R Systems International Limited has informed the Exchange about Investor Presentation
R SYSTEMS INTERNATIONAL LIMITED Corporate Identity Number : L74899DL1993PLC053579 [CMMI Level 5, PCMM Level 5, ISO 9001:2015 & ISO 27001:2013 Company] C-40, Sector-59, NOIDA, Distt. Gautam Budh Nagar, U.P., India – 201 307
Phones: +91-120-4303500 Fax: +91-120-4082699
Email : rsil @rsystems.com www.rsystems.com
Regd. Off.: GF-1-A, 6, Devika Tower, Nehru Place, New Delhi- 110019
REF: SECT/11/2023/12
DATE: NOVEMBER 08, 2023
To, The Managing Director National Stock Exchange of India Limited Exchange Plaza, Bandra Kurla Complex, Bandra – East, Mumbai – 400 051
To, The General Manager BSE Limited Corporate Relationship Dept. Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai – 400 001
NSE Symbol – RSYSTEMS
BSE Scrip Code - 532735
Dear Sir/ Madam,
SUB: SUBMISSION OF PRESENTATION MADE TO ANALYSTS/ INVESTORS
This is with reference to our letter reference No. SECT/11/2023/03 dated November 03, 2023 regarding Investors/ Analysts call of R Systems International Limited (“the Company”) on Wednesday, November 08, 2023.
In this regard, as per Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, please find enclosed presentation made to Analysts/ Investors on November 08, 2023 on the financial results for the quarter and nine months ended on September 30, 2023.
This is for your information and records.
Thanking you,
Yours faithfully,
For R Systems International Limited
Bhasker Dubey (Company Secretary & Compliance Officer)
Q3 2023 Investor Presentation By : Nitesh Bansal (CEO & MD)
Disclaimer
this presentation “Investors are cautioned that contains forward looking statements that involve risks and uncertainties. The Company undertakes no obligation publicly to update or revise any forward- looking statements, whether because of new information, future events, or otherwise. Actual results, performance, or achievements could differ implied in such forward- from those expressed or looking statements.”
2
Engineering Services Market
We play in 3 out of 4 key segments
Global Outsourced engineering services spend (USD billion)
ER&D services market consists of 4 major segments
ER&D services include preparation, design and consulting work to support engineering projects undertaken by enterprises
Mechanical Engineering
Embedded Engineering
Software Product Engineering
Digital Engineering
Design and development of physical products such as cars, aircraft, medical devices and consumer electronics
Design and development of embedded systems that reside inside devices such as mobile phones & wearables
Design, development, product management of software PDLC for ISVs and internet companies
Design & development of digital infrastructure (IoT, AR/VR, AI, etc.) for use-cases such as industry 4.0
• The Global outsourced engineering services spend is slated to
become $450-500 B
• The SW, Platform, Embedded and Digital Engineering is slated to
grow at a faster pace than Mechanical Engineering
3
We are well poised to take advantage of current trends
Demand and supply-side trends shaping the engineering services market Deep dives ahead
We have a mature Embedded and Digital engineering practice and are continuing to deepen our footprint Ex. Mixing live feeds from video, audio sources for a Media broadcasting software provider
IOT and Servitization have seen a lot of traction and our years of experience is helping us address that market along with our CX practice Ex. Large affordable hotel chain in NA
With our existing footprint in CE and APAC we are well poised to take advantage of this trend Ex. Utility provider in CE
Demand-side
Supply-side
1. Embedded, software & platforms, and digital engineering to be key growth drivers of the outsourced engineering services market (50% share by 2025)
4. Pure play digital product engineering players have
witnessed highest growth in the market – Leaders winning on the back of deep expertise, experience and delivery capability within a few areas
2.
Industry 4.0, 5G and rise of ecosystems, CX, sustainability and servitization (“as-a-service” model) to be the key themes driving spend
5. As engineering services largely consists of short one-time project, companies are evolving commercial models to address the “lumpiness” of the revenue model
3. Demand in APAC likely to outstrip demand in Europe by
6.
2025 given the product engineering focus (SW, embedded and digital engineering) of firms in the region
Top players (both pure-play and SIs) have followed a programmatic M&A strategy to consolidate their share from 0.9% in 2016 to 1.2% in 2018 to 1.5%+ in 2022 (of global ER&D spend) through large acquisitions
4
Key Highlights Q3 2023
Revenue*
₹ 4,573M (US$ 55.3M)
YoY Revenue* Growth
14.84%
(10% net of one-time fee)
YoY EBITDA* Growth
48.36%
(15% net of one-time fee)
Net Profit
₹ 440M
(US$ 5.3M)
Earnings Per Share
₹ 3.72
EBITDA : ₹859M (US$ 10.4M)
Q3 2023
Q3 2022
Q2 2023
14.54
14.74
EBITDA Margin (%)
* 18.78
* Excluding one time BOT Fee for a Knowledge Service Customer, Revenue will be ₹ 4,380 mn (US$ 53.0 mn) with 15.2% EBITDA
Key Balance Sheet
As of Sep 30, 2023
In ₹
In US$
Equity attributable to shareholders
₹ 6,394M
US$ 77.0M
Cash Balance #
₹ 1,622M
US$ 19.5M
# Net of short-term borrowings
Note: Adjusted EPS before non-recurring is ₹ 4.03
5
Key Highlights Jan-Sep 2023
EBITDA : ₹2,002M (US$ 24.3M)
Revenue*
₹ 12,682M (US$ 154.0M)
YoY Revenue* Growth
13.60%
(11.9% net of one-time fee)
Jan-Sep 2023
Jan-Sep 2022
15.79
*
13.31
EBITDA Margin (%)
Net Profit
₹ 942M
(US$ 11.4M)
Earnings Per Share
₹ 7.97
* Excluding one time BOT Fee for a Knowledge Service Customer, Revenue will be ₹ 12,489 mn (US$ 151.7 mn) with 14.5% EBITDA
Note: Adjusted EPS before non-recurring and one-time tax expenses is ₹ 10.36
6
Key Highlights (Continued…)
• Market continues to be challenging with continued headwinds from customers.
• Deepening our engagement with customers and helping them with their
immediate priorities of reducing cost of product development and leveraging Cloud, Data and AI to differentiate themselves.
• Served 51 customers with US$1Million+ revenue on a run rate basis.
• Velotio has been both growth and margin accretive. Moving in right direction to integrate Velotio with larger R Systems to accelerate growth through cross-sell and up-sell.
• Strategic realignment of our Go to Market with focus on key verticals to become more relevant to customers leveraging specialized offerings on Cloud, Data, Experience, Embedded Systems, Automation and AI.
• Committed to preserve the margins through efficient operations.
7
Financial Performance –Contribution Analysis – Q3 2023
Q3 2023
Q3 2022
Q2 2023
Particulars
Revenues
Cost of revenues
Gross margin
% of Revenue
SG&A Expenses
% of Revenue
EBITDA
% of Revenue
Depreciation and amortization
EBIT before non-recurring cost
Non-recurring Cost #
EBIT
Interest expense
Other income (net)
Income before income tax and share of profit / (loss) in associates Share of net profit/ (loss) of associates accounted for using the equity method
Income before income tax
Tax expense ^
Net earnings
# Non Recurring cost represents :
₹ in M
4,573.47
2,822.41
1,751.06
38.29%
891.99
19.50%
859.07
18.78%
172.44
686.63
36.46
650.17
(27.65)
1.66
624.18
(2.01)
622.17
182.42
439.75
US$ in M
55.34
34.14
21.20
10.80
10.40
2.09
8.31
0.44
7.87
(0.33)
0.02
7.56
(0.03)
7.53
2.21
5.32
₹ in M
3,982.39
2,533.76
1,448.63
36.38%
869.59
21.84%
579.04
14.54%
87.21
491.83
-
491.83
(11.48)
(25.73)
454.62
-
454.62
86.72
367.90
US$ in M
50.08
31.83
18.25
10.94
7.31
1.10
6.21
-
6.21
(0.14)
(0.34)
5.73
-
5.73
1.09
4.64
₹ in M
4,067.80
2,650.73
1,417.07
34.84%
817.28
20.09%
599.79
14.74%
101.16
498.63
70.34
428.29
(16.96)
43.80
455.13
-
455.13
310.88
144.25
US$ in M
49.51
32.26
17.25
9.95
7.30
1.23
6.07
0.86
5.21
(0.20)
0.53
5.54
-
5.54
3.78
1.76
For Q3 2023, professional fee paid w.r.t. acquisition of Velotio and charges paid to Noida Authority due to change in shareholding of the Company. For Q2 2023, recruitment fee paid for hiring of new CEO and one time joining fee paid to CEO.
^ includes Rs. 200.54 M during Q2 23 provision for tax on dividend received from wholly owned subsidiary.
8
Big Picture – Revenue & EBITDA %age – Quarter wise
)
M n
i
₹ ( e u n e v e R
4900
4200
3500
3,431
2800
12.14
3,750
13.09
4,573
18.78
3,982
3,995
4,041
4,068
14.54
14.93
14.74
13.45
2100
1400
700
0
Q1 22
Q2 22
Q3 22
Q4 22
Q1 23
Q2 23
Q3 23
*
Revenue
EBITDA %
% A D T I B E
20
15
10
5
0
* Excluding one time BOT Fee for a Knowledge Service Customer, Revenue will be ₹ 4,380 mn with 15.2% EBITDA
9
Quarterly Revenue Breakdown
71.5
74.2
75.6
75.2
74.6
72.7
74.7
By Geography (%) – based on location of customer
12.8
12.3
2.5
0.9
10.8
12.1
2.2
0.7
12.8
9.0
1.6
1.0
13.0
9.3
1.3
1.2
12.5
10.1
13.3
10.8
1.7
1.1
1.8
1.4
12.5
9.5
2.1
1.2
80.0
60.0
40.0
20.0
-
Q1 22
Q2 22
North America
Q3 22
Europe
Q4 22
SEAC*
India
Q1 23
Others
Q2 23
Q3 23
* South East Asian Countries
Client Concentration ( Revenue %)
40.0
30.0
20.0
10.0
-
22.7
23.1
22.9
23.9
24.7
24.7
14.7
11.0
6.6
15.4
11.4
6.7
15.7
11.7
6.4
16.5
12.7
6.9
17.2
13.1
17.3
13.0
7.2
7.1
6.5
25.8
19.2
15.2
Q1 22
Q2 22
Q3 22
Q4 22
Q1 23
Q2 23
Q3 23
The Largest Client
Top 3 Clients
Top 5 Clients
Top 10 Clients
10
Summing Up and Looking Ahead
Q3 2023 has been an exciting quarter, with large deal wins and successful
initiation of GTM
alignment based on industry verticals.
As customers face headwinds, we deepen our
relationships through better
relationship
management (farming) and sharper offerings addressing their immediate needs with adopting
Cloud, Data, Automation and AI.
Developing new success stories – Jul -Sep 2023
• Strategic partnership with a Global leader in Access Control systems.
• A leading provider of Digital Marketing services has engaged us to build the frontend, backend and
integrate Generative AI capabilities in the platform.
• A US based precision engineering company is leveraging our expertise to gain insights through data
using Power BI and Snowflake.
• A leader in power generation and distribution in Europe has partnered with us to significantly reduce the complexity of new customer identification, validation and onboarding leveraging a suite of digital technologies.
11
Thank You
Worldwide Headquarter R Systems International Ltd. C - 40, Sector - 59, Noida 201307 (UP), India P: (+91) 120-430-3500 F: (+91) 120-258-7123
USA Corporate Office R Systems Inc. 5000 Windplay Drive, El Dorado Hills, CA 95762 P: (+1) 916-939-9696 (+1) 800-355-5159 F: (+1) 916-939-9697