Each CEO is more like a business segment head for IGTB, IGCB, SEEC and IRTM.
One person alone cannot manage all the segments wherein each segment further has multiple product lines. And each business segment is different in the sense that they are different stage of their lifecycle and thus requires different kind of handling, plus the focus geographies for each business segment could also be different. Like for SEEC, US is a focus geography.
Is there any document or video that gives some detail about Intellectâs products? I canât find much detail in the annual report or company website about their products
@saurabhsadhu Please go through this whole thread( where u will find lot of research reports and valuable industry/expert feedback about IDA, it will be like a movie unfolding) along with company investor presentations may be last 16/20 quarters, u will definitely know what they are trying to do.
Also read lasted presentation and Concall Q4FY22, where Arun Jain tried to explain all the pain points/struggles and overcomes.
@saurabhsadhu You can also check out this highly informative twitter thread by @sahil_vi. There might not be much information about the individual products as such, but the overall business model & thesis have been explained in an intuitive fashion.
Thanks, @abhicsmnnit. I read the thread, it answered a lot of my questions. But how do you compare Intellect with its peers - Oracle, Temenos, and Finastra? Their products are used by businesses and hence are not as reachable. How do you know they are addressing the right problem in a better way than their peers?
Not sure, if this will help but my firm uses Intellectâs products (Transaction and Risk Management) and I had a conversation with colleagues and it seems it is a decent product however, they donât have any experience with any of competitorâs product, so canât compare.
As far as I understood, each of the dominant players have similar kind of products with continuous work on customizing product as per new requirements. Pricing and Referenciability are the major piece of equation, which is the reason each player is dominant in one or the other segment.
I think this is a non-issue. First, he holds 0.27%. Second, he has disposed off 0.02%, which is 7% of his overall shareholding. People can have needs, career aspirations or what not. Not every ESOP selling needs a merit IMO.
That does include senior folks of various segments within the business. Major thing should be the company CEO, company CFO, any board of directors.
I attended the Investor call today. Arun Jain continued with his storytelling fluency.
New things: The presentation broke out the traction by Geos this time, and the Last 12 months run rates.
Prabal Basu (Advisor to Arun) did a nice Summary of the company focus and plan ahead
IP led company- Monetization of that takes time. Focus on spread right now, margins later.
Calibrated growth, in selected markets, with predictable profitability.
Growth is expected to be market leading- ahead of competitors
Needs continuous investments - have to come from current cashflows.
Revenues & Margins
1. Revenue traction is good.New products are doing well. Healthy demand continues.
2. Margins are under pressure, EBITDA margin was 21.6% compared to 24.5 a year ago.
3. Margin guidance is now expected to be 20-25 % and not 25-30 % that they had projected earlier.
4. Reinvesting 5 % , instead of raising capital. Margins will be flat. There will be costs on POC, new pursuits etc.
5. Q2 will see salary hikes, plus new headcount. Q3/4 costs should flatten. This should set up for 90 Mn run rate.
6. 100 Mn run rate should be achievable in next few years, ad margins should be 30-35 % at that level.
7. In 2024 margins are expected to go up.
Products & Platforms
Looking at growth coming from Platforms now.GEM Platform- has grown to good size, now the growth will be closer to 40-50 % annually.Exponent Platform- gaining traction
Platform revenues - B1(Licence - One time ) +B2 (Annual subscription) + B3 (Transaction revenue eg GEM)
Licence Linked Revenue: Licence + Platform + AMC
Annual recurring revenue: Platform( B2 + B3) +AMC
R&D Cost - 70 % is expensed, and 30 % is capitalized
Competing with Temenos and OFSS on Core banking. And Temenos and Thought Machine.
Geos:
1. Curated calibrated growth across geos.
2. North America- 50 % growth expected. Canada is established now across multiple products.US is very small base, mostly iGTB and iSEEC.
3. Europe- Core Banking -Legacy replacement opportunity is big. Germany is main market.
4. Mid East UAE 7 of 9 banks and Saudi 5 Banks are customers already , expand there.
5. Africa- Inbound requests coming in, pull is working due to reputation.
6. Asia- Smaller countries like Vietnam, Malaysia, Indonesia etc well penetrated, now looking to deepen the presence. office in Vietnam.
People: Attrition/Salaries
1. Attrition is now dropping since May.
2. Senior level attrition is managed, no concern there.
3. Add about 800-900 net headcount, similar to last year.
4. Salary increases are mostly in Q1/Q2, but it is a continuous rotation cycle.
5. Salary Hikes are higher than last year.
Most people donât know difference between different IT companies. There is huge difference between Product Company and Project Based IT companies. Both make money but Project companies need to keep winning more and more projects to keep the ball rolling.
While Product companies especially with Sticky Product you need a door to enter then it becomes recurring revenue for almost eternity.
Intellect is product company. Once a Bank chooses their offering, they are locked in as switching cost is huge.
Had a chance to see below Gartner Magic Quadrant report where they dropped IDA from coverage.
Intellect Design Arena was dropped because its products did not meet the current inclusion criteria. This can have impact some big deals in 2022 as many are going through Gartner quadrants while making the decisions.
Active Market Presence Criteria: Intellect Design Arenaâs Intellect Digital Core didnât meet the inclusion criteria for the minimum net new production clients going live between 1 January 2019 and 30 December 2020. All criteria applied only to retail core banking installations, evaluated with a tier analysis and excluding simple updates (see the next section for further detail).
So the decision is based on somewhat old data .
Also,the link mentioned that they did not consider islamic banking system projects.IDA has a large number of those as well. So while Gartner has dropped them on a technicality it does not necessarily mean IDA has done badly .
Also IDA has many more products nowadays.