Quess Corp (QUESS) Q1 24/25 earnings summary

Executive summary

• Achieved record consolidated revenue of INR 5,003 crore (INR 50,031.07 million) in Q1 FY25, crossing the INR 5,000 crore milestone for the first time, with 9% year-on-year and 2% sequential growth.

• Profit after tax surged 132% year-on-year and 14% quarter-on-quarter to INR 112 crore, aided by higher other income, lower interest costs, and exceptional gains from divestments.

• Headcount increased by over 30,000 associates, reaching 597,000, with 14% year-on-year growth and 160 new client logos.

• The company is progressing on a three-way demerger, with regulatory and shareholder approvals underway and new organizational structure implemented.

• Consolidated unaudited financial results for the quarter were reviewed and approved, with a qualified review conclusion from statutory auditors due to unresolved tax deduction disputes.

Financial highlights

• Revenue grew 9% year-on-year (11% adjusted for divestment) and 2% quarter-on-quarter (4% adjusted), reaching INR 5,003 crore.

• EBITDA grew 19% year-on-year to INR 184 crore, though declined 6% sequentially; EBITDA margin at 3.7% (up 33 bps YoY, down 30 bps QoQ).

• EPS for the quarter was INR 6.99, up 116% year-on-year and 10% sequentially.

• Net cash position improved by 11% sequentially to INR 258 crore, with gross debt reduced below INR 300 crore after repaying INR 100 crore.

• Received an income tax refund of INR 107 crore for FY 2018-19.

Outlook and guidance

• Margins expected to improve from Q2 as seasonally weak businesses recover and IT staffing momentum builds.

• Foundit (product-led business) is on track to break even for the full year, with 30% year-on-year sales growth and reduced cash burn.

• Management anticipates a strong fiscal year, with government and private sector job creation initiatives providing tailwinds.

• Budget initiatives and formalization of employment expected to benefit margins and volumes, with implementation from October.

• The company continues to claim tax deductions under section 80JJAA and expects these to be sustained upon ultimate resolution, supported by external legal opinions.