Latent View Analytics Ltd
NSE:LATENTVIEW
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
435.65
559.7
|
| Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
Latent View Analytics Ltd
Earnings Call Analysis
Q1-2025 Analysis
Latent View Analytics Ltd
Latent View Analytics opened fiscal year 2025 on a positive note, achieving revenues of INR 179 crores, reflecting a 4.2% sequential growth and an impressive 21.1% year-on-year increase. This growth can largely be attributed to solid existing client relationships, particularly in the technology and BFSI (Banking, Financial Services, and Insurance) sectors.
The company added eight new logos in Q1, including three potential marquee clients, of which two are Fortune 500 companies. Although these accounts began with smaller contracts, they hold substantial promise for scaling up operations if initial projects deliver satisfactory outcomes.
While Q1 showed growth, the EBITDA margin saw a dip due to wage revisions, rising from a 10% increase in India and 4-5% in overseas locations. The company's EBITDA stood at INR 38.3 crores, decreasing 5.2% quarter-on-quarter but increasing by 36.3% year-on-year. Future margins are expected to improve, with the management targeting a rebound to 23% by Q3 as one-off costs diminish.
Despite a general sluggishness in the macroeconomic environment, the demand for Gen AI and predictive analytics has enhanced. The pipeline for Gen AI holds promising prospects, with over $4 million in potential deals approaching closure and many more in various stages of development. The company anticipates that strong demand from North America will continue while Europe lags behind.
The successful acquisition of Decision Point, effective July 1, brings significant synergies and unique offerings to the table. The integration is underway, with expectations that earnings from this acquisition will start reflecting in Q2 results, particularly enhancing the consumer and BFSI verticals.
Looking ahead, the company forecasts revenue growth in the range of 16% to 18% for FY '25, with an optimistic outlook that better-than-anticipated results could emerge if pipeline deals progress swiftly. While the confirmed work already estimates over 10%-12% growth, the final results will largely depend on successful deal closures and the efficacy of account management going forward.
You don't have any saved screeners yet
Ladies and gentlemen, good day, and welcome to the Latent View Analytics Limited Q1 FY '25 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Asha Gupta from E&Y Investor Relations. Thank you, and over to you, ma'am.
Thank you, Neha. Good evening, everyone, and welcome to Q1 FY '25 Earnings Call of Latent View Analytics Limited. The results and presentation have already been mailed to you, and you can also view them on the website, www.latentview.com. In case anyone does not have the copy of press release or presentation or you are not marked in the meeting list, please do write to us, and we will be happy to send you the same.
To take us through the results today and to answer your questions, we have the CEO of the company, Rajan Sethuraman, whom we will be referring to as Rajan and we have the CFO of the company, Rajan Venkatesan, whom we will be resting to as Raj. This is just to avoid the confusion while doing the transcript.
We will start the call with a brief update on the business, which will be given by Rajan and then followed by financials given by Raj. As usual, I would like to remind you that anything that is mentioned on the call that reflects any outlook for the future or which can be construed as forward-looking statements must be viewed in conjunction with the risks and uncertainties that we see. These risks and uncertainties are included, but not limited to what we have mentioned in the prospectus filed with SEBI and subsequent annual report that you can find on our website.
Having said that, I will now hand over the floor to Rajan. Over to you, Rajan.
Thanks, Asha, and thank you all for joining the first quarter earnings call for financial year '25. I hope you all had a chance to go through our presentation and the press release. Very happy to report that we have started off the year on a fairly strong note. As you all know, the macro environment continues to be challenging and you would have already started looking at results that have been shared by other public listed companies in the IT services space.
We are very happy that we were able to grow our revenue sequentially on a quarter-on-quarter basis, 4% plus and also on a year-on-year basis, 21% plus. Our EBITDA margin came in a [ tad ] lower in comparison to the last quarter, mainly on account of wage revisions and costs that we had incurred on these are for people in India as well as people in the U.S. In general, I would say that the growth continues to be a little on a muted note given the sluggish macroeconomic scenario.
A lot of the growth that we are witnessing is coming from work that we do for our existing accounts, both existing as well as new groups and new stakeholders. New logos, I would say, are still harder to come by. And even when we win that, it is starting off on a much smaller scale in comparison to what you were experiencing maybe 1.5 years back. That being said, there is a lot of interest, especially on the back of new technologies in relation to artificial intelligence and Gen AI and predictive analytics work, and there are a lot of conversations that are moving in the right direction.
We did win quite a few marquee logos in this quarter, and some of them we were able to start off at a fairly large deal of close to $0.5 million or more. And we saw such traction with some of our existing accounts as where we kicked off a fairly substantial engagements for existing as well as new stakeholders. However, I would say that in general, when new initiatives get kicked off, we see that the quantum and the size of the initiatives tend to be a bit more experimental and smaller.
Specifically on the Gen AI front, there has been a lot of experimentation that has happened over the last 12 to 18 months. And in our recent conversations, we hear a lot more positive orientation in terms of now going from pilot and experimentation to production.
Many of them are contemplating how will they prioritize some of the initiatives that have grown successful in the experiment stage, and there are quite a few conversations where they are looking to move to the next stage of production. At this point in time, our Gen AI pipeline is also looking fairly strong over $4 million worth of conversations that are at a closure stage and many more in the top stages of the funnel. In general, I would say that the [indiscernible] signal. We see a bit more of that in North America. Europe, I would say, is still a little behind the curve on that one. But in Europe as well, there are quite a few conversations with larger Fortune 500 companies, which are in the Gen AI space as well as in the protective [indiscernible] state.
The other important update I have for you is that we have now completed the acquisition of Decision Point. The integration efforts are on in full swing. The teams both from Decision Point as well as Latent View we are now working a fairly collaborative fashion in terms of taking value propositions and solutions that each of us have into our existing and prospective clients as well. There are at least half a dozen conversations where we believe that the joint capabilities will be of significant importance in terms of new work that these accounts are looking to do.
At this time, I would say that for the year, full year, depending on how things pan out in the second half of the year we could see a growth of somewhere definitely close to what we did last year, which is in the 16% to 18% range. But depending on how the second half of the year pans out, it could come in much better than what we signed in the last year. We are continuing to double down on a part of investments that we have started making in our marketing analytics horizontal partnership with Microsoft Fabric, Databricks, the NVIDIA partnership and so on.
And at this point in time, we are also looking at repositioning some of the investments that we have in the front end to the channels and the areas where we are seeing more tractions be it terms of the partnership or be it in terms of the specific capabilities that we intend to take into the market.
Overall, I would say that there is a general sense of positivity and optimism at this time within the client ecosystem that we are in conversations with, and that is also reflected in the sentiment within the company in terms of what we can accomplish this year.
With those opening remarks, let me hand over to Raj to take you -- take you through some of the financial details in a bit more detail.
Yes. Thank you, Rajan. Good evening, everyone. Welcome to the Q1 FY'25 Earnings Call. As Rajan mentioned, we actually started the year on a positive note with a strong performance in Q1. For the quarter ended June 30, we closed with revenues of close to about INR 179 crores, which reflects of 4.2% sequential growth and a 21.1% growth on a year-on-year basis, right.
Most of the growth, as already explained by Rajan was driven by, I would say, existing relationships that we've had. But I think just to add to what Rajan also said, while some of the new logos that we have signed up for, while they may not have started off on a fairly large sort of contract value each of these logos, I think at least three of them that we've added in this particular quarter have the potential to become fairly large size opportunities, if we deliver the initial piece of work well, right? So these are -- two of them are Fortune 500 logos of the three that I spoke about.
So definitely, from a logo addition standpoint, these are the right type of logo, logo that we would like to work for. So that's again a positive aspect. On the existing relationships, again, bulk of this revenue increase came from our clients in the technology vertical. But more importantly, I think this quarter, we also saw a good amount of expansion that happened in the BFSI vertical, where some of our existing relationships, we've been able to expand into those relationships and really sort of grow them and that is reflected in the contribution that you see from the BFSI sector as well.
For this particular quarter, they were -- BFSI contributed close to about 10.4% as opposed to the 8-odd percent level in the previous quarter, right? Our other income for this particular quarter stood at INR 17.4 crores, an increase of 10% on a sequential basis. This increase was primarily driven on account of a ForEx loss that we had to book in the last quarter, which was offset by a gain that I would say or a lesser loss in this particular quarter, the quantum of the loss that we booked in the last quarter was significantly higher. That number has come off. These losses are not operational in nature. They are more losses that are driven by intercompany or group company loans that we've granted to our subsidiaries overseas, the corresponding effect of which is booked under other comprehensive income.
So there is one leg that get accounted for in other income and the other leg goes to other comprehensive income. And so this particular quarter, that loss being lower, we were able to see an expansion in other income.
Our EBITDA for this quarter stood at INR 38.3 crores, a decrease of about 5.2% in absolute terms on a quarter-on-quarter basis. But on a year-on-year basis grew by about 36.3%. As indicated last quarter, and we had -- we sort of emphasized on this when we did the last earnings call, wage hikes in the range of 10-odd percent for India and about 4% to 5% were given out for overseas regions, were given out effective [indiscernible]. And that did have an impact on our margins for this particular for Q1.
Incrementally, there were higher spends owing to cyclical visa costs that are typically booked in Q1, where the H1-B lottery happens. And we attribute to the U.S. government fees and the attorney fees paid in relation to applying for H1-B Visas is typically booked, in Q1, and that had an impact as well.
On top of that, we also had incremental advisory and professional charges on account of the acquisition that we closed in this particular quarter, the incremental Visa plus the professional and advisory fee contributed about 0.9% of the sort of EBITDA contraction and wage hike contributed to about 1.2% of the EBITDA contraction. So of the 2.1%, 1.2% came from [indiscernible] rates and 0.8% came from higher visa and professional and consultancy charges.
The second bucket, which is the visa and the professional fees, we expect that we will not be incurring at similar levels in the quarters to come. And so therefore, the impact of that should definitely go away in the following quarters. Our PAT for this quarter, right, stood at about 38.9%, reflecting a decline of 13.9% on a quarter-on-quarter basis. Although it grew by 18.2% on a year-on-year basis. The prime -- one of the primary reasons for the decline in PAT, of course, besides the drop in EBITDA that we've already discussed is attributable to the [indiscernible] for our units going away. And this is something again that we had indicated in our last earnings call.
Incrementally the last year, we also had the benefit of fairly large tax breaks that we got on account of excise of [indiscernible] in our U.S. subsidiary for the full benefit of which are almost -- the 80% benefit of which was booked in the previous year itself. We only have a residual 20% benefit that we're able to book in this year and that's too we will be doing that on a staggered basis on -- or a pro-rated basis over the course of the year. Both these two main [indiscernible] are ETR for this year, and this is -- this should be highly reflective of how our ETR will be going forward as well, will be closer to the 20, it will be between 24% to 25% going forward, right?
So that said, and we believe we are already at those levels in Q1. So this effective tax rate should continue going forward. In terms of industry or vertical offerings, the technology [indiscernible] to be the strongest vertical as of that has been the case in historical periods contributing about 70.9% in the current quarter, followed by industrials at 11.5%. And financial services that I already mentioned, contributed 10.4% followed by consumer and retail.
Now, please bear in mind that consumer and retail for this quarter -- specific quarter does not include any results of vision point neither does the financial results of the company. Like Rajan mentioned, while we closed this acquisition as of 1st of July, we will be consolidating the results of Decision Point with our -- with the [indiscernible] result starting Q2, right? And so the following quarter is when you will see full impact of the merger -- of the acquisition.
We expect that the synergies that we will be able to generate, owing to the acquisition should have a positive impact on the consumer vertical. Not just the consumer vertical, we are seeing significant traction in industrials as well as well as financials of this technology to a lesser extent, but definitely a significant joint go-to-market efforts are underway in consumer, industrials and financial services, and we believe that there will be significant synergies that should come from the acquisition itself.
In terms of the overall geographies [ conflicts ], U.S. continues to be the dominant geography, contributing [ 93.7% ]. Europe is still at 1.3%, continues to be [indiscernible] right? But another good news is, again, with Europe is we are adding several small marquee logos, right, each of which we hope to convert and make them into fairly large opportunities. But still the traction in terms of the deal size continues to be fairly small and sluggish as far as Europe is concerned.
Overall, our balance sheet continues to be strong, excluding the IPO money. The cash and cash equivalents stood at about INR 1,133 crores as of 30th June. But however, with the acquisition of Decision Point that was concluded on July 1, close to about INR 330 crores after cash balance will be invested for closing this acquisition, and therefore, you will see some impact of the lower investment balance that we will carry on the other income, you will be able to see that in the following quarter.
In terms of our overall headcount, we stood at about 1261 at the end of the quarter. We are very happy to announce that we honored our commitments to onboard all our campus hires as we speak right now. We onboarded close about 60-plus people in this quarter, right? But while on a net basis, you will see a decline in the head count for this quarter compared to the last quarter. That is also attributable to typical attrition that we see in Q1 as we announce our wage hike as well as bonuses, we do see a spike in attrition in Q1. And that's been the trend historically as well, and this year is no different.
In terms of the outlook, I think Rajan already spoke about the revenue outlook. In terms of the EBITDA margin, while we've got close to about 21.5% in this particular quarter, we do expect some of those one-off costs in relation to these as well as the other professional charges to go away in the following quarters. We also do anticipate that as revenue continues to grow through the course of this year, we will be able to see some of that operating leverage sticking into, we should be back at those 23% odd levels by Q3 is the estimate at this point in time.
With that, I'm going to be handing over -- handing it back to Asha, and we can open up for Q&A.
[Operator Instructions] The first question is from the line of Vimal Jamnadas Gohil from Alchemy Capital Management.
My first question is on our progress that we've made on Gen AI. I think you mentioned that we have been sort of looking at a lot of deals that are now getting converted to pilot. I just wanted to get a sense on what is the nature of these deals? Is it more towards data engineering, cleaning up data for enterprises who are looking to develop their own LLMs? If you can just help us get a sense on that.
Another question is on the growth in our top 20. That seems to be a bit muted this quarter. Most of the growth has come from x of top 20 accounts. If you can just highlight the reason for the same?
Yes. Vimal, thanks for the question. I'll answer the first one, and then I'll have Raj address the second question. The Gen AI opportunities that we are pursuing, they tend to be across two, three different categories, right? On one hand, we have opportunities related to analyzing unstructured data, data that exists in the form of contract documents, process flow charts and the like, and getting insights out of that right in terms of how our contracts are set up or how they're performing, what kind of discrepancies are there. In general, any kind of unstructured content, right, be it around procurement, be it around marketing, sales. That's one type of work that we are doing.
The second category of work is generating new content. And this new content could be content that is used for our promotional campaign, for example, these could be content for personalized marketing and discount program, for example, right? So this is the second category where Gen AI has been used to generate new content that is personalized and tailored right, depending on the context.
And the third type of work using core Gen AI solutions is analyzing structured data, and this could be data from the client organization, supply chain or from their marketing department or it could be from sales or customer experience, even from HR, there is a very interesting conversation that we are having right now in terms of using Gen AI to improve the employee experience and define what we call the employee segment of one, right, looking at employee lifetime value.
So this is the third category where you are pointing the Gen AI LLM Large Language Models structured data and answering questions about that data as well as any analytics that exist on the data without any kind of hallucination, okay, it means that you are using only the data from the enterprise to answer those questions.
So those are the three types of work that we are doing. A lot of it is currently a work that we are currently doing at least is more on the analytics side of it as opposed to the data engineering side of it. However, we do see that some of the conversations have been moved from a pilot POC to a larger enterprise kind of scale application, it's been necessary to bring together data from across the enterprise, both structured and unstructured and create the right kind of a foundation before you can apply the LLM in front. So that's broadly the kind of conversation that we have had.
So Rajan, just one follow-up there. talking about getting insights from the data that you already have and analyzing structured data and helping inter-department movement of the same. How is it different from the work that we did in the pre-Gen AI era?
So the Gen AI enables you to do this at a much faster rapid scale and turnaround. There is a huge amount of productivity uplift that we can see in terms of performing the nature of that work, it is not necessary for you to go into writing the sequels in some instances, even the modeling. For example, the latest launched from Azure, right, the AI studio that they have launched that allows you to actually use three defined components that are available for you to do a lot of this work and without the need for complicated assembly of the different components as well as iterating through all of them, right, in terms of what works.
The Gen AI platforms and the technologies that are available, allow you to execute many of these in a seamless fashion, while at the same time, getting the benefit both in terms of computational speed and processing power reduction as well as how you store from a memory standpoint.
They are also allowing the use of different types of LLMs. You're not bound to one LLM. So that's what the platform that are available allow you to play around this different kinds of LLMs. So basically, if I were to summarize, it's really the speed at which you're able to execute the same type of projects and the options that are available for you to experiment and then figure out the solution, right, that generates the best kind of response for you with the least amount of cost both from a computing as well as from a memory standpoint.
Understood, sir. And sir, on the top 20, x of top 20 client growth, if you could just answer that one?
Yes. So specifically on this question, right? But you will see that actually, our growth in the top 5 as well as the top 10 right. I think there has been growth in the top 5, in the top 10. I think you're specifically referring to the 10 to 20 bucket. Is that correct?
I'm just looking at the top 20 and then x of top 20. That's all.
So you will see that the top 20, right? I mean, so if you look at the top 5 and the top 10, I would say that there has been growth in those buckets. Specifically, in the top customers that is between 11 and 20, right? There were, I would say, a few one-off projects that we had executed and some of these were fixed together in Q3 and Q4 right, which we delivered and once we delivered those pieces of work, we didn't have been follow-on work, they didn't get extended, for instance, right. We didn't get signed additional work on the back of some of these one-off projects that that we executed.
So that is primarily the reason why that you would see a small dip in the 10 to 20 bucket. But outside of that, you are right, there have been close to about 8-odd new accounts or new deals that new clients that we have signed on in Q1 each of which contributed a fairly meaningful number, but they are still not very, very sizable in terms of their overall -- at clients, they're not sizable clients, right?
But there was a meaningful chunk of revenue that we were able to generate from some of the new logo signings which also meant that the growth came outside of the Top 20. So your assessment is correct.
And sir, last question, if you can just help us quantify the M&A advisory fees for the quarter?
So the M&A advisory fee for the quarter would be close to about -- in terms of rupees that we would have paid close to about -- I think the number is between INR 9 million to about INR 1 crore that would have paid in this quarter.
[Operator Instructions] The next question is from the line of Mohit Jain from Anand Rathi Group.
Sir, I missed the revenue growth outlook. So one was why Q1 was slightly slower. And then in terms of demand, what are you seeing in the near term like 2Q and 3Q?
The growth outlook for the year, Mohit, it continues to stand at the 17%, 18% mark that we had talked about. In fact, if I take a look at the probability weighted pipeline that I have, that number looks better, but some of them are still at the 25% and 50% profitability. So we are -- we just want to see how this pans out, right, in terms of actual conversations coming through.
But at this time, there is confidence in terms of getting to that 18% kind of a number, right, from year-on-year for the full year. Quarter 1 itself has been a bit of a slower start in comparison to what we anticipated when we were in quarter 4 of last year. But that is largely because some of the deals that we were expecting to commence, commenced a little later in the quarter. So instead of getting started in the month of April itself, we have had to wait till end of May or even June in terms of the vertical getting started.
So we are seeing that uptick from that will be there. And we also see some closures happening in this quarter itself, which will contribute to this quarter and beyond. So yes, so that's the overall commentary. I mean [ usually ] confidence on about 17%, 18% for the full year could get better if things unravel and get [indiscernible] faster.
And this was primarily in high-tech vertical, the slower deal numbers?
No, Hi-tech has been okay, I would say, in fact, I think the sluggishness has been in some of the other sectors in industrials, in consumer, in retail, some conversations, for example, these are taken a bit longer. Overall, with technology, we are seeing the traction seems to be picking up at this time.
Okay. And now earlier, we were looking for around 23% margin for the full year. But now your outlook is 23% by end of the year, like 4Q?
I say if we get to the top end of the 18% to 20% growth, so while we are projecting 16% to 18%, Mohit, if we get to the -- we're able to go beyond the 18% growth for this year, I think we should be able to, on a full year basis also to get to the 23%. But ultimately, it all depends on the -- because most of the investment on the SG&A side are all fully baked, right? I don't think there will be any incremental investment that will kick in.
Now, so most of the growth that we will deliver will all sort of flow through the EBITDA. But if you're able to stick to the higher end of the guidance and maybe go a little bit beyond, we should be able to deliver a 23% on a full year basis as well. But right now, our sort of comfort level is on guiding that we will be back to the 23% by Q3.
And then Q4 if you are able to do slightly better numbers then it could be even higher in Q4.
This is without including acquisition?
That's correct. This is -- all of this is just organic. So inorganic, we will start guiding once we start consolidating these numbers, Mohit, from Q2 onwards. At this point in time, all the projections that we are giving is all organic.
Right. And they are operating at 30% kind of margin, right?
So they will be -- yes, they are operating at 30%. That's correct.
So we should take into account for wherever the consolidation happen?
That's correct. Yes.
The next question is from the line of Karan Uppal from PhillipCapital India.
First question is on BFSI. So BFSI has been doing very well, so congratulations on that. If you can elaborate on what sort of projects you guys are winning? And what's the competition like? And which are the end clients in BFSI, given that BFSI is such a large vertical. So are you serving the big banks capital markets, cards and payment companies, insurance companies. So if you can elaborate, that will be helpful.
Karan. The focus for us in BFSI till date have been largely related to the [ fintech ] and the nontraditional space, right? So trading platforms, payment mechanisms, investment, asset management investment companies. These are the ones that we are focused on. While we are currently pursuing opportunities with a few brands and insurance companies, there are yet to take off [indiscernible]. I mean -- so therefore, there isn't much happening, right, in that space.
All of the action has been in the other areas that I talked about. And there, it has been a fairly broad spectrum. There's quite a bit of work that we have been doing around, just a progress financial compliance analytics type of work. There is work that we do quite a bit related to customer experience and marketing analytics. There are projects that have been kicked off on the underlying data engineering and data platform requirements for the asset management companies.
We are also doing work related to some Gen AI areas. In fact, one of the conversations that we are now having with the bank, it's about using Gen AI for analyzing the filings that companies do with the exchanges and the central authority. And how can you use Gen AI to come up with financial analysis of those companies, right? So that's the kind of problem statements that we are examining.
So a fairly broad spectrum of work. But I would say that still they get -- still it has been largely in the nontraditional space. We are spending time and effort on the banking and the insurance space. The expectation is that we will have a few that we'll be working with it in the next two to three quarters' time frame.
So, Rajan just a follow-up here. So the growth -- sequential growth has been in the range of high teens or even more than that. So do you expect this momentum to continue in the [indiscernible].
Related to -- I mean, the overall growth of the company, right?
No. I'm talking specifically for BFSI. For last three quarters, it's -- the growth is almost 20% on an average. So do you expect this to continue or it will moderate?
No, no. We are expecting it to continue. In fact, we are expecting that it should get better in the coming quarters. In fact, one of the discussion points that we had in the Board meeting today was further doubling down on the domain expertise that will bring even more domain-specific solutions. I mean I talked about the broad range of areas where we are working. But there are of two specific value propositions that we have identified as where in we want to double [ domain ] even more.
So there will be some investments that we'll be making on shoring up on the domain expertise in that area. And that coupled with also using Gen AI and some of the other areas with the traditional sectors, we are expecting to see more traction in India.
If you remember, Karan, BFSI was one of the areas that we've identified even during our IPO in terms of doubling down and building out for the opportunity. While the market has been a bit sluggish, we also use the opportunity to understand where we are strong and what we can play at. And at this point in time, there is increasing confidence that we'll be able to pursue the opportunities that are coming our way in that space.
Okay. So its a bit [ increasing ] because you are also lowering the guidance. Last time when we spoke, you mentioned about 18% to 20% kind of growth. Right now, you are talking about 16% to 18%, given that most of your large verticals like BFSI in technologies where you have spoken about positive outlook. So where is the stress coming in your portfolio?
No. I would say that the sector where we are concerned at this point in time, it's really only retail. We are seeing positive momentum in all of that. In terms of just the overall growth trajectory that we are indicating, we are just taking into account that while the conversations are underway and there is a great deal of interest, it does take time for clients to sign up even for the first pilot or initiative. And even when they do that, they are starting off a little small and not at the kind of ticket prices that we were anticipating.
So I'm just being cognizant of all of that is happening. As we said earlier, right, during my opening remarks, things start getting better in the second half of the year, we would be able to do much better than the 17%, 18% right, that we are talking about at this time.
And last is on Europe. So Europe, basically, we had invested in leadership as well as in [ HNM ] in the past, but we are yet to see substantial results there. So what's the update on Europe?
So Europe has been a tough situation. I mean, in general, the degree of conservatism that prevails in Europe, given the current macroeconomic scenario is definitely a lot more in comparison to the U.S. On top of that, Europe is also a tougher market to break into, from a relationship standpoint.
The good news for us, though, is that at this point in time, there are at least half a dozen logos that either signed up or we are on the verge of signing up, which are all of the right sizes. It has taken in quite a bit of investment and effort on our part even to get the first initiative, right, [indiscernible], all of them are talking about how the relationship can scale if we do the right thing.
On our end, I would say that the investments that we did at the front end in the sales and the business development some of them stand out for us and some of them didn't in terms of personal caliber, what they thought to the table, the solutioning approach that they were able to employ versus what the client was looking for and what we had to offer. So we are also learning from all of that experience and we are adjusting the model. Some of our people who we had earlier deployed from a sales perspective are helping with solutioning because that's where they're able to play a more impactful role.
So the expectation is that with all of this, we should start seeing some [indiscernible]. Raj mentioned that we are currently less than 2%, 1.6% or so in terms of contribution. If things go well, even in the remainder of the year, I would expect that contribution to double from the current fiscal and so. We should be approaching the 3% plus mark in terms of overall contribution as we close this year.
And if we have the right foundation clients, many of them do spend money on analytics and we would expect to grow with them in the coming quarters.
The next question is from the line of Nilesh Shah from [indiscernible] .
Yes, just to sort of zoom out a bit, I'm just looking at the industry structure as you had a really structured it in your DRHP, where you had sort of broken down the data and [indiscernible] a new pool, right, in these sort of four parts, you had enterprise data then these sort of three parts that follow from that, which are descriptive, predictive and prescriptive.
Now I just want to take your perspective, right? What -- if you were to compare how the market was before the advent of Gen AI and now, right? How do you see the -- the market shifting into these different pipes? The concern that we have is that you see a trend that more of the customer mind share and dollars are going towards the data engineering side, right, because you have a lot more data that can be processed?
And the second bit is that are the later parts of the value chain where companies like yourself would operate, are -- do you see any signs that companies may choose to either do them in-house or use some of these tools at scale that may sort of curtail the size of projects that firms like yourself could get. If you could share your thoughts on that, it would help.
Yes, sure. Thanks for the question, Nilesh. You are right in the sense that as the industry evolves and the activity of companies go up in terms of how they use data [indiscernible]. They will put you more complex and public problems, which require them to bring in data from across the enterprise, outside the enterprise necessitating a more sophisticated data platform. So there is definitely going to be a ton of work that happen on data engineering and data platforms.
And this is something that we are, we have anticipated and we have prepared for as well. I mean today, about 20% of our revenue comes from doing that type of work, we're expecting that percentage could go up in the coming quarters, in the coming years. In fact, one of the things that we discussed in some amount of detail in the Board today was about doubling down even more with specific partnerships that we have, adding people to front end the partnership channel directly in the market in the U.S. and also hiring people on the sales business development side, where it kind of connects with the PIO city organizations that will be undertaking the central data platform type of initiative.
So that is definitely happening. Now having said that, the data engineering and all of this work is not something that any organization would do in isolation. It is always as a means to an end -- and the end of this -- typically will be in the use cases that they seek to execute. And these use cases will -- while they will benefit from the advent of Gen AI and other kinds of tooling and technologies available, the scope and the opportunity there is it very watched.
I mean most organizations, even with using some of the tooling that is available, we'll only be able to raise themselves up to a certain kind of a level playing field. And when organizations do that. All that happens is the level playing field changes for a broad spectrum of companies within that. A technology like Gen AI will accelerate that process of creating the level playing Field.
But then you will have to look at the next level of qualifications and ramping in terms of how you use the information. The underlying analytics that we need to be done, the predictive, prescriptive type of work, the underlying analytics around connecting that between the business use case and the decision making. That will still be there to quite some extent. I mean I gave you the example of using Gen AI to look at financial statements and some of this investment TC, right, on how the companies are performing as an example.
Another recent example that we have encountered is how we can use generative AI to actually do fairly complex entry, market entry and market positioning type of analysis. Now we are been having conversations with the company that does this kind of work. But all that means is that, that tool and the technology will create a new level playing field with the work moving on to a more sophisticated plane, right, in terms of what you can do with that information.
So our philosophy and our expectation on this one is that there will be a lot more work that will happen on the predictive, prescriptive and analytics side. Some of the simple and [indiscernible] right, which is the look-back analytics and the business inside generation type of work, that could get commoditized and automated using the technology because that is well understood, you can avoid the problems for hallucination and stuff and so on, right, in those areas. So that will happen. But in terms of the decision-making and the optimization, the tooling and technology will create more opportunities to get on into a more advanced type of approach.
The next question is from the line of Pranay Khandelwal from Alpha Invesco.
Just wanted you to talk a little about the products that we have and also the product that Decision Point has [indiscernible] GPT. How's the adoption for those products? And if you can give a breakup also of the revenue from products versus revenue from services?
Yes. So I just want to -- I mean, I should say that we don't consider what we have built so far as products. I mean, I would best classify them as accelerators and solutions because we are not operating in any kind of a license revenue or a subscription type of a model.
Whatever we have built, we are typically using them in the provisioning of the services, right, that we bring to the table. So I talked about LASER or Gen AI -- or sorry, LASER or AI Penpal earlier, right? These are the Gen AI products -- also the solutions that we have, which help analyze either unstructured data or generate new content.
Similarly, our smart innovation solution, our connected new supply solution. I would say all of these are in the nature of solutions and accelerators that create a fairly good starting point for us, as well as nonlinearity in terms of effort that we need to expect. For example, recently, we completed a significant migration project for a large media retailer, media retailer that they are a retail company, but they primarily use television as the channel for the business. It was a significant amount of migration work and we were able to almost cut down 60% of the effort required using our MigrateMate solution.
However, none of these are solutions that we can sell or give away as a product and we still need to be in the mix in order to make use of that solution to deliver the services. On the other hand, we use GPT, I would say user product. They have been able to actually sell them, sell the GPT app subscription as a license model. So it's a bit of a first of a kind for us.
They have also integrated it very effectively with the Microsoft Teams environment. So therefore, deployment and usage also becomes fairly simple. There will be learnings for us in terms of taking some of those components and then making it possible for us to maybe evolve the solutions that we have, right, to our product level.
At this point in time, though, we are kind of fairly clear that overall strategy and philosophy for us is that we will continue to be a bespoke analytics, consulting and services organization. Product revenues any will be marginal in the scheme of things, and we will be using that more for creating the nonlinearity in the entry point right in terms of conversations. BeagleGPT has good potential. It's already generated million dollars of revenue, right, for the Decision Point in the last year.
And this year, if conversations are anything to go by, it could generate even more revenue. So we will continue to double down on that and then make further investments to see how we can continue to evolve the product asset.
The next question is from the line of Agam Shah, an individual investor.
So most of my questions have been answered though. A quick question on the opening remarks, you said that bunch of clients [indiscernible]. But it's taking time [indiscernible] from that. So where do you see very low the spending level increases or the getting more business from them? Can you elaborate on this thing?
Yes, sure. Thanks for your question. I think it's a matter of time. What has happened given the general uncertainty on the macroeconomic environment spending, discretionary spending that clients have kicked out are focused more on the newer areas and technologies like the generative AI type of solutions.
And obviously, in those areas they have been cautious, but they seem to understand what the technology support, what it can do for them. Therefore, the pilots that they have kicked off have been smaller. And this has been the case even with larger organizations. I'm expecting that as we pilot these results and they can see some direct benefit, right, either on the top line, bottom line, other metrics, then the appetite for expanding this will come in.
And we are also seeing softening in terms of the interest rates and potentially likely the macroeconomic uncertainties of unwinding. So it's just question of time. I mean our expectation at this point in time is that the second half of this year itself could see some of that uptick happening as clients move from smaller to larger initiatives.
Even in these new areas, some of the clients with whom we have been working for a longer period of time where the relationship three years or more, they have already taken that kind of an approach. One of the largest accounts that we've worked with, we were able to win a million dollar generative AI engagement, right, this year already, and we are executing on that. So I'm expecting that uptick could happen within a quarter or so.
So just last follow-up. Sir basically, what I understand is, so are all levers are in place in terms of hiring, in terms of investment technology anything. You just need the macro environment to subdue, right?
That is correct. I mean the good news is that even in this sluggish macroeconomic environment, we have been able to grow our existing accounts and bring in new logos as well. So that is giving us confidence that that's on the fact that there are multiple conversations and opportunities that we have in the pipeline that gives us confidence that once the sentiment improves in terms of starting to invest for the future. I think it could pick up pace pretty fast.
[Operator Instructions] The next question is from the line of Narayan, an Individual Investor.
Sir, my question is in the field of risk, management sir, so what are the major risks and challenges that you are foreseeing. And how are you planning to mitigate them in the near future?
Yes. Thanks for the question, Narayanan, it's a very broad question, of course. I mean, there are risks all the way from strategic type of risk to what one might encounter on the IT and cyber security space. From a business standpoint, right, if you have to just look at business risk, I think we typically look at two or three areas.
One is the risk related to general, the demand environment and the macroeconomic scenario. This is what that you've been seeing playing out over the last almost six quarters, right? When things have softened up and we are seeing that the growth rates are much lower in comparison to what we were anticipating, right before the downturn started.
And there the best difference is to keep investing in the right kind of capabilities and the tooling and equity so that our solutions and expertise makes sense even in that type of an environment. And I believe that, that is the approach that has actually stood us well in the last four to six quarters where we are continuing to grow, albeit at a lower rate in comparison to what we were doing earlier. But we have still managed to grow during those periods right in terms of quarter-on-quarter and year-on-year growth.
Another big glimpse that you typically see from a business standpoint is just the pace at which the technology is evolving. And the need to keep [indiscernible] of those technology changes and make sure that we are not only aware and we are able to learn all of the stuff, but they are also able to incorporate it in performing the work that we do for our clients and bring the best and the newest innovations and ideas that emerge from the advent of those technologies.
I think generative AI is a great example of that. And in fact, I was talking to somebody earlier today, and they were asking me do you have a generative AI practice. And I was responding to them saying that for the kind of work that we do and the industry that we are in, we cannot -- we cannot say that we have a generative AI practice because everything that we do have generative AI embedded right [ hidden ] in some form or the other whether it is around generative AI core solutions or generative AI with wrapper in the solutions and the services or that are improving our own productivity as an organization, right in the performance of the work.
So I think that's the second risk, and we need to stay completely prudent and then we need to be fast and adapting to all the new technology changes that are coming. The third is, in general, this area also lends itself to rapid commoditization and automation, which means that we cannot just keep doing work that we did in the past and the hope that the clients will continue to pay top dollar for that type of work.
We have to continuously keep innovating and finding new problem, more complex and [indiscernible] . I talked about how any new technology raises the level playing field, but the good thing is that it also raises and increases the visibility that we have. It's pretty much like climbing a mountain, the higher you go, the more it becomes visible to you and therefore [ doubles ] that visibility, right, understanding that we try and bring to the context that we are aware of more revamped problems and approaches and solutions, and we can take them to the table.
So I would say broadly from business standpoint so the thing. I mean I'm not talking about other risks like [indiscernible] risk, client diversification risk -- I mean there are any number of reasons. Of course, cybersecurity itself is a fairly big area in terms of -- because we deal with data and we have to be very careful about that. But those are all -- we obviously have awareness of what is happening and now we are putting in the right kind of mechanism.
I'm assuming that you are talking about businesses risk rather than this other [indiscernible].
The next question is from the line of Hasmukh Vishariya from Tata Mutual Fund.
Yes. My question is around the guidance and risk to that guidance. So I just wanted to understand that for the lower end of the guidance, what sort of deals momentum you have considered for the existing book of business, from the existing book of business, how much, let's say, revenue growth can come from and how much is built in from the potential, let’s say, deal conversion? And yes, yes, that's it.
Yes. So I would say that right now, if I just look at the confirmed revenue that we have, which means these are all deals that have been signed and [ switched up ]. As well as the high probability extensions that we are looking at. That itself amounts to about 10% plus growth, okay, 10%, 12% of growth will come just from all the confirmed work and the high potential extensions that we have.
On top of that, there are other projects where extensions are feasible, and in addition to that, we have almost $45 million pipeline for this year and meaning the total revenue that can convert in this year if all the start. Now of course, the $45 million pipeline, the opportunities are at various stages of the funnel. And we have assumed a certain kind of conversion and probability to arrive at the guidance that we have given.
If things move faster, I mean all these are real opportunities, which have non-zero probability of [ conversion ] anywhere from 10% and above. Some of them will be at 25% booking and so on. So the pace and the velocity at which these deals will move through the funnel and the actual [indiscernible] will determine whether we are able to go fast higher end of the guidance.
Got it. Got it. The thought process behind the question was basically, you have talked about macro improving or the macro improving from H2 onwards, if that, let's get posed by a quarter or 2, whether there is any risk to the guidance is what I wanted to understand.
I don't think the lower end of the guidance will get impacted by that. We will be able to deliver on -- I mean, anyway, the range that we get fairly narrow. We're talking about 16% to 18%. At this point in time, I would say that, that 18% is fairly -- we are confident of that, right even without any improvement in the macro economic scenario, if the macro scenario improves, then we could go well past the 18% [indiscernible].
The next question is from the line of [ Abish Muraria ] an Individual Investor.
Keeping our growth trajectory in mind, I just wanted to know what type of investment are we looking in terms of talent?
Yes. Thanks for the question, Abhishek. Right now, the main investment that we are looking at is doubling down on few areas, right? One is around data engineering and the capability, right? As we have said that data engineering will become even bigger in the coming quarters on the coming years.
Today, we have about 200, 250 personnel, right, who do data engineering work. But there is no concentrated expertise in a particular area. I mean we are kind of agnostic and we do work across all the hyperscalers. We do work with Snowflakes and Databricks. We use a bunch of other tools and technology as to like do the data engineering work.
The intention now is to pick one of them, right, and doubled up. We have chosen at this time, Databricks as the partner that we want to really build some serious expertise. And there are some specific things that are happening within the Databricks ecosystem as well in terms of new things that they are introduced. This then -- and Microsoft Fabric that I mentioned earlier, right? This is the other one in which we are going to be making some substantial investments.
So some of the hiring and talent additions will be in those areas, just shoring up even more on the Databricks high-end architecture type of skills as well as people with certification, investments that we make into training people and all that. So that is one area.
The other one is related to the domain expertise that I alluded to, especially in the area of financial services, I talked about traditional areas of banking and insurance services and also the work that we do in other parts of the BFSI spectrum.
Likewise, investments that they want to make around industrial, automotive, around retail as a business area, right? These are all the areas where we are looking adding more domain experts into the mix. At this point in time, some of the value propositions that we are able to offer in these areas, they are more of the generic, horizontal value proposition that we are offering, like supply chain analytics or marketing analytics. We want to make it a lot more specific and tailored similar to what we have in the consumer packaged goods space.
If I can recall -- reminded on the call, with CPG, we are focusing on three specific areas. We're focusing on R&D and innovation, with our smart innovation solution. We are focusing on on-shelf availability, demand forecasting, right, with our connected view supply chain solution, and that we are focusing on revenue growth management with the acquisition, observation part. We won't to be able to do similar type of value prop and offering with a very tailored to the particular challenges that BFSI banks and insurance are similarly right in industrials or on retail updates. That is the attempt, and that is where we'll be adding more demand expertise.
Ladies and gentlemen, we'll take this as a last question. I would now like to hand the conference over to the management for closing comments.
Yes. Thank you. We feel at this time, I mean, in closing, I would say that the start for this year, quarter 1, I mean, we -- while it's coming at the 4% plus kind of a mark. I mean, this [ tab ] lower than what we were hoping for, right, when we were in the second half of the last fiscal. I would say that the signs that we started seeing then are still intact. We would want to be able to accelerate some of the opportunities that we are chasing and we want to move on to that trajectory, right, depending on how the external scenario unfolds.
But I would also add that a lot of the investments that we have made, right, either in building the solution, or the content bandwidth is what has made all of those conversations and opportunities in the pipeline possible. So at this time, I would say that we will -- while we will make some adjustments in terms of repositioning and reprioritizing the investment, right, moving some of the front end into the capability and the domain expertise and stuff that I talked about. I think we are well positioned for capitalizing on the opportunities, right, when they do start getting unlocked.
There are good signs of that happening in many of the verticals. We are also energized by the acquisition of Decision Point and just bringing in more thinking, thought leadership and solutions, right, to the table, specifically in the [indiscernible] good space. In general, when something like this happens, it's also a [indiscernible] for the entire organization, and we can see that kind of a momentum and possibility in all that we do.
So the expectation is that this year in the coming quarters, we will see even greater momentum on not only CPG, but also in the rest of the industries where we are operating. Technology already, we are seeing some good traction. Raj talked about the optics that we are starting to see in the financial services. Retail is still a bit sluggish. And I expect that there will be some more pain in that space. But otherwise, in all the other sectors, we are trying to see some momentum, and then we want to write that momentum right in the coming quarters.
So overall, positive about how things will pan out, right, over the remainder of the year. Of course, we don't want to run ahead of parcels, and we want to watch how things unfold as we made the deprivation positions [indiscernible]. With that, I'll hand it to Raj for any further comments that he has.
Thanks, Rajan. In closing, I'd just like to reiterate some of the points that Rajan already spoke about, while Q1 did come in at the lower end or slightly below our expectations and a lot of that was primarily driven by, I would say, a delay in signing on some fairly promising or high probability deals, right? But the good news is we were able to stitch together some of those deals towards the end of Q1, which means that we will be able to see revenue from those deals flowing in Q2, right?
We've also added close to about 8 logos of which I would say 3 would be marquee logos. That gives us the confidence that if you're able to land some of these POCs or initial pilot projects that we are executing in these Marquee logos, we should be able to build on the strength of the relationship over the rest of the period, right?
The acquisition of Decision Point unlocks several joint go-to-market pursuits. Some of which is in positioning their [indiscernible] services to our client side, some of the solutions that they're building to their client side. Also, near-shoring opportunities in Lat Am, again, but represents fairly significant joint go-to-market opportunities where we are positioning resourcing from either Mexico or Chile for client [indiscernible] is again is a new, I would say, dimension or new area of growth for us, which seems to be fairly promising at this point in time.
So all in all, I would say there are several positives to take from the Q1 performance and also some of the sort of activity that has been happening even though they're not -- they may not have necessarily converted into active deal closures. But having said that, as always, we continue to tread with caution, right? I mean, we do understand that while confirm plus the order book will mean that we will be able to deliver a 10% to 12% type growth, right?
There is still work to be done. There are deals to be closed. There is -- also on the account management side, we have to continue ramping up our efforts on mining existing relationships, right? Some of the large accounts that we have, have grown to very, very sizable values. And therefore, that means that there is increased pressure on us to deliver outstanding quality to these accounts, and we will have to continue to do that, watch our service delivery excellence metrics very, very closely, right?
So that could be on the top line side. But as we continue to grow and scale, we will also continue to look for opportunities to drive some of the operating metrics around utilization, on-site offshore ratios, look at near-shoring as well as offshoring as opportunity for us to improve the margin profile, also look at Gen AI and as well as using internal repository of solutions and accelerators to drive efficiency. As well as improved pricing, right? So we will continue to work on the operating margin side as well to improve the margin profile and not just relying on top line growth.
And all that I can say that at this point in time, it does feel that we are ending Q1 on a fairly strong footing. But having said that, there is still work to be done, but we are hopeful that we have the right team in place to deliver the sort of growth trajectory that we've indicated on this call.
With that, I would want to hand it back to Asha to close the earnings call.
On behalf of Latent View Analytics Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.