and gentlemen, good day, and welcome to Nugen Software Technologies Limited Q3 FY 2022 Financial Results 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. Please note that this conference is being recorded. I now hand the conference over to Ms. Dithi Mehrachuk from NuGen Software Technologies.
Thank you and over to you Ms. Chuk.
Good day everyone. I'm Deepti Mehrajuk, Investor Relations' Meeting, Software Technology, Mentor. And I welcome you all to the Q3 FY 'twenty two results of the company. Wishing everyone a happy New Year, and I hope everyone on the call is keeping safe. Joining with me today on our call is our management, Mr.
Vivekan Nigam, Chairman and Managing Director, Nugen Mr. Viren Rajeet, Chief Executive Officer and Mr. Arun Kumar Gupta, Chief Financial Officer. Before we move on to the discussion, let me highlight that this call may contain certain forward looking statements concerning NuGen's future business prospects and profitability, which are subject to a number of risks and uncertainties, and the actual results could materially vary from the forward looking statements. Past performance may not be indicated by the future performance.
The company does not undertake to make any announcement in case any of these forward looking statements become materially incorrect in future or update any of these forward looking statements made from time to time by and on behalf of the company. For any further details, you may please refer to the Investor Relations section of our website. I will now hand over to Mr. Nigam for presentation of
the results, which will be followed by a
Q and A. Thank you. Good afternoon, everyone, and thank you for joining us today. First of all, let me wish all of you a happy and a healthy New Year. I hope all of you are keeping safe amidst another COVID break.
For NewGen, Q3 has been a quarter on the path of continuous progression amidst the ongoing uncertain environment. Our revenues were at INR203 crores with a growth of 9% by OI. We witnessed acceleration in business from existing customers and healthy operating margins. Our subscription revenue continues to be the strongest component, witnessing a growth of 20% Y o Y. Several of our subscription orders have long gestation leading to deferment of revenues.
As we had mentioned earlier, moving forward, we are pushing for changes towards subscription based pricing model only. Annuity revenues were INR112 crores during the quarter, witnessing a growth of 11% BOE. SaaS revenue of INR 14.2 crores. SaaS growth was muted during the quarter due to the impact of period adjustment of 1 of our projects on our clients. The product license business witnessed a growth of 37% during the quarter.
In terms of markets, EMEA and APAC continued to outshine during the quarter. We witnessed several expansion deals with existing customers following our land and expand strategy. Unfortunately, travel has not resumed at the same pace as we had anticipated at the beginning of the year. In the U. S, revenues have been stable.
Revenues last year included catch up revenues related to PCP logos, which are not there anymore. Overall, we added 17 new logos. Some of these logos are still in the process of being built currently. We continue to help our existing and new customer in creating digital capabilities across the modern day business needs. Our key orders from new and existing customers during the quarter include cloud order for a captive Premium Financing, our leading global automobile manufacturer project for a diversified wealth management solutions CloudOrder for a leading specialty finance provider in the UK and Ireland for NewGen's automation platform to enhance its premium finance process for business insurance customers.
Customer mining for additional license business from 1 of the world's largest investment management company. Order from an existing customer in Singapore, which is part of a leading international banking company. Moving to update on our offering and opportunities. During the quarter, we launched an upgraded version of our industry recognized low code process automation platform, iVPS. The latest version enhances personalization option of end users and provides an upgraded rule engine for improved decision making.
Further, the platform offers improved data handling, enhanced capabilities with robotics, process automation, deployment, containerized deployment, upgraded mobile capabilities and more. Reinforcing our strong position in the industry, we continue to receive additional analyst recognition during the quarter. We are positioned as a visionary in the 2021 Rational's Magic Quadrant for content services platform for our ability to execute and completeness of vision. We are positioned as a strong performer in the Forrester wave for digital process automation software Q4 2021. These recognitions further validate our commitment to drive product innovation to facilitate end to end digital transformation.
We now have 22 patent grants in place. We were granted a patent for invention entitled Centralized Control Printing and Administration. We were also granted a patent for an invention entitled integrated capture and analysis of documents. This patent protects the invention to automatically capture the best quality document imaging using mobile or tablet devices with the help of real time collaboration of various parameters. As further step to tap the growing enterprise IT budget in the space of artificial intelligence and machine learning, we are happy to announce that Nutan is acquiring India based No.
3 and AI analyst data sciences platform. Company subject to completion of conditions as stated in the approved share purchase agreement. This acquisition is expected to further extend the New Zealand's low core digital transformation platform with AIMS, modeling and data analytics capability. We look forward to accelerating our journey in data science and AIML domain with this acquisition. On the operational front, last quarter, medium senior management and other teams were back in office.
It was good to have face to face meetings. The team has participated in person events. However, we have again been forced to move to work from home for the time being till the situation has stabilized. Collective safety and productive working are paramount for us. We shall review the situation and make changes as warranted from time to time.
As the situation improves, we will move back to the hybrid growth model, ensuring productivity, cultural acceleration and offering flexibility at the same time. We continue to remain focused on long term talent development and in centralization. During the quarter, we have also come out with an RSU scheme for employees. On the sales and marketing front, we are continuously working on building our focused alliance with GSI. We are driving joint sales and marketing activities and campaigns as well as joint solution development with our partners.
We are working on our GSI pipeline. However, as mentioned last time, the contracting period of some of these projects are elongated. On the profitability side, despite the escalation, we have delivered another quarter of healthy margin. Our EBITDA was INR 58 crores and profit after tax was up 35% by OI at INR48 crores. IRSA decreased on account of normalization of cost base compared to last year as well as increased remuneration to manage attrition.
We continue to invest heavily in our global expansion, our product and in our people. During the quarter, R and D expense compromised about 10% of sales and sales and marketing expenses comprised 20% as usual. Our balance sheet is strengthening with every quarter. Our cash and bank balance and investment put together amount to INR 4.79 crores and the net cash generated from operating activities was at INR 147 for the 1st 9 months of the year. Our EBITDA days continue to show improvement.
Our net trade receivables were INR183 gross at the end of December, which resulted in net DSO of just 90 days on back of sales and collection improvement. For the 9 month period of this year, revenue from operations were INR 5.48 crores, up 16% YOY. Annuity revenues were at INR 3.31 crores, witnessing a growth of 16% ROI. Our subscription revenue witnessed a growth of 19%. EBITDA was INR 127 crores and profit after tax up 45% YOY at INR.
7 Looking forward, the demand environment continues to be robust. The GSI engagements are positive. We look forward to the integration of Number 3 with our platform to give our customer an edge. With this, I hand my commentary on the results and wish you a safe and happy year ahead. We now are open to question and answer.
Thank you.
Thank you very much. We will now begin the question and answer The first question is from the line of research team of Karlin Asset Advisors. Please go ahead.
Hello. Hello. Please go ahead.
Yes. Thank you for the opportunity. I had a few questions pertaining to the growth aspect. So while
I look at geographical breakup of
our revenues, right, when I see the India revenues, so we have been in the range of 50, 90 to 60 odd crores year and there for quite a few quarters now. So if you could help understand that. And also in the U. S, you did mention that there was some one offs, if I understood correctly in Q3 FY 2021. But again, when I look at USA Regional as well, our revenues seems to be quite stagnant for the last few quarters.
So if you could help understand how our revenues are moving in lines with the traction that we have from Global Systems Integrators, that would be pretty helpful.
Yes. Thank you for that question. So I think you have 2 parts of your question. One is about the segmentation of revenue. As you have seen, I think the growth predominantly has been driven from this quarter, India and Middle East.
And you are right, on the India trend, both the COVID year and given the last 6 quarters, we have been quite muted on the site of new logos. There are two reasons for that. One is predominantly on the overall economic sector, there has been a slowdown in the 1st 6, 7 years. The other government has been a substantial part of our India business has completely stopped or come to an halt. So the government and the new logo acquisition have been slow over last 5, 6 quarters in India.
On the other hand, I think we have seen a substantial improvement of sales in existing accounts in India. Most of our large banks, most of large insurance companies are expanding their digital initiatives. And that's why in spite of the dip in the new sales part of it, we are able to maintain India revenues and grow them slightly incrementally. On the U. S, if you look at the COVID year for U.
S, last year was extremely good. In fact, some of the quarters we are between 20% to 40% growth. And as we had mentioned that, that growth was an account of our supporting the PPP initiative in U. S. For a series of banks.
Since that was a one time initiative, that revenue does not come as a cumulative year after year. So whatever subsequent growth is happening is U. S. Is compensating for that revenue. So the market is pretty wide out there.
We continue to win logos. So that component does not reflect in the overall growth of the territory. On the account of GSIs and other initiatives, so what's happening to 2 things. One is some part of the U. S.
Revenue is getting compensated for the loss of PPP, but the other bigger part is that most of the new logo acquisitions, like even in this quarter, we had a substantial number of new logo acquisitions. Since we are shifting deliberately from one time Jerky perpetual license revenue to subscription licenses or cloud, the realization of revenue comes at least 2 or 3 quarters later. And it comes slightly in the more graded rather than upfront JW. Looking at all these three factors, that's the reason about looking at flatter revenue numbers in U. S.
And while in other territories, still there's a license business being pursued and there are still some accounts that are delivering license business. That's why we are having a good health care. On the other hand, Middle East and APAC both have been growing for us. And last year, COVID year, Middle East was slow. This year, it has predominantly delivered for all three quarters.
And APAC has delivered in both quarters. I hope that answers you, Krish.
Just few follow-up questions. So on the U. S. Side, what was if you could help understand the amount of the one time work that we did, what was the amount out there which was there in the last quarter?
I think for
the year it was somewhere between INR 20 to INR 30 crores.
Sorry, sir, I missed out. What was the amount?
Sir, for the year it was something around INR 20 crores to INR 30 crores, but if we can provide you more details and numbers.
The few crores for the quarter, I'll get back to you with the exact amount.
Sure. And as far as India goes, you said that basically you're not seeing any traction from the government part of the business. So what is the outlook out there going forward now since things have started to resume resume and economic activity has also kind of started to pick up. So how is the traction on that front?
See, I don't see any substantial changes happened over the last 2, 3 quarters on the ground itself. Though they are keeping they keep on starting and they keep on stopping. But we don't see lot of government initiatives coming into typical spaces where we are operating. Even when there are RFPs, we are sitting on those RFPs for a very, very long period of time. Unless we are really behind this COVID for at least couple of quarters, then only it will be more accurate to predict how the India market will behave.
But if you leave out Bovid, the other segments are surely showing a lot of interest, both in the new financial services as well as our existing accounts. We do see a better momentum building over next quarter on that.
Thank you very much. I request to all the participants. Please restrict to 2 questions per participant. If time permits, please come back in the question queue for a follow-up question. The next question is from the line of Karan Doshi from EDELWEISS Financial Service.
Please go ahead.
Hi, congratulations on a good set of numbers. So my question is like last quarter we've seen good deal wins and healthy logo additions, But some of these deals have slightly longer gestation periods leading to deferment of revenues. Given that one of our key strategies is expansion in mature markets, my question is what is sort of the proportion of new deals and new logos from, let's say, North America or Europe? And can we see a spot in business in mature markets over the next 1 or 2 quarters once this gestation period for New Zealand? And can they start contributing incrementally in the next 3 or 6 months?
Thank you.
Karam, thank you for your question. You're absolutely right. We have logo acquisition has improved over the last quarter as well. And you're right that since most of these logos, they don't contribute to revenue of that quarter or subsequent quarter. But you are absolutely right in 2 to 3 quarters, you will see that building up and adding to the numbers.
On the number of new logos coming from mature market, I don't have the exact number, but we did have wins out there. We had wins in U. S, we had wins in Europe, we had wins in Australia this quarter, at least 4, 5. And I think some of them at least 3 were through the GSI channel. So there is a momentum picking up up there.
And once the base is established and the run rate is established, in few quarters, you'll see that starts reflecting it also on the top line and the numbers. Regarding exactly the number of cobos we have won in mature markets, Zixvi can send you the data.
Okay, okay. I think that's it for me. Thank you.
Thank you. The next question is from the line of Akshay Sathija from Alfa Invesco Research. Please go ahead.
Hi. Thank you for the opportunity. So if you could help us, how do these contract with GSIs actually go? So we understand we are maybe into productively GSS provide these services. But what could be the quantum of the implementation of these services and the other services or when it comes to cloud, what's is it revenue distribution?
What is the model out there for cloud based accounts?
So thank you, Akshay. So Akshay, you are right. So what is the GSI contract? Predominantly, we are looking at the revenue streams which are more licensed subscription based. They could be cloud or they could be Infosys, but it is predominantly on the license side we charge.
So the revenue share, it depends on the contract side. But on the long term, the long term view of the implementation of service revenues around these clients are multiple times than the license revenue. But the deals could vary. The deals could be the initial deals could be from $500,000 to all the way up to $3,000,000,000 $4,000,000,000 But the lifetime value for our product is typically multiplication of that license value or the upsell we do on the license, while on the service side, it could be very wide because they could do global rollouts, they could do additional services around that product. So generally, it becomes it can be anywhere 3 times to 10, 20 times than the license value.
Okay. So is it that when earlier we used to do all these services. So is it that now GSIs would be taking away all these rep services revenue or there would be some portion that flows to us? Is there some revenue distribution kind
of a thing there? Yes.
So that's one way of looking at it. So you're right. Since we are not executing these projects, the GSI does this and we don't do this revenue. But the other way of looking at is that these are the accounts generally which we have not been pursuing. So this is a market which is getting opened and extended.
And through the GSI's implementation, we are able to scale it as a channel. So it's not an order. So you have to look at GSI as a channel by which they can give you multiple orders, where they are able to serve. And in either we are at a company at a smaller level at a $100,000,000 company, we will not be able to serve with all the global customers across all. So GSI or a partner based is a strategy which all product companies do.
So the Got it. Yes. So it's a scale based model for us.
Okay. So if you could also help us, how many SaaS customers do we have versus what we did in last year?
I have sorry, I don't have a number. But overall, we are roughly around 30 customers in SaaS right now on cloud. But on subscription license, we'll have many more. But Diti can send you more data on that.
Okay. Also, so one last thing. So what would be our sales team in U. S? So I believe we have roughly 300 employees in sales and marketing.
What would be what portion of it would be in the U. S?
Okay. So, yes, overall
in U. S, I think we have around 60 people.
So 60 people are not all in sales and marketing, but some of them are also front end in the service element of that. But the direct, we have roughly around 10, 12 people in direct sales. And then if you include the enablement and other thing, another 20 people around that. So around 20, 25 people in the sales and sales enablement role.
Okay. So okay, got it. So one more thing, we have been talking about that the key difference between us and the competitors like APN and ATMs and Tega would be the value proposition that we provide. If you could help us understand what is there a cost differentiation between them and us? And if it is so, what could be the quantum of the difference?
So Akshay, this is a very long question and a long answer. See, predominantly the value proposition is around what the complete offering which we have. We have a philosophy of being the approach of low code has been very integral to what our products we have developed. And our NuGen 1 positioning, if you go to our website, you can see our ability to provide content services, business process management and customer management communication as a single platform reduces lot of cost of ownership for the customer. And the ability for us to execute this project in much compressed time cycle, make many projects viable.
So broadly, that is a core value prop. And beyond that, whether it's 2 times or 5 times depends on the complexity of the deal and what you are trying to do in which geography. But we do provide a substantial value when it comes to competing. And I said then, every company becomes expert in certain domains and in our core domains, especially in financial services and any content centric business processes, we are very difficult to compete with. In fact, we end up winning most of those deals.
Okay. Okay. And so actually just to add on overall on the cloud, I think cumulatively we have about 45 plus logos.
Okay. On the cloud side. Okay. One last question. Are we looking forward to launch any new platforms along with the current existing 3 platforms, customer management or anything on that front?
Broadly, these 3 platforms are very, very large. And the potential of these platforms, we are not really realized fully. We are just partially realizing that in certain verticals and certain areas. As a company, we'll continue to strengthen these platforms and expand. But within these platforms, there is a huge space to expand, getting into more verticals, getting into more solution areas.
And with our investments in analytics and with the new approach of getting number theory, which we've just even talked about, we are further strengthening our whole ML and AI capabilities in the platform and then expanding further use cases for the customers.
Okay, got it. That's it from us. Thank you.
Thank you.
Thank you. The next question is from the line of Hino Gada from ICICI Securities. Please go ahead.
Hi, thank you for giving me this opportunity. So just in for margins, if I see your employee cost as a percentage of revenue, they've actually dropped sequentially. So if you could give some color on that? And also just for understanding, please correct me if I'm wrong, do we give wage hikes during quarter 3% or is it some other quarter?
Yes. Hino, thank you for the question. So one part of the employee cost will drop as we scale out because a lot of our revenue streams have no direct process with that, especially the license, the subscription, ATSs. So it's a natural phenomenon of the business. But having said that, I think there's a huge cost pressure in the whole industry about people.
And last year, this cost was not the realistic cost because the costs were less. This year, the costs have slightly rationalized back and we are looking at increasing the cost of manpower. So the salary wage hike, generally the cycle hits us in the July 1. So it has it was part of Q2 as well as will be part of the Q3. But then that's not end of it.
I think we'll be further looking at improvement of compensations to manage our attrition and manage our people and talent. So there may be further some increase in the cost in this quarter and that would increase the base cost for the next year.
Okay. And if I see your 9 months EBITDA margins, they come to almost the lower end of our guided range for 23% to 25% that we want to achieve. So given that we're already at the lower band and we still expect some of, I mean, as you said, employee costs to increase. And once the situation completely normalizes, we'd expect further costs as office travel resume. So can we say that the 23, 25 aspiration band that you have might take a bit longer, for us to see that?
No, I don't think so. I think as you are rightly pointing out, we are already in near the brand, which we had already anticipated for the whole year. But what happens is typically, since our revenue is lopsided, the margin expansion happened in most in Q3 and Q4. So in spite of taking higher costs, we should be able to deliver further small amount of expansion in the margin for Q4. Next year, generally, again, in Q1, Q2, you will not see the numbers at the same level, but in Q3, Q4, again, they will expand.
So I
think I don't think we need to revise our guidance on the net margin and the EBITDA margin. We should be able to meet around 2019, 20 and roughly around somewhere between 23.5 to 25 on the EBITDA.
Got you.
So would this expansion, in my understanding, is it just based on the fact that we'll have better deals going forward? Or is it some operational levers that will also improve?
If you can give some color on that as well.
So one of the simple factors, generally, our Q3 and Q4 are larger quarters compared to other quarters. So if you look at independently the QC margin, EBITDA and net margins are at 28% and 22%. So Q3, Q4 would have similar even if we take some amount of cost, it will still deliver higher margins. So as a overall for the whole year, the margins will be in the range which we have projected.
Right. No, no. So Mike, like I'll put it in the other way. So, I understand that your Q3, Q4 is always strongest in terms of margins. But going forward, as our travel costs and all will come back, are we depending solely on the fact that Q3, Q4 will have better revenues, which is why the additional costs will be absorbed?
Or are there any other operational levers in terms of reduction in some other costs that we see might help us?
So the 2, 3 things. I think, 1, you are right. I think the cost basis will increase then normalize it. So travel would normalize, but it will never come to that percentage it was before because some part of the travel, some part of the operational efficiency which has come is going to be retained irrespective when the market will control that. The second part is what you see in our business model, you will see the higher what you call higher margin revenues, which are typically around annuity, which are around subscription, keep on growing always at a much higher speed than the overall complete speed because they have a cumulative effect on that.
So year on year, irrespective of the growth rates in terms of if we have the same growth rates, we still keep on expanding margins because that's the nature of the business unless we decline more in the sales and marketing and our R and D. So as is the business on a normal growth rate keeps on expanding margins because more than 55% of the revenue does not have any direct costs associated with it. So and that keeps on compounding. So the way we are projected right now, I think next few years as we grow, we will keep on investing more aggressively in sales and marketing. And then only we can maintain the margins and EBITDA margins and flat margins around 35% to 20%.
I hope that answers it.
Yes. Thanks, Sadu.
Anup. The next question is from the line of Fushil Sharma from Edelweiss Wealth Group. Please go ahead.
Good evening, sir. I have just one question around SaaS revenue. This quarter SaaS revenue is INR 14 crores, 7% WAN Y growth. I just
saw it. I saw it. I saw it.
I saw it.
I saw it.
Yes. Can you hear me now?
Much
Yes. So my question is around SaaS revenue. This quarter, 14 crores revenue, 7% YNY growth, 15% Q on Q decline. What I understand is that SaaS revenues built I mean the new SaaS revenues build on the existing SaaS revenue. So what I'm missing here, why on a post pandemic start of post pandemic 4Q FY 2020, first time we are seeing this Q on Q decline.
So is there something in billing or we have seen some cancellation in this quarter?
Yes. So for the cancellation, I think it was a term readjustment, 1 of the large contracts. So if you look at 9 months of SaaS has grown at around 23%. So we got a we had to readjust the term by which we have to readjust revenues for a particular client, which is a larger client. See what happens in even a INR 14, INR 15 crores, if you have to do a INR 2 crores adjustment, it makes a huge impact on the quarter.
But if you look at the 9 month period, we have still managed to go around 24%. And this is this quarter change, which will only be adjusted. I don't see that happening from next quarter onwards.
Sure, sir. Thank you. That's very helpful. That's it from my side.
Thank you.
Thank you. The next question is from the line of Nelay Chethani from B. O. Yaxam Mutual Fund. Please go ahead.
Hi, sir. Thanks for the opportunity. So first question was on the GSI business. So I'll break it down into few parts. So currently, I wanted to understand what portion we do from GSI.
Currently, when I say in 9 month period what we have done. And also, when we do ex GSIs, my understanding is whenever we enter a client, our minimum revenue what we get from them is around USD 2,000,000 to USD 4,000,000. But in case of GSI, what is typical initial revenue we get from those GSI partners? So wanted to understand the business model on that side first. Thank you.
Yes. Thank you, Nish. So see, GSI itself is new. I think last year we started it. And right now as an overall percentage, though our partner based revenue is roughly around 20%, and this changes between 23%, 25%, 18% depending on what quarter we are.
So GSI as a percentage will be very, very small right now. On the number of deals which we have won through GSI, I think last year we had around 16, if I'm right. And this year, so far, if I'm not wrong, we have 5, 16 so far we have made sure. But Deepthi can give you more better data on that. Our deal sizes with GSI will matter.
It could be as low as initially around $400,000 $500,000 and as high as couple of $1,000,000 But those are we don't enter into $2,000,000 to $4,000,000 as our regular business. Our regular businesses also are even smaller range than this. So broadly, if you look at most of the GSIs panels, which we have right now, is around 60 to 70 cases, which we are pursuing in the market, which are typically in U. S, Europe and Australia. That's what we are focusing.
And we do expect that over the coming years, this becoming a substantial part of the funnel. So this overall in next 4, 5 years contributing roughly around 40%, 50% of our overall business from these large customers. But right now, it's a big leap and we are working on it.
So broadly, today, there is no much difference in the initial business we get either from our own sales team or by the GSI business. And it ranges from $300,000 to say $500,000, 600,000 dollars
Yes. Initial deal sizes can vary, but that depends on the kind of customers. Yes, and with GSIs, our objective is to go to Fortune 2 to 3 customers. So the potential generating a $2,000,000 benefit from that is very high compared to a mid tier bank or a smaller account in other tiers. So when we enter that account, the entry can be at a 1,000,000 or it can be at a 500 or 400,000, but the potential of those accounts are much better.
So that will be realized over 2, 3 weeks, supplementary.
Got it. And so would there be any difference in the margin profile via GSI? And what is that difference number?
So the margin profile is based on the revenue stream. So since it's a subscription or a license, these are generally at high gross margins of around 90%, 95% gross margin. But it does not have to do with the GSI or non GSI deals. Since most of the revenue from GSI will be coming as licenses or subscription, so it will just add only higher gross margin business to the company.
Got it. Got it. So second question was on the segment wide revenue. So we have an off lid focusing on the banking and insurance space, trying to enter into small banks or insurance company or wealth business or lower USP revenue terms. Just wanted to understand on a Y o Y basis when I compare because our business is more comparable on a Y o Y basis, growth doesn't seem to excite us.
Is there a lot of churn happening of clients at lower levels? What is happening exactly? Wanted to understand that on the banking and the insurance space.
On the banking and insurance space, I think last year, we had a flattish year and so there was no growth. So there was no excitement. But I think our Banking Insurance are the fastest growing segment. Even for this year, for 1st 9 months, the revenue growth in banking is more than 26%, whereas because the government and other ones have squeezed. So banking has still continued to give us momentum.
So I don't see the reason that there's a concern on these segments. And they are doing very well for us. And they are doing very well for the whole industry right now. We do expect that in coming years, even this becoming even stronger as we are getting more strongly positioned in banking both on our solution or vertical side as well as horizontally declaring our platforms to larger customers. We will see that growth momentum continue into that.
The challenge probably I may be speculating that you are thinking about the NetLogo acquisition. In NetLogo acquisition, lot of logo churn happens in small partner accounts. And that is where I think you don't see net addition of logos. But on the revenue side in Financial Services, we have always a very healthy revenue addition.
Got it. And so on this am I audible?
Yes, sure.
Yes. So on this banking piece only, I remember in the earlier discussions we had, there were some opportunity which was laid down where there are around 900 banks out there in this revenue category of 22 2 to 50 $1,000,000,000 or the asset size. So I wanted to understand how well are we penetrated about what number of clients we have. I remember last time we discussed we had around 30, 40 clients in this segment. So I wanted to understand how has been the growth on client addition side or the number remains same?
No, we have I think this year also we okay, we have not really added the amount of clients we expected to do around 20 to 25 clients a year. But so far, we may have had only 4, 5, 6 clients in a year. We may add another 4, 5 this quarter. So there is a drop in the overall addition rate in U. S.
So on that segment, you're addressing just strictly around 900 accounts of asset sites, dollars 2,000,000,000 to $20,000,000,000 asset sites. So you're penetrating that market, but overall, what is happening, wireless, the there is a huge boom in the digital in the overall IT industry. But the market, which is typically in these small banks in the U. S, don't respond the same way. Most of these accounts have been either working on the lending page parity program for last year and this year, they've been struggling with COVID.
They don't have the same traction and same kind of a momentum. But I'm very sure as the market stabilizes, market opens, I think they will all restore and come back to that healthy growth rates.
Got it. And then last on the clarification, I wanted to our EBITDA margin guidance remains at 23% to 25%, am I right? Yes. And any guidance on growth?
See, growth, we this year was to come back to our historical around 20%. I think Q1, Q2, we did meet around that number and was slightly a larger quarter and also we had some issues in various some geos where we did. So we are still trying to push back to the last year's previous year's growth. And let's hope here we are right now we are around 16% we are seeing whether the year closes, maybe difficult to predict right now.
Okay. Got it. So I
think travel also hasn't started to the extent that we would have otherwise planned.
Yes, makes sense. Makes sense. Thanks, sir. Those were my questions and thank you so much for patiently replying to each
The next question is from the line of Rahul Jain from Dollar Capital Markets. Please go ahead.
Yes, hi. Thanks for the opportunity. I have a question which is related to we've been hearing this demand traction for SaaS based local offering in many companies, especially on the Indian IT services side, has been a very strong tailwind from the implementation opportunity perspective. And as a result, we have always seen the growth rate for these companies have significantly increased versus what they've been doing in the past. So with that background, do we see that things to be visible for us where we can say that
Rahul, I'm sorry, you're not very clear towards the last part of the question. But if it's about the overall growth rates of the low code SaaS based companies, then I can take up. Is that what you're asking?
Yes. Could you repeat the question once
you just repeat this question because I lost you
a little bit. Yes, yes. Is it any better now? Yes. Thank you.
Yes. So essentially, if I have to rephrase it, basically, I'm asking, do you see any reason to think that our growth rate can be substantially better than what we used to do pre pandemic as the same thing we are observing for the IT services player who are basically more on the implementation side of the business and is leveraging adoption of SaaS local kind of event, while we being the product side of it is not reflecting that growth now. But is there a reason why it can happen in any time future where our growth rate of PaaS could be exceeded in, let's say, next couple of years?
I think it's a very fair question and you're right. There's a huge traction on the low code play. And low code is not only on SaaS, but across all the business lines. Customers are expecting that to solve their digital journeys or to solve their digital problems, low code is always deployed as an initiative. And NuGen being one of the top 4, 5 companies in the world to play in this low code area.
And it's a market getting the second phase is, should we expect growth coming out of I think should be. And I think one of the most important things, which we keep on repeating that for us, since we are a smaller company and our coverages and accounts is limited to our product portfolio, for us new logo wins or retention of new clients is very, very important. And that is not easy to do completely remote. Since most of our sales strategy was India based or India supported sales strategy, so we'll have to go and win new logos. And I'm very sure as soon as the momentum in the travel starts back, I think the acceleration of our use cases because of low code or because of our own verticals in financial services and other verticals were very strong, we should be able to push back the growth momentum and it should translate into a demand for our kind of products.
But I think we are more hopeful than the low core SaaS. We are more hopeful about the overall GSI initiatives and the partner based sales, which is picking up. And that should push us to a higher growth momentum than the which used to traditionally record before COVID.
Okay. Just an extension to the same question and I have a follow-up. The as you said, low travel and I can for people who are serving the same market, let's say, for U. S. Or being more local is still taking advantage of adoption of low code solution since there is a limited travel constraint to them being a local?
Or is it a different nature where the kind of customer we are chasing in a non decision mode given that they are working remotely, that is a bigger concern. And if the concern is point number 1, then it's not since it's almost like 2 years we are in pandemic, have we identified ways to address this assuming this situation remain like this for, let's say, another couple of years? So do we continue to see this as a challenge or we have rectified the ways to solve that issue?
No, I think your point is absolutely. I think, surely, companies which are completely very close to the mature markets and have a substantial presence do find an advantage. And that advantage comes not only from the presence or way to operate, it also comes from their existing customer base around those areas. Because most of the in this period, most of the growth has come around accounts which people already have and those accounts are demanding more work and more resources and more software solutions. But if you want to acquire and start a new initiative, it's been all challenging whether you are close to the market or remotely.
Having said that, we have also shifted a lot of our sales. In fact, this year, so far, we have done around 34 local acquisitions. Now this is almost 2 years down in the pandemic. So all these accounts have been operated, acquired through a very different model than the traditional model of FaceTime. So we are also picking up the game out there.
But I think there are 2 points to it. 1 is the advantage is more surely they are able to capture the market who have already the customer base, especially the larger customers in mature markets. And second is surely your direct presence, your ability to be close to the customer, have a relationship with the customers or the customer trusts you for placing new order. Those things do help. So I think both play a part.
Okay, okay. That's helpful. And just lastly, if you you mentioned somewhere that you have a funnel of 60, 70 cases in these three markets, U. S, Europe, Australia. Just wanted to understand because is this more like a qualified pipeline versus a total pipeline where we could be like L2, L3 kind of a thing, last 2, last 3 kind of a thing?
Because if we have mentioned in the past that we work with multiple GSI plus we are in multiple product as well as we are in multiple markets. So if we just have a pipeline of 60, 70, which would mean that per sales person for the GSI, it could be just chasing 4 or 5 customer at max per client. So how serious opportunity it is from
the partner perspective?
You're absolutely right. So overall funnel roughly is around 69 cases and that's a complete funnel. That's all from prospect to the advanced stage of engagement and closure. So the funnel is thin and predominantly we have been able to penetrate or do better work with some GSIs where almost 50% of the funnel is coming from a single GSI and other GSIs are starting and exploring. So the funnel, you're right, the funnel size is small right now.
It does not really do justice to kind of potential the overall the market has. That's what we have been trying to grow in that area. Though we don't have too many front end sales teams for GSIs alone, because most of our traditional sales have been on our own mid verticals that is banking, insurance, government shared services. So the GSI sales teams regions are a very, very thin teams right now. They are not expanded.
So 70% of team is still working on the business as we do traditionally. It is selling to banking, selling to insurance companies, selling to government across these strategies. So right now, they have cases, but this funnel needs to grow to a substantial side over the next 1 or 2 years.
Thank you very much. And I'll join very quickly to come back in the question queue for a follow-up question. The next question is from the line of Rohit Balakrishnan from Italk Portfolio Management Service. Please go ahead.
Hello. Am I audible?
Yes, Rohit. Please go ahead.
Yes, thanks for the talk, Nudy. So just one two questions, one very basic. So in your split of revenue by revenue driven, there is something which is called support which is 25% and then there is AMC also which is 23%. So can you just explain what is support exactly what exactly involves support?
So, right, what basically what we look at is once we sell our software licenses, most of these customers would start we would charge them in what you call annual technical subscription or an ATS or an AMC, which is kind of an insurance to keep the license updated, cut and temporary. It's a kind of annuity generated over the life. So what happens is some of these customer systems, they have very large implementations. They beyond because this part of revenue does not have any direct manpower associated, it's kind of an insurance. They do contract additional support where they have basically a team of maybe 5, some people have a 10 or a 20 people team to implement these projects to keep on running and executing these projects over a period larger period of time.
So that's kind of an extended support. So the nature of this business is more annuity since it's more renewed since they're already having these installations. But the profile of this revenue is more typically their margin profile is like a support or a service profile. That's why we call it support. Does that experiment?
Yes, that answers So my second question is, I mean, you've been talking about your partnership with GSI and that should sort of open up more doors for you in the Western markets like in the U. S. So just want to understand and feel great if I'm wrong, maybe my reading is wrong. But in terms of I mean, just from a GSI point to what is in there I mean, what is it for them to go for somebody that's losing? Then you have others who probably, as you were explaining earlier that you have other players who work over to the customers itself, that is a certain international market or in terms of market is good for them.
So in the overall balance of power or to put a different bill, what is it? Why would a GSI want to go with a close-up medium versus somebody who's going to be very sluggish, making it much more slightly more difficult for them to sell us for the more established business?
So I think this is a very typical question for where we always keep on facing this question. And the answer is very simple. So see there is a market for our kind of products and solutions and it's a $20,000,000,000 market, so there is a demand. Of course, when GSIs are with customers, they are also competing for these values. So it's not that these orders are available to them.
The customer is at demand. So GSI is providing a solution and he is 2, 1 of the proud players. Now the 2 most important things for the GSI out there are, 1 is that customer's acceptance for the product. Now this customer acceptance comes from the brand. So with our presence in gardeners and foresters for last 12, 15 years, I think that we surely qualify that no customer can ask future news in because we are among the top 3 4 players in the world around these areas.
Now the second most important thing for the GSI is the probability of succeeding and the support he gets. That is where we score. Since most of these GSIs over the last 8, 10 years, we have extremely successful cases. They have been in India, they have been in Middle East, APAC, and they have now taken these initiatives outside India. And with some of these successes, which has been kind of a marquee win for the GSI also, they have realized that with NIM, the potential for success, the value they get to the customer and the surety they have about delivering solution is very, very high.
And that's where they are able to take you. That doesn't mean that we don't have to fight. We still have to convince the product. We go and sell to the end customer. We have to convince both GSIs and their end customer about the product.
But there is a clear cut choice. Given a choice to start certain GSIs in certain areas, they will prefer NuGen today. But that will mean they will always put 100% time always push up NuGen. But we don't need that. We need it most of cases they are able to push, we should be able to succeed.
Got it. And so this, are you sharing the names of the GSI that you're partnering with or you're not?
No, we don't have disclosures about that, but I think we can surely, Diti can work out about because whatever positions we have got for which deals we can share those names
with. Thank you, sir. This is very helpful. Thanks so much.
Thank you very much. Ladies and gentlemen, that was the last question for today. I will now hand the conference to Ms. Dipti for closing comments.
Thank you so much, everyone, for joining in the call. For any further queries, you can connect to me anytime or go through our website. Thank you.
Thank you very much. On behalf of NuGen Software Technologies Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.