hSenid Business Solutions (HBS.N0000) Q1 2025 earnings summary

Executive summary

• Q1 FY25 revenue reached LKR 466 million, up 30–30.5% year-over-year, with PeoplesHR Cloud driving growth and recurring subscription revenues comprising 84.9% of the segment.

• Exit ARR surpassed USD 3.5 million, up 50% year-over-year, and new deal closures totaled USD 357,482, with 87.5–88% from PeoplesHR Cloud.

• Free cash flow margin improved to -5% from -28% in FY24 and -7% in Q4 FY24.

• Net loss for Q1 FY25 was LKR 60–60.4 million, with EPS at (0.22) LKR.

• Churn rate remained below 5% and NRR at 101% for FY2024.

Financial highlights

• Gross profit margin improved to 43% in Q1 FY25 from 40% in FY24, with gross profit at LKR 198.6 million.

• Normalised EBITDA margin declined to -9.6% from -7.8% in Q4 FY24, mainly due to higher partner commissions.

• Staff costs increased to LKR 171 million from LKR 157 million last quarter, mainly due to annual increments.

• Net cash from operating activities was LKR 68.4 million for the quarter.

• Cash position at ~LKR 1.1 billion as of Q1 FY25.

Outlook and guidance

• Management expects continued growth momentum and positive results for the remainder of the year, with Q2 and Q3 expected to see higher sales closures and Q4 traditionally the strongest.

• Targeting profitability by end of FY25, with focus on improving EBITDA and free cash flow margins.

• Focus on organic growth, reallocation of IPO funds from M&A to market development, and continued investment in product and partner network.