Vice Chairman and CEO, Rahul Kanodia, shares insights about Q1FY24 in a special interview with Dalal Street Investment Journal.

Sep 14, 2023 4:34:50 PM

In Q1FY24, the company’s revenue soared by 19.64 per cent from Q1FY23 to Rs 391.1 crore, while the net profit surged by 28.13 per cent from last year’s same quarter. What were the contributing factors to the company’s strong performance?

We have started the year on a strong note with respect to both revenue and profitability. Our revenue stood at Rs 391.1 crore which is a growth of 19.6 per cent on a YoY basis. Our EBIT stood at Rs 58.6 crore compared to Rs 39.3 crore in the same period last year. This translates to a growth of 49.2 per cent in our EBIT which is a very healthy growth.

In Q1 of FY’24, we added 14 customers, most of them are in the US and European markets. We have done well in all the three segments in which we operate - Digital Technologies, Digital Operations and Digital Experiences. In Digital Technologies growth was on account of revenue accrual from a Metro project as well as the addition of clients in the BFSI domain. In Digital Operations we have seen strong business growth in our Digital Content business. In Digital Experiences, we have seen strong business growth in existing clients. Overall, we have a very healthy deal pipeline and conversion. All these factors have contributed to the company’s strong performance.

The Digital Operations segment witnessed a growth of more than 13 per cent on a YoY basis to Rs 166.95 crore. What were the contributing factors for the growth? Also, what is your outlook on the Digital Operations segment of the company for the next few quarters?

Our Digital Operations revenue was at Rs 167 crore, which is a growth of 13.2 per cent on a Y-o-Y basis. Digital Operations EBIT margin was at 20.1 per cent and its contribution to total revenue was 43 per cent.

Digital operations witnessed expansion mainly on account of growth in the Digital Content business. We also added new clients in the operation business which contributed to growth. We see the Digital Operations segment maintaining similar momentum in the coming quarters.

The company’s BFSI vertical contributes 25 per cent to the total revenue. What is your outlook on this vertical for the next few quarters?

In terms of industry footprint BFSI vertical continues to remain the largest segment for us contributing to 25 per cent of total revenue. At the industry level, there might be a slowdown but as far as Datamatics is concerned we have not seen any slowdown and on the contrary, have seen a robust pipeline in BFSI.

How does the company’s collaboration with the Memphis Area Transit Authority (MATA) to launch the GO901 Smart Card System, fit into the long-term objectives of the company?

Datamatics is the only Indian company to have a highly evolved Automatic Fare Collection (AFC) system, Smart Gates, and Contactless Gates service offerings. Over the last 25 years, the Company has been instrumental in successfully executing over 30 marquee projects in tier 1 metropolitan cities across the globe, including Dubai, Hong Kong, London, Melbourne, etc. We see a sizeable opportunity for AFC in the US and emerging economies around the world, including India.

At Memphis Area Transit Authority (MATA), Datamatics has seamlessly integrated its AFC platform, TruFare into the GO901 Smart card solution, facilitating effortless ticket purchase across the counter, loading of the Smart Cards and enabling contactless travel. Additionally, Datamatics has developed commuter-friendly kiosks which are strategically placed throughout the city for hassle-free card top-ups. This engagement gives us a good platform for promoting our solutions in the US market, which is a key focus market for the company.

In India, Datamatics has recently implemented an AFC and mobile ticketing system at Mumbai Metro Line 2A and 7 which is estimated to be used by over 1.3Mn Mumbaikars daily. Datamatics has also implemented AFC in locations such as Kolkata, Lucknow, Katra in Jammu, and New Delhi.

In Digital Experiences, the team has built an AI-enabled Customer Service Chatbot for L1 and L2 support, delivering a high-level omnichannel customer experience. What is your outlook on this vertical for the next few quarters?

A shift of focus to ‘Tech-enabled Experience Management’ from ‘Customer Support’ has been the growth lever of the ‘Digital Experience’ pillar. This pillar focuses on improving the front-office engagement of our clients’ customers. The past 3-year CAGR in Revenue and EBIT have been beating average industry growth. Our expertise in managing Customer Operations and deriving insights on consumer behavior through deep analytics, endorse our promise of delivering ‘Customer Experience the way you want it!’

With offices in India, the Philippines and the USA, the Digital Experience team covers global time zones and languages. The headcount has more than doubled at a 26 per cent CAGR over 3 years. Our state-of-the-art, modern, omnichannel, and multi-lingual contact centres can drive customer satisfaction and loyalty, backed by our IT prowess and superior hiring practices and superior productivity.

Besides providing AI-enabled inbound and outbound customer management solutions, Digital Experience offers advanced analytics, customer journey management, NPS measurement, mystery audits, data visualization and digital proctoring across the entire CX continuum

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