Latent View Analytics Limited analyst Q&A

The first question comes from the line of Aditi Patil from ICICI Securities.

My first question is on the technology vertical. The sequential drop in technology vertical appears to be higher than what we had called out in Q3. So, correct me if I am wrong, we had called out around $5 million, $6 million annual drop we are expecting in one of our top tech clients. So if you consider that, then the sequential drop in Q4 seems to be slightly higher. Is my understanding correct? And is there any other client-specific issue in the technology vertical?

Yes. Aditi, specifically in this particular account, while the initial estimate was the drop will be closer to about $5.5 million, $6 million, that was the estimate that we had given out in the last quarter. In reality, some of the rationalization that happened subsequently as well or continue to happen meant that the total value of shrinkage was closer to about $6.5 million to $7 million. That is the total value of shrinkage that happened in this particular account. But with this, the one thing that we want to confirm is all the renewals, all the rationalization are all done. So, it was not $5.5 million to $6 million, it was closer to about $7 million, but coming back to Rajan's point, we are in active discussions even with this particular account on several other threads at this point in time. Which definitely gives us confidence that we will be able to recoup more than 50% to 60% of the revenue lost in this account in the next one or two quarters in terms of the overall book of work that we execute with them. So there are already some very advanced discussions that we are in with this particular client to recoup the revenue lost.

Okay. Got it. And apart from this client, what is the traction we are seeing in other clients? And therefore, like what kind of growth should we expect in technology vertical in FY '27?

I can cover the traction and Raj you can comment on the percentage number. The other two large accounts that we have in the technology space, in general, with one of them, it's been fairly even keel, right, at this time. They have also gone through some leadership change at their end at the very top. And the third one, they've been going through some consolidation and related exercises over the last couple of years. But at this point in time, again, the interactions that we have had so far indicates that we will actually pick up in the next year. Other than these 3 top accounts, in general, the sentiment in the technology space, given the amount of activity that is happening in relation to AI seems to be more positive rather than negative at this time. Of course, clients want to do a lot more on their own. But there is also the general feel that whatever initiatives were kept on the back burner whatever was shelved earlier can all be picked up. And there could be movement on many of them because the economics of getting initiatives done has improved significantly. I mean you can do many of these things with much higher velocity with lower effort. And that is creating a revival of interest in exploring and doing a lot more things in comparison to budget constrained approaches. That were there in earlier quarters. So, in general, I feel more optimistic. I mean the percentages and stuff we will obviously see as things pan out over the next one, two quarters. But at this point in time, that's the headline.

Okay. That's helpful. And my next question is on the BFSI vertical. So we had a very strong growth in this vertical for last the few quarters. But in Q4, if we see the sequential growth, it was flattish. So was there any onetime revenue in Q3, which were not there in Q4? Or what can explain this?

Aditi, even in relation to what we delivered for the last quarter, the share of BFSI revenue from 14% has gone to almost 16%, in this particular quarter on a sequential basis. So there is a definite increase in this particular quarter in relation to the previous quarter.

Okay. I will just check my numbers on that.

Yes. I'm happy to answer this offline. But at least for this quarter, there was fairly strong momentum even in BFSI. So, BFSI ended the year with close to about $18 million in revenue, and as the business continues to scale, you will see the incremental rate of growth dropping because obviously, they are on a higher base as well. So that is something that we will start to witness. But in absolute terms, the current business has continued to grow.

The next question comes from the line of Karan Uppal with PhillipCapital India.

Rajan, You mentioned about the AI impact on the business is like that almost half of the work has some bit of AI involved. So if you can give some examples in terms of the nature of services, which we are delivering as well as the deal sizes. And if you can also comment how the deal sizes are different from the traditional deal size of around $0.5 million to $1 million or maybe $1 million to $2 million. And how much of it is, let's say, the token cost, which could be a pass-through revenue and how much is retained by LatentView, so that's my first question?

Yes. The last question is easy to answer. Whatever revenue that we are reporting is all our revenue. It's got nothing to do with the token cost because the model that we use with pretty much all the clients that we are engaging with is that they take care of the infrastructure tokens, whatever LLM access and all that. So everything that we are talking about is our revenue. I did give some examples when I did my opening remarks around the agentic workflows and processes. That we are impacting around payments, invoice reconciliations, market intelligence orchestration, campaign analytics, fraud, counterfeit analytics, warranty claims and so on. It's fairly broad-based in the sense that any area where the process is known and the parameters are understood and guardrails can be established, guardrails in the sense that you want to make sure that there isn't hallucination, there is transparency, traceability. All of that stuff in terms of what is the decision that is being made and why is the decision made, right? And then you can clearly connect the dots, especially in a multi-agent orchestration framework when agents hand off from one to other, it's important to have that kind of recognition. So in those type of situations where there is a good understanding of the traceability parameters, there is enough traction. Of course, simpler ones, right, where when I say traditional, when I gave those numbers, it included the combination of all three, traditional, generative and agentic. A lot of the work that we are doing is having some AI component in some shape and form. So going back to your question on deal sizes, it is the full spectrum. I mean we are seeing examples where a particular use case or something simple is being done with trillion-dollar spend. But we are also seeing examples where the initiatives are fairly larger. In fact, the three initiatives that I referred to with our largest account, all of them involve AI in some shape and form because I mean, which technology clients are not leveraging AI. Its pretty much a given. I mean you cannot do any work without the AI either under the hood or directly being implemented in the form of either a generative AI interface or an agentic orchestration of the workflow. So the spectrum of work from a deal size also ranges all the way from $0.25 million to $2 million, $3 millions.

Second is on this OpenAI and Anthropic launching their services arm, it's a very recent phenomenon. So any anecdotal evidence of, let's say, enterprises maybe giving more work to the services arms of OpenAI and Anthropic and maybe rationalizing third-party vendors, not LatentView, but anyone else you have seen in the industry, any observations there?

It's too early to comment on that. I mean, obviously, they just have announced these launches. I think OpenAI acquired a company, if I remember, I think called Tomorrow or some, that was the name I saw. And the others are in the process of setting up their JVs and hiring people. Anthropic plus OpenAI probably had put out, recruited 500-odd people, okay, of forward deployed engineers, that I mentioned earlier. So they will be building out these teams. But obviously, they will focus more on the areas where they see friction with respect to the model usage. There is a fairly large amount of work that needs to be done. And we see by any stretch of imagination that an OpenAI or Anthropic will be able to do everything because the model is just one aspect of it. Everything that I talked about that needs to sit on top of that. That all needs to be done by some services company or the other. Of course, these can range all the way from boutique firms to the OpenAI and Anthropic service arms, right, doing it themselves. But I'm sure that they are also announcing multiple partnerships. Anthropic has received applications for some 40,000 people like partners and they're working through the mechanics of these areas. These two firms are also taking very specific approaches. I mean Anthropic has been more enterprise focused. OpenAI has been more consumer focused, but I'm sure that there will be some amount of meeting point, right, that will happen over the next few quarters. In general, my feel is that thesis play will be a significant play in the scheme of things. I mean that is the point I wanted to make. That is not going away. Of course, the nature of the work will change in terms of the power deployed engineering model coming into play. But there is a tremendous amount of work that needs to be done on all the points that I mentioned, whether evaluation, observability, traceability, right, all of that stuff.

Okay. Got it. Next is on FY '26, in dollar terms it is 20% of growth but if can you clarify what is the organic part in it? And for FY '27, how should we think about the overall growth for the company?

Yes, the organic growth for the business would be 18.2% or 18.3% because please recollect that there is only one quarter of Decision Point revenue, which was not consolidated last year. We started consolidating Decision Point revenues from 1st of July last year. So, we had 3 quarters of revenue. So it is only one quarter that was missing. So, the rest of the business delivered 18% growth. In terms of your growth guidance for the next year, and maybe, Rajan, do you want to take it or do you want me to take that question?

Yes. You can take it. I can add on the color. Go ahead.

Yes. So, Karan, right now, what we definitely can see at the beginning of the year, of course, when we're looking at planning for the next year, we actually want to split that answer into a couple of sort of data points. So right now, the way we are looking at our current order book as well as pipeline, we have a reasonable level of confidence in terms of high visibility pipeline and order book to deliver about 12% to 13% of growth, and that is, of course, at the beginning of the year. As we see in any year, typically, whatever you have visibility for, you will end up adding more to the order book and pipeline through the rest of the year, right, and that is where we obviously are making investments in the go-to-market side as well as on the capability building side. All those investments are obviously targeted to deliver a growth rate, which is very similar to what we delivered this year. This is all organic that I'm talking about. I'm not talking about including inorganic. But right now, the level of visibility that we have is to deliver a 12% to 13% growth. But with investments that are being currently made to deliver a similar growth to what we delivered, which is 18% to 20%.

Yes. The only data point I'll add is that in the previous years, compared to when we start the year to when we end the year, this high visibility number that Raj talked about has typically gone up in the range of 8% to 10%. So, it kind of adds up, I mean we are targeting a 20% kind of a growth, and if things pan out well, then we should be able to get there.

Thank you. The next question comes from Vimal Jamnadas Gohil from Alchemy Capital Management Private Limited.

Yes, thanks, gentlemen. My first question is on the overall outlook that you just provided. Partly, you've answered my question, but I just wanted to get a sense of what are we building in, in terms of tech and non-tech verticals? Are we building the headwinds to continue for the tech vertical because you mentioned that despite strong conversations with our top clients, we'll still see the revenues won't fully cover the decline that we've seen. So that essentially means that the non-tech verticals will do the heavy lifting. Correct me if I'm wrong. And I just want to understand the nature of the decline in the technology vertical. Is it because of absolute cancellation of projects? Or has there been a severe deflation in the amount of work we've done. So basically, what I mean is the volume of work that we've done has possibly increased, but the deflation around that has been higher than our volume growth. Has that been the case?

I'll take the second part of the question. And Raj, you can comment on the percentages question. The nature of the decline is twofold. One is a consolidation where they have decided to work with one of several partners. This has led to some amount of the decline. The second part of it is taking the work in-house. Specifically in this account, there was a new leader who came in to head up a big chunk of the work that we were doing. And their preferred model is to work with internal full-time employees as opposed to work with the vendors. That's what they are familiar with and comfortable with from their previous organizations. And therefore, the moment they came on board, they very clearly made their intent known to us, that this is the direction in which they're going to move. There is no impact on account of work staying the same, but revenue falling or anything like that. I mean the way the whole industry anyway is moving is that budgets are either staying the same or going up in general. They're just getting more work done because of the increased productivity that is now possible through the use of AI, right, in all shape and form. So, if you take a baseline two years back and compare it to today across the board, right, in all industries, all sectors and more so in the technology sector, you will feel that for the same amount of budget, 30%, 40% more work is being done. There has not been any shrinkage of budgets itself that we have seen. They've either been a reallocation to internal mechanisms or consolidation with other partners. You haven't seen instances where clients have said that do the same work for us, but we're going to pay you less. In general, they said that we are going to pay you the same amount, but more work can be done with the money as well. Raj, maybe you can give color on the percentage.

Yes. So, Vimal, in terms of percentage, your assessment is right that it will be the non-tech vertical, which will have to do the heavy lifting this year. But having said that, I think right now, the visibility or I would say, the sort of confidence that we have is that technology will deliver anywhere between and I'm giving you a range over here because right now, we are working on certain pipeline opportunities depending on, one, the size of these pipeline opportunities eventually and also the timing of when we close them, the revenue that we'll be able to book for the year may sort of change, right? So, technology vertical for this year, our sense is that it should be between 5% to 8% growth on a year-on-year basis. This is adjusting for the loss. They will still be able to recoup some of the losses. Of course, also there are some new conversations that are going on with some new logos as well in the technology vertical. So adjusting for the losses that we've already witnessed, we should be able to deliver a Y-o-Y growth of about between 5% to 8%. That's the confidence that we have. Consumer should, our sense is right now, should grow anywhere between 18% to 22%. So that's the sort of range that we're looking at. And BFSI, obviously, the growth rates for the next year will come down compared to the previous year. But our sense is they should grow at least at about 40% for the next year, based on where we stand right now.

Understood, Raj. Raj, just on margins, we've had benefits around, of course, the USD. We've also had some employee adjustments that we have done, plus we have had our utilization levels around 90%. I do understand, I mean, the utilization going up because of employee adjustments. But to some extent, I feel we've sort of stretched our levers in terms of margins. In case there is any normalization as far as these levers are concerned, how should we think about margins going ahead? I mean I don't see any levers that we can sort of leverage at this point in time.

So, your point on utilization for this particular quarter going up from the 85% to almost 89% levels is very valid, Vimal. The only point that I would want to reiterate is one of the reasons why the utilization levels have significantly gone up in this quarter is owing to some one-off. When I say one-off, this is certain large one initial project that we have won with certain consumer clients. And they are actually cutting across two different quarters. So, some of these projects were won in February and March. And they continue to be delivered through May and June as well. So, in order to deliver these projects, of course, we had to deploy all the people that we had on the bench, and therefore, that's the reason why you have seen utilization levels going up. Having said that, I think one of the things that we continue to work through is this large client consolidation that we spoke about, a lot of the work historically used to happen on site. One of the things that we are actively pursuing with the client is as we open new threads with the client, we want to do a lot more work either offshore or nearshore. So, that is one lever where definitely from a margin standpoint, we will be able to make better margins on some of these projects. Two, I think while on a full year basis, you may not have seen the impact, the favorable dollar to INR ratio right now as we see it, should continue to positively impact us. I mean if they continue to stay at these levels, for sure, I think there will be a positive impact on margins for next year. So, I think there is sufficient cushion both in terms of the movement to doing more nearshore and offshore work for technology clients plus the favorable INR USD ratio right now.

The CPG vertical should see normalization next quarter, Raj, because there was a one-off this quarter?

Yes, there will be some level of, I would say, normalization for the next quarter because some of these large projects that we executed, they will start sort of tapering off in the next quarter. Of course, there are some conversations in the pipeline for follow-on work, but you will see a little bit of tapering off for at least the next quarter for CPG.

Fair. Thank you so much. I'll fall back in the queue.

Thank you. The next question comes from the line of Pritesh Thakkar from PL Capital. Please go ahead. Pritesh Thakkar So, I was referring to the earlier question of Karan. You were indicating 12%, 13% of revenue that we are anticipating. So that is majorly on the existing accounts or the qualified debt pipelines that we have. That's what we are referring to, right? as per my understanding.

It's not just existing accounts. When we say we have visibility of 12% to 13%, it will be a combination of growth we are expecting from existing accounts as well as the high probability opportunities that we see in the pipeline with the new stakeholder groups and existing accounts as well as completely new logos. What Raj referred to is the ones where there is high probability and high degree of confidence. The full pipeline will have many other opportunities that are at a lower level of probability, right, which we want to progress. In addition to that, we still have more than 10 months available, right? And we will keep adding new opportunities. The point I made was that in general, in the past, compared to the high visibility number that we talked about at the beginning of the year to where we will likely end up, we have seen an 8% to 10% kind of an addition, okay, if things go well. So that's what we are expecting for this year as well.

Understood. I was just looking at the client additions that we had on a $5 million plus band. If you can provide some color on the industry profile and the scope of engagement with this particular account.

Yes. So, this actually is a financial services account that we've added.

Okay. Understood. And lastly, on the bookkeeping side, two years back, if I look at our DSO was around 65 in FY '25. It was 73 a year back and now it is 80 in FY '26. So if you can provide some color why it is inching up and what should be the steady state going forward?

Yes. So, I would say two things. One, as the share of Decision Point revenue to the overall company's revenue increases, you will see a small uptick. I think we are already maxed out in terms of what that impact is. But Decision Point, because they do a lot of work with CPG companies, CPG companies in general tend to have credit terms ranging between 90 to 120 days, and for this particular quarter, specifically because of the uptick in CPG revenue, which is largely driven by Decision Point, you did see that DSO days go up. Having said that, purely from a bookkeeping standpoint, we are very well aware of the fact that the DSO was high at year-end, but we've realized a lot of those collectables subsequent to the year-end as well, right? So, some of those were billed out or were in unbilled revenue, which has been subsequently invoiced. So, there has been a fair bit of progress as far as even the collectibles are concerned.

Okay. Understood. Lastly, on the margin side, given our appetite for investments, even if I look at last year, there was a lot of rupee depreciation benefit that came into our bucket, but we made a lot of investments there. So even if I were to include quarter three one-offs that we had on an adjusted basis, if I look at FY '26 margins are, I would say, marginally lower than what we delivered in FY '25. So, can we expect FY '27 to replicate a similar trend of yours? Or you believe the investments are largely done and dusted? I heard Rajan saying that we have some seniors onboarding process. And at the same time, we are hiring forward deployed engineers there. So just wanted to understand the investment strategy that we are introducing.

So yes, I would say consistent with what Rajan already alluded to, there will be some senior level hiring that we will continue to make specifically in the AI space, right, including a potential hiring of a Chief Technology Officer. So, some of these investments will be made to obviously future-proof the organization. We will continue to add people on the AI side across all industries as well because that is something that I think from how we lead conversations with clients, I think an AI-first narrative is absolutely important. We need to hire people who deliver some of these projects at scale, right, for large enterprises, and we will continue to make investments in bringing some of these senior level folks, Pritesh. So I don't think from an investment standpoint, all the investments that we had to do, it's not like we've done all of them. Specifically on the capability side, we will continue to invest. Maybe on the go-to- market side, we don't need to do a lot more investments. I think there is a fair amount of investment that is already there. Here and there, depending on it, it could be geography-specific investment, could be in Europe, right, specifically, we may do one or two hires. But on the GTM side, we are largely done as far as the investment is concerned. Databricks, again, we will continue to invest in this partnership channel for growth. So, I would say the two big areas of where we will continue to make investment would be Databricks as well as the AI center of excellence.

And how much is our revenue from Databricks currently this year, if I look at FY'26 full year absolute terms?

So, on a full year basis, our revenue from the Databricks ecosystem put together is closer to about $17.5 million.

And the Y-o-Y growth, how much that we delivered in yearly terms?

So, the previous year, the similar number was close to about $12 million.

Understood. Yes, thanks a lot. Thanks a lot for answering this question.

Thank you. The next question comes from the line of Srinath V. with Bellwether Capital.

Hi, guys. Three questions. I'll just put all the questions together. Raj, first question would be the growth outlook shared in the call, would that be in USD terms or constant currency terms? If you could clarify that, that will be great. The next set of questions are on Databricks. I want to understand the outlook for Databricks for FY '27. What's the kind of growth you guys are working with? And would it be fair to assume that Databricks-funded or cloud partner-funded projects will start coming in this year? And would it largely show up in CPG and industrials? And the last one would be the Financial Services business, could you kind of cover it a little more in detail, the sequential growth, Y-o-Y growth, momentum seems to continue. So again, kind of how is the outlook for FY '27, new logo additions? Or is it all coming from these existing set of customers spending more? So, these are the large three areas. If you could please address that will be great. Thank you guys.

Raj, you can take the first question. I will address the second and third.

Srinath, to answer your question, the growth guidance that we put out at the beginning of the call is all in USD terms, not INR.

On Databricks, Srinath, the expectation is that the Databricks portfolio of work will continue to grow at about 60% plus. Last year, I think we went from between $11 million and $12 million to about $17 million plus, okay. This year, in fact, it should accelerate more on the back of the points that I made at the beginning of the call. There is good traction. There is a lot more engagement. We are talking to all the right people, the senior people. They are bringing us into their QBRs. When they do their QBRs, they call all of their account executives and salespeople, and we are able to showcase the solutions that we are building. So, in general, there is good recognition. I talked about the professional services trust as well, right, where they could bring in partners. And even on that, I mean, professional services in Databricks context in the past has focused more on migration type of work because that's a fairly big chunk of where Databricks gets its revenue. But they are now starting to say in the recent conversations that industry solutions and building on top of the migrated data will be an important component as well. And that's where they see somebody like us bringing in more differentiation than the typical migration- only partners that they have worked with in the past. So, in general, I'm expecting that the trajectory of 60% kind of growth should continue. On the Financial Services, it's going to be a combination of growth with the existing account, the large account that Raj has talked about, and then there is also a follow-up question, getting into the financial services. We're expecting that there will be momentum with that account going into this year. But even as we have started this year, I think we have signed up two other accounts. And I had meetings with two more in the wealth management, asset management space as part of this trip. So, I'm expecting that there will be traction in all the spaces, payments, asset wealth management and also credit card as another space. Insurance is something that we are looking to get in. But the sectors where we are already present, I'm seeing good conversations in all of them.

The next question comes from the line of Rohan Nagpal with Helios Capital Management. Please go ahead.

Just a couple of quick questions from my end. So, the first one, I think you said that you'll be able to recover 50% to 60% of the book that was eroded in your top customer by the end of the year. . Is that on a run rate basis? Or do you expect to recoup 50%, 60% of that for revenue that you booked this year? And then the second question was, I missed a bit on Anthropic. Have you signed up with Anthropic as a partner on that professional services front or as their customer?

On the first question, obviously what I meant was, we are looking to sign deals which will ensure the value of the deals itself, we'll ensure that at least we'll recoup 50% to 60% of the total annual contract value with these clients. Now depending on the timing of when we sign some of these deals, they could sort of have an impact on the revenue for the full year. But right now, as we speak for this particular client, the current projection is that we will be at least at 95% of the revenue that we delivered with this client for the last year. That is the target that we set out for this client on a full-year basis.

Yes. So, it's in kind of absolute revenue terms, just to confirm that point. Not just ARR.

Yes, that's right. Yes.

This is discussion with Anthropic as a partner, not as a client at this time. I don't know if any requests or anything that is there on that side. I mean the good thing, though, is that we are talking to fairly senior people. And in fact, the person with whom we are engaging, he used to be at Databricks before. And we have actually started helping him directly on his analytics requirements. So, there is a possibility that we might be able to extend. But right now, it's all limited to the partnership with Anthropic.

The next follow-up question comes from the line of Aditi Patil from ICICI Securities.

My question was on margins. So, I think at the start of the year, we were expecting Q4 margins to be slightly higher, maybe 24.5% plus adjusted EBITDA margin. So, were there any unexpected cost headwinds in Q4? And given that we will be investing in AI and Databricks and other capability building, so do you expect the margin could be below FY26 levels in FY27?

So Aditi, yes, I mean, this quarter, like I said there were a few items on this, even when I did the EBITDA walk last quarter to this quarter, there were some professional charges that were incurred in relation to some senior level hiring that we are looking to do on the Databricks side as well as the AI CoE side. So, there were some hiring costs or consultants that we had to engage to bring on some of these senior level hires. So that was incurred in this particular quarter, which did have, I would say, a marginal impact on EBITDA for this quarter. Adjusted for that, obviously, we could have been closer to the 24.5% that you spoke about. Now in terms of what we would like to guide for the next year, Aditi, see, like I said, I think this year will be a year where specifically on the AI CoE as well as the Databricks side, we feel the need to bring in fairly strong leadership to drive conversations with clients. In fact, like I alluded to before, there are some senior level hiring that will be done on both these fronts, which will mean that at the beginning of the year right now, what we would like to guide. And of course, this is not adjusted for currency, there will be some benefit of currency. When we did the planning, of course, all this planning was done based on USD to INR conversion ratio of INR92. Right now, where we are, we are talking about INR95, INR96 or even higher levels for the rest of the year. But when we've done the planning at INR 92-odd levels, what we planned for is an EBITDA between 21% to 22% for the revenue growth that we will deliver primarily on account of some of these upfront investments that we are making in the leadership hires on the AI CoE side as well as the Databricks side.

So, on gross margin front, I wanted to understand the gross margin profile of the AI project, AI revenue versus traditional revenue, and then also you mentioned of some of the work moving to offshore and nearshore, so is there scope for improving gross margins further because of these two factors?

Yes. So, you would have seen that we started reporting the gross margins in the investor presentation also, we reported gross margins for the first time in line with what the feedback that we heard from you folks. So, we started publishing gross margin number. So, for the full year, we reported close to about 50.8% of gross margins for the last year. When you compare this with the gross margins that we are seeing on the AI-led projects, we are seeing gross margins in the range of 55% to 58%. So, it's a fairly broad spectrum, but depending on the size of the project as well as the nature of the projects, we are seeing that the gross margins on those projects are definitely higher at about 55% to 58%. We do see levers to improve gross margin by doing more nearshoring as well as offshoring work Aditi. But the planning that we've done and the guidance that I gave out is without factoring in any significant change in the current levers. So, we are assuming the current sort of model to continue. So, to the extent we're able to execute better, we should see some upside on gross margins from these fronts.

We will take the last question from the line of Karan Uppal from Phillip Capital India.

Just wanted to understand from the pricing perspective, how much of our work is time and material versus fixed price? And how is the trend of these two line items? Is T&M decreasing in the last few years? And second part of this question is that how much deflation are we seeing in the T&M line item because of AI productivity benefits?

Raj, you can go ahead. I will add in some color on that.

Yes. So in terms of our overall share of fixed-bid to T&M bid, so within T&M, again, we're including the way we internally review or classify contracts is pure staff or T&M contracts, and there is a concept of managed services, which essentially, again, while the pricing is headcount-based or capacity based and there is a fixed monthly sort of revenue that comes to Latent View, it is still, to some extent, based off a headcount number. And then, of course, you have the fixed-bid. We don't do a lot of outcome- based pricing today, but fixed-bid you have. So today, the ratio of fixed-bid to T&M for us will be closer to about 18% to 20%. So, 20% from fixed-bid, fixed type of work and then T&M would be about 80%. But within that 80%, almost 65% to 68% of that would be in a managed services construct, what I mean to say is it's not based off time sheets that someone is entering in the client systems. These are essentially people where we are contracting for a certain level of capacity and the client pays us a monthly fixed amount for those resources there. So, there is no linkage to, one, the time that is clocked or, two, the sort of deliverables that we have to deliver as part of the projects. So that's how we internally view it. What was your second question, Karan?

I will add color to the first question also before I take up the second one. So, Karan, the plan though is to shift a bit more to both milestone and deliverable based as well as outcome-based. So that 20% that Raj referred to, we want to bump it up, okay. I'll tell you the reason. The reason is that productivity gains that you can get by building an agentic foundry or a suite of agents that can be deployed, along with the people who do the work or even productivity benefits by building a full-fledged solution, nonlinearity or even the pace at which we can do work, these can be accrued to us only if we contract differently. If we continue to contract either in a managed services model or in a T&M model, then the benefit of having a suite of agents that are doing a bit of work, our own people being more productive, they will only accrue to the client. So internally, we have launched an initiative where we're incentivizing our project teams, in areas that are well understood where the process is known. And we are able to build good bounded agentic solutions that we encourage the client to contract with us in alternate models, as opposed to just a managed services or a T&M model. We'll keep you posted on the results of how that is panning out. But internally, our teams have been incentivized to move a bit more to that model. The second part of the question, there is no deflation on the way it works is that clients continue to engage our people. In fact, in many instances, they will be willing to pay a bit more. That's why Raj was referring to an earlier question, he was saying that gross margins could be higher if you're doing agentic or AI work. But the expectation, of course, is that though they are paying more for the people, they will expect a lot more work to be done by them, okay, within the time frame. So therefore, in terms of margin, there is no deflation. There are no rate reductions or margin deflation that is happening. It's just that people will be more productive. So, more initiatives will get done with the same set of people and same capacity.

Got it. Thanks. Thanks for the color. And all the best for FY’27.

As there are no further questions from the participants, I now hand the conference over to the management for closing comments.

Yes. Thank you. Not too much to add. I think we covered quite a bit of the stuff. I mean this will be an important year. It will be an inflection point year, in many ways, whether we are talking about the whole AI agentic shift that is happening in partnerships with the likes of Anthropic and so on or whether we are talking about Databricks and the work that we are doing even with, say, CPG and Microsoft and so on. So, there is a lot more action that we expect to see on those fronts. Of course, everybody is trying to understand how the entire agentic shift will play out. My own read on the matter is that there is going to be a need for a lot more complex design engineering of the agentic frameworks, which brings in all of the governance and transparency aspects that I have talked about. And we need good people who are able to marry not just the technical understanding, of how to use Claude Code or Codex or how to create agentic orchestration. But people who can marry that with the business process, the underlying risk and the transparency and the governance requirements and then bring it all together. So, in some sense, this will be a year where this whole forward deployed engineering concept that brings together many of those things will start seeing a significant play. We are gearing up for that in all ways on the capability, expertise, certification, hiring front as well as how we evangelize this, how we talk about this to our clients and show them what needs to be put in place so that they can get the benefits of it. So, we are expecting traction on all of those fronts. Obviously, we'll keep you all posted on a quarterly basis on how this unfolds. But thanks for your wishes. And hopefully, we will continue to execute on the initiatives that we have set in motion.

Thank you. On behalf of Latent View Analytics Limited, that concludes this conference. Thank you, everyone, for joining us, and you may now disconnect your lines.

This transcript has been edited for readability and does not purport to be a verbatim record of the proceedings.