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Intellect Design Arena Ltd
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Good evening and welcome, everyone. Thank you for joining us today to discuss the Intellect Design Arena Limited financial results for the first quarter of the fiscal year 2022, '23 ending 30th June 2022. The investor presentation and the press release have been sent to all of you and it's also available on our website. Our leadership team is present on the call to discuss the results.
We have with us today Mr. Arun Jain, Chairman and Managing Director; Mr. Prabal Basu Roy, Adviser to the Chairman and Director on the Corporate Board; Mr. Manish Maakan, CEO of iGTB; Mr. Rajesh Saxena, CEO of iGCB; Mr. T.V. Sinha, CEO of iRTM; Mr. Venkat Saranu, CFO; Mr. Andrew England, Full-time Director, besides some other senior members of the Intellect management team are present on the call.
Mr. Arun Jain will brief you on the results, and this will be followed by Q&A. This will be replied by the senior members of the management team. [Operator Instructions]
On safe harbor. I would like to remind you that anything which we say which refers to our outlook for the future is a forward-looking statement. This must be read in conjunction with the risk the company faces.
With this, I request Arun to give his briefing. Over to you, Arun.
Good evening, everyone. Thank you for joining into this platform for investors where we are interacting with you on a quarterly basis. Every 90 days, we're regularly participating in building the institution called Intellect. So let me take you through the entire journey, what changed in this quarter. Some of you would have been the new participant over here. So for whom, I would like to share somewhat is quick overview of the company.
As you know, company has a depth and edge are the 2 keywords in our journey which build next-generation open finance composable solution. So that's where the story is there which is very, very important story to work on. We won 6 awards, #1 in retail banking, #1 in transaction banking, insurtech, lending with a base of product, breadth and regional leader. This itself is a starting point, safe harbor statements, to ensure that this is the presentation. Maybe Praveen Malik, you want to read it, or it's okay to go ahead and skip it? In this...
Go ahead, Arun.
In this quarter, we look at it, and we spend a lot of time in our design for digital which is our byline and when we are talking to the customer and helping them in digital transformation and employees and everyone, the common thread came out that we're helping to live their dream in their journey, helping them to make more profit, helping them to have a more customer satisfaction, and then we can see our purpose. So we think about all live your dream as a byline from design for digital. Our purpose as an organization and during the Technology Day, we said we provide large enterprise grade composable and contextual solutions, driving higher business growth, reducing cost and risk on sustainable basis. This is the purpose of our nation. The difference Intellect versus any fintech is we are in large enterprise grade, very high volume, make it composable, contextual, driving higher business growth for our customers and reducing cost and risk using AI machine learnings on a sustainable basis.
We ranked #1 in 6 category, 25 years of experience 97 countries served, 10 products. So instead of 12 products, we moved the 2 products to the platforms. 6 platforms are becoming more rich and 4 technologies.
Very good Board of Directors, good strategic Advisory Board from all over the world, the good bankers from Europe, from Americas, from India and Middle East. This is our evolution from technology stack when we had data model, we created products since data modeling products are based on open API and micro services base bundled into cloud and created platforms. And then we started being third-party participant and plus fintech, it becomes marketplace. So this is our 4 vocabulary we are sharing here.
I will be taking you to the platform and product because -- if you need to know more about our fintech, you should go to December 7 Technology Day presentation, which is available on the website to understand the whole technology story of the company and how quarter-on-quarter we are moving from December 7 from product to platform.
So looking at quarter 1 financial highlights. This quarter, we've grown healthily, 33% of the growth against 20%, which we believe and calibrated. In dollar terms, also, it's a 27% growth to $70 million in just last 4 quarters. Then our EBITDA has moved 17%, in spite of the cost and full cost post-COVID has come into system. So it's in line with our journey because our travel cost itself has moved back close to 12. INR 13 crores is adjusted travel cost increase beside the talent cost increase. That has been reduced because of some of the taxes which have gone up. As we advised last time, it's a full tax regime we are getting into. It's around 26% of the tax, which is being put on our PBT.
And -- but the advantage for us is we still have a [indiscernible] where tax outflow -- cash outflow may not be there. So that will be -- cash outflow will be maybe 10%, not 26%. Gross margin stands at 55.6%. EBITDA stands at 21.6%, and collection is INR 473 crores. My DSOs are 114 versus 125. So good collection this time. And this quarter, we could able to collect a lot of money from the Indian government also, which was a concern last time. For the investors GeM, we collected close to INR 100 crores.
Then if I look at the revenue distribution, platform and calling we used to call SaaS cloud revenue. We re-branded as a platform revenue. I'll share what does it mean on the platform and in my qualitative comments. So as of now, platform revenue moved up by 47%, very healthy revenue. License is minus 3%. 10% is AMC growth. 18% is license linked to revenue growth, and annual recurring revenue growth moved up by 28%.
10 wins and 5 platform wins, 11 new digital transformation completed. Now we started giving -- this was a request made that last 12 quarters makes a lot of difference. And when we look at the last 12 months, not 12 quarters, last 12 months LTM revenues. So we plotted LTM revenue for you to highlight that quarterly revenue for Intellect will be up and down in various buckets. But when you are looking LTM revenue, that gave you the trend of movement.
LTM revenue moved to -- by 29% over the last 4 quarters. ARR growth is 29% against 20%. At a dollar level, it's the 26%, we moved to $267 million from $212 million. Gross margin stood -- growth at 31%. EBITDA grew at 26% on LTM basis. PAT grew at 17%. Gross margin on an LTM basis is 57.3% and EBITDA is 24.3%.
On LTM, my platform revenues grew healthily at 90%, INR 220 crores to INR 400 crores, almost doubling our platform revenue on a sustained basis. License is almost flat, we are able to sustain the license. It's not got cannibalized in the platform. We are able to sustain that was a concern Investor Days earlier. AMC grew by 11%. License-linked revenue crossed INR 1,100 crores, which is very powerful. By our investment of close to INR 300 crores, we are able to generate license-linked revenue of INR 1,100 crores.
our CapEx-to-sales ratio is now 15% on investments. Annual recurring revenue is INR 756 crores, which grew by 44%, which has got a cloud plus AMC coming together. In the last quarter, 35 wins, 18 platform wins, and go live which determine our reference -- referencing -- which is determined by the -- how many are there -- 54 mutual transformation deal for the customer.
The sales pipeline is growing very healthy now. I think we are now in a position to choose the deals which we want to take it up. We have crossed $805 million, that's the capacity what we have to handle as of now, if we need to increase the capacity now for sales and presales. Number of deals, which is -- which we call Destiny deals is growing year-on-year, and that's how the buildup is happening. So we were running around $45 million to $60 million bucket. Now that time that the number of Destiny deal is to be 30, 35, now it's 64%, and that's what the capacity of the deal is getting created.
Average deal size is also increasing. So non-average deal size is coming to $6.2 million per average deal value compared to $5.6 million last year. So on both the dimensions, the quality of the deal and number of deals, both are increasing over here. That indicates a number of deals more than INR 50 crores or more than $10 million that moved by almost 60% from 9 such deals has been pipelined, which is moving to 15 such deals.
This is the currency mix, GBP and euro. This quarter, we suffered because of higher 23% exposure of our revenues comes from the GBP and Euro, and those currencies have fallen by 15%. 15% to 18% these currencies have fallen. So we suffered a loss of $1.5 million because of the currency drop.
We have digital transformation, 11 global financial institutions have transformed their digital journey on Intellect product stack. These are the 5 platform deals which we have won during the quarter in which we need to highlight private sector bank and the figurte has driven digital core, which is a second product in the -- we are top 3 products, if you remember, liquidity, DTB and Quantum. And the next set of products is digital core, lending and payments.
So now if you look at first 2 deal win represents the acceleration in the core banking and lending. So if you look at first 3 deals are in that area, and the fourth deal is in the area of SEEC and AI machine learning platform. And again, lending platform. So 2 deals lending, 2 deals core, which is showing the momentum moving this lending, and core is moving to a leadership partner.
We have now the third quadrant product was wealth, treasury and trade. Out of which now wealth is emerging, which is moving from third bucket to second bucket after signing SBI 2 quarters back. Now we got a second big deal out of the top 5 private bank has signed up with us for their wealth, and we have a good pipeline within India for the wealth.
Quantum is carrying the momentum by winning 2 large deals in the quarter. One is from large bank of Saudi, Central Bank of Saudi, and then Central Bank of -- the Central Bank in Africa, which is driving the significant change in Africa. So Quantum deals are becoming more full deals, and we are getting a significant mind share of the market. Important deal is in Canadian bank market and North American market. So both of these deals are interesting deals which I want to highlight that our North America health take the market story. But Canadian and American market is moving positively in the right direction.
The interesting digital transformation we have done. So one of the first element where we do top 5 bank in UAE when [indiscernible] business deals which bank [indiscernible] is to lead and we are able to do a kind of contextual experience by bringing lifestyle banking together using AI, data analytics, agile architecture, core agnostic, which is helping the bank to acquire customers at 3x faster pace than any other bank.
Similarly, we have second bank in Middle East, which has gone live with CBX-Retail and iTurmeric to define how the branch banking and digital system will work. The third element is on North America. This customer has gone live with liquidity. Now one of the top 3 banks in India is now live with Wealth Qube. So and so forth, then we have one of the large bank in -- of Spain. We went live in Argentina and Mexico. So that is a small entry into South America.
This will get us some knowledge in South America for the next 2, 3 years, not immediately. Still we have footprint in South America. Similarly, a large financial institution announced iGCB mobile solution, the state-owned commercial bank in Sri Lanka went live with [indiscernible]. So these are the 11 transformation deals. These are the results you must have seen. So let me skip this slide. Let me run to the qualitative commentary how -- because this is a presentation when we are looking at it between last 2 years at the time of COVID and post-COVID scenario. Almost 2 years post-COVID, this presentation is happening, where we are making a significant shift.
So last 2 years, we were working on a calibrated manner, some more changes. And then December, we made a presentation on Technology Day, too. We started looking $15 million as investment buckets. So we are looking for each investment bucket when we were in December 2020 -- sorry, July 2020, we were $45 million in revenue. And then we looked at it, how do we move to $60 million in revenue. And it took us 5 quarters to reach to $60 million revenue.
From them -- and we started in second quarter when I was speaking to you, we said that we started investing for $75 million. Now we have a visibility of $75 million. We have already crossed $70 million in this quarter and next 2 quarters, definitely, $75 million is visible to us. Now at this point in time, we may have to move the investment of next $15 million bucket of $90 million quarterly run rate. So that's a preparation for the next year for the sustainable growth. We mentioned in May 22, there are 3 additional costs, which are going to be there for this quarterly result where it was reinstatement of travel costs post-Covid, tax rate of around 26% and the additional cost of platform and our [indiscernible] line. So their third cost was additional cost for platforms when we are moving to platform and R&D cost goes up during the early stages of platform build-up.
So when I come to platform, I'll explain what the platform means and how is our revenue model platform works.
I mentioned about sales pipeline earlier. In Technology Day 2, we said we have a 4 platform we launched -- when we launched on that day we look at Exponent, underwriting platform in U.S., we looked at it cash cloud, BTV platform, we looked at it [indiscernible] 16, and we looked at it IDC core bank open finance banking platform with 300 APIs. Then we launched our platform for iColumbus.ai in first quarter.
In second quarter, we launched Magic Invoice as a platform. They have become 6 platforms. Let me take you through what do you mean by platform and what do you mean by product? So there are 2 categories of platforms which Intellect has the ability to launch. So first, we had a platform, subscription-based platforms. So when we give a platform, we give it in a cloud, the complete infrastructure, complete technology, complete accountability of running the platform, where bank lease out the technology platform from us on a fixed sum, which can vary from $45,000 per month to $100,000 per month. It can go up to $200,000 per month.
So this platform leasing will be between to $47 to $20,000 per month is the kind of a platform, which is subscription platform. So if you have a 3 category of businesses, if we say B1, B2, B3, B1 businesses, my license business, B2 business is my platform business, which is on annual subscription model. And then there's a B3 business, which is based on -- which is also a platform where we offer the platform like GeM, and we charge on the transaction basis or percentage of the business basis. So that's based on the volume of the customer [indiscernible] kind of a platform, which is a B3 business.
So B1, B2, B3 are the 3 possible revenue line, which we call license-linked revenue, while the 3, B1 plus B2 plus B3 become licensed linked revenue. While B1 is not recurring in nature, only AMC is recurring after that. B2 plus B3 plus AMC become my recurring revenues. So these are 2 points we need to explain what is licensed link revenue and what is annual recurring revenue what I mentioned in the beginning.
The annual recurring revenues are AMC plus B2, which is an annual subscription license plus transaction license is a -- so B2 plus B3 plus AMC is my 3 revenue streams pool into call annual, which is around INR 741 crores via this quarter. And license-linked revenue of INR 1,100 crores, we did this which is direct license plus B2 plus B3 combined together frontline license-linked revenue, which is INR 1,100 crores.
Now after a successful of GeM platform, we are fully in a stage where it's going quarter-on-quarter. And last year, it grew much faster. It will not grow at the same pace as last year it grew. Because at the time when governments move from INR 30,000 crores to INR 100 crores in a single quarter, so a single year. This will grow of 50%, 60% levels. Now we have picked up exponent platform, which is based on AI. That is now gaining traction. The revenue is not start building it up.
So in a platform business, I need to put up a cross [indiscernible] team So when you set up a platform, it means you're setting up at constant investment. A typical platform investment for building a platform may be close to $5 million per year. That's a typical model. In U.S., typical platform, when you look at the investments, a lot of fintech companies are coming with the platform. Each platform cost between $5 million to $10 million per year on a constant basis on the platform. That's what when we are building GeM, we are spending that kind of money on the platform.
So that is an axis, which is flat axis if you look at the graph. An initial period when you were at only 2 customers or 3 customers, your cost remains $5 million, while your expense will be close to -- sorry, revenue will be $1 million, $1.5 million, it will grow step by step and to match -- it takes 3 to 4 years from my start revenue between investments and what the annual subscription revenue start coming in.
But when high customers becomes, particularly 5 to 7 customers at $1 million each, will be good to suffice a subscription-based platform investment. So once we sign 5 to 7 customers, the platform could be breakeven. But then 7 to 20 customers, my incremental investments in the platform are not more than 20%. It's really between 10% to 20%.
So my RPR, revenue per person, who is deployed on the platform business moves up substantially multiple times in the platform story. And platform story is a recurring revenue, which has got a next 10-year life cycle value, which is revolves around the platform. So that is the 6 platform story versus 10 product story. Now the next question comes to your mind is, is platform cannibalizing license revenue? Now forward looking at it, we found that there are certain markets, which are -- certain products and certain markets are suitable for platform and certain markets are suitable for license and certain kind of customers are suitable for license.
So Tier 1 customers are suitable for license, while Tier 2, Tier 3 customers are for platforms. Similarly, certain markets behavior is, they want to buy a license. So if we intersect this, the platform will be country specific and focused customer specific. When I'm looking qualitative of the markets, I visited -- spent some time in the U.S. market. This was a concern at the Investor you were highlighting, when is the U.S. market traction will start moving in?
Now this year, we have visibility that U.S. will move 50% growth in the U.S. market. U.S. market, we have 2 platforms. One is Exponent, which is underwriting platform. We are working with close to 22 prospects in the U.S. market, led by iSEEC. And similarly, we have iGTB platform, which we are having close to 24 prospects, we are working with iGTB on the second platform. So U.S. market, our strategy of platform is now starting -- started getting traction, and that is giving us the confidence that in U.S. market, which was going slow in first 5 years of our journey where we kept on making a lot of investments in AI, machine learning, data, now has started paying off because products that we have is one of the unique product in the market and that platform gives Magic submission, data and underwriting platform, all integrated and which can be implemented in less than 3 months' time or onboard the customer in 3 months' time using the AI machine learning cloud technology.
So that's -- similarly, Canadian market, we invested the full state investment in Canadian market, and that has started delivering results. Canada market has got all the Intellect suite products starting -- including treasury, even for banking products in Canadian market. So Canada is becoming a wholesome market for Intellect.
In Europe, if I come to Europe, we discussed about Europe last time that what is selling in Europe. Europe now -- the new investments are coming in Europe now. First of all, the good news is that, they are now looking for modernizing their old systems, lot of legacy which is 40-year-old legacy, they're looking to upgrade that. And they are upgrading with a very strong architectural mindset.
So the difference in Europe and other parts of the world is Europe like German focused or French focused, or U.K. focused are focused on architecture. And because we are focused, Intellect products are designed for open finance composable and contextual platform. And then we have the ability for microservices to be composed across core lending and credit cards. These 2 combinations, 1 on domain combination of core lending and credit card and on other side, we have a data, AI, machine learning, cloud microservices, cloud compliance, the number of prospects are increasing every day.
Rajesh will -- can take you through the journey, but his hands are full. His capacities are totally full there. He needs to add the capacity very quickly in that area. And especially after we got a reference -- one reference client going live in Germany with an open finance platform first of its kind which has gone live, while my competitor may say that they have an open finance, but we may not have a reference site for going live. This funnel is moving better.
In UAE, 7 out of 9 banks are our customers. Now -- we are expanding, Saudi market is doing very well. We have 5 customers in Saudi. So this year, as on Europe side, our focus will be Germany, setting up a more -- new operations in Germany and France. In Middle East, Saudi will be our expansion. Africa market is growing on the back of Quantum. Quantum is bringing leads from various -- unique country. Sometimes, they are very fascinating country.
We have -- some of it -- sometimes, I don't even know the name of those countries before getting RFP. So it means it's coming with [indiscernible] of the quantum. They are approaching us rather than we are going to those markets because we don't have those connections like [indiscernible] and Madagascar. We didn't have any connections, it came from websites. So there is a very good news that once products start getting the cooling effect.
Similarly, all the product lines are operating in a [indiscernible] market. APAC, we did a good job in last 5 years. We have 9 banks in Vietnam as a customer, 9 banks in Philippines as a customer, 7 banks in Malaysia, 4 in Indonesia. Now this is a time when we need to start looking for deepening our relationship. So we shifted our office in Vietnam as a center that how we can do the business impact from the implementations we are doing in Vietnam market and how do we build, deepen the account kind of a model in APAC.
In India, obviously, as you all know, we have presence. We manage a nice critical infrastructure, whether it's RBI, whether it's a GeM or LIC or [indiscernible]. 9 of top 10 private banks are using our technologies. Sri Lanka, we have some presence, not getting impacted with a [indiscernible] in Sri Lanka. Bangladesh, we have [indiscernible] Bank partnership. Now we are looking more entry into Bangladesh. So this is about market analysis where last time somebody wanted to have what is the market [indiscernible] are seeing caution individually, I try to put all the slides for all the markets in this time as a qualitative.
The other thing, which is happening on the product side, our data platform, AI machine learning platform, now we start getting it in the monetization phase of it. So last 3 years it took to build this platform. So first platform, which is there is doc to API, where we have a contextual using CDR Graft Technology. We are able to add a lot of value in document reading. Our accuracy across varies if you have 10 pages of document and you have to contextualize between first page and seventh page, our technologies can do it, which many other AI technologies are page-by-page technologies. It can read any context from any PDF document.
Now we are using that technology to go to market. We use this technology from a Magic submission for underwriting team platform. We are using the same platform for Magic Invoice, and we're using the same technology for iColumbus AI for and guarantees document be there. So top 2 APIs underlying platform, so it is a onetime investment, but we are building in multiple use cases for looking at.
Then our data platform now, we started spending some time on the go-to-market of data platform. We found that our MQS search, multi-question search, is very unique such combined with Big Data and MongoDB and contextual AI algorithm. Now its -- we are building for next quarter, we launch for complex risk requirement of large banks and insurance company in area of underwriting an risk.
The third platform -- third technology is what we are working was integrated banking platform, 300 PBCs, is creating a demand in the market, especially in Europe. Quantum, as we've mentioned, it's a consistent winner. Exponent, the platform is gaining momentum I mentioned. Digital transition banking is our core cash cow for us with Microsoft Azure partnership. Now we have started doing prospecting lean prospecting. With the increased interest rate scenario, liquidity management system is now getting a lot of RFP now. And Wealth Qube is moving from 3 buckets of the products. Even P2P 3 buckets, it's moving from P3 bucket to P2 bucket, and IDC is moving from P2 bucket to P1 bucket. So that's how this transition is happening.
Rest of the slide is you can go through how the analysts readings are there, which is each analyst is covering our product. So Intellect is now in the top 3 players in core banking between thought machine terminals. And Intellect, many RFPs we are getting qualified in that area. We need to increase our capacity for e-sales and partnerships. So these are the 2 things, which is our core agenda now. Thank you very much.
Thank you. Arun. Now the platform is open for the questions. [Operator Instructions]
The first question is coming up from Mr. Mohit Jain of Anand Rathi Securities.
Sir, one was, this Q2 drop in SaaS revenues. So what happened there? And if you could give us some split on, if it is pure SaaS license? Or is it SaaS license plus SaaS implementation?
What is the drop -- there's no drop in SaaS.
Sir, in dollar terms, it appears there is a drop on a sequential basis.
Quarter 4 to quarter 1, okay?
Q4 to Q1.
Q4 to Q1.
While [indiscernible] seasonal fluctuations?
No, no. Transaction based -- that's why classified 2 platforms. One is a transaction-based platform, sufficient transaction-based platform. While the annual subscription-based platform, there will not be dip. So transaction...
We're looking at this 1 1 6 0 , this is total, is it?
Last quarter, how much was it? 1 1 9.
1 1 9, that is right. That is correct.
Yes, yes. Marginal -- GeM revenues. GeM is a quarter 4, we have a higher volume.
Okay. Okay. So that was one. Now second was on your margin outlook. Now what you have spoken about is, there could be a 3% point drop rate in R&D and other things. While if you look at it from a Y-o-Y perspective, there is already a 3 percentage point drop. So what we are referring to is from Q1 margins, we may decline? Or is it -- the comment is more related to Q1 '23 versus Q1 '22?
Yes, Q1 '23 versus '22. We are reinvesting our margin for platform, new learnings. So our margins will be in the bracket of 20% to 25% percent bracket, not 25% to 30% bracket, which we were earlier targeting.
20% to 25%, sir, that's a steep drop actually from 25% to 30%.
25% to 30% to 20% to 25% -- and with the 5%, we are reinvesting. We are reinvesting margin investment we are doing, we are not raising any capital for the platform journey.
That prospecting. And third, I think you were -- you used to give us this capitalized amount, which is missing in this quarter's presentation.
Capitalized amount is mentioned, INR 35 crores is mentioned. I saw it there in the presentation. Maybe we'll just -- but INR 35 crores is the guidance.
INR 35 crores for the quarter?
Yes.
So your capitalized amount has also gone up by the same quantum in that proportion.
All the 3 investments I mentioned, the platform as an R&D investment. So capitalized investments. So we capitalize only -- so if there are 6 platforms, our investments are close to between $25 million to $30 million plus product investment. So total investment, we are only capitalizing less than $20 million investments. The total capitalization investment when we are saying from the beginning is around $20 million. Now it will be around INR 140 crores around capitalization for this year.
This was mentioned in the earlier call also. So -- but not -- the exact number was not given because at that time, we didn't have the budget approved. Now the budget approval of the capitalization is through around INR 140 crores, which is around at current currency rate, it will be close to $18 million to $19 million.
Sir, this amount is largely in INR. Is that correct? Or will it fluctuate depending on the exchange rate?
Exchange rate also. There are people in the international -- managers are sitting in U.K. or in U.S.
Okay. Next was on the ARR. While I heard your comment, I was not sure what is included in ARR, which you have disclosed. So if you could just help me understand that part.
ARR is which is annual recurring revenue, which consists of platform, which is a B2 platform, which is an annual subscription revenue. B3, which is a transaction, subscription plus AMC.
So platform subscription plus platform transaction plus AMC?
That's right.
Implementation are not included in this?
That's right.
And you multiply that with 4 to give us a picture on an annual basis?
That's right.
Perfect, sir. And lastly...
We are giving LTM now. We are not even giving forecast number. We're not multiplying it. We are reverse. Now we are giving a more accurate picture of LTM because no LTM is available.
The number that you have given on Slide 11 is LTM number, not annualized -- not quarterly annualized?
Not quarterly annualized because that time last year, we were being annualized, and that was a question raised by one of the investors that why won't you give LTM that will give the better picture.
Right. And sir, finally, U.S. is looking up from the currency breakup it appears, developed markets are finally coming through. So you have given this growth target, et cetera. Any percentage split, like how small or large are we in the U.S. currently from where you expect this 50% growth?
Not likely.
Approximation will do, sir.
It is small right now. And I think it will go better. But the U.S. is catching up and company entering into U.S. Last time, we said -- last year, you were looking for Europe. So the story over here is calibration, curated, calibrated growth, country by country, product by product, country by country.
Now getting -- last time you had -- Mohit, you had a question on U.S., what is happening on U.S. And I did have a response.
Many quarters, I have that question, but good to see, finally, you guys are moving there.
And if I didn't have answer, I didn't want to tell you anything wrong or any hopes of that nature. I told you, I mean, within the time, we are working on it. So now the results are there, now the visibility is clear, I can speak to you.
No, no, perfect, sir. So FY '23, hopefully, we will see more growth in U.S. And lastly...
Yes, yes.
Our gross margin which is a linked question. But when we improve our growth rates in the U.S., should we expect gross margins to improve during the year?
Not this year. '24, you will see significantly growth. This year, I think, platform investments are higher. We have to invest upfront on POCs. So those investment goes up in a platform business. But '24...
Sir, I was referring to growth adjusted for R&D, excluding R&D investments.
But some improvement will be there in gross, but still POC investments, sometimes it goes into delivery investment. If you book the POC all into CSM marketing, then there will be gross margin improvement.
Current norm is fine, sir. We are used to...
Okay.
Thanks, Mohit. Next, we have Mr. Vivek [indiscernible].
Sir, this quarter, we saw a sharp jump in the pre-EBITDA costs from about INR 390 crores to INR 425 crores. Do you think a bulk of the jump is behind us? Or should we expect a similar quantum? I'm guessing, as you moved from $70 million to, say, $80 million, $85 million, how much would the cost go up for every, say, 10% growth in revenue?
Our growth -- the numbers, cost numbers goes in lumps, $15 million bracket. So our cost with the opportunity available, our cost will go up in Q2. It's not an end of a cost increase, which you are seeing. It will be -- Q2 also will be the higher increase, the new [indiscernible] is also there. Head count also we are planning for the $90 million number.
So this quarter will have increase. Q3, Q4 will be more salary increase, lateral increase. But yes, travel increase will not happen in this -- next quarter, travel increase of pre-COVID level. Now come to the almost 80% level in Q1. 20% differential will happen in Q2.
So these are 2 places where Q2 cost will increase. But new head count costs in Q2 will go up.
Sir, so this new headcount cost, is it in preparation for the $90 million? What I'm trying to understand is -- so I'm guessing we'll be in the investment phase for another quarter or 2. Would that prepare us for a $90 million run rate? Or I mean, every quarter...
[indiscernible]
Okay. So say, by Q3, our cost structure should be aligned to $90 million? I'm just trying to understand when the operating leverage can play out.
Exactly, Vivek. Now as you [ play ] last year, our Q2 costs, we went up by some -- I don't remember the number, but there was a -- when we had the call on October, the number went up. So Q2, Q3 number went up. 2 quarters number went up on the salary cost. That was the time when we were preparing from $55 million to $75 million. So that $15 million jump has seen in this quarter. So in 3 quarters later, you've seen the jump. And that number got accommodated, and my EBITDA margin is around 21.6% this time, though 3% is a drop compared to 25%, which is normally in the industry this happens, which is the talent cost increase and the travel cost increase. So now whatever we do in Q1, Q2 cost increase will service us for the next $90 million run rate.
Sir, any color on the top line growth? Have you seen any headwinds in Europe or other parts? And what is the 2- to 3-year outlook? I mean are we still hoping to hit $100 million run rate in the next 8 to 10, 12 quarters? I mean some color on how confident are you of achieving that. Or is it only a case where we need to just increase the capacity to service the demand?
Demand is there. Healthy demand is there, Vivek. Market is looking for [indiscernible]. Quarter-on-quarter, the way we saw last quarter, 1 or 2 deals here and there. [ You play in these ] 2 deals [indiscernible] Otherwise, we are seeing a positive traction right now in Europe and America. So now I have given the commentary -- country-by-country commentary. So I've not even given a general commentary of [ advanced ] market.
So based on that, I think you can [ make it out ] that $100 million quarter-on-quarter. I think all of us are looking for 8 to 12 quarters to get into $100 million per quarter. So that trajectory, we are working on. Manish, me, Rajesh, Banesh, all of us are working. [ Beauty is now third business ] of Banesh also started delivering substantial results after last quarter.
So if you look at it, in 2019, we spoke that GTB now got $100 million. Then he says GCB will now work over the next 2 years. Now then GCB started giving significant result. [indiscernible], which is the third business, started delivering results from this quarter onwards with Exponent, Underwriting, AI, machine learning strategy. So 3 out of 4 businesses we look at it have started giving substantial throughput. Now we have to spend time in the RTM. But it's going as per the very calibrated structure. So...
Sir, just one last question. So just trying to understand this once again. So while we're in the investment phase, our margins will be depressed, as you said, in the 21% to 22% to 25% band. But when we're at $100 million run rate in the next 2 to 3 years, I'm guessing the margin should be much higher than that? Or would that be wrong to presume?
[indiscernible] At $100 million level, they should come back to 30%, 35%, at $100 million level.
So that still stands, correct?
Yes, yes, yes.
Thanks, Vivek. Next, we have Mr. [ Ankush Agarwal from First Capital ].
Congrats on a great set of [ top line growth ]. So firstly, what I want to understand over here is that when you say that you will be reinvesting 4% to 5% margin to support platform revenue growth, so can you talk a little bit more over here? Like where is this investment going? Is it going on the sales and marketing front? Or is it going into product R&D? And do you know for how long you expect this to continue?
Ankush, you can just understand, when any platform is created, like [ naukri.com gets ] created or you take [indiscernible] created, when you create a platform, initially, you put up a [ full kit ] team. You will put up few architects for there, few designers for it. So [indiscernible]. Then you'll put up a full go-to-market team, marketing team. So the money goes in all the 6 dimension of a business: from brand to end customer, to leadership, to IT, to execution and financial capital.
So all the 5 -- 6 capital, which we call BELIEF as a framework, all the 6 areas where investment goes in. So that -- and that investment in a platform, as I explained, [ it costs ] $5 million typically for a platform on an annualized basis. Initially, the revenue may be $0.5 million to $1 million in the first 2 years -- or 1, 2 years. And when it crosses $5 million with 7, 8 customers, then we can [indiscernible].
Okay. So sir, then if we are saying that we are now investing in these products and these are going to add to the top line, so would you be saying that our outlook for revenue growth, which was earlier at high teens to about 20%, that would increase substantially since we are now investing in [ additional ] platform?
If we are able to do in a product company, so Ankush, one point is product company 20% growth is equivalent to 30% growth of service company because [indiscernible] revenue [indiscernible].
That is fine. That is [ taken ]. What I was asking is earlier we had [indiscernible] that high teens to 20% growth and then you had this margin outlook of growing to 30%. But now since we're investing more into additional platform, so shouldn't that add more revenues and then increase our top line outlook because now you're investing more?
Ankush, I said that like in LTM, we have 29% growth in LTM. But I still calibrated the business at 20%. So we may get a high number, but we still say 20% is the calibration of the business.
Right, right. Okay. So with this 20% growth that you're not saying [ with any additional ] investments, so would profitability will at least grow at that rate or it would be much lower than that because earlier we were guiding x growth in top line and then relatively higher growth on the bottom line front because of the margin expansions and all that stuff? But now since we're investing more, would it -- the higher growth obviously is not going to come because we're now investing 4%, 5%. But would it be much lower? Or would it be like at least still what the top line is growing?
The margin will grow higher than the top line. In this quarter, it was [ change of ] quarter. So this quarter number should not be the reference number because this quarter [indiscernible]...
I'm not saying about this quarter. I'm taking it from the comment that you're going to investment 4%, 5% of the revenue. So that would obviously -- and that is going to be continued to a couple of quarters at least. So since, say, for example, last year FY '22, I think we did about [ 20-odd percent ] in EBITDA margin. And if we're going to invest 4%, 5% more, so that would put a lot of pressure, obviously, right?
No, Ankush, that -- if you've seen last year, if you look at the numbers, it moved from 30% EBITDA to 27%, 28% EBITDA. So there is operating leverage play that also happened. So 4% to 5% when we are investing [indiscernible] that operating leverage [ is lower ] between the top line and bottom line as a product company, we'll always have that advantage. Today, the talent cost, which has gone up in the industry. But once it's cooling down, that impact will not be so much in '23, '24. So margin will improve going forward and [ delivering ] faster and higher than the top line growth.
Got it. So basically, you are saying that even though you are making this much investment, but there is an element of operating leverage and that could cushion some of this 4%, 5% [indiscernible].
That's right. Yes.
Yes. Sir, lastly, just on the use of cash. So now we have more than INR 500 crores. And obviously, we had allocated some INR 100 crores to the AIF investment. But -- and that is going to be in the future, right, will be more piece-by-piece1. So any thought on how you're going to use this [ cash ] because historically, you have mentioned that we are not so much interested into inorganic growth. So -- and we are still going to generate a lot of cash this year as well. So any thoughts on that?
It's still the amount of cash is just sufficient [indiscernible]. It's a 1-quarter cash. We have INR [ 531 ] crores revenue, INR [ 558 ] crores. I think as a product company, you need this much cash as a bucket to reserve. We'll talk about it when we cross INR 1,000 crores cash.
Okay. So you want to keep some INR 500 crores, INR 600 crores cash is what you're saying?
That's right.
Thanks, Ankush. Next, we have Mr. Moez Chandani from Centrum Broking. Moez?
So my question was on the employee benefits and on employee attrition. So are you seeing a decline in the employee attrition both on the senior level as well as the junior level? That's one. And secondly, are you also -- I think you mentioned that you're going to hire a lot more people this year. So can you just give us an idea of how much is the hiring expected to be this year as opposed to what it was last year?
Okay. So the 2 questions you asked -- 3 questions you asked, first is attrition level. Yes, we have seen [ the pattern ]. It's dropping since May onwards because the start-up issue started [ happening ]. It's dropping now. Attrition is dropping. Our attrition is -- second question you asked about senior-level [ attrition ], senior-level attrition for us is [indiscernible] from last [indiscernible] year. We didn't have a senior or mid-level attrition. I think we have a very strong culture to [ begin ] there. That's not a concern last year also. Our attrition was in the bucket of 2 to 5 years bucket. That is because we may not provide them the global opportunity of going to -- send them to [indiscernible] assignment. So that's the area where we now are refilling back with a strong module of fresh engineers and creating a fintech engineering program for that. So that's attrition.
Exact numbers for this year, how much we need to recruit, I think that's -- that plan is very -- as of now, not fully worked out. It will between -- last year, I think we would have done 800, 900. So this year will be a similar number maybe there. I think we need to work it out with the platform right now, platform strategy. So we'll come back. As of now, we [ are not sound up ]. It takes some time to [ sound up ], maybe another 1 or 2 months [ sound up ].
And when are the salary increases being rolled out, if you can just remind us?
In our case, it's almost -- the [ major load ] of salary increase happen in first quarter and second quarter. And -- but it's a quarterly cycle. So we don't have a one -- single cycle. We have a rotation cycle.
Sure. And the salary increases that are being rolled out this year are in line with what was last year? Or are we doing better in terms of salary increases this year?
This year is higher than the last year.
Thanks, Moez. Next, we have Mr. Aman Thadani from Solidarity. Aman, ask your question.
Can you hear me?
Yes.
Sir, my first question is can you help us understand the target addressable market bases of products that we have in each business division?
Yes. So Aman, when I look at the market, I told you about each product. So I took you to the [ last ] market presentation deck and look at which products are relevant in which markets. So if you just go back to that presentation, I think -- I don't necessarily repeat the same.
[indiscernible] of each market or for each product that how much can we do for our transaction business or how much can we do for our core banking business? Or what's the size that would be of each market?
Yes, we are not announcing how much revenue per product per market. So that's what we don't announce. It's the overall number we can announce. We don't want to do that for our competition. So we don't announce those numbers, Aman.
Sir, my second question is did banks replace their existing software with us? Or does Intellect make something new, which is like an add-on...
Can you be a little louder?
Sir, did banks replace their existing software with Intellect? Or does Intellect make something new, which is an add-on...
We're not able to hear you, Aman.
Aman, we are not able to hear you.
Can you hear me now, sir? Hello?
Yes, repeat...
Sir, the products that we offer to banks, so did banks replace their existing software with us? Or do we make an add-on software which they're using above the legacy software?
They do both things. Some of the time when we will have complete digital transformation, we replace an existing banking product. And then we do a specific platform. They act as a periphery solution, and they coexist with the existing solution. So both those things are there, Aman.
Sir, can you help us break this down? Like what proportion of our revenue would be we are replacing someone and what proportion it would be like we are offering something completely new?
How will it help here? I also don't track it. How will it help you to forecast? So I think we don't do [indiscernible] numbers. So...
Thank you, Aman. Next, we have Mr. Mayank Babla from Dalal & Broacha. Mayank?
Sir, I missed the early part of the call, I missed your commentary on you're going to [ up ] your spend this year for these products and R&D. Sir, what was the amount that will be [ routed ] through P&L and what would be capitalized? Can you just elaborate on that?
Yes, typically, if you look at 6 platforms and $5 million, $30 million -- between $25 million, $30 million, we expect the investment in all the buckets. So -- but we are capitalizing only a small piece of it. Our capitalization amount is remaining in the less than $20 million. It will be close to 18.5 or 20 -- INR 140 crores will be the investment in the capitalized amount. [indiscernible] expensed out whether in sales and marketing or expensed out in R&D or software development expenses, all the 3 areas that [ we have expensed out ]. So almost 70% of amount is expensed out, 30% amount is capitalized. Prabal, you want to just summarize?
Yes, of course. You see, there are a couple of things, I think. We have discussed a lot of numbers and questions from investors. I think there are a few points which I would like to leave you with in a quarter like this, which is actually quite a pivotal quarter in many ways.
Very similar to 2 years ago, in July 2020, when we started on a new journey and the results are something which are there for you to see. So this is also pivotal in that sense. And I think Arun has spoken a lot about the [ crafts ] of this quarter, which is journey from product to platforms. That is the -- that is fairly fundamental in this entire journey of from product stack to products, to platforms, to ecosystems. In that entire journey, this is which we are highlighting today is actually very fundamental. And the important thing for all of us to understand and appreciate is that the company, as we have disclosed earlier, is built on 4 fundamental pivots. And we continue to remain on these guiding principles and foundational blocks, so to say. And I'll just highlight those 4 in a moment so that we all have common understanding.
The 4 fundamental pivots are: one, that we are an IP-led company, and monetization of IP through new and innovative business models is something which is the core DNA of this organization. And that is what [indiscernible]. And being a young company, of course, our priority remains to populate the market with our IPs. So far, it has been products. Now it will be products and platforms. So this is the fundamental of an IP-led business.
The second important pivot is that we will continue on a path of calibrated growth with predictable profitability. So we will grow, but we'll grow in a calibrated manner in selected markets, in our chosen accounts and so on and so forth and with the predictable profitability.
The third one is that our growth, with respect to competition, will always be market-leading. So we don't want to give numbers of 25%, 30%, 40%, all of that. We have said that the organization is geared up for a 20% type of growth. But it will be market-leading depending on where the markets are. The world is not in a good place, as all of you know. So therefore -- but we will be market-leading with respect to our competition [indiscernible]. And this growth will require continuous investment in the IP and in the business to keep the technology contemporary and ahead of the curve, right? We talked about this in length in the Technology Day. And I think this is the third important pivot that there will be market-leading growth and that growth will require continuous investment in our IP, right?
And the fourth important pivot, very important pivot, is that this growth and investment will not be capital dilutive. So efficient capital allocation will be the cornerstone of our growth strategy, which we had mentioned earlier, and we continue to do that. So there'll be no capital dilution.
The moment you put all these 4 in a bucket in terms of a strategy, it becomes obvious that the -- to secure our future in terms of the new opportunities which are coming in the marketplace in the current context of these platforms, the investments for that will necessarily have to come from the existing cash flows. And that is the point the Arun was making that the trajectory which we have talked of EBITDA so far of 25% to 30%, that trajectory will get compromised because we will use about 4% to 5% of that and put it into the bucket of investments. So now it will be 22% to 25% of [indiscernible].
That is the -- that is the crux of this impact. So as long as we sort of appreciate this fundamental preset, we will know that the company is actually going to create the institution which we have always talked about. We are on a certain path, which we have chosen for ourselves, and it's all about the choices we've made.
Now we see massive opportunities in the platform player. I think Arun mentioned that. And which is really an extension of the solutions to ecosystem play, which we are outlining. So therefore, this current state what it does for us, just to give you a benchmark, is what it did for i-flex in 2008, 2009. Since then, i-flex has not grown significantly. If you have seen, they have not grown at all in many, many years. But look at their cash flows, their margins. It all is a result of that phase of i-flex from 2007 to 2009. And I think -- and I say that we're being a young company, we are actually creating revenues and avenues for future flows from these platforms.
And most importantly, it does not cannibalize the existing revenue streams because the large banks, as Arun mentioned, Tier 1 banks will continue to take the license [ fruit ] and all of that. So we're creating new opportunities for avenues growth we're monetizing rightly. I think this is a very, very fundamental shift and a fundamentally -- fundamental importance to understand. And so therefore, financials, we have seen both Y-o-Y as well as LTMs. We have been healthy on practically all parameters. The pipeline speak for themselves, a $600 million to $800 million in 1 year is saying a lot. And the average deal size, of course, has gone up in all of them.
So therefore, I think we are, by and large, on the chosen part within the choices we have made and sort of sticking to the part of making a sustainable business which become value creation at the end.
We have a couple of more questions. So can we have?
Yes, just one or two question we can have it.
Okay. Mr. Rohit Balakrishnan from ithought.
Hello? Sir, am I audible?
Yes, Rohit. Please go ahead.
Thank you for the very detailed presentation, which is very helpful. Sir, I just heard probably it was sort of answered, but just a couple of clarifications. Sir, one was the part -- the life part that you explained maybe towards the margins. Is it -- so to understand this, is it the right way that probably from H2 FY '23 or probably Q4 FY '23, the margins will be back to what they were, let's say, I mean, to the earlier guided range and from there on, that the margins will sort of see an expanded path, as you explained, whatever platform that -- I mean, platform revenue that will take. Is that the right way to think about it?
Yes, absolutely. So think about it is in -- see the choice which we had now -- let's just -- step back for a moment. The choice which we had now is because of this emerging platform player, which is sort of showing a lot of traction. If we did not invest properly in this area, we still remained at 25%, 26% margin very easily, right? But that is not the wise thing to do. So therefore, we are creating avenues for future growth apart from product license. Product license remains. I mean that is something which will remain, but these are creating different avenues with the same IP.
And that is the beauty of an IP-led model at the end of -- but obviously, there'll be a gliding path. And there will be -- just -- that's why I gave the example of i-flex in the 2008 and 2009 and look at it today I mean [indiscernible] cash flows, right?
So being a young company like ourselves, our priority is obviously to populate the market with as many products and platforms as we can in the next few years. So the ultimate objective and ultimate sort of goal at the end of fall, this would be when we reach a certain mature phase, we're not populated products and platforms in the market which will give those cash flows? Yes, absolutely.
But whether it's one year or whether it's 1.5 years or 2 years, that's a moat point depending on how -- because you see, today, we are faced with 2 things. The entire industry is faced with cost increases. We all know that. Plus we are opening up after COVID. That also we know, plus we have this platform opportunity. So all 3 are coming together. And that is the reason you see this minor recalibration of the EBITDA part, which we have talked about.
Sure. No, very well explained, sir, again. Sir, the second question was, so now the subscription [indiscernible] platform is about INR 116 crores this quarter. Sir, one question that I had was, so we don't disclose GeM how much it is. But I'm assuming that GeM will probably come from contract renewal. So just -- I mean, just qualitatively, can you share like is there any risk on that part for it to sort of -- I mean, I don't know how much you can share in terms of how much quantity in terms of quantum it is that. But as an investor, I just wanted to get that part understood from a risk point of view, let's say, somewhere in FY '24. So my understanding is right that revenue is going to come for -- the contract is coming for renewal.
Would you like to just answer it, please?
GeM -- he is asking about GeM renewal. Unfortunately, we don't announce it in this part. It's like in a confidential with the government. So unfortunately, what Rohit is asking, we cannot answer right now.
Sir, just if I can sort of -- I understand, sir. I mean -- but if you can give some qualitative commentary in the sense that my context of the question is that -- hello?
It's difficult to them to build it up anywhere, Rohit. These platforms once you design, the chances of extension are higher, substantially higher. The TCS got Passport office. So unfortunately, I cannot disclose it. So leave it at that, Rohit.
Thanks, Rohit. Next, we have Mr. Rahul Jain from Dolat.
Can you hear me?
Yes, Rahul, please go ahead.
Just wanted to understand and sorry to harp on the question, this has been asked earlier. This -- the need for the investment on the platform side, is it also led by the volume demand in the market and where some of our past, the power and the progress to win for off of an existing product may not be as sharp as we may need to and that's why there is this sudden need for investment? Or this do you think the logical investment which any R&D company has to do as part of the business equation?
Rahul, how many companies are entering to U.S. market as the platform from India or even Europe. It's very difficult to enter into the U.S. platform coming from India or Europe companies also on an organic basis, not inorganic and acquired the company. These investments are required to have a big opportunity in Europe and America to leverage using platform and building a recurring revenue stream.
Such a big opportunity, U.S. company has built up, Rajesh has built up, Manish has built up, which is need to be supported by -- and this is getting supported from the margin redeployment, not by capital generation. A 4% margin redeployment is very normal for any business decision from a Board level.
Right, right. And just to extend that part in terms of -- as you said, the kind of a product which is relevant for that market. So, a, if you could share your thoughts on how the current product would compete with the likes of product that we see, which product like Mambu or maybe thought machine? Or you would say that this kind of development is just small .
Rajesh, would you take up this question? Competition with the thought machine, Mambu, and...
Sure, sure. I think let me before answering the question, I've been listening to this conversation, let me give you a little bit of business commentary, especially look from a retail banking or a core banking perspective. I think the way we are looking at the market is really, if you look at our products, right, we have 3 products on term, we talked about it, right? It's a very specialized product that we build for central banks on the back of our win on RBI, right?
And in the last 4 quarters, we have won 10 deals on Quantum, right? So that's the kind of momentum we are seeing, and that's the kind of momentum when we say that Arun talked about the pull being generated. Today, we are called for opportunities, right, where we don't have to go ourselves, we are getting pulled in back that demand that we have created from a product perspective. So that's about Quantum, it's a leadership product. It's going from strength to strength. We have made lot of progress in Africa, Middle East.
We recently won -- I think it's in the news. The Saudi's crown prince has talked about this new country NEOM. We have won the Quantum banking deal for NEOM. So we are seeing a phenomenal momentum in Quantum. We are now seeing some growth in Quantum even in advanced markets. So in the coming quarters, hopefully, we will be able to take Quantum to even advance markets. So that's on our first product, which is Quantum.
The second product, which Arun talked about, which is moving from Phase 2 to Phase 1 is our core banking product. And you saw in the list of deals won, we won 4 deals last quarter on the core banking as a product. That's again, if you compare, if you go and look at what Temenos is winning or Oracle is winning, we are in the same league from a number of wins perspective.
We are also seeing momentum on lending. You saw 4 more deals were announced where we won on lending. So from a product perspective, we have a very clear strategy. We are focused on Quantum. We want to take it all. [ IBC ] is on a hyper growth trajectory and lending we want to take. Now let's talk about platform. So what we have done is we have -- from a retail banking perspective, we have 2 platforms. One is, of course, our iKredit360 platform, which is typically targeted towards Europe. And we have an open finance platform, which is, again, targeted in Europe. This is a platform which Arun talked about, which has the breadth of core lending and cards.
We are in a unique position to offer that. And what we are seeing in the market is that many European banks, regional banks as well as large banks are looking at modernizing their platform. So we see -- we are in a good position in that. And if we specifically talk about Europe, we are in the large 5 deals, we are in the last 3. And who are our competitors in all these 5 deals, right? It is Temenos, it's Intellect and it's Thought machine.
So we are now in the same category as a Temenos and a Thought machine, where Temenos brings the functional depth, it brings the brand name, it brings a lot of references. Thought machine is building a cloud-native architecture. What we are bringing is the width and the depth as well as the latest architecture. So I think in many of these deals, we are seeing a lot of competition happening between us, Temenos and Thought machine.
Some of the deals, Thought machine may be ahead, some of the deals we are ahead, some of the deals, Temenos maybe ahead, but it'd a neck to neck fight in many of these deals in Europe that we are seeing. So I think that's what I would like to say. If you look back and see Temenos Capital Day presentation, you will see that even Temenos has recognized us as the setting coming closest to them from a winning deals perspective.
So I think that's where this platform story, the open finance platform story of Europe and the iKredit360 platform is fitting in. Good momentum in the European market is what we are seeing, both in U.K. as well as Continental Europe.
Right, right. Yes, yes. Appreciated the color and sorry If I can possibly ask one more. So just to -- some of the entire thought process, what I essentially found is that, we are getting into newer markets. We are getting better acceptance in the market for our offering. We are coming up with new offerings, which also expands the market scope and positioning. And then we are also getting a lot of proactive deals because of the kind of offerings we have.
Now when we have this kind of accelerated thought process in terms of the revenue potential and we are also investing more and more in the business. Somehow, the margin comment is very, very clear, which is getting aligned with this kind of thought that you have, but somehow the growth comment is not reciprocate in the same enthusiasm.
I think somebody else also asked about this. But is it somewhere like -- and the real advantage of all this exercise may come much later than in the recent year and that's why you are trying to not give that kind of a view right now? Or this is more about being conservative in GeM?
Whatever you interpret, Rahul, that's okay. But we are seeing our LTM is 29%. We are seeing calibrated growth. We have designed [indiscernible] 25% growth. We don't give a guidance. So we told guidance we stopped giving But we think how the business is designed and we are [indiscernible] sharing. What interpretation you want to have it, it's your call as analyst what you want to look at it.
But 29% growth, we have demonstrated in last LTM. So [ community ] can be better. It will be good for the investor, but there's no point of looking at it. My competitors are not growing more than 5%, 7% single-digit growth in my entire product journey. If I'm growing 20%, I'm very, very happy. And if it's 25%, 26%, 27% happening, lucky to have everybody on the same page. And we have many strategic deals on the table. We have 15 strategy deals on the table. Each deal is more than $10 million deal. It can change the color of the growth differently. But there's no point of till the time we win 15 deals of the nature, which are now getting us into a $10 million to $100 million range.
So we are fighting in many deals, which is more than $50 million after RBI division. We are now getting to $50 million, $100 million deal hikes which I mean better than Thought machine. So we are very enthusiast. But specific number to put it, I think we don't want to put what is my design principle. Design principle is 20%. And the rest of it is the interpretation what we succeed.
Thanks, Rahul. Arun, can we take couple more questions.
This is already 06:30. Now we can just take the question by writing unless somebody...
So one last question we can take at least.
Yes, last question we can take it.
Yes, the last question. Ashish Das from [ Sharekhan ]
Am I audible?
Yes, yes, Please go ahead.
Two questions. Yes, I understand you stopped giving the revenue growth guidance. But in the -- at the starting of FY '23, you mentioned 20%, but now you stopped the guidance. Okay, that -- what is that reason? And second, last quarter, when you commented, you mentioned that you are entering into 3 new markets, and you want $10 million per country in the next 3 years.
Now you entered into the U.S. So is that commentary -- is that outlook still remains?
Yes, yes, that's right. This is same up to 3 countries, Vietnam, Saudi and France and now we're looking at Germany. So that commentary remains. So the guidance, we never given guidance. We always said design the business for calibrated growth, but it stood as a guidance. So which is okay. It's an understanding is there. That's what we designed the business because there could be ups and downs in license revenue. Sometimes we can win a very large deal and we -- the other quarter, we may not win a large deal. So it's not quarterly, quarterly. Then we are looking at LTM as a growth chart. In LTM, we are able to ensure that it will be 20% design. Okay.
Thanks, Ashish. So since we have many questions, we request everybody to please do write to us any questions which we might not be able to take because of the shortage of time. And thank you all of you for attending the call. Thank you so much. Now we can close the call. Thanks, everybody.
Thank you.