Latent View Analytics LtdQ3 FY24
Latent View Analytics Ltd Q3 FY24 Earnings Call Analysis
Revenue, margin, capex, fundraise and order book outlook from management commentary.
Price: ₹299P/E: 32.1Market Cap: ₹6.4K CrSector: IT - Software
Management growth scorecard
Revenue
Category 2
Margin
Category 1
Fundraise
N/A
Order
N/A
Capex
Yes
2 of 3 growth signals are positive.
Full analysisRevenue guidance
Category 2- →Latent View Analytics aims to double its revenue to $200-$220 million by FY27/FY28, roughly 2.5x growth from IPO levels.
- →Revenue for FY25 is guided between $100 million to $105 million on a pro forma basis.
- →Growth driven by expansion in AI, ML, advanced analytics (currently ~1/3 of business) and data engineering (currently ~20%, targeted to reach 35-40%).
- →Significant growth expected in BFSI, Retail, and CPG verticals, alongside strong presence in technology and digital native sectors.
- →Investments in marketing analytics and global capability centers to accelerate growth.
- →Inorganic growth via acquisitions, particularly in data engineering and Databricks partnerships, to supplement substantial organic growth.
- →Recent large deals (e.g., $3.5 million per year contract) demonstrate improved deal sizes and demand recovery.
- →Length and tenure of client engagements expected to increase with more multi-year managed services contracts.
- →Revenue growth supported by innovation accelerators driving non-linear revenue per employee improvements.
Margin guidance
Category 1- →Latent View aims to double revenue to $200-$220 million by FY27/FY28, approx. 2.5x growth since IPO.
- →EBITDA margins improving: Q2 FY25 adjusted EBITDA margin at 22.5%, expected to rise to 24-25% in H2 FY25.
- →Margin profile of 24-25% expected to maintain with revenue doubling over next two years.
- →Investments in growth areas like data engineering and AI/ML solutions expected to drive incremental revenues and operating leverage.
- →Operating leverage anticipated as current investment levels can sustain $25-$50 million growth without significant incremental spend.
- →Focus on increasing average revenue per employee through solution accelerators and non-linearity in effort versus revenue.
- →Revenue from clients with relationships over 5 years contributes 76%, indicating stable contract renewals supporting steady earnings.
- →M&A and inorganic growth, especially in data engineering and Databricks focus, are supplementary growth drivers.
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Fundraise plans
- →There is no mention of any current or planned future fundraising through debt or equity in the provided transcript.
- →The management discusses focusing on organic and inorganic growth primarily via acquisitions in the data engineering space but does not indicate raising new capital through debt or equity markets.
- →They emphasize managing margins and generating operating leverage through growth and investments rather than external fundraising.
- →The company has already made an acquisition (Decision Point) and is focusing on integration and synergies.
- →No explicit statements about fundraising plans were made during the Investor Day 2024 session.
Order book
- →Latent View Analytics recently won its largest-ever single statement of work deal, valued at over $3.5 million annually.
- →Another substantial deal worth approximately $1 million to $1.5 million with a CPG company is in the pipeline.
- →Multiple other significant deals are expected to materialize soon, indicating a positive outlook on order inflow.
- →The company’s revenue guidance of $100 million to $105 million for FY25 does not depend heavily on an improved demand environment, reflecting confidence in current orderbook and pipeline.
- →The managed services model, which accounts for 70% of work, offers predictable and renewed engagements with most contracts lasting 1-3 years or longer, supporting steady order backlog.
- →Over 76% of revenue comes from client relationships exceeding five years, suggesting high renewal rates and a stable order foundation.
Capex plans
Yes- →Latent View is actively investing in building capabilities, particularly in data engineering, with a focus on the Databricks platform.
- →Investments include expanding the alliances team, training and certifying personnel, and developing solutions hosted on Databricks.
- →The company is doubling down on nearshore centers like Latin America to serve North American clients, enhancing talent access and cost efficiency.
- →They are focusing on strategic acquisitions, such as the recent Decision Point acquisition, aiming to supplement organic growth and build capabilities in data engineering and product innovation.
- →Continued investment in solution building and accelerators to enhance revenue per employee and non-linearity in revenues and margins.
- →Support for growth in global capability centers, especially in analytics for subscale and expanding organizations.
- →Overall, the investment strategy balances growth initiatives with maintaining operating leverage, supporting a target of doubling revenues in 2-3 years.
How does Latent View Analytics Ltd rank vs peers in IT - Software?
Pro feature1Latent View Analytics Ltd
Rev 2Mar 1
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