LATENTVIEWNSEQ1 FY2023August 02, 2022

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Management on call

Rajan Sethuraman

CEO

Rajan Venkatesan

CFO

Diwakar Pingle

EY LLP, INVESTOR RELATIONS

Key numbers — 34 extracted

rs,

forward-looking statements that may involve known or unknown risks, uncertainties, and other factors, must be viewed in conjunction with our businesses that could cause future results, performance, or

Rs 120 Crore

r the quarter before we open up for Q&A. From a revenue standpoint, we reported revenues of about Rs 120 Crores for the current fiscal, which reflects the growth of about 37% on a year-on-year basis and 2%

37%

ported revenues of about Rs 120 Crores for the current fiscal, which reflects the growth of about 37% on a year-on-year basis and 2% sequentially. Like Rajan mentioned we continue to see a robust dem

Crores for the current fiscal, which reflects the growth of about 37% on a year-on-year basis and 2% sequentially. Like Rajan mentioned we continue to see a robust demand for our services in fact,

Rs 35 Crore

e pipeline. From a profitability standpoint, EBITDA for the quarter stood at about close to about Rs 35 Crores representing a 28.5% growth on a year-on-year basis. In percentage terms, the EBITDA for the

28.5%

lity standpoint, EBITDA for the quarter stood at about close to about Rs 35 Crores representing a 28.5% growth on a year-on-year basis. In percentage terms, the EBITDA for the current quarter came

29%

h on a year-on-year basis. In percentage terms, the EBITDA for the current quarter came in at 29% witnessing in line with our expectations as well because as one of the things that we continue to

n, of course Q1 also had the impact of wage increments that we had given out, which range between 8% to 12% across various levels in the organization, so all of that had a marginal impact on the ove

12%

course Q1 also had the impact of wage increments that we had given out, which range between 8% to 12% across various levels in the organization, so all of that had a marginal impact on the overall EB

30.6%

marginal impact on the overall EBITDA margin profile and that is why you see a small decline from 30.6% that we reported for the last quarter to 29% in the current quarter. Our EBITDA margins of cour

Rs 31.5 Crore

ntinue to pay up in the future. In terms of PAT, our PAT for the quarter stood at Rs 31.5 Crores plus reflecting a growth of about 41.1% on year-on-year basis, of course the one thing that we d

41.1%

n terms of PAT, our PAT for the quarter stood at Rs 31.5 Crores plus reflecting a growth of about 41.1% on year-on-year basis, of course the one thing that we do want to highlight is compared to the im

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Guidance — 20 items

Diwakar Pingle

opening

“In case anyone does not have the copy of the press release or presentation or you are not in a mailing list; please do write to us we will be happy to send the same to you.”

Diwakar Pingle

opening

“Rajan Sethuraman whom we will be referring as Rajan and we also have CFO, Rajan Venkatesan whom we will be referring as Raj to avoid any confusion while you are transcribing.”

Diwakar Pingle

opening

“We will be starting the call with the brief update of the quarter given by Rajan, which will be then followed by financials given by Raj.”

Rajan Sethuraman

opening

“While this ramp up has been happening, we expect that the actual impact in terms of these investments will start playing in a couple of quarters or so.”

Rajan Sethuraman

opening

“Overall, we made net addition of more than 100 people in quarter one with the heavy focus on campus hiring with about 80 plus people coming from campus, going forward also we believe that the bulk of the recruitment that we will be doing with be focussed on the campus joiners and finally I wanted also to highlight that we have been able to revive analytics round table events.”

Rajan Sethuraman

opening

“The round table event was well attended by our advisory council members as well as clients and prospects and we do expect that there will be several leads in conversation that emanate from it.”

Rajan Venkatesan

opening

“These are people that we have recruited from engineering colleges and they are currently in the process of being put through training to be deployed on project in the coming months.”

Vimal Gohil

“So, this will be reported right now in constant term?”

Vimal Gohil

“Right, just I was hoping to hear incremental contribution from consulting to be on the positive side of the margin given the fact that our margins over there could be a better than the company average and you also said that consulting typically has better margins, so how should we read that going forward?”

Karan Uppal

“Just a followup to that, you mentioned that some of closure is taking a little bit longer so in that context given that analytics itself is growing at 20% kind of CAGR run rate, so shall we assume that within you would be able to need that kind of a benchmark or do you think we will be lagging behind?”

Q&A — 10 exchanges

Thank you for the opportunity. Sir, I just have one question, I mean most of the other questions you have already answered in your opening comments, just on the sequential softness I mean assuming that you do not had a lot of seasonality to be seen within quarters, any comments on the sequential softness during the quarter because if I were to take your dollar revenue they are almost sort of fattish, while the Y-o-Y growth they looks very good, so what explains the sequential softness in revenue?

Rajan Sethuraman

Let me take that and Raj you can add in on the exceptional item that you had last quarter, we do not have too much of seasonality, sometimes we see a little bit of softness in Q3 if budgets are winding down our Q3 tends to be the last quarter for clients in the US, but sometimes we have also seen a spike because there are money left to spend and pick it up, so overall I would not attribute any seasonality, one thing that we are seeing is that we are pursuing larger opportunity and larger deals and we have been able to elevate the conversations to more senior stake holders within the target org

Thanks for the opportunity. I have a couple of questions, so starting with the high-level question on macros, so you mentioned that one of your clients in the retail vertical has you know canceled their analytics initiative so what is the outlook on the overall other verticals as well as retail itself, are you seeing this trend is getting developed in their analytics practice and in the client analytics practice?

Rajan Sethuraman

So, the point about the particular client deciding to scale back that was not even in the last quarter that decision call was taken by them probably in June-July of last year, so the only thing is that it played out over a period of time and then eventually the settlement that Raj referred to happened in Q4 of last year, it was unrelated to the macroeconomic scenario, they just decided to go in a different direction right in terms of what they wanted to do the analytics capability and then how they create it, but coming to the current macroeconomic scenario, they are not seeing any particular

Thank you for the opportunity. I know you spoke a little about retail, so going forward sequentially should we expect to start moving up in the retail vertical?

Rajan Sethuraman

Yes, Krishna, so the sectors that we are really doubling down on they are BFSI and what we call consumer, consumer is the combination of retail and the consumer products verticals, these are sectors where we are also doubling down right in terms of the investment, so we hired a business head for the retail practice who joined us in Q1, we also have made substantial investments in the BFSI vertical as well right even over the course of the last year and we are continuing to do that, out of that three new additions, that we had in Q1, two of them are actually in the BFSI vertical, so we are expe

So I wanted to ask questions about you said the digital transformation is a multi year journey right and the digital wave it is already progressing, so the large IT service companies they also have data and analytics is the part of their offerings and they are very skilled with that, so how different is your product offering as compared to them because clients they do not have to go for each and everything to other vendors right, so they consolidate most of their offerings, so what is the trend do you see here and how are you differentiating with respect to them?

Rajan Sethuraman

Sure, we offer best of consulting services right from a data analytics standpoint and much of the work that we do involves solving for the yield to find problems where there is a good mix of three very important skills, there is a deep domain understanding that is needed about the industry, about the functional value chain area, there is the math and modeling expertise that is needed and then finally the technology skill sets that are needed, different organizations approach this from their own vantage points and there are strategy consulting forms, which come in more with the business perspec

Thank you for the opportunity. Can you please elaborate on the partnerships that you mentioned about IBM and Neo4j, what exactly is the nature and how do you see revenue changing because of these partnerships?

Rajan Sethuraman

Sure, the partnerships with IBM and Neo4j are the latest in the fold, we have already had partnerships, we have partnerships with the likes of AWS and Redshift with Microsoft Azure and the PAR platform also with the snowflake and there are also a whole host of other technology tools that are there that are used in the space now starting with visualization capabilities like Lugaru, Tableau, QlikView and so on, we have had what we call as technical partnerships with many of them, where we get access to the sandbox environment, we get access to early release material, learning environment, certif

Thanks for the opportunity. Sir, what would be our revenue from 30 Fortune 500 clients, which we are having?

Rajan Sethuraman

Raj, do you want to take that, I think it will be fairly high, I mean the work I would imagine that is the order of like 70% of the revenue or probably even higher, but Raj you will probably have the exact number. Yes, I do not have the exact number handy with me at this point in time, but it will be of the order of magnitude that Rajan spoke about 70% plus should be revenue from Fortune 500 I think it will be even higher more like 75% to 80% is my number, but I do not have that number straight away handy with me right now. And is there any room for growth in these Fortune 500 clients because

Yes, one clarification, I was saying that the top 6 to 20 clients have dropped on a sequential basis, so is it related to the retail vertical client?

Rajan Sethuraman

No, it is not related to that I think that is just the change in the mix of revenue that we will probably be getting, so you are talking about how much revenue contribution is coming from the next 6 to 20 clients right and not the top six to 20 clients? Yes, 6 to 20. I think the top five they have accelerated even more in the last quarter in particular, I mean our number two client has now become number one client actually yes, number two client has become number one client because they have actually grown dramatically in the last quarter the quantum of work what we are doing, so there has bee

Sir, I have a few questions like our 95% revenue is coming from USA and just 2% from Europe, so can you share like what plan with Europe continent going forward to increase the size of revenue from de-risking point of view I am asking and also on the client concentration side, our concentration amongst top five is very high, so what strategy on same front and also strategy for to increase the contribution of top twenty clients later on your remarks on same?

Rajan Sethuraman

Sure, so on Europe the intention is to really double down and make the investments necessary to grow the practice, we already have subsidiaries in UK, Germany and other lines and we have a handful of accounts, we see prospects for growing the accounts where we are present in, but we also believe that Europe is looking for the same kind of value propositions and solutions straight away they are able to bring to the table right what we have been doing in the US, we believe that there is opportunity in the European market as well, we have not really focused on the Europe markets in the past, but

Sir, thank you for the opportunity again. Though I know we maintain a bench of 15% to 20% given that we had an intake of 100 odd employees this quarter, I was wondering if you could just share with us what is the utilization was for this quarter?

Rajan Sethuraman

For the current quarter I think we were at about 78% to 80% utilization, the bulk of the people have come on board from the campus in the last three, four weeks or so and we are expecting that we will add more people, but we have also shortened okay I would not say shortened, we have restructured the L&D and the boot camp and the training programs to allow for some faster deployment into the project while some of the learning and development happens in parallel right the capstone project and some of the other things, so we are expecting that people will get pulled into productive build work so

Thanks, Jacob. So, the main thing I wanted to end with is that we are fairly confident about the traction and resonance that are value propositions and solutions have in the marketplace, I am especially happy with the recent round table event that we did where we had our advisors as well as clients and prospects attend and exchange a good set of ideas that they can take back to their work in terms of implementing analytic solutions. Overall, I feel that the inflection point that we have talked about earlier right in terms of company is doubling down on their analytics initiatives they are stil

Rajan Venkatesan

No, Rajan, I think you have pretty much covered everything in summary, I think the one aspect that may be I will briefly touch upon is the fact that the current book of work that we are sitting on as well as the new conversations and pipeline we are continuing to witness makers us believe that there is significant runway ahead of us, which also gives us confidence as management to continue to make these investments in the content as well as building out capabilities and what we do believe is while the industry is poised for growth at this moment there are some early indicators of recessionary

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Speaking time

Rajan Sethuraman

Moderator

Rajan Venkatesan

Karan Uppal

Krishna Thakker

Vimal Gohil

Akshay Kothari

Saurav Sadhwani

Dev

Diwakar Pingle

Opening remarks

Diwakar Pingle

Thank you, Jacob. Good evening to all the participants in this call. Before we proceed let me remind you that the discussion may contain forward-looking statements that may involve known or unknown risks, uncertainties, and other factors, must be viewed in conjunction with our businesses that could cause future results, performance, or achievement to differ significantly from what is expressed or implied by such forward looking statements. It gives me great pleasure to invite all of you to the Q1 FY2023 Earnings Call of Latent View Analytics Limited. The results and investor presentation have been mailed to you. In case anyone does not have the copy of the press release or presentation or you are not in a mailing list; please do write to us we will be happy to send the same to you. To take us through the results today and to answer your questions, we have Rajan and Rajan, the CEO of the company, Mr. Rajan Sethuraman whom we will be referring as Rajan and we also have CFO, Rajan Venkate

Rajan Sethuraman

Thanks, Diwakar and thank you all for joining the call today. I am just going to share the highlights from a business perspective and then I will pass it on to Raj. So, first half we had a fairly strong quarter in terms of growth and revenue as well as EBITDA on year-on-year basis and our EBITDA did come in at a higher than planned range from a percentage perspective, so we are able to continue to make the investments that we had indicated in our earlier earnings call as such. The investments have been largely in the area of addition to the sales and business development bandwidth that we have been making in the US, but also to begin within Europe and in India and I will talk about it a little while later. We have also been able to add people to the front end from a client services perspective and they have been building up our delivery and capabilities as well offshore. Overall, we see good traction for our services whether it is consulting or the data engineering work or the value pr

Rajan Venkatesan

Thank you everyone. Good evening to all. First of all, I would like to thank and welcome all the participants on this call. Let me just give you a quick update on the financials for the quarter before we open up for Q&A. From a revenue standpoint, we reported revenues of about Rs 120 Crores for the current fiscal, which reflects the growth of about 37% on a year-on-year basis and 2% sequentially. Like Rajan mentioned we continue to see a robust demand for our services in fact, the order book continues to fairly healthy and we see increased traction on some of the newer conversation that are also coming into the pipeline. From a profitability standpoint, EBITDA for the quarter stood at about close to about Rs 35 Crores representing a 28.5% growth on a year-on-year basis. In percentage terms, the EBITDA for the current quarter came in at 29% witnessing in line with our expectations as well because as one of the things that we continue to take even right through our IPO journey we will co

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