Thread by @ValueEducator

#IntellectDesignArena Q3 22 concall Highlights 🏦💻

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@NeilBahal

Financial Updates -
1. The Revenue for Q3 were up by 33% at 508 cr
2. The companies gross margins are at 60% and has increased 39% YoY

3. EBITDA margins stood at 26.2% grew at 37% YoY, PAT grew by 25% YoY
4. The ARR (Annual Recurring Revenue) stood ar 683 cr
5. The Collection in Q3 were 485 cr, Collection days / DSO stood at 129 days
6. The company has zero debt and cash stands at 431 cr as of Dec 21.

7. SaaS Subscription revenue is up by 113% YoY at 89 cr
8. Licenses revenue is up by 23% YoY at 112cr
9. AMC stood at 82 cr, grew 11% YoY
10. On YTD basis 57% of the revenues are license linked and 43% is Implementation revenue.

Deals -
1. The company had 29 deal wins in the quarter including 10 platform deals.

2. Company claims to have a very healthy pipeline with 57 destiny deals (Deals at the final stage)

Business Updates -
1. AI/ML – Data Platform, Hyperscale Contextual/Corporate Banking Operating system, IDX and iTurmeric are the core technologies of Intellect Design.

2. The company claims to provide a proof of concept to its customers in period of 4 to 8 weeks ultimately improving the collection period.
3. The revenue recognition lag in terms of recognition is 3 to 4 quarters in case of cloud revenue

4. Products IDA and CBX are getting demand momentum
5. Sometimes a clients gets a license then shifts to cloud and again shifted back to license even such fluctuations happen with day to day business

6. The total headcount is close to 5000 employees and added around 400 employees during the quarter to prepare for 75 million quarterly run rate.

7. SaaS is still evolving, SaaS revenues can be as large as 2 million dollar annualized. Traditionally it is 20 thousand dollars for a typical player but for Intellect design a typical customer ranges between 250k dollars to 2 or 3 million dollars.

8. Investment cost is involved in order to make the same product ready for different geographies.
9. If the client does not update the platform, intellect design’s revenues are stuck due to lag from the customer end.

10. Company is experiencing the same kind of spend from the African client compared to a client in a developed country.
11. Promoter has not sold a single share in past 5 years

Stages of deal wins-
1. P0 - Deal awareness
2. P1 - Demo shown to the customer
3. P2- Multiple conversations with the customer
4. P3 - Request for proposal &
Then deal money recognition is done.

How are revenues booked-
There are multiple methods to book revenues, lets understand it with an example
Eg- 100 rs deal split in 50 rs license and 50 rs implementation and 10 rs AMC

i) Method 1 - when the deal license is separated from implementation and license is delivered on the day of signing deal 100% of the revenue is recognised in the books of accounts.

ii) Method 2 - It is recognized with proof of completion, where customer says he will do milestone based payments, so revenue booking depend upon the percentage of completion

iii) Method 3 - Intellect design signs with the customer, set up cloud for him and does billing as per PUPM - per user per month model
iv) Method 4- 7 year deal licence, here license is given for 7 years for lets say 1000 rs and is charged 130 rs per year for 7 years (AMC)

Tailwinds-
Going more towards Destiny deals, greater acceptability and referenceability improving the price, demand for digital transformation.

Guidance -
1. The company plans to grow at 20% on topline
2. Intellect design arena targets EBITDA margin of 30%

3. If the company is missing any capability and does not wish to build capabilities internally they might buy a small stake in a company providing that capability instead of completely acquiring the company.