LATENTVIEWNSEQ2 FY2023November 03, 2022

Latent View Analytics Limited

11,864words

74turns

10analyst exchanges

3executives

Download PDF ↗LATENTVIEW stock page →

Management on call

Rajan Sethuraman

CEO

Rajan Venkatesan

CFO

Asha Gupta

EY LLP, INVESTOR RELATIONS

Key numbers — 35 extracted

2 million

dictive and prescriptive analytics work. This was also the first quarter where we find our first $2 million plus annual revenue contract. In the past we have had several accounts where the total annual bil

10.4%

l as new deal flow. On a quarter-on-quarter basis, we have registered a revenue growth of about 10.4% on a sequential basis and about 39.7% on a year-on-year basis. We closed the quarter with a rev

39.7%

quarter basis, we have registered a revenue growth of about 10.4% on a sequential basis and about 39.7% on a year-on-year basis. We closed the quarter with a revenue of about ₹ 132.4 Crores which is th

₹ 132.4 Crore

tial basis and about 39.7% on a year-on-year basis. We closed the quarter with a revenue of about ₹ 132.4 Crores which is the highest ever in the company’s history. The growth was fairly broad based and driven

₹37.3 Crore

the coming quarters as well. From a profitability standpoint, EBITDA for the quarter came in at ₹37.3 Crores, which reflected a growth of about 41% on a year-on-year basis and upwards 7% plus on a quarter-

41%

ity standpoint, EBITDA for the quarter came in at ₹37.3 Crores, which reflected a growth of about 41% on a year-on-year basis and upwards 7% plus on a quarter- on-quarter basis. The EBITDA margin itse

ame in at ₹37.3 Crores, which reflected a growth of about 41% on a year-on-year basis and upwards 7% plus on a quarter- on-quarter basis. The EBITDA margin itself for the quarter was at 28.2% a drop

28.2%

nd upwards 7% plus on a quarter- on-quarter basis. The EBITDA margin itself for the quarter was at 28.2% a drop of about 80 basis points compared to the immediately preceding quarter. The drop in EBITDA

80 basis point

a quarter- on-quarter basis. The EBITDA margin itself for the quarter was at 28.2% a drop of about 80 basis points compared to the immediately preceding quarter. The drop in EBITDA margins was primarily driven b

25%

as well when we have been talking to you guys we have repeated that an EBITDA margin of between 25% to 28% is sort of the comfortable levels at which we will continue to operate, but all in all our

28%

when we have been talking to you guys we have repeated that an EBITDA margin of between 25% to 28% is sort of the comfortable levels at which we will continue to operate, but all in all our EBITDA

70%

s for the coming quarters as well. Our PAT for the quarter stood at ₹37.3 Crores which reflects a 70% plus growth on a year- on-year basis and 18% on a quarter-on-quarter basis. Coming to PAT itself t

Advertisement

Guidance — 20 items

Asha Gupta

opening

“The results and investor presentations have been mailed to you, in case anyone does not have the copy of press release or presentation or you are not in our mailing list please do write to us and we will be happy to send you the same.”

Asha Gupta

opening

“Rajan Sethuraman whom we will be referring to as Rajan, and we also have CFO of the company Rajan Venkatesan whom we will be referring as Raj to avoid any confusion while doing transcription.”

Asha Gupta

opening

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

Rajan Sethuraman

opening

“So, while the going is slow on this front we do want to be deliberate and careful that we are actually identifying the right kind of opportunities and integrating them right into the fold and given that this will be the first acquisition that we will be doing, we also want to make sure that we are doing in the right way and not in any hurry.”

Rajan Sethuraman

opening

“We expect that there will be more progress in the next one, two quarters and will be closer to fructifying something as we get to the close of this fiscal year.”

Rajan Venkatesan

opening

“We also see a fairly healthy order book at this point in time as well as good pipeline which gives us the confidence that we will be able to continue the current growth trajectory in the coming quarters as well.”

Rajan Venkatesan

opening

“In the long-term of course we expect our effective tax rate to go back to that 25% levels, but the lower tax expense in the current quarter is all owing to the tax benefit that we got in the US.”

Rajan Sethuraman

“Obviously there will be some aspects of nonlinearity that could kick in, in terms of one leveraging some of the value propositions and the assets that we are building and secondly also in terms of what will be the acceptance from continued price increases that we can see in the market, so these things will play out in terms of what the impact will be on the number of people that we will need.”

Rajan Sethuraman

“The good news for us on that front is that we are already positioned well with the higher value adding fuzzy problem solving premium world so in our case it will be more about backward integration into the data engineering work and that is the capability that we have been aggressively building strongly so I would believe that we have positioned well should that consolidation pickup stream but as I said it is still early days on that front and we will have to see how it pans out.”

Rajan Venkatesan

“Now of course this is an event that in the last couple of years we were unable to hold owing to the pandemic but it is something that we will revive, in fact we will have another round table event most likely early next year in February or March and therefore to that extent this will be an expense that will be recurring in nature going forward as well.”

Risks & concerns — 2 flagged

Rajan spoke about the campus hires that we did, a lot of the hires that we have done through the campus are currently undergoing their bootcamp training and therefore not in build roles, so the incremental cost owing to the campus hires plus the investment that we are making in the frontend these are investments we are making ahead of the curve in anticipation of revenue growth that we will follow, both of these led to a marginal decline in the EBITDA margin for the current quarter.

— Rajan Venkatesan

Just one last question on sales and marketing sequentially we saw a decline in headcount should we expect you to add more or how should we see that moving forward the sales and marketing so we had 57 in Q1 and we have 52 in Q2?

— Krishna Thakker

Advertisement

Q&A — 10 exchanges

Thank you for the opportunity. Sir my first question is on the hiring outlook attrition trends and offshoring trends if you can highlight on these three how much are we expecting to sort of add, we are just about 1000 plus how big do we see our team by the end of this year, secondly how is the attrition while you did point out something on the supply chain but if you could just highlight how have LTM or TTM attrition trends being like and plus if you can just highlight something on the offshore trends because you are sort of winning new large contracts this will probably entail a bit of onsite

Rajan Sethuraman

Firstly, in terms of what we are witnessing in terms of additions to the number of people we kind of went past the 1000 mark during this quarter I think we are already up to 1050 plus at this time and I am expecting that the growth momentum that we are seeing will continue into the coming quarters as well. So, while I do not have a specific number in terms of what headcount we will end up with at the end of this year we will have enough people to make sure that we are sustaining the growth momentum that we are seeing in this quarter so we are expecting that to continue as well through the rema

Europe was soft sequentially I wanted to understand is are we seeing good demand there or for the next few quarters in Q2 it was soft?

Rajan Sethuraman

The effect of the additions that we are making will take some time to play out. Europe you might have heard from commentary by other companies as well it is different; it is not the way you go to market and how you sell it has its own nuances Europe as a whole and within that each of those countries as well. In some sense we are starting from pretty much scratch there with the induction of the new Europe business side and the team that he is building I expect it will take at least two, three quarters to start seeing some decent momentum. Having said that we did win our first contract since our

Thanks for the opportunity. Couple of questions from my side. Firstly on Q3 if we understand correctly Q2 is seasonally strong for Latent View so this time also you expect Q3 to be strong and will it be better than Q2 that is my first question?

Rajan Sethuraman

We are not putting out percentage guidance or anything at this point in time. We see strong momentum though we are already at the end of October almost and going by what we have seen in this month and the expected deal closures and work to commence in the coming month I would say that we will continue to have a strong quarter in Q3 as well. Secondly Raj mentioned in his opening remarks that you would like to replicate the performance which you have done in the current quarter so if I look at your H1 growth rate is almost around 30% in dollar terms and last time when we spoke you mentioned that

Thanks for the opportunity. Just want to understand that most of the growth is driven by top clients, top 20 client explained large part of the growth so can you help us understand how we are building the funnel across client bouquet, how many clients currently we have and how we are seeing some of them are entering into maybe next top 20 for us?

Rajan Sethuraman

Let me take that and Raj keep me honest or correct me if some of the numbers are slightly different. We have upwards of 50 clients at this point in time and you are right that the top 20 clients obviously account for much of the revenue, it is in line with our philosophy that we want to work with few clients but go really deep in terms of the quantum of work that we are doing and the spectrum of work that we are doing for them. Also we have mentioned that in general we are looking at working with either the Fortune 500 kind of companies right which have a propensity to spend on data analytics

Thank you for providing me opportunity to ask the questions. My first question was you have mentioned that you are expecting growth of around 25% to 30% on an organic basis so this is for this year or for the long-term period?

Rajan Venkatesan

Again like I said this is while we were not giving out a guidance this is what we believe is achievable in the next few years because the industry itself is expected to grow at 18% to 20% and we are making significant investment and also operate in areas which are expected to grow at a rate which is higher than the 18% to 20%; however, having said this the one possibility that we will definitely not rule out is if there is any growth concerns or demand- related shrinkages that we witnessed because of the macroeconomic situations that is playing out in the US and Europe and because of which the

Thanks a lot for the opportunity. I just wanted to ask a little bit more on the production platforms business if you could provide me more insights on what is going on in that area and on the slides I see two new products which we added PART and AI if you could give me a little more color on it?

Rajan Sethuraman

Sorry the second question which are the ones that you mentioned? Bot and AI assist that I see on the slide. I would not call them products really because I think that might be presuming too much, having said that we have built a suit of assets and accelerators and maybe some of them we can actually call them a solution because they do address a particular pain point or an opportunity that might be there in the market for example SmartInsights or Casper for example Matchview they are all examples of that I think though was an anomaly detection tool that we build in order to help identify what d

Thanks for the opportunity. Sir I wanted to know regarding the inorganic growth which we are looking for, there has been a significant traction for analytics firms by the PE investors and we have been hearing a lot of these things, so are we going to invest as a minority holder or are we going to go for a full acquisition?

Rajan Venkatesan

At this point in time at least and this is probably true for the first one or two even acquisitions that we will be doing we are looking at majority control from when we are looking at inorganic opportunities where we will one get to one tightly integrate the business and two also derive maximum synergy out of our investment into that business and that is possible only if we take controlling stake in that particular company so at this point in time looking at control or 100% buyout opportunity. The five accounts we added what was the hook that got us this account, was it only on the basis of c

Thanks for this opportunity and congratulations on the great results. Question to the Latent Analytics team is in terms of the acquisition are you looking at companies that will add to your technical capabilities or is this acquisition to enhance your geographic presence, grow your sales in regions that you are not present in?

Rajan Sethuraman

The intent is to actually try and use the inorganic route to plug gaps or maybe accelerate development in areas of focus so there are five areas of focus right for us from a geographic standpoint it is Europe and I have called that out, from a horizontal and type of work data engineering and supply chain analytics are the two areas of focus and from an industry standpoint Banking Financial Services and Retail are the two industries that are on focus. So an ideal acquisition if you had to find one like that would be somebody who is doing retail supply chain work supported by data engineering ca

Thanks for the followup. I just want to understand in terms of the nature of the work or the services in terms of consulting analytics and data engineering so at a time of the IPO you mentioned that the split was 15% consulting, 60% analytics and 20% data engineering so in the last few calls you have mentioned that data engineering has scaled significantly so has that split changed?

Rajan Sethuraman

I would say that data engineering is probably running at about 25% at this point in time and I would not be surprised if it actually becomes even 30% in terms of work. The reason being that larger more complex initiatives, they call for more robust data platform, integrating data across multiple silos that might exist within the organization. So given that low hanging fruit would be gone by then where you use data from a particular business unit or a silo to tackle a simpler use case or a problem statement and now you are looking at more holistic or optimization taking more things into account

Thanks. I think I kind of touched upon pretty much what has been the highlights for the quarter but I think in response to questions I also talked about the focus areas I do believe that there is a good amount of opportunity so while there is some of the concern around the macroeconomic headwinds and what it might mean to spending on specific sectors or thinking on those matters is that as long as we say will closely aligned with initiatives that can create real impact for our clients on the P&L either in terms of revenue growth or margin enhancement we believe that we will continue to be very

Rajan Venkatesan

Nothing else Rajan. I think we pretty much covered most of what we had to during the course of the call and I think you have summarized it very well so nothing else to add onto this.

Speaking time

Rajan Sethuraman

Moderator

Rajan Venkatesan

Karan Uppal

Krishna Thakker

Chintan

Vimal Gohil

Dev

Akshay Kothari

Sriram Rajan

Advertisement

Opening remarks

Asha Gupta

Thank you Steven. Good evening to all participants in this call. Before we proceed let me remind you that the discussions may contain forward looking statements that may involve known or unknown risks, uncertainties or other factors. It must be viewed in conjunction with our businesses that could cause future results, performance, or achievement to differ significantly from what has been expressed or implied by such forward looking statements. It gives me great pleasure to invite all of you to this Q2 FY2023 Earnings Call of Latent View Analytics Limited. The results and investor presentations have been mailed to you, in case anyone does not have the copy of press release or presentation or you are not in our mailing list please do write to us and we will be happy to send you the same. To take us through the results today and to answer your questions we have the CEO of the company Mr. Rajan Sethuraman whom we will be referring to as Rajan, and we also have CFO of the company Rajan Venk

Rajan Sethuraman

Thanks Asha and thank you all for joining this earnings call. First of all I wanted to wish all of you a belated Diwali given that this is the first week and it is indeed a pleasure to connect with all of you on the back of strong results that we have had for this quarter. We had a good set of numbers for this quarter as well and I wanted to share some highlights of this quarter right both from a business perspective as well as in terms of people standpoint and post that I will hand it over to Raj to cover some of the highlights of the financials. So first half we added five new accounts this quarter and two of them happened to be in the Fortune 500 list but the other accounts as well very interesting mix of opportunities spanning a fairly broad spectrum of work that we do across data engineering, consulting as well as both diagnostic and descriptive as well as predictive and prescriptive analytics work. This was also the first quarter where we find our first $2 million plus annual rev

Rajan Venkatesan

Thank you Rajan. Good evening everyone and belated Diwali wishes to everyone given that we are in the week of Diwali. Like Rajan mentioned we are happy to announce a set of strong numbers for Q2 after Q1 which was a little maybe muted in terms of earnings growth Q2 we witnessed a fairly strong bounce back in the overall demand situation as well as new deal flow. On a quarter-on-quarter basis, we have registered a revenue growth of about 10.4% on a sequential basis and about 39.7% on a year-on-year basis. We closed the quarter with a revenue of about ₹ 132.4 Crores which is the highest ever in the company’s history. The growth was fairly broad based and driven across all our industry verticals primarily technology, CPG, retail and BFSI which continue to be the focus areas for us from a vertical standpoint, the revenue growth was driven across all these three verticals. We also see a fairly healthy order book at this point in time as well as good pipeline which gives us the confidence th

Advertisement

← All transcripts LATENTVIEW stock page →

Latent View Analytics Limited

Market Movers