Release Date: February 14, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- R Systems International Ltd (BOM:532735, Financial) reported an EBITDA margin expansion of 200 basis points, reaching 16.7% for the year.
- The company was recognized as the Best Supplier of the Year by the Chamberlain Group and as a top 10 leading AWS partner to watch in 2024.
- R Systems International Ltd (BOM:532735) achieved significant partnerships and alliances, enhancing its status with Microsoft, AWS, Salesforce, and ServiceNow.
- The company launched new offerings, including modernization solutions and a Chaos Engineering integrated DR model, enhancing its service portfolio.
- R Systems International Ltd (BOM:532735) added key leadership positions, strengthening its management team and expanding its capabilities.
Negative Points
- Revenue growth was impacted by lower billing days in Q4, resulting in a 3% impact on quarterly revenues.
- The company faced geopolitical uncertainties and inflationary pressures, which affected revenue growth for the year.
- R Systems International Ltd (BOM:532735) reported a net profit decline to INR 131.2 crores from INR 140.1 crores the previous year.
- The effective tax rate increased to 31% due to non-deductible amortization expenses from acquisitions.
- Despite positive indicators, the company did not provide specific guidance for CY 2025, leaving growth expectations uncertain.
Q & A Highlights
Q: Can you provide insights into the ACV and TCV growth and any new client acquisitions in the ISV verticals?
A: Nitesh Bansal, Managing Director and CEO, stated that the ACV and TCV have grown significantly, with over 50% growth in deals generating over $0.5 million in revenue. The pipeline includes larger deals, and R Systems is now invited to more RFPs than two years ago. New ISV clients have been signed, including a significant ESG platform company and a Healthtech platform focused on behavioral health services.
Q: What is the strategy for partnering with mid-size clients in the GCC trend, and what services will be provided?
A: Nitesh Bansal explained that R Systems has experience setting up dedicated ODCs for clients, which can evolve into GCCs if clients wish to own part of the setup. The company offers end-to-end services, including entity setup and hiring key leaders, and aims to be a strategic partner in the GCC trend, which is growing in India.
Q: Are there any plans for acquisitions to enhance growth?
A: Nitesh Bansal confirmed that acquisitions are a core part of R Systems' growth strategy. The company is actively looking for opportunities that align with its focus areas and offer the right valuation. Being backed by Blackstone provides access to funding options, including using internal funds, borrowing, or capital infusion.
Q: How is R Systems addressing the potential impact of vendor consolidation trends?
A: Nitesh Bansal noted that R Systems is largely shielded from vendor consolidation risks due to its focus on platform and product development, which involves significant IP and ongoing R&D work. This makes it difficult for clients to replace R Systems without significant disruption.
Q: What is the outlook for revenue growth in CY 2025, and how does R Systems plan to achieve market-leading growth?
A: Nitesh Bansal emphasized that while R Systems does not provide specific guidance, the ambition is to achieve market-leading growth. The company is focusing on building capabilities and partnerships to capitalize on market opportunities, with a positive outlook based on leading indicators and client engagements.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
