Hi. Am I audible? Yes sir, you're audible.

Sir, in the last call you mentioned that we have lost one of the top NBFC as a client. And obviously, they would have been in our top five customers. Because they had invested in a company who is a competitor to Nucleus, since they shifted to that in your invested company. So, is it possible to let us know, that isn't that – this is for major top 5% first time customers?

Could you be a bit louder? Your last part is not clear, though we got the content, but what is the precise question?

My question is, so is it possible to let us know that isn't this a risk for every of our top customers? They can invest in a company who would be like a competitor to Nucleus and give them business to the competitor?

Theoretically speaking, it's a risk, but how many clients would want to do that is the question. So theoretically, yes, that that has happened once. Practicality of it is, because the company would also want to do business with any other customers.

I'm saying that that client was one of the major NBFCs in the country. So just wanted to know what are you thinking on those part?

We are thinking only about whatever we can do best, so our investments in our products and R&D and AI, we can do what we can do better, and we are confident of our positioning in the market. We are getting traction, so this is a one-off case, that's what.

So my second question is, in the last 2 to 3 years, we are focused on to strengthen the sales and marketing team. But we are not seeing that conversion into business. Sir, one factor could be the loss of customers, but what could be the other reasons? What are the gaps we are not able to fulfill?

So, I will let our CFO answer that part.

With respect to the question, you are asking in terms of not reflecting in the business, so just to share, last quarter, we have dropped our biggest order book of INR 600 plus crores in a quarter. That is a reflection of the work, sales, marketing team is putting together, along with duly supported by our delivery function and other support functions. Continuing on that trend, this quarter also we have locked the order book in excess of 300 crores. So I think that is a reflection of the great work this team is doing in terms of strengthening and building on the foundations such as was laid during all these years.

Okay. Just a question about customization. If a small NBFC can decline, obviously a customer of a Nucleus comes to Nucleus for some customization, will you be open to it, or you'll have some criteria for customization of the software for different level of customers?

I think when we talk about customization, we generally encourage configuration and design. Fundamentally we look forward into opportunities, how we can make those business elements implemented through configuration. Having said that, when it comes to the regulatory part, then certainly we have provisioned the way of delivery to our customer. Customizations are minimal and to an extent of some integration changes, which comes sometimes to our table, and that has been managed through the power of extended AI. Hope this answers.

Sorry to interrupt, Rushabh sir. I would request you to join back the queue for more questions, sir.

Yeah, thank you. Thank you, sir. The next question comes from the line of Mr. Vinay Nadkarni from Hathway Investments. Please go ahead, sir.

Good afternoon. Just wanted to check out, if you can just give us some broad view on what are the other expenses that have increased so much in this quarter as compared to the previous quarters, if breakup can be given?

Well, the same breakup, I will not be able to share, but it is largely on account of personal cost. Since this is first quarter, salary revision has been factored into this. That will also reflect in subsequent quarters. In addition to that, we have also given RSUs that has also impacted in a certain way our Op erative Expenditure.

Yeah, but employee expenses have grown by 3.8% QoQ, whereas your other expenses have grown by 18% QoQ. So I just want to know the other expenses. Have we incurred more on sales and administration, or what is it that has caused this bigger jump when your revenue has actually degrown?

So, it is a little bit of marketing expenses, which has increased since we are investing heavily in global markets so in terms of that, some expenses has increased on that side. Little impact in terms of admin is because of increase in some diesel and power expenses, because of this war situation and the diesel price has fluctuated a lot, and that has also impacted a bit on that front.

Okay. That's it from me. Thank you.

Thank you, sir. Participants are kindly requested to restrict with one question in the initial round and get back to queue for more questions. The next question is from the line of Mr. Hardick Bora from Vireya Capital l. Please go ahead, sir.

Hi, good afternoon. Can you hear me? Yes.

Thank you. First question is, some color on the order book. It seems that in this June quarter and in the March quarter put together, you would have won close to crores to INR 900 crores to INR 1,000 crores of orders. What I wanted to understand is that, is the execution cycle of these orders, m eaningfully longer than, let's say, what our historical experience has been or would it be in line with our past track record?

So more or less it would be in line of our existing track record. While, yes, efforts are being made to speed it up, bring in more efficiencies, but largely it will remain as our existing.

Okay. Actually, just a follow -up on this. We attended the AGM on Monday, and I think there was a comment about some AMC related aspect also being part of the order book, and hence, the execution cycle could be longer. I am trying to clarify my understanding here. Despite the sharp jump that we have seen in the order book, thanks to the marketing efforts that we put in, the execution cycle doesn't necessarily become longer due to some AMC aspect in it, right?

The thing is with respect to AMC; this order book includes the AMC contracts also. These contracts are long term contracts. It cannot be exactly compared to implementation of a particular order, which will entail a shorter period rather than an AMC.

That would be the case for our orders in the past as well?

Yes Sorry to interrupt, Hardick sir. I would request you to join back the queue for more questions, sir.

Okay. Thank you. Thank you. The next question comes from the line of Mr. Mahak Singhvi from Mak7 Investments. Please go ahead, sir.

What are the logo deletions in these three months?

Sorry?

As you are not performed in India. Why is the revenue so down and so is the segment result in India. As far as India is concerned, how many logos have left?

Some of the logos have left, and in fact, we have added three new logos.

If none of the logos have left, then how come the Indian performance is so down?

It depends on some one -time event which has occurred in the last quarter with respect to one of our biggest customer to where we have got some part of the revenue as a special capitalization initiative delivered for that.

Sorry, to interrupt Mahak sir, we are requesting you to ask one question. Due to a lot of participants in the list, we would request you to join back the queue again, sir. Thank you. The next question comes from the line of Mr. Samarth Singh from TPF Capital. Please go ahead, sir.

Thank you for the opportunity. I think the main question I have is, our sales and marketing expenses, which have gone up a lot, have finally shown results in our order book. But there seems to be some sort of a mismatch between that converting into P&L. Could you just explain to us what is the reason why our order book has literally doubled from last year, but our revenues are down 3% YoY.

Our order book is a composition of certain contracts, which are a little long range, maybe extending up to 5 years also. There are certain orders which get 55 with a shorter period of time also. That is why you might not be seeing exactly or culminating into a shorter revenue cycle. In addition to that, sales and marketing expenses which you talked about, is yielding definitely the results in terms of healthy order book. Why? Yes, there are certain markets in which we are setting our foot. And in those markets there will be certain expenditure which will yield or result in maybe subsequent quarters.

My point is that the order book is starting to consume at some point, right, and start reflecting in the EBIDTA. I mean, when you go from INR 600 crores to INR 200 crore order book, you know revenue should start go start going up, but they are not. I would need clarity on that.

Yeah. So, the implementation cycle also is slightly longer. It is not a quarterly phenomenon. It takes some time to implement the order, and it also depends on customer -to-customer depending upon the kind of complexity which we have to deliver. Also, it depends on the volume which they have in terms of migrating their legacy systems to ours. So that is why typically, this implementation cycle varies from customer-to- customer.

Sir, how many customers are in this increased order book of INR 600 crores that we've got over the last 12 years? How many additional customers does that represent?

So, if we talk about in last 15 months, we have added almost 10 new logos.

Okay. Thank you. I'll come back in a minute. Thank you, sir. Participants are kindly requested to restrict with one question in the initial round and get back to the queue for more questions. The next question is from the line of Anuj Sharma from SteadFort Investments. Please go ahead, sir

Thank you for this. Just a request. One question won't even allow you to ask a follow -up, but yeah. See, just one observation from '23 to '25. Our observations were that we were a deeply discounted pricing structure, and we would want to correct that. We did correct, which helped us to get margins of 25 to 27. We did comment that it is our aspiration bei ng a product centric company, our margin should be in that range, which was consistent with industry dynamics. But over the past 2 years, we really surrendered and couldn't retain any of these benefits. So, just wanted to understand this journey. And if I just extend this journey, it seems that we, again, in the next few years, will again become a deeply discounted model, waiting for another round of price correction. You know, just trying to understand, where have we seen that kind of maturity which other product companies have seen? And that's question number one.

So with your observation, I think, I would agree partially only, because what we had to do in the past, of course, gave us the benefit for some time. I think we have mentioned or you would have noticed that past couple of years, the new orders, new logos were not there, which kind of impacted us. Now second half of last year and this quarter is when our order book has got back again. It's become strong again, which will, of course, result in revenue as the projects start getting executed. I'm not able to relate the past to present but this is what the situation. What we did a few years back was something which was needed. That did give us a leeway for a couple of years. But now it is new orders that will give us both.

Yeah. No, I get that. But my real question is, you don't see product companies like this. Most of the time product companies are able to extract efficiencies and productivity, and are able to retain it. Nucleus somehow has not been able to do so. So I’m just trying to understand where are we different, or what are our challenges which are not similar to other product companies? I'm talking about successful product companies, because many don't survive, but the ones who do and achieve a reasonable rate demonstrate some maturity in operating metrics. So, Vishnu ji, I will be just understanding beyond what is it clearly that we behave unlike a product centric company, our financials rather.

So can't talk about other product companies. You would be comparing that better. But one thing which I can tell you is when our order books were low, we did not stop investments into product. So our product investments did not stop, because we have been maintaining that that we always have a long-term view. Last couple of years when we were not getting new logos, we did not stop investments. And that could be reflecting what you are observing right now, but now that the new logos and new orders are coming in, we should now again see an update. That's how I would respond, yeah.

Absolutely. As Parag has very clearly highlighted, that is what has happened. Our commitment to our customers, existing and obviously prospective also , is firm in terms of delivering the latest functionality and the latest technologies, irrespective of how in the short term, we are able to service our stakeholders that is represented by you. So for us, customers have continued to be our highest priority. And in that prioritization, sometimes shareholders would get affected, which is what has happened in this quarter also.

All right. I'll come back in the queue. Thank you.

Thank you, sir. The next question comes from the line of Mr. Rahul Jain from Dolat Capital. Please go ahead, sir.

Hello?

Rahul, sir. Please go ahead with your question.

Hi. This is Rahul from Dolat Capital. Sir, basically if you could tell – first of all, congratulations on very strong order signing in last couple of quarters. It would be great if you could explain us, are this most of this subscription model? And does the big part of those orders are related to the subscription value, which would accrue over 5 years to 7 years? That is part one of the question. Part two of the same question is that this model is moving towards subscription more and more. Do we see the implementation as a percentage of the order value reducing? And in general, if you could talk about how you expect this order book traction to tran slate into revenue traction? Will it be back ended during the year, or it will be more even beyond that? Any color on this would be great.

you know we don't give any future guidance on that trip, I'll not be specific on numbers. But directionally if I talk about – these AMCs are basically, I will not call it as a subscription model, but based on certain amount which grows by certain percentage every year, and that may last up to 5 years. So, we normally get into this contract for 5 years. And with respect to all the new logos, obviously there will be implementation and licensing cost that definitely we’ll get from the customer once the implementation starts. That is where the significant part of the revenue will get accrued. Certain part in the form of AMC will get accrued over a period of 5 years.

Got it. Are you trying to also see that the jump might have also come up because of some AMC renewal on a longer chart or you're saying generic comment? I'm assuming the biggest jump would have come from the new logo wins.

So, it is exactly coming from the new logos. Yes, a significant portion is coming from the new logos, but a reasonable part is coming from existing customer also. AMC getting renewed at a significantly better price.

Sure. Thank you. That's it from my side. Thanks for the call.

Thank you so much, sir. We have a follow-up question from Mr. Hardick Bora from Vireya Capital. Please go ahead, sir.

Thank you for the opportunity again. So I was just looking at the marketing and sales expenses and the G&A expenses. Both have increased to about INR 21 crores. Now of course, we are seeing the order book already reflecting the efforts made on this front. But is there some lumpiness in these costs, or are they expected to go down going forward? Just wanted to get some color on the sharp rise in the S ales G&A and marketing costs on a QoQ basis.

we will keep looking for investing in those events or in those markets, which are strategic priorities to us, and which can yield results in the coming future. That calibration will go up.

So there's no large one-off that we need to keep in mind, that came in this particular quarter perse?

Nothing.

Okay. Thank you.

Thank you so much, sir. The next follow-up question is from Mr. Mahak Singhvi from Mak7 Investments. Please go ahead, sir.

Yeah, your employed benefit expenses as a percentage of sales is around 75% right now. Is it going to come down, or is it going to remain the same?

It should come down, because it is as a percentage of revenue. And if you see, we have largely been hovering around the INR 210 crores, INR 215 crores. That is the number we are looking at. As obviously revenue increases, there will definitely be a decline in percentage, you should see. But yes, we'll continue investing in our talent and hiring the AI native talent, and that may impact a little bit, but not much.

Do you have any, like, margin control initiatives? Because even if you increase the revenue, the expenses are eating up all the profits and nothing is left for the shareholders.

So, yes, we are working on that. I feel you will see the effect of those efforts in subsequent quarters, while we can't quantify it. But yes, on ground, we are looking at this. In fact, we are focusing on high margin deals as well, as we chart our course of growth in other geographies than India.

Okay. I will join in the queue. Thank you.

Thank you, sir. The next follow-up question is from Mr. Anuj Sharma from SteadFort Investments. Please go ahead, sir.

Just wanted to understand our pricing philosophy or pricing structure. Over the past, again, I would focus on the long term. How has our pricing changed in the last, let's say, 3 years, 5 years. What do we do different in pricing? Because one of the challenges again for us was pricing so how have you worked on it?

So, yes, pricing always remains a challenge in the wake of competition, but we have chosen to retain and be a premium player, because the kind of product we offer in the market is extremely, I would say, strong and solid product. In terms of effectiveness, in terms of features, in terms of various aspects of the product, we believe in our product. And yes, there is strict competition in the market. While we don't talk about the competition, but yes, that is also a little bit affecting in terms of our efforts to take the price up. So we are maintaining the price segment and we want to continue that segment. As situation improves, obviously, we'll take that up.

Okay. In terms of geography, since we are now when we have been for some time looking beyond India, which geography seem to be very promising for us in the medium-term, medium to long term?

I feel Middle East and Southeast Asia are our big bet. Definitely, we have got our footing in U.S. markets also, and we see growing in these markets little differentially than other markets.

Got it. And one small question. In terms of productivity benefits, do you see us getting any productivity benefits from AI?

Not now. But yes, we are expecting those benefits to flow in as we strengthen our AI usage inside the organization, so it might come in.

This is Abhishek. There is a visibility that – but we have not actually started measuring in terms of what tangible benefits that are in terms of numbers. So we are holding it for this quarter, but we are on the right path.

All right. Thank you so much.

Thank you, sir. The next question is a follow-up question from Mr. Samarth Singh from TPF Capital. Please go ahead, sir.

Thank you for the follow -up. Just on the order book over the last 12 months, the increase that we have seen. Can you give some color on is it largely FinnOne Neo or is there some FinnAxia in there as well? And the geography of the orders have come from?

Largely just FinnOne Neo.

And the geography?

Geography, I think mostly India. Middle East and America.

And then just on, I guess, the North American market, I think we have been – well, GM Financial has been a customer for us for a long time, but I think that's everywhere outside of the North American market. So, if you can just talk about why has it been that customer who's used our products everywhere else in the world has not converted their U.S. business to Nucleus, and is that an opportunity for us going forward?

In two parts. One is, that is the way the customer business is structured. They have a North America division, and they have rest of the world. Our contract has been with outside North America. And yes, future, there is a possibility. I can't rule that out. But the other customer that we talked about, other order we talked about, one U.S. order that we got in the last year, based on that we would expect to build upon that as well outside GMO.

And was this also another sort of a, you know, a vehicle financier or was it a bank? The client that we have in the U.S.?

The US market works in this segment, or we picked up a very less segment in the auto finance area. It is that customer.

Got it. Okay. Thank you so much.

Thank you, sir. In the interest of time, that will be the last question for the day. Now, I would pass it over to Ms. Swati for her close closing comments.

Thank you, Akash. Now, we would like to thank all the investors for joining us today on this call. I would now pass it over to Vishnu, sir, for his closing comments.

Once again, I would like to take this opportunity to thank you for your continued interest in Nucleus Software, and I would like to reassure you of our commitment to build a long-term institution. Thank you. Thank you, sir. That concludes our conference for today. Thank you for participating. You may all disconnect now.