Quess Corp (QUESS) Q4 22/23 earnings summary

Executive summary

• FY23 revenue rose 25% YoY to ₹171.58bn, with all platforms growing over 20%; year-end headcount reached 511,000+.

• Reported EBITDA fell 6% and PAT fell 11%, reflecting ₹0.95bn of Product Led Business investment; excluding PLB, EBITDA rose 7% and PAT rose 28%.

• Divested the 53% Simpliance stake at an enterprise value of ₹1.22bn, recording a consolidated exceptional gain of ₹535.03m.

Financial highlights

• Consolidated revenue from operations was ₹171.58bn versus ₹136.92bn in FY22; reported EBITDA was ₹5.86bn versus ₹6.23bn.

• PAT was ₹2.23bn versus ₹2.51bn; diluted EPS was ₹15.04 versus ₹16.18.

• Reported EBITDA margin was 3.41%, down 114 bps YoY; excluding PLB investment, normalized margin was 4.10%, down 45 bps.

• Operating cash flow was ₹4.66bn versus ₹5.54bn; OCF-to-operating-EBITDA conversion was 71%.

• Consolidated revenue grew 25% while headcount added 74,000, up 17% YoY; this was the second consecutive year of 70,000+ net additions.

Outlook and guidance

• North American staffing was expected to reach breakeven by Q3 FY24; the first customer billings were recorded in Q4 FY23.

• Management targeted double-digit ROE in FY24 and a longer-term, sustained ROE of 20%; FY23 ROE was 8.4%, or 12.39% excluding PLB growth investment.

• FY24 priorities include expanding manufacturing and infrastructure staffing, pursuing higher- and mid-margin IT skills, and growing US professional staffing.

• Facility management growth focus included healthcare, logistics and public infrastructure; security priorities included margin improvement and scaling electronic security.

• Foundit planned to build on product investments as they began contributing to revenue, while progressing its shift from job board to talent platform.