Found this company interesting as the management seems to know their stuff. Ended up going through the entire recording. Took some running notes, sharing it below.
For their IP led products, they get around 25% of the rev share. Going forward this share will only increase. IP component revenue is recurring every year, in addition to MS component revenue and then services component.
Risks – Need to strengthen international sales, gain more business outside of India. Keep cost of talent low.
All customer relationships are multiple years (5,10 yrs). And they are always increasing their business with Alletech
Adding a new Sales head in Toronto, have a sales office in Dallas – will continue to focus on sales as opportunities open up
In 2 quarters will bring solution on MS cloud to make MS co-sell ready. This is both in international and Indian market. Will leverage MS and Salesforce relationship to sell more, both in enterprise space and corporate managed accounts.
Key differentiator – 1. They are development partners and not just implementation partners for MS business applications, they have their own engineering teams working closely with MS because they know the products in and out. 2. Scale and experience – Having done more than 800 projects bodes well for clients’ confidence in them. 3. 97% business comes from existing customers. Customer life time value is key and focus will be this.
New deals – sophisticated , large footprint solutions so organizations take time to absorb and scale. Once finalized, they tend to go on for years. Typical sales cycle is 6 months (average). Customers don’t come to buy MS products, they want customized solutions which Alletech provides. Ball park of typical large customer revenue is 1Crore.
Started rolling out in international markets as well like Malaysia, Dubai, Antigua.
I liked the way management answered most of the questions – showed their core competence, focus on business, refused to speculate on matters of stock market and share price, seem focused on large term client relationships rather than short term profits.
Margins guidance – In 2-3 years times, share of International business and IP led solutions will grow and hence margins WILL grow.
There were also question from existing investors cum customers – they also sound like they are happy with how things are shaping up so far.
Azure is picking up very quickly in ways Alletech hasn’t thought of 1-2 quarters ago. Currently in the process of moving another competing smaller foot print financial accounting software in India from their own cloud to Azure (expect announcement in next con call). Once moved, solution would run 40000 users on Azure, ramping up to over 100000 users. So there is large complex projects/businesses coming in. Total cloud MS Azure cloud market is huge and growing faster than industry which bodes well for Alletech.
They didn’t disclose the size of the order book but said its substantial.
Large part of cash on books (i think ~100 crores) will be utilized for inorganic growth. 2 acquisitions may happen in the future.
No Plan to explore EU or S American markets for now – APAC is a possibility
Financials are healthy as it reflects in the AR. They have booked a loss of 90 lakhs in one of the subsidiaries 2 years ago which is no longer operational (something on the lines of writing off a loan since they ended up merging with the then acquired entity)
Why are the standalone numbers not growing? – You should look at consolidated numbers since we are working in parallel to increase international business so looking at standalone numbers can be misleading.
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