Release Date: October 30, 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) reported a 33% growth in total income for the first half of the financial year, indicating strong overall performance.
- The company's profit after tax nearly tripled, showcasing significant profitability improvements.
- The South African Reserve Bank contract continues to be a major growth driver, contributing significantly to revenue.
- The company has successfully reclassified its reporting segments to align with global standards, enhancing clarity and comparability.
- IRIS Business Services Ltd (BOM:540735) is leveraging AI to improve internal productivity and enhance customer value, particularly in its litigation management system.
Negative Points
- Despite the growth, the company acknowledges that high growth rates on a lower base may not be sustainable for ongoing trend analysis.
- The company faces challenges in maintaining growth momentum, particularly as the base revenue from the South African contract increases.
- There is a need for further investment in marketing and sales to scale the business, indicating potential future expenses.
- The company has experienced some customer attrition, particularly in the UK market, due to clients taking work in-house.
- The competitive landscape includes instances of underbidding, as seen in a recent contract loss in Sri Lanka, which could impact future revenue opportunities.
Q & A Highlights
Q: How does the visibility look like with regard to the South Africa contract for the next two quarters? Do we anticipate similar revenue growth?
A: Balachandran Krishnan, CFO, mentioned that while the base is increasing, there is still significant work left in the implementation phase of the South African contract. The revenue numbers should remain stable or potentially increase slightly, but growth rates may not be as high as in previous quarters.
Q: What comes next after the South Africa contract in the Collect segment? Are there other large orders anticipated?
A: Swaminathan Subramaniam, CEO, stated that there are numerous opportunities globally, with many regulators yet to adopt standard-based reporting. The company is seeing growth in Africa, particularly in Nigeria and Mauritius, and is exploring new business models to ensure continuous revenue streams.
Q: Can you explain the revenue model for the Tax Tech business, and when can we expect it to break even?
A: Gautam Mahanti, Business Head - IRISGST, explained that the Tax Tech business operates on a subscription model based on transaction volumes. The business is not yet profitable due to overheads, but they are expanding into new geographies like Singapore and UAE, which could drive future growth.
Q: How is the company leveraging AI in its operations and products?
A: Swaminathan Subramaniam, CEO, highlighted that AI is being used to enhance internal productivity and improve product offerings. For example, in the litigation management system, AI is used to automate notice classification and case creation, with plans to further integrate AI for drafting replies and referencing case laws.
Q: What is the company's strategy for expanding its sales team, and how does it plan to manage geographic revenue distribution?
A: Balachandran Krishnan, CFO, noted that the company is focusing on strengthening its sales and marketing teams, particularly for the SOTE business. The geographic revenue distribution is detailed in their presentation, with significant contributions from Africa, including South Africa, Nigeria, and Mauritius.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
