Latent View Analytics Ltd : Indian Analytics For Data Of World

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Latent View Analytics Ltd provides analytics services such as data and analytics consulting, business analytics & insights, advanced predictive analytics, data engineering, and digital solutions. The company provides services to blue-chip companies in Technology, BFSI, CPG & Retail, Industrials, and other industry domains.

Latent view is the leading pure-play data analytics services company in India based on the expertise of the entire value chain of data analytics from data and analytics consulting to business analytics and insights, advanced predictive analytics, data engineering and digital solutions with a more holistic view of the business which is leveraged by its customers to guide business strategy and optimize spending decisions.

"Business segments;

  1. Consulting services, that involves understanding relevant business trends, challenges, and opportunities and preparing a roadmap of data and analytics initiatives that addresses them;

  2. Data engineering, which is undertaken to design, architect and implement the data foundation required to undertake analytics;

  3. Business analytics, which delivers analysis and insights for clients to make more accurate, timely and impactful decisions; and

  4. Digital solutions that it develops to automate business processes, predict trends and generate actionable insights.

"International Operations,

The company has a presence across countries in the United States, Europe, and Asia through their subsidiaries in the United States, Netherlands, Germany, United Kingdom, and Singapore, and their sales offices in San Jose, London, and Singapore.

"Deep relationship with their clients,

The Company has partnered with many of the largest enterprises in the world, and have worked with over 30 Fortune 500 companies in the last three fiscals. Their client base includes several marquee enterprises engaged in diverse industries, including Adobe, 7-Eleven, Uber Technology. They have held relationships with their top 5 clients of FY2021, for an average of over six years as of September 30, 2021, and have evolved from being an analytics provider to a strategic thought leadership partner.

"Presence across diverse Industries!

They provide services primarily to companies in Technology (63.25%), CPG and Retail (9.62%), Industrials (17.54%), and BFSI industries (9.59%).

"Asset Light scalable Business model;

The Company’s business model is supported by stable and recurring revenues, significant operating leverage and low capital requirements. The majority of their revenue is generated from long-term agreements. Thus, their capital requirements remain minimal with capital expenditures representing only 1.10% in FY21.

"Leadership Recognitions;

The company has consistently been recognised by the industry as a leader in analytics, including Forrester as a “Strong Performer” in Customer Analytics Service Providers in 2017 and 2019, and by Gartner in the Market Guide for Advanced Analytic Service Providers for Marketing in 2017. It has also been awarded “Analytics Company of the Year” by Frost & Sullivan in 2015 and 2017 and has been recognized by Deloitte in their list of Tech Fast 50 from 2012 to 2017. The other industry-leading recognitions include being awarded the Nasscom AI Award Winner in 2018 for predicting vehicle risks across 108 countries by modeling driver behaviour using sensor data,

"Concentration of Revenue;

The top five clients contribute 54% of revenue — Adobe alone accounted for over 20% in the quarter ended June. It gets 90% of revenue from the U.S. and plans to invest the proceeds from the IPO to expand in the U.K., Germany and the Netherlands,

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Do note that the company research reports by 3rd parties are 3+ years old which is a long time in the IT world. all date from 2015,17,19.

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® Risks Involved,

✓Client concentration : The company’s top five clients (all from the technology industry) accounted for 54 per cent, 53.7 per cent, and 54.7 per cent of total revenue in FY21, FY20, and FY19, respectively. Given that the company’s growth strategy hinges on its plan to increase its scope and service with its existing clients, any trouble in maintaining its relationship with these clients could put LatentView Analytics in a spot of bother.

✓ Intense competition : The market for data and analytics is very competitive, and it will only increase in the future, given the importance and use of data. The company faces competition from large and emerging enterprises, each vying for an increasing share of the customer’s wallet. To keep itself competitive, the company has to invest in all aspects of business, like, personnel, research, and development. Moreover, the drawback when competing with larger enterprises is the availability of financial resources and the broader and diverse service offerings of such enterprises.

✓ Constant updating of technology and digital solutions : The nature of the business is such that LatentView Analytics cannot afford to get complacent. It has to constantly keep abreast of the latest technologies and effectively use them for its clients. Moreover, it is susceptible to introducing new and better services by its competitors, which may make its offerings obsolete. Any defects, errors, or failures in the company’s offerings may also jeopardise the market acceptance of its products.

✓ Forex risk : As the company generates more than 95 per cent of its revenue from outside India, it is exposed to foreign exchange-related risks.

∆ Disclosure: Nothing on this website should be construed as investment advice. Please consult your financial advisor. We are not SEBI registered Analysts/Advisors. We are not accountable for any loss or gains that might occur to you from this or any analysis on the website.

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∆ Disclosure :

We owns sizeble piece(>10%) in our portfolio since the IPO,

Nothing on this website should be construed as investment advice, Please consult your financial advisor.

We are not SEBI registered Analysts/Advisors.

We are not accountable for any loss or gains that might occur to you from this or any analysis on the website.

The company is having cash and cash equivalent _ Bank balance to the tune of 221 crore. The details have not been provided as according to them it is not mandatory. The C&CE+ Bank balance is more than their annual expenses. I am unable to understand why it is not invested in other income generating securities.

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Inprite of they were raise 400 cr. Odd !

Might be they have acquisition plan on table & C&CE fund hold as opportunity cost, not sure… !

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yes, the company has mentioned in object of offer that they will utilize net proceed from offer in inorganic growth in next three years. So it is required in next three years.

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Data & Analytics Industry Report 2021.pdf (5.4 MB)

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°Revenue Components,

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whether the company proposes to grow by acquiring other companies
if yes what is the business acquisition proposed by the company

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While there is no doubt that the opportunity size in data and analytics space is huge, I don’t see anything different with latent view analytics that others can’t replicate for it to command such high valuations. They may have the first mover advantage when it comes to data & analytics and case studies built up on their current client relationships but whether and how far they shall be able to hold the forte is a key question. This also gets corroborated by the fact that the company is looking for acquisitions as a growth lever so early in the game.

Some reports of comparison from Gartner: -

P.S. This is not to be treated as any buy/sell recommendation.

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It would be good to keep a close watch on their consulting side of the business to see if they are able to make a mark there. None of the Indian pure play names have been able to; let alone dislodge Accenture.

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Results include 28 Cr other income from US gov compensation package (One time).
The attrition rate is 20-22%, very high.
Co seems will face challenges in revenue growth. - My opinion.
Very expensive to justify the results. - My opinion.

Disc: I am in the IT field. Not invested, tracking closely for investment. Views are mine, not recommendations and wrong many times in past.

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Latent View Analytics Q32022 Conference call Highlights

:eight_spoked_asterisk: Numbers Update :eight_spoked_asterisk:

  1. The revenue for Q3 was 107 cr up by 13.7% QoQ an 37.7% YoY

  2. EBITDA stood at 32.2 cr for Q3 and EBITDA margins stood at 29.9%, giving the industry highest margins.

  3. PAT for Q3 was 49.9 cr and PAT margins stood at 44.2%

  4. Technology sector contributes around 67% of revenues

  5. CPG Contributes 15% of the revenues and other contribute around 18% of revenue.

  6. 6 clients were added in this quarter

  7. Utilisation stands around 80% - 85%

:eight_spoked_asterisk: Business Updates :eight_spoked_asterisk:

  1. Latent View Analytics is a pure play Analytics company and also little towards consulting and data engineering, Business analytics is 60% of the business.
  2. The company majorly work with fortune 500 companies
  3. Around 95% of the revenues for the company comes from US, the company will be increasing its footprints in Europe going forward
  4. The company tends to work at the front end of the value chain, the work company does is to solve fuzzy problems for its clients.
  5. Latent view faces competition from leading consulting firms like Mckinsey and other IT companies with analytics capabilities.
  6. Growth in the quarter was due to strong demand, technology business led to overall 58% of the growth in Q3
  7. Q3 tends to be the strongest quarter for the company because the majority of its revenues come from the US. Companies there have their last quarter hence clients tend to increase IT spend.
  8. Q3 contributes around 28% - 30% of revenue for the entire financial year
  9. The company will be looking for inorganic opportunities going forward
  10. The company also helps its clients to move from perpetual licensing model to subscription based model Eg- Adobe was one of the clients whom they worked with for the same.
  11. First client that was acquired in the US went from 0 revenue to 6 million, highest the company has clocked is 0 to 10 million in the period of 4 years.

:eight_spoked_asterisk: Revenue recognition :eight_spoked_asterisk:

  1. The company recognises its revenue in two ways -
    A) Managed services - 70% - 80% of the business is through managed services
    B) T&M - 20%- 30% of the business
  2. Managed services is a fixed price charged per month to its clients based on the complexity of project.
  3. Managed services business has more flexibility and consistency of revenues also the client engagement is higher here.

:eight_spoked_asterisk: Employee updates :eight_spoked_asterisk:

  1. 243 employees were added in this calendar year, total number of employees stands around 900 employees.
  2. Company gave increments to 80% of its workforce, wage hikes were 16% - 17% for the employees in India and around 4% hikes for employees in US.
  3. The onsite offshore ratio stands at 1:5
  4. Attrition stands around 30% higher as compared to previous year, observing reduction in attrition with wage hikes and other employee programmes.
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