Release Date: May 21, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- IRIS Business Services Ltd (BOM:540735, Financial) achieved a significant milestone by crossing the INR100 crore revenue mark, driven by a major contract in South Africa.
- The company reported a 37% growth in revenue for the full year, with EBITDA increasing by 45% and profit before tax nearly doubling.
- Return on net worth improved substantially to 21% from the previous year's 14%, indicating efficient use of capital.
- Collection efficiencies improved, reducing receivables as days of sales to about 80 days, aiding in better working capital management.
- Net operating cash flow for the full year more than doubled to close to INR12 crores, providing a strong cash position for future growth initiatives.
Negative Points
- The company's growth in the 'create' segment was more sedate compared to the 'collect' segment, indicating a need for better performance in this area.
- Despite the strong financial performance, the company faces challenges in converting project-based revenue from the 'collect' segment into recurring revenue.
- There is uncertainty regarding the number and value of future RFPs (Request for Proposals) from regulators, making it difficult to predict future revenue streams.
- The company has not yet generated revenue from its ESG (Environmental, Social, and Governance) offerings, which are still in the early stages of development.
- The company has a cautious approach to making forward-looking statements, which may limit investor visibility into future growth prospects.
Q & A Highlights
Highlights of IRIS Business Services Ltd (BOM:540735) Q4 2024 Earnings Call
Q: What are the marketing plans for expanding the collect business and its geographical reach?
A: The collect business primarily grows through responding to RFPs issued by regulators. The company approaches regulators to position itself as a potential partner for implementing regulatory filing platforms. (Swaminathan Subramaniam, CEO)
Q: Is there any plan to bifurcate or split the business to generate more capital for expansion?
A: Discussions about subdividing the company into various parts, including collect and consume, happen at the Board level. If any decision is made, shareholders will be informed first. (Swaminathan Subramaniam, CEO)
Q: What proportion of the South African contract is completed, and what is the pipeline for the collect business?
A: Approximately 30-35% of the South African contract is completed. The collect pipeline is looking more interesting with more inquiries and RFPs being floated in the market. (Balachandran Krishnan, CFO)
Q: What is the strategy for winning more customers for IRIS CARBON in the absence of new mandates?
A: The focus is on non-mandate sales, creating awareness, and positioning IRIS CARBON as a valuable disclosure management product. The company is also leveraging its experience in multiple geographies to stay ahead of mandate changes. (Serveshresht Sawhney, SVP of Sales and Growth)
Q: How is the company leveraging data analytics in the consume business segment?
A: The company has products like 'fields' for the banking system and other analytics solutions for regulators. These products help regulators make sense of the data collected and are increasingly being bundled with the overall suptech offering. (Swaminathan Subramaniam, CEO)
Q: What is the company's approach to R&D spending?
A: R&D is a continuous process integrated into the development of all products. The company spends on constant improvements and upgrades, with R&D expenditure primarily consisting of salaries. (Deepta Rangarajan, Whole-Time Director)
Q: What is the company's strategy for client mining and cross-selling products?
A: Cross-selling is a key focus, with efforts to offer multiple products to existing clients and their subsidiaries. The company is considering forming a dedicated team for client mining to increase per-client billing. (Serveshresht Sawhney, SVP of Sales and Growth)
Q: How sustainable are the current EBITDA margins, and what growth is expected for FY25?
A: The company does not make forward-looking statements but aims to maintain robust volume growth to sustain margins. Overhead costs are growing at a lower rate compared to revenues, indicating potential for sustained margins. (Balachandran Krishnan, CFO)
Q: What is the company's stance on raising equity capital or taking on debt?
A: The company is not actively looking to raise equity capital but is open to opportunities. It is not interested in taking on debt and prefers to conserve resources for growth. (Swaminathan Subramaniam, CEO)
Q: What is the company's strategy for the ESG mandate and its potential revenue?
A: The ESG mandate is expected to roll out in Europe first, followed by the US. Currently, there is no revenue from ESG offerings, but the company sees it as an interesting market for future growth. (Deepta Rangarajan, Whole-Time Director)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
