Release Date: July 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue for Q1 FY25 grew by 32%, driven by strong momentum across major business segments.
- EBITDA increased by 27% and PAT grew by 41%, reflecting enhanced operational efficiency.
- Secured several new deals in the banking sector, with a promising pipeline buildup.
- Concluded a successful QIP, attracting prominent global and Indian institutions.
- Received final authorization from RBI for online payment aggregators, setting up for next-generation payment solutions.
Negative Points
- Planned slowdown in the Smart City segment, which may offset growth in other areas.
- High R&D expenses, which are expensed out and increasing every year, impacting short-term margins.
- Sales and marketing expenses are kept below 5%, which may limit aggressive market expansion.
- Recurring revenue streams are not included in the order book, potentially underrepresenting future revenue.
- Integration and scaling of new acquisitions like Arya.ai and Omnifin are still in early stages, with uncertain immediate impact.
Q & A Highlights
Q: What are the key growth levers in the Technology Innovation Group (TIG) business, especially regarding the data center business?
A: Ashish Rai, Vice Chairman and CEO: TIG consists of transit payment, smart mobility, data centers, and Smart City segments. The transit business is growing strongly, especially outside India, with promising markets in the US, Central America, Latin America, Australia, and the UK. The data center business, which has grown over 50% annually for the last three years, will continue to grow at a similar rate. Strategic partnerships and selective complex projects will drive this growth.
Q: What is the business opportunity for AuroPay after receiving RBI authorization to operate as a payment aggregator?
A: Ashish Rai, Vice Chairman and CEO: The focus will be on building a high-margin business around transit payments and B2B software-based payment capabilities. The company will avoid commoditized B2C markets and instead leverage its strengths in transit payments and software integration to create value.
Q: Can you provide details on the order book of INR1,000-plus crores, including its duration and split between TIG and Banking?
A: Ashish Rai, Vice Chairman and CEO: Approximately 85%-90% of the order book will be consumed over 18 months, with 70% within 12 months. The current split is around 65% for TIG and 35% for Banking.
Q: How has the order book expanded since the last disclosure, and where do you see future growth coming from?
A: Ashish Rai, Vice Chairman and CEO: The order book has slightly expanded and will be published again in September. Typically, the order book grows by 5%-15% each quarter. Future growth is expected from both TIG and Banking sectors.
Q: What is the strategy and opportunity size for the lending business, especially with the acquisition of Omnifin?
A: Ashish Rai, Vice Chairman and CEO: The Omnifin product fills a strategic gap in the retail SME digital lending space. The business is expected to grow faster than the enterprise growth numbers, with plans to expand globally, particularly in Southeast Asia and the Middle East.
Q: What is the long-term strategy for Arya.ai, and how does it fit into Aurionpro's overall business?
A: Ashish Rai, Vice Chairman and CEO: Arya.ai aims to create a global enterprise AI offering focused on banking and insurance. The integration with Aurionpro's enterprise applications will drive significant value. The company is investing heavily in this space and expects Arya.ai to grow by 50%-60% this year.
Q: How does Aurionpro plan to scale its data center business, and what is the potential for recurring revenue?
A: Ashish Rai, Vice Chairman and CEO: The data center business is expected to grow at 30%-50% annually. The company is developing products like edge compute to drive recurring revenue. Currently, the focus is on design and program management services, capturing 30%-40% of the spend on data center projects.
Q: What is the focus for the transit business, and are there any plans for tie-ups or acquisitions?
A: Ashish Rai, Vice Chairman and CEO: The focus is on consolidating and building on strategic partnerships in the US, Mexico, Latin America, the UK, and Australia. The company is also selective in India, focusing on high-impact projects like the card issuance with the Haryana government. The transit business is expected to grow strongly, driven by the global shift to open-loop systems.
Q: How does Aurionpro plan to leverage its platform for MSMEs, and what is the long-term potential?
A: Ashish Rai, Vice Chairman and CEO: The platform aims to provide Tier 1 solutions for MSMEs, with a focus on broad-basing adoption and integrating with AuroPay. While not a significant revenue contributor currently, it is a long-term play with potential for meaningful impact in 3-5 years.
Q: What is the engagement level with large US banks like JPMorgan Chase and Wells Fargo?
A: Ashish Rai, Vice Chairman and CEO: Aurionpro has relationships with several global banks, primarily through partnerships and technology stack supply. While current engagements are small, the company expects strong growth in the US market, aiming for a 50%-60% increase this year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
