Tecnotree Oyj

OMXH:TEM1V

Earnings Call Analysis

Earnings Call Transcript 2024-Q1

[Timo Holopainen, executive]

Good morning. I welcome you to join this Tecnotree Quarter 1 Results Publishing Event. My name is Timo Holopainen, and I will be the moderator for this session. We will record this session and make the recording available on our website later today.

Today's key speakers are our CEO, Padma Ravichander; and CFO, Indiresh Vivekananda. And in this session, first, Padma will give you the business revenue, then Indiresh will present the numbers in more detail and discuss our prospects for this year.

After these presentations, we will have a question-and-answer session. You can always write down the questions on your screens during the event. With this short introduction, I will hand over the presentation to our CEO, Padma Ravichander. Please, Padma, stage is yours.

[Padma Ravichander, executive]

Thank you, Timo. I hope I'm audible.

[Timo Holopainen, executive]

Yes, you are.

[Padma Ravichander, executive]

Thank you. Dear Tecnotree investors and analysts, welcome to Tecnotree Q1 2024 results broadcast. Thank you for joining us here today. Timo, can you help me with the slides? Can you go to my first slide, please? Thank you. Next one. Yes.

We are continuing to grow our global footprint in newer growth markets with follow-the-sun approach today. And I'm proud to say that for Tecnotree customers, we have 32 locations across the globe through whom we serve all our customers globally. We have more than doubled our addressable market share from USD 2 billion to about USD 4 billion in the last 2 years, which is clearly demonstrating the fact that we have added more than 28 new logos in the last 3 years, while our competitors have been losing ground. This keeps our growth rate higher than market trend and the competitive benchmark. We are not only a challenger in the realm of BSS IT and beyond telecom. We have also been recognized by Gartner in the new Magic Quadrant for AI in CSPs due to our predictive, strategic and futuristic investments in AI through our Sensa Fabric and its integration into our embedded digital offerings.

Next slide, please. Building a long-term share owner value with a winning and strategic 3-year plan is a multidimensional approach for Tecnotree. We have steadily improved through the work that we have done with the industry analysts and forums to improve our competitive positioning and increased our market share, emerging as the preferred partner not only for telecom operators. But today, I'm proud to say, in several vertical industries, such as e-health, education, fintech and beyond, particularly in emerging markets.

In addition to being a challenger today, the growth story of Tecnotree is in the minds of the analysts is the fact that we are born in emerging markets as a company right from Technomen days, but we are transforming today to become a preferred vendor of choice in growth markets. This is certainly an evolution and true transformation of the company over the last 4 decades.

We are making huge global impact for our customers and their abilities to go beyond connectivity as we are embedding AI in our digital interactions. Soon, we will be able to bundle intelligence in devices. And with connectivity, we will create hyper-personalized and intimate experiences unheard of in the history of digital experiences.

While Tecnotree has been recognized by the Nordic Business Diversity Index as a top mid-cap company for diversity, we are today working to go much beyond diversity and to be recognized for our contributions in the realm of ESG as well. Our experiences in emerging markets to reduce the digital divide across the world with our technology is a true demonstration of our commitment to sustainability and how, in our minds, the corporate social responsibility goes beyond just inclusivity not just for our customers and employees, but to human kind as well.

We truly believe that a unified customer, analyst and employee approach for a 3-year strategic growth as a winning plan is a sure path for success for our investors to realize the growth with Tecnotree.

If you can turn to the next slide, please. The company has maintained great momentum in driving global sales in our digital platform, and Q1 2024 is definitely an indicator of further growth. We have completed many AI/ML digital transformations to key customers, resulting in a significant increase in revenue.

The growth in Q1 primarily came from Lat Am, but EMEA and APAC continue to remain as growth markets for our digital platform. As you can see, the net sales grew by 4.7% to EUR 16.3 million compared to EUR 15.5 million in Q1. Our operating results grew quite significantly by 22.3% to EUR 4.4 million compared to EUR 3.6 million in Q1 of last year, and we delivered a EUR 0.01 earnings per share, and our order book continued to enhance by 10.3% on to EUR 74.8 million compared to EUR 67.8 million the previous year.

I truly believe that there are notable milestones in the first quarter that Tecnotree achieved. We, as a company, solidified our position as a trusted partner to deliver AI/ML integrated journeys in our BSS stack by winning an AI/ML-enabled digital transformation partnership in Jordan in the Middle East. Additionally, we delivered Nuh-Digital in Brazil. We -- I mean, we won -- we secured a deal with Nuh-Digital in Brazil, which is an MVNO.

And we added to our list of MVNOs that we are serving in newer markets. Tecnotree's Moments platform was selected by Global Hitss in Mexico to elevate the e-health experience in Latin America by promising a very streamlined digital operations for health care along the value chain. This is a significant win, and it's a re-affirmant of our strategy towards to go beyond -- to delayer the telco and go beyond connectivity.

This initiative has also been recognized by the TM Forum Excellence Awards, where we have been chosen as a finalist for our collaboration with Global Hitss in the health care segment in Mexico and for our use of the TM Forum ODA standardized framework in accelerating network monetization.

If we go to the next slide, clearly, in Q4 -- Q1 of this year, we delivered 4 go-lives across MTN, Zain, Ooredoo, STC, and many of these included AI/ML use cases as well. And we continue to grow our ARR, our annual recurring revenue, and maintain more than 60% of our order backlog to include ARR journeys.

And finally, we have focused, as we had said earlier, in our emphasis to collect cash with our Think Cash Do Cash initiative, which is on target. And it is an internal project that we drive across all business units as we expand our customer footprint globally.

If we can go to the next slide. As you can see, we have maintained our position as a Platinum Badge holder with the TM Forum standards body, number one for number of open APIs. These are standard integration interface capabilities on our platform with -- as you know, telecom businesses are very complex, and having standard interfaces makes our platform much more adaptable and usable for many of our customers. And we maintain this position as a unique position on the vendor community, while we have -- out of the 59, 9 of them being actually used in real-world applications as APIs. And we have more than 8 implementations around the world of this digital stack with these TM Forum APIs.

In addition to that, over the last 5 years, as you can see here, we have been continuously recognized for several excellent solution delivery capabilities in the area of customer experience, revenue monetization. And this year, TM Forum has selected us as a finalist in the TM Forum award for network monetization, particularly because of the work that we are doing in Mexico City with hospitals and in partnership with Global Hitss.

Next slide, please. Now our strategy in AI, and I wanted to spend a little bit of time here because AI is a very important strategic element to growth and it's everywhere. We have taken a 3-pronged approach to AI, customers, delivery, operations and employees. In 2024, our strategy for AI will continue to be that to embed AI in all our products and our processes, enabling higher productivity for our employees, greater accuracy and predictability of our stack, and better reliability and experience and growth and monetization capability for our customers. With AI integrated into our customer life cycle, we believe we will be able to surface very meaningful insights across the value chain, resulting in a net positive experience, which is what every customer interaction should be, humanizing the whole experience across the business offering.

From an AI acquisition that we made in 2022, it was already a serendipity moment for Tecnotree, that particular acquisition, which came with 137 patents. Today, we have a very unique capability on our Sensa Fabric platform called the Profile-of-One. This allows us to move beyond creating groups of customers as segments of customers to unraveling multiple personas and facets of customer experiences. In today's world of fast-paced technology, we really believe to live multiple lives within the same life is the need of the hour. When you are a telecom customer, you're not just a telecom customer. You are also an athlete. You may be a patient. You might be a tourist. You might be a social media influencer, all at the same time, all at once, and you can experience all these avatars with Tecnotree's Profile-of-One.

If you can go to the next slide. I'd like to sort of reinstate the fact that Tecnotree's performance has been steadily improving in the right direction with our receivable diversification, especially now into the growth markets, and no single dependency on one customer. In fact, our dependency on our 2 large customers have significantly dropped below 50% over the last year and continues to remain that way. The increase in customer presence in new growth markets with strong Tier 1 customer growth is a justified value proposition for us to grow our EBIT stronger. Let us reaffirm our collective commitment to advancing Tecnotree's strategic objectives by fostering sustainable growth and delivering long-term value to you share owners to our customers and employees alike.

I want to thank you for giving me the opportunity to share with you our excellent results, and I now invite Indiresh to talk a little bit about the financial performance of the company in detail. Indiresh?

[Indiresh Vivekananda, executive]

Thank you, Padma. Good morning, everyone. I hope my -- I'm audible. As you are all aware, this morning, we announced our Q1 results, and I'm here to share more details on that. I would like to first walk through the -- are the slides changing? Can somebody confirm?

[Padma Ravichander, executive]

They have changed. We're on Q1 2024.

[Indiresh Vivekananda, executive]

Yes. Thank you, Padma. I would like to first walk through the text part of my presentation, and then we will talk about the absolute numbers.

As we explained in our release, we have a consistent growth in our revenue. On a constant currency, this is something very important for a company like ours. We would have achieved a EUR 20.6 million revenue in the first quarter of the year, which would have been a 33% increase compared to the last year Q1. The cash collection at a constant currency was about EUR 11 million, which was lower than the previous years. We improved EBIT on account of cost optimization. High impact of ForEx losses continues to hurt us. Impact of seasonality, extended holiday season in the Middle East, and the cash collection -- that hurt the cash collection and the order intake, some of them were pushed to the next quarters. We also had a healthy year-on-year improvement in our order backlog, and we did collect about EUR 2 million in Q1 towards our CCD program.

Now coming to the absolute numbers. I have provided here the last year Q1 performance and also 1 year prior that. As you can see here, in '22 Q1, we were at EUR 13.3 million, went up to EUR 15.5 million in revenue. And this year, we could post EUR 16.3 million as our revenue.

On EBIT, that is earnings before interest and taxes, in '22, we were EUR 2 million. And in 2 years, we have more than doubled to EUR 4.4 million. Whereas last year, we were at EUR 3.6 million. The financial items, which includes my exchange losses or primarily consists of my exchange losses, we had to have a substantial impact in the Q1. As all of you know that, there was a huge changes in naira in the Q1 also. While at the quarter end and of late, there is some sign of positivity in naira growth. But still, during the quarter, it hurt us.

The net income, as a result of higher ForEx losses, remained almost same as last year. Last year, it was EUR 1.8 million. And this year, we were at EUR 1.6 million. And just to remind, in Q1 '22, we were EUR 1 million. The cash collection, as I explained, is EUR 9.5 million in this quarter, which was very high in the last year at EUR 15 million, and EUR 10.8 million in the '22 year. Probably, I do have some data to share how this changes quarter-on-quarter.

The order intake, we've got additionally EUR 10 million new orders, which was lower than the last year's. And the order backlog at the end of the quarter was standing at nearly EUR 75 million, which is much higher than EUR 68 million at the end of the last year Q1, and about EUR 64 million prior to that. The EPS, earnings per share, this is still computed on the pre-split numbers of 318 million, which was EUR 0.01 rounded right through in all the 3 years.

I want to draw the attention of the people here on the seasonality of our revenue and collection. We have explained in many forums how of my revenue and collections change quarter-on-quarter. If you can look here, I have provided the data for last 2 years. In Q1 of '21, our revenue was EUR 13.3 million. As you can see, it keeps going in the second, third and the last quarter. Again, in the Q1 of the subsequent year, it comes down. But again, it keeps growing. And hopefully, this year also, we have the same hope that we'll grow in the second, third and the fourth quarter compared to the Q1.

And again, collections also, this has a high seasonality. Sometimes, it depends on if I collected a lot of money in the previous quarter. The subsequent quarter, there will be a substantial dip. As you could see in -- for example, in Q3 of '21 (sic) [ '22 ] we had a EUR 21.9 million collection. But immediately in the next quarter, it came down. Again, in the Q4 of last year, we had a very high collection. But again, this came down in this quarter. So this is the seasonality which affects us. And also during the Q1 of this year, we had a lot of invoices that were sent out during the month of March. When I walk you through the receivables, I will explain you how it is looking currently.

As we have always said, that it has a seasonality. And how do we address this? The first part, as Padma already mentioned, we have a new motto in this year called Think Cash and Do Cash, continuous tracking focused on improving the free cash flows, increased focus on ARR business, to move our revenues and collections to a more predictable [Audio Gap] deliver faster, exploring facilities for currency swaps and adjust this.

I think last month, when we were in the AGM, we also discussed one of the challenges we face is when the currencies are fluctuating so much, even if we need to book a forward contract or a swap, that is going to cost us very heavily. So sometimes, we do validate the correctness of it, a cost-benefit analysis of it, and then we take a call. Then expanding in newer markets, developed markets with our competitive portfolio, that is also going to bring more stable revenue and more stable collections. As Padma already mentioned earlier, earlier about 2 years back or 3 years back, 80% of my revenue is to come from 2 large customers. Today, it has come down below 50%, which means that I'm spreading into new geographies and more developed economies. And hopefully, that will bring more stability into our operations.

I'll walk you through the healthy financial ratios. One of the key factors for analyzing any company is the debt -- current ratio. Current ratio is the amount of liquid assets I have against the current payables. We have been consistently follow -- have been having a very good current ratio at about 5.3 in the current quarter, which is same as in the last couple of quarters, which means that for every euro I need to pay, I have nearly EUR 5 of collectibles.

Now on the slide, I am also showing you the account receivable aging, which I think is a very, very important parameter for assessing us. While the total receivable remained constant at almost same level of the previous year, if you could see, my substantial reduction is there in the receivables over 1 year, as you can see here. That, I think, is a very important point to be noted. There is a 48% reduction in the receivables, which were outstanding for more than 1 year. However, the receivables which are not due, that is less than 30 days, have gone up substantially by about 74%. This clearly explains while my collections were lower for this quarter, my receivables were almost same as in the previous year. But most of my receivables are not received or receivable, which is not due. And hence, we'll have a higher collections probably in the subsequent quarters.

Further, the DSO days, which is another good indication of the ability to collect money. As you could see, we have about 10% reduction in the DSO days compared to the last year. Again, the other thing is as we move out of -- from 2 major customers, the regions also change. We are getting into the newer markets. My collections from Africa is improving, and the DSO days are coming down. But my Middle East and Africa, you could see there's a huge receivable. That's mainly on account of some of the larger deliveries that happened in this year, where the invoices are shipped now and expected to come later. Again, in the Lat Am, I have a higher DSO days. Lat Am -- typically, most of the countries in Lat Am, they take a longer time to repay, and most of the collections for the year comes in the second quarter of the year. While this is a day I wanted to share with you, while my DSO days, we are able to bring it down by about 10%.

Now we did announce about the cost optimization, which will also benefit or which will reflect in my higher EBIT. As you can see, again, the EBIT, we are trying to stabilize in the last 4, 5 quarters, if you see. It is more or less -- it is coming into a more stable way. I know that when the revenues grow up faster compared to the previous quarters, my cost do not grow up in a similar manner, which results in a higher EBIT. But our aim is to make a consistent growth in my EBIT, and we are seeing some stability around it.

However, we still continue to face the challenges of foreign exchange. We still have a good amount of business coming from some of the countries, which has a very high currency volatility. I gave one example of Nigeria. Probably, I wanted to share with you how it looks. In the below table, you could see that I have given in the last 4 months how much the naira has changed, how volatile it has become. December '23, it was NGN 899 per dollar, went up to NGN 1,356, still went up to NGN 1,544 in February, slowly becoming more normalized in March at NGN 1,300, and the last count I had, it had still come down to NGN 1,160. The -- what we want to conclude here is, yes, naira plays a major impact on foreign currency losses, but we hope the naira is strengthening and becoming a more and more normalized currency. Once it happens, we'll have lesser and lesser foreign exchange impact.

How do we mitigate this risk? We have been continually talking to the -- negotiating with the customers, with the contract negotiation to mitigate this risk. We are expanding customer base, as we showed in the earlier slide, to more stable economies, arrangement with the institutions for currency hedges and swaps. So these are some of the activities. This is a constant process. And I expect that going forward in the shorter period, we'll have a better fee -- better management of the foreign exchange losses.

We also announced a global cost reduction program, where we said that 5% to 7% of the global OpEx reduction is expected by 2025 through the optimization across people, infrastructure and operational costs, travel expenses, and also a lot of improvement in our processes. One is lean process model in engineering framework, working closer to the customer, tools and automation, then also ESG for reduced power consumption. As you could see here, the company has development centers in multiple locations. One is increasing the portion of customer-specific product development. This will take closer to the customers and also leveraging our global presence for optimization of the operations. If I'm supporting some customers in North America, I have the presence in North America as well as in South America, and they're probably in the same time zone. I have people working in Africa and Finland to cater to the European and the Africa market. We have people in India, which can take care of the Eastern side of the world.

We also announced a cap-table actions. The key time lines were reverse share split. This was approved by the Board on the 19th April 2024, which we gave effect to. And with the new numbers, the trading has started with -- on 22nd April 2024. And request to note that there is no change in the ISIN number. We strive to maintain a consistent dividend level and bring long-term value to the investors. That is the purpose. The shares -- number of shares in absolute numbers are reduced from 318 million to about 16 million. With this reverse split, the company is better enabled to pay out a consistent dividend.

Now I'll want to present the prospects and risks. As the key risk continue to be constantly evolving market demanding disruptive technologies and differentiators, there's a high competition. As you all know, telecom is a constantly evolving market having a high technology demand. That's a huge challenge for any operator. The mitigation is constant investment in R&D. We are investing consistently on our development processes to stay ahead of the curve and the competition.

And also, we are adopting a disruptive pricing and business models, moving delivery capabilities closer to market, as we call as the nearshore, and customers we serve. Then the receivables and currencies, this is another challenge Tecnotree historically has been facing. Nonavailability of euros in developing economies, and in many countries, we do have Central Bank restrictions. And the other risk we have is a long project gestations, intense repatriation efforts.

How are we going to mitigate this? One is constant evaluation of currency hedges and swaps, improved productization and automation to reduce payment cycles, increasing ARR model of business, expanding into newer and developed markets, and streamlining of cost of operations. Again, footprint in economically vulnerable countries and emerging markets. We just explained that the 2 customers had more than 80% stake of business in a couple of years, which has come down substantially. The mitigation for that is expanding into newer and developed markets and intermittent cash and carry policies.

Now my final slide on the prospects. We expected the revenue to go higher by 2% to 7% when we published our results and this is the guidance we gave, so we are sticking to that guidance. Operating profits will go up by 7% to 15%. This is the guidance we want to provide. The assumption. Our telecom BSS industry, where we mainly operate, they grew at 2.1% annually from '22 to '27. This is Gartner's prediction and the technology continues to grow above the market rate, led by demand for its competitive products and services. We have more ARR business models, driving predictable and stable quarter-on-quarter revenue. Revenues in the short term will be impacted due to uncertain global economic scenarios. Company is expecting a higher cost optimization in the current year. Foreign exchange rates are expected to remain approximately the current level. These are the prospects I'm presenting before the investors.

Now Padma, back to you.

[Padma Ravichander, executive]

Thank you, Indiresh. I think -- thank you, Indiresh. Thank you for that. I think we are ready to take some questions. Timo, if there are questions to be had.

[Timo Holopainen, executive]

Okay. Thank you. So we are ready. Thank you, Padma and Indiresh, for the updates. And it's time for this question and answers now. And very good that we have a few questions already coming in.

And the first one is related to the cash collections for this year. And are you -- do you believe and are you able to increase your collections this year? Any guidance you could share on this?

[Indiresh Vivekananda, executive]

Padma, may I take that?

[Padma Ravichander, executive]

Yes. Please take that, Indiresh.

[Indiresh Vivekananda, executive]

Okay. Timo, that's a -- thanks for that question. It's an interesting question. Yes, the aim is always to increase the collections. But can I give you a definitive guidance at this point of time? It's very difficult. For example, I just showed you how naira is moving. And if we had a constant currency in one quarter, my collection would have been higher by 20%. And the collections are always on a seasonality. There are fluctuations which are happening, which are -- we are trying to mitigate through ARR thing. And yes, the expectation is we do collect substantially what we have to collect. And that is what is defined under Think Cash and Do Cash. Now I'll request Padma to add.

[Padma Ravichander, executive]

I think you've covered it well, Indiresh. There is definitely a seasonality. As you can see, in Think Cash Do Cash and Project Eurion, we have really focused on a lot of deliveries in Q1, which means we will be raising the invoices for these deliveries. And our hopes are that would translate to cash collections in the upcoming quarters, so this is a cyclical business. The gestation period is anywhere from 8 to 12 months in terms of deliveries, and this pattern has been observed in the last 5 years of the company.

And I'm proud to say, other than the foreign exchange losses, typically, our customers are all Tier 1 telcos with big bank balances. And our going concerns, selling very essential services, communication industry and Internet connectivity today, is more important than food for the new generation of youngsters and communities. And therefore, I really believe we are in markets that sell goods that are more important than oil. So we believe that the customers are good for credit, and we need to continuously work towards better collections.

[Timo Holopainen, executive]

Okay. Thank you very much. You definitely answered the question. And the second one is, it sounds like this one, according to Gartner, it seems that you have been able to expand your addressable market pretty fast in the past couple of years. What is the key driver behind this? I mean, is it more customer-driven development, you're product development-driven or what?

[Padma Ravichander, executive]

So there are many answers to this. Let me take this question, Indiresh. It's a multipronged strategy that we have been working on over the past several years since I would say 2020. We were the first to embrace TM Forum standards and create an ODA architecture-compliant digital platform for BSS. We launched this product in 2019 with micro-services and low-code, no-code capabilities, so that we can easily deploy this product to our customers and also monitor this product on the cloud using cloud technology and cloud-enabled tools. So during COVID, this capability of ours came to fructification, and many operators started looking at Tecnotree's zero-touch deployment capabilities on a digital stack for their businesses to be a very critical advantage for them to offer new digital services, especially for the enterprise customers. As during COVID, people couldn't move around much or travel much, so having connectivity at an enterprise level was extremely important. And our business model was extremely strategic from that perspective in terms of the R&D investments we have made on our digital stack.

Then moving along in 2021, we integrated financial inclusivity for emerging markets by integrating a digital wallet, Tecnotree DiWa, which again proved extremely beneficial as the commercialization of the enterprise continued post COVID and post the pandemic. And then we moved in 2022 to a full ecosystem play where we go beyond connectivity, delayering the telco capability on our stack to offer capabilities where a telecom customer is also a patient. He can also be an athlete. He can also need other types of services. And can a telecom operator enable, with very intelligent knowledge of the customer, newer types of services in the areas of digital health, connected cars, sports, medicine, social media integration, et cetera? And we have followed a very United Nations sustainable growth strategy to deliver this by adopting to essential services in vertical industries.

And finally, our acquisition of the AI/ML company in 2022, towards the end of 2022, was a -- as I said earlier, a serendipity moment for Tecnotree. And today, the Profile-of-One that we have integrated on our digital stack stands tall, is a barrier to entry for our competitors in terms of telecom use cases that really enable the operator to sell and monetize services on our platform.

So Gartner's recognition of our AI/ML capability and go -- our ability to have a higher amount of addressable market, almost doubling our market share and getting into growth markets, is a validation of our strategy.

[Timo Holopainen, executive]

Okay. Thank you, Padma. That's a really in-depth answer, a comprehensive answer. The third one is that, could you remind us of the reasons behind reverse split and -- that was conducted in this week?

[Padma Ravichander, executive]

Yes. Indiresh, do you want to restate...

[Indiresh Vivekananda, executive]

Yes, I'll take the answer.

[Padma Ravichander, executive]

Thank you.

[Indiresh Vivekananda, executive]

Thank you. As our investors know, before reverse splitting, we had 318 million shares of Tecnotree, outstanding at this Tecnotree, which means that for a company of our size, even if I need to pay a EUR 0.01 dividend, that would have cost me about EUR 3 million, which is, at this point of time, is a very high cost for the company.

We wanted Tecnotree to be a company, which is going to give dividends. We wanted to get into the dividend-paying bracket. And the only option available to us was, even to provide a moderate dividend to our investors, was to reduce the number of shares. And that is how we reduced it by [ 20 million ]. Now it is about 16 million. It's the number of shares, which are much comfortably we can manage, I think. Yes, for the current year, there is a proposal to give EUR 0.01 dividend, which is pretty moderate. But we want to -- and it could be a more symbolic, but we wanted to make Tecnotree a dividend-paying company, which has its own advantages. So that is the purpose we wanted to do this. And with the approval of the shareholders, what we got in the AGM, we are able to effect that.

[Padma Ravichander, executive]

Can I add a couple of points, Timo, to that? From a business perspective, that sort of talks about the cap-table and how we want to be a dividend-paying company. But really, if you look at the growth story of Tecnotree, we have -- our EBIT stands tall against our competitors. We are declaring very high profitable growth in tough markets, mainly because we have a product-first and a product-led thinking that we have nurtured over the last 2 -- I would say 12 years or literally since I joined the company. And this means do once and use many times and also increase the speed of delivery in which we are able to deliver the stack. So I really believe the company is healthy in terms of profitability, low in terms of debt and real debt that we are having in the company, and it is now time to increase our free cash flow and return to investors the strategic growth that the company has enjoyed.

This move of consolidating the dividends, the cap-table, lends itself to becoming, as Indiresh said, a dividend-paying company and also sharing the growth story of Tecnotree with the investors who have invested long-term in us and having them realize the benefit of the profitable growth we've had. So that's really the strategy, increase the free cash flow and share the wealth with our investors.

[Timo Holopainen, executive]

Okay. Thank you, Indiresh, and thank you, Padma. Then next question, in Q4, you informed and you had a provision for potential acquisition. Could you give us a status update on that?

[Indiresh Vivekananda, executive]

Yes, I can give that. This was for a company which has been working with Tecnotree for a long time, and they have been supporting us with some of the products alignment and all that stuff. We saw a synergy with them, and we wanted to make an acquisition of that company. In technology firms, even to do a due diligence, they will not allow you to go to their source code, open up their entire stack to us, and do a due diligence. So we have to do a technical due diligence, then a commercial due diligence. The technical due diligence is in process. We have done a financial due diligence. And hopefully, this quarter, we should be able to complete this transaction.

[Timo Holopainen, executive]

Okay. Thank you. Thank you, Indiresh. I think so now, we have like a answer to all questions what we had at the moment or coming on the feed. And it is now time to close this quarter 1 result webcast, so thank you very much for joining and asking these questions. It's very important, this interaction, and that we can clarify all doubts and questions that you may have. But -- and then as well before we close, I want to inform you all that the next opportunity to meet us will be at Tampere Investor Fair, 3rd of May. And I hereby invite you all to visit our staff there. And I'm pleased as well, stay tuned and follow our IR website and social medias channels as well. So it's the time to conclude this quarter 1 result webcast. And have a nice rest of the week, rest of the day, and enjoy the coming weekend. Thank you again, and goodbye.

[Padma Ravichander, executive]

Thank you.

[Indiresh Vivekananda, executive]

Thank you.