TeamLease Services (TEAMLEASE) Q1 24/25 earnings summary

Executive summary

• Consolidated revenue for Q1FY25 grew 19% year-over-year to ₹2,594 crore and 6% sequentially, with group headcount up by ~12,700, offsetting NEEM trainee attrition.

• EBITDA declined 16% year-over-year and 40% sequentially to ₹22 crore, mainly due to EdTech seasonality, delayed university billing, and annual appraisals.

• Most headwinds, including NEEM trainee offboarding and HR services investments, are now behind, positioning the business for margin and profit growth from Q2 onward.

• Degree Apprenticeship trainee headcount grew, offsetting NEEM loss, driven by NAPS and WILP programs.

• 187 new client logos were added during the quarter.

Financial highlights

• Operating revenue reached ₹2,580 crore, up 19% year-over-year and 6% sequentially.

• EBITDA margin compressed to 0.9% from 1.5% in Q4FY24 and 1.2% in Q1FY24.

• Profit after tax dropped 25% year-over-year and 31% sequentially to ₹19 crore; PAT margin at 0.7%.

• EPS (consolidated) at ₹12, down from ₹16 in both previous quarter and prior year.

• Free cash balance improved to ₹320 crore after an interest refund of ₹115 crore; net cash position at ₹439 crore as of June 30, 2024.

Outlook and guidance

• Management expects EdTech business to post substantial growth in revenue and profitability for FY25 as university signups and student enrollments recover.

• Margin and profit expansion anticipated from Q2 as negative impacts subside and operational efficiencies improve.

• Labour code implementation and government employment initiatives are expected to drive formalization and productivity.

• Specialized staffing and DA businesses expected to contribute positively as market conditions stabilize.