Indegene Ltd Q1 FY2025-26 Earnings Conference Call

0:01 Ladies and gentlemen, good day and welcome to Indigen Limited Q1 and FY26 earnings conference call. As a reminder, all participant lines will be in the listenon mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Abhishek. Thank you and over to you sir. Thank you moderator. A very good morning to all of you and thank you for joining us today for Indigen's earnings conference call for the first quarter of the financial year 2026. Today we have with us Mr. Manish Gupta Indigen's

0:47 chairman and CEO and Mr. Suhasu CFO to share the highlights of the business and financials of the quarter. I hope you have gone through our results release and the quarterly investor presentation which have been uploaded on our website as well as on the stock exchange website. The transcript of this call will be available in a week's time on the company's website. Please note that today's discussion will be forward-looking in nature and must be viewed in relation to the risks pertaining to our business. After the end of this call, in case you have any further questions, please feel free to reach out to the investor relations team. I now hand over the call to Manish to make his opening remarks. Thank you Vishek. Um good morning everyone. Um thanks for joining our uh Q1 earnings call today. What I'll do in this call apart from our Q1 results, we'll also touch

1:33 upon some of the external trends. We spoke about them last time and so we'll just double click on what we are seeing. We'll also lay out our FI26 outlook and strategic uh priorities. Now starting with the external perspective uh there was some renewed talk about US farmer tariffs in the last few weeks. Now at least what we see uh from uh is that this continues to be a non-factor not a big thing at all for the innovators. VCs VC is based on all the analyst commentary and more importantly based on our customer interactions. There have been some other program announcements like the national priority voucher program by the FDA that should positively impact drug review timelines

2:18 and maintain high throughput of drug approvals and launches. Also, there was a changes at CDC's ASIP immunization advisory committee which might have a little negative impact on the vaccine subsegment but not material. The bigger item was passing of the what has been called the one big beautiful bill act. There are some positives in it for the pharma industry. A broad exemption for rare diseases disease drugs from the Medicare price negotiation program and preferential track tax treatment for R&D expenditure. Industry and lot of companies are excited about uh this development. On the other hand, there was one point

3:05 of a projected decrease in federal and peer drug spending via Medicaid. This will also uh be because of uh increase in the number of uninsured individuals. While this healthcare spending reduction uh might have a larger impact on providers which are hospitals, it will only have a very small impact on the pharmaceutical industry. Uh this is because Medicaid only accounts for a small portion of many drug makers revenue in the US uh and uh even smaller share uh of their total revenue worldwide. Further even prior to the changes introduced in uh the OBBA which is the uh big beautiful act. Medicaid uh has historically reimburseed companies for

3:50 drugs at lower rates than those in other programs like Medicare or commercial insurance. So the impact is even lower. Even so, this dynamic is likely to broadly influence patient access to medications and in turn investment decision decisions related to research and development, M&A strategy, overall sales performance in the pharma and biotech sectors. one way or the other. This is yet another step in line with our strong belief and long-term outlook for the business that innovators will have to accelerate digital first transformation adoption of AI uh advanced analytics across R&D, supply chain and commercial operations to improve speed to market

4:37 and reduce overheads as a response to a secular pressure on drug pricing. Something which we have been saying again and again. Now if I summarize, we see no change in the industry outlook. Uh directionally the pressure remains on drug pricing and hence pharma operations uh will be more pressure to be more efficient. Uh and the recent macro news and trends reinforce this pressure as well. Now if I come to the industry, this year has been going I would say reasonably well for the industry so far. industry is expected to have mixed growth with most companies growing between low to mid single digit. There are of course some of them which will be doing extremely well. Um and they seem to be managing the macro pressure well.

5:25 More interestingly, we also see clients now coming back to the table more and more for the next level of evolution of the programs we've been working uh uh with them for. While decision-m is not on steroids, it's not very fast like this is a conservative industry. We've said it again, but we clearly see clients actively shaping the directions of uh their programs. Uh now, now moving on to our business performance for Q1 FY26, revenue came in at INR 7068 million. Uh a growth of 1.8% in USD terms and 7% in INR terms. The growth in USD would have been 2.2 quarteron quarter but came lower due to

6:11 a one-time credit given to a customer in settlement of unresolved project expenses. These expenses were in relation to an engagement which was concluded mid of last fiscal uh and were already provided for as project expenses and hence no material impact on profitability in the current quarter. Ibida came in at INR536 million a growth of 7% quarteron quarter. Uh we reported a Q1 part of INR 1164 million. At this point I would like to introduce Tectonic to you. We've been talking to you about this for some time now. Uh these are large transformative conversations we've been having with our

6:56 large customers. This is not taking shape and we calling it tectonic. This is indigen's effort to move up the marketing value chain on commercial content creation creation side and capture more work upstream which has traditionally been done by awards or specialized healthcare agency but this time by use of our marketing and medical capabilities global operations and technology especially AI capabilities we are making big decent impact in this area. Q1 has seen us make good progress in terms of conversations which led to uh paid pilots and eventually full-scale engagements. Uh we've generated more than US 1 million of revenue from

7:41 Tectonic in this quarter across two customers. Both of them are top 20 and we'll continue to take this proposition to other customers as well. Now we can uh at this point of uh time if you just uh go from a segment reporting uh perspective tectonic will not be reported separately but will be part of ECS enterprise commercial solutions. We believe over time the lines between upstream tectonic work and the downstream production work that we are currently doing will become part of single larger engagements and that's a strategic direction uh we are working uh towards with our customers. Before I go uh deeper uh given that we

8:28 spoke about tectonic and the u impact of uh and the reason why we able to do this well bringing all our capabilities together let me also allude to some some of the stuff which we are seeing uh across the board in our solutions uh as we have incorporated AI um and cortex as we had announced earlier. Now our clients are excited right what we were able to offer are very unique value propositions differentiated propositions across the value chain right uh in medical affairs regulatory safety commercial uh and we see clients being excited we have multiple conversations going on uh we helping clients uh think about their few year uh road maps however

9:16 as we said earlier this is a conservative industry uh they careful in u terms of adopting some of these things and hence they continue to engage with us. We believe that over a medium uh term uh AI will play a very significant role in differentiating us uh and uh enabling us to take a larger market share. All our initial engagements uh make us excited about it and hence we are doubling down our on our efforts uh in u investing building the products tools which we have been doing and also incorporate them in our solutions. Now this is a good time to talking about our segmental revenues. Our enterprise segments ECS and EMS enterprise commercial and enterprise medical which contribute 86.6% 6% of our revenue grew

10:05 by 3.3 3.5% quarteron quarter. We have also renamed omni channel activation now to be called brand activation to reflect the distinct nature of the engagement at the customer level in in brand commercial segment. Viz is the enterprise commercial segment. Brand activation had a degrowth of 21.6%. This is due to two reasons. First a project went on hold and revenue got deferred due to a customer's regulatory hurdles impacting launch of its parts and second the conclusion of a project with a customer. Both were sizable projects. The se other segment has grown 16.9% quarteron quarter uh but contributes only 3.5% of the overall revenue and

10:51 hence will not have a material impact on a consolidation basis. Coming to client con uh our client view our largest customer has grown by 4.3% quarteron quarter more importantly our transformationative deal construct with them which we introduced earlier as tectonic has started generating revenues and we should scale up over the next few quarters. The top five accounts have grown by6% quarteron quarter reversing last quarter's trend and also signaling that past year challenges are behind us. Top 20 is business as usual and contributed 76.2% of revenues. Accounts beyond the top 20 continue to have

11:36 higher growth growing by five 5% quarteron quarter in Q1. Existing accounts contributed 92% of this while new accounts contributed 8% of this. On the existing accounts and engagement side, we did not see any significant challenges uh with our operations or revenue. This was a good quarter in terms of new pipeline growth which also alludes referring back to my earlier conversation of clients coming back to the table thinking about their programs. Uh we al we also maintained our momentum on deal wins with two large deals and wins of 3 million plus ACV one in ECS expected to go live in Q2 itself and the other in brand activation to go live in H2. We also had four deal

12:25 wins of call it in that 1 to 3 million ACV uh two in uh enterprise commission one in uh enterprise medical solutions and brand activation. Cash generation continues well and our cash and cash equivalent investments in each are 17280 million crossing 200 million. We remain committed to utilizing this in the best interest of the shareholders. M&A remains a priority for us and we have a pretty healthy M&A pipeline at this point of time at different stages and it's progressing u well before I wrap up I want to touch upon FI26 initiatives and strategic priorities for Indigene FI25 was a somewhat challenging year for

13:10 Indigene as we had some unexpected client issues but those look like are largely behind us now looking at FI26 our deal pipeline is improve improved and we are seeing the results in our improved dealbooking data. The progress on tectonics is another outcome of the same revenues from two customers and advanced rules of c of uh communications with three more. I spoke about the traction we are seeing uh with customers as we incorporate more and more AI into our solutions and the value proposition we can offer before because of that uh and hence we continue to double down on that operationally we have done a strategic reorg of our sales function uh and completed a remapping exercise to

13:57 drive higher effectiveness um uh and traction and efficiency. We're adding senior leaders to strengthen and drive growth in our sales functions, consulting and capabilities like data analytics, content and medical affairs and regulatory affairs in EMS. These FY26 initiatives uh might not have near-term impacts but act as a bedrock for our medium to long-term uh growth. With this, I'll pass on um Mr. Suaz to get into more details on the financials. Thank you Banish. Once again a very good morning to everyone and we appreciate your participation on this call today. Let me dive um into some more details of

14:43 the financial performance for the quarter. As Manish mentioned, revenues for the quarter came in at um uh rups 7,68 million, which is up a strong 12.5% yearonear and uh 7% uh sequentially. The growth in US dollar terms is 1.8% quarter quarter and 4% quarteron quarter in constant currency term. As Manish highlighted, our revenues would have been higher um with the USP growth at 2.2% quarteron quarter but for a one-time credit to a customer in settlement of unresolved project expenses. This was for a project for an

15:29 Indian affiliate of a global customer and hence the contribution of the India geographic segment in our revenues has dropped from 9% to.3% in the current quarter. Uh coming uh to the rest of the geographical segments 95% of our revenue continues to come from the US and um Europe regions. North America revenue share is uh north of 70% in Q1 and Europe revenue share is at 27.1% in Q1 and this is largely in line with uh our past trends and expectations for

16:17 the future. The EITA margin for the quarter was stable at 20.2%. And we have spoken about tectonic and our continued investments in tectonic including certain unpaids at this point in time. Um and uh at uh normal rates uh of charge out this would have added about 3% to our margin. The employee expenses during the quarter was lower by 7%. But combined with subcontracting costs which are part of our other expenses are higher by 1.2%

17:03 which is in line with the growth uh in our revenue. Other income uh was negative primarily comprising of exchange loss due to foreign exchange fluctuation due to the weaker uh US dollar uh against euro and u even INR PBT came in at rupees,521 million a strong growth of 27.1% yearonear and 1.9% quarteron quarter And finally, PAT came in at rupees,164 million, a growth of 32.7% yearonear while it's a degrowth of 1%

17:50 quarteron quarter. The pack margin for the quarter came in at 15.3%. a reduction of 30 basis points sequentially with the effective tax rate for quarter 1 recorded at 23.5% versus in the past quarter it was a lower 21.2%. That let me take a pause and move on to the questions that either Manish or I can answer for you all you're open for Q&A. >> Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on the touchstone phone. If you wish to remove yourself from the question queue, you may press

18:36 star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question assembles. The first question comes from And of Shivani from Monach's network. Please go ahead. Hello M. >> Hi am I audible? >> Yes. >> Yeah. Hi Manishai Sas. Congratulation on good set of numbers. There are two question. Um one is if you can touch upon omi channel activisation decline both year on year and quarter on quarter. Again I also see the margin um is impacted and it has uh decreased significantly. So um can you please elaborate on this one? Sure. Good

19:24 morning Shani. I'll pass it on to Su for Gails. But uh uh there are two things. One is uh you got to think omni channel u activation as a business uh and that's the reason we also calling it brand activation is a brand by brand uh business right uh visav our other business uh enterprise uh solutions whether it's medical or commercial which is much more broad-based enterprise uh wide engagements and the nature of the business is such that some brand having an FDA issue right uh or uh engagement getting over uh there is a slight more variability on the business. However, uh what we'll also uh encourage all of you to think about this uh brand activation along with enterprise uh commercial

20:10 solutions, right? Uh because I spoke about uh tectonic and we very excited about where this can go, right? Uh Tectonic as a capability u an offering we are only able to build because of our presence and brand activation. uh we have these capabilities uh in brand activation we're combining them with our marketing medical global operations technology AI skills and are able to create a proposition over here so over time we believe uh the brand activation capabilities will also help us create a fairly large significant business in uh tectonic right uh so that's the broad strategic overview I'll pass it on to SAS to double click on any numbers >> sure thanks uh Manish and

20:58 going forward from what Manish explained on the nature of the business more specifically during the quarter the we had contracted with a customer for a brand launch program which has got deferred due to certain regulatory hurdles uh FDA uh you know uh requirements uh in the US which has deferred the launch by we anticipate about 3/4 quarters and hence uh the customer has put the project uh on hold. Um this meant that uh revenues in the range of between 7 to8 million uh dollars that we were anticipating from this uh engagement during the quarter has got deferred by about uh three uh

21:46 quarters. Uh but um uh you know as uh you would understand we continued to incur the cost um and this would have uh um adversely impacted pretty much to the same quantum the segment margins and the consolidated uh margins um as well. But having said that u the rest of the business uh the enterprise segments and uh uh others have shown a very positive growth specifically uh uh enterprise segments have grown by 3.5% uh quarteron quarter and those contribute uh today to close to 87% of our business. >> Thank you. Uh so is this the reason why we also see the client count uh

22:32 decreasing from 73 to 70? Uh there would be marginal variations again on a quarteronquarter basis. Uh given that there would be project based revenues from customers some of which will cross that uh uh quarter million dollar level which is when we consider this to be an active uh customer count in our uh uh list. Uh yeah there would be a couple from this segment as well. Having said that uh holistically I wouldn't read too much uh into that um we would uh look at this over longer tenor and uh when you look at this over

23:18 the past 3 four five years also now you would see that this uh has grown consistently year on year. Yeah, if I just double click on the client thing while obviously we look at the long-term stuff. Uh but we also feel fairly good that uh u if you will see the numbers towards the end of the year we'll do better on the client uh thing. Quarteron quarter a client dips from 26 million to 24 the numbers change right it doesn't mean much uh but directionally I think we're moving uh in the right uh way over here even with the client number side. Sure that was helpful. And the next question is on margin. Uh so uh uh we see that margin remain flattish uh quarter on quarter which is a good thing because quarter 4 is generally stronger.

24:05 But what I wanted to understand is that with all the AI investment uh that we are doing which will only improve our capability going forward. So how we see margin progression uh uh and how much is the margin expansion uh scope if you can throw some light on that. Sure. Um Shivani as you rightly pointed out margins have been uh stable and uh uh going over the last three uh quarters. Um so we uh uh you know uh productivity initiatives both automation geni le uh uh uh you know uh contribute to uh enhancement of margins and uh over period is offset basically due to wage bill hikes. um as well as uh um uh you

24:54 know uh annual resets uh of uh uh rates um and I shouldn't say every year but whenever there are renewals uh um for some of the customers which happen once every 3 to five um uh years but having said that uh uh today we are able to offset the incremental investments uh uh uh as well as u uh you know unpaid uh uh uh projects or PC's that we do uh for customers as we push aggressively uh to introduce these new concepts in our client uh environment and therefore in the near term we believe that we would be able to sustain um and be in the

25:39 region of around 20% at a beta level on a full year basis. >> Sure. Thank you. If I can just chip in one more uh which is on uh M&A. So we have a very strong cash uh balances which is a 17 billion. Uh can we expect more acquisition to happen in the European uh region because uh we have been talking about diversification. Uh so is my thinking correct or or we'll see more of uh you know combination of US and uh Europe acquisitions going for more acquisitions going forward? There are two things uh uh actually there are bunch of things over there let me unpeel those uh that we we are looking at acquisitions uh from a

26:25 capability perspective right of what we can do so we are looking at to that extent uh we really are not uh necessarily focused on any geography wherever we see the capability we do strong and the company offering something we will be interested in that M&A so we have a pipeline both in the US and uh uh Europe uh As far as the cash part uh goes uh I don't think uh cash has been a deterrent for us uh to do M&A right it has been u uh us finding the right target at the right price right uh now what we are seeing over here is interesting that companies for a very long period of time uh had unrealistic expectations of value they were still

27:11 driven by the 2122 euphoria uh which had happened right in the private uh space uh deals haven't happened and uh we clearly see that expectations uh coming down right and becoming more realistic and hence we are more bullish on our ability uh to probably get uh M&A uh done right the engagements are becoming and the discussions are becoming much more realistic and getting to value zones which we are comfortable with. >> Sure. Thank you. That is all from my side. >> Thank you. Before we take the next question, we would like to remind participants, you may press star and one to ask a question. The next question comes from the line of Abishek Bandari from Namura. Please go ahead.

27:57 >> Yeah, thank you for the opportunity. Uh Manish, I had one uh very basic question. You know, of late you've started shifting to PQ in terms of you know talking about numbers. Any reason why you started shifting towards P instead of YI? uh do you think now the business has become kind of a linear and we should measure it on a sequential basis first of all good morning uh you know I'm going to give you a very honest answer on this uh I still look at business more yearly right the nature of our business uh but have been guided that everybody all of you want to see quarteron quarter that's why we have shifted to uh that uh so there is no very wellthoughtout reason uh for that so as Yes. But having said that uh Abishek um

28:45 you know uh full year basis 12.5% um on revenue and uh uh 27% on PPT 32% on uh facts I think uh uh you know we would keep referring to that because we believe uh you know whatever concerns that we had expressed during our current quarter performance in the last fiscal year versus this. We would want to also highlight that those uh challenges are behind us and maybe uh the quarterly commentary is more uh to emphasize on that. >> Absolutely. Got it. Uh thank you for

29:30 that. The second question Manish is uh we have been reading lot from outside about you know the uncertaintity what the uh life sciences or big farmer are going through. Some of them also have been going through you know sea level changes of date and some of them are top of your top account as well. So in your you know discussions with the clients do you see any you know hesitation for them to start on certain large project or you think no the other thing is actually true that when things are uncertain we need to reduce cost and hence we'll become you know more relevant. The place I'm coming from is you know most of the investors still think uh that you know our business is tilted towards you know the discretionary part of this trend of life sciences it being on SNM. Please

30:16 could clarify that will be helpful. >> Okay. So I I think first of all let me start with the last part. The reality is that our business is not deflationary. In fact it's completely on the other side. Right. If you see any pharma company broadly their spends on SNM regulatory medical affairs uh remain in same uh ballpark right uh it is uh and that's why we think about our business more and from annual uh perspective right uh the enterprise business especially 86.6% percent right uh uh of that business not discretionary as far as the sea level changes are concerned and all the stuff uh we see that as a very localized thing uh in few of our clients and we've called that out one of our large clients where we had

31:02 challenges last year they went through a lot of uh those changes but it's not a broad-based thing right uh it's one or two places uh and one of them was a large customer right uh uh we had seen that churn But we also believe that they are also stabilizing now right finally and we having multiple conversations even with those customers now right from a pipeline perspective which was pretty much uh which was a challenge till last year but we seeing pipeline grow even in those customers which went through the sea level change. So two points uh business is not discretionary right uh it is absolutely critical and uh non-discretionary and second thing is we don't see too much of those challenges right now

31:47 >> got it thank you Manish and all the best for 26 thank you >> thank you a reminder to all participants if you wish to ask a question you may press star and one the next question comes from the line of Naman Mansali from Nine Reverse Capital. Please go ahead. >> Hi sir, thank you for the opportunity. Uh first question is uh that some of the IT companies have been talking about pricing pressure from customers and higher competition which is leading to some sort of margin erosion. So how are we seeing this and what is your take on this? >> Okay, thanks thank you for the question. See we there are two things. one uh is that uh u our industry and the kind of work we do marketing regulatory it's a

32:33 uh it's not a back-end cost element right uh uh it's super uh uh critical uh for our customers and hence their propensity to shift or do anything based on a few dollars here or there uh is really not high right uh and that is the reason why even some of the AI based solution where they can get significant benefits are taking time to even get adopted right uh uh because of the risk uh perception. So we don't see that right uh on this uh part of course customers are actively looking out what else can they do right and from the future right u and especially uh given uh the possibilities AI offer uh but uh we are not seeing that in our part of the industry.

33:19 >> Got it. Got it. Uh and second question is what is the split of the organic and inorganic growth and how is engage impacting your numbers? >> MGL is really tiny um thing. It's one of those capability acquisitions uh as a team we have done and this is I've alluded to this many times uh in our one-on- ones and of course this whole thing that we are preparing for tectonic uh to be scaled up across geographies. So these tuck in acquisitions we do on the agency side will be small acquisitions which are uh instead of hiring people beforehand uh given that this could scale uh at some point whenever it scales right uh you want to be prepared for that uh given the uh opportunity it presents so it's think about these as more as acquireers.

34:08 >> Got it sir. Thank you. >> Thank you. Before we take the next question, we would like to remind participants, you may press star and one to ask a question. The next question comes from the line of sank from I thought PMS. Please go ahead. >> Good morning sir. So my first question is regarding the patent case and how we are getting benefited from this. So in your experience for the past 15 years, how are you benefited from this ped? Sorry, sorry. Could you repeat the question? We couldn't understand. Benefit from what? >> It wasn't very clear. Can you just repeat once more? Sorry. Sorry.

34:54 >> You're not audible. Your audio is very low. Mr. Sar is able to better sir. Sir, how are we getting benefited from patent cycle? Sir, >> sure. So I I would say that uh and again there are two things. One is patent uh cliff uh are is there but on the other hand new launches are also stated to be very high for the industry. So overall the industry is going to uh be okay right uh now as far as patent cliff is concerned. uh we have a offering of uh providing omni channel uh for mature brand uh categories right and that's where we see a very active pipeline at this point of time where companies for

35:40 mature brands right are saying is there a better way to promote uh and our omni channel uh business uh both on the combination of enterprise and brand activation side fix uh to be able to deliver those as a solution and we see bunch of that increasing in our pipeline >> got it sir got it sir Sir my second question is that uh how are we differentiate from other players like uh contract sales organizations or generic IT companies in terms of uh services and capability >> generic IT companies are not even in conversations uh when wherever we going right they're not part of the mix uh as well uh at least our experience is if they're getting an RFP it is essentially to make up the numbers right uh because

36:25 you have to send it to whatever five seven uh people uh as far as CSOS, agencies, contract uh research organizations. Those are the ones which uh uh are the more credible competition and there we are differentiated let's you asked a specific question on CSOS contract sales organizations there what CSOS do is that they put feet on the ground right let's take an example of what you just asked on on mature product now if a if a product is going to go off patent in the next couple of years and pharma company says you know what I don't want to spend my field force and marketing organization to manage this why don't I just take all these products and give it to a contract sales organization which will put feet on the ground. Right? Now as indigen we are going to the same guys but with a very different value proposition that we will

37:12 be able to take your uh products right uh and reach out to physicians on your behalf but rather than putting feet on the ground we'll do it through digital AI right uh and we can bend your prescription uh curve right uh so the tech stack we have capabilities we have we have data on 2 million physicians for their digital propensities we have algorithms to create what we call shortest path to description right uh that's what we bring uh to bear uh to deliver solutions in this uh area right which is a very unique uh proposition visa with the uh csos right uh visav let's call it and I'm just going to complete it although we didn't ask for it agencies what we bring is uh very significant global operations

37:58 combination of medical marketing capabilities various a based platforms to uh deliver stuff at faster turnaround times lower cost right and quality and at scale right which agencies don't answer your question so my last question is uh what is the organic revenue growth for the past 3 years >> so shar again I would like to emphasize that pretty much a large portion of our growth would be organic. uh the inorganic acquisitions that we have done

38:44 um in the current year or even the last uh uh year have been um you know non-material uh uh as Manish mentioned capability and credibility uh acquisitions which are tucked in and get quickly integrated uh with the existing business and therefore is very difficult to carve out um you know what would be organic and inorganic We would like to uh emphasize that please look at these as businesses which get integrated with the existing uh segments and look at it holistically. >> Great sir. Thank you sir. Best >> thank you. >> Thank you. The next question comes from

39:31 the line of Naman Bansali from Nine Rivers Capital. Please go ahead. Hello Mr. Naman your line has been unmuted please go ahead. >> Hello am I audible? >> Yes. >> Yes. So so can you please provide more details on the tectonic engagement and what kind of engagements are these uh what is the outlook here? What scale are we envisaging and what are the different capabilities needed here? Uh maybe how much automation or AIdriven is this? So uh if you think about it mean a lot of the work uh which we have been doing in enterprise commercial uh solutions uh is around uh downstream activities in

40:19 content creation for example content adaptation localization and execution running campaigns data analytics right uh uh these are the capabilities which you've been doing so essentially agencies do lot of the work upstream right uh the developing the the developing the concepts, right? Uh doing the market study, right? Basing based on that, developing the concept, coming with the creative uh uh ideas, right? Uh and then starting to develop denovo content, right? Uh so we can come in at a later stages which is where capabilities were getting uh centralized. Now in through tectonic what we are doing is things like denovo content right uh taking those content

41:05 from one channel to the other channel some of the medical uh some of the creative uh uh adaptation around that right at the higher stages those are also getting bundled now from a opportunity perspective to give you a sense I would say what we were accessing earlier through our enterprise commercial solutions would have 5 to 15% and these are approximate numbers mind you uh over here of the marketing budgets with tectonic we believe that that's 5 to 15 increases to 35 to 50ish depending on the customer and the situation uh from a budget perspective right uh so that's the level of unlock we are talking about you want to double click on any of this um

41:51 >> yeah and women you also spoke about uh um you technology and that's a key part of uh what we bring to the table um versus agencies which would throw throw people uh expertise into the mix whereas we are able to blend uh that combined with the modern technologies and uh platforms the new platforms you know genai le platforms that we are contextualizing for this industry um is a uh is uh is the uh uh value that we bring uh to the table, right? The generative uh element wherein learning from the creative aspects that are done continually day in

42:38 day out helps us make uh the uh the content the campaign a lot more uh uh effective and the entire execution a lot more uh efficient in relation to what was possible in the past. And uh you know harnessing that uh uh u uh you know power is what we bring uh to the table through technique and that is why we are very excited that this possibility throws up for us in the future and from a revenue perspective it's already started generating uh revenue Manish mentioned in uh earlier in the call already a million dollars of revenue during the quarter uh while We continue

43:24 to do unpaid uh you know PC's u you know uh to prove uh the strength and power of this to our customers and we believe uh we are well positioned to uh uh to keep uh gaining u on this front as we make more progress. >> Got it. Got it. Very helpful. Thank you. >> Thank you. The next question comes from the line of Mohammad Patil from Edel Wife Public Arts. Please go ahead. I hope I'm audible. Yes sir. So in the I have uh three questions. In the near term, how should we think of headcount additions and wage hikes?

44:11 Yeah. Um so uh in the near term u wage hikes for us are effective u July 1 in the current quarter. If you would have also seen our past few years of quarterly performance um the wage hikes are impacted the larger cycle is uh uh July every year. there's a midyear cycle in January but that has a very small uh impact the uh the near-term impact on wage hikes will be seen uh on the margins in the next uh uh quarter. Uh but having said that um you know you would have also seen uh that u our

44:59 headcount has remained um fairly stable and also marginally degrowing over uh the past few uh uh quarters while the revenue continued to be stable and uh growing. Um but having said that um you know we would say that in the longer run the uh revenue growth and the uh uh headcount growth would be in the same direction. Though the uh pace of uh uh addition of headcount versus the pace of growth in revenue need not uh be at the same uh rate. Right? And um uh I would say uh so that while there is a correlation between the headcount growth and uh revenue uh wouldn't necessarily

45:47 mean that both are growing at the same uh pace. >> Yeah. And our revenue per employee is showing that trend right. Uh if I look at the last quarter it was 70 67 point so per employee. >> Okay. And w should we expect high single percentage on an annualized basis? Um so it varies u between u geographies um since uh we also have more than 16% uh of our staff uh outside uh India right it you know country by country it would vary uh but in the rupee terms on a full uh year basis wage hikes tend to be um in the uh 6 to 8% um range

46:37 uh uh for a from a fullear u uh perspective and what we've done successfully as you would see in the quarterly margin rate is while Q2 tends to be the uh the uh tends to show a dip in the ITA margin right it grows through the next three uh quarters um and um you know on a fullear basis we've been fairly stable uh to growing on a a bit margin and therefore part also >> okay and I wanted to understand the operating leverage in the business so if the revenues grow 15% should we expect other expenses to grow 50 basis 50 to 100 basis point lower

47:23 uh yes um uh uh uh from an operating leverage perspective but at the same time uh what we would guide in the near term uh is that uh we would uh continue to reinvest um the incremental uh dollars that we earn for you know uh the future um you know tectonic, genai as well as um expansion uh of uh capabilities organically which will uh uh play uh uh into the growth over the medium term uh to even longer term. So 3 years, 5 years uh down the line uh and therefore uh we are comfortable to operate at a consolidated

48:11 basis at the levels that we are at uh today uh moment. >> Yeah, I think that's an important point because now we are seeing customers uh coming back as I said looking at where they want to go right and uh in that context our priority is going to be growth rather than u expansion of margins. Okay sir, understood. The last question is I just wanted to confirm that you are saying all top 20 client accounts are expected to do well going forward. I would never say all 20 but overall as a segment it will uh grow. Uh difficult to call out all give a commitment on all each one of the 20 uh >> but it shouldn't uh have an impact like it had last year. >> Yeah, absolutely. Absolutely. Thank you.

49:01 Thank you. The next question comes from the line of Rohan Wara from Envision Capital. Please go ahead. >> Hello. Thank you for the opportunity. Uh so the first question was uh under our journey uh and we've been uh saying that we want the clients in the 10 to 25 million buckets to move up to 25 plus million buckets and then then on to the 10 million plus. So, so where are we in that journey? Uh, you know, uh, any a broad idea on that? I know you know you've been uh putting efforts in that direction. So, so that was the first question. >> Yes. So, I I think we're progressing well on uh that. I can't call out exactly when you start seeing those uh numbers. uh but I uh we feel good about

49:49 uh uh if I let's say call it uh a few quarters down the line our client pyramid is going to start uh looking uh uh stronger right uh 10 to 25 moving to 25 plus uh fingers crossed we're also hoping to break the 50 mark uh right having a customer move over there uh the number of million-dollar customers should increase right and of course the number of active customers also should go up so this whole chain we believe good right now from what we see uh is going to be stronger in a few quarters. >> Absolutely. So no, I get your point. I'm just saying ballpark we'll start seeing uh some of this in in in a few quarters, right? So so that is that is what I was trying to get. Uh yeah and and second was on the uh cortex part. So so AI side

50:39 of it. So how is the traction there and you know uh what can one expect from that you know clearly a year from there a year from now. Keep from there are two things. One is uh Cortex as a platform right is enabling us to very quickly uh incorporate uh AI right or geni in a lot of our solutions and I alluded to that uh that medical writing right MLR um across the board right commercial content right uh some of our clinical processes uh we are incorporating uh AI and uh taking the cortex based approach uh which gives clients lot of confidence confidence uh that the whole geni based

51:24 approach we're taking is for them drisk right because our clients are very concerned about uh many things like security confidentiality bunch of other things scalability uh of platforms how they plug in with other systems they might have invested in right uh so on one hand we seeing a lot of comfort over there right uh and hence uh uh these discussions are progressing well on the other hand we also see while it's still early days we also seeing uh Cortex being customers themselves saying that they would want to use pure for their internal purposes Cortex based uh uh platforms and services right which is not necessarily incorporated in our uh operations today uh but is a standalone offering uh by itself.

52:09 It's all right. And >> absolutely and will will you be able to you know sometimes in future give a measurable number you know contribution from cortex or some sort of a numbers in future. We not we're not too sure about that because that's honestly not a very that's not a priority for us, right? The priority is transition our offerings to be geni enabled and we'll encourage you uh this is a quarter where we also have our indigen digital summit uh and um I'm hoping that we'll also to do a stream of this used to be one of those marquee events in the industry. This year we're going in person for the event in Philadelphia. uh I think it's September 24th right uh so we'll send a link to uh all of you

52:56 have a look at uh what our customers are saying what industry people are saying right you'll have a lot of market people coming in the conference customers will be talking and our CTO also will be presented a bunch of things on uh cortex and where we think ji is going to be going so that's really helpful >> absolutely >> thank The next question comes from the line of Omar Savan from masterless investment managers. Please go ahead. >> Hi. >> Yes. >> Yes. Uh I had two questions both on tectonic. So first uh technonic how does this complement our uh current health uh

53:44 uh services because even that was our effort to move up the marketing value chain. And the second question is that as we are moving up the marketing value chain and competing with these specialized healthcare marketing agencies. uh the reason that these marketing agencies exist is that they do a lot of uh customized work they have local understanding and local nuance. Uh and for our context which is global operations uh centralized operations which we cater to uh how does that uh fit in when we compete with these marketing agencies? >> So uh that's a great question. Now if you think about it uh and you rightly as

54:30 you rightly said uh uh the whole omni channel or brand activation as we call it now was meant to go upstream and we did acquire that capability right establish our credentials in the space and I think we've done well on that however that business is a brand by brand type of a business right uh we believe and our view was and that's the reason we uh take the thing is that technology enabled, right? Uh and global operations enabled creation of all this material, right? Uh is the way to go, right? Uh now what we have been able to do using uh uh cult right and the capabilities we have had take some of these capabilities and think about reimagine them uh on an

55:18 enterprise uh basis, right? that if you strip off some of the work which was being done by agencies and consolidate into global operations how will that look like right uh and incorporate and uh pretty much think about it melded that with enterprise commercial solutions as a capability right uh it's taking time for us to do that right we acquired cult in 2022 uh we made I think it took us one and a half two years to get all this sorted out uh and uh it started resounding with our clients uh where they see clear benefits of consistency cost benefit pairs right obviously if they have to drive AI across their marketing operations the only way they can do it is with centralized things right if you're working with 20 agencies as a company there's no way you'll be able to get the benefits of AI uh whereas the central

56:03 operations enables that right uh so that is the path we are taking right uh now we're not saying agencies won't be there agencies will continue to play a role right uh they will uh still be the ideation guys right they will still be the guys who are coming with the creative concepts at least right now right uh and uh but some of the execution work which they are doing we taken on a lot of that earlier but there are other things which you believe could have been centralized this is what we've been able to do now we got the credibility because of cult right to even have that conversation and we've used that effectively >> I hope that answers >> yes yes yes and uh just a follow up to this uh in the yesterday you mentioned that for any tech techn technology that

56:49 you launched, you track three uh critical KPIs, right? Reduction in time to market, resource optimization, and the number of use cases that you address. Can you help me understand how does tectonics uh cater to all three uh KPIs? Uh some color on that. No, so tectonic uh is uh is not you have to delink uh our uh what you heard on the investor day uh on the CTO office, right? All the work which we doing on AI from Tectonic, right? Tectonic is very specific to commercial operations, >> right? And so think about it as a cross between uh enterprise commercial solutions and uh brand activation from a capability perspective. uh when we are

57:34 talking about cortex and the use cases those are much broad-based there are multiple use cases of cortex uh in enterprise commission solutions there are multiple use cases in brand activation uh as well as clinical and enterprise medical solutions within enterprise medical solutions also right uh the point solutions of which where we are using cortex and our generic abilities are a lot right as I said MLR uh various medical writing uh uh documents ments, right? Clinical study reports, PSURs, I can go on and on on uh that piece, right? Uh safety. Uh so we using JI in a much more broader way. Tectonic is one instance of that a large one though. Oh, >> okay. Understood. Thank you. That's it.

58:22 >> Thank you. The last question of the day comes from the line of Vinit Manik from Karma Capital Advisor. Please go ahead. Uh good morning Manish and team and it's good to see uh the growth coming back uh especially from the last difficulty of what we had. So uh just two questions from my side. Uh one is pertaining to that uh we were at about a high single digit kind of a USD growth this quarter from topline perspective. Uh so uh should we assume that the worst is behind us and we are seeing that acceleration in the launches and spends on the top plans coming back. Uh would we accelerate this to a early double digit kind of growth or meeting kind of growth by the end of this year? And my

59:09 second question comes uh to the margins. So as as we have upped the efforts on tectonics and other value added services. So should we assume that with the portion of this going up in the medium term uh it will be more margin accretative from the beta perspective or or how should we look at that effort? Sure. I'll pass it on to SAS to your deep dive but uh uh we uh don't like giving uh exact numbers and guidance uh but uh we feel uh comfortable and good of where we are right now right uh in terms of our engagement pipeline uh and we believe we are on the right trajectory uh as a company uh from a

59:55 growth uh perspective right uh so that's uh uh one our priority uh from a reinvest Investment investment perspective is also going to be growth. As I said uh uh after the frantic activity during co time right till 2023 we saw the industry consolidating customers going slow uh because of what happened during co and also some of the pressures we see that easing right now right customers coming back uh in terms of where they want to go all the stuff. So in in that context our investment and growth becomes uh uh uh paramount. So that's going to be our priority as a company but the specifics I'll uh pass it on to Su to comment on. >> Yeah. Thanks Mish Vene

1:00:41 again to reemphasize why we don't give out guidance for the year. Um three uh factors that you yourself alluded uh you know uh the uh existing customers are top five top 20 uh customers stable and uh growing um you know uh deals uh that we have uh spoken about not just this quarter but uh I think last few uh earnings calls uh converting to um revenue which you are also seeing u in the quarterly uh um numbers now and the uh uh client conversations changing to

1:01:27 uh uh overall pipeline uh for us are uh positive uh uh indicators and uh on the margin front while we scale there is opportunity uh to scale uh margin disproportionately operating leverage kicking in. uh but uh having said that in the near term uh uh we would look at u uh you know investment doubling down on some of the things while balancing out the margins and therefore uh I would say margins in the near term in the vicinity of 20% at a beta level but in the medium term uh you know expansion is certainly a possibility

1:02:15 Got it sir. Got it. Thank you. Thank you for answering my question. >> Thank you ladies and gentlemen. In the interest of time that was the last question. I would now like to hand the conference over to management for closing comments. Thank you and over to you sir. Thank you um everybody for your participation and continued um interest uh in uh Indigen. Um value uh these interactions and uh conversations with the entire uh investor community and look forward to uh continuing this level of uh engagement. Thanks once again and have a good day. >> Thank you. >> Thank you on behalf of Indigen Limited. That concludes this conference. Thank you for joining us and you may now disconnect your line. Thank you.