CE Info Systems Ltd Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Chandramouli Muthiah - Goldman Sachs - Analyst : My first question is just a follow-up on the IoT business. Thanks for your earlier comments on that. So just trying to understand the interplay between the software part of the IoT business and the hardware part of the IoT business. You'd think that the hardware part is sort of an installed base on which the software bit can be annualized potential revenue there. This quarter, we've seen a meaningful pickup in software part of the business, which I'm guessing is slightly higher page 6 of 15 margin. So just trying to understand how the interplay between hardware installed base and software annualized revenue should ideally work in your plans going forward?

Question: Chandramouli Muthiah - Goldman Sachs - Analyst : \My second question is on the INR1,000 crores target that you've set for yourselves in FY27, '28. That would imply sort of mid-30s to maybe 40% annualized top line growth. Just looking through your financials over the past three years, it looks like one out of four quarters might be a little slower versus that run rate, possibly because it's a B2B business. So just trying to understand in FY25, how do we think about that slight lumpiness in the business? Is this the one-off quarter that you foresee in your business planning for FY25? And do you see the balance three quarters as being on track for that 35% to 40% growth target that you've set out for yourselves?

Question: Chandramouli Muthiah - Goldman Sachs - Analyst : =And my last question is around the Hyundai contract that you've discussed over the past couple of quarters. I think there was some commentary in the investor presentation for this quarter that there was a ramp-down in some of the older contracts. So just trying to understand, is the ramp-down REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 12, 2024 / 10:00PM, CEIF.NS - Q1 2025 CE Info Systems Ltd Earnings Call related to some of the older Hyundai business ahead of the pickup? And when exactly would you say the new Hyundai contract, I think, the INR400-plus crores that you mentioned over a period of time, when exactly is that flowing through into your business plan?

Question: Ikshit Naredi - Naredi Investments Private Limited - Analyst : So my basic question is on your Map-led business. Why are your maps not updated with current geographical changes? Like I think it's six, seven months old. My second question is why are your maps not working through Apple CarPlay or Android Auto? Can you please guide me with this?

Question: Ikshit Naredi - Naredi Investments Private Limited - Analyst : And my last question is if you talk about the Ola Maps and Google Maps, is there any pricing pressure on us or in future? Is it easy to switch your customers to the other companies like Ola Maps or Google Maps? Can you please comment on that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 12, 2024 / 10:00PM, CEIF.NS - Q1 2025 CE Info Systems Ltd Earnings Call

Question: Moez Chandani - AMBIT Capital - Analyst : My question was more on the partnership that we had with ClarityX. So just wanted to see, have there been any incremental revenues coming in from this partnership already? And also, how do the revenue and profitability sharing agreements work in this partnership?

Question: Moez Chandani - AMBIT Capital - Analyst : Okay. So all the revenue is accrued directly to MapmyIndia business? And secondly, on some of the new initiatives that we've talked about earlier, international markets, drones as well as consumers, any update in terms of growth there or any incremental revenue contribution on new projects that we've seen here? Page 9 of 15.

Question: Anmol Garg - DAM Capital - Analyst : A couple of questions. Firstly, on the last 2twoquarters, we are seeing increase in the technical services outsource cost. If you can indicate what this pertains to and what can be the normalized level that we can expect for this expense?

Question: Anmol Garg - DAM Capital - Analyst : Sure. Secondly, just a continuation on the Hyundai and Kia contract. So as contract comes in 2Q, can we expect a strong increase in auto revenue going ahead in second quarter? And also, in continuation of that, in this quarter, particularly, so if we include the IoT business as well, then it looks like the auto business actually grew ex of IoT despite the Hyundai and Kia impact. Is my understanding right over this?

Question: Abhishek Kumar - JM Financial - Analyst : First is on IoT. I just first want to understand, given that the fund approval has come just last week, and that means essentially almost half of Q2 also gone. So are we looking at a softer Q2 also? Or is there kind of a pent-up demand in hardware and we can make up for the lost time in Q2?

Question: Abhishek Kumar - JM Financial - Analyst : Second, on the SaaS revenue itself, my understanding was that it's kind of sticky on the installed base. So I was a little surprised at the sequential decline from Q4 level of the software revenues. So is it because some of the hardware where we have given a kind of annual subscription were not renewed? And if that's so, if you can just give us a percentage of retention?

Question: Abhishek Kumar - JM Financial - Analyst : No, I understand that. But if it was INR18.5 crores last quarter, that must be linked to some hardware, which is already sold. So a decline from that level, I'm just curious on that.

Question: Abhishek Kumar - JM Financial - Analyst : And one maybe last question. You keep saying that we should look at it on an annual basis, the revenue. So while we have a 35% to 40% kind of revenue CAGR to achieve our target, every year from now until FY27, '28, should we look at the growth in that ballpark of 30%, 35%? Or it's more like a back-ended revenue that we are looking at to achieve our INR1,000 crores target? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 12, 2024 / 10:00PM, CEIF.NS - Q1 2025 CE Info Systems Ltd Earnings Call

Question: Nitin Sharma - MC Pro Research - Analyst : So firstly, can you please talk about how big is this 3D digital twin project and how much time will it take you to complete it?

Question: Nitin Sharma - MC Pro Research - Analyst : Is there a rough timeline for this project or any project of a similar nature in your understanding? Based on your conversations, do you think that this whole flood situation is manifesting open opportunity for you from other state governments?

Question: Nitin Sharma - MC Pro Research - Analyst : And if I can squeeze in a small question. So the 40% EBITDA margin guidance you had previously given, is it intact, right?

Question: Nitin Sharma - MC Pro Research - Analyst : Yes, yes. Right, margin guidance.

Question: Vidyadhar Ginde - Sohum Asset Managers - Analyst : So my first question was regarding the annual report. You have discussed in detail about addressable market size in various areas such as drones as a service, drone solutions, defense, B2C digital maps and services, a lot of MEA markets and SEA, and given what is the addressable market size improvement slightly increased, slightly up to 2030. I presume this will also start contributing to revenue over the next few years and probably will contribute something to your revenue by FY27 and FY28 when you are targeting INR1,000 crores of revenue. So should we expect that we need revenue to come from these new areas to move to INR1,000 crores? Or if anything comes from these areas, it will take your revenue to a level higher than INR1,000 crores? And will you, at some stage, give us a road map of revenues from these areas also so that we have much better clarity on your overall revenue?

Question: Vidyadhar Ginde - Sohum Asset Managers - Analyst : No, no, what I'm saying is, for example, the road map which you gave us of your INR1,000 crores, certainly did not include B2C digital maps and services, in-app advertisement as well as going to MEA and SEA road maps. And I presume you will do that before FY27, FY28. So that was my question.

Question: Vidyadhar Ginde - Sohum Asset Managers - Analyst : So are you saying that these are unlikely to contribute significantly to revenue in FY27, FY28?

Question: Vidyadhar Ginde - Sohum Asset Managers - Analyst : So my second question was on this ClarityX thing. From the answer you give to one of your earlier questions suggests that in this partnership, the entire revenue will go only to MapmyIndia and nothing to ClarityX. Is that correct?

Question: Deepak - Sundaram Mutual Fund - Analyst : Sir, earlier, you made a comment on Ola Maps and said that the product quality is not up to the mark and with Google Maps, there is no pricing consistency. So can you please explain with a small example, let's say, taking an autocomplete or direction map APIs, what could be the pricing differential between, let's say, Google Maps or Ola Map or you on an API basis?

Question: Amit Chandra - HDFC Securities - Analyst : So my question is on the continuation of the competitive intensity that you have mentioned. So in light of the higher competition, how do we see the margins of the Map-led segment? Obviously, we have seen that it is costing around 50%. But with the higher investments that you're planning in terms of technology, can we see some contraction there over the longer term? Also, we have a very high market share in the auto segment. Have you ever seen the OEMs asking for any pricing discount? Or we believe that the pricing that we have is still very low and there is a scope of improvement there?

Question: Amit Chandra - HDFC Securities - Analyst : So is there any clause of any volume-based discounts? Now that we have the dominant market share, as the volume increases is there any chance of any un-operating-based discount that the OEM can ask, because we have seen that happening with other players and who was very close with the OEM.