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Ladies and gentlemen, good day, and welcome to the Persistent Systems Earning Conference Call for the Fourth Quarter of FY '22 ended March 31, 2022. We have with us today on the call Dr. Anand Deshpande, Chairman and Managing Director; Mr. Sandeep Kalra, Executive Director and Chief Executive Officer; Mr. Sunil Sapre, Executive Director and Chief Financial Officer; Mr. Saurabh Dwivedi, Head of Investor and Mr. Amit Atre, Company Secretary. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Sandeep Kalra. Thank you, and over to you, sir.
Good evening, good morning to all of you, depending on where you are joining from. It is good to be with you once again, and we hope all of you are safe and healthy. As always, we would like to start this call by thanking each one of our 18,500-plus Persistent team members and our customers, partners for their resilience and continued trust in us through all these ups and downs over the past couple of years.
We are happy to report yet another solid growth quarter across all major business and financial metrics, concluding in a banner growth year for us. With that, let me get into the business and financial updates. The revenue for Q4 came in at USD 217.32 million, giving us a growth of 9.1% quarter-on-quarter and 42.2% year-on-year basis. In rupee terms, this translates into a growth of 9.8% quarter-on-quarter and 47.1% year-on-year basis. This was the first full quarter for consolidation of SCI and Shree Partners accounts, while that of Data Glove was consolidated. Adjusting for these revenues, our organic growth for the quarter was 6.8% on a sequential quarter basis and 36% on a year-on-year basis in USD terms. We are pleased to state that this is the fourth consecutive quarter in which we have achieved 9% plus sequential quarter-on-quarter growth. We've also had consistent execution on profitability, resulting into 9 consecutive quarters in which we have had an improvement in EBIT margins quarter-on-quarter. Coming to the full financial year. The revenue for fiscal year FY '22 came in at USD 765.6 million, giving us a growth of 35.2% on a year-on-year basis. On an organic basis adjusting further impact of SCI, Shree Partners and Data Glove acquisitions, the revenue growth came in at a robust 32.8% for the full year. Coming to the EBIT side. Our EBIT for Q4 came in at INR 2,300 million, giving us an EBIT margin of 14%. This translates into a growth of 10.4% on a Q-on-Q basis and 57.1% on Y-on-Y basis for the EBIT side. The EBIT margin was stable at 14% on a sequential basis despite various headwinds, including higher amortization costs and onetime expenses related to M&A transactions and continued talent supply chain. Sunil will provide you more color on the EBIT margin movement across the quarters a little later in the call. For full year FY '22, our EBIT came in at INR 7,922 million, implying a healthy 56.1% year-on-year growth over FY '21. In percentage terms, this translates into an EBIT margin of 13.9% compared with 12.1% in FY '21, implying an improvement of 180 basis points. Coming to the order book for the quarter. The total contract value for the quarter came in at USD 361 million. The annual contract value component of the TCV is to the tune of $261.9 million. In terms of new bookings in the quarter, the new business TCV was $195.1 million, out of which the ACV component was $131 million. For the full year FY '22, the total TCV 1 was to the tune of USD 1.22 billion. The annual contract value component of this TCV is to the tune of $943.3 million. As you may already be aware by now, these TCV ACV numbers include all bookings, small and large, renewals as well as new bookings across existing and new customers.
On the people front, during the quarter, we brought in 1,610 new colleagues. This includes 700 colleagues from our acquisition of Data Glove, bringing our total employee base to 18,599 at the end of March 2022. Fresh graduates constituted approximately 25% of the organic net addition in the quarter. We continue to add a healthy number of colleagues each quarter, and that should help us continue our growth journey going forward. Utilization for the quarter came in at 80.6%, a 2.4% decline Q-on-Q as we added freshers in the system and also created capacity for further ramp-ups as we go along in the further quarters. The utilization rate is a function of our endeavors to operate efficiency and also create the heavy buffer to staff our future plans.
The attrition for the quarter came in at 26.6% compared to 26.9% in Q3. As you can make out from these numbers and historical comparisons, the annualized attrition in Q4 has moderated considerably compared to Q3. Our efforts with respect to employee engagement, learning development interventions, career planning as well as monitoring incentives, link to salary hikes and long-term incentives, such as ESOPs have worked well and have been well received by our employees. We are watching the attrition levels cautiously. We expect the trailing 12-month attrition to remain elevated for the time being and decline gradually over the course of FY '23 as the demand is expected to remain robust. While the addition of new batch of freshers will help in partially elevating staffing issues for us and the industry at large. There are a few other highlights that I would like to share for this quarter with you. On the leadership side, we welcomed a number of key senior leaders to Persistent. This is the part of our ongoing endeavors to further strengthen our management team in line with the growth that we have seen and we expect to see over the quarters. Yogesh Patgaonkar joined the company as the Chief People Officer. He'll be responsible for Global HR, People Engagement, Talent Acquisition and Development Initiatives. Yogesh has worked with RPG Group, L&T and Mphasis in his earlier [ stint ].
Sameer Bendre who was our earlier Chief People Officer has taken over as Chief of Operations. He'll be responsible for ESG, Risk Management, Enterprise Information Systems, Administration and Internal Audit functions. Sameer is a long-time Persistent veteran and has been with our company since 2004.
We also welcome to our leadership team through the Data Glove acquisition, Rajiv Korpal and Rahul Bajaj, who will be the key leaders in our cloud practice going forward on the Microsoft side with Rajiv leading the efforts for the Microsoft business unit. During the quarter, we also welcomed Merlyn Mathew as our new Head for Delivery Excellence & Talent Management; Larry Modder as the Vice President for Sourcing Advisory, and we also welcome Phil Fasano, the former CIO of AIG and Kaiser Permanente to the Persistent Advisory Network. Giving an update on the acquisitions. As you would have seen over the last several quarters, we have been articulating that our strategy on the M&A front is based on tuck-in acquisitions. These are capability-based acquisitions that give us either an edge in an industry vertical or a service line or help us expand in a target geography. In line with the stated strategy, during FY '22, we announced the acquisitions of SCI in the payment space, setting up a payment business unit; Shree Partners through a vendor consolidation and a large client of ours; Data Glove in the Microsoft Azure space and Sureline as well as MediaAgility in GCP space.
During the quarter gone by, we closed the acquisition of Data Glove on March 1, 2022. The integration of Data Glove is proceeding along the expected lines, and we will share more details in the future quarters as we move -- go ahead.
We are expecting to close the acquisition of MediaAgility in the next 1 to 2 weeks. We will update you on the same as we close the transaction. The integration of SCI and Shree Partners is working well and we are -- already have a few large opportunities in the pipeline through joint efforts. We expect to report positive developments on the same in subsequent quarters.
As you will notice, these inorganic investments bolster our capabilities in the hyperscaler domains, which are an integral part of our long-term strategy to be on the cutting edge of cloud, data, AI, Machine Learning as well as go deeper in the industry verticals we operate in. We strongly believe that the hyperscaler ecosystems across IBM, Microsoft, AWS, Google and Salesforce will increasingly strengthen their vertical offerings through industry-specific clouds such as health cloud, financial services cloud, sustainability cloud and so on. We are working with each of these hyperscalers to ensure our offerings are aligned to their roadmaps and our customers are able to leverage us to drive their forward-looking digital journeys. These investments will also make sure we are future-proofed and are able to gain in opportunities like Metaverse as these emerge at scale. Coming to the ESG side. We continue to make good progress on ESG. We are in the process of onboarding an experienced leader to lead our ESG initiatives along with Sameer Bendre. We'll release a comprehensive report on our ESG roadmap and current initiatives later part of this quarter.
I would also like to share the fact that, I, and our senior management team have been traveling extensively over the past several weeks to meet key technology partners across the 5 hyperscaler ecosystems and multiple of our customers. The response from these partners and customers has been very positive, and we've got significant validation for our differentiated offerings based on our organic and inorganic initiatives.
We've also met with the senior management of the hyperscalers, and they are infused with their progress with us on the go-to-market side and our joint offerings. Our close collaboration with these partners holds good promise for our ongoing joint go-to-market vision.
With this, I will turn the call to our CFO, Sunil Sapre, to give a detailed color on the quarterly financials and related matters. I'll come back after Sunil's comment to give you some more details on our key client wins, analyst awards and other recognitions. Sunil, over to you.
Yes. Thank you, Sandeep, and good evening and good day to you all. And thank you for taking the time to join us today. So you have got a flavor of the market outlook and business performance from Sandeep. Let me give you some more financial details for the quarter's performance. The quarter was another quarter of strong growth, revenue coming in at $217.32 million with Q-o-Q growth of 9.1% and Y-o-Y growth of 42.2%. The growth of 9.1% as the organic growth component of 6.8% and the balance coming from acquisitions. This organic growth of 6.8% was after absorbing the drop of approximately $4 million in revenue relating to one of the revenue share contracts which was restructured.
As you will recall, we had announced the acquisitions of SCI Fusion360 and Shree Partners during Q3 and Data Glove in March 2022. So as Sandeep mentioned, there is a full impact of -- full effect of the acquisitions announced in the last quarter and 1 month for the acquisition of Data Glove.
Revenue for the quarter in INR terms was INR 16,379 million, expecting growth of 9.8% Q-o-Q and 47.1% Y-o-Y. And for the full year, revenue is at $765.59 million, growth of 35.2% and in INR terms, INR 57,107 million, a growth of 36.4%. Going on details of the revenue in terms of services and IP-led revenue. Services revenue continued to grow strongly and registered growth of 14.6% quarter-on-quarter, while IP-led revenue declined by 26%, mainly due to restructuring of one of the deals with our top customer. This deal, which was in form of revenue share is now restructured into ER&D.
In terms of the segment performance, BFSI grew by 10% quarter-on-quarter. Some of the inorganic growth came in this segment, while some has come in the Technology segment, particularly the Data Glove acquisition is reflected in the Technology segment. So the growth in Technology segment was 8.5% quarter-on-quarter and Healthcare grew by 9.2%. On the further details of linear revenue, offshore linear revenue grew by 11.5%, primarily on account of volume growth of 9.8% and billing rate increased by 1.5%. The on-site linear revenue grew by 20.1%, comprising a volume growth of 17.6%. Billing rate increased by 2.1%. You would have seen that we've been working on improving the client concentration, reducing the client concentration number. The number of customers in greater than $5 million category went up to 25 and number of customers in $1 million to $5 million categories went up to 93 during the quarter. This quarter had currency benefit to the extent of 30 basis points on the margin. The CSR expenses were slightly higher in this quarter, and we also had onetime costs relating to acquisitions impacting margin by about 30 basis points. There were some old receivables, which we had provided for which were recovered, which is why you see a credit in the P&L on that account. So with all these adjustments, the EBITDA for the quarter was at 17.2% as against 16.8% in the previous quarter. Depreciation and amortization was higher on account of new acquisitions and EBIT came stable at 14%, same as the previous quarter.
On a full year basis, EBITDA is at 16.8%, while EBIT at 13.9% as against 12.1% in earlier year. Treasury income for the quarter was in the same range as previous quarter at INR 251 million. The ForEx gain was higher at INR 120 million as against INR 30 million in the previous quarter.
With that, the profit paper tax was INR 2,672 million at 16.3% of revenue as against 15.8% in the previous quarter. PTR was slightly lower at 24.8% due to lower tax in some of the overseas jurisdictions. On a normal year basis, the ETR is expected to remain in the range of 25.5% to 26%.
PAT D for the quarter was INR 2,010 million at 12.3% of revenue as against INR 1,764 million in the previous quarter at 11.8% of PAT. For the full year, profit after tax stood at INR 6,904 million, with a growth of 53.2% on a Y-o-Y basis. And in terms of percentage, it was 12.1% of revenue as against 10.8% in the previous year.
Earnings per share was INR 90.34 per share as against INR 58.97 per share in the previous year. The Board has recommended a final dividend of INR 11 per share. This, along with the interim dividend of INR 20 takes the total dividend for the year to INR 31 per share as against INR 20 per share last year.
The operational CapEx for the quarter was $533 million. And as you know, we have loan given to the ESOP Trust, which is standing at [ INR 3,522 ] million at the end of March '22. The cash investments on the books were is INR 17,373 million as at 31st March as compared to INR 18,964 million as of 31st December. DSO was slightly higher at 59 days as against 58 days in the previous quarter. Coming to cash flow from operations. The OCF to EBITDA conversion was 0.62, which you will find slightly lower than the previous quarter. And let me give you a couple of reasons for this thing. Our annual insurance premium payouts of INR 340 million, which typically happen in April every year were made in March this time due to bank holidays at the start of April. During the quarter Jan to March, some of the new deals that were signed in Q3 and some of the renewals took some time for completion of paperwork. And a part of the efforts for January were build in February due to which certain collections spilled over to April, and this amount was to the tune of INR 350 million. So the adjusted OCF to EBITDA considering these 2 items, had they've not been spilling over to the next quarter and 1 item getting preponed to this quarter, would have been 0.87 for Q4 and 0.97 for the full year, vis-a-vis 0.62 for Q4 and 0.90, which are the ratios based on reported numbers. Forward contracts as of 31st March 2022 was $175 million at an average rate of INR 77.7 crore per dollar. Thank you all, and back to Sandeep.
Thank you, Sunil. Now I'll give you a color on the movement of our customer segments and key client wins from the quarter. We saw healthy growth across our top account categories. On a Q-on-Q basis, the top 1 customers saw a decline of $4.5 million, predominantly on the back of the IP contract restructuring effective Q4 as Sunil talked about. He has spoken about this IP contract restructuring in the prior quarters, and we completed this in this quarter. So that is the effect of this restructuring on the quarter-on-quarter basis. Overall, the revenue growth among top customers was very healthy, with the top 2 to 5 client category growing by 8.8%, top 6 to 10 by 18.2%, top 11 to 20 by 19.6%, sequentially. On a year-on-year basis, top 1 customer saw revenue growth of 10.6%, 2 to 5 client category grew by 43.1%, 6 to 10 category grew by 38.1% and top 11 to 20 by 44.1%, respectively. Our press release for the quarter carries a number of our deal wins across industry segments. Just to highlight a few of these segment wise. I'll first talk about the software, high tech and emerging industries.
We won a deal to manage and modernize end-to-end IT operations for a private equity backed leader in cloud and telecom expense management software. This is a 5-year managed services deal, involves [ repatching ] of a certain number of existing [indiscernible]. We were chosen to design, build and manage a greenfield hybrid multi-cloud infrastructure transformation program for a private equity-led carve-out from a leading global media company in Europe. This is a 5-year deal structured in a managed services model. On the banking, financial services and insurance side, we were chosen to modernize and migrate the Enterprise Data Platform to the cloud for a payment network provider. This deal involves us taking ownership for design, development and DevOps for modernization and migration to the Enterprise data platform of the client and was one based on our credentials in the payment term.
We were chosen by a top 5 bank in the U.S. as a partner who modernize payments, wholesale digital experience and capital markets regulatory reporting. This is based on a certain amount of vendor consolidation account. It is one of the largest accounts we have, and we have been selling our strategic positioning as a trusted department for the U.S. client. In the Healthcare and Life Sciences space, we were chosen by a leader in immune-driven medicine to engineer the next-generation platform aimed at scaling their diagnostics and drug discovery business. Our expertise in diagnostics, lab workflow, EMR and patient experience were the key differentiations for winning this engagement, which involves building the new platform on Microsoft Azure. We were chosen by a large biopharmaceutical company to enhance the patient relationship management and experience leveraging the Salesforce platform. We have been able to win multiple opportunities with this marquee customer based on our extensive experience across the Salesforce technology landscape. Moving on to the awards and recognitions for the quarter. Q4 saw us get continued recognition from industry leading analyst firms and associations. To mention a few, we bagged the top position in 2021 Engineering Research and Development Services ratings by Zinnov. This is the 9th year in a row that we have made it among the top providers in this testing rating.
For the fourth year in a row, we were named to Constellation Shortlis for Innovation Services and Engineering. Our systems, a leader in Low-Code No-Code space named Persistent, the Partner of the Year in Americas for the third consecutive year. In summary, we delivered an industry-leading revenue growth in Q4 FY '22 and for the full fiscal FY '20. We continue to see good traction for our services in the markets we serve. We remain confident of our approach going ahead. Our ability to identify the emerging industry and technology trends and deliver value to clients through our digital engineering expertise has given us a significant competitive advantage in the market, which is the underlying reason for 4 sequential quarters of 9% plus growth.
Further, our strategic acquisitions have bolstered our cloud and industry capabilities as well as key partnerships with the hyperscalers. We plan to build on this momentum in FY '23 by staying focused on accelerating our clients digital transformation journeys. With this, I would like to conclude the prepared comments and would like to request the operator to open the floor for questions.
[Operator Instructions] First question is from Dipesh Mehta.
Can you hear me?
Yes.
A couple of questions. First of all, can you help us understand how our digit size is likely to change with the combined capability we did a few acquisitions in the last few quarters. So how you expect it to help us? And obviously, synergy benefit is likely to play over next few quarters. But considering overall capability, how do you expect our deal size to change and how it is evolving, let's say, over last few quarters? That is first question.
Second question about margin. Can you help us understand how one should look your EBITDA, EBIT margin trajectory going into FY '23? If you can provide some puts and takes kind of thing. So tailwind headwind, if you can provide some sense on it.
So I'll take the question about the deal sizes, and I'll let Sunil answer the second part of the question. So If you look at the deal sizes, look, we have done 3 major acquisitions, if you were to look at the last. So first acquisition was SCI, which is in the payment domain. And if you look at my comments few minutes back, there are 2 major deals where I talked about the deal win mix afforded by the payment capability that we have.
So one of them is for payment technology provider. And because of our capability that we had at Persistent and with the combined capability of SCI, we were able to craft out a star deal. And this deal is in excess of $10 million on an annual contract value basis. So there are deals that are being supersized because of the capability we've got in and that is just an example from an SCI perspective.
Similarly, if you look at the cloud space. As we integrate the capabilities that we have from the Data Glove side and post-closure from MediaAgility side, we expect to go even higher in terms of the capabilities and hence the deal sizes. And we'll keep reporting the deals as we go around. But fairly good thing as far as initial integration of SCI is concerned. And we had also talked about how Shree Partners had enabled us to win large vendor consolidation. And in the same account, we are also fighting 2 large deals, which are multiyear and which are significantly higher than the double-digit million mark on a TCV basis. Sunil, over to you.
Yes. So on the margin front, Dipesh, there are -- I would say, 4 broad points -- spread. One is the elevated inflation levels across the globe, which are going to translate slightly higher wage hikes this year. The second aspect is with respect to the pressure intake that we have had last year, and we'll continue to have this year, which will help us in terms of the cost management in terms of the entire talent pool.
The third element is with respect to the scale at which the revenues have grown. You have seen the services revenues growing at more than 40%. Overall revenues growing at 35%. And the demand environment being strong, we will try to achieve the benefits of scale in the SG&A category. The amortization is coming from intangibles, I mean, the acquisitions, that is something which is between EBITDA to EBIT. They are going to be of the order of 70 to 80 basis points for the whole year. So we have, broadly, I would say, headwinds on multiple fronts and some cost benefits coming out of scale as well as the pressure intake that has happened. We also expect that, with all the companies doing significant hiring, if not immediately in the next quarter or the first half of the year. But definitely, in the second half of the year, there'll be moderation in the attrition rate, while we are not breaking in too much of that for now. but we do hope that it will happen.
And the other benefit that we will have is from the conversations, which have been well received by the customers, and customers are also sensitive to the fact that in the current situation, talent is key and some of the customers where we have pricing benefits that will help us to offset some of the cost pressure. So that is how you can look at the entire segment.
Do we expect net effect is 14% is defendable from EBIT margin perspective?
Absolutely. So that is the entire objective for managing.
Next question is from [Abhi]
Am I audible?
Yes you are.
This is the first time I'm trying on the company call on Zoom, that's why. Anyways. So sir, whilst my questions have been answered to some extent, I may repeat to in order to get a fuller response from you. Firstly, sir, your -- the IP-led business that degrew, you explained that, that is because from what I understood, some kind of reclassification, if I'm not mistaken, but does this mean that IP-led business will further degrow down the quarters? Or will it actually grow again as this quarter's effect normalizes? So that is my first question. Then I'll move on to my second.
Sounds good. Let me answer the first question quickly. This is not a reclassification. This was a contract that was -- a long-term contract for us, which was on a revenue share basis. We have restructured the contract part of it on a time and material basis. So the contract value may have reduced to about 30%, 35% of the original contract, but it is on a T&M basis with the gross margins being at the company average versus the margins which were at a much deflated value because of the nature of this construct and the product under this IP.
Now at an overall IP level, we expect the IP revenues to grow. The IP revenues will grow maybe in the range of 10% to 15%, which may be lower than the company average in terms of the services growing much faster than that. So that is the answer to your question.
Okay. My second question is from what I understood the receivables seem to have increased by a larger percentage than the revenue. Now is it because of the timing of the payment strategy. I think you alluded to it but I just wanted to confirm that maybe some payment timings have shifted. What is the reason, sir? Is my understanding correct?
Yes, your understanding is right to the extent that it is out of the revenue build up during the quarter than to March. So like I explained, some of the efforts for January got billed little later during the quarter because of which the collection spilled over to the next quarter. So it is not arising out of change in payment terms as such. It is more about the receivable bit that which we'll get squared up in the next quarter.
So in essence, this is not any cause of worry?
Yes.
Next question is from Vimal Gohil.
Yes, sir, I hope I'm audible. Sir, My first question is for Sunil, sir. Sir, a balance sheet-related question. If you can just help us highlight how much of the total payables that are there in lying on the liability side of our balance sheet related to acquisition. What is the total amount here in current and noncurrent?
Yes. So let me give you total numbers and then, if possible, we give you the current and noncurrent part of it. See the construct of the consideration, which is payable later in these acquisitions, is in 2 forms. One is which is linked to the earn-outs linked performance, which are payable over a period of 2 years. And there is a retention payout, which is based on the employees continuing over a period of 3 years.
Now out of the total acquisitions, which we have announced in the last 2 quarters, the total payout at a gross level is $220 million, of which roughly about $150 million is in form of upfront consideration and balance is in form of the deferred consideration of what we call as the contingent consideration in the balance sheet. Of these the MediaAgility acquisition is yet to close. So that number amount will get spent in this Q1 of this current year as we speak. So that is broadly this thing. We'll maybe come back with you with the current and noncurrent status. Currently that is...
Right. So out of that -- out of $220 million, $150 million is being paid and the rest is lying on the liability side of the balance sheet, that understanding is correct, right? Okay. Fair enough.
Sir, my next question was for Sandeep sir. Now given our acquisitions, it is extremely clear that we are very well will prepared for the whole cloud hosting or cloud transition prepared for grasping the opportunity on things moving cloud. My question is slightly long term. What happens after that? I mean, what -- after the workloads have moved to the cloud, how is Persistent prepared to grab that particular opportunity? I understand this is a slightly longer-term question, but I guess, with things moving so fast, we are not very far from that state as well.
No. So your question is absolutely valid. And look, that is the underlying premise for doing this acquisition and becoming even more stronger. So let me take a minute to explain this. So the cloud is not just about lifting, shifting and application, infrastructure, database or overall data related stuff. That's just the starting point. That is where the journey starts. Then it is about transforming, whether it is lift, shift and then transform or transforming while you are doing the migration. And there's a whole lot of things that are happening, which are cloud native. So whether it is application development, whether it is product development, lot of work is moving cloud native with the cloud. Now, even if you look at the journey from a Microsoft perspective are any other things -- any of the hyperscalers, they're also trying to build industry cloud. So we talked about how we see the future of cloud being a Microsoft Health cloud, a Salesforce health cloud, a Google health cloud, AWS health cloud. Similarly, financial services, sustainability, manufacturing, whatever. So over a period of time, cloud is going to become like a standardized platform and people are going to build their secret sauce on top. So what we have done through these acquisitions and through organic initiatives is basically furthered our capabilities. And we are aligning very well with our hyperscaler ecosystems as they are creating those components in their industry clouds. And we have been working, for example, on the Salesforce health cloud for more than 10 years, even before it emerged as the health cloud. So that is the journey we want to undertake with the Microsoft, with AWS, with Google and on the hybrid cloud side with IBM. So rest assured, it is not just about the initial migration lift, shift. It is far beyond that. And the strategy that we have -- the investments we have done on the 5 hyperscaler ecosystems is very well thought of. And that will make us absolutely relevant for today and relevant for tomorrow as these industry clouds also emerge. So that's our way we are looking at it.
Got it, sir. Sir, just one clarification. I mean while we are working with ISVs, given the current macro weakness that people are talking about, are some of these ISVs looking to sort of defer some of their engineering work, which could impact us? Are you seeing that? Or do you still see continued spend around product development where Persistent will play a huge role?
So we are not seeing, at this point in time, any weakness in the ISV market. Look, the ISV market again, there's multiple players in this market. There are the start-ups, which are venture funded. There are private equity players, which are mid-market. There are public companies. There are companies that are born in the cloud. There are companies that are born before the cloud, they are modernizing and so on. So it's not just 1 market. And even with the -- let's say, let's take a private equity. These are investments that are committed for multiple years. And so the relationships that we have, we have very little exposure to venture back start-ups et cetera, because any which ways, their volume is much lesser.
Mid-market to the larger ISV, we are seeing them commit for the longer run. So we have not seen any pullback. And that's where we are in very active touch with our customers to make sure that we understand any of these structural deals happening much before it happens. So as of this point in time, while there maybe the conflict in Russia and Ukraine, and we all hope that it subsides sooner or later. While there may be inflationary pressures and so on and so forth, the demand environment is still healthy, and we have not seen a pullback. So that's where we are.
And in case the funding sort of dries out, none of your venture-funded start-ups or rather mid market, I would call mid-market companies that you work with -- are any sort of issues in terms of funding, et cetera, that you don't see right now.
So as of this point in time, look, our exposure to venture-funded companies in terms of revenue percentage is very low. Doesn't matter. They are a very small part of our this thing. Product development I talked about. And look, our mix today is product development and Enterprise market. And look, from an Enterprise market, keep in mind what happened in COVID? The enterprises that were prepared from a digital perspective were the ones that thrived and survived.
Now when we talk to the management teams, right, from CEOs down to CXOs of enterprises, and we talk about the macro environment, the feedback that we are getting is this. Right now, they are not pulling back investments. Should there be a scenario going ahead where if let's say, inflation goes much higher, the conflict between Russia and Ukraine grows much higher, technology spend will not be the first one to be cut. So technology spend is down the line in terms of being cut. So from that perspective, enterprises are still healthy in a demand environment. Product companies fuel their digital transformation. They are still healthy. And we all wait and watch and see if there's anything that happens, we'll come and report back. But from a demand environment perspective, as of this point in time, it continues to be there.
Next question is from [ Dev Agarwal ].
Am I audible?
Yes. You are.
So I wanted to ask question to Sandeep, sir. Sir, can you give me the guidance relating to your revenues and EBITDA margins for FY '23?
So Dev, we don't give forward-looking guidance, as we've said in earlier calls as well. But if you want to look at the order books, et cetera, you can see that in our earnings, the materials that we've shared. From an order book perspective, we have done $943 million plus in that trailing 12 months. From an ACV perspective and $1.22 billion in terms of the total contract value. And we have a certain strategy. That's the M&A data is all over there. So I'll just let you do the calculations. We don't give the forward looking guidance. And we are bullish on the prospects and there's good healthy pipeline.
And sir, one more question I had. Can you give me the revenue growth in -- organic revenue growth for FY '22?
So for the quarter, it was 6.8%. And in terms of the full year -- the full year organic growth was 32.8%.
Next question is from Nagendra Maurya.
Am I audible.
Yes. You are.
Congratulations on good execution. I have a question on the debt side. I remember regarding the acquisition of the MediaAgility and the Data Glove. We proposed to raise debt somewhere around $60 million, right sir? So currently, I see in the book around INR 430 crore of the debt is reported on the balance sheet. So I just wanted to confirm, is it the peak debt we have or we are going to reach further more debt for the MediaAgility going forward? And can you provide the cost of debt and tenure of the repayment?
Sure. The debt that we have taken is for 2 acquisitions One was for SCI Fusion360, it was $25 million. And we have taken debt of $35 million for the Data Glove acquisition. So these are the 2 which are appearing in the balance sheet. So far as MediaAgility is concerned, that transaction is due for closure very shortly now. And then after that, that transaction will happen in first quarter in terms of the debt funding.
In terms of the cost of this debt, you will have details in the balance sheet, but it is at a cost of about LIBOR plus 155 basis points. And so far the tenure is concerned, it's a 3-year amortizing structure in terms of the debt repayment.
Okay. Understood. Sir, just wanted to -- you've said from the BFSI margin, I see there is some dip on the BFSI margin quarter-on-quarter. So can you give us a sense why there's decline in the margin on the BFSI side?
So if you look at the BFSI growth, as I mentioned, in terms of the split between the linear growth right, the on-site revenue [indiscernible] has gone up [Indiscernible] low margin in BFSI for this quarter.
Okay. Understood. Does this have and SCI and Shree Partners consolidation as well?
No. SCI, Shree Partners are actually at similar levels of the company average funds. There is no [indiscernible]
Just one more question. Can you provide the revenue contribution of the new acquisition for this quarter?
$4.7 million contribution for this quarter.
All 3?
All combined.
Next question is from Sandeep Shah.
Sir, can you hear me?
Yes.
So Sandeep, before you start, let me just correct one thing. $4.7 million is the incremental contribution from the acquisitions in this quarter. So it's not the total including, whatever was. So if the last quarter, it was x, so x plus $4.7 million is the [ contribution ]. Sandeep, go ahead, please.
Congrats on a good set of numbers again. Sandeep, just wanted to understand macro concerns [ unfinished here ], most of the corporates are also cautious about. Do you believe where we play a role is more in terms of front-end digital deals, which are slightly discretionary in nature and with macro [ outsourcing ] do the large outsourcing deals should be in the favor of trend in terms of [ wide display ] or you believe our portfolio is now back between these two and the impact will be not be that big, if macro concerns anything.
So I would say, it is the latter. If you look at even the deal wins we have announced, some of the deal wins that we've announced, which are 5-year deal wins are where we are basically working on longer-term things which are not necessarily fully on the discretionary side. And even today, when we look at our customers, our customers who are involving us on the digital side are also coming back to us and saying, okay, can you also help us in our business as usual and then transform over a period of time. So I would say today, it's a healthy mix. And I am not overly worried even, if the market was to slow down the capabilities that we have, the kind of deals that we are working on, the kind of customers that we have garnered and the prospects that we have in the pipeline, will still hold good. So I'm not overly worried about the market going sideways or slightly down or whatever.
And just in terms new business, we see its one of the best in this quarter as a whole. And looking at your growth and the scale, which is going up very fast. Do you believe this could be the new flow in terms of new businesses going forward and there could be an upside because of lot of acquisition synergy which will kick in going forward?
So Sandeep look at it this way. You build a pipeline, the pipeline has multiple kinds of deals. There are some large deals, which are multi year kind of deals. You close some, and you are in a continuous -- and it's a running concern. You're continuously building pipeline, closing some moving on. Some quarters, you will have higher TCV where you close some of the larger deals. In some quarters you have a slightly lesser TCV. The way I would want to look at our business is year-on-year rather than quarter-on-quarter. Quarter-on-quarter maybe some variations. Some quarters, the TCV may go up, some quarters it may come down. But look at it this way. We closed $1.22 billion TCV deals in the last. $943 million ACV in the last where we have announced a revenue of $765 million plus. So overall, if you look at our trajectory, overall, if you look at the patterns that are there for you to see quarter-on-quarter, the bookings are increasing, whether it's ACV or TCV, and we hope to continue that average.
And just last thing Sunil, sir. If I'm not wrong, you said amortization cost in FY '23 will be 70, 80 bps higher versus FY '22 as a percentage to the revenue and we will still like to defend EBIT margin at close to 14%.
No. What I meant was that the total impact amortization from the acquisitions will be to the tune of 70 to 80 basis points on an incremental basis, it will be about 50 basis points.
And we would aspire to remain flattish in terms of EBIT margins?
That is correct.
And quantum of wage hikes which can come in Q2?
Our wage hikes are due 1st of July. So currently, we are working on how the -- 2 or 3 moving parts with respect to the inflation, the market expectations in terms of how people are pursuing the wage hikes. And the third is, of course, in terms of what you call [indiscernible] pass on some of the wage hike to the customers. So we'll come back to you after the first quarter.
Next question is from Mohit Jain.
2,3 questions, all related to the quarter. So one is on the billing rate fluctuation like in this case, we often find that the billing rate fluctuates a lot on a quarter-on-quarter basis. So just help me understand what is happening there and how should we look at the billing rate in your case? Second was on TCV. Are you guys sharing TCV excluding the acquisitions to make it comparable on a Y-o-Y basis? And third is related to these other direct costs. So IP revenues have fallen, but the purchase royalty costs have gone up on a quarter-on-quarter basis. So what are these expenses? How should we look at new trends in purchase royalty in connection to IP revenues?
I'll answer the TCV part and I'll have Sunil answer the other 2 points. So in TCV yes, the TCV, so far, what we have responded to or the data that you shared, it does not include that.
So I'm looking for 4Q versus 4Q does not include Data Glove or Shree Partners or SCI?
No.
Perfect.
Sunil sir, if you can answer that.
Mohit, on the other 2 parts in terms of the billing rate, what happens in our situation is that when the -- particularly if you look at the on-site revenue, if the composition of that revenue from Europe is higher, it has some kicker in terms of the overall realization per person. Also in this quarter, we have an improvement in revenue from SCI because last quarter because of the holiday season, that billing was slightly lower. So these 2 parts being better, that has reflected in higher onsite realization...
So generally, Europe rates are better than U.S., is that a correct inference?
That is right. That is right. Costs are also higher, so it's not about just the rates but, yes, that is how it is. In terms of your other question on purchase royalty, so this is on account of some partner IPs where we're also doing the implementation work. So it is not necessarily linked to the business that got restructured or something. This is relating to other partner IPs.
So right now, when we look forward, this line is not so to say, linked to IP revenues that you guys report?
No, they are linked to IP revenues. It's just that, so far as this quarter is concerned, you have a significant dip in IP revenue out of the restructuring of the contract and when the contract has got restructured, the revenues are coming in T&M form, they are getting reported as services revenue. The backfilling of that has happened by the partner IP revenues with the other partners. But the amount is not that big, but you get that impact in the purchase royalty account. We can give...
Well, I'm sorry, I'm need more information on this. So you're saying IP revenues are not there, but IP expenses that you were showing is related to some other assignment which is part of services?
No, no it's not like that. There are 2 parts of IP revenue. One is what happens on revenue [Indiscernible] right, which has got restructured. So that is one way and it has gone into T&M in the services mode. The other part of our IP revenues are in 2 formats. One is the partner IPs, whether it is partnerships that we have with several other OEMs, accurately companies and so on. It can be our systems. It can be -- so many companies that we deal with. And the third portion is the own revenue out of our accelerate portfolio. So that is what is the composition of IP revenue. One big part out of that, which is relating to revenue share, that has got restructured. That's why you find overall dip in IP revenue while purchase royalty, if you'll try to link to that, it will not be right. Anyway, we can connect and give you more details.
Next question is from Madhu Babu.
So this year, we have gone a bit aggressive on acquisitions. So would you take a pause and try to consolidate them? Or we are still hungry for more?
Yes, so far, you're right, we went aggressive on the acquisitions because, look, there was a time when we were not doing many acquisitions. We have a stated strategy. We've been saying we want to do acquisitions, which are tuck-in acquisitions for capabilities, not for revenue, capabilities or geographic presence. We have done our share of acquisition for the timing. Prep is to integrate these for the next 1 to 2 quarters, we are absolutely focused on integrating and making sure that the synergy revenues that we expect to happen. So one is whatever they were supposed to do on their own. One is what we can bring from taking their capability to our landscape, our capability to their landscape, that is the first order of business. And then we will look at other acquisitions as we go along. And in the meantime, way, something comes very opportunistically, we will look at it, but otherwise, for the next 1, 2 quarters, we are absolutely focused on integrating and performing.
And just one more, sir, on Eastern Europe, which is seeing a lot of turmoil the [indiscernible] and all is getting impacted. So are we seeing incremental deals because we also work on the product engineering and will that be a delta for us for this year?
So yes, there are discussions that are happening, multiple levels, multiple companies. Nothing yet at scale to report significantly. But yes, there are discussions happening. And having said that, we at a human levels, want to see this conflict go down and you would not want to gain at the expense of something like this. But yes, there are deal discussions that are happening.
Next question is from [ Karan ]
Am I audible?
Yes.
Yes. Sir, first question has already been asked on M&A. The related question to that is, sir, we are close to around $1 billion in the revenue run rate and our vertical spread is mainly through 3 main verticals, BFSI, Healthcare and Tech & Emerging. So as Persistent grows, would you like to build capabilities in other verticals like manufacturing, energy utilities, telecom, et cetera, maybe, organically or inorganically? Your thoughts would be much appreciated.
Sure. So 2 parts of the question. So one, if you look at the tech companies, BFSI, healthcare, life sciences. Now this is itself or a huge ocean. In any GDP, BFSI and Healthcare, Life Sciences are a significant spend. And 80% of our revenues today come from the U.S. where this is a big spend and then Europe as well this is a big spend. So the propensity for us to keep going even focusing on these verticals is pretty good. And we have been always at the leading edge in tech companies.
Now having said that, when you look at your question, you said tech companies and emerging verticals. So the emerging vertical for us is communication, media and telecom. So we do have a certain footprint that revenue run rate is more than $50 million. And as it kind of comes to a significant mass we'll report its entities. So there is definitely some verticals being worked upon, which are emerging verticals. And as they become at scale, you will see them being reported separately. But otherwise also our propensity to grow even in our footprint in BFSI, Healthcare Tech companies is enough addressable market for us to keep going.
Okay. And secondly, just again on M&A. So you have done acquisitions and payments in the cloud space. So if -- you said that in the next 1 or 2 quarters, you are focusing on integration, but I just want to understand what's the strategy in which areas maybe after 2 quarters you would like to fill the gaps?
Sure. So just to recap, we did acquisitions over the last few years in the Salesforce space. So if you look at historically, we did PARX and youperience in European Salesforce, then we did CAPIOT which was integration of MuleSoft, TIBCO open source. Then we did Sureline, which was basically an acquisition of IP in the GCP space, cloud space for migration lift, shift, large-scale projects and so on.
Then Data Glove, Shree Partners and MediaAgility. So there's a bunch of acquisitions in different strategic buckets that we wanted to do. Now what we would have done ideally in a wish list, if the Russia-Ukraine conflict would have not happened, we would have looked at something in Eastern Europe. So as things go along, as things stabilize, we'll look at Eastern Europe's presence, whether through a deal construct with a larger customer or doing an inorganic foray over a period of time. So that would be the other part, along with maybe some European footprint as well.
Next question is from Abhishek Shindadkar.
Congrats on a strong execution. Maybe I'll try my luck on the guidance again. Given that Data Glove and MediaAgility contribution could be seen in this year and the growth rates for those 2 are also higher, any color in terms of what's the trajectory? That is first question.
And second, on the margins. So should we now assume that as a strategy, we will kind of operate in the current margin band and try and grow as fast as we can? And the last is just a data point to -- question to Sunil, sir. Sir, the incremental amortization number you gave, does not include the MediaAgility's contribution, if that is correct, should that also contribute roughly another 40 basis points to the incremental number?
Sure. So since we have only 3 minutes left, I'll quickly answer 2 parts of the question and then hand over the third part to Sunil. So on the overall revenue trajectory, look, we have said we have aspirations of hitting $1 billion. So over the next 4 to 6 quarters, our aspiration hopefully will be achieved sooner than later. I'll just leave it there. And balance, you can do the triangulation between the order wins, the M&A, the quarterly run rate and so on. Huge lay out. On the margin trajectory, our first goal is to make sure we keep going. We have come to the industry-leading growth with a lot of effort. That's our first priority. Margin optimization is a second priority. We can remain at the same levels, given all that headwinds, et cetera, that would be a good win, but growth comes first, maintaining margin second priority and so on. Sunil, if you want to talk about incremental amortization?
Yes, yes. So actually, the incremental impact includes MediaAgility, which is not over and above that. The only thing that will happen is that the transaction is will be for closure during, say, this quarter. So from quarter to quarter, the impact may move and as a percentage of revenue as we keep scaling the revenues, that number will get moderated. So the overall what you call impact is what you can look at for the year, but it is including MediaAgility.
Next question is from [ Arvind ]. We'll take that as the last question. Sandeep, sir, we'll take that as the last question. I would now like to hand the conference back to Mr. Sandeep Kalra.
So we would like to once again thank all our 18,500-plus team members, customers, partners, investors for their unflinching support in growth journey. We are bullish on our prospects for FY '23. We aspire to maintain industry-leading revenue growth combined with healthy levels of profitability. And we appreciate you spending time with us on the call today. We look forward to connecting back with you in 3 months from now to provide an update on our ongoing process. And please stay safe. Stay healthy. Thank you.
Thank you very much to the Persistent management. Ladies and gentlemen, on behalf of Persistent Systems Limited, that concludes today's conference. Thank you for joining us, and you may now disconnect your lines and exit the webinar.