A little late but thought could value add to the thread. Here are some AR 20 notes -
- InfoBeans at present caters to a total of 11 Fortune 500 clients as compared to
just 3 at the time of IPO in 2017.
- Presently, InfoBeans is a CMMI Level 3 certified enterprise software development
company providing Product Engineering, Digital Transformation & Automation
and DevOps services
- IB has offices in Indore, Chennai, Pune, Bengaluru ~ 825 employees
- Segments including distributed storage systems, multi- platform content delivery
- and eCommerce & web mobile platforms
- Product Engineering - most prevalent service offering, also known as outsourced product development. It is the process of innovating, designing, developing, testing, and deploying a software product. The intellectual property so created in the process is owned and further monetized by our clients.
- Digital Transformation - Automate manual process from invoicing to complex processes in mid to large sized companies - Automation & DevOps
- 90% of businesses are repeat businesses
- Presently it takes us anywhere between 6 to 24 months to reach the $1 million benchmark
- Low-balling price is not our strategy, we always go for the premium pricing model and focus on the quality of delivery of our services
- There are a lot of niche areas that are completely ignored by our larger peers, due to the sheer size of business it can generate. Such uncrowded niche service areas work well for us. In fact, some of our business practices, such as ServiceNow and SalesForce, have been built on the same principle. Larger players also have a certain friction in terms of adopting newer practices, adapting their team as per project needs.
- 75% of team being in Indore helps in cost efficiences. Will continue to do this so maintain the cost advantage
- So far, we have been able to grow our non-USA business to ~10% vis-a-vis ~0% three years ago.
- In the German market, almost all the business is generated on the back of ServiceNow offerings. Whereas in the UAE, it is mostly digital transformation services. The USA market on the other hand is ripe for all our offerings.
- We have also observed that it is relatively tougher to gain trust of a traditional business in Europe and Middle-East
- The financial results expected to arise out of the Philosophie acquisition will also appear a little late on our books.
On Philosophie
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Philosophie is a niche, high-end consulting company known for its rapid prototyping and innovation consulting capabilities. It was founded a decade ago by Skot Carruth and Emerson Taymor, based in the USA. At present, Philosophie has a total team of ~50 people based in New York and Los Angeles. Philosophie works with organizations such as Google, Amazon and American Express
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The recent acquisition Philosophie is more design centric - The CEO exhibits such characteristics from youtube videos, his LinkedIn Profile etc.
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Philosophie has done certain prototypes with PricewaterCooper (pwc) and thus indirectly for Google and other companies. They seem to be a relatively small studio shop
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Philosophie provides a complementary range of service offerings to InfoBeans’ portfolio. Design and UX consultation are the primary stages of software development, while we at InfoBeans offer software development & product engineering services. It is adequate to say that this is a backward integration for InfoBeans. A broad set of admirable clientele on both ends provides great opportunities to offer end-to-end solutions. This acquisition also provides Philosophie’s customers an offshore presence and hence the ability to offer software development at competitive rates.
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Philosophie clocked a sales turnover of $10.5 million in the year 2019, which was
above our initial estimates of $8.6 million during the signing of the term sheet.
The company reported an EBITDA and PAT of $0.91 million and $0.64 million respectively. Philosophie is also debt-free. After the acquisition, we have undertaken a lot of cost-optimization initiatives,
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In the longer run, hope to make Philosophie’s PAT margin in line with IB so as not to dent the consolidated PAT margins.
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The transaction has been structured into 4 tranches of cash payments. The first payment, 50% of the total consideration, was paid immediately after the deal in September 2019. While the subsequent payments are scheduled to be paid in 3 equal parts i.e. March 2020, March 2021 and March 2022. .
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Founders of Philosophie will be responsible for running the business till December 2021
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The Group has acquired 100% stake in Philosophie Group Inc through its wholly owned subsidiary InfoBeans Inc. wide share purchase agreement dtd 24/09/2019. The purchase consideration of the acquisition is in the range of USD 7.84 to 9.4 million, based on the performance achieved in the subsequent years. - ~60 - 70 cr
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Inorganic growth has been a concrete, well-defined strategy at InfoBeans. we’ve been looking for companies that specialize in niche IT space or are in a domain we aspire to grow into.
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InfoBeans did not have any domain expertise in high-end innovation consulting that has design and UX as core components. That is how Philosophie ticked the first box
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Through Philosophie, InfoBeans will be able to expand its competencies into ideation, design, and prototyping software development.
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Both run like sister concerns and not merged into one entity. Decision will be made post 2021
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Constant inorganic growth efforts & developments are something that would be a part of this organization perpetually.In future, we will be looking at acquisitions in the range of $10-$15 million. At present we are looking at inorganic growth opportunities only in the USA.