{"id":157936,"date":"2024-01-23T07:24:47","date_gmt":"2024-01-23T12:24:47","guid":{"rendered":"https:\/\/44.250.171.167\/?p=157936"},"modified":"2024-01-23T07:24:48","modified_gmt":"2024-01-23T12:24:48","slug":"zensar-technologies-ltd-q3-fy24-earnings-conference-call-insights","status":"publish","type":"post","link":"https:\/\/alphastreet.com\/india\/zensar-technologies-ltd-q3-fy24-earnings-conference-call-insights\/","title":{"rendered":"Zensar Technologies Ltd Q3 FY24 Earnings Conference Call Insights"},"content":{"rendered":"<p><strong>Key highlights from Zensar Technologies Ltd (ZENSARTECH) Q3 FY24 Earnings Concall<\/strong><\/p>\n<ul>\n<li><strong>Financial Performance<\/strong>\n<ul>\n<li>Revenue declined 3.2% sequentially in constant currency to $144.7 million.<\/li>\n<li>Services revenue grew 1.8% year-over-year in reported terms to $144.5 million.<\/li>\n<li>Banking and financial services grew 12.6% and manufacturing grew 5.5% year-over-year.<\/li>\n<li>Hi-tech and healthcare declined 9.6% and 14.3% respectively year-over-year.<\/li>\n<li>Cash balances increased to $248.3 million, addition of $21.3 million in the quarter.<\/li>\n<li>DSO stood at 75 days, four days lower than previous quarter.<\/li>\n<li>Order book remains healthy at $167.5 million with consistent new logo additions.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Profitability<\/strong>\n<ul>\n<li>Gross margins dropped 70 bps quarter-over-quarter to 31.1% due to furloughs and lower utilization.<\/li>\n<li>SG&amp;A increased 70 bps due to reversal of lower management bonus payout benefit.<\/li>\n<li>EBITDA margins at 11.2%, up 20 bps adjusted quarter-over-quarter.<\/li>\n<li>YTD adjusted EBITDA margins at 17.3%, above guided mid-teens range.<\/li>\n<li>Deal pipeline remains stable to better than last year.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Outlook<\/strong>\n<ul>\n<li>Revenue declined 3.2% sequentially due to seasonal softness and deeper furloughs.<\/li>\n<li>Expect growth in non-HiTech businesses with easing of furlough impact.<\/li>\n<li>Added service lines showing traction; riding newer tech trends for growth.<\/li>\n<li>Bullish on growth prospects barring HiTech stress.<\/li>\n<li>Guided EBITDA margin band at 14-16% going forward.<\/li>\n<li>Current margins not sustainable in long term.<\/li>\n<li>Working to ensure growth investments don&#8217;t pressure margins.<\/li>\n<li>Demand environment continues to remain challenging.<\/li>\n<li>Expect situation to remain similar over next 2 quarters.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Margin Performance<\/strong>\n<ul>\n<li>Gross margins dropped due to furloughs, utilization and forex impact.<\/li>\n<li>EBITDA margins resilient; YTD at 17.3% above mid-teens guidance.<\/li>\n<li>Leverage areas like utilization, operational excellence for margins ahead.<\/li>\n<\/ul>\n<\/li>\n<li><strong>BFSI and Other Verticals<\/strong>\n<ul>\n<li>BFSI grew 12.6% year-over-year; strong momentum seen.<\/li>\n<li>Manufacturing and consumer services grew 5.5%.<\/li>\n<li>Also seeing tailwinds in UK, Europe and South Africa.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Expansion in Non-top Accounts<\/strong>\n<ul>\n<li>Incremental revenues driven by client mining efforts.<\/li>\n<li>Moving several clients from sub-$5 million to $5-10 million plus brackets.<\/li>\n<li>Helped open 9 new logos including Fortune 500 companies.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Strategic Focus Areas<\/strong>\n<ul>\n<li>Addressed farming, hunting, large deals and capabilities.<\/li>\n<li>Seeing early benefits like highest ever EN deal wins.<\/li>\n<li>More room for further improvements in future.<\/li>\n<\/ul>\n<\/li>\n<li><strong>M&amp;A Strategy<\/strong>\n<ul>\n<li>Evaluating acquisition targets almost every week.<\/li>\n<li>Looking for strategic fit and right valuation.<\/li>\n<li>Conserving cash given fiduciary duty.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Healthcare Vertical Focus<\/strong>\n<ul>\n<li>Recently established it as a separate vertical.<\/li>\n<li>Was contributing 9-10% of revenues even without focus.<\/li>\n<li>Will invest significantly for growth given industry trends.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Repositioning Strategy<\/strong>\n<ul>\n<li>Focus on Experience, Engineering and Engagement.<\/li>\n<li>Seeing early traction; will help drive top quartile growth.<\/li>\n<li>Resonating strongly with existing client base.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Generative AI Traction<\/strong>\n<ul>\n<li>Seeing traction, but largely in proof of concepts stage.<\/li>\n<li>Have worked on about 100 PoCs across verticals and clients.<\/li>\n<li>Revenue contribution small currently.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Key highlights from Zensar Technologies Ltd (ZENSARTECH) Q3 FY24 Earnings Concall Financial Performance Revenue declined 3.2% sequentially in constant currency to $144.7 million. Services revenue grew 1.8% year-over-year in reported terms to $144.5 million. Banking and financial services grew 12.6% and manufacturing grew 5.5% year-over-year. Hi-tech and healthcare declined 9.6% and 14.3% respectively year-over-year. Cash [&hellip;]<\/p>\n","protected":false},"author":1767,"featured_media":154818,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[9825,392,8],"tags":[10169,9124],"class_list":["post-157936","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-earnings-call-highlights","category-earnings","category-technology-stocks","tag-earnings","tag-software-technology-services"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/alphastreet.com\/india\/wp-content\/uploads\/2023\/10\/CC_Image_1.jpg","jetpack_likes_enabled":false,"jetpack-related-posts":[{"id":157726,"url":"https:\/\/alphastreet.com\/india\/hcl-technologies-limited-q3-fy24-earnings-conference-call-insights\/","url_meta":{"origin":157936,"position":0},"title":"HCL Technologies Limited Q3 FY24 Earnings Conference Call Insights","author":"Praveen","date":"January 16, 2024","format":false,"excerpt":"Key highlights from HCL Technologies Limited (HCLTECH) Q3 FY24 Earnings Concall Revenue Growth and Margins Revenue grew 6% sequentially and 4.3% YonY in constant currency, the highest growth since Q3 2021. 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