Happiest Minds Technologies Ltd Q1 2025 Earnings Call Transcript

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

Question: Manik Taneja - Axis Capital - Analyst : Hi, thanks for the opportunity. Just for the benefit of the audience, while you did allude through the number of days of consolidation of PureSoftware merger and acquisition that we made to get absolute numbers in terms of contribution from these entities. The second question was with regards to the comment that you made around certain one-off write-backs that you had in Q4. Just trying to confirm if that was called out as a gain in Q4? And what does this pertain to? 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 13, 2024 / 3:30AM, HAPP.NS - Q1 2025 Happiest Minds Technologies Ltd Earnings Call

Question: Manik Taneja - Axis Capital - Analyst : Sure. So Venkat also just some sense on the contribution of acquisitions in the current quarter, although the number of days integrated with the absolute contribution?

Question: Manik Taneja - Axis Capital - Analyst : No, Venkat, I was actually looking for the revenue contribution of the two entities, basically.

Question: Manik Taneja - Axis Capital - Analyst : Venkat, I'm looking for the relative contribution of the two acquisitions that were made because when I'm looking at your standalone numbers, those numbers still appear to be soft and that's why I was just looking to did absolute contribution of the two acquisitions for the quarter.

Question: Manik Taneja - Axis Capital - Analyst : Sure. And just a clarification with regards to the full year outlook that we've shared after Q4. I hope that stays intact both on growth and margins.

Question: Manik Taneja - Axis Capital - Analyst : sure. Venkat, you may also want to mention the absolute revenue growth we're expecting, whereby we are seeing that this will be our best ever quarter. You don't have to give the exact number, maybe above some --

Question: Manik Taneja - Axis Capital - Analyst : Sure. And if you can elaborate on the near term, how could you alluded to the lower number of working days coming in August, September. This is something that you might have known even on April 1 when we're forecasting because --?

Question: Manik Taneja - Axis Capital - Analyst : So that's nice to hear and wish you all the best.

Question: Apurva Prasad - HDFC Securities Ltd - Analyst : Yeah, good morning. Thanks for taking my question. Venkat, just another clarification to what you cited earlier. This change from 35% to 40% for FY25, coming down to 30% to 35%, is this only the timing of PureSoftware and Aureus? Or is this organic growth, which you see it to be lower basis the near-term outlook?

Question: Apurva Prasad - HDFC Securities Ltd - Analyst : Got that. And on the service lines, could you explain why there is some weakness in the analytics and AI and security solutions, especially when the GBS unit seems to be tracking well. Joseph Anantharaju - Happiest Minds Technologies Ltd - Executive Vice Chairman & CEO ¡ Product and Digital Engineering Services So let me take that, Apurva. If you look at PureSoftware and Aureus, more of the revenues come from digital infrastructure and applications, they have less of analytics AI and security. And that's the reason you see this going down as a percentage of revenues. But at an absolute level, all of these service lines have grown. And if you look at conversely, this is a selling opportunity. And as we speak, the IMSS business unit is very closely engaged with both Aureus and PeopleSoft on some of their existing customers to cross-sell infrastructure and security division. Again, another area that they're tapping -- another 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 13, 2024 / 3:30AM, HAPP.NS - Q1 2025 Happiest Minds Technologies Ltd Earnings Call two areas that they're tapping very aggressively around the automation, both business and business plus automation, RPA, as well as on test automation and on the analytics and AI side, where we have strong centers of excellence. So in summary, absolute numbers have grown for these service lines. As a percentage, it comes down because PureSoftware and Aureus have lesser revenues from these streams. It also affords us a cross-selling opportunity that we are actively working on.

Question: Apurva Prasad - HDFC Securities Ltd - Analyst : Got that. And I had another one on the top account, which has come back to growth in after three quarters. Any outlook that you can provide there?

Question: Apurva Prasad - HDFC Securities Ltd - Analyst : Right. And on margins, Venkat, you called out the headwinds for next quarter, but with all the pluses and minuses, you think lower end of the band which you have given out that, that can be defended?

Question: Apurva Prasad - HDFC Securities Ltd - Analyst : Okay, got it. Thank you. And all the best.

Question: Ankit - IDC ventures - Analyst : Good morning. So on the net profit, you called out aspects for onetime charges for this quarter. But if I look at overall for this complete year, do we think we can deliver growth on the net profit line over the course of the entire FY25?

Question: Ankit - IDC ventures - Analyst : Thank you. And secondly, I've just been coming across some advertising by contractors like [TPAM], which are hiring very aggressively in the Indian market or seem to be hiring in the Indian market. Is an increase in competitive intensity something that you're kind of seeing on ground, and is that something that we should be looking out for? Joseph Anantharaju - Happiest Minds Technologies Ltd - Executive Vice Chairman & CEO ¡ Product and Digital Engineering Services We really have not seen much of competitive intensity from some of our similar size or slightly larger resident. But what we are seeing is more of the GCC is getting established. And this has been a trend for the last 10, 15 years. And it's something that we have worked, and we are working into our strategy mind. 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 13, 2024 / 3:30AM, HAPP.NS - Q1 2025 Happiest Minds Technologies Ltd Earnings Call

Question: Ankit - IDC ventures - Analyst : Yeah. So thanks for the other opportunity. Just following up on the earlier commentary that, at this time we are not including the other income in the operating margin. So just for a clarification, what would be the operating margin guidance that we're giving of 20% to 22%. Does this not include the other income altogether?

Question: Ankit - IDC ventures - Analyst : Could you give the exact EBITDA margin this quarter are a little lower than the same quarter last year. And I do understand PureSoftware is a 40-day integration. But even if I look at from a 90-day perspective, do we feel the confidence that PureSoftware is actually [APS] accredited and also that it has a similar or a higher margin profile to our organic business? Or can we expect a compression in margins when that come?

Question: Ankit - IDC ventures - Analyst : Okay. Thank you.