Key highlights from Latent View Analytics Ltd (LATENTVIEW) Q4 FY24 Earnings Concall
- Operational Performance
- 19% growth in challenging economic conditions.
- 6% quarter-on-quarter growth, 21.7% year-on-year growth.
- Uncertainty and sluggishness in winning large discretionary projects.
- Added 6 new client accounts and kicked off smaller initiatives with existing clients.
- Strategic Partnerships
- Partnership with NVIDIA on Generative AI solutions.
- NVIDIA’s GPU technology and tech stack to enable GPU usage for business impact.
- Encouraging early results, especially in real-time analytics on streaming data.
- Acquisitions
- Acquisition of Decision Point in final stages of diligence.
- Decision Point’s expertise in consumer packaged goods (CPG) and revenue growth management (RGM).
- Synergies with Laterooms’ solutions in R&D, innovation, supply chain, and onshore availability.
- Decision Point acquisition to be funded through IPO proceeds and internal accruals.
- Expect CPG practice to reach 20% of revenue in 2 years.
- Expected to grow at 25-30% given smaller base and high-growth areas.
- Generative AI
- Good traction in Generative AI solutions and pilots.
- LASER and AI Penpal solutions gaining traction.
- Leveraging large language models and GPU technology.
- Myeloma Foundation
- Selected as Partner of the Year by International Myeloma Foundation.
- Building data platform to provide 360-degree view for doctors, caregivers, and patients.
- Assisting in patients’ journey to recovery through data insights.
- Pride in impacting lives meaningfully through this non-profit work.
- Financial Performance
- 19% year-on-year revenue growth, despite challenging environment.
- 6% quarterly growth, 21.6% year-on-year growth.
- Revenue of INR 640 crores for the full year.
- EBITDA of INR 40.4 crores, 9.8% quarter-on-quarter growth, 34.2% year-on-year growth.
- EBITDA margins reached historical levels of over 25%.
- Geographic Expansion
- S. contributed 95% of revenues.
- Europe contributed 1.4%, but seeing good traction.
- Aim for Europe and APAC to contribute 5-6% in next fiscal year.
- Future Outlook
- Optimistic about relationships built in FY 2024 yielding results.
- Strategy expected to play out positively in FY 2025.
- Continued investment in people, with 133 campus hires in Q4.
- Organic growth guidance around similar levels as FY24 (~20%).
- Expecting 6-7% QoQ growth in Q1 FY25 as deals get finalized.
- Growth momentum expected to pick up in H2 FY25 compared to H1.
- Aspiration to achieve 8-10% sequential growth exit run rate by Q4 FY25.
- Target to maintain 21-23% EBITDA margins in H1 FY25.
- Q1 margins to be impacted by wage hikes and higher visa costs.
- Pipeline and Deals
- Pipeline larger than start of FY24, but lacks large initiative opportunities.
- Confirmed revenue and extensions already exceed FY24 revenue.
- Two to three deals worth $0.5 million+ in pipeline, but facing elongation.
- Margins and Profitability
- Expect to maintain 21-23% EBITDA margins in H1 FY25.
- Target 25% EBITDA margins in H2 FY25 if growth reaches 6-8% QoQ.
- Decision Point acquisition to be EBITDA accretive but impact limited initially.
- CPG Business Integration
- Structure in place with Decision Point founder leading CPG practice.
- Latentview’s delivery lead managing combined CPG delivery.
- Overlapping sales teams incentivized to pursue joint opportunities.
- Expectation of rapid acceleration in CPG practice growth.
- Inorganic Growth Strategy
- Parallel process to continue evaluating inorganic opportunities.
- Meeting prospective targets in data engineering, BFSI, retail verticals.
- Opportunity window due to realistic valuations after macroeconomic challenges.
- Focus Areas
- Data engineering capabilities, especially for hyperscalers.
- BFSI and retail verticals.
- Combination of data engineering for financial services firms ideal.
- Continuously engaging with external partners for prospects.
- CPG expected to contribute around 20% of revenues over next 24 months, up from 8% currently.
- Significant investments being made in CPG, aided by Decision Point.
- Campus Hiring
- Strong campus hiring of 450 offers, with 360 already onboarded.
- Around 40% of new campus hires already deployed, rest in bootcamps/shadow mode.
- Tempered next year’s campus hiring to 250 offers based on anticipated demand.
- Campus hiring impacting near-term utilization and margins as per expectations.
- Market Analysis
- Recent market intelligence exercise indicates $300 billion market size in 3 years at 18-20% CAGR.
- Expects to achieve 25-30% organic CAGR over next 3-5 years if economic conditions improve.
- Currently a small player in the overall data analytics market.
- Significant headroom for growth given the large market size.
- Acquisitions to provide step changes and aid in replicating/improving on growth rates.