- Operating Revenue (Q4 FY '24): INR 2,554 million, up 2.1% from INR 2,502 million in the previous quarter.
- Total Income (Q4 FY '24): INR 2,572 million, down 1.6% from INR 2,615 million in the previous quarter.
- EBITDA (Q4 FY '24): INR 398 million (15.6%), compared to INR 385 million (15.4%) in the previous quarter.
- Profit After Tax (Q4 FY '24): INR 148 million (5.7%), compared to INR 338 million (12.9%) in the previous quarter.
- EPS (Q4 FY '24): INR 10.12, compared to INR 21.93 in the previous quarter.
- Net Cash Position (Q4 FY '24): INR 1,840 million, compared to INR 2,117 million in the previous quarter.
- Operating Revenue (YoY): INR 2,554 million, up 10.5% from INR 2,311 million in the same quarter last year.
- Total Income (YoY): INR 2,572 million, up 9.5% from INR 2,349 million in the same quarter last year.
- EBITDA (YoY): INR 398 million (15.6%), compared to INR 431 million (18.7%) in the same quarter last year.
- Profit After Tax (YoY): INR 148 million (5.7%), compared to INR 290 million (12.3%) in the same quarter last year.
- EPS (YoY): INR 10.12, compared to INR 18.73 in the same quarter last year.
- Net Cash Position (YoY): INR 1,840 million, compared to INR 1,557 million in the same quarter last year.
- Operating Revenue (FY '24): INR 9,649 million, up 6.8% from INR 9,033 million in the previous year.
- Total Income (FY '24): INR 9,724 million, up 5.8% from INR 9,194 million in the previous year.
- EBITDA (FY '24): INR 1,483 million (15.4%), compared to INR 2,001 million (22.2%) in the previous year.
- Profit After Tax (FY '24): INR 887 million (9.1%), compared to INR 1,357 million (14.8%) in the previous year.
- EPS (FY '24): INR 58.27, compared to INR 86.27 in the previous year.
- Net Cash Position (FY '24): INR 1,840 million, compared to INR 1,557 million in the previous year.
Release Date: May 27, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Expleo Solutions Ltd (BOM:533121, Financial) reported a year-on-year revenue growth of 10.5% for Q4 FY '24.
- The company has been investing in AI and digital technology, which is showing growth opportunities.
- Expleo Solutions Ltd (BOM:533121) signed a record number of new customers, indicating potential future growth.
- The company is optimizing its bench and talent pool to improve EBITDA margins to the target range of 16% to 18%.
- The company has a strong cash position with INR 1,840 million net cash as of the end of the quarter.
Negative Points
- Profit after tax decreased significantly to INR 148 million in Q4 FY '24 from INR 338 million in the previous quarter.
- EPS dropped to INR 10.12 in this quarter compared to INR 21.93 in the previous quarter.
- The company faced a higher bench charge due to unmaterialized opportunities, impacting profitability.
- There was a decline in traction with smaller customers, leading to a slight decline in revenue from this segment.
- Expleo Solutions Ltd (BOM:533121) incurred a substantial Forex loss of INR 56 million in this quarter.
Q & A Highlights
Highlights of Expleo Solutions Ltd (BOM:533121) Q4 FY '24 Earnings Call
Q: Hi, Balaji, Hi Mani, So, Balaji just wanted to understand for this quarter our margins were about 13% and you attributed that there was a benefit etc. So, how do you look at the coming year FY '25? So, if you can just maybe share your overall views on what kind of growth and how should we think about margins for this year?
A: From an overall growth perspective, we have done around 3% organically in this quarter and expect similar growth percentages over the next three quarters, aiming for closer to double-digit growth for the year. From a margin perspective, our EBITDA should be in a similar range as now, around 15.6%, but we expect to be in the range of 16% to 17% over the next three quarters.
Q: How does the strategy of increasing our outsourcing and offshoring to Indian offices play out given the subdued demand?
A: Due to the softness in the European market, growth from the group has been relatively lower. However, the group contribution to our revenue growth is higher than what we have been able to do directly from other markets. We expect to be in the 16% to 18% EBITDA range. The headcount growth was supposed to be a combination of both organic and inorganic, but the inorganic component has not kicked in yet. We hope to see some acquisitions next year to help grow headcount numbers in India.
Q: Can you articulate the broader capital allocation strategy, especially regarding the cash balance?
A: We are looking at potential inorganic opportunities within India. If we are unable to find anything over the next one or two quarters, we will decide on how to allocate the accumulated cash, potentially considering dividends.
Q: Do we have testing as a service offering, and how is it impacted by the rise of AI?
A: Yes, testing is still our bread and butter, though it has shifted more towards automated testing and DevOps. We are investing in AI and have created POCs and tools based on generative AI to drive more automated testing and test engineering.
Q: What is the current status of engineering outsourcing from the group, and what more scope can be there?
A: Engineering services account for approximately one-third of our total business. The group business has grown from 25%-27% to 33%-34% of our total business, primarily driven by engineering services.
Q: Why are we not attempting to get more work out of our parent company, given the challenges in the IT services market?
A: We are driving to increase our share from the group, aiming for 45% of our business from the group by 2025. The group faces similar challenges in core markets, and the outsourcing they do is primarily for new business. Our share from the group business is continuously increasing.
Q: Can you explain the rationale behind opening new offices overseas in the context of subdued demand?
A: The new office in Dubai is due to changes in government regulations allowing foreign entities to operate from the mainland. This change eliminates the need for local contractors for visas, enabling us to cater to local business within Dubai more effectively.
Q: What steps are we taking to grow our business faster, especially in the context of our own business development efforts?
A: We are focusing on growing markets like the Middle East and India, and have invested in a data management company in the US, which is growing at 40%-50% year-on-year. We have also increased our business development team from 6 to 14 people over the last six years.
Q: How do you see the impact of AI on manual testing and the overall quality assurance business?
A: Manual testing will be impacted by AI, which is why we are investing in AI-driven tools and methodologies like predictive quality assurance and risk-based quality assurance. This shift will drive more automated testing and test engineering.
Q: What is the outlook for growth beyond CY '24, and have we revised our internal targets?
A: We haven't reworked the numbers yet but expect to be in the mid-teens to 20%+ growth range next year. The ambition is to return to the growth rates seen in FY '21 and FY '22.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
