eClerx Services (ECLERX) Q1 24/25 earnings summary

Executive summary

• Q1 FY25 operating revenue reached $93.5 million (INR 7,819 million), up 11.1% YoY and 1.5% QoQ, with all business segments showing positive quarter-on-quarter growth, led by financial markets momentum.

• Margin decline in Q1 attributed to wage hikes and full-quarter impact of management hires; margins expected to improve from Q2 onwards.

• Net profit for Q1 FY25 was INR 1,116 million, down 14.5% QoQ but up 5% YoY.

• GenAI360 platform received two major technology awards in 2024, highlighting innovation in AI-driven services.

• Unaudited consolidated and standalone financial results for the quarter ended June 30, 2024, were reviewed and approved by the Board and Audit Committee on August 13, 2024.

Financial highlights

• Operating revenue in INR was 7,819 million, up 1.7% QoQ and 16% YoY; consolidated net profit for Q1 FY25 was INR 1,120.45 million.

• EBITDA was INR 1,873 million, down 14.3% QoQ but up 7% YoY; EBIT was INR 1,556 million, down 15.9% QoQ but up 6.2% YoY.

• PAT margin at 13.9%; EBITDA margin declined 437 bps QoQ due to wage hikes and S&M investments.

• DSO improved to 81 days from 84 in the previous quarter.

• Basic EPS for Q1 FY25 was 23.13 INR (consolidated); total cash and cash equivalents stood at INR 10,893 million.

Outlook and guidance

• Margins expected to recover from Q2, with improvement starting immediately and following a linear trend through Q4, assuming stable conditions.

• Margin guidance maintained at 24%-28% for FY25, with expectations of double-digit revenue growth.

• Sequential growth in EBITDA and PAT anticipated for the remainder of FY25.

• No specific revenue growth guidance due to business volatility, but double-digit growth is targeted.

• Management highlighted forward-looking statements are subject to risks and uncertainties, including integration of acquisitions and regulatory/economic conditions.