C.E.Info Systems hosted a conference call on Jan 31, 2023. In the conference call the company was represented by Mr Rakesh Verma-Chairman and Managing Director, Mr Rohan Verma-CEO, Mr Anuj Jain –CFO and Mr Sourabh Somany-Company Secretary.

Key Takeaways of the call

The company delivered another quarter of strong performance.

Revenues:

Revenues in Q3FY2023 grew 56% YoY to Rs 68 cr.

In 9M FY2023 revenues grew 46% to Rs 209.0 cr as against Rs 143.4 cr in 9MFY2022.

Revenue growth was driven by upselling and cross-selling to both existing and new customers.

Growth in revenues was broad based across verticals and products side.

From market perspective in Q3,revenue from  Automotive and Mobility Tech( A&M) grew by 45% YoY and Customer Tech & Enterprise Digital Transformation(C&E) grew by 76% YoY. For 9M,  A&M grew by 51% YoY and C&E grew by 40% YoY.

From products perspective in Q3, revenue from Map & Data was up 78% YoY and Platform &IoT was up by 51%.

Due to nature of the business, revenues of the company is seasonal and lumpy.

Margins:

In Q3 EBITDA grew by67% to Rs 27.8 cr with EBITDA margin of 41.1%.Improvement in margin in Q3 was on account of the company calibrating the marketing cost down.

In 9MFY2023 EBITDA grew 41% YoY to Rs88.4cr with EBITDA margin of 42.3% against EBITDA margin of 44% in 9MFY2022.

Effective Tax rate: Effective tax rate was lower in Q3 when compared to Q2 as other income includes unrealized income on investment due to re-valuation of portfolio investments. Capital gains tax is lower when compared to business tax.

Marketing Expenses: The company closely monitors and will caliberate up and down  the marketing expense based on the growth of revenue and  profitability.

Cloud hosting expenses: The company expects the cloud hosting expenses to go up but expects optimize the same.

Investments:

Gtropy: The Company acquired 76% of Gtropy to scale up IoT led products business as there is huge opportunity.

High growth in IoT business compresses margins initially, as device hardware has lower margins, but starts creating high margin SaaS revenue in future, typically 12 months down the road.

9M FY23 Revenue from Sale of Hardware increased to Rs 31.8 Cr YoY from Rs 10.7 Cr in 9M FY22 (H1 FY 23 was Rs 20.4 Cr). 9M FY23 Revenue from SaaS Subscription for IoT-led business increased to Rs 12.4 Cr YoY from Rs 4.1 Cr in 9M FY22 (H1 FY23 was Rs 6.5 Cr) and EBITDA margins for the rest of the business (map-led business) are very strong at 53%.

Indrones Solutions Private Limited: The board of directors have approved the acquisition of 20% equity stake in Indrones Solutions Private Limited for Rs 7 crore. The acquisition will aid to improve the company’s activities and synergies for company’s  products.

Acquisitions of the portfolio companies are based on improving the overall business of the company.

Valuation of the portfolio companies are based on lower of either the valuation of new investments made in the portfolio company or by an valuation expert.

New Projects Signed:

In A&M vertical : Auto NCASE sales for the Company have outperformed the automotive OEM industry volume growth i.e. increased attach rate to more number of vehicles for our NCASE solutions; Large, new 4-wheeler EV OEM entrant into Indian market signed up for NCASE solution;Large 4-wheeler OEM upsold on ADAS use case of NCASE solution; Large 2-wheeler OEM signed up for NCASE solution; Multiple 2-wheeler EV OEM startups signed up for NCASE solution and Taxi Cab company signed up for Video Telematics solution to monitor their cabs and also ensure safety for their drivers and customers.

In C& E vertical: Multi-year extension of contract with Big Tech company; Large Marketing/Ad Agency customer upsold on Micro-Geodemographic Analytics Data Set and 2 Large Bank & Fin-tech companies signed up for workforce & workflow monitoring, management & automation solutions.

Competition by Google: The Company expects good opportunities for its consumer app and B2C business, based on recent competition actions by CCI and supreme court, which opens up the market fo the company’s Mappls app. The company expects Google to implement the changes directed by Competition commission of India and Supreme Court.

Dividend Policy: The board will look at paying the dividend at the end of the year. Dividend payment will be based on cash requirements to make investment in portfolio companies; Investments required to grow organically and normal cash requirements for operations.

Management Commentary:

Commenting on the performance Mr RakeshVerma CMD said: ‘In Q3 FY23,Mapmyindia delivered another strong performance, with quarterly revenue up 56% YoY to Rs 68 cr, EBITDA up 67% to Rs 28 cr, PAT up 61% to Rs 30 cr. EBITDA and PAT margins both expanded in Q3FY23 onaQoQ basis as well as YoY basis, with EBITDA margin at 41.1% and PAT margin at 38%. Year to date Year on Year is the right way to compare performance trend of the company. 9MFY23 YOY revenue  is up 46%,EBITDA is up 41%, and PAT is up 22%. EBITDA margin is 42.3% and PAT margin is at 33.9%. Overall these are very healthy growth and profitability numbers. The upselling and cross-selling of our products and solutions to existing and new customers continue, which bodes well for the future of the company. We are happy that we have been able to balance our growth and profitability goals, maintaining financial discipline, while also ensuring that we are investing for the future.”

Mr ROhanVerma-CEO said “ In Q3 FY23, revenue growth continues to be broad based with A&m up45% YoY and C&E up 76% on the market side. On the product side, Map and data was up 78% and Platform &IoT was up 51%. For 9MFY23 YoY, A&M revenue was up 51% and C&E revenue was up 40%. Similarly, Map & data revenue was by 39% and platform and IoT revenue was up 50%. Thus, both for the quarter and the year, the business is on a strong trajectory. As part of financial discipline, we calibrated marketing expenses down during the quarter, aiding in the company’s profitability, while successfully leveraging previous quarters’ marketing expenditure to generate revenue and order book growth. We are excited by the customer wins for our various products and solutions across industry verticals for many exciting and newer use cases. Good prospects lie ahead for our consumer app and B2C business, based on recent pro-competition actions by CCI and Supreme Court which opens up the market our Mappls app.”