Intellect Design Arena Ltd Q2 FY23 Earnings Conference Call Insights

Key highlights from Intellect Design Arena Ltd (INTELLECT) Q2 FY23 Earnings Concall

Q&A Highlights:

• [00:37:15] Krishna Thakker at Anand Rathi asked about cost structure, if in that all the costs are built in. Arun Jain MD answered that costs are built in on an actual basis.

• [00:39:31] Krishna Thakker at Anand Rathi enquired about the margin outlook and if 16%, 17% is not recurring margin and next quarter the company should look at 23%, 24% margin. Arun Jain MD replied that an exact number cannot be given but clarified that it will be 20% plus for the full year.

• [00:40:39] Sugandhi Sud with InCred asked about the reason for significant deceleration in AMC SaaS revenue mix. Arun Jain MD answered there are two things; one is the license revenue of $3.1 million. And the structural issue is due to high inflation, the market environment based on the structural delays in closing the deals. And secondly due to license AMC and implementation.

• [00:46:01] Sugandhi Sud of InCred asked about the increasing number of deals in the funnel and the actual win rate. Arun Jain MD replied that the environment issue is delaying some of the decision and secondly with the cloud tech available, the way the client evaluate a vendor is changed substantially.

• [00:51:17] Vivek Charoria enquired that on the cost structure, INTELLECT said it expects another $2-3 million for next 2 quarters and if it will be the new norm. Arun Jain MD answered that the company needs to see how the markets stabilize and only then it can be commented if it can be a new norm.

• [00:51:30] Vivek Charoria also asked that on the headcount if the company is at a $90 million run rate. Arun Jain MD clarified that the company is almost there. INTELLECT still needs more headcount on the sales and marketing side to increase the run rate.

• [00:57:24] Harshil Shethia for AUM Advisors asked about the reason for operating cash flow reducing to INR45 crores in 1H23 from INR94 crores in 1H22. Arun Jain MD answered that the reason for the reduction is mainly due to bonus payout as it’s higher in the current year. Also salary costs were higher in FY23.

• [00:59:15] Harshil Shethia for AUM Advisors enquired about the standard sustainable range of DSOs. Arun Jain MD replied the company is trying to look at it between 115 to 125, that fluctuates on an overall basis.

• [01:02:48] Ravi Mehta from Deep Financial asked that in 2Q23 the company signed nine platform deals out of total 15, but the subscription revenue are flat QonQ. Arun Jain MD replied that typically it takes 3-6 months to get the realizations flow in.