Release Date: July 16, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue growth of 5.2% year-over-year and 5.7% quarter-over-quarter.
- Profit after taxes increased by 28% year-over-year.
- EPS growth of 33% year-over-year.
- Addition of seven new customers in the quarter.
- Adoption of AI First strategy, enhancing digital transformation services.
Negative Points
- Profit after taxes decreased compared to the previous quarter due to higher taxation.
- Uncertainty in the US market due to upcoming elections affecting discretionary spending.
- High collateral requirements for working capital limits leading to pledged shares.
- Employee costs have increased, impacting margins.
- Challenges in predicting the exact number of new customer acquisitions.
Q & A Highlights
Q: What is the order book size of Kellton Tech Solutions Ltd?
A: The order book size is around 10 months, which translates to approximately INR850 crores. (Niranjan Chintam, Executive Chairman of the Board, Chief Financial Officer)
Q: Can you provide an update on the Karnataka and LIC projects?
A: The Karnataka project is on track, and we expect to raise an invoice soon. The LIC project has already seen the first invoice raised and paid, with the second milestone expected around September. (Niranjan Chintam, Executive Chairman of the Board, Chief Financial Officer)
Q: What is the expected revenue from the LIC and Karnataka projects?
A: The total project size is about INR140 crores over seven years, with 70% expected in the first two years and the remaining 30% over the next five years as part of annual maintenance contracts. (Niranjan Chintam, Executive Chairman of the Board, Chief Financial Officer)
Q: How is the AI First strategy impacting your business?
A: The AI First strategy means integrating AI at the core of our solutions, leading to better quality code and optimized bench strength, which is expected to improve EBITDA margins. (Karanjit Singh, Whole-Time Director; Srinivas Potluri, Non-Independent, Non-Executive Director)
Q: What is the outlook for your US business?
A: We are seeing early signs of recovery with new investments, especially in AI projects. However, the market's future will depend on the upcoming US elections and potential interest rate cuts. (Srinivas Potluri, Non-Independent, Non-Executive Director)
Q: How many new customers were acquired this quarter, and what is the target for the year?
A: We acquired seven new customers this quarter. While we can't predict the exact number for the year, we are focusing on quality and long-term enterprise relationships rather than just the number of customers. (Niranjan Chintam, Executive Chairman of the Board, Chief Financial Officer)
Q: What is the current headcount, and how is it affecting employee costs?
A: The current headcount is a little over 1,700. While the number of employees has come down, we are hiring higher competency employees, which has not significantly reduced costs. (Niranjan Chintam, Executive Chairman of the Board, Chief Financial Officer)
Q: What are the R&D expenditures, and what are the future plans for AI solutions?
A: Last year, R&D expenditure was around USD 2.5 million, and this year it is expected to be a little over USD 3 million. This investment is aimed at developing products that will yield returns over the next three to five years. (Niranjan Chintam, Executive Chairman of the Board, Chief Financial Officer)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
