Aurionpro Solutions Ltd

NSE:AURIONPRO

Earnings Call Analysis

Strong Q2 Growth with Positive Outlook Amid Strategic Expansion

Aurionpro Solutions reported a robust Q2 with a 32% revenue growth, reaching INR 278 crores. EBITDA rose by 23%, while PAT improved by 34%, indicating effective execution. The banking software segment, fueled by high demand and new market entries, has been pivotal to growth. Company guidance targets over 30% growth in FY '25, maintaining EBITDA margins between 20% to 22%. The firm is focusing on cash efficiency, particularly in the transit and smart city projects. Noteworthy contracts include the Panvel Safe City project, which aims for high double-digit margins over its 16-18 month execution timeline.

Strong Revenue Growth Sets the Stage

In Q2 FY '25, Aurionpro Solutions Ltd. reported a robust revenue growth of 32% year-on-year, reaching INR 278 crores. This momentum was driven primarily by its banking software segment, which continues to gain traction in global markets. The company is particularly excited about its progress in expanding its banking software offerings and entering new markets, positioning itself as an increasingly competitive player on the world stage.

Profit Margins Reflect Positive Operating Execution

Net profit after tax (PAT) for Q2 stood at INR 46 crores, marking a 34% increase from the previous year, with PAT margins at a commendable 16.4%, slightly above the guided range of 15% to 16%. The EBITDA margin for the quarter was 20.3%, although it saw a slight decline from the previous quarter due to a one-off foreign exchange loss. This highlights the company’s effective operational execution and suggests there are no significant changes in the underlying business economics.

Market Expansion and New Projects Drive Future Growth

During the first half of the fiscal year, Aurionpro made commendable strides in its banking and technology services business. The first half saw significant focus on product innovation and gaining traction in new markets across regions like the Americas, Southeast Asia, and the Middle East and Africa. The company is confident this momentum will continue, aiming for revenue growth exceeding 30% for the full fiscal year.

Strategic Focus on AI and Fintech Partnerships

The company is also harnessing advanced machine learning capabilities to enhance its banking software product stack, which has notably improved win rates against competitors. Additionally, Aurionpro has formed successful partnerships in the fintech space, expecting this area to contribute to strong revenue growth in the coming quarters.

Navigating Cash Flow Challenges Amid Rapid Growth

Despite the strong revenue performance, Aurionpro faced negative operating cash flow of INR 66 crores in the first half, primarily due to increasing unbilled receivables as the company ramps up large-scale banking projects. Management noted that cash flow would normalize as these projects reach execution milestones and are taken live, especially in the second half of the year.

Guidance for the Future: Sustained Growth and Margin Expectations

Looking ahead, Aurionpro's management expressed confidence in maintaining revenue growth of over 30% and keeping earnings margins within expected ranges. The continuous investment in research and development, particularly in product enhancements and capabilities, suggests that the company is set to sustain its growth trajectory and enhance long-term shareholder value.

Segment Insights and Order Book Overview

Aurionpro's current order book stands at approximately INR 1,150 crores, with about 40% sourced from the banking segment and 60% from the technology and infrastructure (TIG) business. The company anticipates ongoing growth in both segments, bolstered by recent contract wins in transit payments and safety technologies, including the Safe City Panvel project.

Long-Term Vision and Strategic Acquisitions

With an aspiration to be a top 3 global player by 2030, Aurionpro remains committed to achieving its Vision 2030, focusing on sustainable long-term growth. The company's exploration of inorganic growth opportunities indicates a strategic approach to complement its core capabilities and enhance its market presence.

Earnings Call Transcript 2025-Q2

[Operator]

Ladies and gentlemen, good day, and welcome to the investor call of Aurionpro Solutions Limited to discuss the Q2 and H1 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, Neha. Good afternoon, everyone. On behalf of the company, I would like to welcome you all to the earnings conference call for Q2 and H1 FY '25. Today on this call, we have with us from the management, Mr. Ashish Rai, Vice Chairman and Group CEO; Mr. Vipul Parmar, Chief Financial Officer; and 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 during this call may be forward-looking in nature. Such forward-looking statements are subject to certain risks and uncertainties that could cause the 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 Q2 FY '25. I'm sure by now you've all received the investor deck, and I hope you had an opportunity to review it. I'm very pleased to share the continuing strong performance in Q2 and in H1. We continue to make significant progress in the quarter on our agenda to expand the banking software business to newer markets as well as to recalibrate parts of the TIG business to focus on better economics as we've talked about before.

Our revenue for Q2 has grown by 32% on the back of continued momentum across the businesses, especially on the banking side, EBITDA increased by 23% and PAT grew by 34% which is a great indicator of continued effective execution by the team. Building a scaled up enterprise technology player that delivers value on the global stage will take immense focus on a complex range of factors, and it's worth appreciating how steadily and methodically the team has continued to make progress across the various aspects of the strategic agenda.

To recap the performance revenue for the quarter stood at INR 278 crores, which is a significant increase on a Y-o-Y basis. PAT stood at INR 46 crores for Q2, and PAT margins for the quarter stood at 16.4%, which is slightly above the guided range of 15% to 16%. EBITDA margin for the quarter stood at 20.3%, well within the guided range, but down 1 point from the previous quarter due to a one-off FX loss that we had. This growth is driven by significant expansion in demand for our core offerings as well as our entry into newer markets where we are increasingly succeeding because of the competitiveness of our product stack.

The most important highlight of the first half of the year has been the significant progress our teams have made on product build-outs as well as new market entries for both banking as well as TIG. This progress doesn't show up in the quarterly results, but it's probably the most significant determinant of our ability to achieve Aurionpro's stated Vision 2030 and deliver industry-leading returns on capital for our shareholders. We announced market expansion and deal wins across Americas, across Southeast Asia, across Middle East and Africa. And we feel confident that we will continue to see an acceleration of these based on the strong growth in pipeline and our ability to convert pipeline into deal wins across both the segments.

Banking and fintech business continues to experience a very strong demand environment and our win rates have been very good, thanks to the competitiveness of our product stack as well as the increasing effectiveness of our sales and delivery teams. We have especially made very strong progress on enabling our enterprise software in banking with the very mature ML offerings from Arya.ai and that has especially enhanced both our win rates as well as the size of the revenue opportunity for our enterprise application stack. The last quarter was also great from the standpoint of industry recognition with Aurionpro featuring as global category leader across 5 of Chartis RiskTech Quadrants as well as feeding strongly on the Global RiskTech100 report.

Coming to the TIG business. TIG has been focusing sharply on growth in transit payments and data center space as well as recalibrating the business on the smart city side for better economics and cash efficiency. We've been talking about this. I think we've made tremendous progress on this and feel great about improving demand and economics on this side of the business through rest of the year. TIG had a landmark win with Safe City Panvel project as well as significant wins with strategic partners in data center business, which will set us up very well for a strong second half.

Our focus for rest of the year going forward will be to stick to the strategy and do more of the same, continue to invest strongly in R&D to support product build-outs, especially around entering new markets where we do need to build out some additional bits on the product to enable them for the newer markets as well as to AI enable the product stack, as well as focus on execution and cash efficiency in some parts of the business where we need tighter execution to wind down some projects that have struggled due to lead time that we need to build capacity to deliver.

As we look towards the rest of this FY and beyond, we feel fine about our ability to continue to strongly grow the business while investing in building capabilities and offerings that will fuel the long-term earnings power for the firm. We are heading into the second half with great momentum and feel good about delivering our guided growth of 30% plus and keep earnings margin within the guided bands. We'll continue to explore inorganic options as well that complement our existing capabilities or enhance our presence in chosen markets to positively impact our longer-term growth potential. Finally, we extend our sincere gratitude to our employees, customers, partners and shareholders for their continued support and contribution to our success. With that, I'll 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 Vimal Jamnadas Gohil from Alchemy Capital Management.

[Vimal Gohil, analyst]

Congratulations on great quarter.

[Ashish Rai, executive]

Vimal, I can't hear you properly. Can you be a bit louder?

[Vimal Gohil, analyst]

Great. So sir, my first question was around on margins. Could you help us or rather could you take us through various puts and takes of this 152 basis points decline quarter-on-quarter and even on a Y-o-Y basis, our margins have slipped to the lower band of our guided range. I do understand that you have given a guided range for a reason. But if you can help us explain the factors that have led to this particular decline? And then I have a follow-up.

[Ashish Rai, executive]

Okay. Yes. So look, Vimal, thanks for the question. And I think you said this in your question itself, I've said it's very -- at the pace at which we are growing, it's hard to calibrate EBITDA margin down to a fine point, and that's why we gave a range of 20% to 22%. I would say there are significant investments that we are making in terms of supporting the products to expand into newer markets. And we are sort of -- I think when you are building product at rapid speed, even if you have order book to sort of deliver, there is -- there will be periods where the expense kind of goes a little bit ahead of the revenue, right? Not to a significant extent because we are very measured in where we make our investments, but there will be -- that's why we keep the 2% band, expenses will sometimes shoot up, right? So I think we are expanding at a pace that we've never done before. We are entering new markets at a pace we've not done before.

We are doing product build-outs, especially AI enabling the whole product stack like we've never done before. So yes, there is a significant uptick in sort of both the headcount as well as the expenses that are going in. But there is -- even if it's a little bit of a lag, there's revenue to back it up. In this specific quarter, we also had a INR 4 crore FX loss which is a one-off, and that is probably 1 point hit or slightly more than 1 point hit on the EBITDA. But I would really advise not to read too much into the quarterly EBITDA numbers because honestly, we cannot calibrate down to a fine point. So sometimes it will go to 23%, sometimes it will come down to 20%. But by and large, there is nothing fundamentally changing from one quarter to the next in terms of the business economics, right? I mean, that's what I would say to it. I hope that answers the question, but I would really advise not to read too much on these numbers from one quarter to the next.

[Vimal Gohil, analyst]

Fair enough, Ashish. Ashish, the second question was around our balance sheet and cash flow. So what I noticed is that while the EBITDA growth has been very strong in the first half, hasn't led to generating operating cash. So we've sort of reported a negative operating cash of INR 66 crores this -- in the first half which is, of course, led by the receivables and other assets and I believe this is due to the increase in unbilled receivables. So if you can take us, how do we sort of unwind this? How does the full year of FY '25 look and how do we make sure that we return back to normalized cash generation?

[Ashish Rai, executive]

Yes. Okay. Good. So great question, Vimal, right? So look, cash flow would be a little bit cyclical for us, and I'll probably try and explain the factors. But by and large, the headline story is when we are growing parts of the business rapidly, the cash conversion will suffer. As the businesses come down to lower growth rates, the cash conversion will get better at a -- I mean that's too generic a statement, but I think that is at a headline level what really happens, right? In terms of the actual factors that go into the negative INR 66 crores, let me think through those. So I would say one very large factor is -- and I have to be careful what I can sort of disclose, but we are in some M&A process for a large global asset, which is kind of a core sort of process and there's been deposits that have been given.

It sort of works 2 ways. Either you succeed, in which case, we probably have an M&A, if we don't succeed, then the deposit gets returned back, but those sort of add up to the cash that goes out, especially even it would show up on other assets or something. We do also have the unbilled part that you're talking about. So it's not just unbilled, it's probably unbilled as well as receivables. But basically, we have started on very large -- we've had very large wins on the banking side, right, especially where we've had projects like State Bank of India, we've had wins in Saudi Arabia. We've had a very large global fintech vendor where we built out new products, which they are selling. These are actually pretty significant successes.

But what really happens as we are ramping into these projects, is that we are making progress. We're accruing revenues, in some cases, we invoice those out. But bulk of the conversion will happen as we take these clients live. In the case of these large projects, most of these are within the year. So -- and that's why I say you'd see some cyclicality between now and then but by December, January, some of these large projects would be live. We would collect the cash before March. So I think that will normalize. The inorganic process as well will normalize. We've had some also around the ESOP schemes that we've rolled out to attract the right kind of talent and motivate our employees. We've had some outflow in terms of loans to -- advances to employees to enable them to -- on the ESOP schemes, right? So that's also a material number.

So there is quite a few of these, but I think the headline story is there will be some level of cyclicality in terms of cash flow conversion when we are going at a rapid pace, especially parts of the businesses which are going at rapid pace. So banking now is growing at 50% plus. So we will start large projects and the larger the project, the more the sort of mismatch that's likely to happen. We had the same problem when TIG was growing rapidly the last couple of years at 50% plus. So we slowed TIG down this year to focus more on cash efficiency, and that will start showing up in the second half of the year. So I fully expect by the time we get to March, a lot of these conversions would have happened and you see the result. But again, when we look at balance sheet from one quarter to the next, you will see some of these variances going out. I hope that answers the question, but I'm happy to take a follow-up on this.

[Vimal Gohil, analyst]

Yes, yes, sure. If I may, Ashish. So what you're saying is by the end of FY '25, we should be returning to positive OCF? And assuming I'm just -- I'm not putting words in your mouth, but assuming that the growth rate continues to be strong in FY '26, we should not see this kind of cyclicality or rather lumpiness in cash flows because TIG would clearly be growing lesser as compared to your banking business? Correct me if I'm wrong here.

[Ashish Rai, executive]

True. Yes, yes. No, so you're right. And that is the reason -- and then we've been very -- look, I've been totally transparent on this, why we've slowed down parts of the business, why we are accelerating other parts of the business. Banking, I mean, other than the few large projects we have started off tends to generally be fairly cash efficient. And we typically finish off most projects within 12 months. So you would normally be very, very reasonably efficient. So yes, by the time we finish FY '25, I think it would be a different picture, but the second thing is also the mix of the businesses. We continue to focus on it.

Like, I think what we need to really understand as managers, I mean even as Aurionpro shareholders is I think businesses which go through rapid growth would not have the same predictability of cash efficiency as a mature business growing at 5% or 7% growth, right? And in the product business, it sort of becomes a bit more susceptible to the time line of the projects going live. But having said that, I am very confident as we go from one financial year to the next, we will get much stronger and stronger as we go because the bottom line is banking software is fundamentally a business with very good economics, and it's growing at 50%, right? So I think some of the cyclicality aside, I think by the time we finish the year, a lot of these projects will be live, by the time we get into FY '26, we'll be much stronger on the balance sheet than FY '25, right? So I think it will keep going from there.

[Operator]

The next question is from the line of [ Karthik Iyer ], an Individual Investor.

[Unknown Attendee]

Ashish, congrats on a good set, I just had a couple of questions regarding TIG. Congrats on the Panvel order win. I just wanted to know what is the time line for execution of that project? And what would be -- could -- if you could throw some light on the margins we would be making on that?

[Ashish Rai, executive]

Okay. Yes. [ Karthik ] so look, TIG, as I said, we -- maybe give a little bit of background on this. On the Smart City side, we deliberately slowed down the business over the last year to focus on identifying the levers to getting better economics on that side. We obviously built up some fantastic IP. We built up some fantastic capabilities on that side. But we wanted to be very careful as we get that business back to growth. Safe City Panvel, we carefully selected as a business with the right sort of parameters, they -- we bring enough value to the table for us to get the economics right, right? So that is -- again, having said that, we are still calibrating that side of the business, but that is what our plan is, and hence the project. We will get most of the delivery done between 16 to 18 months. I think beyond the 12 months, I think we'll get most of the deliveries done. It is a multiyear project, but I would say on the outside at about 18 months, we'll get most of the deliveries done.

[Unknown Attendee]

And if you could throw any light on the margins for that?

[Ashish Rai, executive]

Yes. So margins are kind of on this -- so I don't think we can specifically highlight the deal margins, but it's high double digits.

[Unknown Attendee]

Okay. And if you could throw some light on, is there any fresh order wins with regard to transit and anything that we are -- the order book for the data center space?

[Ashish Rai, executive]

Okay. So look, transit side, we have had significant traction in Americas, we've announced large wins in Mexico, which we're delivering against. We've had success in Costa Rica, Ecuador, et cetera. We continue to double down on those. We are also now seeing some new progress in terms of closed loop to open loop movement in the U.S. We are involved in a bunch of POCs, which we hope will translate into large-scale sort of action on part of the government participants and the transit operators. So we hope to see for the next few quarters a lot more action in the U.S. market itself. Of course, California continues. We are live in more and more cities. And that progresses, but we feel the market is ready for more action in other states, states other than California and there's a bunch of POCs going out.

We are also now on the transit side, sort of seriously getting into Europe both -- largely in terms of our partnerships with other larger players. So more as part of consortia than going directly ourselves, but there is a lot more traction there. And we are now -- we have some very strong, well-progressed pipeline opportunities in Asia in, let's say, Southeast Asia, in a few countries, right? So again, those should come to fruition over the next couple of quarters. So transit has very strong traction outside of India. In India, we've had success with one of the metro projects, but we are being very measured in the kind of transit business we take on in India. I think globally, the expansion would be a lot stronger.

The question around the data center space, we have had sort of significant order wins from Iron Mountain and Web Werks, which we've -- I think we've sort of publicly disclosed. That business continues to grow. We continue to work on some -- on the R&D side in that business to hopefully be able to get some productized offerings out, but this is a -- it's a long haul, it's complex to really get the productization right in that space, but we are working through it. I think the order wins are there. So this year data center business will -- should grow at a very, very -- at a very good number, but then it's been going at that rate for the last few years, so it will continue to expand. Hopefully, that covers what you asked.

[Operator]

But it seems like our current participant got disconnected. We'll take our next question from the line of Ahan from Vimana Capital.

[Ahan Rajgor, analyst]

Yes, Ashish, congrats on a fantastic set of results and growing the business. Just one or 2 questions. One was on the order book. Could you please like give a breakup of the order book of INR 1,100 crores between the TIG and the banking and fintech and what sort of goes within the Smart Transit, data centers and give a, please, break up of that.

[Ashish Rai, executive]

Ahan, Thank you. So order book right now is in the range of, I would say, INR 1,150 crores, give or take, right? And the split between the banking and then the TIG business is roughly 40-60. I think banking, we picked up a lot of new orders, but we've also been executing against those orders pretty rapidly, right? So I think it's still a larger share on the TIG order book, also thanks from some of the newer orders we picked up on both the data center space as well as Safe City Panvel and all, right? So that is where we are. Banking continues to pick up a higher volume of smaller ticket size orders and continues to sort of execute on those.

[Ahan Rajgor, analyst]

And across both the businesses, could you share like a rough margin range? I know the blended one target guidance that we've got is for 22% around that range. But what would it be for individual segments roughly?

[Ashish Rai, executive]

Yes. So look, there's a reason, Ahan, I don't really -- we don't get into segment-wise margins because I think this thing is, one, the smaller you make the scale, the lesser you get the price stability in terms of margins, right? I think -- and that's why we keep it at a macro level. But having said that, I would say banking is anywhere between 4 to 6 points above the enterprise margins and TIG at the movement is probably 4 points, 5 points below the enterprise margin, but then it really varies by the segment inside these segments, subsegment inside these segments as well as the nature of work that you're talking about, right? So the smaller you get, the less predictable your margin is, in some quarters, it would be exceptional, in some orders it will come down. So -- and that's the reason we don't really narrow it down. Hopefully, by next year, each of the segments is scaled up enough for us to start publishing it. But at the moment, I would say just as a general thumb rule, say, 4 to 6 points above on the banking and fintech side and 4 to 5 points below on the TIG side.

[Operator]

The next question is from the line of [ Karthik Iyer ], an individual investor.

[Unknown Attendee]

I seem to have got cut off. So sir, one follow-up on the banking. On -- are we investing in a team to execute all the successful order wins that we are doing in the banking and fintech space?

[Ashish Rai, executive]

Yes, [ Karthik ] so I hope you got the -- my answer to the last question, right? On the banking team side, look, I would say the number one focus for Aurionpro at the moment as well as the number one challenge in front of us is scaling up delivery capacity, right? I think it all looks nice that we are growing at 50%, but it is complex. You need the full spectrum of skill sets, unlike a typical services shop where someone else defines what needs to be built and then we're looking up for a bunch of developers. We need a much more complex spectrum, the full spectrum of skill sets to mobilize product teams and the -- and it's not so straightforward.

The second is most of the capacity addition that we need to do on the banking side is people who implement our own applications. So you need to really train people up on the applications that we build, and that also takes time. So I would say the lead time to really build capacity out is proving to be a little bit longer than we should have. And that also sort of results in weakness in terms of cash conversion because it sort of -- it comes down, right? You need to have the capacity to take the clients live. You need to take the clients live to convert these orders into cash and the whole thing adds up, right? So I think we are working heavily on this. This is the number one focus item for us. We have instituted a new learning and development function inside Aurionpro to step up how quickly we ramp up resources.

We've built out internal training mechanisms because we can't find enough experienced talent out in the market. We are hiring heavily from the global PL grouping in centers outside of India to be able to get the right sort of skill sets, right? So -- and that's the reason why we run R&D centers in Singapore, R&D centers in Istanbul, in Vietnam, right? So we are broad-basing the talent base. We are instituting heavy investments in sort of internal training mechanisms to ramp up the teams. We have obviously added people so you can see that the headcount is 2,500 plus. But I think we are not a very resource-intensive business. You need the right quality of skill sets, right? I think that is where the challenge is.

That is where we are super focused on it. We have also built up the management bench. We've been -- I think from time to time, we've sort of introduced people, the senior managers who've joined in so we've hired the right set. I feel we have probably one of the most talented management teams in the industry today in terms of product build-outs and then we've added capacity at the lower level with precaution of sort of training them and ramping it up, right? I think it's a continuous process and it's that it's not happening fast, but I would be a lot happier if it happened a little bit faster than we are, and we'll keep sort of working at it. I mean it's just the right question to ask, but I would say we need to keep working at it.

Thank you, thanks, [ Karthik ]. And on that point, sorry to just add the answer, we will probably try to deploy some not so organic approaches as well where we get an opportunity to quickly scale up talent, right? So for example, on the AI side, we were struggling for quite some time, but acquiring Arya.ai has really lent us a lot of strength in terms of talent coming in. Same thing on the lending side, when we acquired Omnifin, we were -- we really grew up the talent of the lending side. So we'll always be open for opportunities where there are inorganic opportunities, allow us to quickly ramp up on talent as well as obviously come with products and revenues which are relevant to us. But even just from a talent standpoint, some level of acquihire sort of opportunities. I think they do show themselves up and we'll probably act on those in ways that make sense. Thank you.

[Operator]

The next question is from the line of Anmol Garg from DAM Capital.

[Anmol Garg, analyst]

A couple of things. Firstly, we have shown very strong growth on the banking side of things. Now can you indicate some of the areas where we are seeing this growth, particularly on the product side, which of these products are showing more traction versus the others, yes?

[Ashish Rai, executive]

Anmol, thanks. Yes, so banking, I think the probably 2 or 3 levers, which are working for us at the moment. One, the strongest area of growth is transaction banking at the moment. So we -- which is where we announced deal wins in Saudi Arabia. I mean, given the state of the pipeline and how well progressed the pipeline is, I'm very sure we'll announce more wins in that space going forward. So that segment -- and this is where, again, we won SBI, Canara Bank, et cetera, last year. So this is a segment which is growing rapidly where our win rates are, I would say, probably the best in the industry right now and the pipeline is very large, right? So when you combine a very large pipeline with us being the player with probably the strongest win rates in the business that, hopefully -- not hopefully, I think I'm very confident that translates into a very large number of wins even in the future. But that's where the growth is very strong.

The second area where we see very strong growth on the banking side is where we have sort of AI enabled the product stack. So even the transaction banking side, part of the win rates being better than the competitors today is how AI enabled our product stack is, right? So for example, on the transaction banking side, we have implemented a number of use cases, even in the wins we did in the past like State Bank of India, the Middle East wins and all, they go together with a lot of actual AI decisioning going into the product stack, right? And I think that both includes our win rate there. But wherever we've AI enabled the stack, we see just -- I mean, it's just we've never seen this level of demand before, right, on that side, it's just unprecedented the scale of demand on the enterprise AI offering. So that's number two.

And the third area where we've seen, let's say, over the first half, pretty rapid growth is the -- so the fintech ecosystem sort of partnerships that we built out with some of the global players. I think that has been -- a lot of those have gone from 0 to very material numbers even in the 6 months and for the full year, they will be very, very material numbers, right? So these fintech partnerships, especially in the U.S. probably in the second half in Europe, we'll get some wins. Those are working very, very well for us, right? So I think those are the 3 major areas. Lending also, we've won a few deals that we announced, and it's growing as well. But those first 3 levers are like expanding very strongly.

[Anmol Garg, analyst]

Understood. Understood. And I think during your media interview, you indicated that our U.S. growth will be very strong in FY '25 probably in the range of 60%, 70%. Can you again indicate that would this be coming from the deals that we have already won or is there a good pipeline over there from where this growth can come from?

[Ashish Rai, executive]

So I would say for the second half of the year, there may be one or 2 that convert from the pipeline, but most of the growth would come from deals we've already won, right? I think a lot of this expansion is around the third lever that I mentioned, which is the fintech partnership that we've struck, right? So some of the revenue -- honestly, because a lot of the IP that we provide is Singapore-based, so I need to see where sort of the revenue falls, right? But it's essentially the end U.S. clients, mostly through the fintech partnerships, I think we see a strong growth, bulk of it will come from orders we've already won. There are deals in the pipeline, but just the revenue contribution for those would probably be next year.

[Anmol Garg, analyst]

Understood. Understood. And lastly, just wanted to dwell a little bit more on our cash flows, which have been a bit negative during the quarter. So in here, wanted to understand that we have also signed a deal in the TIG space which is the Safe City project for Panvel. Now how is the receivables for this particular project versus the company average? And do you believe that by the end of the year, our receivables can -- particularly as we execute through this deal, the receivables can be impacted a bit more by executing this deal?

[Ashish Rai, executive]

Yes, so okay I'm going to split that up, right? I think the Panvel project specifically, we very carefully worked on it in terms of the payment milestones, in terms of what the execution milestones are. So we feel good that it is not going to impose any additional pressure going in other than normal. There is a few TIG projects that I've talked about in the past, where we know we've had pressure. We've had a very special team focused on sort of executing against these projects and getting these done in time before end of the year, right? So I think -- I feel that on that side, by the time we get into February, March, the execution situation would be very different and a lot of the cash collection priorities that we set in place would already be done. I think Panvel specifically, we feel good that we've -- because as you know, we had slowed down that side of the business to really only be able to take business that we feel comfortable with.

I think this is a project we're very carefully identified, so I don't feel this would really be -- I think this would be pretty much a normal project in terms of both the execution milestones as well as collections. So overall that should get better, right? I think on the cash flow side, a lot of the pressure is coming in -- what really happens is whatever part of the business is growing the fastest sort of creates that issue because in the product business, a lot of the cash happens when you take the clients live. And if you're starting off a lot more projects than you're finishing off, it is just natural for sort of the cash collection to come under pressure, plus we've had the topics set out -- I think you were earlier in the call, so topics that I talked about earlier, which is around some inorganic opportunities, which is a one-off opportunities, which we feel we needed to play, right? So we'll see what the results of those are.

[Operator]

[Operator Instructions] The next question is from the line of Pranay Roop Chatterjee from Burman Capital Management.

[Pranay Roop Chatterjee, analyst]

Sir, this is the first time I'm attending this call, and I'm new to the company, so I have a slightly fundamental question. Sir, I was looking at your revenue mix and 70% is from software services and around 30% is from sale of equipment and product licenses. So given this information, I wanted to understand what is the recurring portion in your total revenue? Like, for example, if you're earning INR 100 crores in a quarter, what proportion is from onetime sales be it software or product? And is there like a maintenance component or a recurring component, which allows you to continue earning revenue over a certain period of time?

[Ashish Rai, executive]

Yes. Okay. Thanks, Pranay. So look, I think the way to read the software services and product licensing difference is largely one-off versus what is either recurring, near recurring or implementation services, right? But a bunch of recurring revenue would also come into the product licenses mix because we increasingly do a lot more subscriptions, right? So I think it's hard to read exact recurring number in those numbers. Let me -- sort of, let me try and answer it this way. Split the business into 2 parts. You've got banking software, which does 55%. You've got TIG which does 45%. On the banking software side, I would say our recurring plus near recurring revenue is something of the order of 55% to 60%. When the business was growing slower, when the business was growing at 15%, that used to be closer to 65% to 70%, right?

But now the business is growing a lot faster so there's a lot more kind of one-off implementation projects, et cetera. So recurring plus near recurring. So recurring is typically AM fees and subscriptions and the near recurring is essentially like ongoing services with long-time existing customers like UOB, OCBC, et cetera, right? So those would be 55% to 60% and the other 40 % will come from a mix of one-off licenses plus one-off implementation projects, which typically are 12 to 18-month projects that we do when we take on new logos. So that is the 55% banking business. Coming to the TIG side, TIG side, I would say the recurring mix is lesser. It's probably of the order of 25% to 30%.

And that typically comes from the long-duration projects we sign in terms of transit revenue streams, when we sell software and equipment outside of India, like -- deals like California, Maldives, et cetera, these tend to almost be like software contracts because we charge something upfront, we charge an AM fee, we charge an operations fee. So those again become recurring streams with some one-off there, right? So I would say they are probably 30% if you added near recurring deals, which are long-term services contracts around, let's say, so cloud, for example, most of the cloud that we sell on the TIG side is around our own products, and these are long-term, multi-duration contracts. So that probably climbs up by another 10%, 15% in those sort of deals. So that's the way I would look at it. Does that answer the question clearly enough?

[Pranay Roop Chatterjee, analyst]

That's excellent, sir, and gives me a lot of color on the business. My second and last question, sir, is trying to understand your revenue model, right? So obviously, over the course of time, you have expanding into various different products and segments. But if I were to ask you, is there a predominant way you charge your clients like either it be employee hour basis or in terms of some metric of how they use your software? Like how do you charge your client? Is there one answer or like would there be multiple answers?

[Ashish Rai, executive]

So there would be multiple answers depending on what IP that is. But typically, I would say, for the banking software side, there are 2 models that we sell largely which should apply to like 80% of the business. We sell term licenses where we charge a one-off license fee and then people pay AM fees, right? And the second is the subscription model where both the license and the AM fee would combine into one stream. So typically, let's say, if you signed a $6 million 5-year TCO deal, typically 1/3 of it would be license revenue. So $2 million is license revenue, paid either upfront or paid over 5 installments over 5 years. The second is maintenance revenue, which is typically 20%. So that's another $2 million over 5 years, right?

So $400,000 per year for 5 years. And then the third is implementation fee of $2 million, this is typically a project that gets done over 12 to 18 months on an average. Now these are like thumb rules. There are some other models in banking, which are smaller in revenue terms, especially consumption-based models, where, for example, we sell an API call and we're charging per API call, right? But those are not -- I would not say that's huge from a revenue standpoint, but those models also exist within the banking world. On the -- yes, I think that is a predominant way. We have, for example, on the transit side and all, we've got a very long-term 10-year, 12-year contracts where there's revenue share and things like that. So it depends on how you are selling IP, right, and sometimes there will be transaction-driven models. A lot of times, it will be license-driven models.

[Operator]

The next question is from the line of [ Hardik Gori from Alpha Plus Capital Associates ].

[Unknown Analyst]

What is the current mix of TIG between smart mobility and data center?

[Ashish Rai, executive]

Okay. So TIG, I would sort of put 3 slices to it, right? And so till last year, each of those was only 1/3 each. So you have smart mobility, which is essentially the open-loop transit payments stack that we sell. The second is data center and hybrid cloud. That is the second slice. Most of it is -- hybrid cloud is basically around our own applications by and large, and data center is where we design and program, manage the build of data centers. And the third slice is smart cities/government technology work that we do, right? I would say this year, the mix is -- so last year, I think it was probably 1/3 each out of the 45% that goes on the TIG side. This year, I would say the smart city side is probably going to be a little bit smaller. So it's more like, I would say, 35%, 40% and yes, so thereabout, even 20%, 25% on the smart city side. So I think that's roughly the mix.

[Unknown Analyst]

Okay. Okay. Okay. And then what is it that we are expecting, say, in the next 3, 4 years?

[Ashish Rai, executive]

Look, I think it -- so over 3, 4 years, I do not like giving the guidance that far out. And I think there's a reason for it, right? So I think the way to look at it is this, we have a stated Vision 2030. Externally, there is a qualitative view that we publish with sales in each of the spaces that we are in, we want to be a top 3 global player. Internally, we have a quantitative number against each of those. The reason that quantitative number is not very important over a 3- to 4-year horizon is, I think we will keep on sort of calibrating the growth as we go. Typically, the business as a whole, we're saying we grow in the range of 30%. That's what we've done for the last 4 years. That's what we feel like we can keep on doing for a long time. But inside it, we will keep on changing the pace at which businesses grow because in the product business, it's fundamentally very risky to keep your foot on the pedal all the time.

What really happens in the services business, if I want to sort of grow 100%, I double the number of people, hire the right skill sets. The job is largely done, you, of course, need to do the projects. In the product business, if you try and grow too fast, there are lots of interconnected pieces. Some pieces will break if you go too fast, right? So we'll keep on resetting the sort of growth, so banking, for example, last 2 years, was growing a lot slower, 15%, last year 30%, 15% the year before because we said we want to focus on product build outs, we don't want to grow. Now it's growing at 51%. TIG was growing at 55% a year before, last year 33%. This year, we slowed it down even more because we say, we want to focus on some IP build-outs. We want to focus on calibrating the business for better economics. So within -- so I would not put too much sort of emphasis on subsegment level planning for the next 4 or 5 years, we will broadly -- these are very large spaces.

If you are a top 3 global player by 2030, obviously, you're not growing at 30%, 35% because at 30%, 35%, the business becomes maybe 4x, maybe 5x over the next 5, 6 years. If you are a top 3 global player, you probably have to be much larger than that. So we do expect sometime between now and 2030, we will hit inflection points for various businesses where we can really step up the growth. When that time comes, we'll come and talk about it, till that time, I would say, at the enterprise level, we try and target a 30%-odd range. Within that, some businesses from the time and time will grow faster and some businesses will slow down, and we will sort of pace it that way. I mean, I know it's probably a pretty long-winded answer to something which should be a pretty straightforward question, but that's the way we think about it, at least. Hopefully, that helps.

[Operator]

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

[Ankush Agrawal, analyst]

So Ashish, would it be possible for you to share some more bit details on the possible M&A that you're alluding to? Is it like an operating business that you're looking to acquire? Or is it like a specific IP that you're looking to acquire, if you can share?

[Ashish Rai, executive]

I can't share too many details. It's an operating business yes, but I can't share. It's sort of a pretty complex process. I can't even say we feel confident about doing that. I mean I just mentioned that because there was a question about cash, right? So we are always actively in a lot of processes that don't really pan out. So I would not kind of spend too much time on it.

[Operator]

Ladies and gentlemen, we'll take this as the last question. I now hand the conference over to Mr. Ashish Rai, Vice Chairman and Group CEO, for closing comments.

[Ashish Rai, executive]

Yes. So thanks, everyone, for taking the time out of your busy days to come and join us on this call. We -- I mean, there's really no significant changes to what we do. We do more of the same. We focus on building the products out. We focus on R&D. We focus on expanding to newer markets. We focus on our partnerships. We really value you spending time to try and understand us. We will look forward to seeing you again next quarter. Thank you.

[Operator]

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