TRACXN TECHNOLOGIES LIMITED

(Formerly Known as “Tracxn Technologies Private Limited”)

November 14, 2022

To, To,
BSE Limited National Stock Exchange of India Ltd.
Phiroze Jeejeebhoy Towers, Exchange Plaza, Plot no. C/1, G Block,
Dalal Street, Bandra-Kurla Complex,
Mumbai- 400001 Bandra (E), Mumbai - 400051
Company Code: 543638 Company Code: TRACXN

Sub: Transcript of the Investor/Analyst Earnings Call held on Wednesday, November 9,

2022

Dear Sir/Madam,

This is in continuation to our letter dated November 09, 2022, wherein we had informed you
of regarding the audio recording of the investors earnings call for the quarter and half year
ended September 30, 2022 (Q2 FY 2023 and H1 FY 2023 Results).

Please find enclosed herewith the transcript of the said call. The Transcript is also available on
the Company’s website i.e. www.tracxn.com.

Kindly take the above said information on record.

Thanking you.

Yours faithfully,
For Tracxn Technologies Limited

Megha Digitally signed

by Megha Bohra

Bohra Date: 2022.11.14

15:49:03 +05'30'

Megha Bohra
Company Secretary & Compliance Officer

Registered Office Address: No. L-248, 2nd Floor, 17th Cross, Sector 6, HSR Layout, Bengaluru, Karnataka, 560102
Ph: +91 90360 90116, Email: [email protected], Website: www.tracxn.com CIN: U72200KA2012PLC065294
 Tracxn Technologies Limited
Q2 FY23-Earnings Conference call
November 9th, 2022

Management:

Ms. Neha Singh, Chairperson and Managing Director

Mr. Abhishek Goyal, Vice Chairman and Executive Director

Mr. Prashant Chandra, Chief Financial Officer

Host and Moderator:

Mr. Rishi Jhunjhunwala, IIFL Securities Limited

Tracxn Technologies Limited – Q2 FY23 Earnings Call Transcript 1

Moderator: Good evening, ladies and gentlemen, thanks for joining us today on the 2 nd quarter fiscal ‘23
earnings call of Tracxn Technologies Limited. On behalf of IIFL Institutional Equities I would like
to thank the management of Tracxn for giving us the opportunity to host this earnings call.
Today we have with us Ms. Neha Singh - Co-founder, Chairperson and Managing Director,
Abhishek Goyal - Co-founder, Vice Chairman and Executive Director, Prashant Chandra - Chief
Financial Officer. I will hand over the call to Neha to give their opening remarks and present
their PPT, and after that we will open it up for Q&A. You will have two options to ask
questions, either you can raise hand, use the raise hand option and we will pick you up on that,
or you can put in your questions in the Q&A tab available at the bottom of your screen. With
that I will hand it over to Neha. Thanks, and over to you.

Neha Singh: Thanks, Rishi. I hope my screen is visible. Welcome everyone, thanks so much for joining us
today for our first earnings call. As a publicly listed company we are very excited to present our
quarterly results. As you may be knowing we got listed on 20th of October about 20 days back.
In terms of the format, I would like to run through a short presentation which covers the key
update pointers. I will also give some commentary along the way which will be helpful in the
overall understanding and we will follow it up with Q&A session as Rishi mentioned. I request
you to go through the standard disclaimers for this presentation.

A quick recap on our business, Tracxn is a data and software platform for the private markets
globally. If you look at the public markets it has created multiple large companies, many of
which are highly cash rich profitable companies. As private markets are becoming large and
important it will also create platforms like these. And we are building a global platform in this
space. Our customers include venture capital funds, private equity funds as well as M&A and
innovation teams of large Fortune 500 corporations. It is a global platform so nearly 70% of our
revenue is international and we have customers in over 50 countries.

I would like to first begin by summarizing the key financial performance of the quarter. One
theme that you will see across all our numbers be it revenue growth, profit growth, EBITDA
market expansion you know increase in free cash flow is the continued momentum across all
these numbers. The momentum that you would have seen across the last 3 years that
continues across the recent quarter as well.

To set the context, we have one business and one legal entity. So, you will not see terms like
standalone or consolidated, all the numbers that I will talk about is for the business overall. In
terms of revenue for operations for Q2 FY23 it was 19.1 crores which is 28% increase over
same quarter last year. This is an annualized run rate 76.4 crores. Our total income was 20
crores which is 32% increase over same quarter previous year. This is again an annualized run
rate of 80 crores. Previous financial year if you remember FY22 the total income was 65 crores.

Coming to profitability the key numbers are Adjusted EBITDA, Adjusted PAT, EBITDA and PAT
margin. Adjusted EBITDA is mainly EBITDA adjusted for non-cash ESOP expense as well as IPO
expense which is completely reimbursable to the company as it was pure OFS. And in the latest
slides we will also give out the detailed components from how we sort of built this.

So, in terms of Adjusted EBITDA for Q2 that was 2 crore, last year this number was negative 1.2
crores, so this is the increase of 3.2 crores on a year-on-year basis. Adjusted PAT was 2.9 crores
which is an annualized run rate of 11.6 crores. Just to know PAT for the same quarter last year
was negative 1 crore, so this is an increase of 3.9 crores on a year-on-year basis. Talking about
the margins this is something that you will find fairly interesting. The Adjusted EBITDA margin

Tracxn Technologies Limited – Q2 FY23 Earnings Call Transcript 2

 for Q2 was 10.5% which was an expansion of 19% on a year-on-year basis. Just to repeat the
Adjusted EBITDA margin last year Q2 was negative 8.4% which has expanded by 19% to be
positive 10.5% in the current quarter.

Neha Singh: This is something that we find very exciting in our business, the EBITDA margin expansion that
has been happening and even more exciting is the pace at which this margin expansion has
been sort of playing out. On similar lines the Adjusted PAT margin for Q2 was 15.3%, last year
same quarter this was negative 6.5%, so this is an expansion of 22% on a year-on-year basis.

The other interesting aspect about our business is that it also generates free cash flow which
has been increasing. In H1 of the current financial year the business generated positive free
cash flow of 5.3 crores which is an increase of 4.2 crores on a year-on-year basis. The cash and
cash equivalent increased by 7.3 crores on a year-on-year to end at 52.4 crores. Please note
that this also includes 4.8 crores of IPO expense which is in the ESCROW accounts and to be
reimbursed to the company as it was a pure OFS.

In the subsequent slides I will be covering each of these metrics in detail which I talked about
in the summary starting with revenue.

The revenue from operations is essentially revenue from platform subscriptions. Just to note
100% of our revenue is subscription based. There is no services or one-time implementation
component so it is a fairly high-quality revenue. Also please note that this is accrued revenue
so though we do pre-paid billing and collection like most of the financial data platforms that
we may have used but we only recognize revenue for the time duration within the reporting
period for which the service was delivered. So as discussed earlier revenue from operations in
Q2 was 19.1 crores, total income was 20.1 crores which is annualized run rate of nearly 80
crores, this is 32% increase over the same quarter previous year.

Even if you look, we have also added historical data in the same slide, so you can see the
historical data for the last 3 financial years. And if you look at the growth CAGR across the last
two years it has also grown, the revenue from operations has grown in a similar range of 30%.

Moving to bottom line and profit margins, Adjusted EBITDA for Q2 as I mentioned was 2
crores, last year same quarter this was negative 1.2 crores so this is an increase of 3.2 crores
on a year-on-year basis. The margin last year was 10.5%, sorry margin this year is 10.5%, last
year same quarter this was negative 8.4%. So, this is 19% expansion on a year-on-year basis.
Also, you can note that this trend is not one-off, this trend of expansion of the EBITDA margins
is not one-off, even if you look at last 3 years, the business has seen a consistent EBITDA
margin expansion. For instance, from FY20 this adjusted margin was negative 53% which
improved by 21% in FY21. This margin again improved by 40% in the subsequent year to
become positive 7.5% in FY22. This expanded to 8.7% in the first quarter of the current
financial year and in Q2 it has expanded to 10.5%.

So, this as I mentioned this is fairly interesting in our business, the sort of consistent EBITDA
margin expansion that has been happening and also the rate at which it has been happening.
In the subsequent slides I will also be explaining as to what is one of the key reasons of why
this happens in our business.

On a similar note, Adjusted PAT was 2.9 crores for the current quarter annualized run rate of
11.6 crores, this was an increase of 3.9 crores on a year-on-year basis. Adjusted PAT margin
was 15.3%, last year same quarter this was negative 6.5% so this is a 22% improvement in the
margin on a year-on-year basis. Again, this is not one-off, the PAT margin has been improving
across the last two years as we have also shown in this slide.

Tracxn Technologies Limited – Q2 FY23 Earnings Call Transcript 3

 So, one of the key reasons for the EBITDA margin expansion is that bulk of the incremental
revenue you know goes into the bottom line. To be specific if you look at the revenue from
operations from this quarter and compare it to the same quarter last year, we added
incremental quarterly revenue of 4.2 crores out of which 77% or 3.2 crores went into
incremental quarterly Adjusted EBITDA. And that is why you can see a rather fast pace of
expansion of EBITDA margin. And again, this is not one-off, so from FY20 to 21, 87% of the
incremental revenue from operations went into incremental Adjusted EBITDA, and from FY21
to 22, this was 97% of the incremental revenue from operations went into Adjusted EBITDA
increase.

Neha Singh: Just to summarize since our cost to serve incremental customer, bulk of the incremental
revenue goes into bottom line for us. The company also generated positive free cash flow of
5.3 crores in the first half in the current financial year which is an increase of 4.2 crores for the
same first half previous financial year. The cash and cash equivalent, is 52.4 crores which is an
increase of 7.3 crores on a year-on-year basis. And as you can see, we have also added data for
the last 3 years so the free cash flow has also been increasing across the last 2 years.

Now coming to expenses, our total expense for Q2 was 18.3 crores. In this slide we have given
the breakup of the expense into the key components. There are two interesting points to note
here, the first is that bulk of our expense is team cost. In Q2 89% of our total expense was
team cost. This percentage in the last two financial year which is FY21 and 22 was 88% and
89% of the total expense respectively. Just to note that all our team is in-house, there is no
outsource or there is no contract workforce. Second interesting aspect to note here is that we
do not have a large paid marketing expense line item because we do not have a large paid
marketing spend neither digital marketing nor offline based which is typically required for
customer acquisition. The reason for this being because we are a data company, we produce a
lot of content and hence we are able to use that content to get a lot of organic traffic. So, we
are able to acquire leads fairly efficiently, which is also reflected in our expense breakup.

In terms of the growth on a year-on-year basis, the expense grew at 8%, and two interesting
things to note over here, one is that there's fairly modest increase in expense despite us
investing aggressively in sales and marketing efforts. For instance, between May-21 to June-22
which is about a period of 13 months we increased our sales marketing and customer success
team by over 90 people. The second interesting thing to note over here is that there is very
high operating leverage in the business as you can see in the numbers. For instance, revenue
from operations on a year-on-year basis grew by 28% while the expense in the same period
grew only by 8%. Again, this is not one-off even if you look at last two financial years our
expense grew at a CAGR of 4% while revenue from operations in the same period grew over
30%, that is why you can also see the margin expansion sort of happening.

In the subsequent two slides we also cover four other KPIs which we track closely for our
business. On the first slide we cover the numbers of customer accounts, number of user
accounts. We closed Q2 at 1155 accounts and 3365 users which is a 17% increase over on a
year-on-year basis. And please note that the pricing per user may vary as the initial users are
priced higher than subsequent users. For instance, like our pricing is also given on our website,
our first single user PAT starts from nearly 5 lakhs on a yearly basis and the subsequent users
are slightly cheaper. Our average pricing per user is close to 2.3 lakhs. So, if we are acquiring a
lot of new accounts then the revenue growth will be typically higher than the user growth, and
if we are seeing more expansion within the existing accounts then the revenue growth will be
lower than the user growth. So, this is some nuance around these KPIs.

Tracxn Technologies Limited – Q2 FY23 Earnings Call Transcript 4

 In terms of some of the other KPIs we also track contract price for billing amount, contract
price for Q2 of the current financial year was 17.8 crores, please note that there can be minor
seasonality in contract price across the quarter. For instance, if you look at last financial year
Q1 was higher than Q2 which is a trend we have also seen this financial year.

The next graph that you see on the righthand side is about the entities profile which is an
indication on the amount of data which is added onto the platform. So, today we track more
than 1.9 million entities including private market companies, funds, etc., globally. We have also
summarized the same numbers on a half yearly basis, I will not go into more details but you
can refer that offline.

Neha Singh: So, moving to some of the other business updates, a quick recap on our journey. We launched
the platform in FY13, over the years we have raised capital as a private company from various
venture capital funds, angel investors, and over the time we have been expanding our offering
as well as the global footprint of customers we work with and this year we got listed on NSE
and BSE.

Some interesting aspects about the business, one is that bulk of our revenue is international.
So, for Q2 69% of our revenue was from outside. Even if you look at last 3 financial years it has
been in the similar range of nearly 70% of our revenue being international. These customers
span over 50 countries.

Due to this cost arbitrage of Make-in-India and sell globally we enjoy a significant cost
advantage. This cost advantage because of three reasons, one is that, though we have global
data and data about companies across all countries, our entire data production and technology
platform is actually built from India. Second is another thing which people find it very
interesting is though we have customers panning 50 different countries our entire sales
primarily happen from India. So, we have different teams that work across different shifts
spanning all the time zones and the sales happens remotely over video calls like these. Third is
that we don't spend a lot on paid marketing neither digital nor offline as a means to acquire
customers because we are a data company, we are able to use a lot of content to do content
marketing and acquire customers fairly efficiently. So hence we believe that these 3 things give
us a very significant and a long-lasting cost advantage.

Another interesting aspect about the company is the experienced board and team. Apart from
the promoters we have had investor nominees Ravi Adusumalli and Vivek Mathur from
Elevation who have been on the board for the last 5 years. A formal board has also ensured
that the company has been fairly high in compliance in corporate governance, so right from
the third year of incorporation of the company we have had a Big 4 as auditor for the
company. For instance, we have had PWC as the auditor for the company for the last 7 years
with no qualifications at all across all these years. In addition, we also have 4 independent
members which bring in fairly rich experience from having worked with at various corporates
as well as private market funds. For instance, Rohit Jain is an alumnus of IIT-Delhi. He worked
with Google, Microsoft, now he is a partner at a private market fund. Nishant Verman is an
alumnus of University of Michigan and Northwestern University. He worked with Canaan
Partners which is a venture capital fund and then Flipkart. Payal Goel is an alumnus of ISB,
previously she worked for a private equity fund Peepul Capital and then Aspada and now part
of the corporate development team at Google. Brij Bhushan is an alumnus of IIM-Bangalore.
He has worked earlier with companies like Infosys, Bain and Nexus Ventures.

Apart from that we have a fairly built out and strong senior management team across VPs,
AVPs, CXOs, our CXOs are alumni of some of the top schools in India for instance including IIT-

Tracxn Technologies Limited – Q2 FY23 Earnings Call Transcript 5

 Kanpur, IIT-Kharagpur, ISB, IIM-Lucknow, and also bring in rich experience from having worked
with reputed MNCs, companies like Goldman Sachs, Amazon among others. Apart from that
we are also fortunate to have had the backing of very marquee set of investors. So, in our
journey as a private company, we were fortunate to have had the backing of the respected
venture capital funds like Elevation, Accel, Sequoia Capital and some vey marquee angel
investors including Mr. Ratan Tata, Nandan Nilekani’s Trust, founders of Flipkart, Sachin
Bansal, Binny Bansal, Founder and CEO of Freshworks, Girish Mathrubootham and more. Also,
in our IPO process we were fortunate to have had the backing of some very marquee
institutional investors in our anchor book including funds like ICICI, Kotak, Nippon, WhiteOak,
Motilal Oswal, Abakkus among others.

One interesting aspect of our business is our very robust scalable and automated technology
platform which is very essential in building global data platform. So at the back end, we track
millions of companies and mine information about them. This helps us bubbling up new
companies every day. So today at the back end, we track more than half a billion entities, and
it's also very intelligent. We use big data to mine large data sets. This also enables to add data
at a fairly rapid pace on to the platform.

Neha Singh: Lastly, one interesting aspect is that we play in a very large and growing market. So if you look
at public markets, it has created multiple large billion dollars plus revenue companies.
Cumulatively these companies generate over $30 billion of revenue annually and most of these
companies are also fairly profitable and generate large amounts of free cash flow. As private
markets – so private markets today have also become large. For instance, the private market
AUM has crossed $9 trillion according to industry report, and it's also growing at a fairly fast
pace of 12% CAGR. So as private markets are becoming large, it will also create data platforms
- global data platforms like these and this is the space that we play in. Subsequently, we have
also given the detailed financials, which I will skip, and you can probably refer to that offline.

So that's all. That covers the key items I wanted to share. I will pass it back to Rishi to start the
Q&A.

Moderator: Thank you Neha for the presentation. Requesting the audience, if anyone wants to ask a
question, please use the raise hand option at the bottom of your screen or you can actually
type in your questions in the Q&A tab. The first question is from Divyesh Mehta. Divyesh,
please un-mute your line and go ahead.

Divyesh Mehta: Thanks for taking my question. So, my first question is largely on the sales process. Can you
give me an idea in a detail form how the sales process works? From my understanding, it's that
anyone could log into the free platform and if they want more data, they'll click and then you
will connect with them, have a remote chat, and that is our leads are getting converted. If you
can throw some numbers around it and explain the process in a bit more detail that would
help me out. That's my first question.

Neha Singh: Sure. Thank you, Divyesh. So, to address that, in terms of our sales process, we have the top of
the funnel, which is the marketing, which is generated through a lot of the content pages that I
talked about, through content pages as well as reports. We give out a part of the reports for
free for building the brand and helping people get to know the kind of data that we have. So
that gives us a huge top of the funnel. That's done by the marketing team. All the closures that
we actually end up doing, typically someone has given a demo to that customer, and that is
done by the sales team. So, the sales team works across all the time zones and they close
customers over remote calls. So that's the closure part. They then hand it over to the

Tracxn Technologies Limited – Q2 FY23 Earnings Call Transcript 6

 Customer Success team, who then helps in on boarding the customer as well as account
expansion over time.

Divyesh Mehta: Okay. So, can you just give some idea from top of the funnel to conversions, what would be
the ratio? If you can share that?

Neha Singh: So, in terms of the numbers, we haven't given the conversion funnel numbers. So what we
wanted to start off with this core set of KPIs, which is helpful in understanding the business,
and over time we'll probably add few over time. So, we haven't given this funnel.

Divyesh Mehta: Okay, fair enough. Just one last set of question. So, in terms of the competition and the whole
space, while I understand the point that private AUM is growing and a lot of VCs will invest in
this software, or they will actually need to, and the number of users will also grow, but also
there are many other players there. So, a specific VC would be using two or three software,
right? And it would be for a team of like 10 or 15, at least 3 or 4 associates would be having
that software. Who are the key competitors here and in most of your customers, what do you
see in terms of how many softwares they are holding out? What is the underlying trend going
on in that space? And just a competitive analysis of why you think your product would beat out
towards other players, because there is a space only for 2 or 3 softwares out there, right?

Neha Singh: Sure. So, I'll take this. One is, in terms of the competition landscape, because we play in a
vertical industry, the number of players that we run into are fairly limited versus a horizontal
space. If you see like a CRM space, which is fairly competitive, right? In here, globally, there are
only about 6 or 7 players which exist in the private market data space, which are sizable. So
that is why and these are the players that are typically there globally when you're selling to all
the customers. Coming to the second point is that whether they're using multiple things or
not. So most of the customers that we acquire today, most of the customers have not used any
software before. So there are some small segment of customers which are probably using
more than one software. But bulk of the customers that we work with, have typically that we
acquire new have actually not used a software. So I think one of the things that we also see in
this industry is that the adoption of software is happening probably for the first time in the last
decade. So that is there.

And coming to the third point, which is in terms of the competition analysis. So right now, it is
not so like-to-like. So, there is some overlap which exists, but for instance, there are a lot of
things which are fairly unique to our platform. One is our whole coverage of sectors and
industry coverage sectors, emerging business models, our coverage of emerging technology
sectors, as well as some of the data points that we cover. So that is fairly unique and
differentiated. So a lot of the times the customers are actually evaluating you in isolation.
Hope that answers your question.

Divyesh Mehta: It answers it very well. Just one thing. So I think when you would be highlighting the point that
most of them have come new to it, in reality what it would mean is that the bigger ones have
already used or they have 2 or 3 softwares but most of the larger chunk, the smaller, the tail
market is actually still new and where you would go towards expanding. Is that a fair way to
think about it?

Neha Singh: No. Actually a lot of the large ones that we also have acquired in this quarter or the previous
quarters, which would include some of the large VC or A PE fund, even for them, we are

Tracxn Technologies Limited – Q2 FY23 Earnings Call Transcript 7

 typically sometimes the first solution that they are using. So, this would not mean the long tail.
This would mean like the core set of customers also.

Divyesh Mehta: Okay, that answers, that's helpful. I'll go back to the queue.

Moderator: Thank you Divyesh. The next question is from Sapna Jahwar. Sapna, please go ahead with your
question and unmute your line.

Sapna Jahwar: Hi, good evening. I actually wanted to understand that does this number, the revenue number
in this quarter also has substantial currency benefit since 70% of our customers are
international or the revenues come from international source? So, if you could just quantify
that.

Neha Singh: Yeah, sure. That's a good question. So, we haven't given the break up but my sense is that
most of the growth, even historically, even now, continues to be because of the growth in
numbers of accounts as well as number of users. That's why we have not given that. Having
said that, we obviously do benefit from rupee depreciating or USD becoming stronger because
like I said, nearly 70% of our revenue is international, bulk of which is USD. I think on that note,
I'll also probably point out one nuance as to how the FOREX, improved FOREX rates impact us.
So, we actually book the FOREX based on the day we raise invoice to the customer. To give you
an example, for instance, if today the rate is 82, Dollar to rupee, and if we raise an invoice for a
customer, which is for an annual contract, so we'll convert today at 82 and that will be the
same revenue, part of the revenue will flow on for the next 3 to 4 quarters. Similarly, the
revenue which I book today, the accrued revenue of this quarter, if I have some component of
revenue which was invoiced for an annual contract like 12 months back, and it was converted
at a currency conversion rate of say, 75, 12 months back in this quarter again, that conversion
rate will still be 75. So having said that, whenever the foreign FOREX improves it will impact
not just that quarter but also the subsequent quarters.

Just another stat. We had given the percentage annual contract, which was last financial year.
So that was nearly 60%. So, 60% of our revenue last financial year was from the annual
contract. Hope that gives you some sense.

Sapna Jahwar: Sure. So, basically the currency benefit would not only flow in the current quarter but will also
come with a lag in the next quarter to come in.

Neha Singh: Exactly yes.

Abhishek Goyal: So, today's currency rate is not like…the impact remains the next 12 months or next 6 months.
It's not immediately that you see direct impact.

Sapna Jahwar: Sure. And do we have any hedging in place?

Neha Singh: So, we actually don't have any hedging because on the cost side, our entire team is actually
based out of India, which is bulk of our cost. So, we don't have any much exposure in terms of
the currency based fluctuation on the cost aspect. And on the revenue, obviously we do have
the benefit of that. Currently we just convert it as we get the collections. So, we don't hedge it
or do that because typically, historically I think dollar has been becoming stronger.

Tracxn Technologies Limited – Q2 FY23 Earnings Call Transcript 8

Sapna Jahwar: In your earlier comments you did mention about some seasonality in your business. Now just
wanted to understand how is this seasonality factored in? Is it largely during the holidays in
the US and Europe? If you could just explain that seasonality factor a little better and point out
specific quarters where it would be highlighted.

Neha Singh: On the whole there is minor seasonality. I would say there is not a lot of seasonality, but
there's some seasonality which is there. For instance, like it is slower in summers in Europe
and US because it's longer holiday period for people. So, you typically have the collection or
the invoicing either sort of you try to not have it at that period. But you'll probably just see
through our numbers this minor seasonality I would say not a lot.

Sapna Jahwar: Sure. One more question basis on the macro. Now, given the bulk of the revenue comes in
from international and we've been talking so much about an impending recession or slowdown
or sort of that, and given that a lot of your clients are into the private equity, or the venture
capital side would an M&A would definitely be impacted on this side? Do you see any impact
in terms of deal closures, in terms of account closures during this scenario?

Neha Singh: Sure. So that is something obviously that we are hearing a lot and we are also trying to track it
in our numbers. If I look at this quarter, it has actually grown at slightly faster than last quarter
on a year-on-year basis and if you look at our customer segment so it's not that in VC or PE
layoffs are happening. I would say that they are still sitting on a lot of dry powder which is
there. So obviously the investment activity is a little slower this year but it's not that
downsizing or anything is happening from what we hear. So just to step back and answer that,
yes, that is something that we are fairly cognizant about and we do want to track that but
currently we have not seen that much at least in this quarter.

Sapna Jahwar: Sure. But because a large part of the revenues that you book this quarter will be visible in the
next quarter to us so this impact should also come up with a lag. I mean is that understanding
correct? In case this gets an impact on the business in terms of say a delayed deal closure so it
would come with a quarter’s lag?

Abhishek Goyal: See Sapna, we are monitoring these things closely. So far, we have not seen any material
impact at least at our end. So hence we have not and obviously we are monitoring the
situation closely. But I don't think we've seen any material impact on the closure numbers or
percentage closure numbers or any of that, number of new leads. All of that continued to sort
of be in the line of what we have been seeing in the past.

Neha Singh: And that is why even if you see in terms of like in the 12 twelve months, we actually increased
the team by more than 190 people. So that is like we are also aggressively also investing in
sales marketing because we're not instantly seeing that.

Sapna Jahwar: Sure. Just one last question before I move back in the queue. On the ESOP front now is that
included in the employee line item or where is the ESOP accounted for in the cost line item?

Neha Singh: Yeah. So, the ESOP is a line item it is there in the employee benefit expense. We have removed
that from the adjusted EBITDA which I talked about but you can actually see that in the
detailed P&L and probably Prashant can add.

Abhishek Goyal: Actually, we can show the detailed financials that number will be there.

Tracxn Technologies Limited – Q2 FY23 Earnings Call Transcript 9

Sapna Jahwar: So actually, I just wanted to understand that how the ESOP impact will fade away in what time
frame and are we in the process of floating up any newer ESOPs in the near term.

Abhishek Goyal: So actually what, the way in our case while Neha is pulling it, I will sort of…so for some of the
top people in the company we do provide new ESOPs as a part of annual appraisal, and that
has been the policy since the beginning. So, we have not done like one-of things. Usually, we
do as a part of salary appraisal and it is sort of a replacement for bonuses that is there in the
industry. So, this is the charge…

Neha Singh: So, you can actually see that in a sort of detailed P&L which is there in the line item.

Abhishek Goyal: This quarter the ESOP charge was 1.1 crores, right?

Sapna Jahwar: Yeah. So, any time frame by the time this ESOP cost will be completely absorbed and we do
not see it.

Abhishek Goyal: No. So, this will be a…

Sapna Jahwar: So, this will be a continuous process.

Abhishek Goyal: So, it is part of annual appraisals. So, every time an appraisal comes there is a fraction…above
certain designation we provide ESOPs as a part of component of appraisal and we have kept it
like this so you don't see a very large number. It's related to our cost. It is 1.1 crores on a base
of 15-16 crores. That is the range we expect to sort of broadly be in range.

Sapna Jahwar: Sure. That helps. Thank you for answering my questions and all the best.

Moderator: The next question is from Bharghav Buddhadev. Bhargav, please go ahead.

Bhargav Buddhadev: So, if I look at your presentation, the user base has increased about 17%. So, what I wanted to
know is, how much of this user addition would have come from customers which you have
acquired maybe 3 years back.

Neha Singh: Customers acquired 3 years….so you mean to say. Sorry can I have…

Abhishek Goyal: Actually, that break up we won’t have. So, let’s say we had a 100 users in a period, then how
many of those users are part of new accounts versus how many of them are from the account
which have been with us for for three years. Actually, I don't know if we have that data handy
we will have a look at that. Anecdotally, we have seen some cases. So, it is not a representative
but anecdotally cases that come to me for approvals. I think there are enough cases where like,
fairly old customers keep coming and as with people join in those accounts, they come and take
accounts. But I don't have an exact breakup handy.

Bhargav Buddhadev: Because the reason I was asking is, there's a 17% increase in your customer accounts as well.
So, I believe this would be new customers which you have added.

Neha Singh: Yes.

Bhargav Buddhadev: Does that flow into user expansion also subsequently, which would mean that….

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Abhishek Goyal: Yeah, yeah, that we see. If customers actually after they use it for a while they keep adding
new accounts, new users. Anecdotally I know that happens a lot, exact data I don't have handy
and we'll probably maybe over time start adding that data also into our disclosures. But it
happens like I've seen lot of people come to me but I get a lot of those approvals before the
extent and annually at the end of the year we do some like, generally we have 2-3 cycles in
which we reach out to customers for buying new users. So there are some upgrades that
happen there also.

Neha Singh: And this is also something that the customer success team actually works on, which is once…so
typically customers start small and expand over time. So they also work on account expansion.

Bhargav Buddhadev: So is it fair to say that in a recessionary environment there could be some slowdown in terms
of new customers being added but, user the addition may still continue at a…?

Abhishek Goyal: Actually, it's very hard to say that today because we are still a single digit percentage market
share of the business of the overall market. So I think at least we have not seen macro factors
playing it into our number so far. There is not a strong visibility as such. I think a lot of these
trends we might observe once we become much larger.

Bhargav Buddhadev: And fair to say that most of the users whom we are servicing are not the first users of a private
database. They would be using some other database as well, right?

Abhishek Goyal: No, not really…

Neha Singh: Actually, interestingly, it’s the other way round. For a lot of the bulk which the sales team
actually acquires, typically they were not using any software before that, either on the
corporate side or on the investor side. We do work with both the customer segments, so on
both the sides.

Abhishek Goyal: So, it’s a fair mix, I think. We see enough variants on that front.

Bhargav Buddhadev: Of the 196 people you’ve added in sales & marketing, what number would you have added in
the last 3 months? Do we see some slowdown over there from your side?

Abhishek Goyal: I think we have added 196 overall.

Neha Singh: … across the last 12 months. We might have given the numbers also for June end. Maybe
Prashant can pull that out in the meanwhile. But we would have the numbers for June end
also, that we may have given earlier.

Abhishek Goyal: So, it was not market related. We had started to ramp up our sales team since last year and a
half, and over time we hired those people. My sense is that a smaller number has happened in
the last quarter; Prashant can pull up the numbers in the meantime. But, I think, anecdotally I
know that the last 3 months we have done not as much hiring or team expansion there.

Bhargav Buddhadev: So, assuming a scenario where there is some slowdown which you see on account of recession,
would you step up your marketing spends for customer acquisition or do you think the existing
models are…

Abhishek Goyal: I think, today we spend very minimal… and insignificant amount of money on paid marketing;
it probably is less than 1 lakh a month. Because we are a content company, we generate… lot
of these leads are people who discover us… they are searching for something, they receive a

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 report from a colleague and then they reach out to us. So, this is not something… paid is not
something we have done in the past. I think, content marketing continues to give us good set
of leads, and that is something which will… even if there’s a slowdown, we have not seen any
significant impact on the leads that we are receiving from the market.

Bhargav Buddhadev: Is it possible to quantify the realization increase on the YoY basis?

Neha Singh: Sorry, realization on what?

Bhargav Buddhadev: Price paid per user.

Neha Singh: So, we can actually sort of… approximately realized ASP per account. For instance, our ASP per
account is close to 6.8 lakh today. This was probably earlier between 6 and 6.5 lakhs.

Bhargav Buddhadev: Sorry? It is 6.8 versus 6.5?

Neha Singh: Yeah. For the last financial year, it was 6.5.

Bhargav Buddhadev: Okay. And my last question is, when will the IPO expenses be refunded? The amount is about
4.8 crores, right?

Neha Singh: Yeah. So, this amount is actually in the ESCROW account, and we are just in the process of
doing that. So, probably within…

Abhishek Goyal: Prashant, if you have a concrete answer?

Prashant Chandra: Yes, so, we are in the process of settling the expenses and everything else. In the meantime,
perhaps in the next 1-2 weeks we should be able to receive this amount from the ESCROW.
Also, on the point of the sales & marketing team in the last 3 months, as of now in this quarter
we have not given a breakup of the headcount. But, I think perhaps, in the subsequent
quarters we can start looking at that as well.

Bhargav Buddhadev: Thank you very much for your response and all the very best.

Abhishek Goyal: Thanks Bhargav. Good to have you here today.

Moderator: The next question is from Akshay Jogani. Akshay, please go ahead.

Akshay Jogani: Thank you for the opportunity. I want to better understand how customer churn repatriates
look like over time? So maybe, as a starting, if you could help me by giving a sense of…
generally when you acquire say 5 customers and Rs. 100 of revenue in a given year, what is the
trend like on volume of the total customers? How many stick in the 1 st, 2nd, 3rd? Where does it
plateau? From a revenue retention or growth point of view how does it look like? And, what is
the kind of customer churn that you envisage over time at an annualized basis?

Neha Singh: Sure. Thanks Akshay. Coming to that, so, we will… as I was saying, actually we wanted to start
with some of the core metrices which is very helpful in understanding the business, and over
time we’ll keep adding more metrices. In the current quarter, for instance, we have not
detailed the revenue retention or the churn, but probably this is something that we may add
going forward. On this note I will just add one thing, one nuance which is interesting for our
business. One thing which we see in our business is that, if we acquire a customer, one is that
a lot of them actually sort of retain even for subsequent months. The other interesting thing is
that, even for the customers that we use, we actually have an initiative in the company to
actually look to get them back. So, we also have some of the negative churn customers. So

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 unlike a sale like a software sale where you have an implementation and then you are buying a
software and you are implementing one, and then once you implement a software, the other
ones are not relevant. Unlike that, in our business, sometimes we also see a lot of customers
that may have churned, they also come back once we have a better data for the country or
once they are looking for that particular thing and we have better coverage in those industries.
So, we also see that. So, hope that answers your question. We’ll probably have a more detailed
data in the future, but that just gives you some nuance around our customer segment.

Akshay Jogani: Sure. And maybe if not data, at least some qualitative insights on… what are the top 3 reasons
why a customer decides to churn out? That would be good to know.

Neha Singh: Sure. So, in terms of the key reasons that we hear, one is, people have started to use the
software for the first time. So, there are also different phases in terms of usage. That is
probably one reason that we hear. Second is that, they are looking at data for a particular
industry and a country, and sometimes we have different levels of coverage. So sometimes,
when we have more customers, we try to sort of invest more in building the data in there. So
that’s probably the second reason that we’ve heard of.

Akshay Jogani: Sure. And of the customer mix or maybe revenue mix, do you segment it by early stage
venture capital funds, late stage venture capital funds, private equity funds, corporates? How
does that pie really look like? And, where do you see more opportunity as you go from current
revenue to say 2X or 3X tomorrow or in the next 3-4 years?

Abhishek Goyal: Sure, Akshay. So, we haven’t given the breakup, but I think anecdotally what I see is that, we
are seeing relatively a good mix… people who have higher AUM usually end up buying larger
number of seats, and people who have smaller teams also, I see a lot of traction there because
they find lot of value, because they don’t have lot of manpower. But I think obviously, people
who have higher AUM, usually end up buying more seats from us. Again, we will over time
start giving more colour to size and scale of this data.

Neha Singh: And just to add, we have a… one thing that people find very interesting, is that in addition to
the private market investors, VC funds, private equity funds, investment banks, we also have a
large corporate as a customer base. So, we had actually given that, for instance, in our DRHP,
which is last year’s number. By number of accounts, 52% was from private market investors
and investment banks, 27% were actually corporations and then 21% were others. So, I think
that’s the other interesting aspect. In addition to the investors, we also have a large corporate
base which includes many Fortune 500 corporations.

Akshay Jogani: That’s very helpful. I look forward to knowing more in the coming quarters.

Neha Singh: Thanks.

Abhishek Goyal: One of the most interesting parts is that we have customers in more than 50 geographies, and
we’ll start publishing a lot of this data with many our Annual Results or Quarterly Results over
time.

Akshay Jogani: Sure. That’s it from my side. Thank you.

Moderator: Thanks Akshay. The next question is from Sameer Dosani. Sameer, please go ahead.

Sameer Dosani: Hi Abhishek, thanks for the opportunity. Just one question on… Q2 if I look at QoQ growth in
customer accounts, if I look at growth in revenue, is it… you have already highlighted that this

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 is a seasonal impact. But, do you think beyond this, our QoQ growth journey would improve? If
you can just throw some light on that?

Abhishek Goyal: Actually, if you look at Q1 and Q2 of last year, there was a similar pattern. There was one slide
where we have projected that. Last year also we had a similar trend in contract value as well as
in revenue. I think it’s somewhat because people are… like, lot of holidays are there in this
season, so sometimes people are not available, and all of that happens.

Neha Singh: And, just to add to that, so currently we’re not seeing that. For instance, if you look at QoQ
growth, like Q1 on a year on year basis we grew at 23% revenue from operations is what I’m
talking about, and Q2 we actually grew at 28%. So, it has actually increased. So, right now
we’re not seeing any impact which is there, as of now; broader macro impact which is there.

Sameer Dosani: Sure. And also, you have already highlighted this non-linear EBITDA expansion. So what do you
think would be a longer term outlook or a target or any sort of number in mind that this is the
EBITDA margin, this is the business at which this business can operate? If you can throw some
light on that? Thanks

Neha Singh: No no, that’s a very interesting question. I think we will probably discover that over time. Like
you have data subscription… so you don’t have companies in the private market data space,
but you have companies in the data subscription space, for instance in the US, with a fairly
high EBITDA margin. There are companies which have EBITDA margins north of 40%. Here you
also have the cost arbitrage which plays out. So unfortunately, we don’t have sort of a peer set
in India in that same segment. So, I think this is a number that we will also discover over time.
But what we can see as a linear trend, at least for the last 3 years quarter on quarter, is that
margin expansion has been happening though we have been aggressively investing in our
sales, marketing and that efforts. But this is something that is very interesting that we find in
the business.

Sameer Dosani: Understood. Thanks for the opportunity. I’ll come back in the queue.

Abhishek Goyal: Thank you, Sameer. Nice to have you here today.

Moderator: We’ll take some questions from the Q&A tab as well. Maybe I’ll read out and you guys can
answer that. One question is, if you can help us understand why contract price in this quarter
of 17.8 crores is lower than the revenues that we have booked of 19.1 crores? I think what
they mean to understand is, is our collection slowing down versus how the revenue growth is
happening?

Abhishek Goyal: This is in line with how we are being seen also in the last year in the same period.

Neha Singh: So even if you look at the last financial year, actually our Q2 was lesser than Q1 and Q2 was
barely equal to the revenue from operations which is there, which is a similar trend we see in
this financial year, which is Q2 contract, contract price of the billing is slightly lesser than Q1.
But again, as I said, we can probably see more quarter… the overall revenue from operations
has actually accelerated.

Moderator: The next question is, what can be a sustainable growth rate of user addition without putting a
focused marketing effort i.e. the high price sales team?

Abhishek Goyal: Actually, our entire sales is done from India, so it’s an inside sales model. We generate lot of
top of the funnel leads from organic channels. The sales team is all based out of India and they
do remote sales over a Zoom call like this and then they convert. So, I don’t think so far we

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 have a plan of putting up high price sales people in the near future. Neha, is there anything
you want to add?

Neha Singh: No.

Abhishek Goyal: Does that answer your question?

Moderator: It’s on the Q&A tab. There are couple of questions on retention rates. So, if you could share
some net retention rate that you have in this quarter, and also probably going froward, that
will be helpful.

Neha Singh: So on the retention, as I mentioned, just to answer that, we actually wanted to start with a
core set of metrices. One of the things we had heard is, you start with a metric and then keep
reporting till perpetuality. So, that is what we wanted to sort of do with starting the core set of
metrices which helps people understand the business fairly effectively. So, in this quarter we
haven’t given this particular metric. Hopefully, let’s see if we are able to sort of add this metric
over time.

Moderator: The next question is, are there any other sources of revenues that you would be looking for in
the future, and any new product or data offerings that you are planning?

Neha Singh: So, in terms of the sources of revenue, we think that the private market itself is a fairly large
market to go behind, and currently we are a small single-digit percentage of the market, and
it’s a fairly large market. So, a lot of our focus is on expanding in the existing customer
segment which we work with, which is both private market investors as well as large
corporates that we work with. So, that’s going to be one core focus – continue to acquire new
customers or continue to increase users within the customers. This second thing is that, we are
going to continue to work across geographies. So today, for instance, we have customers from
different countries, 70% of our revenue is international, that is again one of the core focus of
ours, which is continue to double down on the countries wherein we already have a customer
base, and continue to increase the data, as well as the customer penetration in these
geographies that we are present in. That is the second. The third is that, this private market
data is also relevant for a few other segments. For instance, we have fund performance data,
which is also relevant to the limited partners which invest in different funds. We have data on
private companies which is relevant for sales & marketing, for companies which are targeting
this large and growing segment. In these segments we already have a few customers, and then
over time, we’ll go deeper into that. Another interesting used case is your product discovery.
For instance, if someone is looking at a particular solution in a technology space, we also have
data on those. So, in these segments we already have some customers, and over time we can
actually grow deeper into that. So hopefully, these three items help you address that question.

Moderator: And maybe just one last question to wrap up from the Q&A and then I’ll pass it on to Neha and
Abhishek for the closing remarks. And this is an interesting one. Going into the future, do you
see yourself as Bloomberg of data or Gartner for startups, or both?

Neha Singh: So, our aspiration is definitely to build a large platform for the private market data space. So
currently, one of the things that we see is that, India has been like the back office for lot of
these large financial data companies; most of them are headquartered either in New York or in
London. And, we want to actually use the next… I think one of the reasons why we also wanted
to list, is basically it provides us a good platform to continue to build this company for the next
2-3 decades. And, our aim is to actually build a large global iconic… global data platform from
India. So yes, that is definitely one of our aspirations, to do that.

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Moderator: Great! We’ve run out of questions and the call timing as well. So with that, I’d like to thank the
Tracxn management for giving us the opportunity to host the call. I’ll pass it on to Neha and
Abhishek to give the closing remarks. Thank you.

Neha Singh: Thanks Rishi and thanks everyone for joining us today. Hopefully through this presentation and
through the Q&A you have a good understanding of our business, as well as the latest
numbers. And, in case you have any follow up questions, please do feel free to reach out to
any of us 3. I’m available at [email protected], or you could reach out to Abhishek and
Prashant, or you can also write to our team which is [email protected]. Thanks
again. Hope you have a good rest of the day.

Abhishek Goyal: Thank you everyone for attending the call today.

Prashant Chandra Thanks everybody. Have a good evening.

END OF TRANSCRIPT

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