Iris Business Services - Emerging SAAS Microcap

Stock Opportunities Untested - but worth a good look
22

This is an interesting company in a field that will continue to grow, though clients will look at regulatory compliance as cost rather than investment that will generate revenue - therefore not easy to replace existing players.

A couple of questions I am trying to get my head around -

  1. What does the depreciation consist of? Is it the cost of product development? It is significant amount.

  2. why is the revenue/employee so low? TCS, a pure play volume service player has nearly double their revenue/employee.

  3. Why is the management so conservative in projecting even a range of growth? They are not even answering questions around industry rate of growth. I am surprised they were not able to raise funds when there was glut in funding post COVID.

2 Likes
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  1. I am not sure, something to ask I suppose.
  2. Probably due to the upfront cost of developing and launching their SaaS Carbon product, TCS, on the other hand is a service-based company directly marking up x% over their employee salary. Operating leverage should play out here if they’re able to sell the product - basically fixed costs remain the same while sales increase
  3. Look at the con-calls, they have previously given a 20% revenue growth guidance over the next few years, though I feel the company should comfortably beat this (going by the Marketing JD on their careers page). For industry growth, you can look at other global players like Workiva. Not a direct comparison, since Workiva’s portfolio of products is much larger and their pricing is also much higher than IRIS Carbon
  4. Management has repeatedly said the reason for not raising direct funds is because they don’t want to dilute at such a low market cap. Additionally, the management can’t participate in a rights issue due to their low salaries. Look at their credentials, folks from Ivy League, IIM-A working at 45 lpa + bonus. The highest paid employee is their CTO.
5 Likes
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any update what is happening with the stock?

25

Hello All,

As per the presentation, Iris business services being a small company dealing with multi national stock exchanges, banks & financial institutions.

  • I have a query regarding the trade receivables are always higher as a percentage of PAT.
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I would like to stay away until the company reports continuous positive operating cash flows & healthy working capital cycle.

1 Like