- What is Majesco bringing to the table? Is capgemini going to recommend tweaks to majesco software that’ll enhance the experience and produce incremental business?
- Will there be revenue sharing or how does this partnership work?
Partnership (i assume) will focus on improving the products portfolio
2) majesco will have reach with more and more insurers globally which are presently engaged with capegimini insurance(cross sell), dont know how much majesco can cross sell since capgemini is also partner with duck creek and guidewire.
3)markets is also not regoicing so much with this partnership, more details to be seen
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Can anyone share the us concall transcript
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Key highlights from US con call.
-Majesco has a mediocre result for Q1. Subscription revenue is showing upwards trends YoY, but it is down QOQ, although not significantly.
- IBM deal is likely to get implemented imminently. Based on what management has hinted earlier, I thought it might be in Q1 but looks like it is still not yet ready to go live. However, management seemed optimistic. However, they have been optimists for ages in the cloud world.
- Exxae margin is similar to Majesco, so it is not margined accretive as well as margin dilutive.
-Current quarters has quite a few one-off expenses- Nasdaq investor day/annual customer day event. So has affected the net income for the quarters.
-Cap Gemini partnership. It is still in the planning phase for different deals. Considering the slow nature of the deals, it will a while before deals start flowing through them. Also, the nature of the deal is such that Cap-Gemini will be implementing the solution means that Majesco will not observer any meaningful contribution in the first 1 year of the go-live because the license revenue in the first year will be very low. I think this is a medium to long term opportunity for Majesco.
My impression
- IBM would be a game-changer, but when it is as clear as mud. Hopefully, in Q2/Q3 they go live. Generally, cloud deals are faster implementation and considerin that Majesco has been working on it for all most 2 years and yet to go live, does not sound great. It does not look like the problem from Majesco side. But things may change once IBM goes live.
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The Indian numbers are disappointing, especially the bottomline.
USD reporting profit is up yoy but Indian reporting profit is down on consolidated basis.
The USD/INR conversion of revenue for instance comes to 69 while for taxation the rate is something vastly different.
Plz can anyone throw some light on why the US and Indian numbers are diverging? Is it GAAP vs Ind AS?
Till now didn’t found any good answer of your question, still finding, will try to ask this in next conference call,btw you can also contact investor relations of majesco india unit to resolve your query
IBM is stepping up marketing efforts about the insurance platform on IBM website. Looks like the going live is imminent as the CEO said in the US call.
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Please explain, there was a issue in one account where there was a on premise upgrade, so i am not wrong has the client migrated from cloud to on premise lisence, or anything else? What issue they are talking about?
Secondly why indian reported numbers are divergent, depreciation part i studied and understood, but taxation part still not able to understand, why profits were lower?
I dont know whether u have got the answer about the same. I just got on the page now. As can be read from the investor presentation and concalls, they have moved to SaaS model of revenue. So they will make the money if the client makes the money. Upto a certain amount majesco will make a minimum revenue per year and once the company goes breakeven in terms of underwriting policies, majesco will earn as the company underwriting policies grow. So the future revenue is not an issue… The model has stickness to it in terms of revenue
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Quick Notes On US Call.
- The business was subdued- PAT was $0.9 million as compared to $1.3 million in Q1.
- UK impact on business. This is normal and not surprising. It is always easy to attribute revenue reduction to the UK and Brexit in the current context. Not sure to what extent it is true.
- Large deal has completed development. I think they are referring that IBM MetLife deal and indicated that it might go live in Q1 of next year. They have not elaborated on this further.
- P&C is contributing 78%, and L&A is contributing 21%.
- I was on the call, but the operator did not take my call and closed the call. As a result, I could not ask a question. The good part is there are having a con call for Majesco limited next week, so maybe I will get an opportunity to ask a question.
Overall, I think management is mincing words and using an adjective like the “solid result”, which does not look solid from any angle to me at least.
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Clearly the results are concerning, especially lower revenue and higher cost of sales. More details required.
The executive CEO in the previous calls too came across to me as someone with no clear answers…back then he was a newcomer so that was still ok.
In the previous call, some analysts asked interesting questions. Lest they clear things, this will become a value trap.
Promoting good news is something they’ve been doing well since the past year, but good PR needs to be backed with numbers.
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Did i heard right what adam elster said in concall that they will start earning revenue from there largest customer from current running quarter only!
I do not recall or remember the CEO saying this. When someone asked him the question, he just brushed it off, by indicating that IBM may go live some time in next couple of quarters(may be).
I, however, am beginning to doubt about their IBM deals. I am not sure why it is taking so much time for them to go live. Even the management is not forthcoming about it going live. I hope I am wrong about my doubts.
Parag
This quarter we were very pleased that our single largest customer completed their initial project
implementation and have now moved into pre-production with their new system.
Unfortunately, the one-time financial impact in the quarter limited cloud implementation
services and minimum subscription revenue. *> This impact will not have the same affect in Q3 as *
*the systems go into productionand we begin generating
cloud subscription revenue
from this *
relationship.
Parag sir i have taken this from conference call transcript here last he is saying we begin generating revenue in q3
This is from US call—
ADAM- …As far as our largest customer, we completed the project and with all large projects, there is generally an extended period of testing in pre-production until they go live, but we anticipate that in the near term, but the good news for our business model is we were able to see an increase in our cloud revenue despite not having that single customer. So with a much healthier mix of customers in the cloud revenue this quarter.
Howard Brous – Wellington Shields – Analyst
Can you just be a little bit more granular in terms of that customer? Do you think by the end of the year or certainly calendar first quarter next year.
Adam Elster – Chief Executive Officer
I think that’s a realistic expectation.
–
I do not think they are going live in Q3. If at all they are going live, it will be in Q4/Q1. But look at the tone of it, it is subdued. The same can be observed in Indian call. IBM is Majesco’s biggest deal, they should be excited, but I did not get the same impression on the con call. If they are excited, they would have elaborated in bit more details.
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I’m yet to understand the role of Mr.Elster as the CEO and what he’s bringing to the table. I believe that even without him, the deals would’ve been won. Can someone throw more light on his deliverables apart from managing the company? Of course he has a colorful CV.
Among different ones, the Ullisco win is impressive.
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Mr Ketan Mehta has crated Majesco pretty much from nothing and he has been managing company for many years. He is not young anymore, so he might have thought of passing the baton to a professionally managed CEO- hence Mr Elster.
Generally Insurance deals take 12/18 months to materialize, so what deals which we are seeing, may not be initiated in Mr Elster’s tenure. However, next year will see how much improvements he brings to the business.
I reckon Majesco wanted US focused management hence they brought US based CEO and CFO. Slowly they are moving away from the India headquartered business towards US.
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Majesco (US) has repurchased shares worth $16 million from Mastek (UK).
I am not sure this is in the best interest of Majesco India shareholder for following reasons.:
1- At the current price of $7.98 per share, Majesco(US) was valued around $337 million. Majesco India is valued at 1135 cr (CMP of 400).
Considering Majesco (India) already own 69% of Majesco (US), I would have preferred Majesco buying shares of India company at 1135 cr Market cap than buying Majesco US at $335 million market cap. Agree, the seller was Mastek (UK), which is their own company in earlier life, but it still does not seems rational to buy an expensive company. Further, this additional spending of $16 million will not bring them a new client, new revenue.
2- In Jan 2018, Majesco (India) raised around 250 cr (approx $35 million) mainly to propel them for inorganic acquisition. In two years, they have acquired a company (Exxae) at around $11 million. With this current investment of $16 million, they have already used approximately $27 million of the money raised. The remaining $8 million, they need to keep it on the balance sheet as the future client want to buy a product of companies which have a strong balance sheet. Further, Majesco at most generate $3-4 million profit a year, means they have to very careful for using the cash they have. As a result, they are unlikely to make any acquisition in the insurance space in the immediate future, unless the acquisition is stock-based or raise further equity. I have serious doubt on capital allocation policy of the new management.
I would have preferred Majesco to invest the money into enhancing existing capabilities in P&C (e.g acquisition). Guidewire has made an acquisition of more than $1 billion in the last few years. On the contrary, Majesco has done only one purchase and that too in L&A space, which contributes only 20% to Majesco revenue. The segment which contributes around 80% of Majesco revenue has not benefited from the money raised, which is a concern in my view.
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