MAPMYINDIANSEQ1 FY2023August 12, 2022

C.E. Info Systems Limited

7,656words

107turns

15analyst exchanges

3executives

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Management on call

Anmol Garg

DAM CAPITAL ADVISORS LIMITED

Rohan Verma

CEO & EXECUTIVE

We Have With Us Mr. Rakesh Verma

Co-founder & Chairman of the Company and Mr. Rohan Verma - CEO &

Key numbers — 40 extracted

50%

I will say, strong results. Just to summarize them, for Q1 on year-to-year basis, revenue was up 50% to Rs.65 Crores, EBITDA was up 55% to Rs.30 Crores, EBITDA margin was at 46%, PAT was up 18% to R

Rs.65 Crore

say, strong results. Just to summarize them, for Q1 on year-to-year basis, revenue was up 50% to Rs.65 Crores, EBITDA was up 55% to Rs.30 Crores, EBITDA margin was at 46%, PAT was up 18% to Rs.24 Crores and

55%

o summarize them, for Q1 on year-to-year basis, revenue was up 50% to Rs.65 Crores, EBITDA was up 55% to Rs.30 Crores, EBITDA margin was at 46%, PAT was up 18% to Rs.24 Crores and PAT margins were

Rs.30 Crore

rize them, for Q1 on year-to-year basis, revenue was up 50% to Rs.65 Crores, EBITDA was up 55% to Rs.30 Crores, EBITDA margin was at 46%, PAT was up 18% to Rs.24 Crores and PAT margins were at 34%. The Cas

46%

asis, revenue was up 50% to Rs.65 Crores, EBITDA was up 55% to Rs.30 Crores, EBITDA margin was at 46%, PAT was up 18% to Rs.24 Crores and PAT margins were at 34%. The Cash and cash equivalents includ

18%

s up 50% to Rs.65 Crores, EBITDA was up 55% to Rs.30 Crores, EBITDA margin was at 46%, PAT was up 18% to Rs.24 Crores and PAT margins were at 34%. The Cash and cash equivalents including the financia

Rs.24 Crore

% to Rs.65 Crores, EBITDA was up 55% to Rs.30 Crores, EBITDA margin was at 46%, PAT was up 18% to Rs.24 Crores and PAT margins were at 34%. The Cash and cash equivalents including the financial instruments w

34%

Rs.30 Crores, EBITDA margin was at 46%, PAT was up 18% to Rs.24 Crores and PAT margins were at 34%. The Cash and cash equivalents including the financial instruments went up also from Rs.356 Crore

Rs.356 Crore

ere at 34%. The Cash and cash equivalents including the financial instruments went up also from Rs.356 Crores to Rs.392 Crores. The effective tax rate this time has been 28.1% as against the previous Q1 FY2

Rs.392 Crore

Cash and cash equivalents including the financial instruments went up also from Rs.356 Crores to Rs.392 Crores. The effective tax rate this time has been 28.1% as against the previous Q1 FY2022 when it was 1

28.1%

ments went up also from Rs.356 Crores to Rs.392 Crores. The effective tax rate this time has been 28.1% as against the previous Q1 FY2022 when it was 17.3%. With these numbers, I would like Rohan to

17.3%

es. The effective tax rate this time has been 28.1% as against the previous Q1 FY2022 when it was 17.3%. With these numbers, I would like Rohan to give you some more color on the performance of the com

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Guidance — 12 items

Anmol Garg

“Sure, thanks and secondly I wanted to ask if we can provide any viewpoint on the margins as well, because in the previous quarter we had stated that the margins would be in the range of 34% to 43% and this time we have exceeded the range despite the contribution from Gtropy, which is a low margin business, so is there any change for the margin range guidance for the full year of FY2023?”

Rohan Verma

“You know, we want to maintain that flexibility, that of course as revenues grow, the operating leverage is there, profitability will grow.”

Anmol Garg

“So we have talked about the Mappls business and the revenue outside of India has a big opportunity and we have been making investments towards it, so just wanted to understand if there has been any contribution from the same in this quarter and what kind of revenue contribution can be expected down the line for this year as well as next year, if you can give some colour around it that would be great?”

Gaurav Chopra

“Two questions for my side, first was on this Mappls RealView maps, so how do you plan to monetize these 3D maps, which you guys have launched and if you could help us with some use cases which your company would be looking at and what are the costs associated with it and adding to that, we recently read about Google’s partnership with one of the local player, does it anyway impact our ability to fully monetize the opportunities coming in this space?”

Rohan Verma

“So, how we plan to monetize is very similar to how we monetize our products so far, so whether licensing the maps or building APIs and providing that on a subscription or transaction basis or building different types of SaaS or software solutions and charging based on usage of that is how we monetize.”

Rohan Verma

“So, our software orchestrates all that and we provide IoT devices for the same and so that is the large kind of opportunity when you look at 20 Crores kind of vehicles, of course, we know that not all of them will be our customers today, but a lot of them are now looking to digitize because using technology they can become more efficient and that is our play there.”

Rakesh Verma

“So, if you look, these expenses may vary quarter-to-quarter because if we put in more, advertise more, there will be more advertisement expenses, like that.”

Vignesh Iyer

“Fair enough, so can we finally say that that way we can have a FY2023 guidance from your side for Rs.250 Crores or what would be the revenue possible in this financial year, if you can guide us?”

Rohan Verma

“We do not give any specific guidance, but I guess a little bit can be seen from the track record.”

Nitin Sharma

“Just a bookkeeping question, how should we see the tax rate going ahead, are you still on the old tax structure or moved to the new structure because you are already effective tax rate has been around 28% to 30%, some guidance in that?”

Risks & concerns — 4 flagged

So, if they also try to penetrate into India, so how you are trying to counter this risk because auto currently is significant portion of your revenue?

— Deep Gandhi

— Rohan Verma

I see the growth momentum is pretty strong, continuing to in terms of what the last couple of speakers back asked in terms of the growth momentum, do you see any risk or any large investment that we might want to make?

— Ashish Kumar

So, really the pressure on the working capital from that does not come too much maybe a little bit, but not much.

— Rakesh Verma

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Q&A — 15 exchanges

Thanks for the opportunity. So, just had few questions, firstly wanted to get a colour on the order pipeline for the quarter. So, while we have highlighted the type of deals that we are winning during the quarter, but it would be great if you can state more into this. And also, in our PPT we have highlighted that we have been winning businesses with EVs as well, so does that mean that there is an increase in the pricing within the A&M segment? This is question number one.

Rohan Verma

See, again order booking happens on one side automotive OEMs, on other side corporates or businesses sales, across sectors including from a fleet or logistics companies, but also other sectors like banks, BFSI, tech companies, retail, etc., and then on the government whether national, I mean, central, state or local government smart cities, etc., so we are seeing order wins across the board and the pipeline is also quite strong. I mean, it continues to become larger and more interesting because just so many more customers, it is becoming hygiene for them to use some solution, which MAPP LS Map

Thanks for taking my question. Congrats on a good set of numbers, sir. Two questions for my side, first was on this Mappls RealView maps, so how do you plan to monetize these 3D maps, which you guys have launched and if you could help us with some use cases which your company would be looking at and what are the costs associated with it and adding to that, we recently read about Google’s partnership with one of the local player, does it anyway impact our ability to fully monetize the opportunities coming in this space? That is my first question.

Rohan Verma

Sure, so the purpose of kind of releasing Mappls RealView or 3D Metaverse Maps, etc., is basically to look at newer interesting kind of monetization opportunities that will come, for example, in the real estate sector, for example in the VRs or Virtual Reality or Real world Metaverse sectors, potentially in the smart city or road infrastructure sector. So, like maps, RealView is kind of another type of map, it’s a geo-referenced 360-degree street imagery plus we are adding these additional immersive 3D landmarks. So, on one side it is to give more edge to our map that this continues to innovat

So, you had mentioned about the after sales market in your presentation, so just wanted to understand what exactly is the value proposition over here and could you throw some light on the revenue and business model opportunity, what is the kind of revenue and business model over here?

Rohan Verma

Sure, see the aftermarket opportunity, so let me explain the mobility part of our A&M business. Basically, look there are about 20 Crores odd vehicles on the road, four- wheelers, two-wheelers, commercial vehicles, many of them are involved in fleet operations, let us say for logistics movements whether long haul or last mile as well as for taxi or bus, passenger transport like yours taxies or buses, etc. Our solutions are two- fold, one is it is IoT-led as ours, and when I say ours now I include Gtropy, the company that we acquired, it is IoT-led meaning GPS trackers, now dash cameras as well

Sir, thank you for the opportunity. Sir, one question on the fact, so what is the key line item that make up other expenses because that has been fluctuating over the last three, four quarters, so as a percentage of sale that keeps on fluctuating, there is a bit volatility. Can you help me understand what are the key components that form this and also what the sustainable levels are?

Rakesh Verma

If you are looking at the other expenses then in the Q1 2023 you find it something like Rs.11.46 Crores as against Q4 of 2021-2022 the previous quarter of Rs.15.58 Crores, so it has come down. Now what constitutes the major number where the differences might be happening, one is the Legal and professional fee, which came down this quarter to Rs.1.71 Crores from Rs.3.61 Crores so that is the reduction in that cost, Provision against bad inventory also came down to Rs.0.86 Crores from Rs.1.36 Crores and I think Communication expenses, which includes cloud hosting came down to Rs.1.74 Crores from

Sir, congratulations on a good set of numbers. I just wanted to know about this large order book in place, what is the execution timeline for this entire order book if you could just give me a ballpark number?

Rohan Verma

See, the track record is about three to four years on order book to revenue kind of conversion on average. So, this does not constitute revenue that we would generate from Gtropy, right? No, the number that we closed with FY2022 that is Rs.699 Crores, did not include anything of Gtropy. Fair enough, so can we finally say that that way we can have a FY2023 guidance from your side for Rs.250 Crores or what would be the revenue possible in this financial year, if you can guide us? MAPP LS We do not give any specific guidance, but I guess a little bit can be seen from the track record. If you saw

Thanks a lot for taking my question. Two questions, first of all, given the news flow around new age businesses where it is said they are tightening their finances, so far with your discussion have you seen any impact?

Rohan Verma

You mean from the US? No, new age businesses, maybe your clients or potential clients in terms of what kind of visibility that is coming from and the impact on your business? New age businesses, actually we get paid from new age businesses based on growth of their usage and their business. So, in general it is actually quite bullish because all these new age companies are doing quite well from the point of view of the app usage, or their transaction, or revenues, so, in that sense it is good sign for us and we are trying to continuously explore new and new use cases with these new age companie

I just wanted to know that the integration of Gtropy acquisition, the revenues over there would they be largely coming into the C&E segment, or will there be split between A&M as well as C&E?

Rohan Verma

They will primarily come under the A&M, Ashish, I mean most of their customers historically have been in the logistics sector, so we call that as part of our mobility aftermarket, so it will fall under A&M. So, would it be fair to assume that the entire Rs.8 Crores would be largely accruing to the A&M and very marginal or if anything to see any? Yes, that is right, so the Rs.8 Crores was their standalone number from a revenue point of view but about Rs.5 odd Crores was through the C.E. Info Systems’ standalone. So, I think let us put it this way, the entire Rs.8 Crores are MapmyIndia standalon

One more question, on the Nawgati Tech acquisition, can you just please talk more about it, it appears to be very small and you have taken acquisition of around 3%, so how does it fit in and what kind of technology benefit basically you are talking about on SaaS side?

Rohan Verma

Sure, thanks Nitin for this question. See, Nawgati has a video analytics product, they have multiple products, but focused on the oil and gas sectors and there they have a video analytic SaaS product which kind of monitors the congestion or wait time or traffic at the fuel station, which is something very important or valuable to both the fuel company potentially also to consumers where the fuel company can see what type of utilization, what type of efficiencies or inefficiencies are there at the fuel stations, get that analytics MAPP LS and as consumers you can see whether a CNG pump right no

So, I was mentioning that globally Google has also been trying to penetrate towards the auto market side. So, they have already I think lunched this Android auto operating system, I was reading that a lot of auto companies like GM, Volvo, Fiat, etc., have already signed some deals with them. So, if they also try to penetrate into India, so how you are trying to counter this risk because auto currently is significant portion of your revenue?

Rohan Verma

Yes, there are two parts to this actually. If you ask the OEMs, they do not want to go down this asset manufacturers route where they outsource all the technology in the cars to these big tech companies. So, while we will provide compatibility for cars they are not stopping the technology, the detailed technology experience that they offer to their customers, and that is what is the CASE - connected, autonomous, shared and electric is the technology these OEMs are adopting and so with MapmyIndia’s NCASE offering navigation-enabled connected ADAS shared and electric, that is what we have been p

Thank you for the opportunity. Congratulations on a great set of numbers. Sir, the question is very basic, I wanted to understand on the customers switching costs like falling on to the earlier participant question, say for example, we are already serving to the top OEMs and Google with the help of a domestic guy gets onto probably something that we already have, the data and it also starts offering similar services. How easy probably it is for one customer to switch to say the new, our competitor and what is usually the exit rate in that industry like, is it 100% renewal rate or 95% renewal r

Rohan Verma

See, at least in the automotive front, these integrations are quite deep so it is not that easy for anybody to switch out because there are multiple points of integration, like I said in the car, in the companion app, in the backend cloud systems and just as I answered the question previously also, the Google solution that they have launched is not really something that is very meaningful for automotive. It might be meaningful or interesting from a consumer point of view, but not for automotive or enterprise per se so that is the kind of on that front. Our approach on retention of customers an

Thanks for the opportunity and congrats on a great set of numbers. I just have two questions and they are kind of related, from a high-level view what do you see as the two or three key headwinds that could disrupt your business going forward even as well meaningfully reduce growth, from a competition perspective, is it more important keeping tech updated, is there any regulatory issues, so what do you see as key risks to the business?

Rohan Verma

See, our biggest risk as a company is if we stop innovating that is if we do not keep coming out with newer products or enhancements on our existing products that will not hold us in good strength and the other is, if we stop engaging actively with our customers that will also impact us. So, we’ve built up a pretty strong leadership position and building such quality and comprehensiveness of a map data product and this technology platform, which covers multiple areas and in automotive, we talked about NCASE, this is not a small area; in mobility, we talk about logistics SaaS or transportation

Thank you, Sir, and congratulations on a good set of numbers. I see the growth momentum is pretty strong, continuing to in terms of what the last couple of speakers back asked in terms of the growth momentum, do you see any risk or any large investment that we might want to make? The reason where I am coming from is that we already are sitting on a Rs.300 Crores kind of a cash balance so what is the thought process around using that cash balance, do you think that we would need that as a buffer?

Rakesh Verma

See, the cash balance that a company keeps is for making sure that any opportunity that comes up like the small opportunity that we picked up with the Nawgathi that may not be worthwhile talking from a cash perspective, but we definitely want to make sure that we do not fall short of cash whenever any opportunity comes up. Opportunity could be in terms of acquisition, opportunity could be in terms of making our own investment, investment could be in terms of R&D, something very big or it could be even in terms of MAPP LS re-energizing the brand. So, I do not think the amount of money that we h

Thanks Sir for the opportunity again. Sir, just wanted to ask a question on the working capital side, now that we are planning to increase the government business and also that we have acquired Gtropy, which deal with the logistics players as their customers. So, do you think that these two reasons or these two types of customers can increase our working capital requirement in the business and second to that, what can be the government business that can we expect in this year, for the complete consolidated entity?

Rakesh Verma

The government revenue last year we talked about was 5%. This year definitely we are gradually building up the order booking in the government because there are lots of opportunities, but we are careful about being a platform and product player on a SaaS model, that is, we have also closely worked with the systems integrators. So, really the pressure on the working capital from that does not come too much maybe a little bit, but not much. To answer your question on the other one about the Gtropy, yes, there might be some investments we will require to support the Gtropy from the gadget side of

MapmyIndia is having the services?

Management

I just wanted to say thanks to everybody for spending the time, asking us the questions, we were pretty happy with how the quarter went, it is going inline with kind of what our efforts has been over the last few years and we remain kind of committed to working hard, building products and engaging with our customers and look forward to connecting after the quarter.

Rakesh Verma

Thank you all for joining the earnings call. MAPP LS

Speaking time

Rohan Verma

Moderator

Rakesh Verma

Anmol Garg

Gaurav Chopra

Nitin Sharma

Ashish Kumar

Srishti Jain

Vignesh Iyer

Ashish Chopra

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Opening remarks

Anmol Garg

Thank you Melissa. Good afternoon, everyone. On behalf of DAM capital, we welcome you all to Q1 FY2023 conference call of C.E. Info Systems. We have with us Mr. Rakesh Verma – Co-founder & Chairman of the Company and Mr. Rohan Verma - CEO & Executive Director of the company. So, without any further ado I will hand over the call to Mr. Rakesh Verma for his opening remarks. Thank you and over to you, Sir!

Rakesh Verma

This is Rakesh Verma. Good afternoon to all of you. The quarter that just ended, we have demonstrated, I will say, strong results. Just to summarize them, for Q1 on year-to-year basis, revenue was up 50% to Rs.65 Crores, EBITDA was up 55% to Rs.30 Crores, EBITDA margin was at 46%, PAT was up 18% to Rs.24 Crores and PAT margins were at 34%. The Cash and cash equivalents including the financial instruments went up also from Rs.356 Crores to Rs.392 Crores. The effective tax rate this time has been 28.1% as against the previous Q1 FY2022 when it was 17.3%. With these numbers, I would like Rohan to give you some more color on the performance of the company related to the business.

Rohan Verma

Good afternoon, everybody, this is Rohan Verma here. I will it keep it short so that we have more time for Q&A. Performance was good on a broad-based basis, revenue in A&M or Automotive and Mobility tech sector or segment was up 65% and our Consumer Tech and Enterprise digital transformation segment was up 37%, and again this is a function of the open order book that we are sitting on, beginning of the year it was Rs.699 Crores up 85% from the previous year of Rs.377 Crores. So new launches, new go-lives of our OEM customers or new fleets in private sectors or public sectors embedding our IoT solutions as well as on Consumer tech companies whether in the delivery side or logistic side or even consumer-facing companies like Footwear brands or Banks as well as Enterprises such as steel manufacturers or in the government, whether national, state or smart city or local governments, everybody is using Digital Transformation solutions powered by us. For example, analytics for market expansio

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