Intellect Design Arena Ltd

NSE:INTELLECT

Earnings Call Transcript 2024-Q1

[Praveen Malik, executive]

[Audio Gap] Mr. Manish Maakan, Mr. Raj Saxena, Mr. Banesh Prabhu , Mr. Venkat Saranu and Ms. [indiscernible] Subramaniam besides some other senior members of the Intellect management team are present in the call. Mr. Arun Jain will brief you on the results, followed by a Q&A session, where your questions will be replied by the senior members of our 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 to the forward-looking statement. This must be read in conjunction with the risk the company faces.

With this, I request Arun to give this briefing. Over to you, Arun.

[Arun Jain, executive]

Thank you, Praveen. It's a great privileged to talk to other investors this quarter. Last year -- last quarter, we had a detailed presentation by all the business leaders and the view of the future by in detail with you from GTB, Manish has shared the future, Rajesh shared the future and [indiscernible] shared the potential of [indiscernible] insurance, Rajesh on coal banking much competition. So it was a detailed conversation the last quarter. So this quarter, we don't want to get into the detailed conversation. We just want to you -- numbers are already the review and you have gone through the numbers. So we are not repeat any of those data points, which has already shared with you.

I'd like to share with you the thesis why we are doing what we are doing and what is our thesis of the belief in the bank and techno industry. So we believe, the thesis was 2, 4 pieces, which we shared from our technology day to be a stack and technology with you. And that if thesis is continuously getting strengthened and getting more and more sharper and more and more referenceable. So based on the thesis, we looked at it that [indiscernible] that we have 5 is coming, bank needs, ultra simplification of their technologies landscape. Banking we spent $600 billion largest in space and they were fixing branded solution versus taking the solution head-on. This is like in the automobile sector, there is a wave of EVs, the level of autonomous vehicle, we are of simplification of the technology, which we wanted to share last time in each of the business unit. We shared eMACH.ai as a fundamental device of that new rethinking. And fortunately, your company is positioned in the front line of the new technology player. And once you're in a front time, you better best attention from the customer to listen to you.

So in this -- just to give you an example what eMACH.ai is there. So people are asking me to cushion what eMACH.ai meant, why does it change? Let me just take you some few examples of it. Rajesh has taken the example of [indiscernible] 60 for resets in previous meetings. What does it mean? It means that it is a trend in Sweden is chosen eMACH.ai technology so that they can compose the credit businesses or care products, the way they would like to cater to their customers. So if they want to embed credit start along with lending or SME lending with something else, or deposit and lending together, they can compose the solution.

It's like I see a way of doing the winners here. You have a component available and you create your own object what you want to deliver to the customer. That's what eMACH -- eMACH as each as far back defines the new way we will be working. New wave will be working on micro services, its work on API. So micro services and API to U.S. around this new way is working. And for experiential learning, we create a cloud and headless from cloud. We provide our technology, which a customer can consume it and he can define the experience. So now another example of the deal, which we have won recently in this quarter is one of the largest bank in East Pacific.

They chose our technology along with Accenture to create the experience. So the underlying technology of corporate banking will be as payment technology will be as at Accenture is bringing the experience here on the top of it. So that gives litigating to work on the. Similarly, on another plant, OTP Bank, we have announced a deal. The OTP Bank is the largest bank in Eastern Europe. It's not only in Hungary, but there are 11 countries, it's present there and GCB, Rajesh Saxena has won this deal. This was a strict competition over the last 2 years. We mentioned 2 years back that we are working on eMACH.ai, that with certain European banks, and this was one of the those banks who decided to -- decide [indiscernible] their favor. It was a tough deal from Europe perspective because Temenos is a local player in Europe for the last 20 years. And on other side, thought machine, we are the investment of more than $500 million investment invested in Google company take PM as a commission. So it was a 3 [indiscernible] we looked at it. At point was -- we are -- on 1 side, we have a cutting-edge technology like what over can get, and we had a deep domain depth of the knowledge which terminals or final can gift and that's the best of both were we are in a front line of the new way of technology.

So then the one thesis, which has resulted into the 5 or 5 different regions. We have won deal in Asia Pacific, second deal in Saudi Arabia, third deal in French bank, fourth deal in Eastern Europe and fifth deal in U.S. Now it means this way, we have not localized to a particular 1 country. This wav is the way of simplification. And simplification is possible, which is driving value for the bank. So why the taxes are getting benefited from this way, their operational costs can be reduced using decision here by 30% to 40%. The ability for targeting the right customer for the right product segment at the right pricing can be improved by 20% to 30% taken target right. The issue of the banking is whether you target trying to the right customer for the right product, that possibility of design using configuration is a second, benefit bank gets.

So bank gets 20% benefit on the top line and 30% on the bottom line on operation cost is an interesting composition. Our focus move towards distribution now. So in fact, 3.0, our focus becomes moving towards how do we get distribution partners. So after IBM or Accenture has looked at our technology and they evaluate it. It took a lot of time for them to evaluate it. Now we want the first deal with that. It's a very big starting point for bringing a liter. So this is a first thesis for what we believe that our gross journey, though banking and financial sector is muted for all the service sector. We will believe that our journey of design around 20% -- 15% to 20% is still intact for this year.

The second reason, which is there, which is that we went to the platform mode of design. So we move from product to platform to technology that I shared with you in December 2021. I shared with you on technology to that what is our technology we are embarking on. And we shared details about the technology details, some of the people trusted us, some of the people who entrust us and resulted into -- and that technology shift of December 2021, we wanted some investments, and we shared that we will be investing our cash into the generating this technology to create eMACH.ai. So we invested extra money during 2022. And that resulted into drop the EBITDA, which has been shared by some analysts that we are losing steam.

So it's been interpreted in spite of sharing with all of you that for a good technology company. Our -- purpose of our cash is not to acquire company, purpose of our cash is to reinvest that whenever a big changes there. But I think we couldn't be able to provide enough confidence and trust in all of you. So this is our mistake that we've been able to provide that just to all of you that provide such technology investments are there for future growth of the company. Before that, in platform, the second thesis that we look at it to be invested into platform for us and then product later. So once you build a platform like build up the AI platform, an AI platform has not multiple components on data component and one document company. So these 2 pieces of the technology with close to 30-plus avarice build the AI platform or the last 7 years. For the steam platform, we are leveraging for ESG where Norges Bank. What does Norges bank use for? Norges tank invest in 8,000-plus companies, deliver $1.3 trillion fund. And that fund they want to look at the company with the investing having right ESG practices or not.

Now ESC score they can get from anywhere but to convert practices, which is defined in some annual reports, some published documents on websites. We had a huge amount of job to be extracted that information and align to the motions they had. So they have close to 200 in the ESG analysts look at it around which they evaluate the company. So our AI platform is looked for that. Same platform [indiscernible] for magic invoice. Same platform is used for underwriting insurance, same platform used for underwriting lending, same platform is used for supply chain, finance and take ship in clubs. So it's one investment platform, which is resulting into 5 estates. Similarly, we will have a platform terminate no code platform, where we can do that the way data was the way process for [indiscernible] products, even works API work and U.S. work. And it's been leveraged for all the other products. I mentioned in the morning call to AGM that we invested over the last 8 years, close to 16 million -- so 16 million [indiscernible] in U.S. context at $80 per hour, which is a temporary rate of R&D dollars such as invest $1.6 billion. No single player in the world has invested $1.26 billion in designing the technologies of the future, which was 5 or the bane looking to us.

So that is the thesis that we have. Obviously, India is under down. And India doesn't believe that we can do something in product business. But today, when we look at competition in space, we have thought machine and terminals are the 2 leaders, we are able to displace them in largely initially in Europe. It will be very insignificant in revenue terms in the quarter, but it's so important in sending the message that gave 5 player who is in the front frontline leader in the BFI.

The next message is around our cash transition capability from an investor perspective, our EPS, our cash generation. I think both of our healthy. EBITDA margins are healthy. We were looking at a 5% investment, we come back on to the same margin levels what we were invested back. Our investments are not behind us is they're not behind us that we are not less investing in the company. But in percentage terms, they are lower than the existing one. We recommend strongly that quarter-on-quarter, we cannot meet your expectations. So I want to tell you upfront that we cannot meet the expectation of investor quarter-on-quarter. This technology business is a long rate of 3 to 5 years where the leadership will be defined. This market size is so huge that it will require the continuous investments, but our investments are very, very calibrated. We have not increased the calibration from INR 140 crores. We are -- we told you last capital that we'll be investing INR 140 crore capitalization. We invested INR 136 crores instead of INR 140 crore the last year.

So all the parameters what are mentioning, I think that is important for you to record and look at it that we can be monitored on LTM basis. LTM from the last 9 quarters are more than 15% to 20%. We are able to grow glass continuous fine quarters. So when somebody says last 2 quarters for the bank, it is only from investor perspective, the last 2 quarters our bank because the lease for a year already it's only when the deal gets executed and comes to the solution, and we see as a high value. So that's the point I just want to make in the commentary over here.

So with this bank of assets, we see a right kind of talent in AGM speech, I mentioned about it. Our 35% of workforce is more than 10 years experience. 16% of the employee hold RSCO in the company. There is a 57 country of footprinted, out of which 10 countries we are those to go deep -- we had a partnership of Accenture, IBM and more people are lining it up with eMACH.ai technology. We have a big partnership with Azure and AWS. We have a top customers in new geography top 9 customers of Middle East to 6 customers of Europe out of 10, top 4 out of 10 in Americas, top 9 or 10 in India. So centering Asia-Pacific. So they will -- there's no single company with a footprint from [indiscernible] Asia Pacific to Americas and where we are showing up example of our gold side on AI and composable and contextual technology, which is driven by design thinking, composability, contextuality and [indiscernible].

So this is the comment. I would leave it now for the question-and-answer session so that you have any time for asking questions to me, Rajesh, Manish, [indiscernible], all 4 of us can answer the question beside financial question can be answered by Vasudha and [indiscernible]. So over to question-and-answer session.

[Praveen Malik, executive]

[Operator Instructions] First question is coming from Mr. Mohit Jain from Anand Rathi Securities.

[Mohit Jain, analyst]

Sir, first of all, congratulations for a good quarter. And then I have 3 questions. One is average size of deal in the highest bracket that you report, it looks like that we are not capturing the deal win information correctly as an outsider. So is there a change in the average side of the deals over the last 1 year or so? So that is one. And then I have a follow-up on GM impact, essentially on the working capital. So revenue you have already told us. But on the working capital, what should we expect in FY '25 when the contract comes off? Should we see the rapid decrease in receivables? Or do you think there could be some other assignments as well?

[Arun Jain, executive]

Okay. Third question?

[Mohit Jain, analyst]

And third is on capitalization as more account fit, I thought I will ask separately. But that is related to, should we see some increase now that you are developing these new tools and tech in terms of capitalization over the next 2 years or overall R&D spend? Or do you think current rate is good enough for us to sort of come out with products similarly?

[Arun Jain, executive]

So let me take every size of the deal, I think the -- we can't calculate like the more versed fundamentally because deals are gearing from 3 years to 5 years to 7 years when the contracts are getting signed, to every deal which we signed is relevant for 15 years. But accounting-wise, is based on the number of the [indiscernible] signed the contract and those contracts fine depending on the client-to-client. So that's one area which we are not able to be accurately made. It's only an indicative measure of the average...

[Mohit Jain, analyst]

Directionally, if you can help like how much it would have gone up? At least the highest bracket, the INR 50 crores and above one?

[Arun Jain, executive]

Yes. The deal values can be -- like was about INR 500 crores a single deal. Some deals are more than INR 200 crores deals are there. So those are the deal sizes which are on large size deals can go up to $30 million to $100 million. So $100 million, we are not crossed right now, but we are intent to $100 million deals. On Second question, working capital, obviously, it will improve. We have a substantial amount is sitting as a receivable and the number of days will improve as we go into the working capital of [indiscernible] as well as we mentioned in our press release, that's a single-digit profit business. So it will impact the top line after quarter 4 will have an impact on the top line. But we don't see a significant impact in bottom line. Some impact will be there, but not significant.

[Mohit Jain, analyst]

So sir, going ahead, international DSO, the way you disclosed in the PPD, we should gradually approach towards that? Or do you think that will still be...

[Arun Jain, executive]

That's right.

[Mohit Jain, analyst]

That's right. That's a fair assumption.

[Arun Jain, executive]

[indiscernible] international. Then third thing is capitalization. We don't see any -- as of now, the budget planning, we have done for capitalization for R&D, we are in line of close to INR 10 crores it's less than $20 million. Normally, our projects used to $13 million, which means was INR 60 crores, but we'll be spending $17.5 million for this year. I know that is a budget exception that we'll stick to that, and we have not deviated it for the last 5 years, anything in capitulation.

[Mohit Jain, analyst]

Okay. Perfect, sir. And if I can -- it is a repeat question, but if I can have a follow-up. Like is there any difference now, our licenses sort of has caught up in terms of growth over the last 2 quarters. So earlier, we saw this trend where license revenue growth contribution was a little lower, while SaaS was picking up quite fast. So last time you told me that now clients are not differentiating much. So is there a change in sale there? Or do you think licensed as could go hand-in-hand at similar growth rates?

[Arun Jain, executive]

I think, compare license line revenue gain from our viewpoint, it's a customer choice to choose pay us upfront license or SaaS. So we don't want to differentiate. We want to get exit the customer what they want to choose, where SaaS -- SaaS is more profitable for us for the long-term cycle. But if some customer of Europe, on stopes license, offering money it's good for us, too. So we want to see how much of the license in revenue If license revenue over the last LTM basis, we have close to INR 1,030 -- sorry, we have close to INR 1,200 crores of license-linked revenue. That's the most important figure for you to look at it, whether it comes from AMC, whether it comes from direct license whether it comes from sales. We are open to that. We are not falling even policy that we only want to do so is just we don't want to follow that.

[Mohit Jain, analyst]

Okay. And your guidance, growth guidance of 20% we should look at it adjusted for [indiscernible]?

[Arun Jain, executive]

Yes, that's right. We need to do that adjusted for the 15% to 15%, you can do it at some decisions may be slower last 5% to 20% anything.

[Mohit Jain, analyst]

Perfect, sir. And all the best. Venkat sir, congratulations for your new roles.

[Praveen Malik, executive]

Next, we have Mr. [ Vivek Taruna ].

[Unknown Attendee]

Are you able to hear me, am I audible?

[Arun Jain, executive]

Yes.

[Unknown Attendee]

So last con call, you mentioned about -- you mentioned about concentrating on India and putting more focus on India. Can you throw more light on how our products are getting traction in India and which products are gaining?

[Arun Jain, executive]

Yes. So I did mention that we are focusing on India. We're seeing we're a global player, and we are looking all the countries and representative of all the regions requiring eMACH.ai technology. So India is also Monte largest financial engine, which is going to all the Indian banks are showing a tremendous amount of growth in double digits and high double digits. [indiscernible] roles, which is happening. And we are now adapting to that new technology and cloud technologies. So emanate position, whether you set top bank publicated banks or setback. So I don't know to name a digital bank over here. But most of the banks have 9 out of 10 tank customers. So we are investing into new technology space.

[Unknown Attendee]

Sir, in your annual report, you also mentioned that [indiscernible], you have done and the accelerated growth in the next 3 to 5 years. I'm not asking the growth rate, but which products and has accelerated. Is it about SaaS growth or is it platform maturing? So where is the confidence coming from? And what products in our platforms are giving us an indication and which by them the next 3 to 5 years?

[Arun Jain, executive]

So I think we are looking composable and contextual. So we changed the product to technology [indiscernible] products are giving attraction is about over banking when you have to look at it, deposits, we are looking at it, lending, we are looking at it where we are looking at a cash management, payments, liquidity, trading, supply chain finance, central banking solution, insurance underwriting solutions. So Today, all these solutions have matured to the level we have indexed for product maturity index, which is a 1,300 point scores. So today, almost 9 out of the 14 products are crossing [ INR 1,100 ]. So we are suitable for the market and they're built on a same architecture for eMACH.ai, so that they can buy. So if somebody wants to buy lending and wealth, they can do the buying of this product, which nobody else can give it to the mine. So this is a new wave of delivery new wave. It's autonomous banking year. I don't have a better word for it, but something as compared to Tata or what they are trying to position themselves as an autonomous vehicle environment plus that's the technology in the port.

[Praveen Malik, executive]

Next, we have Sugandhi Sud from InCred.

[Sugandhi Sud, analyst]

Am I on audible?

[Praveen Malik, executive]

Yes.

[Sugandhi Sud, analyst]

I just wanted to understand, you highlighted your eMACH.ai wins. In terms of platform revenues, quarter-on-quarter, there's a strong uptick. So there is no significant change in the volume of the GeM contract, and there are no there's no lumpiness there on account. And most of this is coming from new client wins. Just wanted to clarify that.

[Arun Jain, executive]

Yes. As I mentioned, don't look at platform and look at licensing even there happiness will be hearing platform versus license depending on which deal goes into which bucket there will lumpiness. So internally, what we are monitoring and giving a credit to our sales people in the whether you have sales revenue or license revenue, all 1 are well [indiscernible].

[Sugandhi Sud, analyst]

Sure. sir. So in terms of the phaseout of the GeM contract, will it be done on a -- in a straight time manner over the course of the year? Should we expect it to be lower this year and then completely disappear next year? Or is it going to be similar to last year and then the major impact will come in FY '25?

[Arun Jain, executive]

As of now, it's up to December. So Q4, we do see an impact, but still it's too early to say just a transition has just started, and let's see further transition is progressing. And in terms of your receivables, there will be contract milestones and all is they run beyond the maturity of the contract? Or is there we can expect that most of those will get shared towards the end of engaging?

You can't say anything about other. We'll have to [indiscernible] everything coming.

[Sugandhi Sud, analyst]

You don't see any incremental stress on account on this account I mean how -- so in the past, I mean, just looking at your provisions, your provisions that you do for your receivables and your unbilled for your under the provisions have slightly trended up, but you don't see any incremental pressure?

[Arun Jain, executive]

No, we are not seeing any incremental pressure the same pattern we have we do some provisions every quarter on the provision. So that future. So we are taking a conservative approach of providing capital price number or slightly higher than that prepared number for provisions to begin some point of time, they could be like traits required. But as of now, we want to remain the same policy of the provision.

[Sugandhi Sud, analyst]

Sure, sir. And I just wanted to cross-check you are guiding for 15% to 20% growth this year.

[Arun Jain, executive]

Yes.

[Praveen Malik, executive]

Next, we have Mr. [ Anil Tulsiram ].

[Unknown Attendee]

I have 3 questions. First, if I look at your history last 10 to 15 years, we have launched many products. And some of the few products have been successful in reaching the stage -- but many other products, like say, treasury, well, brokerage, insurance are still in Stage 3. So what I want to understand is what are the conditions required to reach for a product to this stage till your we ourselves take some conscious decision that -- this product is suitable to reach that. What exactly is that? That is the first question. And the second question is, in the past, we guided that we soon enter USA for banking products. But it has not enter. Obviously, you have taken some conscious decision that it is not the right time or we are not prepared or the competition is whatever it is. So just want to understand what are the conditions that should be met that before we launch our 49 product in the USA? And the last question is, I think in the technology at to, you spoke about [indiscernible] being launched in U.K. and Germany. So what's the progress there? How are we getting the success there? So that are the 3 questions.

[Arun Jain, executive]

So first of all, thank you very much for tracking every conversation and recording all of it to follow up on. So Stage 2 to Stage 5 products, we have discussed with you were cautiously we trade 2, 3 products at the time and more temperate over and stage 5 people investment, go-to-market investment. So normally, people believe that product investments are product investments are at INR 100 and go to market maybe INR 40 of INR 50. But our learning in last 5 years is if I'm investing INR 100 for enduring, then I have to invest INR 200 for go to market. And that's where our defining stage 2 to stage 5, which based on the market potential, TAM of the market and investment we are making towards meeting the leadership products. So now treasury and brokerage was in a Phase I of our players right now. So this year, we are taking this product maybe, but process, we are not taking forward as a product. But the portfolio, which is 2 billion power banking, lending, tell card, sentencing, wealth liquidity, GDP digital transaction banking. I think our basket is to billion basket for us to look at to worry about treasury our brokerage as a product to we look at it. So we don't see that at any barrier for us next 3 to 5 years growth in the -- about second question on U.S. coping. I don't think I've ever mentioned about that we want to go U.S. for core banking. We said we want to be looking banking in U.S. So our U.S. market strategy is around the insurance underwriting -- that is our core span for the U.S. and GTB product, which is a DTP or liquidity is a strategy for the U.S. and we are on track of it. We suffered 2 losses last 2 quarters. The 2 banks which have gone down both of the places we lost substantial sales structure. We had a reason and those deals got delayed for -- so once we have completely bought Silicon Valley bank completely done, those deals would have been a few millions dollars of which would have been there. And similarly FRB, we were looking for a complete dates transformation for FRB and they have already selected us. It was almost on a paper of signing a paper -- so we lost 2 traction in the U.S. on that bank. So that's the update on U.S. But no, it was not related to core banking. We believe that [indiscernible] is a great opportunity in the U.S., but we need to prepare ourselves. As of now, we are seeing a lot of opportunity on for banking is Europe with OTP back signing it up. And our focus is more on that side. We are spending more time. We hire a president for Germany. [indiscernible], he will be moving to Germany in month of August. So Rajesh is focusing on [indiscernible] 6 for Europe, et cetera. Thank you for asking detailed question.

[Praveen Malik, executive]

Next, we have [ Nimesh Shah ].

[Unknown Attendee]

Yes, am I audible?

[Praveen Malik, executive]

Yes, please go ahead.

[Unknown Attendee]

Congratulations on good numbers. So sir, in your opening remarks, you mentioned that now you are at a place where you start looking to add distribution partners. And you have already partnered with IBM and Accenture. So just wanted to understand how will this impact our implementation revenues going forward? And the -- we've always mentioned that over a longer-term period, we -- the business has been designed for a 20% growth. So just trying to understand, is this -- is this growth is for the company as our own sponsor licensing for us?

[Arun Jain, executive]

So this company has a goal. So obviously, when you are choosing a partnership network, how the implementation revenue can be available for the partner to succeed. So that's definitely. But this the size of the pie increase substantially. Mani, you want to answer?

[Manish Maakan, executive]

No, that's the answer. Wherever we've got the system integrators involved, actually, the pie has gone up 5x almost, and we get more money through those because this is not just at that stage automation of the existing system. It's a much larger digital transformation where they look at a customer impact, the customer growth, the operational simplification. So the value added is also at a different order. So the customer is willing to pay that.

[Unknown Attendee]

Right. And does this change our margin profile in any area?

[Manish Maakan, executive]

It will positively.

[Unknown Attendee]

Okay. Any -- some directional, sir?

[Arun Jain, executive]

[indiscernible] a couple of quarters to communicate, but I think it will impact because license revenue goes up and the margin, obviously, we license [indiscernible].

[Manish Maakan, executive]

I think the positive side, a number of these large partners are willing to work with us enabled by like Arun called out map. They look at the technology, they look at our footprint and the customer sand analyst endorsements given to us, and then they look at especially the technology enablement, extensibility, composability that makes the magic portion happen. So we are referenceable, we are extendable, we are composable. And now the partnership, we've always said the indirect distribution will help us grow to the next order. So we're taking those early steps and building that. We don't want to just run through it and blow ourselves up. We want to design it for right scale and deliver, then once we hit the scale, we don't have bumps.

[Praveen Malik, executive]

[Operator Instructions] Next, we have Mr. Amit Chandra.

[Amit Chandra, analyst]

Yes, am I audible?

[Praveen Malik, executive]

Yes.

[Amit Chandra, analyst]

So my question is on the funnel that you have shown. So there is quite a significant improvement in terms of the funnel for the year. wherein the number of deals, the total number of destiny deals have also increased. So is this increase because of -- we have been seeing like delays in region making in terms of deals? Or is it because there is higher spending from our existing set of clients? So -- and also, if you can break this funnel in terms of how is the mix between transaction core and also the newer products that we have launched. So just to understand the funnel better?

[Arun Jain, executive]

I mean, it's difficult for you to understand, Panel because we don't understand the color so well. The question is that it's over of a cycle time for much labels are there in the funnel. That is difficult to capture the action of the funnel. We give an indicative number to you right now. And the market size is a $600 billion market, which IT spend happens. How much will they get translated to new wave high. The new wav high will tell. So now if you say how much petrol vehicle will convert to EV, time will tell how much it will mean everybody will make some projections, then how much it will be. So market is not a limitation. Limitation is our delivery capacity. That's where our partners will play a very critical on distribution in coming months. And the current funnel is integrated, it's growing positively. Our lead generation engine is growing. We had close to 15 workshops detailed workfront clients on eMACH.ai. We are trying to understand what does a new bit means for them. We are having this workshop in Seattle with [indiscernible] going to have it workshop with Microsoft in Seattle around this. We have a workshop wiht Accenture in New York around eMACH.ai. We have close to 25 more workshops lined up in next -- till before 30th September. I said exciting numbers. So we don't know how to quantify this number as of now, but it's an exciting time to look at it. And that's why I don't want to put some color to that. this funnel right now, Amit.

[Amit Chandra, analyst]

Okay, sir. And in terms of what is the confidence in terms of eMACH.ai in terms of the acceptability that it will have in the industry. because it seems to be quite an exciting product, but can it reach the kind of success that we have received in, say, our traditional formation banking kind of products, which are very mature and are contributing or they are in the majority phase and like in the monetization phase? So how we see the growth in eMACH.ai? Also from the perspective of the partnerships, we have been trying to scale up our revenues from the partnership on our ecosystem, but we have not seen a lot of success there over the last few years. I don't know how it has changed now. But from the perspective of eMACH.ai, what kind of growth you're seeing from there? And also, what is how we are dealing with the kind of partners now versus earlier?

[Arun Jain, executive]

So Amir, we're just saying your trust in the -- we never mentioned that we are ready for quarters. We always said that we want to do our implementation unless our product partner ready, eMACH.ai provides me the partner ready for us. We started focusing 18 months back around the partnership. Before that, we were not even hired our partnerships on anemometers only 8 months back joined us. So we are -- it's not that we are not successful in partnership. We've not chosen the partnership as a distribution lever till the time we are ready for by the ready product. So that point I want to clarify that you saw that we are not successful in partnership. It's not that we are -- we didn't make it price to go to the partnership because we want to establish our referenceability of the customer base and then as part of user strategy since 2018 a bit I always explained that first period of our growth will be only ourselves so that we ensure that sensibility is available in that, and we don't want to take exist with a partner or excluding of the customer relationships. So that is question foremost we want to highlight with you about the partnership that we are choosing now, and we will not be using many partners. We'll not be celebrating more is more. We don't want to celebrate less. We want to have a few partners, but deep relationship with the parent. We'll be committing the deep relationship over there.

The second question you asked about -- what was the second question?

[Amit Chandra, analyst]

EMACH.ai question.

[Arun Jain, executive]

eMACH.ai is a new architectural form. It's not that DPV, banking -- now this -- all these products which are their best products is there, which balance for Wealth force. They are all now moved to the intact 3.0 where everybody has a microservices. So we have 25 microservices. So GTB has to move in the next phase of investment, which we made last year is to move them to microservices-based actin. So since the move to micro services access emanated for comment later which is getting expressive itself to construct DTV solutions, liquid disposition, cage finance solutions, supply chain solution, [indiscernible] banking solution. The solution can be designed and we are giving us the flexibility of customers or he wants to design. And that's what the new wave of technology is all about. Rajesh, do you want to add anything to that?

[Rajesh Saxena, executive]

No, sure. So I think you said it, Arun, I think the eMACH.ai gives us the architecture and it stands for event APIs, micro services, cloud and headless. And that's the way all our platforms are constructed so that the banking can become completely composable. And we talked a little bit about what we are seeing. Let me take an example of, let's say, Europe, what are we seeing in Europe? In Europe, we are seeing a good traction in the core banking space. And what the customers are looking for is really a composable solution. So our eMACH.ai architecture, along with our iTurmeric platform gives us that edge. And that is what we are seeing as a traction in the market.

[Amit Chandra, analyst]

Also, like Rajesh, if you can comment on the competing products, which are there in the market, which you see as a competition to eMACH.ai?

[Rajesh Saxena, executive]

Yes. So I think the way I see competition, and let me put this in the context of core banking space. So core banking traditionally, we have seen competition from players like Temenos, Flex Q, Finacle, et cetera. And then there are new age players like Thought Machine and Mambu. Now Thought Machine in Mambu come with an architecture, and what Temenos and Flexential would come would be the domain, the depth in the product. Intellect has the great advantage that we have the depth as well as the architecture of these new platforms. And that's why, for example, we talked about this OTP deal and this OTP deal that we won against Temenos and thought machine was really because of both our architecture as well as the depth that we have. And that's what is resonating in the market.

[Amit Chandra, analyst]

And Arun sir, my last question is on the GeM project. Obviously, the GeM project will be there till December. But in terms of the bids that kind of came up for the project were substantially low in terms of what you're operating at. So how do you see that? And also in terms of our receivables, what part of our receivables is from GeM?

[Arun Jain, executive]

Is substantial to see you, but we mentioned earlier. So that should cover it. And second is, at TCS value, I think we will not be doing that business here. We don't want to be in loss-making business for we don't see if we just can make money on it. I do want to manage it a the joy of selling the moment. But we need solemnly 5 years select project we have taken to on financial from there is not no regret products. cleaning it back mat I would have expected some investor to ask question on AI. I thought in a hot topic right now. and the kind of capability that's managed as well for the year is phenomenal. And that is not coming out as a separate space, which we are differentiating along with composite enteprise contextuality in operation space. And this is a decision is very different from information here. So when you talk about ChatGPT, it's an information AI. You can't lose for any business decision from ChatGPT. We can only take some information and converting information to knowledge and knowledge to decision is a 3-step process of the AI. And our 7 years investment in AI, if you separate the aroma, it should be most valuable company in a global marketplace from that perspective. So this is the platform, which I mentioned in the beginning that fabric platform on that platform I described in eMACH.ai substantially. That's giving entire boost to the ad on the [indiscernible].

[Amit Chandra, analyst]

And also you mentioned about the AI thing. So are you selling AI as a separate capability? Or are we embedding AI into our existing products and platform?

[Arun Jain, executive]

Yes. We are selling a separate product like magic. ESC, is a separate product for the ESG. Norges Bank $1.8 trillion to $1.3 trillion on management. It's a separate correct. So [indiscernible] can highlight more on that.

[Vishwanath Prabhu, executive]

So I'll -- thanks for that question. Let me sort of explain it in 2 different ways. One is MACI. We heard a lot about eMACH. I think the combination of eMACH.ai, that is the architecture along with the AI intelligence is embedding this intelligence into our product lines in a way in which the customer can actually achieve a much higher level of AI implementation, whether it is in hyper automation or in personalization. So I think, for example, I'll give you a wealth perspective, right? So from wealth -- and as you probably have already heard, we won an award for the most exceptional usage of AI across Spain Asia, which as Asia and India, from the wealth briefing awards. And one of the interesting things is MACH gives you the composability that Arun mentioned of being able to compose for different segments, different product capabilities. For example, we've just recently gone live with one of the largest private banks in India. They are using wealth for this first part of the launch is about mass affluent wealth. Now clearly, we all know that the penetration of mutual funds in India is growing significantly. And how do they actually provide a technology architecture. And by the way, this architecture is on the cloud. It's on AWS. And the scale is very large, the ability to actually consume our eMACH architecture for wealth, along with the AI components that can actually make a difference to seamlessly deliver either do-it-yourself capability or a very personalized capability for the customer is one sort of example of how we can actually consume for different segments, whether it's mass wealth, whether it's ultra-high [indiscernible] private bank. So the architecture gives them the power to be able to consume for different clients, different products and different capabilities and experiences. Some of them are driven by financial advisers or relationship managers, so much just do-it-yourself. So I think that's the power of the combination of intelligence embedded in what we would sort of say, embedded AI for wealth. Similarly, in the U.S. insurance, the underwriting insurance, recently gotten a -- had a underwriting -- they don't have a quadrant for underwriting, but they have a very detailed paper underwriting. And like design came out as probably the best digital engineered underwriting platform for using AI. There, we embed data in such a way that the underwriter can actually improve his speed and decision-making quality. And therefore, we've embedded AI into the underwriting workbench. So not only is it operationally efficient, but more importantly, it brings intelligence actually into the product for different lines of insurance business. So coming together, it's a good point here today in the market where it can be a huge difference to improve both operational efficiency as well as helping the client achieve our revenue targets and compete more efficiently with their own competitors.

[Praveen Malik, executive]

Next, we have Mr. Rahul Jain from Dolat Capital.

[Rahul Jain, analyst]

Firstly, my question is if you look at the commentary that we hear from a lot of services companies regarding the spend cuts and discretionary cuts by the banks versus what we see in our case for software companies. The view is quite divergent. So my 2 questions here. One, is it that bank now finally realized the importance of investing into core technology, which is keeping this as a priority aspect for them right now. Or is it also a function of we being more present across global market, which means that our exposure to more troubled economies are less, and that's why it reflects into a better growth for us while services businesses are more concentrated to 2 or 3 markets, which are in pain?

[Arun Jain, executive]

Very good question, Rahul. It's pointing the right thing. So not on the IT spend, which has gone up in the last 3 years, which was the net increase happened in last year was unnatural. Discussed to me, I mentioned in one other call, it was like a [indiscernible] digital, due to the digital, which looks nice on the face of it as makeup, but you don't make it change infrastructure digital such as still you need to make a change in data design. You need to make a change in a data layer, you need to make a change product. You need to make a change in a process here, on or to go together. So your question is a spend COVID happened and everybody wants to sit from go. They did a very quick and dirty solution, and they wanted hundreds and hundreds of people to solve that problem. So it's a good for Indian company that we made a lot of money out of this common statement of [indiscernible] digital. Now [indiscernible] digital structure digital, which Manish was mentioning, sectorial and the deal which we run in Asia Pacific Bank with Accenture. That's a success change. We are looking for a business transformation to digital transformation to the data transformation as we come together, and that is the deal value multitech 5x compared to the [indiscernible] solution where the deal value is limite dto 1. So that's the right analysis you had around not for there's no option. Electrical vehicles, there's no option for any -- all of us not to go to electrical vehicle. When we make a decision, it is your choice.

[Rahul Jain, analyst]

Right. Right. Secondly, from a market perspective, do you think India being now becoming very center stage from a global demand point of view in many, many industries? Do you think that would be true for your business as well? If yes, then what's the strategy out there?

[Arun Jain, executive]

[indiscernible].

[Rahul Jain, analyst]

Yes. Even if you look at what's happening, other kind of credit proliferation is what the regulator is now pulling into the UPI ecosystem or small consumer loans or banking on bank, data-based collateral. These kind of things are now coming with lot of NBFCs and banks are getting into the digital solutions with the lending partner, partnering the lending or fintechs rather. So one side of the story is where these companies would simply partner with fintech to distribute their lending solution or BNPL solution. And the other aspect of the story would be where banks will try to modernize their solution and try to do it directly like what possibility Bajaj is doing in India? So from that context, you think credit being a center stage aspect in India, is that leading to a lot of opportunity here?

[Arun Jain, executive]

Yes, that's true. I think the 2 things are around. I think this is the question here. We are under mine security issue of the banking solution. Let me take out fintech players a lot of people as it in India, like STC ICC all taking a holistic decision of buying the right solution at the right pricing. Today, still India, and we are not investing sufficiently on the cloud technologies. They are not reverting into structural changes. And security is so complex topic in eMACH.ai world that we are undermining the investment, which required in -- there are almost 170 elements are there in security architecture, how you buy the security along with the transactional work, which you do. And that's there -- still, I would say, India will go through 2 phases of investment. One fell investment as a [indiscernible] solution. And then the second phase will happen in structural solution.

[Rahul Jain, analyst]

Okay. So at best, we will see the first [indiscernible] had one where our software companies would have a limited participation, but then we may have a larger piece of the cake eventually?

[Arun Jain, executive]

Eventually.

[Rahul Jain, analyst]

Yes. So -- and the last piece from my side, which is related to wage or any other investment. If you want to say that from the current base, what are the investment required for this part of the -- later part of this year in terms of wage correction or people investment or any other investment from a cost point?

[Arun Jain, executive]

Fortunately, because software industry is in trouble, we are beneficiary of that storm. We don't that one on that particular thing. So -- but on the other side, on the investment side, just not to take it likely, your question is that how much is the forecast on the cost structures. Cost structures are stable now. Last year, our prospects have become unstable because of COVID time and the industry issue, which has happened. Our investment will be distribution. Our focus is 3Ds, distribution, distribution and distribution. That's what we are now looking at it, hence spending time on it. So we are in admin team within the U.S. starting from Monday. So [indiscernible] is sitting in New York right now. So our focus is deep on distribution right now.

[Rahul Jain, analyst]

Right. And this increment, if what -- maybe whatever correction needs to happen is already baked into the current cost run rate at this point?

[Arun Jain, executive]

At this point of time, yes.

[Rahul Jain, analyst]

Okay. Okay. That's it from my side. Congratulations to Venkat for the new role and also congrats for [indiscernible] for this position.

[Praveen Malik, executive]

Next, we have Mr. Narendra. Okay. he's not there. I think he's left, it looks like. Then Arun, we have only the 2 follow-up questions. There's no new questions. Can we take them?

[Arun Jain, executive]

Yes.

[Praveen Malik, executive]

Mr. [ Anil Tulsiram ]?

[Unknown Attendee]

Yes. I have again, 2 questions. First, I understand existing customer base accounts for almost 80% of your revenues. So what I want to understand is what happens at the time of renewal. So how easy this revival are or again, we have to go through the RFP or other things? Or to put it in another way, how easy or difficult is for the customer to switch to another vendor? And what are we doing to make these customers more sticky. That is the first question. And the second question is around 2021, we spoke about cross-sell opportunities that we will go deep in the top 10% of the clients. So what's the progress here? That's the 2 question.

[Arun Jain, executive]

Manish, woud you like to answer?

[Manish Maakan, executive]

I think like Arun briefly shared, we are tracking the top 10 banks in each of the markets and what is our -- we today have the top 4 of the American banks, top 7 of the 10 European banks, top 7 of the 10 Middle East, African banks topped 9 out of 10 in India, 5 out of 10 in -- and this consistent focus right now to be able to do cross-sell of each of our products. difference between us and some of the other vendors is those term contracts our renewal goes in, because they are not -- they are just selling the license and they get away and they're not partnering in the transformation of the bank and the growth of the bank, that's when the RFPs kick in. We've consistently been sharing. We are regularly upgrading our products and capabilities with our customers. So we face less challenge from that perspective. There are sometimes you have from a procurement process, there's a closed bid done just to ensure that compliance processes are taken care of. Our journey is to be with long term for customers, it's a 15-, 20-, 25-year journey. And we have last time also shown some of our customers, the lifetime revenue, we're coming from that. So it is always consistently keep investing in customer success. You don't come -- when the moment comes to renew the contract, we are not then letting procurement takeover is an extension of what you're doing.

[Praveen Malik, executive]

Then we have a follow-up question from Vivek [indiscernible].

[Unknown Attendee]

Yes, sir. My question is on the U.S. Last year, Arun said, we have lost 2 deals. And given the current conditions, do we expect a similar growth rate in last year, I think [indiscernible] 50%. And how is the outlook on that -- both the time to closure and also the insurance partner and Intellect A partner, which were very positive last year?

[Arun Jain, executive]

We are as positive on Intellect AI, it's more positive on Intellect AI on U.S. growth. U.S. with a setback on the stores, we are looking at North America and the market. So Manish [indiscernible] and U.S. together. So from my market, we have a good potential and USD 11B. So at least this year has started very well all in the U.S.

[Manish Maakan, executive]

Canadian reasonably well, and you just announced that for 1 of the large Canadian banks, the USP so we're doing -- we were doing the Canadian now we're doing the U.S. side of it also.

[Unknown Attendee]

So the things are not like because the last quarter because of the SPP crisis, you were more ankles why I was just trying to understand the outflow.

[Manish Maakan, executive]

We did lose 2 deals. First Republic has become JPMorgan. So we were doing some work for First Republic. So it has gone into becoming JPMorgan. We're running that platform. We were already working with JPMorgan before. So it gets our relationship the pop side is with our relationship with JP has become a little better -- bigger, sorry. And -- but the commercial revenue loss on these 2 large deals would have given us another bump in this quarter, but that's the game all managing risk and portfolio. And I think as compared to some of the other software service providers you're seeing, their dependence on U.S. is very high. We've always wins always talked of a portfolio, which is balanced across products as well as markets that hedges us from these seasonalities. It does give us a bump on the road, but it doesn't create a panic that we have to stop hiring and have to get rid of people, have to create panic.

[Unknown Attendee]

So Intellect A, we grew 50%, like you said last year, sir, this year also. Last question, sir.

[Arun Jain, executive]

It's growing substantially, how much we come in the books of account because Intellect AI business comes as a SaaS model better the multi business, but these ideas are increase. So we are even double-digit million dollar lease in Intellect business, which will be -- we are at least 7, 8 deals are there. This is the double-digit million, some do $10 million to $20 million over the next 5 years COC reveal of the knee. So those deals, we are now getting Intellect AI.How much will be translated that will come between 15% to 20% percentage.

[Praveen Malik, executive]

Arun, can we close the call now?

[Arun Jain, executive]

Yes, please close it.

[Praveen Malik, executive]

Thank you all the participants for participating today. In case you have any follow-up questions, please do write to us or call us [indiscernible] reply the same. Thank you, now we can log it off.

[Arun Jain, executive]

Thank you.