Amagi Media Labs Limited — Q3 FY26

Amagi Media Labs Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=dfNx4NNcck4 Published: 3 months ago

0:00 Ladies and gentlemen, good day and welcome to the Amagi Media Labs Limited Q3 and 9 months FY26 earnings conference 0:09 9 seconds call. This conference call may contain forward-looking statements about the company which are based on the beliefs, 0:16 16 seconds opinions, and expectations of the company as on date of this call. These statements are not the guarantees of 0:23 23 seconds future performance and involve risks and uncertaintities that are difficult to predict. As a reminder, all participant 0:31 31 seconds 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 0:39 39 seconds 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. 0:49 49 seconds I would now like to hand the conference over to Mr. Bhaskar Subramanyam, the managing director and CEO for the 0:56 56 seconds opening remarks. Thank you and over to you sir. 1:02 1 minute, 2 seconds Uh hi everybody. Uh this is Baser co-founder, managing director and CEO of 1:09 1 minute, 9 seconds Amagi and I have Vijay, our CFO as well in the same call. We're extremely excited to have you all as part of this 1:18 1 minute, 18 seconds today's morning presentation about our first quarterly results post IPO. Uh thank you very much for joining us. Uh 1:26 1 minute, 26 seconds so we would like to start with a small presentation for all of you. If you go to our website you would see an investor presentation as part of the investor 1:34 1 minute, 34 seconds relationship website web link that you would see there. I would urge you to download that uh the Q3 one which you 1:42 1 minute, 42 seconds can download there and uh we intend to kind of walk you through that from an introduction of the company standpoint. So we'll do that right now. 1:52 1 minute, 52 seconds Um if you look at it uh if you go to slide number two of our presentation uh wanted to introduce Maggi Magi is a 2:01 2 minutes, 1 second media technology software company uh primarily working with TV channels content creators 2:09 2 minutes, 9 seconds studios news sports producers across the globe so that's our primary market that we really work with today's 2:18 2 minutes, 18 seconds fundamental value that we had is to provide a single software platform on cloud infrastructure which covers what 2:27 2 minutes, 27 seconds we call glassto glass starting from the camera screen camera till the final screen where consumers watch content we 2:35 2 minutes, 35 seconds provide an end to-end capability for our customers so this is primarily a B2B a business-to- business uh uh business 2:43 2 minutes, 43 seconds that we do today and all of this is running on a public cloud software and we start doing for anywhere from 2:50 2 minutes, 50 seconds production till the point of viewership of a customer. We pretty much manage all the software on the cloud. That's what we do as a company. And if you look at 2:58 2 minutes, 58 seconds it primarily, we simplify the complexity for our customers in terms of running all their operations on a cloud instead of a hardware base of how to look at 3:06 3 minutes, 6 seconds things. Right now, uh I'm extremely excited because this is something that we started 10 years back as a journey in terms of building a new cloud vision and 3:16 3 minutes, 16 seconds this has kind of come to provision. Uh in fact we uh operated the Super Bowl just about 72 hours back for all of the 3:24 3 minutes, 24 seconds US was watching content through an Amagi's infrastructure. Super Bowl is like the IPL's finals for us which is 3:31 3 minutes, 31 seconds NFL's football league in the US that we actually operated as we speak. Winter Olympics is happening on Amari's 3:38 3 minutes, 38 seconds infrastructure. We do the Grammys. So we continue to do some of the marquee live events and live news content across all 3:46 3 minutes, 46 seconds of US today and we continue to expand this in Europe and in the Asia pack region as well. So that's the primary 3:53 3 minutes, 53 seconds work that we do as a company. Going to slide number three just to give you context of how we look at our business. 3:59 3 minutes, 59 seconds We segment our business into three uh units. The first one is called cloud modernization. This is essentially 4:07 4 minutes, 7 seconds because this business is all about customers TV channels who are actually moving their existing on-prem 4:15 4 minutes, 15 seconds infrastructure which is all in hardware, data centers, people and real estate to a complete software environment which is 4:23 4 minutes, 23 seconds what we do today with lots of the large TV networks worldwide. So that's our first part of the business what we call cloud modernization. The second part is what we call streaming unification. 4:35 4 minutes, 35 seconds essentially uh where we enable our customers to distribute their content worldwide. The third part is we enable 4:43 4 minutes, 43 seconds what's called monetization essentially enable our customers to make money through advertising. We don't participate in advertising ecosystem. We 4:52 4 minutes, 52 seconds are not an ad network but we enable technologies which will allow our customers to connect with ad networks and make money in the process. So our 5:00 5 minutes business is always this is the way we report our financials as well. you would see it as we move forward on this front. 5:07 5 minutes, 7 seconds If you go to slide number four, um the biggest I think the biggest growth area growing forward and the biggest investments we're making as a company is 5:15 5 minutes, 15 seconds in AI and I'm sure every company today is transforming and this is a big transformation happening in the media 5:22 5 minutes, 22 seconds business as well. Right? Media is going through one of the biggest transformation and AI is going to be a big big liver for that. What we see is 5:30 5 minutes, 30 seconds the fundamental value for us at the MAGI because we are a platform for our customers. We have a significant opportunity to go solve the cost of 5:39 5 minutes, 39 seconds human cost in terms of productivity improvements that we can provide and that is going to be the biggest opportunity for us. Amagi is already 5:46 5 minutes, 46 seconds investing on an end to-end capability and uh we are in we are in discussions with multiple customers with design partners and proof of concept starting 5:54 5 minutes, 54 seconds to happen in our business already. So we are very very excited about the whole AI opportunity in front of us and this will be a a significant opportunity for us 6:02 6 minutes, 2 seconds from a TAM standpoint itself going forward. 6:07 6 minutes, 7 seconds If you look at the market itself the market that we play today is the television market where when we talk 6:13 6 minutes, 13 seconds about TV we talk about both traditional television transforming as well as the streaming television which is a big part 6:21 6 minutes, 21 seconds of what Magi does today. For example, the biggest tailwind in this business for us is that only 10% of the TV 6:30 6 minutes, 30 seconds channels have moved to the cloud. All others are in hardware and there are billions of dollars. If you look at it, almost 16.9 billion dollars of TAM is today sitting a large part in hardware. 6:42 6 minutes, 42 seconds Only 10% has moved to the cloud and we see a significant opportunity going forward as the 10% moves towards the 100%. uh over time and that's the 6:51 6 minutes, 51 seconds biggest opportunity that we're really following through today and this would be the biggest tailwind for us as a company going forward and that's the future that we see for ourselves. 7:01 7 minutes, 1 second If you look at it our customers are content creators. So what do they do? They take the content drive this 7:10 7 minutes, 10 seconds content and they want to take this content to as many people worldwide. So it's a global business. So they want to take that content globally worldwide. 7:17 7 minutes, 17 seconds They want to distribute to as many places. Once they distribute it, more viewers watch their content, more 7:24 7 minutes, 24 seconds advertising or subscription revenue that they can make, which in turn drives more content. This is the flywheel of our customers. And we're extremely fortunate 7:33 7 minutes, 33 seconds at MAGI that we provide an end to-end capability for our customers starting from taking their content into our systems till the point of enabling them 7:42 7 minutes, 42 seconds to make money through the monetization efforts that we provide. If you look at it, these are the northstar metrics that we track as a company. If you look at 7:51 7 minutes, 51 seconds the content that's coming into Amagi system, it's continuing to grow. We have 8,000 800,000 hours. There is 8 lakh hours of content that's coming into the system. 8:03 8 minutes, 3 seconds Uh, which is almost 64% year-on-year growth that we've seen in this whole thing. Which essentially tells you that more content that people customers are 8:10 8 minutes, 10 seconds trusting us with more and more content which drives the larger part of the business. So a very it's a leading indicator fundamentally for us to kind 8:17 8 minutes, 17 seconds of track internally. We reaching more places in terms of deliveries that we're delivering today. It's about 9,000 plus deliveries that we're doing. We are 8:26 8 minutes, 26 seconds actually getting to distribute in 48 locations and platforms that we actually distribute today worldwide in about 40 plus countries that we continue to do 8:33 8 minutes, 33 seconds that. And if you look at the ad impressions that we've delivered, we've delivered almost close to 13 billion impressions over the last quarter, which 8:42 8 minutes, 42 seconds is almost 60% growth in year one. All in all, directionally the numbers look good for us and we're very happy with where where we are from a numbers standpoint and what we see going forward as well. 8:53 8 minutes, 53 seconds So for uh next slide and slide number seven I'll ask Vijay our CFO to provide a commentary on how the financials 9:01 9 minutes, 1 second existed in this particular quarter and what we see going forward as well. Uh thanks Bascar. Good morning everyone. 9:07 9 minutes, 7 seconds This is Vijay. Um like Bascar highlighted we had some leading u sort of uh indicators that were pretty healthy. Now we're going to talk you 9:16 9 minutes, 16 seconds through how these manifested in our financials. So I'll start off with revenue uh then move to margins and wrap with cash. Um so on page seven uh if you 9:26 9 minutes, 26 seconds look at the graphs on the left side uh for the first 9 months of FY26 revenue grew 30% year-over-year to 1109 9:33 9 minutes, 33 seconds crores. uh in Q3 revenue increased 22% to 404 crores. Uh we saw pretty much secular broad-based growth across all 9:42 9 minutes, 42 seconds the three segments that Basker highlighted a few slides back. Uh just want to highlight a couple of callouts uh with respect to Q3 growth. uh one is 9:51 9 minutes, 51 seconds that the quarter benefits from seasonal strength given holiday advertising flows and two is on Q3 yearoveryear growth due 9:59 9 minutes, 59 seconds to accounting recognition revenue from one of our top five customers uh was fully recognized in the first half of 10:06 10 minutes, 6 seconds FI26 whereas in FI25 it was spread across all four quarters because of this uh first half of uh FI26 looks stronger 10:15 10 minutes, 15 seconds while Q3 and Q4 growth rates will appear softer this is just a timing impact and and does not change uh fullear revenue 10:23 10 minutes, 23 seconds or demand. Right? So overall good story on revenue. Turning to the costs on the right side of the page, uh we've got three primary cost buckets. Employee 10:32 10 minutes, 32 seconds cost, communication costs and other operating expenses. Uh communication costs primarily reflect cloud infrastructure as our software runs on 10:40 10 minutes, 40 seconds public cloud platforms and is largely linked to revenue or scales linearly to revenue. employee and most other costs are fixed or semi-fixed in total. Right? 10:50 10 minutes, 50 seconds So in total approximately 2/3 of our uh cost base does not scale linearly with revenue. Um this structure kind of 10:58 10 minutes, 58 seconds allows revenue to grow faster than total cost. So for the first 9 months if you look at it um our operating cost grew 11:06 11 minutes, 6 seconds 17% against a 30% revenue growth and in Q3 cost increased only 14% versus a 22% 11:13 11 minutes, 13 seconds revenue growth. Right? So the key takeaway on this slide is that revenue growth remains strong uh and broad-based while costs are growing at roughly half 11:21 11 minutes, 21 seconds that rate. So that difference as you all know is the operating leverage that we see in the business. Um and you'll see that manifest in some of the margin 11:29 11 minutes, 29 seconds expansion that we'll highlight in the next slide. So we move on to page eight. 11:35 11 minutes, 35 seconds So this page um has all the detail on the margins. Um as we highlighted on the previous slide uh operating leverage is 11:42 11 minutes, 42 seconds clearly translating into bottom line expansion. In Q3 if you look at adjusted debit uh on the left hand side uh it 11:49 11 minutes, 49 seconds doubled uh year-over-year to almost 58 crores uh with margins expanding to 14.3%. 11:56 11 minutes, 56 seconds Um for the first 9 months ABITa reached approximately 116 crores with margins at about 10 a.5% uh reflecting sort of improved flow through as revenue scales. 12:07 12 minutes, 7 seconds Uh at the path level the progression is sort of equally visible if you look at the right hand side Q3 PAT increased to 31 crores with margins at about 7.7%. 12:16 12 minutes, 16 seconds For the 9month period uh PAT was at 37 crores. Um there were some timing and one-time items in the quarter like we 12:25 12 minutes, 25 seconds discussed earlier including the seasonal effects. If you normalize for these we view steady state aid margins at approximately 10% which we believe is 12:33 12 minutes, 33 seconds more sort of representative uh indicator of of the underlying profitability in the quarter. Um the key 12:40 12 minutes, 40 seconds takeaway is that uh you know we're demonstrating that our growth model is uh significantly um flowing through to 12:48 12 minutes, 48 seconds operating leverage and is inherently sort of margin accredited. Right. If you move on to the next page uh let me turn 12:55 12 minutes, 55 seconds to cash here. Um this slide sort of walks through the conversion from EITA to free cash flow. Um in Q3 adjusted a 13:04 13 minutes, 4 seconds bit of 58 crores um translated into an operating cash flow of 124 crores and a free cash flow of8 crores uh after 13:12 13 minutes, 12 seconds roughly 6 crores of capex. The conversion in the quarter was supported primarily by improved collections and a little bit of working capital normalization. 13:21 13 minutes, 21 seconds Uh for the first 9 months operating cash flow on underlying basis was 47 crores. 13:25 13 minutes, 25 seconds reported cash flow is negative 76 crores primarily due to one-time IPO expenses and and buyback related uh to ESOPs in 13:34 13 minutes, 34 seconds the first half of the year. Uh free cash flow also was negative 96 crores driven by those same one-time items that I 13:41 13 minutes, 41 seconds highlighted which impacted the first half. U we ended the quarter with about 803 crores of cash and investments on the balance sheet. We went public in 13:50 13 minutes, 50 seconds Jan. So this balance does not reflect the primary raise uh that uh that we had uh in in in JAM. U so to sum it all up 13:59 13 minutes, 59 seconds we had strong double digit growth in revenue backed by expansion and margin. 14:03 14 minutes, 3 seconds Um and um you know that pretty much is a wrap on the financials uh slide. Before I hand it back to the operator, just a 14:11 14 minutes, 11 seconds reminder that in our IR website and the quarterly results, um you'll see a shareholder letter which has detailed sort of Q&A on each of these items which 14:20 14 minutes, 20 seconds provides a more comp comprehensive and holistic update. But in the interim for any live Q&A, I'm going to pass it back 14:27 14 minutes, 27 seconds to the operator so that we can we can start queuing up the questions. So operator, back to you. 14:34 14 minutes, 34 seconds Thank you sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. 14:45 14 minutes, 45 seconds If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use 14:52 14 minutes, 52 seconds handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question cube assembles. 15:07 15 minutes, 7 seconds The first question comes from the line of Vive Anand from Ambit Capital. Please go ahead. 15:14 15 minutes, 14 seconds Hello. Thank you very much for the opportunity. 15:17 15 minutes, 17 seconds I have two questions. The first one is on your customer acquisition. 15:23 15 minutes, 23 seconds You have added 40 plus customers in the last year and uh this seems like you 15:31 15 minutes, 31 seconds have seen some growth acceleration as far as customer count is concerned. What are the factors driving customer 15:39 15 minutes, 39 seconds addition acceleration during the current quarter and how should we think about it? Say if one takes a two three year 15:46 15 minutes, 46 seconds view on customer edition that is question one and the second question is the gross margin that you have in this 15:54 15 minutes, 54 seconds business uh you you commented on IIDA margins 10% uh being being the number that one should uh look at as a guiding 16:04 16 minutes, 4 seconds post. Thanks for that. just to understand this better, how should we think about the buildup of this 10% 16:12 16 minutes, 12 seconds coming in from say gross margin and other costs. Thank you. 16:19 16 minutes, 19 seconds Thank you very much for the question. 16:21 16 minutes, 21 seconds This is uh Baser. Uh I will address the first part of your question primarily in terms of customer edition. Uh just to 16:28 16 minutes, 28 seconds give you context right again our business is largely a vertical market business essentially working with 16:37 16 minutes, 37 seconds only the media and entertainment customers worldwide. So it's a fairly concentrated set of customer lists that we really go after fundamentally. I 16:45 16 minutes, 45 seconds would like to highlight a couple of things that you need to look at right one is if you look at it the market transformation is starting to happen the I talked about cloud modernization and 16:54 16 minutes, 54 seconds we seeing uh acceleration of that trend line of customers wanting to move to the cloud. I think that's that's a clear trend line that's driving some of the 17:03 17 minutes, 3 seconds the customer acquisitions that you're starting to see. number one. Number two, if you look at it is obviously streaming has become larger. We are starting to 17:10 17 minutes, 10 seconds see outside of the US starting to see progressions be it in uh Latin America, we seeing it in Europe and in Asia as 17:18 17 minutes, 18 seconds well as we starting to see acceleration of customers wanting to move to streaming platforms and actually starting to build their own streaming capabilities from a business standpoint. 17:27 17 minutes, 27 seconds That's the second biggest leverage that we see from a market standpoint. And all of this if you look at from a MAGI standpoint if you look at it our sales cost in S&M is pretty much consistent. 17:38 17 minutes, 38 seconds So we are not really dramatically it's not unlike a horizontal uh SAS businesses Amagi's business a vertical business which essentially means with 17:45 17 minutes, 45 seconds the same amount of sales teams we're able to deliver more efficiencies going forward. Why is the health of the logos important for us as we kind of move 17:54 17 minutes, 54 seconds forward in terms of number of logo acquisition is you look at it ours is a net retention driven business NRR based business and we had actually talked 18:02 18 minutes, 2 seconds about 127% NR last half year that we actually demonstrated and we continue to see that as the important trend line now 18:11 18 minutes, 11 seconds as c more and more customers come in these are our foundational customers for the next two to three years for us so the health of both we track as a company 18:19 18 minutes, 19 seconds both the NRR metric and the number of customer acquisitions that we're making which is a good balance as we move forward to maintain our growth and 18:26 18 minutes, 26 seconds profitability that's that's directional call that we take as a company I will hand over to Vijay for providing you an 18:34 18 minutes, 34 seconds IITA commentary on that yeah thanks V for your question on the gross margin I abita just one clarification uh the 10% 18:41 18 minutes, 41 seconds is not a steady state and fullness of time the 10% is uh for the 14% that you saw in the quarter we believe if you 18:49 18 minutes, 49 seconds exclude include the onetime sort of tailwinds that we had. We think that the steady state for this quarter is around 10%. Now you had asked about the 18:58 18 minutes, 58 seconds building blocks of where this would come from. If you think about in fullness of time uh if you look at vertical SAS companies worldwide u or software 19:06 19 minutes, 6 seconds companies worldwide, you'd see that um you know they operate at scale at about 25% sort of uh margins um and and the 19:14 19 minutes, 14 seconds reason they do that is because a lot of your growth is land and expand. So you get into a customer and you start growing. Uh in our DRP you'll see that 19:23 19 minutes, 23 seconds we have roughly 45% of the top 50 media and entertainment companies. So we've seeded a lot of these costs both both on 19:31 19 minutes, 31 seconds sales and marketing and R&D u and as these customers continue to grow um uh you know and because of our NRS being 19:39 19 minutes, 39 seconds healthy uh these costs don't scale linearly to revenue. So you see secular leverage across sales and marketing, R&D, uh which is a good chunk of your 19:47 19 minutes, 47 seconds costs. Uh and those would be the sort of two primary areas from which uh you'll start seeing leverage. 19:56 19 minutes, 56 seconds Okay, understood. Uh just a couple of follow-up questions. Uh would you would you be able to disclose the million plus 20:04 20 minutes, 4 seconds clients which I think you had disclosed in the DRHP and uh and any further color 20:11 20 minutes, 11 seconds on the uh growth of the top 10 clients or say top five clients whatever you wish to provide. 20:21 20 minutes, 21 seconds Yeah. So on the milliondoll uh annual revenue number uh it's because it's an annualized revenue number. So we we 20:28 20 minutes, 28 seconds found it more meaningful to disclose it on an annual basis not on a quarterly basis and we'll making we'll be making that disclosure when we do the FY uh 20:36 20 minutes, 36 seconds results uh on greater than uh on the top five customers growth. It's not a specific metric that we've disclosed and at the right time we'll make that 20:44 20 minutes, 44 seconds available but uh it's suffice to say that uh um our overall sort of arc would 20:52 20 minutes, 52 seconds be reflective of the growth that we are seeing in the top five top 10 customers. 20:58 20 minutes, 58 seconds Okay, just one small feedback. If it is possible to uh include some more metrics 21:04 21 minutes, 4 seconds in the KPI sheet like headcount um broken across say sales and tech and others. I think that that was a metric 21:13 21 minutes, 13 seconds that we would like to track on a periodic basis as well. if you can include that in your KPI disclosures. I I saw the shareholder letter has an 21:22 21 minutes, 22 seconds extraure KPIs but if you can make it a bit bit more richer from a cost structure and productivity standpoint it will really help us. Thank you. 21:33 21 minutes, 33 seconds We have taken a break. We'll see what we can do to incorporate it. 21:38 21 minutes, 38 seconds Thank you. The next question comes from the line of Kawji Taruja from Kotak Securities. Please go ahead. 21:47 21 minutes, 47 seconds Hi uh from tech uh thanks a lot for giving me the opportunity question I have a couple of questions uh but first 21:55 21 minutes, 55 seconds is for VJ uh VJ your revenue growth seems a little bit light I understand the explanation that you had given uh let's say if you had to adjust for the 22:04 22 minutes, 4 seconds timing difference of revenues from your top pipeline what would the underlying revenue growth have been for the quarter 22:13 22 minutes, 13 seconds I think we would be around 25 to uh 30% uh range cover that and when you're trying these 22:21 22 minutes, 21 seconds numbers is it on rupee or largely US dollars so let's say if you had to uh just translate this into dollar numbers 22:29 22 minutes, 29 seconds uh you know what's the range that you're looking at this is constant currency so I think uh 22:37 22 minutes, 37 seconds we wouldn't see much of a departure so 25 to 30% is a reasonable sort of zip code to assume for that as 22:45 22 minutes, 45 seconds Got that. Uh second uh question is on uh uh the customer additions. Uh you know seems uh pretty uh good. Uh uh what is 22:54 22 minutes, 54 seconds the ATV to uh CAC and maybe gross profit margin payback period. If you can just give a directional sense that will be 23:01 23 minutes, 1 second very uh helpful in uh understanding uh uh some of those aspects as well. 23:10 23 minutes, 10 seconds So kal this is as you can imagine we are limited by uh the amount of metrics we cannot disclose but uh our our model 23:17 23 minutes, 17 seconds lends itself to scaling a good chunk with our existing customers uh right and that's why you see significant leverage 23:25 23 minutes, 25 seconds especially in sales and marketing and other costs and even the sticky I'll speak about it in LTV terms and CAC terms uh our sales and marketing is the 23:33 23 minutes, 33 seconds biggest area of leverage um uh you know if you look at sales and marketing expens expenses as a percentage of revenue. they've uh gone down from 23:41 23 minutes, 41 seconds approximately 40 mid 40% a couple of years back uh to about um uh you know in 23:48 23 minutes, 48 seconds in the 30% range right uh so that's an area where we've seen significant leverage uh on the LPV side given our NR 23:55 23 minutes, 55 seconds we typically and given the mission criticality of our platform uh our low code churn is very minimal low single digits so those metrics are healthier 24:04 24 minutes, 4 seconds than what you'd see in the sort of top quartile but it's not a metric that we officially disclosed Got that. Hey, just a couple of more 24:12 24 minutes, 12 seconds questions. One is on uh R&D. Uh uh uh so you know that's an investment which is absolutely necessary uh given the 24:19 24 minutes, 19 seconds current pace of uh changes. Uh so what would your uh R&D spending be at the ballpark? uh you know I know you don't 24:27 24 minutes, 27 seconds disclose that in a financial uh numbers explicitly but if you had to just give a directional sense of what your R&D expenses uh would be and uh uh you know 24:35 24 minutes, 35 seconds would that is that something which will keep on increasing or is that something on which you get a leverage given the investments uh that you've already made 24:43 24 minutes, 43 seconds and help your margin expansion into the future. 24:47 24 minutes, 47 seconds Yeah. So R&D is an area where we'll continue to get leverage. So I think uh when we disclosed the first half it was around 23.4 four I think as of December 24:56 24 minutes, 56 seconds quarter it's at about 21.8%. So we continue to see leverage because of our platform strategy there. Um we we that 25:04 25 minutes, 4 seconds said we don't also capitalize any of our uh sort of AI expenses all in good. Uh so on on one side on the platform side 25:11 25 minutes, 11 seconds we'll be harvesting R&D that will generate leverage and hopefully fund uh some of these AI investments. So long-term mental model is to continue to see leverage in that area. 25:23 25 minutes, 23 seconds Okay. Uh the final question is for Basar. Yeah Bascar there's a raging debate uh or rather uh not a debate I 25:30 25 minutes, 30 seconds think investors seem to be voting with their money on the future of SAS business uh given the substantial progress on Jai. Uh do you want to weigh 25:38 25 minutes, 38 seconds in on this topic uh maybe with a spec specific focus on the relevance of uh AMA at a time when the cost of custom 25:46 25 minutes, 46 seconds build of applications may decline you know may decline significantly. 25:51 25 minutes, 51 seconds I think I think first thing is I think AI we're extremely bullish about the whole AI wave that's starting to happen and for a couple of reasons uh if you 26:00 26 minutes look at it as you as I really point out we are a vertical software company where the deep understanding of the domain and 26:07 26 minutes, 7 seconds the customer pain points is super critical here so it's not a it's not a custom application software that can be vcoded if you will right so clearly 26:16 26 minutes, 16 seconds there's a lot of technology from a domain understanding standpoint it's not obviously we use a lot of our own print for core generation. But if you look at 26:23 26 minutes, 23 seconds it, the key value that we see ourselves is because it's vertical, we see a huge opportunity in front of us to be able to use the platform to demonstrate more 26:32 26 minutes, 32 seconds value for our customers. For example, already our customers are starting to adopt better tool sets in terms of 26:40 26 minutes, 40 seconds agentic infrastructure and software that we're providing to them so that they're able to tell see much more human productivity value out of the systems. 26:47 26 minutes, 47 seconds And if you historically look at the media business, it's been a very capital intensive and more importantly human cost intensive business. So we see a 26:56 26 minutes, 56 seconds significant opportunity in front of us to deliver better experiences for end viewers but more importantly better human cost productivity for our 27:04 27 minutes, 4 seconds customers and we see that as a significant opportunity in front of us and uh I truly believe this is going to be big transformative for the media 27:12 27 minutes, 12 seconds industry and for Amagi to lead that particular trend for our customers. That's the way I see it today. 27:19 27 minutes, 19 seconds Okay. Thanks a lot. 27:22 27 minutes, 22 seconds Thank you. The next question comes from the line of Manish Adukia from Goldman Sachs. Please go ahead. 27:30 27 minutes, 30 seconds Hi, good morning. Thank you for taking my questions and congratulations on the listing. Uh I have a few clarifications from the shareholder letter. The first 27:39 27 minutes, 39 seconds one uh when you talked about the negotiations that you saw with some of your largest customers can you maybe help us understand is that in the 27:48 27 minutes, 48 seconds regular course of the business where I don't know on an annual basis etc there are price negotiation or is that like 27:55 27 minutes, 55 seconds oneoff and how and what drove these renegotiation renegotiated contracts with some customers that'll be helpful 28:03 28 minutes, 3 seconds if you can provide some color there yeah I think I'll Vijay to go through the specifics just to give you Manisha 28:10 28 minutes, 10 seconds overall how we see this whole thing right so if you look at our customer contracts typically it's about 3 to five years so literally uh predictability is 28:18 28 minutes, 18 seconds kind of designed into the business both for our customers and for us because if you look at it lots of stuff that we do is mission critical software so 28:26 28 minutes, 26 seconds essentially that that drives for need for our customers to get stability and for among to get stability as well so that's the way we kind of drive these 28:33 28 minutes, 33 seconds businesses today from a from a contract standpoint on specifically Is that a specific thing that you want to address on the customer? 28:41 28 minutes, 41 seconds Yeah, Manish to your question on whether it's routine. Uh I mean we do opportunistically evaluate uh customers 28:48 28 minutes, 48 seconds based based on their scaling and and look at uh you know we do have the normal lapping of contract ends but with 28:56 28 minutes, 56 seconds the top five customers and top 10 customers we constantly look at our sort of concentration and and then try to make sure that both from a customer 29:03 29 minutes, 3 seconds obsession standpoint and a commercial sort of feasibility standpoint and balancing the two. uh we try to uh maybe 29:11 29 minutes, 11 seconds you know sort of extend the contract for a longer duration because these are long gestation period contracts. Um the top 29:19 29 minutes, 19 seconds five customers wouldn't be routine course of business. It's something that we've intentionally made a call to look at our concentration risk and derisk that a little bit. Today it's at a good 29:27 29 minutes, 27 seconds 40% for the top 10 customers. Um so that's that's a call that we intentionally make. But um I mean what 29:36 29 minutes, 36 seconds we are aspiring for here is making sure that we lock in long-term secure revenue instead of uh short-term uh optics on on price increases. 29:47 29 minutes, 47 seconds Right. And maybe I I I don't think I fully got the answer to question earlier. So did you mention that without 29:54 29 minutes, 54 seconds this uh impact you would have grown mid20s on a Y basis or did I mispill that number? 30:02 30 minutes, 2 seconds That is correct. Yeah, 25 to 27%. Yeah, that understood. Uh, very clear. Um, and the 30:12 30 minutes, 12 seconds other big on revenue that you also called out, you can also explain that where you mentioned the timing impact from revenue for some of the largest customers. What exactly was that? 30:25 30 minutes, 25 seconds Uh so the timing was mostly you know um um the first half what we saw was um one 30:32 30 minutes, 32 seconds of our large customers we have uh a perpetual license contract. This is a grandfather contract. Uh according to 30:39 30 minutes, 39 seconds India is you got to have uh an output method without getting into the technicalities of it. Uh the rickre for that is based on channel go live. Last 30:48 30 minutes, 48 seconds year what happened was that the channel blue light was followed a flow rate schedule through the year so all quarters were evenly balanced. This year 30:56 30 minutes, 56 seconds they came up with a more aggressive timeline to revreck all of the year stuff in the first half of the year. So 31:03 31 minutes, 3 seconds what that meant was that the first half of the year uh you know you had to dial down two to three points and the Q3 and 31:10 31 minutes, 10 seconds in Q4 you'd have to dial it up three to four points in order for it to kind of make sense on a total basis. Does that help? 31:19 31 minutes, 19 seconds Yeah, sure. Thank you. And last question on this topic. When you mentioned uh 14 and a half% reported adjusted margin 31:26 31 minutes, 26 seconds versus about 10% underlying steady state of this 430 odd basis coins of the various one-offs that you called out if 31:35 31 minutes, 35 seconds you can maybe give like a qualitative pecking order of which one had the largest impact and so on. 31:44 31 minutes, 44 seconds So one was the seasonality uh Manish on the revenue side uh and then we had a couple of uh I mean you've seen our 31:52 31 minutes, 52 seconds operating cash flow our collections was pretty robust as well in NQ4. So some of our reserve rates uh on the ECPL 31:59 31 minutes, 59 seconds methodology improved but those would be sort of the two broad strokes and the biggest sort of tailwinds that got the 4.0 and this is also the largest quarter for 32:08 32 minutes, 8 seconds us money in terms of because it's the festive quarter across the globe I think given some part of a business which gets 32:16 32 minutes, 16 seconds a tailwind from advertising so this becomes a bigger quarter for us as a company. 32:21 32 minutes, 21 seconds Got it. Very clear. Uh the next question I had was on managed services. If you can just maybe give us a rough sense of what proportions of your revenue now is 32:30 32 minutes, 30 seconds managed services and maybe for the benefit of the broader audience on the call if you can help us or remind us how 32:38 32 minutes, 38 seconds is your managed services maybe different versus what typical services companies do. 32:44 32 minutes, 44 seconds Okay. Well maybe I'll give a color to the whole thing and maybe we can get to specifics but Manish largely if you look at it we are a technology company. So 32:52 32 minutes, 52 seconds essentially given our customer cohorts who are large enterprise to mid tier enterprise customers who need it, we 33:00 33 minutes provide a thin layer of a service which is it's really literally a very very small percentage point but I don't think we disclose that number but it's actually not even meaningful fundamentally from a number standpoint. 33:11 33 minutes, 11 seconds This is essentially an idea is to kind of provide some sort of a human layer for them to kind of have because there are hundreds of millions of dollars of content passing through the system. So 33:20 33 minutes, 20 seconds we need to be able to provide them some sort of a 24/7 capability so that uh they can feel comfortable because our 33:26 33 minutes, 26 seconds SLAs's are sometimes 99.99 to 99.9999 right so almost like six six n 33:33 33 minutes, 33 seconds reliability example so to manage that is a very very thin layer it's extremely uh I don't think you can be tracked internally in terms of the percentage 33:41 33 minutes, 41 seconds because it's too small just to kind of add uh like obviously low single digits to Bas's point This is 33:50 33 minutes, 50 seconds an area given our cloud modernization sub segment and the runway that we see that this is an area where with the uh 33:57 33 minutes, 57 seconds you know help of AI we see some of the biggest sort of opportunity as well. Um and so uh what is ahead is uh much larger than uh what we have today. 34:08 34 minutes, 8 seconds Right. This last question would you be able to give any kind of let's say forward if not guidance aspiration of 34:15 34 minutes, 15 seconds what next three year revenue ker may look like for the business and where do you think margins may settle over let's 34:23 34 minutes, 23 seconds say a three-ear period at your distributed margin thank you Manisha it's um I'm sure you'd 34:31 34 minutes, 31 seconds appreciate that it's hard to give prescriptive guidance at this point but our endeavor would be to kind of consistently uh deliver the growth rates that we've delivered over the last 34:39 34 minutes, 39 seconds couple of years and uh replicate the margin trajectory that we've seen over the last couple of years and and over the next two to three years as well. 34:48 34 minutes, 48 seconds Thank you very much. All the best. Thanks Manish. 34:53 34 minutes, 53 seconds The next question comes from the line of Om Prakash Kawadi from Aventus Park. Please go ahead. 35:00 35 minutes Yeah. Hi. Uh congratulations to the management team for the public market deput and uh good luck for your uh 35:08 35 minutes, 8 seconds future in this journey. Uh couple of questions firstly on the uh market. So if you just step back and then see uh 35:16 35 minutes, 16 seconds how ami positioned in the market with respect to the three segments uh the cloud modernization streaming and monetization. Could you give me some 35:24 35 minutes, 24 seconds color on how the market share has been for Amagi in the recent years and how do you think about that on a go forward basis and maybe uh a small bit of a 35:33 35 minutes, 33 seconds color on how are we positioned versus competition where do we exactly differentiate I have couple of follow-up questions on that 35:42 35 minutes, 42 seconds yeah thanks for cash thanks for that actually uh a couple of things that you need to look at it from our business standpoint right first if you look at it 35:49 35 minutes, 49 seconds the three business units we talked about one is cloud modernization Second is streaming unification and third is the monetization of the 35:56 35 minutes, 56 seconds marketplaces. to look at the first part of a business. Uh historically Amagi has built technology over a decade right now 36:05 36 minutes, 5 seconds to be able to enable large enterprise broadcasters to move to the cloud which I think is a significant barrier to 36:12 36 minutes, 12 seconds entry for anybody right literally among kind of built it over time and built it as a cloud first solution that doesn't exist in the world today right so 36:21 36 minutes, 21 seconds literally mangi is kind of leading that trend in terms of building one of the most complex and uh comprehensive solution for the TV networks to go 36:28 36 minutes, 28 seconds forward And that has been the reflections that you see in terms of some of the largest media companies today running their winter Olympics or Super Bowl or all of 36:37 36 minutes, 37 seconds that that you see today is because of that uh trend line of what the technology has been able to deliver for our customers. So that's a big mode for 36:44 36 minutes, 44 seconds us uh if you look at it on Praash. The second thing that's happening in the streaming businesses if you look at it is Amagi again starting 2017 was a 36:53 36 minutes, 53 seconds pioneer in providing ad supported models and streaming television technology for the whole of US for example where we 37:00 37 minutes started we continue to be a dominant player in that particular business and we continue to as you've seen the number of distributors we were at 350 plus 37:09 37 minutes, 9 seconds distributors around the DRHP and RHP filing to what you see right now was about 48 distributors that we're supporting today for example. So we 37:17 37 minutes, 17 seconds continue to be aggressive in terms of taking our customer content and be able to deliver and distribute worldwide globally and that's a continuing trend 37:24 37 minutes, 24 seconds that we see. The third part in our growth that you would have seen again is the number of impressions of ad impressions that we're delivering which has been a a record growth that we 37:33 37 minutes, 33 seconds continue to see as well in terms of 60 percentage plus growth over the last year to get to 13 billion impressions. 37:39 37 minutes, 39 seconds So all in all I see that we have a very well-rounded growth trajectory that's kind of starting to play out and that's essentially because of the platform 37:47 37 minutes, 47 seconds strategy which has been consciously taken by the company and what I mean by that is the glasstoglass strategy. Our customers want to gravitate on a single 37:56 37 minutes, 56 seconds vendor who could actually provide them their whole mission critical platform from an end to end standpoint and Amagi continues to deliver on that particular 38:03 38 minutes, 3 seconds promise and uh all the innovations and the AI investments we're making right now is to strengthen and fortify this and maybe supercharge our customers in 38:12 38 minutes, 12 seconds terms of human cost reduction. So that's the future of how we see it. We continue to see uh grabbing more and more market 38:19 38 minutes, 19 seconds share from our competitors. Our competitors come in two buckets. One is traditional hardware vendors who are moving to the cloud. These are the 38:27 38 minutes, 27 seconds companies which are public listed 50 plus years in the business continue to kind of transform. Uh we have a second cohort of customers who are cloud 38:35 38 minutes, 35 seconds competitors who are cloud first who are coming in but as it's small for from an Amongi standpoint and from the sophistication and the platform strategy 38:43 38 minutes, 43 seconds Amagi is quite ahead in terms of the market position that we've taken. So that's where we are crush as a company. Yeah. Thank you for the detailed color. 38:52 38 minutes, 52 seconds The other question is on pricing and slightly connected to the previous participants questions also. I'm more trying to understand I mean uh you 39:00 39 minutes already indicated in the shareholders letter that there has been a renegotiation with one of the largest customers uh and all that stuff but has there been any phenomena where with 39:08 39 minutes, 8 seconds respect to the recent advancements what we are seeing with respect to technology be it AI DA whatever name we give it to u has there been some pressure on the 39:16 39 minutes, 16 seconds pricing with respect to the workflows what we get involved into with respect to these advancements in technology in general not just the large customers or 39:23 39 minutes, 23 seconds the mid customers uh not really anything specific that I can call out home at least for now we've 39:31 39 minutes, 31 seconds not had any conversations related to really in this particular direction of uh thought process right now and uh obviously we'll keep you updated as we 39:39 39 minutes, 39 seconds see progress but nothing really that I'm aware of that that's come to our notice fundamentally the second part if you look at it is in terms of price again 39:47 39 minutes, 47 seconds see we serve a missionritical part of an organization's operations so essentially here uh price is important But that's not the only driver for our customers. 39:56 39 minutes, 56 seconds Our customers really look for reliable uh forward-looking partners who can provide them stability in their operating environments. So that's a big 40:05 40 minutes, 5 seconds driver and obviously price comes next to that extent. That's the way our customers value this whole service and the and the business that we provide today for them. 40:14 40 minutes, 14 seconds Yeah. Okay. Thanks. The last question is maybe probably to Vijay. Uh so how do we think about the ESOP expenses going forward? Vijay some color would be helpful on that. 40:28 40 minutes, 28 seconds Yeah, thanks for that uh question Om Praash. So I mean ESOP uh expenses is an area where we also have seen some 40:35 40 minutes, 35 seconds leverage. So in um Q3 [clears throat] FI25 I think we indicated this in the shareholder letter that it was roughly 40:42 40 minutes, 42 seconds 8.4% of revenue. That's gone down to about 6.6% of revenue. uh as a percentage of revenue given that revenue 40:49 40 minutes, 49 seconds will obviously scale um sort of uh quicker we expect these to kind of be a little more tempered uh and and then follow the trajectory that we've seen 40:58 40 minutes, 58 seconds over the past year in the coming years as well. 41:02 41 minutes, 2 seconds Yeah, thank you. Thanks a lot and again good luck going forward. 41:07 41 minutes, 7 seconds Thank you. A reminder to all participants. A reminder to all participants you may press star one to ask a question. 41:18 41 minutes, 18 seconds The next question comes from the line of Rishi Junjunwala from IFL Capital. Please go ahead. 41:26 41 minutes, 26 seconds Yeah, thanks for the opportunity. Just one clarification on adjusted margin. So 41:32 41 minutes, 32 seconds uh you said 14.3 has about like 4.3 percentage point 41:39 41 minutes, 39 seconds uh tailwinds which are oneoff on the cost side um and and probably some seasonality related to it uh and and so you know one should look at it at 10%. 41:52 41 minutes, 52 seconds when you say 10% is it also adjusted for the labor code provisions which is in the nature of 170 basis points uh um in 42:01 42 minutes, 1 second this quarter and so effectively it is even adjusting for that or if we adjust that ideally the ebida margins would be 42:09 42 minutes, 9 seconds like 11.7 so that adjusts for the labor code 42:18 42 minutes, 18 seconds provisions rashi you're right because we had to do a onetime catch Uh also this is an evolving area where we are continuing to partner with our auditors 42:25 42 minutes, 25 seconds and look at best practices to kind of pin down the size. Uh but the short answer to your questions it's adjusted for that. Uh we'd be able to provide 42:34 42 minutes, 34 seconds clarity on the run rate impact of it as we go as things evolve uh in the subsequent quarters but uh but right now it's embedded in that number. 42:44 42 minutes, 44 seconds Okay. So the 10% includes that it should not be 11.7. That is correct. 42:52 42 minutes, 52 seconds Okay, the other thing is just in terms of how your business plays out through the course of the year, right? So I think um you know if we if we really 43:00 43 minutes look at it uh in 1 our revenues were probably growing north of 30%. In 3Q uh 43:08 43 minutes, 8 seconds you know in INR terms it has grown at slightly higher than 22. Um so just want to understand uh and and these are year 43:16 43 minutes, 16 seconds onear by the way. So widely seasonality should reflect in there. Um so just wanted to understand one typically is 43:25 43 minutes, 25 seconds there you know a sharp seasonality on a sequential basis that plays out you've said 3Q is stronger quarter and secondly 43:32 43 minutes, 32 seconds on a YI basis do you see uh you know the growth rates um uh which direction uh the growth rates will go from here? 43:45 43 minutes, 45 seconds [clears throat] 43:46 43 minutes, 46 seconds Yeah. So if you look at it I mean over the last 2 three years also we've hovered in the 25 to 30% sort of zip 43:52 43 minutes, 52 seconds code um rishi because there are some you know base effects due to one-off contract negotiations or a big event like last year you had the US 44:00 44 minutes presidential elections um or Olympics and and this year you have the super 44:07 44 minutes, 7 seconds um uh our business like you said is not worth looking at quarter on quarter sequentially it's more year on year um again this quarter here. If you look at 44:16 44 minutes, 16 seconds it, the 30% that you saw in the first half was amplified by sort of three points because of the accounting adjustment that we spoke about. If you 44:25 44 minutes, 25 seconds put that back here, um you know that that's the 25 26% that you'll see in Q3. 44:32 44 minutes, 32 seconds Uh to your overall question on seasonality intraear, what we typically see is that 45% of our revenues kind of 44:40 44 minutes, 40 seconds comes from the first half and 55% of our revenue comes from the second half. um of the 55 a good chunk is in like 27 28% 44:50 44 minutes, 50 seconds is in Q3. So Q4 typically tends to be a slower quarter because a lot of the ad spends go to Q3. But that's how I would 44:58 44 minutes, 58 seconds think about facing across the year in terms of seasonality and and mix in terms of revenue. 45:06 45 minutes, 6 seconds All right. Thank you so much. Thank you. 45:09 45 minutes, 9 seconds Thanks. The next the next question comes from the line of Bat Kulati from Dalal and Rocha. Please go ahead. 45:18 45 minutes, 18 seconds Yeah. Hi sir, thank you for the opportunity. I just had a question on our cloud modernization business. Just 45:24 45 minutes, 24 seconds wanted to get a deeper understanding in terms of what exactly do we offer to our customers in terms of cloud modernization given that we're a SAS 45:34 45 minutes, 34 seconds platform and not a infrastructure as a service player. So we don't provide them with a raw uh raw infra that t to evoke 45:43 45 minutes, 43 seconds to transform them to a cloud or native or a cloud based company. So do we help onboard them onto hyperscalers or 45:53 45 minutes, 53 seconds preferred cloud providers and then transfer relevant workflows to our platform or just a deeper understanding on how that business works? Thank you. 46:04 46 minutes, 4 seconds Okay, I'll give a maybe given interest of time I'll give a quick snapshot but I think there's more information that we could uh it's on our website and others 46:11 46 minutes, 11 seconds uh that you could look at but again just to give you context here right uh primarily if you look at it cloud modernization journey is for TV networks 46:21 46 minutes, 21 seconds largely these are these are really mid to large enterprise TV networks who have historically run their operations with 46:28 46 minutes, 28 seconds data centers of their own running applications and all the software for operating environments to sit in that particular office or a real estate that 46:36 46 minutes, 36 seconds they've actually owned. Starting from I'm sure you've seen a OB van which actually stands out at a stadium or what the news journalist today for example 46:44 46 minutes, 44 seconds use example. So starting from that a lot of things are owned and operated by the media companies themselves which has been a pretty expensive proposition for 46:52 46 minutes, 52 seconds them. What Amagi does is to replicate all of that operating environment on a cloud software infrastructure. Yes, 47:01 47 minutes, 1 second these are all running on hyperscaled cloud providers. Uh, so our job is not a services job of modernizing them. So I 47:09 47 minutes, 9 seconds would want to kind of call out that it's not a consulting or a service job where we're moving something from X to Y. 47:15 47 minutes, 15 seconds That's not what it is. They're moving the operating environment so that we provide all our software which replicates what they used to do on a 47:23 47 minutes, 23 seconds hardware environment in their in their offices now move to a complete ondemand infrastructure on the cloud where it 47:30 47 minutes, 30 seconds actually happens fundamentally. So we do not own hardware we don't we don't obviously we we run on public cloud infrastructure which is leased on behalf 47:38 47 minutes, 38 seconds of our customers. Um so we are software companies running on the cloud replicating the environment of an operating environment for our customers 47:46 47 minutes, 46 seconds so that they can run these operations completely in a virtualized that's the core value that we provide in the in the context we also convert capex to opex 47:55 47 minutes, 55 seconds for them so they don't need to buy for a fiveyear amotization cycles today for example people don't need to buy hardware so they actually buy us buy on 48:03 48 minutes, 3 seconds a subscription basis as we move forward but you should look at it as a critical infrastructural component when they look at an operating behior standpoint for 48:10 48 minutes, 10 seconds us. So it's not a SAS application uh a generic app application. This is an operating environment for them. This is almost like the ERP for the business 48:19 48 minutes, 19 seconds pretty much running their business on our software. That's the way to see this. 48:24 48 minutes, 24 seconds Fair enough. So I got that. So just a follow up on that. So typically customers who would come as as cloud modernization revenues for us would then 48:32 48 minutes, 32 seconds convert to unified platform revenues going forward uh once we we onboarded to our platform. Would that be a fair understanding? 48:41 48 minutes, 41 seconds Absolutely Barat I think you're you're spot on on that. Right. What is the first part of the journey? Right. People want to modernize themselves so that they can actually bring into the new 48:49 48 minutes, 49 seconds world. So all our customers eventually have the journey of coming into the cloud with the fundamental motivation to 48:57 48 minutes, 57 seconds go into streaming big time. U if you look at it the growth of every media business today is going to be in streaming. So that's the biggest journey 49:04 49 minutes, 4 seconds that people are going through. Amongi is the only platform in the world today to provide a unified capability across their existing traditional operating 49:13 49 minutes, 13 seconds environments moving to the cloud and eventually enabling them to stream to the new world and globally going across and be able to monetize and that's the 49:22 49 minutes, 22 seconds power of the platform that we able to leverage today. 49:26 49 minutes, 26 seconds Got it sir. Got it. Just the last question in terms of margins sir. So typically uh even in the CNBC interview that you've given you said that margins 49:34 49 minutes, 34 seconds will move up to typical SAS businesses in that 25 to 30% range. So is this purely leverage that would come from uh 49:42 49 minutes, 42 seconds you know the employee costs going down as a percentage or would it also be our gross margins would see an improvement 49:50 49 minutes, 50 seconds and you know if you can just help me understand how would that work out? 49:55 49 minutes, 55 seconds So directionally if you look at it right there look at it we have continued to demonstrate operating leverage as a business and if you go back to our uh 50:05 50 minutes, 5 seconds red herring perspectives go back a couple of years two and a half three years back as well you will see that play out very uh thoughtfully. So this 50:12 50 minutes, 12 seconds is not any artificial sort of infrastructure the the whole the business lends itself for operating leverage and you would definitely see 50:20 50 minutes, 20 seconds for example both cost of sales and marketing and cost of R&D uh and gross margin directionally we've we've kind of proven it over time and you'll continue 50:29 50 minutes, 29 seconds to see that in a directional point where percentage of revenue would continue to go down right that's the fundamental core operating leverage of the business 50:36 50 minutes, 36 seconds will continue to happen having said that this is not coming at some artificial cost of growth because I as a company we want to in a longer term balance growth 50:45 50 minutes, 45 seconds and profitability very very uh kind of mindfully about this whole thing and that's the reason if you look at it like what Vijay pointed out we don't 50:52 50 minutes, 52 seconds capitalize anything and yet we have a good amount of R&D spend in AI that we continue to do because we believe that's 50:59 50 minutes, 59 seconds going to be a big part of the future for our customers and henceforth for us as well as we move forward so we are I think we're quite comfortable with the 51:06 51 minutes, 6 seconds with the investment pieces the the growth plan in front of us and the road map of what trying to continue to innovate on and uh that that's that's the way I see it. 51:17 51 minutes, 17 seconds Got it. Really helpful. Thank you. 51:21 51 minutes, 21 seconds Thank you. The next question comes from the line of Roman Nagpal from Helios Capital Management. Please go ahead. 51:30 51 minutes, 30 seconds Hi. Uh thanks for taking my question. Um this uh just a question on um the uh on the pricing and the way it's playing 51:38 51 minutes, 38 seconds out. Uh so I think in terms of the uh in terms of the uh metrics that you put out in terms of number of channels going 51:45 51 minutes, 45 seconds live um number of uh number of ad impressions shown etc. Uh that growth is 51:52 51 minutes, 52 seconds much higher than the growth that we're seeing in revenue. Um so would it be possible to get a sense of how much of this revenue is coming from customers 52:00 52 minutes who have say perpetual contracts which is not linked to usage or output and how much of that is coming from say 52:09 52 minutes, 9 seconds variableized contracts okay directionally if you look at it and I'll give a answer and then Vijay can 52:18 52 minutes, 18 seconds give some details on that color to that uh right now right so if you look at it directly um I don't think anything to the purpose of contract there's no no 52:25 52 minutes, 25 seconds such overhang in the system fundamentally right what we show as metrics is the leading indicator of how the strength of the business is for 52:33 52 minutes, 33 seconds example and uh I would kind of urge you folks to look at it in that context where these are leading indicators of the strength of the now I was kind of 52:41 52 minutes, 41 seconds indicating that if you look at it largely there is no overhang because of any perpetual license or otherwise here 52:48 52 minutes, 48 seconds all the metrics that we deliver the northstar for the company is largely leading indicators and obviously these are not reflective of what happens in 52:56 52 minutes, 56 seconds this quarter. Uh these are all things which we think will flow through over the next years that's coming forward and that's the way we see this whole thing. 53:05 53 minutes, 5 seconds And Rohan, just to kind of um zero in on your question, I've got I think these to Bas's point are leading indices and 53:12 53 minutes, 12 seconds they're not one-on-one reflective of uh like the price because there are other sort of uh layers [clears throat] in between in terms of yield uh CPMs and 53:22 53 minutes, 22 seconds other things and you know just contract duration and other sliding scales that that come into play before something 53:29 53 minutes, 29 seconds manifests into revenue including the customer's own trajectory. Um it would be suffice to say that a lot of our growth comes from customers adopting 53:37 53 minutes, 37 seconds more products than pure sort of price appreciation. If that's the question behind the question. Uh we've been largely able to kind of hold price but 53:45 53 minutes, 45 seconds we seeing a significant sort of uptake in in volume adoption which is what's driving the growth. 53:53 53 minutes, 53 seconds Oh okay. Oh yeah that's thank you. Thanks Ro. 54:00 54 minutes The next question comes from the line of Prital from Bundan Bank. Please go ahead. 54:08 54 minutes, 8 seconds No, sorry. Hi, this is Pratik from Bundan EMC. Uh, am I audible? Yes. Yeah. 54:15 54 minutes, 15 seconds Yeah. Sorry. Yes. Just quickly, what's your indirect cost base? Uh, normalized indirect cost base. Uh, is it around 240 odd crores? Is that a fair 54:23 54 minutes, 23 seconds understanding? Just a clarification, please. 54:27 54 minutes, 27 seconds our indirect expenses as a percentage of revenue is roughly um just give me 54:35 54 minutes, 35 seconds maybe this includes by the way ESOP cost so I'll have to remove that also I guess 54:41 54 minutes, 41 seconds yeah so it's around uh 220 crores yeah yeah perfect okay that's one second is this bhaskar on on the price reduction 54:50 54 minutes, 50 seconds looks this is an enterprisegrade platform right uh I'm still slightly unclear as to why was this uh I mean why 54:58 54 minutes, 58 seconds was there some bit of price cut or or or uh was it a retention strategy or or just maybe you could obviously you've 55:06 55 minutes, 6 seconds mentioned a bit on in the letter but just if you could double click here would be helpful yeah largely I think see one of the things I think for us sort of as from a 55:15 55 minutes, 15 seconds business standpoint is longevity matters in terms of scale right so essentially we we want to be able to have a quite a 55:23 55 minutes, 23 seconds predictable growth and profitability curve at the company over the next few years. And and that was the reason and the high motivation for us is to get our 55:31 55 minutes, 31 seconds customers to sign up for longerterm contracts which allows longevity and continuity as well as predictability as we move forward. And that's been the the 55:40 55 minutes, 40 seconds driver for us in any of the decisions we make is largely driven by long-term needs rather than any sort of short-term benefits. And we'll continue to do that 55:48 55 minutes, 48 seconds as a practice across all our business parts. 55:52 55 minutes, 52 seconds And Pratik as customers kind of get to this is Vijay as customers get to some sort of threshold scale, we fold them into what's called an enterprise 55:59 55 minutes, 59 seconds agreement which are typically longer gestation contracts three to four years and as a result uh to Baser's point 56:07 56 minutes, 7 seconds you're looking at lifetime value more than short-term optics of inear price or per product price. uh this is normal business practice as I'm sure you're 56:15 56 minutes, 15 seconds aware in terms of how uh software gets priced. So it's it's a matter of business and to Bas's point we want to 56:22 56 minutes, 22 seconds be predictable durable uh long-term revenue growth company. So that that's a problem. This is B AU right in the sense 56:30 56 minutes, 30 seconds uh look two three yeah so all I was saying was this this business as usual right next two three quarters let's say one of your clients 56:39 56 minutes, 39 seconds becomes big and you big and you again pass on some or you know uh reduce the prices that's an ongoing uh exercise 56:46 56 minutes, 46 seconds right there's nothing new in this it is ongoing what is unpredictable is the you know the number of customers 56:54 56 minutes, 54 seconds that will reach threshold scale in a quarter that could be lumpy. 56:58 56 minutes, 58 seconds Ah okay. Okay. So, so maybe a lot of customers we could have more customers reach threshold scale for us to do a lot more 57:05 57 minutes, 5 seconds enterprise agreements and in some quarter just because of timing uh you may not have as many customers. So that that would be the bumpy piece. It is BAU 57:13 57 minutes, 13 seconds in the broader when you look at it in a trailing 12-month basis but in in truck water that could be some ups and downs depending on when customers hit threshold scale. 57:24 57 minutes, 24 seconds And last question is on acquisitions right given the cash balance which you have you called out acquisitions could be a strategy uh any broad markers which 57:31 57 minutes, 31 seconds you can place as to what would be the guarders for acquisition etc. 57:38 57 minutes, 38 seconds So largely again just to from an air standpoint we continue to uh we have a fairly active uh copdev uh strategy in 57:47 57 minutes, 47 seconds place uh obviously we're looking at it mindfully as a company again we don't do anything irrational like the question is not for anything we're not forced to do 57:55 57 minutes, 55 seconds it tomorrow or any any sort of urgency to do it we continue to see good uh opportunities coming by and uh we are 58:03 58 minutes, 3 seconds actively involved in interactions and conversations across industry to look at uh explorations Having said that, do we have a do you have any kind of any statistic in mind? 58:13 58 minutes, 13 seconds We don't have right now. Obviously, as soon as we have anything that we would come back to the streets to kind of give indications, but today we don't have 58:20 58 minutes, 20 seconds anything which is kind of in the bag or close to any sort of acquisition today, but we continue to be active. I think we can give you more color to this 58:28 58 minutes, 28 seconds conversation over the next few quarters as we kind of pan out the strategy and going forward. Today, we don't have anything active to tell you about today. 58:37 58 minutes, 37 seconds Okay, great. Thank you. 58:41 58 minutes, 41 seconds Thanks for ladies and gentlemen. That was the last question for today. I would now like to hand the conference over to Mr. Bascar Subramanyam for the closing remarks. 58:53 58 minutes, 53 seconds Thank you very much uh shareholders and investors uh who kind of joined the call today. We are very excited about building a pretty long-term sustainable 59:02 59 minutes, 2 seconds uh media tech worldwide leader uh from India to the world and thank you for being part of this journey with us and 59:10 59 minutes, 10 seconds uh hoping to kind of make it all successful for all of us. Thank you very much folks. 59:15 59 minutes, 15 seconds Thank you sir. Ladies and gentlemen, on behalf of Amagi Media Labs that concludes this conference call. Thank you for joining us and you may now disconnect your lines.