Iris Business Services – Emerging SAAS Microcap

Adding Notes from the Concall

• S & M Spends – Customer outreach and marketing is where a significant increase in spending occurred

• Employee – finding difficult to get quality talent at the work. Paying more (Risk)

• Performing well in Collect Segment (70% growth YoY H1FY24 – H1FY23)

• Create Segment (10% growth YoY H1FY24 – H1FY23)

• Non Recurring Rev (36% growth YoY H1FY24 – H1FY23)

• Increase in export revenue (Indian revenues have come down to about 30% of the overall pie)

• Improved order book position compared to the previous year

• Establishment of another development centre in Surat. Surat, being a location abundant with skilled professionals, has provided us with a significant boost in
  expanding our product offerings and product lines

• Collect Business – The iFile business, which is the Collect segment, is primarily driven by RFPs (Request for Proposals). The challenge here lies in engaging with regulators, making them aware of our presence, and positioning ourselves to ensure that RFPs come to us. We actively participate in conferences, engage with regulators, and present our credentials, ultimately bidding on their RFPs. It’s a competitive process, and we win some and lose some

• Create Segment – iDEAL is a mandate-driven opportunity where banks are mandated to connect to the Reserve Bank of India. It’s more of an inbound process, requiring minimal sales and marketing efforts and we have a near monopoly, with more than a hundred financial institutions using the product. It’s primarily an inbound process. (iDEAL – 100 customers)
  On the other hand, in the highly competitive GST business, within the Indian SaaS and tax tech landscape, we have a dedicated sales team led by our India sales head and regional sales managers covering North, South, and West regions. They are supported by a marketing team and an inside sales team, which is part of the marketing function, responsible for lead generation

• CARBON, being an enterprise SaaS product, is targeted at international markets, and navigating the challenges of sales and marketing is crucial, especially during ramp-up. Our approach involves multiple strategies. Firstly, we collaborate with partners, with a significant focus on partners and channels. Additionally, we engage directly with customers. (5K+ customers)

• Increase in Authorized Capital – Creation of ESOP Pool – The ESOP consideration is quite different this time compared to the last time we had ESOP before the IPO. Currently, our aim with the ESOP scheme is twofold. Firstly, for existing employees, and secondly, to attract new talent. Many potential hires have placed compensation expectations beyond our current cash range. To bridge this gap and entice the right talent, we are looking at a combination of cash and ESOP. The increase in authorized capital was also linked to the ESOP. Since we are currently in the market raising funds, combining the money raised and the ESOP would surpass our operating capital

• The order book has two components – recurring and one-time. INR 110 Cr recurring & INR 10 Cr one time. One large implementation order that we have, from the South African Reserve Bank

• Collect Business Outcome – there are countries moving towards bigger XBRL implementation. At the same time, some of them are not necessarily willing to work with us for various reasons. There’s a language barrier, for example. Africa, specifically Morocco, had an RFP some time ago, and it seems we may end up losing it based on the current outlook.

• Favorable Regulations for Co: SEBI said that you must report related party
  transactions, and that becomes an add-on to what we’re already doing. So, there are adjacent opportunities in terms of products, which also gain their customers as the people working with customers and delivery are also taking ownership for revenues

• ESG opportunity is there for sure, there are talks going from the market that it might get postponed by 1 year or so

• Disclosure Managements: Disclosure management is going to be the mainstay of our business going forward. This is where our biggest growth is going to come from. Ultimately, companies want to benefit from digital reporting, and they want to find an integrated filing platform. Companies want to go digital, regulators want to go digital. And what we’ve been able to do by combining Collect and Create will actually come home to roost in a very positive sense

• 55% to 60% is SaaS revenue, of the total revenue.