Iris Business Services – Emerging SAAS Microcap

Summary of the AGM transcript for Iris Business Services Limited:

Key Points:

1. Financial Performance:

• The company crossed the 100 crore revenue threshold in the previous year.
• Growth trajectory has shifted significantly upward, with 35% growth compared to historical 22% growth rate.
• Return on Equity is about 22% for the previous year.
• EPS is 4.28 rupees.

2. Business Segments:

• Collect segment: Grows through RFPs from regulators. Two Indian regulators recently announced intentions to adopt XBRL-based platforms.
• Create segment: Divided into RegTech and TaxTech. Entered Malaysia market recently.
• Consume segment: Focused on data analysis, currently underfunded.

3. Growth Strategy:

• Focus on growing collect and create businesses globally.
• Aim to increase customer base from current 6,500-7,000 to potentially 10,000, 20,000 or more in next 5 years. (24% CAGR in Customers)
• Targeting enterprise customers for new offerings like ESG filing tools.
• Moving from mandate-driven business to discretionary spend products like disclosure management.

4. Market Opportunities:

• Each segment the company operates in represents roughly a billion-dollar opportunity.
• Significant traction globally with regulators adopting XBRL-based suptech platforms.
• New opportunities in ESG filings and disclosure management.

5. Financials:

• Recently raised about 20 crores, with 45 crores total available for investment.
• Zero debt, positive net cash position.
• Maintain working capital credit facility for providing bank guarantees to customers.

6. Dividend Policy:

• Company does not plan to pay dividends in near term.
• Prefers to reinvest for growth and potentially reward shareholders through buybacks in future.

7. Technology:

• Incorporating AI tools into products, but in a targeted manner rather than using general AI like ChatGPT.
• Suptech platforms involve significant digitalization components.

8. Competitive Landscape:

• Different competitors in each segment.
• In suptech, main competitor is often the regulator developing in-house.
• In create segment, many small local competitors globally. Largest global competitor is Workiva, a $600-700 million US-listed company.

9. Ongoing Projects:

• South African contract still has a significant portion to be executed over next 2 years.

Forward-Looking Statements:

1. Targeting higher growth rates compared to historical performance.
   2**. Aim to maintain 35% growth rate going forward.**
2. Expect to benefit from government initiatives on digitalization and MSME focus in medium term.
3. Plan to launch marketing campaigns to target replacement market customers.
4. Internal targets for growth, but not sharing specific projections publicly.
5. Aspiration to compete with larger global players like Workiva in long-term.

Concerns:

1. Unpredictability in collect segment due to dependence on regulatory tenders.
2. Challenge in providing forward projections due to nature of business segments.
3. Still early stages of market development, especially in developing countries.
4. Competition from both global players and local competitors in different markets.
5. Need to improve work-life balance for employees following recent loss of a key colleague.
6. Consume (data analysis) segment still underfunded and not a current focus for growth investments.
7. Potential for industry consolidation, with acquisitions happening in Europe and North America.

The management emphasized transparency, timely disclosures, and focus on improving fundamentals as key aspects of shareholder relations. They are cautious about providing specific growth projections due to the nature of their business segments and market dynamics.

Tone of the Promoters:

The promoters, particularly Swaminathan (CEO) and Balu Ganesh Ayyar (CFO), maintained a professional and transparent tone throughout the AGM. They were:

1. Candid about the company’s strategies and challenges.
2. Open to answering shareholder questions, even on sensitive topics like dividend policy.
3. Realistic about the company’s position in the market, acknowledging larger competitors.
4. Optimistic about future growth prospects while being cautious about making specific projections.
5. Appreciative of shareholders’ support, especially during challenging times.
6. Committed to maintaining high governance standards and transparency.

Disclosure: Invested & the above is AI generated transcript