Thread by @Finstor85

So the 1st co we are going to discuss today is one of the most technologically/foundationally strong company that's founder led, 1st generation promoter led IT company - Persistent #PersistentSystems

https://twitter.com/Finstor85/status/1474816289176702980

Industries & Domains Served:

Banking, Financials, Insurance, Healthcare, Lifesciences, Industrial, Hi-Tech, Telecom, Media. Banking & Financials being a steady driver, while Lifesciences has been the alpha generator.

Services:
Digital -Design & Consulting
Business Intelligence - AI/ML, Data Stack, Data Integration
Product Engineering - Product, platform design & engineering
IDA - Identity & Access services, privacy management
cont..

CX Services - Customer Experience strategy, Implementation, Integration, analytics services
IT Infra - Cloud Infra & Managed cloud

Products:
Digital bank & credit union solution - a complete cloud, microservices led design enabling go to market for digital banking services. Mainly focused on credit

Cont..

LOS -Loan Origination System to automate origination & approval of loans.
Patient Mobile Experience - Mainly electronics medical record system

Cloud/Digital is mainly Salesforce focused.
USP - Strong practice in AI/ML, Software Engineering, Platform Engineering

Client Profile - Client concentration of top 10 as % of total revenue has fallen from 51.1% in Q3FY20 to 45.4% Q2FY22 & at the same time large client count has gone up from 10 to 22 over the same period, indicating strong market position

Total contract value has been growing very slowly, steadily

* Revenue Profile - NA 78.7%, EU 8.8%, India 10.5%, RoW 2%
* Scale Profile - Healthcare & Lifesciences has witnessed exponential expansion on both Revenue & YoY growth metrics

* Partner Profile
Implementation partner ecosystem is very important. Appian, AWS, Dassault, Google, IBM, Mambu, Microsoft, RedHat, Salesforce,

Recent Acquisitions:

Recently acquired Fusion 360 that further cements domain consulting in payments ecosystem. This business concentrated in NA so geographical diversification isn't improving after this acquisition

Shree Partners acquisition has brought domain consulting skills for Travel & Hospitality segment and this acquisition is geographical diversification supportive with EU/India business

Software, Hi-Tech segment has dominant share in the revenue profile. However, the recent deal wins in this segment are very traditional services specific. Website migration, Legacy to cloud migration etc.

Persistent is still under $1bn revenue company which is not really surprising. Persistent positioned itself in a niche which did not grow as anticipated on IP monetization perspective

Cont..

Further, the frontloading of investments for developing IBM Watson platform brought a major drag on BS. Not only their investment in Watson led to nowhere, it also stopped the co from becoming a multi-billion $ org. It paid the price dearly & is now fully out of the overhang.

Key Risk:

Nearly 16% revenue comes from top 1 client. and 36% comes from top 5. So client profile really needs to improve. Loss of just 1 account strikes a bunch of revenue off.

Persistent was known to monetize their IPs very effectively. However, IP led initiatives have their own side effects. 1st - frontloading of the costs, 2nd - Revenue realization isn't linear.

Co has strategically reduced its dependence on IP led initiatives which reflects in the reduction in revenue % from this segment as well as reduction of total clients in this segment.

Persistent has a lot of frameworks but fewer products of their own. Although they always took IP lead approach, I am wondering why the co hasn't managed to release at least 3-4 strong products in the market yet. Or, if you think they have one, pl let me know.

Key driver is their strong service line. The data driven business intelligence division has some amazing offerings. Data management & governance isn't really a major contributor in my view since there are many products available in market that does this with plug-play approach.

In AI/ML segment their offerings are pretty stable - Document analytics, enterprise search, conversational platforms etc. are very commonly delivered by many other peers.

But the Explainable AI is an amazing offering that enables organization to understand why AI systems take a certain decision & interpret that in common manner. They build & deliver AI models that help companies analyze bias, drift from anticipated pathway, and other mismatches.

Basically, Explainable AI helps people understand how AI systems model, think, and decide in a layman's term. This, in my view, is an amazing offering. I wonder why twitter handles never mention Persistent's AI practice enough.

The reason why I say Persistent is extremely technologically sound company is this - there are certain programming methods, languages that form core, founding platform of the technology.

For e.g. C/C++ used to be one such strong programming platform that saw many companies build their strong products on top. E.g. SAP! The ABAP programming language of SAP compiles into C++.

Persistent has ensured that no matter what new technology, programming language comes, they never lose the connect with the foundational blocks. This has been their strength.

On cloud side, I'd say Persistent is more of a salesforce expert. Although they have partnerships with almost all hyperscalers, they are nowhere close to what #LTI does for e.g. in the multi-cloud ecosystem.

To sum Persistent's journey since IPO - It is a founder led, technically superior co that has strong leadership foundations. However, a few bumps down the line held them back but the co is not back on growth track. Persistent is still a very strong technology driven company

In sum, Persistent has been around for a long time but they can still do a lot better in terms of market positioning & product launch. #TCS & #LTI have been doing amazing on this front.

TCS is grooming startups on cutting age tech while LTI is launching a complete ecosystem through products. This makes traditional IT cos position better in the days of #SaaS. #Persistent certainly needs that change in my view.

Before we conclude, pl note there always is a possibility that someone known more in some areas. If you think I have missed to cover certain aspect, pl be so kind to point out. Let's collectively learn more about our companies together, better.