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Key Highlights • Date of Call: May 31, 2024 • Executives Present: CEO Partha DeSarkar, CFO Srinivas Palakodeti
Company Performance • New Initiatives: • Established a subsidiary in South Africa. • Launched a comprehensive cybersecurity practice. • Conducted a successful share buyback of Rs. 1,020 crore. • Financial Growth: • 45.8% increase in operating EBITDA year-over-year. • 2.7% year-on-year increase in revenue from operations. • 82.5% rise in operating EBITDA, improving margins from 3.4% to 6%. • Full-year revenue growth of 2.5%.
Strategic Focus • AI and Digital Solutions: • Emphasis on AI-driven solutions and integration of recent acquisitions (e.g., TekLink). • Launch of CelerityX and OneX for cooperative credit societies in India. • Broadband and Digital TV: • Acquisition of a majority stake in ISP Seven Star to enhance broadband services. • Growth in broadband subscribers from 1 million to 1.22 million.
Financial Overview • Profitability: • Decline in profit before tax (PBT) and profit after tax (PAT) due to reduced foreign exchange gains. • Strong balance sheet with a net worth of Rs. 7,643 crore and net cash surplus of Rs. 5,012 crore. • Revenue Sources: • 50% from BPM, 37% from digital services, 13% from other income.
Market Insights • Digital TV Sector: • Unique Headend-In-The-Sky (HITS) platform allows for growth despite overall market decline. • Focus on improving average revenue per user (ARPU) through bundled services.
Future Growth Strategies • Investments: • Funds from net cash position to be used for strategic acquisitions and organic growth. • Technology in Customer Experience: • Investments in tech leadership and generative AI to enhance customer interactions.
Conclusion • Management expressed optimism about growth in both digital television and broadband services, with a focus on underserved markets and technological advancements.
Financial Performance • Date of Call: February 16, 2024 • Key Executives: CEO Partha DeSarkar, Global CFO Srinivas Palakodeti • Revenue Growth: Double-digit growth in business process management and digital media services. • EBITDA Improvement: Increased from 11% to approximately 16% year-over-year. • Profit Before Tax: Rs. 16.2 crore, a turnaround from a loss of Rs. 28.4 crore in the previous year. • Net Profit Impact: Affected by exceptional items and tax reversals.
Business Segments • Operating Revenues: 2.4% increase; 40% rise in operating EBITDA for the first nine months of FY24. • BPM Performance: Steady growth in Canada and offshore markets; subdued in the US and UK. • Tech Solutions: Slight revenue dip but improved EBITDA; focus on managed services and industry-specific solutions.
Acquisitions and New Products • Diversify Revenue Growth: 34% increase since acquisition. • TekLink Revenue: Nearly $30 million for 9MFY24. • New Service Lines: Launch of CelerityX and AI-led process management solutions. • NetX Product: Connects national enterprises with multiple internet service providers.
Strategic Focus Areas • Key Areas: Artificial Intelligence, Analytics, and Automation. • Network Expansion: Operationalized 4,000 kilometers of a national long-distance network. • Subscriber Growth: Digital television subscribers up by 7%; broadband subscribers increased by 32% year-over-year. • Churn Rate: Reduced to 1.57%, indicating strong customer retention.
Financial Highlights • Operating Revenues: 7.6% year-over-year increase; 40% rise in operating EBITDA for Q3 FY24. • Balance Sheet: Net treasury surplus of Rs. 4,893 crore; gross debt of Rs. 920 crore. • Revenue Sources: 57% from BPM, 36% from Digital Services, 7% from Other Income.
Market Outlook and Challenges • IT Industry Challenges: Slow decision-making cycles due to high interest rates and economic uncertainty. • Growth Opportunities: Generative AI expected to drive growth across industries. • Revenue Guidance: No specific guidance for FY25; focus on technological advancements for efficiency.
Future Plans • Market Potential: Significant growth in India's television and broadband markets. • Integrated Solutions: Focus on combining digital television and broadband services. • Cash Deployment: Plans to use surplus cash for future acquisitions and business growth.
Connectivity Strategy • Investment Approach: Not making significant investments in connectivity infrastructure; optimizing existing networks. • Subscriber Growth: Approximately 5.75 million subscribers; ARPU within industry standards. • Customer Retention: Emphasis on longer-duration contracts for renewal.
Conclusion • Closing Remarks: Positive outlook on growth initiatives and market positioning despite economic uncertainties.
Conference Call Details • Date: November 10, 2023 • Transcript Submission: November 16, 2023, to BSE and NSE • Key Executives Present: • Mr. Partha DeSarkar (Group CEO) • Mr. Vynsley Fernandes (Whole-time Director) • Mr. Srinivas Palakodeti (Global CFO) • Moderator: Darshan Mankad (Adfactors) • Note: Some statements may be forward-looking and involve risks.
Financial Performance • Revenue Growth: Reasonable growth in BPM business; muted outlook for the full year due to global economic uncertainties. • Operating Revenues: Increased by 5.7% year-over-year. • Operating EBITDA: Significant improvements noted. • Cost Management: Focus on improving margins and rationalizing real estate; 99% workforce working virtually.
Business Segments • Digital Media Division: • Successful launch of CelerityX with four key products. • Significant corporate client acquisition expected. • Project NLD: • Expanded broadband coverage in India with over 6,000 km operationalized. • Projected significant growth in broadband business due to low penetration.
Financial Updates • Acquisitions: Three acquisitions totaling approximately US$85 million since the sale of the healthcare business. • Shareholder Returns: Rs. 1,794.2 crore returned through dividends and buybacks. • Net Cash Position: Rs. 4,875 crore as of September 30. • EBITDA Margins: Improved from 6.4% to 8.3% year-on-year. • Profit After Tax (PAT): Decreased due to lower Other Income and tax reversals.
Future Outlook • Generative AI: Plans to enhance customer experience and operational efficiency. • Broadband Market Potential: Only 8% of homes in India have wired broadband, indicating significant growth opportunities. • Customer Growth: 10% increase in broadband customer base anticipated with NLD rollout.
Q&A Highlights • Sustainability of PAT Decline: Management indicated it is largely a one-time issue. • AI in CX Operations: Generative AI expected to transform customer interactions. • Media Division Losses: Acknowledged but expected to improve with infrastructure investments. • Cash Reserves: Evaluating inorganic growth opportunities for digital capabilities.
Conclusion • Management expressed optimism for continued growth in digital television and broadband sectors, concluding the call with wishes for a Happy Diwali.
Key Developments • Share Buyback: • Completed buyback of 6 million shares at ₹1,700 each. • Returned ₹1,020 crores to shareholders. • Acquisition Integration: • TekLink acquisition contributed $8.8 million in revenue. • Enhanced cross-selling opportunities. • Expansion: • Established a multilingual CX hub in Colombia, reaching full capacity quickly. • Investment in Technology: • Focus on generative AI and automation, including the Agent X platform.
Financial Performance • Revenue Growth: • Sequential revenue growth of 6%, totaling ₹1,133 crores. • Decline compared to the same quarter last year due to reduced COVID-related work. • Operating EBITDA: • Improved significantly, doubling to ₹76.8 crores. • Profitability: • Profit Before Tax (PBT) improved to ₹28.3 crores. • Profit After Tax (PAT) decreased to ₹16.6 crores due to absence of deferred tax asset benefit. • Balance Sheet: • Net cash and treasury surplus fell to ₹4,962 crores post buyback. • Strong shareholder funds at ₹7,480 crores.
Digital Media Division Update • NXTPLAY OTT Aggregator App: • Launched to access content from over 25 OTT platforms. • Features a content discovery tool for regional language preferences. • Broadband Growth Strategy: • Expanding broadband connectivity across 4,600 pin codes. • 8,000-kilometer rollout planned in partnership with Power Grid.
Strategic Focus • Market Segmentation: • Shift towards mid-market segment for new clients. • ARPU Improvement: • Increased Average Revenue Per User for digital television and broadband services. • Collaborations: • Partnerships with global firms to enhance backend systems and broadband technology.
Investor Inquiries • Generative AI Strategy: • Company partners with tech giants rather than competing directly. • Development of Agent X platform with a $5 million investment. • UK Business Performance: • Revenue decline attributed to post-COVID environment; optimism for steady growth. • Customer Retention: • Focus on higher ARPUs and strategic growth, leveraging NXTPLAY for customer retention.
Closing Remarks • Future Outlook: • Continued focus on organic and inorganic growth. • Next meeting for Q2 results scheduled for November.
Conference Call Overview • Date: June 5, 2023 • Participants: Senior management including CEO Partha DeSarkar and Global CFO Srinivas Palakodeti • Focus: Forward-looking statements with risks and uncertainties
Key Updates from CEO Partha DeSarkar • Buyback Plan: Active from May 22 to June 2, 2023, at Rs 1,700 per share for up to 60 lakh shares. • Business Transformation: Shift from traditional BPO to technology-focused services, including acquisitions like TekLink. • Revenue Growth: Notable growth in revenue and EBITDA despite foreign exchange challenges. • UK Government Contract: Decline in revenue due to reduced demand post-COVID.
Strategic Focus and Future Technologies • COVID-19 Impact: Positive shift with WHO declaring an end to the pandemic; revenue from a key contract significantly decreased. • Long-term Growth: Emphasis on technology solutions, managed services, cloud, and data analytics. • NXTDIGITAL: Important for internet access in remote areas; leveraging generative AI for customer experience.
Vynsley Fernandes on Digital Media • Enterprise Business Unit: Launched key products including MESH Network and SD-WAN. • Customer Engagement: Focus on quality over quantity, maintaining flat subscriber growth while improving ARPU. • Training Initiatives: Over 1,500 digital service partners trained to enhance service delivery.
Financial Performance Highlights by Srinivas Palakodeti • FY23 Performance: 5.4% revenue increase, 62.5% EBITDA growth, profit before tax of Rs. 202 crores. • Q4 Results: Decline in total revenue and PAT at Rs. 25.8 crores. • Financial Position: Net worth of Rs. 8,719 crores, net cash position of Rs. 822 crores.
Q&A Session Insights • Impact of AI: Generative AI expected to enhance customer interactions and knowledge management. • Revenue Outlook: Optimism for margin expansion and strong revenue growth in 2024-2025. • Digital Services Goal: Aim for 70% revenue contribution from digital services. • Geographic Expansion: Colombian operations scaling to support U.S. clients; TekLink and Diversify Offshore showing promising revenue potential.
Conclusion • The company is strategically positioning itself for growth through technology integration and market expansion while addressing challenges in specific regions.
Key Financial Highlights • Total Income Growth: 8.3% year-on-year increase. • EBITDA Growth: Significant 57.1% increase. • Net Profit: ₹51.83 crores, a turnaround from a loss of ₹37.88 crores the previous year. • Dividend Announcement: Third interim dividend of ₹2.50 per share. • Cash Position: Strong net cash position of ₹1,014 crores.
Business Developments • Acquisition: HGS is acquiring TekLink. • New Center: Opened in Barranquilla, Colombia. • Digital Media Launch: Introduced "NXTSkyFi," a broadband-over-satellite solution for educational enablement.
Strategic Focus • Transition to Digital Services: Aiming for a solutions and platforms-led business model. • Digital Innovation: Launch of ONEDigital and a nationwide digital upskilling program. • Client Satisfaction: Achieved a record Net Promoter Score of 65.
Financial Insights • Revenue Increase: Year-on-year revenue growth of 6.4%. • Profit After Tax (PAT): ₹52 crores, a significant improvement from the previous year. • Revenue Streams: Diverse revenue primarily from BPM and digital services.
Future Directions • Portfolio Diversification: Emphasis on traditional BPM, technology, digital media, and HRO solutions. • Technology Services Evolution: Transitioning from traditional BPM to technology service provider. • Focus on Connectivity: Initiatives for network management and work-from-home services.
Market Dynamics • Indian Media Industry: Noted rising online content consumption with a significant unconnected market. • Broadband Growth: Increased customer base by nearly 50%, becoming the fourth largest private ISP in India.
Strategic Initiatives • Improving Profitability: Aiming for double-digit margins through cost optimization and strategic acquisitions. • Revenue Quality: Focus on sustainable revenue quality and innovative products.
Q&A Highlights • Healthcare Provisions: Clarified that legacy provisions were not transferred during demerger. • Buyback Plan: Confirmed buyback of ₹1,020 crores, with remaining cash for growth opportunities. • Media Business Concerns: Addressed increasing losses and strategies for profitability.
Conclusion • Positive Outlook: Strong commitment to digital future and innovative solutions. • Upcoming Contributions: TekLink acquisition expected to contribute approximately $30 million in revenue.