Q4 20/21

Apr 30, 2021

Ladies and gentlemen, good day, and welcome to the Persistent Systems Earnings Conference Call for the 4th Quarter full year FY 'twenty one ended March 31, 2021. 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. We have with us today on the call Doctor. Anand Deshpande, Chairman and Managing Director Mr. Sandeep Kalra, Executive Director and Chief Executive Officer Mr. Sunil Sape, and Executive Director and Chief Financial Officer, Jussaurab Divedi, Head of Investor and Mr. Amit Patre, company secretary. I would now like to hand the conference over to Mr. Sandeep Kalra. Thank and over to you, Mr. Gala. Thank you. Good morning, good evening, everyone. It is good to be here with you once again. And I sincerely hope all of you are safe and healthy. As you would have noticed, we delivered yet another strong Q4, bringing FY 'twenty one to a strong close. And fiscal 2020. Before I go into the financial and business updates, I would like to start this call by thanking our team members and customers for their resilience and their trust in us during these unforeseen times. Our team and our customers are at the bedrock of the continued industry leading performance delivered by us over the past 9 quarters. And we sincerely pray for their speedy appointment. In view, and we sincerely pray for their speedy appointment. In view of the ongoing pandemic, we have announced several initiatives to support our team members, including local support groups and undertaking the cost of vaccination for all our India based employees and their families. We have already embarked on this vaccination drive and expect to start an even more rigorous vaccination campaign starting May 1, when vaccinations become available for all adults in India. Also, as you know, the medical infrastructure across India is a less significant pressure. In this context, the Persistent Foundation is helping us do our part and in assisting hospitals in our local communities in India by donating ventilators and oxygen equipment. As you may remember, we did a similar drive globally earlier in the first wave of and outlook. We sincerely pay for everyone's well-being and hope that we can bend the curve in the right direction soon, Lovely. Now let me turn to the business and financial updates for Q4 end of FY 2021. We are happy to share that we delivered yet another strong quarter, delivering continued progress on all major business metrics. The revenue for Q4 came in at $152,800,000 growth of 4.6% quarter on quarter and 20.3% on year on year basis. In rupee term, this translates into a growth of 3.5% Q on Q and 20.2% on year on year basis, respectively. It's worth noting that this is the first time after a gap of 4 years that we have grown on a sequential basis in Q4 over Q3 overcoming the seasonality of the IP business with strong services growth. And Q4. For the full year in FY 2021, the revenue came in at $566,100,000 showing a growth of 10.9% over FY 2020. In rupee terms, which translates into 17.4% year on year growth for a full year basis. On the EBIT side, the Q4 came in at INR 1,640,000 and EBIT margin of 13.2%. This translates into EBIT growth of 7.4% Q on Q and 70.9% on a Y on Y basis. For the full fiscal FY 2021, our EBIT came in at INR 5,075,000,000 and EBIT margin of 12.1 percent, translating into EBIT growth of 55.2 percent over the fiscal FY 2020. We had yet another strong quarter from an order booking perspective. The order booking total contract value for the quarter came in at $246,500,000 compared to $302,000,000 in Q3. At the end of the quarter. The ACV value, which is the annual contract value of this booking is to the tune of $200,700,000 To put in context, and Q3 is usually the seasonally most strong quarter for us, given 80% of our revenues come from the U. S. And that is the fiscal year close for the U. S. Since this is the Q2 of sharing this data, I would like to clarify that this data includes all bookings, small and large renewals as well as new bookings, existing and new customers. Our collections for the quarter was very good sequentially. The DSO for the quarter moved to 55 days compared to 57 days in Q3. Cash on books at the end of Q4 stood at $268,000,000 In terms of employee numbers, we had yet another strong quarter in terms of employee addition. We added 1242 net hires. And the net income highlights out of this were 10.27 and pressure intake for the quarter stood at 205. The addition for the quarter for trailing 12 month basis is 11.7% compared to 10.3% in Q3. From a salary increase perspective, we had done the last salary increase in November 2020. And we will continue to do direct selling increases in Slide 2021. Coming to the dividend part, our Board has recommended a final dividend of INR 6 per share, which takes the total dividend this year to INR 20 per share. And will talk more about it in his part later in the call. I'm also happy to share with you that we have given our strong performance this year, announced more than 100 percent corporate bonus, which is based on the company performance for each of our employees. Further, given the ongoing pandemic and the resilience shown by our employees, we spent a one time amount of US600000 dollars in giving a resilience gift to our entire team globally. This was an appreciation of the extraordinary efforts put in by our employees and the resilience exhibited by them, making sure all our deliverables were on time all the time through this pandemic. And 2020. Coming to the M and A front, the integration of Capyote is progressing very well. We have seen some meaningful wins in our data integration business, and was in the caveat in our existing accounts and in new accounts. We continue to spout for potential targets in our focus areas and hope to give you a meaningful update in this coming quarter. Now let me give you the quarter's performance from an industry segment and service line perspective. From an industry segment perspective, and the growth for the quarter was led by BFSI and Healthcare Life Sciences, which grew by 6.9% and 6.1%, respectively. And year on year basis, the growth for BFSI and Healthcare Life Sciences were 15.9% and 20.9%, respectively. The growth in technology companies, which includes our largest customer, was 2.7% for the quarter and 22.8% for the year on year business. And year over year. Overall, across both, we saw a fairly healthy growth on a year on year basis and even on a quarterly sequential basis. From a service line perspective, all the service lines did well for us. The growth was led by digital engineering, cloud, security, data, all growing meaningfully in Q4. Turning back to our 2 organizational units, Technology Services came in at a revenue of $120,700,000 with a sequential growth of 8.2% and year on year growth of 22.1%. For the full fiscal FY 2021, the Technology Services business registered an industry leading growth of 18.4%. And the Alliance business was subject to the traditional Q4 seasonality, as you would all know. It had a degrowth of 7.1% quarter on quarter, coming in at $32,200,000 However, on a year on year basis compared to Q4 of last year, the Alliance business showed a growth of 14%. And for the full fiscal FY 2021, the NIAS business generated marginal degrowth of 2.7%. Despite this marginal degrowth, we are excited about the progress that we have made in this business in the recent times. We've also bagged a couple of large deals and Q3, Q4 period for us and that gives us confidence in the ability to bring a predictable profitable growth in this business going ahead. And the year is by 2021 has also seen us optimize the cost in this business and we will continue to figure out revenues of doing cost optimizations in the IT business wherever prudent. In summary, on the Alliance business, we are prudent in adding profitable growth and we are optimistic of continuing that on an ongoing basis. Turning back to the update on ESG initiatives. As you know, Persistent has a long standing history of embracing strong corporate governance, CSR and employee best practices. We are in the process of appointing an ESG consultant to and start measuring against the standard ESG framework, and we'll give you more details in this regard in our annual report and fiscal 2019. Now I'll turn the call to our CFO, Sunil Saka to give detailed color on the quarterly NAV Financials. I'll come back after Sunil's comments to give you more details on key client wins, other awards, recognitions and a few more headcounts. Over to you, Sunil. Yes. Thank you, Sandeep, and good evening, good morning to all of you. And I hope you all are keeping Well, stay in space in this challenging time. Sandeep has already given you a fair amount of details on the financial stuff. I'll give you some more details on that. So the revenue number at 152.82 was QoQ growth of 4.6 percent in dollar terms and 20.3% in Y o Y terms. On the rupee revenue, we had the growth of the rupee revenue was $11,134,000 a growth of 3.5% QoQ and 20.2 percent YOY. So while there was a dip in IP led revenue due to the seasonality as Sandeep alluded to, the strong growth in services revenue and we were able to post a net growth of 4.6%. For the full year, the total revenue was 566 $800,000 with a growth of 12.9 percent and in weekly terms, it was $48,79,000,000 with growth of 17.4%. And Q2. If you take the segments that we have in terms of the IP led and services business. The services revenue grew by 8.6% and the IP led revenue had a decline 13.8%. And in terms of industry verticals, BSS and Healthcare saw good growth of 6.9% and 6.1% respectively, while the technology companies where we have the maximum of the ISV business grew at 2.7%, essentially because of the seasonality in the IP led business, which gets accounted over here. In terms of linear revenue, the offshore revenue, linear revenue grew by 11.2%, all accounted due to volume growth and the on-site linear revenue grew by 4.2% comprising of volume growth of 5.4 and declined billing rate by 1.1%. As you would be aware, we had a pay hike announced in November 2020 for all the employees. The last quarter had 2 months effect of the pay hike. The full effect of the pay hike has come in this quarter. We added 1242 net employees in this quarter to build capacity for growth and service some of the existing this quarter's growth. The royalty revenue being lower also affected the gross margin to some extent and then there was currency movement, which also impacted margins to the extent of 40 basis points. So cumulative impact of the headwinds were partly compensated by the organic growth. As you saw significant growth in the services business of 8.6%. The fact that the resales revenue was lower and we also optimized on the IP person month. And from an overall deployment point of view, there has been increase in the and offshoring effort, which you can see in the 1st month's data. So all these margin drivers taken together had an impact of 40 basis points on the gross margin, which came in at 33.9%, 40 basis points lower than the earlier quarter, 34.3%. The SG and A expenses were 17% as against 17.3% in the previous quarter. As you will recall, we had announced COVID relief donations of rupees 250,000,000 at the start of the year. And we have by now contributed INR 170,000,000 during FY 2021 towards that. The EBITDA for the quarter was 16.9% as against 17% in the previous quarter and for the year it was 16.3% as against 13.8% in the last and year. Coming to depreciation and amortization, it accounted for 3.8% as against 4.3% in the previous quarter. The EBIT came in at 13.2% versus 12.7% in the previous quarter and for the full year it was 12.1% as against 9.2% in the last year. So over the year, essentially you would have observed improvement in EBIT. Treasury income for the quarter was INR 2.11 million and is against INR 288,000,000 in the last quarter, primarily on account of M2M investments on mutual fund investments arising from increasing yields that happened in the month of March post and the union budget announcement of significantly higher government borrowing program. The ForEx gain was $174,000,000 due to the M2M gain on Tejas and against a loss of $2,000,000 in the previous quarter. And full year 2018. With that, the profit before tax was $1849,000,000 at 16.6% as against 18.3% in the previous quarter. The ETR for the quarter was 25.5% and PAT was at least 1378000000 at 12.4 percent of revenue as against 11.2% in the previous quarter. And year over year. For the full year was INR 4507 million at 10.8% as against 9 point at 5% in the last year. EPS for the year was RUB 58.97 per share, the growth of 32.9 percent y o y. The operational CapEx for the quarter was $281,000,000 We have cash and current investments on books amounting to at this $19831,000,000 as compared to this $19,037 as at 31st December. As you know, we had interim dividend payout that happened in the month of February at rupees $14 per share. Forward contracts outstanding as at 31st March was at $135,000,000 at an average rate of $77.11 per dollar. The Board has recommended a final dividend of rupees 6 per share and this along with the interim dividend of rupees 14 per share would make the total dividend of INR 20 for the year with a payout ratio of 33.8%. And quarter. So with that, I would like to thank you all once again and I hand it back to Sandeep. And Q4. Thanks, Anand. So now to give you a color on key client wins for the quarter. Our facilities for the quarterly results carries 30 days, and far more than what I would say. For the Banking Financial Services and Insurance segment, we were chosen by our leading and fiscal 2019 financial services IoT as a key partner for core IT modernization. This is a 3 year deal to support and maintain proprietary at the end of the quarter, we and we were also chosen by a large insurance company for their credit union customer segment to deliver and build a cloud based data and analytics platform. This would be helping their customers see insights as a service and build customer data warehouses for better decision making. In the Healthcare and Life Sciences and segment, we were chosen by a leading U. S. Health system to help them build a digital front door and patient experience solution with integration to EMR systems and patient portals. This will enable the health system to build a unified one patient portal, simplifying business properties, enabling a single view of patient across departments and ultimately delivering consistent patient experiences. We were also chosen by our leading global clinical research organization, EROs as we call them in the healthcare space, to help them execute on an enterprise wide legacy modernization program leveraging dual soft and intelligent business automation. On the software, high-tech and emerging technologies, and we were chosen by a global technology leader to partner with them on an engineering and go to market partnership on a portfolio of security products. And fiscal year 2019. This is a 5 year multimillion dollar deal to develop identity and access management product portfolio with delivery teams spread globally across U. S, UK and Asia. And we are joined by a leading low code technology provider, as incon, in this space to establish an engineering and professional services center of excellence, helping them build industry solutions and deliver transformation programs for their customers in Healthcare Licensing and Banking Financial Services. Moving on to the awards and recognitions for the quarter. Q4 stars get recognized from industry leading analyst firms and associations on multiple fronts. And to mention a few, we were awarded the coveted 2020 Golden Peacock Award for Excellence in Corporate Governance, an award that we are extremely proud of. We were named to ISG Booming 15 Global Fan Outs in Sub $1,000,000,000 category 4th quarter in a row. And we were named as a rising star in the ISG Provider Bench for Healthcare Digital Transformation Services. At the Analyst Group named us as a rising star and a major contender in peak metrics for software product engineering services as well as major contenders in intelligent process automation provider landscape. Constellation Research named us to their shortlist for Innovation Services and Engineering and Q1 2019. All of these are testament to the capabilities that we bring to bear with our customers on a daily basis. In terms of the partner system, the ecosystem highlights, we were chosen by NAFCU, which is National Association of Federally Insured Credit Unions as a preferred partner for digital transformation. Through this partnership, credit unions will have greater access to our service technology services and solutions to accelerate digital transformation, including expanding the use of cloud based products and solutions. We announced a partnership with StreamMarket, point of sale lending for banks and credit unions. This partnership is aimed at enabling at small to midsize financial institutions across the globe to accelerate their digital lending strategies. The joint solution offering between Persistent and SIM market will empower at the Midi Banks and Credit Union, enabling them to seamlessly enter the point of sale lending market by directly originating loans are providing new POS capabilities for their merchant customers. We have partnered with AWS Rova on the Red Hat OpenShift platform to bring services on the AWS public to clients seeking a fully managed OpenShift platform. And Q4. Coming to our leadership team updates, we continued to add to our leadership muscle during the quarter. We announced Stefan Dhanushan Dhanush as our Head for and sales force business globally. Stefan had joined Persistent as a part of the Uperience acquisition and he will now lead our sales force business globally based out of Europe. We also added Bhim Rao as the Head of Europe based out of London. Bhim will be responsible for all our business across Europe. And with this addition of leadership and promotion of Stephan, we will have leadership from Europe for global business and we will have leadership being brought in for Europe in Europe. We also added Zebi Drog as Head of Delivery for BFSI Jovali and Namit Narula for DFSI for East. So we have been consistently adding the muscle to take on more and we're continuing the growth journey that we have established for ourselves. In In summary, we had a strong Q4 and a good growth to FY 2021. We are optimistic about our growth potential in FY22. And earnings call. With this, I would like to conclude the prepared comments and like to request the operator to open the floor for questions. Thank you. Operator? Thank you very much. And and and Q and A. The first question is from the line of Apoorva Prasad from at HDFC Securities. Please go ahead. And Mr. Apoorva Prasad, you may go ahead with your question. Yes, yes. Thanks for taking my question and congratulations on the strong quarter. Sandeep, a couple of questions actually. Is the renewal component within the PCB part, Is that in line with the prior period renewal rate? So say, first half and prior to that. And related to that, If I go by the recent deal wins that has been announced, you think those are good to keep growth rate in the top end of that 3% to 4.5% Q on Q range? Yes. So coming to your first question, typically the renewals for some of our large as customers are in the October, November, December quarter. That is where they do the annual renewals. And so the renewals that happened in this quarter are in line with the forecasted or budgeted renewals. So no worries on that and no worries on the new business. Now in terms of the growth trajectory, If you look at it this way, we are doing $152,800,000 in revenue for the quarter. The ACV value that we have said is at $200,700,000 for the quarter. Anything which is above or in the vicinity of 1.2x to 1.3x the ACV is a fairly good number to have. And keep in mind over the last 5 to 6 quarters, we have done many deals with our multi year deals. The renewals for those will not be due for the next few years. So we are very comfortable with our booking profile and as long as it is in the vicinity of $200,000,000 even TCE plus minus a little bit, We are comfortable with the 3% to 4%, 4.5% quarter on quarter on an average. Obviously, some quarters could be higher, some quarters could be a little lower. But we are comfortable with the order bookings. We We're comfortable with the order bookings translating into the territory that we have established for ourselves. Thanks for the clarity on that. So on the Alliance business, I mean, with respect to Red Hat and Cloud Paks opportunity, just wanted to pick your range here. So I mean, IBM has talked about mid to high single digit growth in that hybrid cloud adoption, especially as IBM is undertaking an overhaul in their own go to market strategy, especially mid market. Do you think that translates into sort of incremental drivers from a persistent perspective and maybe across different components within the Alliance basin. Just your thoughts here will be useful. Right. So on the first part, the Red Hat opportunity, The Red Hat growth, whatever IBM is projecting, give us a growth opportunity potential? Absolutely. So for every dollar of Red Hat that IBM generates the potential for us to generate revenues is multifold. It could be anywhere between 2 to 3, 3.5 times at times. So from that perspective, the market opportunity is right. And one of the partnerships that we also announced was between AWS and IBM Red Hat OpenShift, that's where we are coming. So we are also looking at the various avenues where Red Hat is expanding and how do we sharpen our pencils on our side of things. So that definitely is an opportunity. Overall also, if you look at it, not just and Cloud Pak, which includes the Red Hat and so on. But otherwise, the Cloud Pak for security, the Cloud Pak for data, at 9 yards is where we are looking at different opportunities and we have a healthy traction on that. So from an MIS business perspective, We have made sure that it comes back to the same humming nature in terms of pipeline and so on, and we are reasonably confident it will deliver growth. And just finally, bookkeeping 1, what's the drop in the segmental margin in the BFSI and Healthcare Life Science attributable to? So for some of these quarter on quarter variations may be there. There are some client specific nuances as well. So there are some volume discounts, etcetera, that have to be given at some point in time in different client basis. So I won't worry too much about that on a quarter on quarter basis. Overall, both these segments are overall, we are seeing across the company a good and we are trying to even take our margin up a notch as we go now. Okay. Thank you and all the best. And Thank you. Thank you. The next question is from the line of Dipesh Mehta from MK Global. Please go ahead. Yes. Thanks for the opportunity. A couple of questions. First about the S and M investment, if one look S and M is largely flat even from employee perspective and for last 2 years or so. So now do you think productivity related improvement what you might have driven over last few quarters and largely or you think still there is enough scope to drive better productivity from the team? Or you think now we have to invest in people and your and may start growing. 2nd question is about the digit sizes and tenure. If you can help us understand how it is and Changing listing over the last few quarters. Thank you. Sure. So on the sales and marketing side, we have driven and good productivity from the investments that we are being making on an ongoing basis. And some of the things that also are helping us is as the revenue pans out, obviously, that and then investment is being de prayed over a larger revenue base. Will we make additional sales and marketing investments? We're continuing to make prudent investments at scale as we kind of go through our journey for the next few quarters, years and so on. So there will be F and M investments, but we are not expecting it to be anything disproportionate in percentage terms. I think we have a good productivity metrics established and we'll continue with this kind of a thing. So you should expect this to be in line in percentage terms. Obviously, as the revenue increases, that percentage translates into a little higher spend in other terms. Now on the other side, the deal sizes. So look, the place where we play in, we are very strong in digital product engineering, in practices like Salesforce, low code, no code, cloud data and so on. Usually these are places where deal sizes, if I look at the PCB, anywhere between $10,000,000 to $50,000,000 is a sweet spot for us from a bigger deal perspective. And even for larger peers, I would tend to believe unless they are putting a lot of support revenue along with these kind of deals, These deals will tend to be in this kind of sizes and they will keep having phases. So we are seeing the pipeline at large and small both. The larger deals are anywhere between 10 to 50 on a TCV basis. So that's where it is. And the deal term can be anywhere between 1 to 3 to 5, the bigger deal that Azul has, it will be a 3 to 5 year kind of a deal. And Q4. Sure. Just one clarification, I want about the weakness in the realization what we are seeing on-site ops or both. Is there any element of reimbursement portion? Because I think the definition suggests it include contractual reimbursement portion. So is there any element of travel related softness impacting your realization or it is your realization drop? Hi, Dipesh. So this is actually Would you call the realization there are two numbers on-site where we have had certain expansion in revenue from North America in other geographies Like Canada and Mexico. So you see partly one reason because of that. There is no impact due to the reimbursement That you talked about and then it is more about the, you can say mix of the business. So far as offshore is concerned, yes, offshore is concerned, it is for this quarter slightly higher because of revenue growth in the, What do you call India Business. Understand. So no travel related It is largely business mix related implication playing out. Yes. Okay. Thanks. Thank you. And Q4. Thank you. The next question is from the line of Pankaj Tripur from CLSA. Please go ahead. Hi, thanks for the opportunity. And Sandeep, congratulations on the consistent execution. I had two questions. First, if you can elaborate what kind of margin levers do you see as when you're talking about keeping the margins stable in 16% to 17% EBITDA fair. And just added to that, if you can talk about maybe Suneem can help and understanding the amortization trajectory. That's the first question. 2nd question is on your contract. I believe the $15,000,000 contract that we announced and last year. I believe there is some restructuring there. And I think the client has sold the business as per your release. So So if you can just throw some more light over there in terms of what are the changes that it means for your business and in terms of financials between? And Q4? Sure. So Pankaj, on the first part on the margin levels, so there are so So right now, we have come to the 17% range for the EBITDA part and we are relatively confident of new growth. That's point 1. The underlying levels that we have there are and 3. Number 1, in our IT business, there is certain amount of cost optimization we have done. There's certain more cost optimization that is possible in that business. Number 2, the utilization, if you look at it, for us, the utilization has dipped a bit for the last quarter. And even From our overall perspective, we believe there is significant things that can be driven out of the utilization. And the utilization has has gone a little lower because of the capacity build also that we did. If you look at the hiring that we did, 1600 plus in Q3, 1200 plus in Q4, All of that obviously takes a little time to kind of get it done. So there are levers on the utilization side as well. And then there is the SG and A investments being spread over larger and that we already talked about. And then there are some minor operational efficiencies that we can bring in other assumptions and so on. So overall, we are confident we have enough at levels to be able to take on any cost increases that may happen in other places and still be in a comfortable 17% plus minus at a few bps here and there. So that's the thing on that. Now on the second part, the $50,000,000 contract restructuring that you're talking about. So this and customer of ours was bothered by Nag's hyperscalers. And in fact, that goes well for us. So for the shorter term, yes, and there is a contract restructuring that has happened, but that does not impact any of our next 12 months to 18 months kind of revenue outlook. And even within that, there are discussions happening of what more can be done in different pumps and shapes, which we are very hopeful will continue the revenue at the same level, if not better. 2nd, it also gives us a bigger relationship with the hyperscaler where we did not have that kind of a relationship in the core engineering part and that can be expanded to various other parts and Q4. So overall comfortable with that, not a matter of concern at this point in time for us. So that is where we are on that contract. Hopefully, the 2 questions are answered. Yes, thank you. And so on the amortization piece, yes, hi Pankaj. So on the amortization, we have already got some benefit in this quarter. And from next quarter, there will be release of another 50 basis points worth of amortization expense. So that will be the benefit from next quarter onwards. And that is something which we can assume to be the stable number going forward. That is it. The next question is from the line of Sandeep Shah from Equis Securities. Please go ahead. Thanks for the opportunity and congrats Sandeep and the team for solid execution both on operations and consistent deliverance as a whole. So first question in terms of the order book. Sandeep, it's heartening to see that $250,000,000 to $300,000,000 worth of and has been continuing in Q3, Q4. So you believe looking at the pipeline, there are prospects that this number Can be sustained on an ongoing basis? Or do you believe these are aberrations and these are much higher than may not sustain going forward? At quarter on quarter, some quarters are seasonally stronger like October, November, December. Overall, if we are in the range of 200 to 250 in that range for TCV, and that's pretty healthy. The ACV part would be obviously a component of it. Look at it this way, if we are doing $152,800,000 for the quarter and if we are booking 20% or more in ACV terms, that itself is a fairly healthy thing and you can translate that into TCVs. So we are very comfortable that ECV is in the range of RUB200, RUB250, RUB250, RUB200, RUB200,000,000, and 1 quarter may even be lower. But if you look at a broader picture from a yearly basis, this is fairly healthy. And keep in mind, this does not include and many of the deals that have been booked over the last 5, 6 quarters, which have 3 to 5 year 10 years, which don't come up for renewals, which have no bookings in these quarters. So overall, and fairly happy with the profile. I'm thinking they go up and down, but fairly happy with the pipeline and the prospects going off. And Q4. Okay, fair enough. Just on the technology vertical as a whole, can you refresh in terms of the split of the business on the product engineering for at the end of the quarter, which could be on the legacy products as well as on the new gen products. Because that's on the new gen products, product engineering and We don't call out that split, and Sorry, but we can get back to you on this number. A significant part of our business is on new product development. If I was to hazard a guess, it may be 65, 35 in terms of newer products versus older products being modernized or maintained. But we'll come back to you and we'll be interested in this. Okay, perfect. And this 65% new product, which you mean would be largely digital products or cloud and Absolutely. And even the other part, a chunk of that would be modernizing those products and enabling them in terms of certification or doing a hybrid kind of a thing where some part of that can be taken to the cloud and so on and so forth. So a and A significant part of even that would be digital image. Okay, okay, okay. And just on the Alliance part, this year, we have seen a marginal deal growth. And you have been restructuring and you were also winning the deals. And you were saying that from 1Q onwards, growth may turn around. Is it fair to say the growth rates may start inching up in the Alliance business to company habits specifically on the services side of the business? And Yes, that's a fair statement to make. See, if you look at some of the utilization related things as well, the utilization partly dipped because We had certain programs being ramped up on the Alliance side and otherwise. So both Technology Services and Alliance had some newer programs where we were doing the market transfer and doing the transition part, building newer teams and so on and so forth. So that will definitely bode well for the Alliance business as well. And starting and Q1. Alliance Businesses also calls for a good growth. Thanks and all good questions. Thank you. And Q4. Thank you. Before we take the next question, we'd like to request participants that in order that the management is able to address questions from all in the conference to please limit your questions to 1 per participant. Should you have a follow-up question, we request you to rejoin the queue. We take the next question from the line of Abhishek Shindatkar from Elara Capital. Please go ahead. Yes, hi. Thanks for the opportunity and congrats on a great execution. The question is related to mining. Now despite the strong and growth that we are reporting. It seems that mining is still an area which can add to growth on top of the net new business that we are beginning. So any color on how do we plan to improve that? And would that also mean that there are some tailwinds Into the margins as we rationalize the client portfolio? The second question is just a bookkeeping to Suneel, sir. The improvement in the DSO, is it something that we are consciously following up with clients? Or it is just that because of the shorter nature of the projects, So we are getting payments, early payments or timely payments. Any color on that would be helpful. Thank you for taking my questions. And quarter. So, Vishal, I'll take that first part and then I'll hand over to Sumit for the second part. So The fair statement that mining is definitely a tool in our toolbox and we have been at it. We have formed teams with our transformation and that help our regular account teams and thinking through what the clients' key initiatives are and help them with thinking through the propositions proactively, including proof of concession sworn support. So for FY 2022, this is definitely one of the key initiatives where we are expecting us to go deeper into existing accounts and that should start reflecting over the next 2 to 3 quarters and we are at it and we have seen early successes. Part of the consistent growth that we have had over the last 5 quarters or so, 4 to 5 quarters has been on the basis of both and the new wins in existing customers, which are nothing but mining and getting some large deals in net new customers. So we have seen early successes, but this is a place where we'll double down and deliver even better going ahead. Sameer sir, if you want to answer the second question. Yes, Abhishek. So on the DSO, it is more a function of actually the process efficiency improvement. If you look at it, whether it is a short project or a long project, ultimately the client is paying based on this underlying payment terms. So one is the process efficiency of entire order to cash cycle and the second is the sheer regard in the system. We are also and being conscious of the fact that in this pandemic situation, it is more important that we have I am the bond and ensure that There is no buildup of receivables at any place. So all the factors put together has led to consistent reduction in the DSO, while if you recall in the first quarter. When the pandemic had started, we had actually DSOs going up because of the situation that we all faced as lockdowns and so on. But then from there consistently we have so the first move also get back to where we were and then continuously we have been working on improving this discipline internally. Thank you. The next question is from the line of Rishi Junjunwala from IIFL. Please go ahead. And Q4. Yes. Thanks for the opportunity. Only one question And how have you seen that trend changing over the past few years? And probably I'm assuming that the component is reducing given that you're gaining a lot more multiyear, multimillion views? Yes. So So Rishi, good question. From that perspective, look at it this way. Some of the largest corporations in the world, when you look at, let's say, one of the largest networking companies, one of the largest banks, and the people who are significant to us, even the largest technology company, a bunch of their businesses, They do not give more than 6 months to 1 year kind of use, even though they have been working with us on the same thing for many, many years. So unfortunately, that is a nature of their working and so that we can't push away. But to your point, We've been doing a number of large deals, so that proportion of renewal business on a yearly basis, etcetera, is going to come down. And We are hoping to announce the order backlog in the next quarter. So I would want to wait so that I can in one go give you the order backlog and all these things. Otherwise, the more incremental data points we give, we get more queries and clarifications. So if you can wait for 1 quarter, we'll give you the order backlog that will show you quarter on quarter movement as well. And that will give you a fairly good grasp on all the analytics you want to do. Sure, Greg. The second question is if you look at your headcount, and this year it has grown at 29%, whereas your revenue growth was only 13%. So just to better understand, is this and significantly higher hiring, a function of you doing preemptive hiring because supply could be an issue. And as a result, next year the hiring number will be much lower? Or is it a clear reflection of how much revenue growth you're going to do? And Q4. So it's a reflection of 2, 3 things. It's a reflection of the revenues to come, combined with more offshoring effect, combined with some amount of capability build ahead of the curve, combined with some amount of attrition that we want to mitigate should it happen. So it's a combination of a lot of these things, but you pretty much got the factors right. And to please limit your questions to 1 per participant. The next question is from the line of Madhu Babu from Canada HSBC. Please go ahead. Yes. Hi, sir. Congrats on a great quarter. So just recently, 1 MidCap has done a sizable acquisition in the BPM space. And now that the cost of debt is very low and we already have a very good cash balance. So is it the right time to go for a sizable acquisition maybe in the under business service line or even on the consulting part. So and from an acquisition perspective, Madhuwaho, we are always on the lookout for good acquisitions. And for us, the acquisition will not be to accrue revenue, it will be to and we'll be able to recruit capabilities so that we become more sharper in the service lines that we have or the industry segments that we serve. And at any point in time, we are evaluating multiple of these, at Small to big, hopefully, we can give you a meaningful sign of update in the next 3 to 6 months time, because these things do take time And we do have few things that we are evaluating, but timing will obviously be over the next 3 to 6 months. And so the strong hiring you have done, so I mean was it a decent markup you have given to them because in this pandemic, I think people are and So we had a very good hiring. So just what is attracting them to Persistent? And second, how is the outlook on the pressure hiring for next year? Thanks. So from a hiring perspective, look at it this way. We have been able to attract this amount of talent, 1200 to 1600 people on a quarterly basis for the last two quarters. This is on the basis of 2 things. Number 1, obviously, we have ramped up our hiring engine. Number 2, more importantly, when we approach kind of the hiring talent that we want to hire, and the fact that we work on cutting edge technologies, the fact that Persistent has always been known to be a good technology company, good company where you get exposure to the latest edge work and combined with the growth that we have shown consistently over the last few quarters, bodes very well for us to be able to attract the best talent. So From that perspective, it also helps us not be attracting talent just because of the money we put out in the market, but because of the and credibility of the work that we do, the growth that we have, the credit card that we can provide and the employee experience that we provide. So that way it has been very helpful from that hiring ability and we have not seen that as being the money led part only. And you talked about the pressure hiring. So we hire usually between 800 to 1,000 pressures on a yearly basis. And that would be the baseline for us. We may go a little bit higher if we need to. Hopefully, I answered your questions. Yes, sir. Thanks and all the best. Thank you. The next question is from the line of at Dipesh Mehta from MK Global. Please go ahead. Yes. Thanks for covering on that opportunity. Just want to get your sense about whether we are seeing demand environment accelerating, decelerating stable. And I'm asking this question in the context of if I look over revenue growth, we are 20 percentage y o y. Considering strong bill intake, and pipeline as well as airlines business likely to recover entering into FY 2022. What challenges you think led to to sustain 20 and You think it is sustainable and likely to play out over medium term? Thanks. Vivek, I'm not going to answer the question on 20%, because if I say 20% is sustainable or we will do more, I'm giving forward looking items, which we don't do. I will basically say that, look, we have established a good trajectory for ourselves. We have executed with discipline over the last 4, 5 quarters. We have been in the range of anywhere between 3 to 4.5 or more. We would be in that range. Some quarters would be higher, some quarters would be lower. That is as far as that is concerned. As far as our demand environment is concerned, See the demand environment for our services has been fairly good for the last few quarters. And that's what has both it went for us and our competitors, peers, whatever you know what to call, for the last many quarters. We see that as a stable environment. And when I say stable, it means a good secular environment of growth for us, and potential for the next 2 to 3 years. So that is where we are. And unless something goes here or there, the alignment from a demand perspective is fairly healthy. It's about us to go and execute. And some quarters will be higher for us in terms of order bookings because it takes a lot of effort when you are fighting and a good set of deals. And then you win some, you lose some, you create the pipeline again and you do that. So overall, and stable, confident of our growth and that's where we are. So hopefully that answers you. That answers. Only Airlines, I'm not very clear. You indicated airlines will return to growth like services in next year? And we seem to have lost the line for Mr. Kala. Please stay connected while we reconnect Acala. And and we have Mr. Khalsa reconnected. Sorry, I got dropped. So Dipesh, you were saying something. Yes. Sandeep, I was just asking you made one comment about airlines business where you suggested and revenue growth trajectory likely to converge with services business. So do you expect airlines business to reflect similar kind of growth trajectory entering into next year? And The patients start picking up towards that direction. And obviously, we are seeing fairly high growth in the services business. So that average of 2 will be in the trajectory that we are talking about and incrementally we will see more and more hopefully in the Alliance business. But we have good other bookings to be able to say with confidence that that business is going to be back on growth trajectory and we have to build it up from there. And Understood. Thank you. Thank you. The next question is from the line of Manik Taneja from JM Financial. Please go ahead. Hi, thank you for the question, T. Sandeep, I just wanted to stick your brains about and mix of revenues over the last 12 months. And the reason why I asked this is because in our case, we work with a lot of new age ISV customers. So from that standpoint, are they much more willing to doing development work offshore? That's question number 1. The second thing I also wanted to understand is that given the current outbreak of COVID, how is it impacting delivery for you guys and So on the first part, is the customer willing to pay more based on skills rather than location? And So yes and no. Ours is a fairly competitive market. If you look at it, we compete with and we are not going to be able to get into the business. Yes, globally, whether they are India headquartered, Eastern European headquarters, U. S. Headquarters, broadly global maintenance, right? So while yes, the kind of work that we do enables us to get a little premium over the years, but we have to be and we're very cautious about saying that just because of COVID and location independence people have seen in this, We should be able to get the same kind of premium that we can get in the U. S. And so on or rates closer to the U. S. Or Europe and so on. So there is definitely a premium you can get for RBC, but it will not necessarily be a huge thing because it's always a competitive market. And second part from the current outbreak for COVID perspective. So thankfully, we have not seen any degradations so far in service delivery. All our teams have stepped up. All our team members have made sure if at all there is anyone suffering in their teams and there are some teams where people are suffering, They have stepped up to take on each other's work. And usually, we have a concept of shadow resources as well. We have brought back to there. We also have used our bench in some cases. So overall, we have been able to make sure that even in the past 5 to 6 weeks where we have seen the COVID second wave become and we have not seen solid liquidity savings. That's where we are. Hopefully, that's Sure. Thank you. If I can ask one more, just wanted to pick your brains regarding the onshore utilizations and given the fact that that was that has generally been cited as or suggested to be a source of margin improvement from a medium term standpoint, How should we be looking at the decline in onshore utilization in the recent past? Is it just a function of supply side creation or There is something else to it. Yes. So there is multiple parts to it. If you look at the on-site part of it, we use the onshore and we are working on key members in multiple different ways. 1, they are active product delivery that they are 100% committed to a customer program. 2nd part, a significant part of that is also our consulting capability where we leverage them for the front end piece of work far for being proof of concept, far for onshore related discussions and so on and so forth. So there will be some slack in the on-site utilization compared to and many of the other peers of ours who are basically into operations and so on. The other part of it, is there some and Due to be driven in terms of getting more utilization there, yes, there could be a few percentage points there. But we would focus more on the offshore utilization as well, where we have bid significant capability capacity and there is definitely levers to do and utilization improvement there. So there will be improvement both sides, but offshore will give us more, onshore will definitely give us a few percentage points. And Q4. Thank you. The next question is from the line of Rahul Jain from Dholod Capital. Please go ahead. And Yes, hi. Just wanted if you could share a little bit more color in terms of the areas and where you expect this growth in Allanes to come back to a much higher level from the recent past trend. So any areas you would like to specify? Sure. So if we look at the Alliance business, the largest customer of ours has and reorganize their business in multiple different areas, whether it is their hybrid cloud business, whether it is their cloud packs for data, security, automation and so on. So if we look at it, we are well aligned to some of those businesses. We are seeing definitely an uptick, for example, in the security side, on the data side as well. And so it is more broad based, but there are some pockets where we are more well entrenched, whether it is cloud and security and data from that perspective. So those are the areas at a bottom level that we will see the business come up. And the second aspect of that would be as we do more business on those cloud packs with our biggest customers. We would also be taking that to the market in our customer base as well as newer customer base to be able to do the FEL VI part as much as we do the FEL II part. So from that perspective, there are multiple levers of expansion that are available to us. Right. And given these situation, yes, you think this is a and a multi year opportunity or this is what we're seeing for the near future, but we have to see as our things progress beyond FY 2022. This is definitely short to midterm opportunity. Obviously, this is an evolving market and we also have to see how all this evolves for our customers as well. But for the trough to midterm, we are relatively confident of this approach. We have seen early successes and that is where the confidence that we had from Q1 onwards that we are saying that this will come to growth is reflected. So, sub to medium term, this is a strategy. Obviously, in technology world, if you're looking for 2 to 3 years out, that is the best you can do and then you keep it between 2 to 3 years out every point in time. Right, right. I mean, the reason for asking that is, of course, how this segment has performed over the last and a couple of years. So the point is that is it a difficult business to scale? Is that what I'm trying to understand? And So every customer has a different profile. So from our perspective, if you look at the revenue concentration, we have brought down the revenue concentration because our other parts of business have been growing significantly higher percentage points. And the mix of this and the overall business has been coming down. Given that, there is like a portfolio management. And we will continue to grow. Overall, we believe our business will heavily grow. We will be in the top end of the growth in terms of the top quartile for the industry. Now within that some years, finance will grow and a little higher some years ago and a little bit lower. But on an overall portfolio basis, we are very confident in terms of and the other customers that we have in the portfolio, spread of growth and so on and so forth. So not a worry at the company level. Obviously, puts and takes will always be there at individual customer and Right. Got it. Thank you. That's it from my side. Thank you, Vijay. Yes. I think we are at the end of time. So we should try and close if there are no other questions. Yes, sir. We'll take that as the last question. I I would now like to hand the conference back to Mr. Khadra for any closing comments. Yes. So from our perspective, as I said, it was a fairly strong quarter and a fairly and strong ending to the financial year 2021. We are confident of our prospects in the coming year and we remain and we are committed to delivering industry leading growth being in the top quartile. We would once again like to thank our 13,500 plus team members who made all this possible, and our customers and partners who are with us on this journey and even in these hard times. We appreciate all of you spending time with us on this call and we look forward to connecting back with you with the progress 3 months from now. Please stay safe and healthy. Thank you. And thank you very much. On behalf of Persistent Systems Limited, that concludes this conference. Thank you for joining us. Ladies and