fastest growing vertical for us. We are expecting that there will be a repeat of that, and in fact, this year's growth will far exceed what we did in the last year. There are also some early signs of revival in consumer goods. I don't want to specify numbers here at this time because it's still a little early days. However, we did have new wins in this quarter. More importantly, we are starting to see some traction with the CAO/PPO audience as well, as far as the consumer goods vertical is concerned.
In some sense, we are starting to see that many of the clients are starting to think about a more integrated transformational program that brings together the three important capabilities that we are taking into the consumer goods vertical: research and development, which helps them part strength and identify new product innovation; supply chain capabilities that help them all the way from procurement, manufacturing, inventory planning, demand planning, and on-shelf availability, and integrating that with our revenue growth management capabilities that ensure that all of that translates into real money on the top line as well as bottom line, helping with product price promotion architecture. We are just starting to see the emergence of conversations where these capabilities can be integrated into one holistic kind of an approach, driving through digital transformation for them.
Finally, we are also seeing in the consumer goods space a lot more traction with our Databricks partnership. In fact, I'm about to travel to the U.S. in a day for a series of events that we'll be holding in the consumer goods space in Atlanta, Dallas, and in New York. The consumer goods GCM lead for Databricks will be a keynote speaker for us in one of these events. There is quite a bit of interest and traction from the Databricks side as well. If you recall, we have talked about three important pillars of our growth strategy in terms of getting to the $200 million mark over the next three years. I wanted to touch upon each of them in terms of what's happening and how we are doing. The first one is our strategy around the focus accounts that have been identified, about 26 of them.
There are three broad objectives there. The first one was just to significantly increase the sales process rigor and discipline. This is something that the project team has been focused on over the last three months, and I now believe that we have put in place a fairly robust mechanism to understand where we are in terms of the opportunity funnel all the way from opportunity identification through to closure and what could be bottlenecks holding up in each of those opportunities in each of those key accounts. That mechanism is in place. At this point, the focus of the project has shifted to expanding and defining the opportunity space at a more granular detail, and that work is currently underway. There is also work being done on sharpening the relevance and narrative that we have around the content and solutions that we are taking into the market.
The focus account strategy, I would expect, will give us more benefit in the remainder of this quarter and through the fiscal, not to mention the next two years as well. The second pillar that we had talked about earlier was the partnership with Databricks. I already alluded to how there is good traction with the leadership in the consumer goods space as far as the Databricks partnership is concerned. From our end, we are going ahead with the formation of a full Center of Excellence around Databricks that will bring together many aspects, starting right from the relationships that we have with Allianz, Louise, and account executors, and the industry solution people right on the Databricks side, then stepping up on the GCM and the sales team that we have, and then moving on to people we are bringing in from a solution and the technical architecture standpoint.
Finally, the team that we are building out to support Databricks on a profitability side. This Databricks COE will now have an identified leader that we have already identified internally, and this person will now bring together all of these different elements that I talked about to further drive and accelerate how we do on the partnership. We are also in the process of expanding the GCM and sales team on the Databricks side. One of the people has already joined us. There are two more roles. We have made a few offers, and we expect to close them fairly quickly. There is also a great deal of traction with Databricks on everything related to generative AI.
In the recently concluded summit by Databricks, the Data and AI Summit that happened in San Francisco, they talked a lot about how their Databricks platform is going to dramatically improve GenAI capabilities for everybody, integrating even native capabilities for Gemini or OpenAI, for example. We are also looking to capitalize on that significant shift and new functionality that they are incorporating into the platform. To that extent, recently we had organized a generative AI workshop for one of the prospects that we were chasing, and we were able to convert that account on the back of the GenAI workshop. This is a workshop that we were able to jointly orchestrate and conduct along with Databricks. This is one of the accounts that I'm expecting to scale to $2 million or more, even within the next 12 months or so.
There's a great deal of interest in this account, and on the back of this touchless Databricks, it's also looking at taking us into 15 more workshops with several accounts, from their portfolio as well as from our portfolio. We were also very happy that many of our solutions, including Migrate Mate, ConnectedView, and Markey, have been included as part of the Brick Builder solution portfolio that is there in Databricks. At this point in time, we are also doubling down on building competency around SAP data migration. You would all know that Databricks has announced a solid partnership with SAP, and there will be a lot of work that will be related to managing SAP data within the Databricks environment and building capabilities around it. On the third pillar of priorities that we talked about, that was in the area of generative AI and Agentic AI.
The good news from our end is that we have, again, already identified internal leadership that is going to be running this Center of Excellence for us. Not only that, we have already staffed the Center of Excellence with 10 people, half of them coming from our own teams, experts that we've had within the context, and then we have hired another five people from outside. In addition to that, we are also supplementing the team with interns, many of them PhDs, who bring very, very special capabilities in terms of the type of use cases and architectures that we are taking. We are in the process of building out the team, and we'll continue to build out the team in the next two quarters.
At this point in time, for the current year, we already have $6 million of work confirmed on GenAI and Agentic AI, and there is another $8 million of work that is in the pipeline that they are actively engaged in, and we expect to close. This quarter also saw us getting recognized by Analytics India Magazine as one of the top players in the GenAI and Agentic AI space as part of their PMA Quadrant, and we are really proud about that outcome. Finally, when it comes to the actual focus of the GenAI Agentic AI COE, we will be doubling down on Gemini, Azure AI Foundry, and Databricks as the most important LLM platforms on which we intend to deliver the kind of work that we do. Of course, we will keep our eyes and ears open for all other developments that are happening in the space.
In fact, you will recall that one of the significant objectives that we have for the Center of Excellence is to do the R&D and the experimentation that needs to be done so that we are able to help clients resolve the optionality that is emerging in the space and help them choose the right technical architecture for their GenAI and Agentic AI business use case. Finally, before I hand over to Raj, I also want to update you on the development at our end. Our Chief Client Officer, Krishnan Venkata, who had been with us for 17 years, decided to take a break and pursue opportunities elsewhere. His last date with LatentView Analytics Limited will be the 8th of September. We are currently in the process of making some internal changes related to the consolidation of horizontal and how the entity will report.
At this point in time, all the entity team and the horizontal capabilities that were reporting into Krishnan will now report into me, and I'll directly oversee them. There will be an evolution over a period of time that will help us in terms of bringing the necessary management plan with some data shift on all of the accounts. We are very thankful to Krishnan for the service that he has provided to LatentView over the last 17 years. He was our first employee in the U.S., and it's in no small measure, right, in terms of the kind of success that they have achieved with us. Calling out Krishnan's contribution and thanking him for that. With that, I'll pass it on to Raj to give some additional commentary about our financials.
Thank you, Rajan. I think you've fairly covered the business update as well as the outlook in terms of where the business is headed. I'm going to keep it a little shorter, and I'll focus on the financials, and then we can open the floor for Q&A. In terms of the performance for the quarter, of course, we are very happy that we were able to report a 10th consecutive quarter of demonstrating revenue growth, with the total operating revenue coming in at about INR 236 crores, which, in percentage terms, was a growth of about 32% on a year-on-year basis. Right. What this also included was INR 22.2 crores of revenue from Decision Point.
You will all note that the acquisition of Decision Point was consummated towards the end of Q1 of FY 2023, and therefore, on a YOY basis, Q1 results for last year did not include the results of Decision Point. This, by the way, concludes one year since we acquired Decision Point, and of course, going forward, the goal will be to significantly accelerate that business. From the next quarter onwards, even the corresponding quarters will be on an apples-to-apples basis, right? It will include the results of Decision Point as well. In terms of what really drove the growth for this particular quarter, Decision Point, you would see that we've driven a split of revenue between Latent View and Decision Point. The Decision Point revenue split, there was a lot of positive momentum in the Decision Point business.
I'll come back a little later in terms of the commentary that we had on the CPG industry itself in the last few quarters where we were witnessing, I would say, strong microeconomic headwinds. We are seeing some, I would say, temporary letdown in that, and therefore, there is some good positive momentum. I'll come back to that. In terms of the other businesses, I think we are particularly pleased with the performance of financial services in this particular quarter, which delivered a revenue of close to about 21.3% sequentially and almost 48.4% on a YOY basis. We are fairly upbeat about the growth momentum in the financial services. You will all note that last year's financial services grew by about 60% on a YOY basis.
We would ideally want to replicate a similar performance this year, but at this point in time, we are fairly confident that the business could deliver a growth of a next of 40%. Right. Next, of course, in this quarter, we relatively witnessed, I would say, a flattish quarter, partially attributable to the fact that there were actually one of the projects that I think, or consulting projects that we had included in the last quarter, which came to an end. There was no follow-on work that we were able to sign up for those projects in this particular quarter. The positive update, again, over there is that there is some pipeline that was generated on the back of these one-off consulting projects that we delivered in Q4.
We expect that these pipelines would get converted in Q2, and we will start seeing growth momentum come back in technology as well. What we are happy to report is for the last quarter, we had, I would say, close to about two or three good logo wins in technology, and we will see the full benefit of revenue accruals from those logos in the subsequent quarter. Right. All in all, while this quarter tech was a little muted in terms of overall growth, we expect that in the coming quarters, tech will again sort of be a big contributor to the overall company-level growth. Our EBITDA margins, I would say, for this particular quarter came in at about 21.4% on a, this is on a reported basis, and on an adjusted basis, excluding the transaction-related costs for the Decision Point acquisition, came in at about 22.2%.
I would say this is largely in line with how we had guided our margins would be in Q1. We would also note that we had indicated that we plan to roll out wage hikes effective 1st of April. The wage hikes that were sort of given in this year, I would say, were slightly higher than normal, not so much on the fixed compensation side, but more on the performance and the variable pay side. We had given out fairly substantive increments. This is also in line with recommendations that we had received from an external consultant that we had engaged for the comp benchmarking exercise. The reported margin of 21.4% fully factors in all the wage hikes that were given. Excluding such wage hikes, ideally, our reported margin for the period would have been higher by close to about 3%. Right.
Therefore, in this particular quarter, we were not able to sort of scale the business to the extent there was an impact on account of wage hikes. A couple of other factors that impacted the margins for this quarter, of course, there was a drop in visa-related costs. You will all note that the visa expense is a little cyclical in nature, and therefore, a bulk of the expense for the business is typically booked in Q4 when we get the results of the H1B lottery. There was, I would say, a lower visa expense in this quarter. To that extent, the EBITDA was positively impacted. We also, by the way, in this particular quarter, did a higher level of marketing expenses compared to the previous quarter. The EBITDA impact was negatively impacted by wage hikes and higher marketing expenses and positively impacted by lower visa costs.
Coming to the PBT for this particular quarter, the PBT came in at about INR 62 crore, up 18.9% on a year-on-year basis. Of course, the profit before taxes was positively impacted by storage GME from some of the loans that we have given to our group companies, and that GME came in at about INR 6 crore. Going forward, the one update that I would like to give to all the analysts is that we are looking to rationalize some of the loans that have been given to our group companies. This is also in line with the new sort of transfer pricing structure that we put in place. It will ensure that these overseas subsidiaries are compensated for all marketing-related expenses on a cost-plus basis, and therefore, they may not see substantial investment.
It is a, I would say, a corporate call at this point in time to reduce the level of loan. Going forward, you may not see this level of forex gain or losses, and therefore, you will see steady state, I would say, EPS numbers going forward. The EPS for this quarter came in at about INR 2.46, a drop of about 5% QOQ. Of course, some of this is obviously led by the drop in the EBITDA percentage as well as in absolute terms. More importantly, the PBT for this quarter was also positively impacted by a couple of factors. One, the gain on intercompany loans that I just spoke about was INR 6 crore. In the last quarter, which is the immediately preceding quarter, that number was close to about INR 2 crore.
We had a higher gain of about close to INR 4 crore in this particular quarter. You also had the benefit of an election to move from the old tax regime to the new tax regime in this particular quarter, which has resulted in, while it's resulted in the EPR, the tax rate that the business will pay going forward from 29%. This is for the India business, from 29% to 25%. In the bygone quarter, this also positively impacted the deferred tax liabilities that we were carrying on the balance sheet, which were initially being carried at a rate of 29%. They had to be brought down to 25% in line with the new tax regime. Therefore, you had a one-time gain. There is a note to this effect included in the financials as well. Therefore, these were two things that impacted the EPS for the current quarter positively.
Going forward, I would say technology will continue to be our core growth driver, right? We believe financial services, again, while it delivered a solid set of numbers this quarter, will continue to grow in the coming quarters as well. From a balance sheet standpoint, of course, we continue to have a fairly healthy level of cash. Rajan spoke about the three big strategic initiatives. One, looking at deepening our client relationships; two, enhancing our GenAI capabilities through the Center of Excellence that we are establishing; and three, deepening our partnership with Databricks and also going to market aggressively along with Databricks to build that practice out. I would say these would be the three big initiatives or bits that we have d we will continue to allocate capital for these strategic initiatives.
In terms of the current order book, we have a fairly strong order book, which gives us reasonable confidence to deliver the 18%- 19% growth that we've been talking about. In terms of the pipeline, again, the pipeline continues to be fairly robust and healthy. Based on what we see, we will come back to the analysts maybe end of Q2 to give an update to see where we'll be able to go past that number, right? Right now, there seems to be fairly strong momentum in the underlying business. With that, I think I would say I've covered most of the updates that we had, and we can open the floor for Q&A.
Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Aditi Patil from ICICI Securities. Please go ahead.
Thank you for the opportunity. My first question is, on the organic business, was the growth softer than what you were expecting at the start of the quarter? If yes, what has led to the softness?
Yes. Aditi, on the organic business, I would say definitely the growth number of 0.3% that you see is a little softer. The other point that I did forget to mention, by the way, in dollar terms, the underlying business grew by about 2.8%. That is in rupee terms, and that's the numbers that you guys have access to right now. The underlying business grew by only about 1.6%, right? There is a currency impact in this particular quarter where the rupee appreciated against the dollar. The growth in the core business is definitely higher than the 0.3% that you see. Having said that, I did speak about a few projects that we did, and these were, I would say, this is only one type of project that we executed in Q4 in some of our large accounts.
We were hoping that the follow-on work on the back of the work that we had executed to sort of get stitched up in this quarter. I would say there has been a timing delay in terms of signing on the additional work. Also, while there was a healthy pipeline for the core business, which is tech, we have seen a small delay in converting some of those pipeline opportunities, which has resulted, again, in the slightly muted growth that you see in the core business. There is nothing that is out of the ordinary, or I would say, you know, there is no loss of customers or things like that. In the next quarter, in fact, we already see enough order book in the form of confirmed order book to deliver a healthy growth. This is for the core business.
Okay. Do we see any downside risks to our 18%- 19% USD revenue growth guidance for the full year?
Not at all. In fact, as Raj mentioned, some of the things that we were expecting to come through are now starting to come through, and we have seen some of those conversions happen even already in the second quarter. The second quarter numbers will not only be on track for the 18%- 19% that we have guided, in fact, it will also catch up with the slight dip that we have seen in the first quarter. At this point in time, we are very confident of going past the 18%- 19% number. In fact, I was just having a debate with Raj before this call whether we should put up 20% at this time. We will hold our horses at this time, but there is a great deal of confidence that we will go past those numbers.
Okay. This is very reassuring. I have a third question on the, what led to the strong recovery in Decision Point? Should we see Decision Point growing at the same pace as organic business in FY2026?
I would expect that their growth will impact the outskirts of the organic business because they are coming off a small base, if you remember, and they also had a dip in the quarter four. As I alluded to earlier, we are seeing positive signs and momentum. I talked about how clients are starting to look at a more integrated perspective, right, across R&D, supply chain, and RGM. We are also starting to gain more traction with the decision makers and the CAO/C2 audience. This quarter, we had a few wins as well in the consumer goods space. In general, I feel that the tide is turning. Of course, we want to wait and see how fast it turns, but definitely the performance for Decision Point in Q1, and then going forward into Q2, Q3, we are expected to be fairly strong.
Okay. Okay. On the GenAI work, you mentioned a good order book and a good pipeline. What kind of work are we doing for the client in the GenAI space? Is it based on like enhancing revenue for the client?
Yeah, it is a full spectrum, actually. I mean, there is the work that is being done in the area of customer experience and marketing. For example, one of the accounts that we are on in the consumer goods space, we are using generative AI to help generate the audio-video content as well as the text content that goes on their direct-to-consumer website. This is an apparel company, but they specialize in innerwear, and that's a very different kind of a segment, right, in comparison to other companies, right, that we are familiar with in the apparel space. They had reached out to us.
This is the place where we conducted the GenAI workshop along with Databricks, and we have been able to showcase a very, very strong, powerful way by which they can leverage GenAI and the agentic architecture around that to automate the content generation, right, that gets onto their D2C website. I mean, this is an example in the consumer goods space. Similarly, in the financial services space, there is a lot of traction in terms of helping generate reports that are covering a very broad spectrum of areas, right, around the asset management, around the investment banking, for example, right? These are instances where you can use the power of GenAI LLMs, reasoning models, some semantic layer combined with an agentic architecture to generate the first draft of reports, right, that can be put out.
Of course, right now, most of these still involve a human in the loop in some form or the other, but we are progressing to increasing order of sophistication in terms of what the GenAI agentic solution itself can do so that the human in the loop is able to bring in a higher order of thinking and application, right, before the solution gets absorbed within the decision-making process. Fairly broad spectrum impacting operating parameters, revenue, as well as cost.
Okay. Got it. In the data engineering.
Okay. Ms. Aditi Patil, may we request that you return to the question sheet for follow-up questions as there are forward participants waiting? The next question comes from the line of Vimal Jhamnadas Gohil from Alchemy Capital Management. Please go ahead.
Thank you for the opportunity, sir, and very reassuring comments on the growth going forward. Thank you for that. I just wanted to check on the wage hikes and the consequent numbers that we are seeing on attrition. Typically, we've seen about 120 basis points- 150 basis points of wage hike impact, depending on the environment, on our margins every year. This year, it has been double of that. If I were to sort of join the dots with the attrition that we are seeing at 23%, I think it's on the highest side vis-à-vis the industry. How should we marry these two data points in front of us, and what are we doing to correct that?
Vimal, to your point on the wage hike being slightly higher than the usual, you are right.
I think the intent this year was for us to look at compensation as a total sort of rewards policy and not just look at the fixed component hike that we do. In line with revisiting the comp philosophy, what we've also consciously done is look at a pay-for-performance sort of a structure where all people who are at, say, manager levels and above have a very attractive incentive component. There is strong linkage to company performance as well as the BU to which they perform, they belong, right? There is some linkage to that as well. Therefore, while you do see that the percentage impact on the margins has been higher, a lot of it is actually linked to the performance as well as the BU that they sit in, as well as the company-level performance.
Of course, while the impact is a lot more prominent in this particular quarter, as the business scales, we, of course, periodically, our endeavor would always be to operate at a fairly healthy margin level. When I say margin, these are at growth margin or profit margin levels. Therefore, we would look at all other levers. This could be a perimetry price. It could be looking at the onsite of the risk as well as looking at utilization. All of these are levers that we typically look at to sort of bring back the margins to normative levels or historical levels. That's the commentary on wage hike. I would say that over the next couple of quarters, we should be able to salvage whatever we've lost in the form of margins that have come from the margin loss that has come from the wage hike.
Your second point was around attrition. Yeah, attrition in general, I think even if you look at, I mean, while it's higher than the IT services standard demand, in general, what we've seen as a company, attrition, which is less than, say, 25% for us, is at manageable levels. What we've also seen is Q1, which is typically after we pay out the bonuses and the variable pays, as well as give out the increments, there is a slight uptick in the attrition. In fact, we are pleasantly happy to note that this year, that number is, I would say, while it's at 20%, it's not gone up significantly in comparison to the immediately preceding quarter. This is, again, seasonally a quarter where post the wage hikes and post the variable payouts, you will see an uptick in attrition.
I don't think as a business, we are very worried about that particular metric at this point.
Understood. One more question would be on margins itself. If I were to look at another two metrics, which is the offshore ratio, which is at 83%, utilization at 82%, we've maxed out these two levers. Given the fact that the growth could be slightly higher than what we've seen in the near past, how about some operating leverage kicking in? Do you see that coming in and helping you get to margin levels that you've seen historically?
Yeah, I think the operating leverage will come in, but we are also, the growth that we are anticipating, we are also in the process of building out buffers specifically for the GenAI, Agentic AI type of opportunity, also for the Databricks Center of Excellence, both onsite and offshore. I think that utilization, we will watch it carefully, but we also want to make sure that we are not short-thinking on the supply front, on the availability of skilled people. To answer your question, operating leverage will kick in, but we will also watch out on how the utilization balance needs to be, in relation to the management.
Understood. Thank you so much, sir. All the very best.
Thanks. Thanks, Vimal.
Thank you, Vimal. Thank you. The next question comes from the line of Rishabh Shah from Bhagarurap PMS. Please go ahead.
Hi, sir. Thanks for the opportunity. One question for Latent View. Hiring is the most important part. What qualities do we investigate in a candidate? What are your basis or criteria to judge a hired candidate?
Sorry, I didn't get the last part of your question. I understood the first, I mean, what attributes we look for. What was the second part of the question?
What are your basis or criteria to judge a hired candidate?
A hired candidate. Okay. All right. The capabilities and the qualities we will look for, there will be a spectrum depending on whether we are hiring somebody at a junior entry-level analyst consultant level or whether we are hiring somebody who's more of an expert and a seasoned pro. In general, we look for people who are motivated and self-starters. We look for people who have an intense amount of curiosity because this is a very dynamic and evolving space. Unless people bring that kind of curiosity, it is very easy to stay close to just what you already know from the past and then lose out on what might be happening in terms of the changes in the environment and the evolution. There is a lot of emphasis we lay on learning and development as we go along.
In fact, one of the things that we have been very proud of from a very early stage is exposing all of the people in the organization to the upcoming opportunities so they themselves can take a call on what kind of technologies they want to spend their time learning and building skills and capabilities. We make a fairly broad spectrum of training options available to them. At the more senior level, we will obviously expect that people also bring a certain amount of expertise, whether it is the technical expertise or whether it is algorithmic or whether it is the domain expertise. Domain expertise can be either in the functional area, like parts of the value chain, as in marketing and finance and supply chain and so on, or else it can be an industry domain understanding or a subsector understanding.
That combination of technical, algorithmic, and domain understanding coupled with that curiosity is what helps us deliver what the clients are looking for. At the end of the day, we are more akin to a management consulting kind of an organization because a lot of the work that comes to us is fuzzy and ill-defined. Therefore, these are the qualities that people need in order to be able to diagnose the problem and then suggest the right kind of approaches and then bring the mathematical and the technical rigor to be able to solve the problem. It's a very consultative kind of a model. Abilities, of course, professional skills, like building relationships and then questioning and problem-solving, these become very important aspects. That's really what we look for.
Once people come in, one of the most important metrics that we look at is what is the impact we are creating on the client engagements that they are working on. This is something that we take extremely seriously. We have an internal service delivery excellence team that tracks every project in terms of what is the original business value that was promised versus what got delivered at the end of it. This is not just something that we evaluate on our own and pat ourselves on the back. This is actually administered in the form of a voice of customer survey that goes out every six months. Our immediate sponsors and stakeholders in the client organization, as well as the ultimate sponsors going all the way to the team suite, get this survey.
In fact, the survey for the last year is currently on, right, and we are starting to get responses. Every engagement that we do, the clients come back and tell us whether the impact was conceptualized, analyzed, and it was delivered, whether they were able to implement it and realize the benefit. We also look at whether we got the kudos and appreciation from the senior most levels within the client organization. These all form a very important part of the performance management process that we have. Somebody within our organization will be able to get their top rating only if they have received this kind of acknowledgment from the client in terms of the impact that they have delivered. That's a very, very important thing that we look at. Of course, there are many other things, right, that one includes in the performance management process.
This is one thing that we are extremely proud of.
To extend the client engagement, we do projects for some clients, like for some small projects, and we don't have follow-up work with them. In the sense, we don't get a long-term contract. How has Latent View Analytics followed up with them, and has clients engaged with us after a small project being done for them?
In general, we are able to convert the initial engagement, whether they are in a staff augment model or whether they are in a fixed fee, fixed scope model, into longer-term managed services contracts in about 70% of the time. In the other 30% of the cases, it might still continue either in a staff augment model or it might fall off after the first fixed fee, fixed scope engagement that we do. In some instances, we also see that while there may not be anything that happens immediately after the first project, we are able to re-engage with them a year, two years down the line, three years down the line even. In fact, this quarter, one of the engagements where I talked about fairly fast-track growth, this was a client with whom we used to work when they were in a different organization six years back.
They came back to us because that organization decided to take all data analytics work in-house, and they actually terminated the relationships with multiple data analytics vendors. When this person moved into a different organization and they needed help and support, we were the first port of call for them. There are several instances where ex-clients and alumni clients and even alumni employees come back to engage with us after a period of time. We now have a formal process that we have launched as well, where we look at all clients that we have engaged with in the past and what is the current state of our relationship with them and whether we are in a position to go and help them in some form or the other in the current role that they are performing.
We are also extending this exercise to over 3,500 alumni that we have who have passed through the portals of LatentView and who are currently working in other organizations. If they happen to work in our current client or prospect organizations, we want to tap into them as well. These are all avenues that we will continue to look at in the future.
Thanks, sir. Thank you. Thank you so much.
Thank you very much. The next questions come from the line of Karan Uppal from Phillip Capital India. Please go ahead.
Yeah. Thanks for the opportunity. Rajan, just a question on the BFSI, a very consistent sort of a performance in BFSI. I would love to hear your comments on which subsegments are driving this performance and how is the competition in this space. Who are the competitors we are competing with? That's my first question.
Sure. Yeah. No, the growth that we are seeing is more on the fintech and payment and that type of area because the bill payers have also been traditionally, I mean, they have been stronger even in the past, though we worked with a fewer set of accounts. We are just extending our understanding and expertise in that area, right, to grow those relationships. Banking insurance, we have had starts, but I would want to see a bit more track, right, with some of the larger banks that we are engaging. I mean, I talked about the European bank sample, right? I think that is a place that grows strong. There is an engagement that we have started with one of the largest transfer banks in the U.S. as well. It is still taking shape.
I'm expecting that some of these relationships with the larger banking plateau teams could potentially start giving us even bigger kickers in the next couple of years. At this point in time, it is largely around asset management, around the fintech payment thread that is driving the price.
Which are the competitors which we are competing with in this space?
I think the competitors would be fairly broad-spectrum. You can have anybody, even the IT services players, if they have strong asset solutions that they bring to the table. There are other pure-play data analytics companies as well which do work in the financial services space. You will not have like a Palantir and all, for example, in the space in terms of product companies, but there is a good deal of, this is traditionally the largest sector for IT services as well as even data analytics. It is a well-entrenched space. We are happy that some of the more interesting innovation ideas and GenAI solutions that we are taking into the market is what is finding traction. That is something that we will continue to look at capitalizing.
Okay. Second question is on retail and CPG as a vertical. Core vertical access for a certain point appears to have declined sharply for the spring quarter in a row. Could you help us understand if this performance is the bottom because the commentary suggests that you are seeing some turnaround in this space? I would love to hear your comments on that.
Karan, I don't think it's right to say that the core verticals impact the last quarter when you see Decision Point has actually witnessed a fairly sharp decline. In fact, there were a lot of headwinds specifically in the CPG vertical, which we had guided when we came on the call as well to say that, you know, of course, right now there's a lot of macroeconomic headwinds for the CPG space. Tech had done fairly well last quarter. I would say this quarter for us, because of the large base that that technology vertical is on, the fact that this has been a flattish quarter is probably, you know, that's the reason why you're saying that the rest of the business has actually not performed. Again, a couple of reasons, right?
I did speak about the fact that the last quarter, there were, I would say, two to three fairly large one-time projects that we had closed. This is for the couple of, you know, the top two accounts where we did some one-time projects, and we were hoping that we will be able to close the follow-on work, which will come as a result of that execution of the one-time projects. In Q1, in fact, booking revenue as well. There has been some shift in terms of the time to sign those deals, right? That has definitely impacted the revenue that the technology vertical has reported in this quarter. Other than that, there has been, I would say, a marginal decline in the industrial vertical as well, partly attributable to some level of one-time projects that were executed in the last quarter.
These were initial POCs that we had done on the GenAI side, again, for a fairly large industrial house. We're happy to report that, again, there is, I would say, meaningful pipelines that we are currently working on, which if we're able to close now, the industrial vertical, again, will be back on the growth trajectory. For technology, we are very confident that for the next quarter, we will sort of be back on the growth trajectory, right? This quarter, while it was a flattish quarter, was largely because of delayed timing follow-on work on the back of one-off projects that we had executed in the last quarter. Hope that answers your question.
Yeah, yeah. Just to follow up there, my question was pertaining to the CPG and retail vertical except Decision Point. It appears to have declined for the second quarter in a row. Just for some clarification on that.
You're right. I think your assessment is right. We've had a couple of good quality logo wins, right? I mean, Rajan spoke about the innerwear apparel company where I would say, while we are starting off with an initial sort of POC which has to be executed by August, they're very, very positive about the engagement on this particular opportunity. We believe that this can be a substantively large opportunity in phase 1 as delivered. I would say definitely, there again, we are seeing some green fruits. We did see some contracts in a couple of accounts where we were working, and these are substantially longer-term relationships that we've had where I would say there were some picture changes, some rationalization in terms of the number of vendors that the client organization was working with, which resulted in cut the existing logos.
I would say on a full-year basis, our CPG business except Decision Point, again, will be back on a growth trajectory. This is based off the order book and the pipeline that we are currently carrying.
Okay. If I have to summarize from the commentaries on all the verticals as well as the guidance, there is no flag-specific issue at first and no pain in the CPG vertical going ahead. Is it a fair assessment?
Absolutely. Absolutely. Whatever pain was there in terms of one or two specific things where there was, I would say, some level of budget rationalization as well as vendor rationalization that was happening, that has already been factored in the results for the current quarter.
Thanks for that clarification. Just last question on GenAI, if you could help us understand in terms of the lead sizes and the tenure in the GenAI work. Is it largely the project-based work, or is there any annuity component also which we are seeing?
Yeah, it's a combination in terms of that. I mean, some of the work, I mean, obviously, GenAI, Agentic AI being the new foot on the block, right, in terms of the buzz and the excitement, there will be a bunch of POCs, pilots, and experimentation type of projects that are happening. We have seen instances where it's already moving into product with a longer-term kind of involvement in terms of executing the work using the new architecture and the framework at the same margin. We are assembling the team largely as an expert team. This is not, I mean, because there are already people within the organization who have been doing GenAI, AI type of work. There is, it's not as if we don't have a critical mass of people within the industry entities, organizations that we have.
The purpose of the horizontal COE, the Center of Excellence, is to bring a higher order of expertise and capabilities, right, in relation to the R&D experimentation that I talked about. We will be largely staffing people with the people who bring that kind of perspective and expertise into the things.
Okay, thanks, Rajan.
Thank you. The next question comes from the line of Pooja Jain from Trinetra Capital. Please go ahead.
Hi. Thank you for the opportunity. My question is, how are the macroeconomic headwinds like interest rate hikes, client IT spend reductions, and evolving AI regulations impacting your project pipelines or pricing flexibility?
I think the macroeconomic headwinds have been prevalent for almost an 18-month kind of a period, right? I'm sure that we are hearing commentary from other service providers as well, right, in relation to how it continues to be a bit sluggish when it comes to large initiatives, new decisions on that. Over the last 18 months, we have also experienced that. The good news has been that with many of our existing stakeholders, incremental opportunities have been easy to come by. That is what has helped us, right, deliver the 18%-1 9% organic growth, right, that we have seen in the last several quarters. We are still also looking at when the inflection point will happen in terms of kicking off new initiatives which are substantially larger. While this has been happening, there is also a shift in terms of decision-making around at least the data platform.
Most organizations have come to realize that they do need to have more robust integrated data platforms in place. Therefore, data engineering and the work there is expected to be a fairly significant boost in the coming quarter, at least when some of the uncertainty in the macroeconomic scenario is liftoff, right, around inflation, around tariffs, war, all of that stuff. One of the first things that we would all expect organizations to do is to put in money into cleaning up and improving the data platforms. That is the reason we are also gearing up, right, with the Databricks partnership and the capability that we have on data engineering. I think initiatives which are more sophisticated, right, in the AI data science, GenAI kind of space, that will also gather momentum.
At least many initiatives that saw the light of the day in terms of pilots and POCs plan to be more willing to commit real dollars to production type of engagement. At this point in time, I would say that while that interest and excitement is fairly significant, they are still being a little cautious in terms of signing up for the larger production scale engagements. That is what should change once the mood gets better, right, in terms of the uncertainty in the macroeconomics.
Thank you. The next question comes from the line of Srini Nathan from Belvedere Capital. Please go ahead.
Hi, Rajan. Just wanted to understand data engineering, you know, the kind of POC growth you've shown and kind of looking at your commentaries. We decide to assume a large part of Databricks and other hyperscaler work is in the order book in the FTC execution. How do you see this particular business growing over the next, say, 12 months-1 8 months?
Yeah. I mean, data engineering and Databricks, I mean, Databricks in particular, we are expecting a lot of acceleration. In fact, only on Friday, I was reviewing the pipeline that we have visibility into in terms of what Databricks is chasing. There is a whole host of migration opportunities that are in there. This is the migration that needs to be done to clean up the data ecosystem that I alluded to in my response to the earlier question. I also talked about these competencies around SAP and the alliance that Databricks themselves have announced with SAP. There is a fairly large quantum of work that needs to be done in terms of cleaning up and getting the data platforms ready to be able to capitalize on the new tooling and the new approaches that everybody is building into the platform.
Whether it is a Databricks or a Snowflake or even the Azure AI Studio or even the GCP plus Gemini platform, all of them can deliver value only if there is a significant amount of efforts put into the underlying data. That is the reason we see that there will be a big uptick in terms of opportunities. There are already opportunities in the pipeline that we are having conversations with. Clients just need a little bit more of a push on that front. I mean, with respect to the macroeconomic. Otherwise, they are still waiting and with a large data cleanup exercise of the sort. The eternal question is always like, do I just do it in a big by big piecemeal manner, use case by use case, or do I go ahead and make those big investments right ahead of the curve?
That is where we are also having conversations with clients. In many instances, we are recommending what will make sense given the culture, maturity, and the approach that the organization takes. In many of the instances, we do see organizations willing to make that commitment, which is why the conversation is also shifting to the CIO/CTO audience as opposed to just the business stakeholders audience. We are expecting that there will be good momentum in the coming quarters.
Yeah, you know, about 19%- 20% growth on this INR 360 crore base would start to work over a 5% kind of quarter-on-quarter growth. Would it be fair to assume that our order book is thereabouts in the execution pipeline to see that kind of ramp-up in growth over the, say, the next, you know, two, three quarters?
Absolutely, yeah. That's fair, yeah.
Perfect. One suggestion from my side, Raj, it would be nice if you could start disclosing constant currency growth so that, you know, confusions on currency going forward would be easier. That way, we can model it out easier. Thanks, guys.
Fine, taken. We will consider it next time, Priyam. Yeah, I can do that. Yeah.
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to one per participant. Should you have a follow-up question, we would request you to rejoin the queue. The next question comes from the line of Pratap Maliwal from Mount Intra Finance. Please go ahead.
Hello. Am I audible?
Yeah, we can hear you.
Yes, sir.
Yeah. Hi. Thanks for taking my question. I just had one question. Regarding a recent management interview that you had given, we had said that service providers like us would have to pivot to become AI integrators, like JSM integrators. I just wanted to understand what would be the change from JSM to our current business model. There were, in particular, changes, kind of contracting that we do as you said that we convert work to managed services after initial projects. Does it change anything on that front? Just to have some idea around that.
Yeah. I first just talk about what I meant by the AI integrator role, and then I'll comment on the contracting part of it. What I mean by being an AI integrator is playing the role of a service provider consultant that can help organizations navigate the increasing optionality and complexity that is emerging in the AI ecosystem. I mean, the explosion that even happened in the high capital-intensive LLM space, right, once DeepSeek came in and revealed their modeling approach. We are seeing the same thing happen, whether it comes to reasoning models or whether it is small language models, whether it is semantic layers, whether it is RAG models, retrieval augmented generation models. In all of these areas, and not to mention the agentic infrastructure itself, Databricks, for example, recently announced HuginBricks as their agentic architecture. We are already seeing what OpenAI has announced last week.
That optionality and the complexity and the ability to navigate that is really what I meant when I said that one needs to play the role of the AI integrator. All evidence that we have till date in terms of enterprises attempting to go it alone indicates that it's a fairly challenging and complex space. While there might initially be euphoria in terms of we have implemented the, say, Databricks or Snowflake, and therefore now our own business users and data scientists can go ahead and do what needs to be done, when it eventually comes down to implementing enterprise use cases, you still need to choose the right kind of technical architecture that solves for your context, both on the technical environment that you have as well as the business case and the use case environment that you have. That is the role that one could play.
What this will mean, however, is not that every line of code, every piece and component needs to be built by it. It might mean that we are able to leverage a lot of the tooling, technology, functionality components that are already available as part of the evolving complex landscape. Therefore, that is what will enhance significantly the efficiency and the productivity of the team. There is a role for service providers like us. The ones who do this faster and disrupt and go with the best kind of technical architecture, innovations, and solutions will be the ones that emerge victorious in this. Now, what is the implication that it has on the contracting infrastructure? I think managed services model will continue to be in vogue. I don't think that they're going to get replaced by one-off fixed fee, fixed scope projects only.
There will, of course, be maybe a higher % of fixed fee, fixed scope projects that start happening, especially when the analytics maturity and the internal environment of the client organization is very strong. They might need initial and periodic refreshes of architecture and decisions related to that, as opposed to ongoing continual support for everything that needs to be done. We've got to see how that impacts the contracting model. I'm expecting that there will be more instances where we are able to go in and help them on specific technical architecture engagement aspects. However, if you do that well and you establish your capability, then whenever there are opportunities, whenever there are requirements to get a whole lot of work done, the organization that helps with the architecture could be the one that is called upon as well to execute on the use cases.
That's how I see this evolving.
Thank you for your detailed answer. I'll follow that in the queue.
Thank you. The next question comes from the line of Jalad from Eswell. Please go ahead.
Yes, I hope I'm audible.
Yeah, I'm very good.
Yeah. Thanks for the opportunity. I'm a coworker and a decent social member. I'm in the first year at LinkedIn. I have had two sets of questions, basically. First, I wanted to understand with regards to Decision Point, the role of payments, at least for that 70% that has been made. Is there something else that you need to take in the amounts?
Yeah. The 70% acquisition, all the payments in relation to that have been completed. In fact, in the current quarter, we have made the acquisition of another 10% in Decision Point. With this, what we are looking to sort of in terms of payout, what will be payable, and this will happen next year, around June of next year, is the payment for the balance 20%.
Is there no specific performance reinforcement also on this? Is there a part to that also?
The consideration is linked to underlying performance, which is revenue as well as the floor EBITDA that they need to maintain for the overall business.
Okay. Thank you. The second question was more to do with our aspirations. Would it be fair to assume that the top-line aspiration of $200 million is by 2028? Just a direct statement. I'm not sticking to the number, but the way we are growing, I guess that is very much achievable. Certainly, to just add to it, as the revenue growth or the balance of the year for our aspiration looks like a very accelerated growth. There is no assumption of macro improving, I'm assuming, built into it.
Yeah. The three-year $200 million target calls for approximately a 26% CAGR. As you just alluded to, I think at this point in time, there is a good deal of confidence that we should be able to go past that 20% kind of a number, right, even before the end of this quarter. If things improve a bit from there, then the 25%, 26% that is required should be achievable. Of course, we don't want to jump the gun here and say that everything is hunky-dory. Obviously, that aspirational number, right, that we have put out, keeping in mind the expectations that we have also around how the macroeconomic uncertainty will resolve, at least in certain areas, right, not a little bit. We'll watch out for that, right? We will anyway double down on the areas where we are seeing traction, right, in terms of what is happening.
If you look at Databricks, for example, since we talk about the Databricks partnership, they have put out a CAGR of 60%, right, that they are targeting in the next few years. Therefore, we are also encouraged by what we see the larger players talking about here. In fact, this afternoon, in response to a query from one of our board members, I was doing a bit of lookup on what is the consensus estimate on GenAI Agentic AI's growth over the next five years. Everybody is talking about anywhere from 35% to 45%. That is an area that we will focus and double down on, right, so that we are able to realize that aspiration.
Of course, there's a lot of work to be done, but there are macroeconomic, I mean, irrespective of macroeconomic uncertainties that might be providing now, there are other factors also that could play out, right, in how this unfolds.
Thank you. The next question comes from the line of Shubham Sultania from SIMplus+. Please go ahead.
Hello. Am I audible?
Yeah, we can hear you.
Yes, sir.
Yeah. Can you share how many new clients were added during the quarter? Additionally, if you could break down the revenue growth of how much came from the existing client versus the new one?
See, the overall number of new clients that were added during the current quarter, I would say, is about seven in total. In terms of the split of the growth, in terms of what came from existing clients versus new clients, like I mentioned, right, in dollar terms for this quarter, we grew by about 2.8%. Of that 2.8%, I would say about 0.6% came from new clients that we added in the current quarter, and the remaining came from existing clients. Hello?
Yeah, no, no, no. Thank you.
Okay, thank you. The next question comes from the line of Varun Kumar from VK Investments. Please go ahead.
you for the opportunity. I just wanted to [audio distortion]
We're not able to hear you. The next question comes from the line of Survi from Belvedere Capital. Please go ahead.
Yeah. Hi, Rajan. I wanted to talk about some integrated deals in the CPG vertical where you go from R&D to supply chain and then integrating the technology. Could you throw some light on such deals and explain how the stay-up for the same would happen? Would it be more gradual in nature, or would it be more like an upfront pitch for an integrated project on the go? In such cases, what could be your R&D sizes and the length of relationship with your clients?
Yeah. Our intention, Survi, is to make a bit more of an upfront transformational pitch. We are seeing some degree of receptivity from this, from some of the clients that we are having conversations with. We are also seeing a greater deal of receptivity from Databricks as a partner because they are also looking to differentiate themselves in the evolving market. I mean, these could involve pitches being made more to the C-suite, maybe even to the CIO/CDAO type of an audience, as opposed to separately to the supply chain organization or the R&D innovation organization or to the team that is responsible for marketing, pricing, and so on. We need to keep it up a few levels. We are looking forward to Databricks also supporting us in those kinds of conversations.
The three events that I talked about, which are happening in the U.S., we are looking to pitch that kind of an idea, at least a piece, in terms of how that can help organizations that adopt a more integrated approach to realize more value, both on top line and bottom line, if they take that kind of an approach. We are seeing some early encouraging signs on those types of conversations.
happens, then even initial engagement can easily be upwards of $1 million, right? Of course, they won't do it for the entire company, but this kind of an integrated approach to take a particular product market or a product category market, right? Say a particular beverage or a food item or a cosmetic, and you're just looking at one geography and implementing it there. This kind of an integrated approach can still mean that it is a substantial engagement. That's the kind of thing that we'll be pushing for.
Got it. Very true. Is there anything you want to spell out specifically on Rajan's? We've seen some good traction on SEO, SEO basis. Anything that you would like to specifically call out here?
Sorry, Toby, I couldn't get the question. What are you?
In the Europe geography.
Europe.
Europe geography, yeah, correct. We've seen some good traction on a few SEO basis. Would you like to call out anything meaningful happening here and some sort of guidance there?
Yeah. One of the, I mean, we are seeing traction both in the financial services space and in the consumer goods space. If you remember a few quarters, a couple of quarters back, we had already started talking about that we want to double down only on these two industries in Europe. At this point in time, I think we have upwards of half a dozen clients that we are working with in these two sectors put together. We recently also relocated one of the Decision Point key people into the geography in London. We are in the process of adding another client partner specifically for one of our accounts in the region. In the financial services space, when I alluded to the growth that we are seeing, the account where the person who used to work with us earlier came back and engaged with, that is again in Europe.
We are seeing some traction in consumer goods as well as in BFSI in Europe, and that is what has led to the EOQ. We are looking at certain other options as well, right, in terms of partnerships that we could potentially do with the local European management consulting and boutique consulting organizations. These are early stage decisions at this time, but we will want to double down on these two verticals and then bring in other levers that can help accelerate our growth.
Got it. Just one follow-up here. Any internal milestones for this geography, say, two to three years out?
Slightly early days. In the past, we had alluded to Europe contributing 10%+ in terms of revenue for us in a three-year time frame. Obviously, we haven't cracked the code on Europe yet as a geography. I would want to take some more time beforehand to put out a number.
No problem. Thank you so much.
Thank you. The next question comes from the line of Abram Shah, an individual investor. Please go ahead.
Hi, sir. It's a good question. Most of my questions have been answered. For the other income for this quarter, it was around INR 23 crore. It should be in this range going ahead.
Rajan, like I mentioned, there was product-related gains, and these were gains on account of loans that we have given to our subsidiaries in the U.K., and that came in at about INR 6 crore, right? Of the total other income reported for this particular quarter, of the INR 23 crore, INR 6 crore pertain to this product. I don't think we should then be moderate for the future period. Obviously, this level of gain or loss will sort of come down because, as I alluded to in the earlier part of the call, our intention is to pare down or substantially trim the level of investment in Europe because of some of the transfer pricing changes that we have made. Therefore, we don't need that level of investment or debt to be sitting in the books of the subsidiary.
You will see this level of gain or loss that we've reported historically has come down. You should consider that a one-time, more than sort of factoring it as an ongoing gain.
It should remain in the ballpark of INR 15 crore-INR 20 crore?
The other income should be, I would say, going forward, should be in the range of INR 17 crore-INR 18 crore. Give or take, of course, that number could go up or go down depending on the yield that the treasury generates, but it should largely be in the range of INR 17 crore-INR 18 crore.
Okay. Given all the commentary given by you all and the excitement around GenAI and the data updates and data engineering and all, are we, you know, and even after the revival of the consumer verticals, are we maybe being a little conservative in growing the 18%- 20%? There is a scope of, you know, overachieving these numbers. How are we looking at it?
I mean, there is always a commentary for numbers. I wouldn't deny that. We also want to see the deals coming through, signatures on the dotted line, and work coming through. As we can sense from this call and our commentary, there is a greater deal of optimism, right, in comparison to where we were even one quarter back based on what we are seeing. We will want to keep guiding, right, on the basis of some of these things that are rectifying and coming through as well. A lot more conversations seem to be progressing to the final stages. In general, the sales cycles have been long, right, through the past 18 months and longer. I don't see a letup on the sales cycle themselves. Sometimes some of these conversations were picked up 12 months back, 18 months back.
We are starting to see some of them coming through at this time, right? We are obviously putting forth the pipeline as well. The thinking is that we will be able to move past that kind of a number.
Okay. That makes sense. Thank you very much.
Thank you.
Thank you. The last question for today comes from the line of Aditi Patil from ICICI Securities. Please go ahead.
Thank you for the follow-up. My question is on margins. The transaction, for how many quarters should we see the transaction-related expenses? When do we expect them to phase out? For the full year, since we have a higher impact of the annual compensation this year, should we see the full-year margins to be lower versus FY 2025?
See, I would say, to answer your first question, the transaction-related cost, I think that will sort of play out for the next three quarters. Therefore, you will see this getting fully phased out by March of 2026, right? Thereafter, you will not have this cost. Coming to your question on the impact of wage hikes and consequently what will be the full-year margin, like with Justin, I think we wanted to accommodate the margins on a full-year basis in the 20%- 24% sort of a range, right? We are fairly confident that the impact of the wage hikes not retracting, we should be able to bring back the sort of margins to that level on a full-year basis.
The only thing, though, that I think Rajan also spoke about briefly, where there was a question by Dhumil on the operating leverage playing out, was that we are at this point in time planning for investments on the Databricks side as well as the AI COE side, right? While we have made some investments already, we are in the process of formulating one, setting up the team and also formulating the plan for the rest of the year. We will see substantial opportunities to set up these COEs or practices well so that they're able to deliver disproportionate or exponential revenue, right? In that process, there could be some investment that could sort of, again, have some impact in the short term. I would say long term, for us, the margins should be in the 23%- 24%.
Any deviation from that, we will be mindful of that, and we'll call that out. If we see any impact on account of the investment that we are making, we will call that out. Right now, that doesn't seem to be the case. I think we should be back to that 23% odd levels fairly soon.
Okay. Thank you. The last question, the last bit, you spoke at length on the data engineering space opportunity you see. When you do the data engineering project, does it also come with the analytics work, or is it purely the data engineering work?
Most engagement in data engineering will have some of the other business use cases, right, driving the need for getting the data engineering work done. In the past, almost all organizations were taking a piecemeal approach, meaning use case by use case. They will go back and figure out what is the data environment they need to get in order. What we are starting to see now is that quite a few organizations are thinking about investing in their data infrastructure and getting it sorted out as the cost of doing business, meaning that they are ready to do it ahead of the curve, right? They are taking a philosophy that if we build a good data infrastructure, the use cases will come, and everybody will benefit from it, right? In which case, the initial data engineering engagement could be just about getting the data house in order, right?
The organization is always executing a bunch of things, right, even around their data analytics requirements. Even if it is largely a data engineering engagement, there could also be a handful of use cases that they would like to see implemented and executed as part of that engagement itself so that they start seeing the impact and the benefit of what they are doing.
Okay. Got it. In the data engineering service line, for the last two quarters, there has been a sequential drop. Is it like a one-off thing?
I don't think in absolute terms, I mean, maybe percentage terms, there has been a marginal drop, Aditi. I don't think in absolute terms the data engineering, of course, like I said, right, there will always be some short-term, you know, quarter to quarter, if you see, there could be some projects that we execute, which could sort of not have follow-on revenue. That could definitely have an impact on a Q2 basis. I think on a full-year basis, we definitely are on track to deliver, you know, the same, in fact, if not higher than the company level of growth, the same level of growth in the data engineering practice as well.
Okay.
In fact, it's going to be higher on the back of all the work that we've done.
Okay. Okay. Yeah, that's assuring. Thank you for answering all the questions.
Thank you.
Thank you. As that was the last question for the day, I would like to hand the conference over to the management for closing comments.
Yeah. I think we had a fairly lengthy and detailed interaction. I think I at least covered all the points that were in my mind, right, in terms of what we would like to convey. In summary, I just wanted to say that there's a bit more optimism that we have based on how the environment is panning out and how it is unfolding. We are also energized by the traction and the progress that we are making on the three strategic priorities that we have. I think all of these are also very synergistic in nature. I talked about how the generative AI Center of Excellence focus is helping us even with the Databricks partnership because Databricks has identified us as one of the GenAI partners that they will go up with, right, in terms of taking it into consumer goods companies, for example.
I think these are all connected and related. That's how we are looking at it and approaching it as well. We are putting in more organizational constructs and mechanisms at our end as well to make sure that we are not losing out or missing out on any of the synergy that exists between the different aspects of our strategy and our priority. That is what will be the focus of the management and the leadership team. We have discussions happening not only within the management team, but also with our board. You will all recall that Dr. Anindya Ghosh has joined us recently as one of our Independent Directors. In fact, he was here with us today and tomorrow. We are going to be having some discussions specifically focused on the topic around GenAI and Agentic AI.
We are expecting that we will get more good counsel on how to take this forward. That is the pathway that we will seek to action on and drive things forward. With that, I think I'm kind of done with my closing arguments. Raj, if you want to add anything.
No, I think we've pretty much covered everything, right? I think we've had a fairly extensive call. Obviously, the focus will be on executing to the strategy that we put out. That's where I think over the next couple of quarters, we will be putting our heads down and executing to the plan that's already been laid out.
Thank you, sir. On behalf of Latent View Analytics Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.
Thank you.
Thank you.
Thank you.