IRIS Regtech Solutions Ltd Q4 FY22 Earnings Call Analysis
Revenue, margin, capex, fundraise and order book outlook from management commentary.
Management growth scorecard
Revenue
Category 3
Margin
Category 3
Fundraise
Yes
Order
N/A
Capex
Yes
2 of 4 growth signals are positive.
Full analysisRevenue guidance
Category 3- The company expects a natural increase in Annual Recurring Revenue (ARR) next year, factoring in deferred revenues, targeting around Rs. 47 crores for FY23.
- They project revenue growth between 10% to 15% without external fundraising, with an adjusted expected growth of 11%-12% when factoring in deferred revenues particularly from South Africa.
- Growth is driven primarily by the CREATE segment, which saw a robust 26% growth, and steady growth in the US and European markets, especially through the IRISCARBON SaaS platform.
- Revenues have increased at a CAGR of 18% over the last five years, with expenses growing more slowly at 11%, indicating improving operational efficiency.
- The company plans to accelerate growth further post rights issue funding and with senior hires in the technology team.
- New regulatory mandates and expanding product offerings like ESG filings, IRP (Invoice Registry Portal), and transporter app segments are expected to contribute to revenue growth.
See what IRIS Regtech Solutions Ltd management said on margin guidance — free account, 30 seconds.
Fundraise plans
Yes- A rights issue is planned to raise equity funding but has been delayed to allow the market to price in recent company performance.
- The rights issue will not be priced at a significant discount; it may be at market price or even a premium.
- Promoters currently do not have the funds to subscribe to the rights issue.
- The rights issue aims to raise capital to support growth in new markets and initiatives, especially related to expanding XBRL reporting opportunities globally.
- No mention of specific new debt fundraising; focus is on equity rights issue.
- Company expects to generate Rs. 4-5 crores cash next year from operations at current performance levels.
- The timing of the rights issue will be decided soon after market conditions stabilize post-earnings call.
See what IRIS Regtech Solutions Ltd management said on order book — free account, 30 seconds.
Capex plans
Yes- The company plans to raise funds through a rights issue to support a bigger growth path and new initiatives (Page 6).
- The raised capital will be used for growth in certain markets with new opportunities such as expanded XBRL reporting mandates in the US and Europe (Page 6).
- No specific current or future capital expenditure amounts are mentioned, but the focus is on strategic investment in market expansion and technology strengthening (Page 18).
- The company is also strengthening the technology team significantly, with a very senior technology person joining soon, indicating investment in technology capabilities (Page 18).
- Overall, capital investment is geared towards growth, product development, and market expansion rather than heavy physical capex (multiple pages).
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Margin guidance
Category 3- Revenue growth expected between 10%-15% annually without additional funding.
- Annual Recurring Revenue (ARR) increased from around Rs. 40 crores to Rs. 47 crores, indicating stable revenue streams.
- Deferment of filings in South Africa delayed Rs. 3.25-3.5 crores revenue recognition to next year, likely boosting future revenues.
- Rights issue planned to raise capital for growth in new markets and initiatives, potentially accelerating expansion.
- Operating costs rose by 18%, including a 12% rise in employee costs, but controlled for efficient spending.
- Profitability improving as company cleared employee dues and founders now drawing salaries.
- Cash generation projected around Rs. 4-5 crores next year from current operations.
- Growth fueled by new mandate opportunities (e.g., US energy market, European ESG filings) and technology enhancements.
- Attrition rate around 20%-21%, with talent acquisition stabilizing post funding slowdown in startups.
Order book
- The order book mentioned during the call is approximately Rs. 67 crores.
- This includes an ARR (Annual Recurring Revenue) component of around Rs. 47 crores for the fiscal year 2023.
- The ARR component includes a South Africa component of approximately Rs. 49 crores.
- Some contractual components of the order book may spill over into the next financial year.
- The company presented the current orders received in their presentation but did not disclose specific current pending orders during the call.
- Expansion into some geographies like Chile was mentioned with sales of licenses for SEC filings.
- Overall, the order book reflects both recurring revenue and multi-year contracts.
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What IRIS Regtech Solutions Ltd's management said in earlier quarters
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