Aurionpro Solutions Ltd

NSE:AURIONPRO

Earnings Call Analysis

Aurionpro's Strong Q1 Performance and Ambitious Growth Strategy

Aurionpro Solutions started FY '25 with a robust Q1, showcasing a 32% revenue increase to INR 262 crores. Key successes include a 27% rise in EBITDA and a 4% growth in PAT, now at INR 45 crores with a 17% margin. Significant demand surges, new banking deals, and strategic partnerships fueled this performance. The acquisition of Arya.ai aims to enhance AI capabilities for banks. Aurionpro anticipates a 30-35% revenue and earnings growth and continues to explore strategic expansions. Securing RBI authorization for online payment aggregation positions the company to pioneer next-gen integrated payment solutions. The company remains committed to disciplined execution and long-term value creation for stakeholders.

Strong Start to FY '25

Aurionpro Solutions Limited began FY '25 with impressive financial results, showcasing a 32% year-over-year revenue growth, amounting to INR 262 crores. The company's EBITDA rose by 27%, indicating improving operational efficiency, while Profit After Tax (PAT) grew by 4%, reflecting sound management practices.

Key Business Segments Performance

The growth was primarily fueled by increases in demand for core offerings, particularly in the banking sector. Aurionpro has secured several new contracts, with the banking segment exhibiting a robust pipeline. The Technology Innovation Group (TIG) is expected to continue its positive trajectory, particularly through advancements in smart transit and data center operations. A slight deceleration in the Smart City segment is anticipated.

Strategic Moves and Partnerships

Q1 FY '25 was eventful, marked by the successful completion of a Qualified Institutional Placement (QIP) that enrolled prominent global and Indian institutions. Additionally, Aurionpro acquired Arya.ai, aimed at strengthening its position as a global enterprise AI player. The company is set to deliver next-generation payment solutions, especially after receiving final authorization from the RBI for online payment aggregation.

Future Revenue and Growth Guidance

Management has set an ambitious guidance for revenue and earnings growth, projecting an increase of 30% to 35%. This growth is underscored by a commitment to exploring inorganic options to enhance existing capabilities and market presence, with the aim of positively impacting long-term growth potential.

Investment Focus on Research and Development

Although Arya.ai and payment licenses are expected to be margin-accretive in the long term, management emphasized that the current focus will be on increasing R&D expenditures to expedite product development. As such, the company does not anticipate immediate margin expansion, aiming instead for a steady growth in the software business's EBITDA margins over time.

Recurring Revenue Streams and Order Book Insights

Aurionpro maintains an order book exceeding INR 1,000 crores, with an expectation that 70-90% will be consumed within the next 12 to 18 months. While they don't include long-term maintenance contracts in their order book, management believes the revenue streams in software are typically sticky and yield consistent growth.

Elevated Engagements with Global Banks

In the U.S., Aurionpro anticipates strong growth—potentially 50% to 60% year-over-year—through engagements with major banks like JPMorgan Chase and Wells Fargo. The company’s recent partnerships with global fintech leaders are set to expand its footprint in North America.

Data Center and Smart City Sector Dynamics

The data center business has been a significant growth driver, expanding at over 50% annually in recent years. Looking ahead, Aurionpro expects this sector to grow by 30% to 50%. The Smart City segment is anticipated to experience a slowdown, indicating a strategic pivot to focus on high-growth areas like transit and data centers.

Investment in Sales and Marketing

Aurionpro plans to increase its marketing expenditure this year, aiming to strengthen its sales channel, which has already doubled over the last two years. The current marketing spend is under 5% of revenue, reflecting a conservative approach to customer acquisition costs.

Long-Term Vision and Opportunities

Despite competitive pressures, management believes in the substantial growth potential within the banking tech sector, forecasting favorable long-term trends driven by increasing expenditures on technology. The focus remains on delivering high-quality products and expanding market presence strategically.

Earnings Call Transcript 2025-Q1

[Operator]

Ladies and gentlemen, good day, and welcome to the investor call of Aurionpro Solutions Limited, to discuss the Q1 FY '25 earnings conference call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Aashvi Shah from Adfactors PR Investor Relations. Thank you, and over to you, ma'am.

[Aashvi Shah]

Thank you, Angeli. Good afternoon, everyone. On behalf of the company, I welcome you all to our earnings conference call for Q1 FY '25. Today, on this call, we have with us from the management, Mr. Ashish Rai, Vice Chairman and CEO, Mr. Vipul Parmar, Chief Financial Officer; Mr. Ninad Kelkar Company Secretary.

We will begin the call with brief opening remarks from the management followed by a Q&A session. Please note that certain statements made during this call may be forward-looking in nature. Such forward-looking statements are subject to certain risks and uncertainties that could cause our actual results or projections to differ materially from those statements. Aurionpro Solutions will not be in any way responsible for any actions taken based on such statements and undertakes no obligation to publicly update these forward-looking statements.

I would now like to hand over the call to Mr. Ashish Rai for his opening remarks. Thank you, and over to you, sir.

[Ashish Rai, executive]

Thanks, Aashvi. Good afternoon, everyone, and welcome to this earnings call for Q1 FY '25. I'm sure by now you have all received the investor deck, and I hope you've had an opportunity to review it.

Our journey to deliver sustained growth as started off for this year on a strong note. Our revenue for Q1 has grown by 32% on the back of continued momentum across both our major business segments. EBITDA has increased by 27% and PAT has grown by 4%, which is a good reflection of our enhanced operational efficiency and very effective execution on the order book by the wider team. These results underscore our commitment to building out a global product and platform player, that delivers sustainable value for all of our stakeholders.

To recap the performance a bit, revenue for the quarter stood at INR 262 crores, significant increase Y-o-Y. PAT for Q1 FY '25 stood at INR 45 crores, and PAT margins for the quarter stood at 17%. This growth is driven by significant expansion in demand for our core offerings as well as our expanding sales channel and the strategic partnerships that we forged with the large global technology players.

All our key businesses continue to demonstrate strong momentum. We have secured several new deals in the banking sector and the pipeline buildup in banking is especially very promising. Technology Innovation Group is expected to experience a positive growth as well, driven by advancement in the smart transit and data center operations businesses, which will get offset a bit by a planned slowdown in the Smart City segment.

Q1 was quite eventful for us from a strategic perspective as well. We concluded a successful QIP, and it's very encouraging to attract prominent global and Indian institutions to join us in this mission to create a global tech player rooted in India. We concluded the acquisition of Arya.ai, which is, again, a game changer for our strategy to create a global enterprise AI player that is sharply focused on creating the next generation of AI offerings for banks and insurers globally.

We're also pleased to announce that we've received final authorization from RBI on the online payment aggregators. This sets us up very well to deliver the next generation of payment solutions, integrated tightly with several of Aurionpro's offerings already in the market.

With a strong performance in Q1 and a positive outlook for the upcoming quarters, we feel we are well placed to deliver on our guided growth of 30% to 35% on revenue and earnings. We will continue to explore inorganic options that complement our existing capabilities or enhance our presence in chosen markets to positively impact the longer-term growth potential for volume growth. Finally, we extend our sincere gratitude to our employees, our customers, partners and shareholders for their continued support and contribution to the success.

Okay, with that, I will close, and I look forward to an engaging Q&A. Over to you, Aashvi.

[Operator]

[Operator Instructions] The first question is from the line of Anmol Garg, from DAM Capital.

[Anmol Garg, analyst]

Congratulations Ashish on strong performance. I have 2 questions. Firstly, if you can indicate what are the key growth levers in the TIG business from here on? So as I understand data center business has been becoming bigger within TIG. So what is the growth potential do you see over here? And does it extend beyond networks as well, which has been a prominent [indiscernible] for you.

[Ashish Rai, executive]

Thanks for the question. So look, TIG is roughly -- is basically 3 slices, right? So you've got the transit payment, smart mobility side of the business. You've got the [indiscernible] side of the business and then you have the Smart City's piece, right?

I think the growth drivers basically exist for us at the moment on the Transit business. I think that is growing very strongly. A lot of that growth happening outside of India. So I think U.S. is looking good. Central America, Latin America is looking good. Australia is looking good, we just entered U.K., the MasterCard partnership is looking good. The VIX partnership is looking good. So I think we see a very strong pipeline on the Transit side. I think it will certainly grow very strongly this year.

The Data Center is the second sort of big driver in that space. And you're right. I think to some extent, we've been limited by the strategic relationship that we've had. And it was sort of a chosen strategy for us. So this is one of those spaces where there is significant demand. But we've tried to be selective in terms of business. The business has still grown at more than 50% per year for the last 3-odd years. I think it will continue to grow at about the same rate.

We have Web Werks, the reason we focus on the strategic partnership is because the demand set is very wide, and we really need to focus on business that we can execute against and where we can maintain our margin side. But we will expand the scope of partnerships we have in that space. We've been selectively also taking up the more complex projects.

So for example, we announced from time to time, IT Guhati, IT Mumbai, High-performance Compute, the design work we do with RBI, Tier 4 data centers. So we continue to pick up complex projects, which are high margin and we will expand the scope of partnerships in that business, right?

I think the question of how much can you scale the delivery capacity. I think between, let's say, 30% to 50% is all the reasonable growth for that business. We will not try to grow faster than that.

[Anmol Garg, analyst]

Sure. This is helpful. Secondly, I want to understand that we have recently got authorization from RBI to operate as a payment aggregator through AuroPay. So I want to understand what kind of business opportunity are we looking at for AuroPay? Are we also looking at B2C kind of business or this would be totally B2B in nature?

[Ashish Rai, executive]

Yes. So, Anmol, I think the focus for us is to 1 build a business, which is sort of good from a margin profile standpoint, right? So I think going down the the totally commoditized B2C and is not our preferred choice. So we will try to first build a business around spaces that we are strong in, transit payments where we own the contract end-to-end. I think this becomes a fantastic lever for margin expansion in those businesses because we've been using third-party gateways anyways.

B2B, where we have software presence, combining software-based payment capability, I think is a significant sort of way to build out high-margin businesses, right, whether it's on the lending side, whether it's on the additional statement side that we have, with the Interact guide, or whether it is the ROVs, the SME SaaS side, right? So I think our focus would be to go where you can create a combined position, which creates a lot of value and hence allows you to capture a lot of value, right?

I think if you go down the clone for a [indiscernible] B2C [ gain gain ]. I don't think that we'll fix with the sort of economic profile that Aurionpro expects from our business side. So we'll go where there's a combination of software with payments and go down that [indiscernible]. Having said that, even transits B2C, right? So we would be to in B2C spaces just not go down the Plain Vanila sort of gateway kind of business.

[Anmol Garg, analyst]

Sure, sure. And lastly, I just want to understand that we have indicated the order book of INR 1,000-plus crores. So if I understand, so what can be the average duration of this order book? And how would it be split between PIH and Banking?

[Ashish Rai, executive]

Yes. So order book, in terms of duration, it is basically roughly, I would say, 90 -- 85% to 90% of the order book will consume over 18 months, right? I would say, 70-odd percent would come over 12 months, right? So that's how we count order book because we don't count the long-term AMCs and all in our order book, right? So those come anyway overall, right?

So 70-odd percent would come in [ 12 months, 18 months ], we can give upto 90%. Right now, the split is more [ 65/35 ] in terms of the order book with TIG, something in the range of 65% and banking something in the range 35%.

[Operator]

The next question is from the line of from Ahan from Vimana Capital.

[Ahan Rajgor, analyst]

Ashish, congrats on the greater results. Just wanted to understand that the order book has expanded from when we disclosed the last closing out FY '24? And if so, going forward, where do we see the growth coming in for orders, whether it'd be in the PID sector or banking?

[Ashish Rai, executive]

So look, order book, I think has proved slightly expanded from where we publish it twice a year, right. We will publish it again in September. Typically, the way Aurionpro order book behaves, right? We try not to include the long-term multiyear revenue streams because according to us, you're kind of showing a INR 500 crore, INR 600 crore order book, which no 90 knows what it is.

So for us, order book is usually where we've sold projects and there is an immediate license or an in-year sort of stream to come in, right? So for us, what happens is typically in a quarter, you will sort of consume, let's say, about INR 250 crores, INR 270 crores from the order book, and you will probably add at about the same pace. So the net addition to the order book ends up being quite small in quarter. Q1 is a seasonally slow quarter for us from an execution standpoint because Q4 is where a lot of deals got done, right?

So I would say it's slightly more. We'll publish it again in Q2. At which time it should be, let's say, up up somewhere between 5% and 15% depending on what we pick up. But typically, it would move 8% to 10% at most in a quarter, right? So right now, I assume low single-digit addition.

[Ahan Rajgor, analyst]

And just another quick question on the data center side. How much of within the CIG group, how much of the data center makeup in that [indiscernible] ?

[Ashish Rai, executive]

So data center, roughly 1/3 of the business, but it's growing quite fast, right? And Smart City side has sort of shrunk a bit and will shrink again, right? So I would say the way to look at it is, last year's numbers, each of the 3 slides is roughly a 1/3 each, so transit, data centers, Smart Cities as well. And this year, I think data center will grow stronger than the TIG overall growth number, Transit will go stronger than the TIG overall growth number and Smart Cities will grow -- will shrink -- will not grow, right? So I think that's how the number would probably be. So overall, the mix would be slightly more than 1/3 by the time you finish this year.

[Operator]

The next question is from the line of Vivek Gautam from GS Investment.

[Vivek Gautam, analyst]

First of all, congratulations on consistently giving good set of numbers, sir, for the last several quarters. Now so my question is about the -- your's is sort of a [indiscernible] DNA strategy you follow. You acquire a lot of companies, and then you let go of them if they don't perform. And I believe that Smart City and the cybersecurity sort of a thing was of that [indiscernible] . So how is the strategy of [indiscernible] software going on sir Mitra's company which you acquired in Noida? And what about RAIE, how much time do you give and -- what is the opportunity for acquisition?

[Ashish Rai, executive]

Okay. Thank you. Look, I think, so HBS, which was the Omnifin product that we acquired that is clearly -- was a gap in our strategic blueprint for the lending space. So lending, as you know, we've been very strong on the corporate loan organization side, collateral management, limit management, et cetera. We did not have an offering on the retail SME digital lending space.

That's where HBS Omnifin fits in. Abhijeet and team are probably the most transactional team of lending specialists in the country today, they're building out a fantastic products. I think that is going to be a huge growth driver for us.

Lending as a whole is going to be a huge growth driver for us and Omnifin sort of fits a very, very key piece for us. It was a business -- it is still a business which is largely centered in India. So we service 35, 37-odd digital lenders, nonbank lenders. Our goal is to make the business global. So we've been very actively working on expanding the business in Southeast Asia and the Middle East. We hope to see some success or be able to report some success this year. We feel confident about it, and that business will grow. So I think that business will grow probably faster than the enterprise growth numbers we have for the next few years. So we feel good about it.

Arya.ai is a different [ kettle ] of fish. So we are very, very positive on creating a large enterprise AI offering, a global enterprise AI offering that can play specifically in the banking and insurance spaces. We feel while the world is is busy doing Gen AI and building out foundation models, and there may be some winners to that game. There may be no winners to that game. We don't know how that game pans out.

We believe when a technology matures, bulk of the value is created on the application layer. So obviously, the Omnifin models and [indiscernible] play on the foundational layer, you've got a whole bunch of pumps investing in the tooling around AI, which is also fine. But at the application level, we see a massive space to create value, and that's how Aurionpro grows and capture value. We've always been very good on enterprise applications. We say how about we bring very mature AI capabilities to play together with the enterprise applications.

This is where serious banks, serious insurers are using our mission-critical applications to run their businesses. This is where they will get the value from using AI on their business processes, and that will allow Aurionpro to really capture that value. So we are -- it's a very big bet for us.

We believe Arya.ai is probably the best team in the country probably in the world in terms of focusing on specifically on banking and insurance use cases. And we intend to become a very significant global player when it comes to building Enterprise AI for banking and insurance world across the globe, right?

I think that is the place. Time will tell how successful we get, but we feel very strongly about it. We feel very good about our strategy. We are not huge fans of the calling API calls RMs and calling it AI. So we will invest heavily in the pace, and we'll see how successful we get.

[Vivek Gautam, analyst]

[indiscernible]

[Ashish Rai, executive]

Sorry, can you go again. I think your line is not...

[Vivek Gautam, analyst]

What I was saying that AS software team is ex-nuclear software, so quite a good track record and experience they have, I believe, which you require.

[Ashish Rai, executive]

No, I agree completely. I think Abhijeet and team are probably the strongest team of lending tech business in the country today. It's a very, very strong setup. We enhanced that with the strengths that Aurionpro brings in and we let Omnifin become a global product. We feel very strongly about it. We feel we've got just the right team to execute on this.

[Vivek Gautam, analyst]

So next is the opportunity size for their products in Southeast Asia and in the banking domain, a lot of banks in Indonesia and Mayanmar order which you got tightly. So -- is there still a lot of potential there? Our penetration level is already at a substantial level. And similar query about the opportunity size for our rest of the vertical, especially data center and transit in India and abroad.

[Ashish Rai, executive]

Yes. Look, I think opportunity size for each of these spaces is fit...

[Operator]

Sorry to interrupt. Please return to the queue.

[Ashish Rai, executive]

Yes. So let me take that. So look, opportunity size for each of the spaces is pretty large. lending, we see a lot of spend coming in across the markets that we play in, which is mostly in Asia. And as the world has gone into a high interest rate environment, there is even more interesting sort of transformation projects on the lending book. So we see actually a pretty serious demand coming in.

Then the other way to think about it is Asia is probably at best 8% to 10% of the overall technology spend as we expand into Europe and U.S., I think the size of the opportunity becomes bigger. So I think our focus should be on building out the best possible product and compete -- become the most competitive player. I think the segment is large enough for us to grow very strongly for very, very long period of time.

Same thing with data center, I think, like you mentioned, I think there's like tens of billions of dollars coming into the space. There are all sorts of reports which will tell you it's a trillion dollar opportunity over the next 5, 7 years. Same thing with AI, right? So I think these are all large spaces. We are a fairly small player in that space. So I see no problem in the headroom for growth or lead to grow very, very strongly for several years into this space. The focus should be on bringing the best possible product that we can, and that's what we are focused on.

[Operator]

The next question is from the line of Abhishek Shah from Ambika.

[Unknown Analyst]

Congratulations on a great set of numbers. Just a couple of questions. So firstly, in your previous call also, you have mentioned regarding Arya.ai and on this call also regarding the payment license. These are likely to be more products that we would use as possibly margin accretive in the long term. So just wanted to get a sense on how we can think about our margin going forward?

And secondly, on the revenue side, you mentioned that you don't include the recurring revenue streams in your order book. So some sense on what that number is and how sticky and what kind of growth you can expect on that as well?

[Ashish Rai, executive]

Abhishek, thanks. So look, Arya.ai, payment license, they will be margin accretive. But at the moment, these are investment-driven long-term growth drivers, right? So I would not really build in -- I mean Arya.ai may be, but I would not really build in a sort of uptick on the margin side.

Our R&D, as you know, by and large, is expense out and the size of the R&D budget keeps on increasing every year. So I would -- the game plan is for the next 2,3 years to not focus on margin expansion. I don't think this is the time for Aurionpro to do it. I believe the best way for us to add value to shareholders is to keep increasing the size of the R&D and keep increasing the number of qualities we sort of bring out into the market and keep the margins where they are. So that is the game.

But having said that, in a quarter or 2, it can go up or down 1%, and I think we don't -- we don't calibrate our margins so finally, but I would not expect margins to really go up because we're not trying to do it. On the -- but overall, I think over the long run, we do believe software businesses are capable of driving 40%, 45%, 50% EBITDA. I think that's pretty common in the industry, not even at a very large scale, at a fairly modest scale. So as the businesses mature and the growth rates slow down, we do expect EBITDA numbers to start climbing up, but this is not the time to do it.

Second order book, look, I think for us, the reason we don't count this is typically, especially on the software side of our business, the revenue streams are very sticky. So we rarely lose a customer once they start using Aurionpro's software. So the maintenance teams are typically for life, which in software businesses anywhere from 15, 20, 25 years side, changing software is a very painful task for anyone, especially when you send to -- sell to regulated spaces, such as banking and insurance side.

So I think that's the reason we look at it that way. We believe the AMT streams are more or less permanent. And we keep adding them to the plan every year depending on what it is. They're typically indexed. So your stream would probably go up between, let's say, 3.5% to 4.5% or so every year because of being indexed to CPI and stuff like that.

What is the quantum of these themes? I would say, actually now, obviously, that number, I will probably not do that right now, but maybe we'll consider sort of publishing that future state. Let me take that away.

[Operator]

The next question is from the line of Ankush Agrawal from Search Capital.

[Unknown Analyst]

sir, typically in the software products business, along with R&D, sales and marketing is another cost pocket, which requires the sort of upfront investments. And though R&D is something that we've talked a lot about. Can you talk a little bit about the quantum of investments in terms of percentage of revenue that you are putting into sales and marketing? How this number has moved over the last couple of years? And how do you see this number going at like R&D, we are continuing to increase the pilot based on the operating levels that we're getting. So similar kind of thing is it playing out in the sense the marketing side as well?

[Ashish Rai, executive]

Yes. So look, sales and marketing, we've steadily up the spend. We are not huge fans of software businesses claiming you need to spend 20% on marketing and sales for us to keep growing. So we typically keep it below 5% for us.

Having said that, the channel is now twice the size it was last year. So we keep scaling the channel, basically more or less in line with the planned growth numbers. The way to look at -- and I'll tell you why we are not big fans of paying sales and marketing will take 15% or 20%. I know that's very accepted in the SaaS space and software space.

And the reason for that is the following: we sell mission-critical applications to regulated institutions who rarely change software. So this is not like some SaaS CRM software, where switching cost is low. The switching cost for Aurionpro software is very, very high. You're talking a large bank using a corporate loan orgination system. You look at like banks in Singapore have used us for 15 years, 17 years, 20 years.

The cost of switching is fairly high, right? So if you don't sell a single new logo, you'll probably still grow the banking software business between 12% and 15%, right? Obviously, to grow at 60% like we are growing right now. We need to sell new logos, and that needs a sales channel and that we invest in, we believe that number would probably stay in the range of 5% or less than that, more or less as we grow. If that changes, I'll come back and talk about it. But at the moment, we don't feel the need to to really scale that number.

Having said that, the sales channel is growing. It's grown, over the last 2 years, it's basically doubled. Over the last year, it's gone up by 50%. Marketing spend for us is very low at the moment. And this year, we intend to step that up. So that will go up a bit.

[Unknown Analyst]

Second question that I wanted to ask. So in terms of the strategy of licensing our IP to some of the larger products company globally. So at the current stage, it makes a lot of sense given that some of these players have a large presence in terms of the developed market and in terms of the logos that they have.

But in the future, as and when Aurionpro itself becomes a larger company, how do we see this kind of partnership evolve within maybe in the future Aurionpro might itself be capable of going directly to these geographies and to this type of clientele. So if you can talk about how do you expect this kind of partnership evolve? And does this contract allow you to, say, in the future, go and compete directly with these companies for the same kind of product that you're currently liscensing?

[Ashish Rai, executive]

Yes. So great question. I think you framed it quite well. Look, at the moment, we are $140 million, $150 million players in most spaces are $10 billion, $20 billion, $30 billion, $50 billion spaces, $100 billion spaces, right? So you are very small player in very, very large spaces. You are a very competitive player with a very deep product, but you're still a fairly small player, right?

So I think for us, this is the time to go out and expand. In the product business, in the software business, it's not so straightforward to really go into U.S. and Europe. So I'll give you CLO as an example, we compete with. We compete with the FIS, we compete with Moody's. We compete with the same global players in Asia. And our win rates are typically the best in the market. We win more than we lose. It does not mean that when I go to the U.S. and I compete with the same players, our win rates are going to be the same, most likely our win rates are going to be very, very bad.

And the reason for that is you need local -- it's not a product depth issue. It's a local references issue. It's a local adaptation issue, right? So you need time to build that up. It takes 3, 4, 5, 6 years after initial success is to build up a scale software business in banking and insurance space. So for us, we -- so that is one.

The second thing is we have a slightly different way of thinking about how to add value to the bank. We believe the banking tech world, especially has been very proprietary tech driven, has been very top tech driven. And typically, vendors have not worked together with each other to look at value. We believe that is changing, we believe that needs to change, given how complex the tech landscape in banks have gotten, right?

So the combined created value of us with the Finastra or [indiscernible] or MUREX or I know our partner is a lot more than the individual some of the past, right? So we strongly believe in the open ecosystem way of creating value for the banks, and we have a heavy corporate of it. And we feel it will go that way. What happens if the world does not go that way? I think these are not married to it for life. We can always walk away. We're not giving up our IP in these cases. We keep our IP, we license the clients mostly directly, right?

So you can always walk away. It's not -- if it's no longer a win-win, right? But at the moment, it is a solid win-win. We feel over a period of time, it will remain a solid win win. We don't just do that on the banking side, right? On the transit we could look at it, we collaborate with MasterCard, we collaborate with VIX, right? So we feel strongly about the ecosystem value of sort of vendors working together to create solutions to their strength right?

If it doesn't go that way, I mean, these are not marriages for life. We have our IP, we will -- at least have the references in the market, and we can build on that, right? So that's the way I look at it.

[Unknown Analyst]

Got it. Just a last clarification. So the next 1 year AMC would be included in our order book, right? The next 12 months?

[Ashish Rai, executive]

So it's not included in the order book, but it's included in the guidance.

[Unknown Analyst]

Yes. Yes. So it's not included in order book. So order book is basically anything new that we're going to do?

[Ashish Rai, executive]

Correct.

[Operator]

[Operator Instructions] The next question is from the line of Keshav Garg from Sacheti Family Office.

[Keshav Garg, analyst]

Sir, I wanted to understand it. So I understand we provide services related to data center and consulting and project management-related services. I wanted to understand how much of the CapEx pie related to -- is related to building a data center, right, from strat attributable to services provided by us. So I wanted to ask a few questions on that. And what is the average cost of a data center, 1 megawatt data center and how does it differ across Tier 3 and Tier 4? And how much of such a CapEx is attributable to our design services and project management services?

[Ashish Rai, executive]

Yes. Look, so I think it's a tough question depending on the scale of DC -- I going to bring up. I mean if you want to get into detailed question, I think probably best get to Investor Relations, and we can sit down with the DC team. The -- look, broadly, what we capture is only a share of what the spend that goes into a data center. So we look at designing of those data centers, will handhold -- especially with the strategic partners through that process, we will program manage the build of the DCs. We will not get into the EPC side, all that stuff that goes into it, right?

So we probably end up -- if it would depend to some of our contracts are pure design contracts. So then you're picking up kind of a few percent, most of the contracts will include design and program management, I think you're getting to provably 30%, 35%, 40% of the spend. But you would never get to the 100% of the spend overall, so, right.

So that's how it works, but it really varies depending on the scale, depending on the purpose and depending on what exactly you're setting up.

[Keshav Garg, analyst]

So let's say, [ 40 CR ] spend for 1 megawatt, how much would that be [indiscernible] real estate? And how much of that remaining -- a yield 40% of that, 30%, 40% of that can be attributable to your service?

[Ashish Rai, executive]

We can capture, let's say, 40% to 50%, but we will not capture that in every contract. It depends on the nature of the contract.

[Keshav Garg, analyst]

Okay. And can you give some breakup this 40%, 50%? How much is the design services and how much of project management services?

[Ashish Rai, executive]

Yes. Look, I think it's -- It would really vary project to project. I would say it's still design would be like a few percent best operator, if you're really doing the heavy work. So -- and a lot of our contracts are actually pure design contracts, right? So in this case, obviously, all of it is designed. But typically, you are seeing single-digit percent.

[Keshav Garg, analyst]

On the design one?

[Ashish Rai, executive]

Of the design. Yes, on the design side, right? And the rest of it then depends on the scale of work you take on, right? So it's really project by project. But I think we will at most capture for -- so I think the way to look at it is this we are taking on only what we can realistically deliver, right? Because the space is such that if you tomorrow wanted to start going at 200%, you can find a path of growing at 200%, but we will not have the delivery capacity to do it.

So we are taking on projects to the extent that we can sort of reliably scale and deliver on them.

[Keshav Garg, analyst]

Also, do you have any recurring services when data center is built and operating or is it only the game of CapEx?

[Ashish Rai, executive]

Yes. So look, our long-term game is -- so I think the way to look at data center is this, data center is today where transit was for us 4 years or 5 years back, right? It's by and large a services business, where we have very little IP, right?

But the reason we get into a space is because we feel strongly about the demand in the space. And then we feel once we have understood the whole space through the services offering, we will productize and drive the nonlinear economics. So we are only now getting ready with the first set of products in the data center space.

For example, we are close to launching properly an edge compute product, which is a fully prototyped product, right? We also have some services in terms of really being able to run operations for those, right? So at the moment, I think the recurring side is low and most operating services. But if it pans out the same way transit panned out for us, in the next couple of years, we will move to a very heavily product type stuff, which will be significantly recurring.

But then it's still initial product launches in pilot stages. So I think we are probably 12, 18 months away from going mainstream.

[Keshav Garg, analyst]

Got it. Just the last question. So what is the team size for the data center related? And what is our capabilities on how much data center business we can do in terms of units of data center or in terms of revenue?

[Ashish Rai, executive]

Look, I think we can probably keep on growing at 40%, 50%. Right now, it's about the 1/3 of the TIG pie, so probably a couple of hundred crores slightly less than that. I think we can delightly keep on going at 40%, 50% for -- or at least 30% to 50% for a fairly long period of time if we wanted to. I think the reality is, a pure services business, the reason Aurionpro is cautious scaling it is. The margin profile is not the same as a product sized business. right?

So we feel good about continuing to scale it at a good growth rate. Right now, it's 1/3 of the pie for TIG, you can do the math, right? I think that's basically what I will say at this point.

[Operator]

The next question is from the line of Kartik Ayar, who is an individual investor.

[Unknown Shareholder]

You touched on data centers and banking software. Could you just throw some texture on the state of as of the transit business? And if you're pursuing any tie-ups or acquisitions in that respect?

[Ashish Rai, executive]

Kartik, great question. Thank you. So look, transit, for us, the focus this year is on consolidating and building on the the success we had in terms of building out the strategic partnerships last year. So we are U.S., we are investing in quite heavily. We feel good about being able to expand in Mexico, which is a very large market.

I think we had -- we reported a initial win a couple of months back, and we've got a strong partnership with the market. Latin America in general, I think we are in a few deals. So that will expand. We announced the partnership with VIX to enter the U.K. market. We announced the partnership with MasterCard, and we're working on with them on multiple deals across the world. We announced our entry into Australian market as well through a partner.

So I think we've now done the groundwork of being in the right markets with the right partners. So this year is more about doubling down on those partnerships and really monetizing what comes from it. So we feel very, very good about transit internationally, growing very well for us. In India, we've been very choosy because I think we are the only player probably who plays in India who can really export in a big way. We've been focused on the international pie. India, we've been selective, but the engagement we had around the card issuance with Harayana government, I think we just are very excited about that.

I mean that's the scheme with a meaningful impact, but it's a very good business as well the card issuance piece. So we see how we can expand on that one as well. So transit will continue to grow strongly. Like I said earlier, TIG, we expect project to grow quite fast data centers to grow quite fast and will slow down on the other pieces, right?

So transit, I think the close move to overlook movement in the world is probably over the next 5, 7, 8 years, I would say 90% of the world will move from close to open look, if not more. So it is a very long runway of demand. We have one of the most integrated end-to-end offering stack in the space. We do everything from validators, the hardware side, our own EMV certified card readers to the AFC software, to the pickling systems, to be even the gate.

So we are probably one0 of the most integrated player in the space, in a space that is going to see huge demand over the next 6 to 8 years, right? So I think we'll keep calibrating that growth, but we feel very good about to grow strongly just right across.

[Operator]

The next question is from the line of [indiscernible] who is an individual investor.

[Unknown Shareholder]

My first question is around Aurionpro's platform. So in the latest budget, government put a lot of emphasis towards MSMEs, right? And I believe the platform is especially designed for them, right? And I believe we had multiple tie-ups with multiple state governments, right? So can you give more details on the platform? And what kind of opportunity we have around that? I mean do you see that becoming a large contributor or it's still in early stage?

[Ashish Rai, executive]

Yes. Thanks, [indiscernible] . So, no, the reason we invested in the platform, and we built it out is because we feel over the long run, MSMEs or SME space in general, one needs a mature [indiscernible] solution when it comes to digitization and they need the handholding and the support. We believe that is a large opportunity over the long run and not just in India, but across markets, right?

And we had the right assets to play in that space. Now with the payment license coming in, we get even stronger in the space. So we feel that there is a long-term opportunity to play. Having said that, right now, from a revenue standpoint, that's not a meaningful contributor. It is still, let's say, an R&D project, which is very well thought of and you're right, it was very well appreciated by some state governments, and we continue to talk to more, right? So we -- right now, the focus is on broad basing the platform, broad-basing their auction, get a lot of SMEs on the platform, right?

And we will use part of the functionality for the B2B payment supplier payment side that we are building out with the payments, AuroPay [indiscernible] right? But I would say this is a 3- to 5-year play. Don't expect meaningful revenue contribution this year or the next. And the reason for that is, one, these are spaces which need to be incubated and really scaled.

Second, we're not a startup. We don't have the need to show immediate sort of runs on the board and all that stuff. So we -- I think we can take our time building the ecosystem and then the longer-term value would be larger, we feel.

[Unknown Shareholder]

Okay. My second question was around -- on the web side, right, on the Aurionpro was on web side, in the client list, I see some of the largest U.S. banks like JPMorgan Chase, Wells Fargo already in the list. So what kind of engagements we have with them at this stage?

[Ashish Rai, executive]

Yes. So look, it could vary from bank to bank. I mean, we've got -- so I think we've got relationships with a very large number of global banks. I mean I think the U.S. banks typically -- so what happened is over the last couple of years through some of our partnerships, we have expanded in U.S. We expect this year, U.S. to get to a, let's say, a double-digit million dollar more around the mid-teens sort of number, which should be a strong growth, right? And part of it is through our tie-ups with the global fintech majors.

And we talked about and then some of it is through our tie-ups with the U.S.-based fintechs who we are supplying our technology stack to. It's still not something big. I think these are small sort of starts in most cases, but the combined contribution will be big. I mean what do we do for which client, unless it was a very large thing, we normally don't talk about it, right? So I don't want to start getting in there. But U.S., I expect this year should grow 50% to 60% for us.

A part of that IP is coming from Singapore. So I don't know which size of the bucket the revenue sort of fits in, but U.S. would sort of grow strongly for us this year.

[Unknown Shareholder]

So again, a, just to add to that, right? So I feel like JPMorgan Chase, Wells Fargo and TD Bank as our customers or our clients on the web side, right? So are we already there are we in the initial stages?

[Ashish Rai, executive]

Look, I think -- no, we will be doing something small here and there, but we're not in there with a major product.

[Unknown Shareholder]

Okay. Okay. So -- but are we engaged with them? Or are you able to -- at this time, are we engaged with them? Or it's too early to say on that?

[Ashish Rai, executive]

No, we are engaged on some services and trying to build something. And if we declare something on the website, normally, there is some value behind it, but it's not like we sold a big lending product or things like that.

[Unknown Shareholder]

Okay, okay. And my last question is on REEI. So what kind of growth it had in the recent quarter? And I know you mentioned that it was growing like more than 100% for the last 2 years. Now in this Q1, what kind of growth it had? And have we -- have we completed the integration with them so that we can go out and sell or bundle with our products?

[Ashish Rai, executive]

Yes. So look, an I'll not get into sort of quarterly sort of number declarations at a subsegment level. For the full year, we expect RAR to grow 50% to 60%. I'll sort of leave it at that. The integration side of things are a little bit more interesting. It's fully integrated on the sales channel side. So we are seeing fantastic conversations across Southeast Asia, Middle East. We participated in some joint events together in Middle East and Southeast Asia. We started work around integrating the Arya.ai with our enterprise applications, which is lending, which is the Integro side, which is the transaction banking side, which is the Omnifin side, right?

So we started -- that is our main play, integrating Arya with our enterprise applications. So that gives us a net sort of revenue levers, where we are already present with the client, as well as give Arya way to operate. And yes, I mean, sales-wise, we see strong momentum. We expect to grow for the full year. That's about what I'll say.

[Operator]

Ladies and gentlemen, I now hand the conference over to Mr. Ashish Rai for closing comments.

[Ashish Rai, executive]

Okay. So thank you, everyone, for joining the call. I hope you got some more color on how the Q1 was and anything else you're interested in. We are sharply focused on our core strategy, which we've been fairly transparent and clear about for the last couple of years. There is not a lot of new changes to that playbook.

We will stick to the playbook. We will try and execute with discipline. We feel very strongly about the size of opportunity in front of us in each of those spaces, and we will remain focused on executing against those opportunities. Thank you for taking the time to join this call, and I will see you again. Thank you.

[Operator]

On behalf of Aurionpro Solution Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.