Informist, Wednesday, Jan 25, 2023
By Reshab Shaw
MUMBAI - The December quarter was an unprecedented one for Happiest Minds Technologies Ltd. An extra day of furlough and a sharp rise in leaves taken by employees hit growth and cost the company as much as $1.5 mln in revenue.
"We really didn't expect the leaves to be this high, and the one-day loss is something that we had sort of factored into our plan and that's what has resulted in that 2% or so differential (from the revenue growth in the past several quarters)," Executive Vice-Chairman Joseph Anantharaju tells Informist in an interview.
Furloughs refer to the practice of clients in regions such as the US and Europe not paying for outsourced employees from Indian IT firms for several days at a time when their operations are shut due to festivals or other reasons. This hits the margins of outsourcing companies based in India, as they still have to pay full salaries to their employees even though they cannot bill the client for the furlough period.
A quarter typically has 62-63 working days and one working day equals revenue of $800,000 from a client, the company said.
The Bengaluru-based company also said many employees took leaves in December as this was the first full-fledged year when neither COVID-related restrictions nor fears about it held back people from celebrating long holidays and this too impacted growth in the quarter.
"We know what the trend is, we plan for it, but sometimes like this, (there are) unusually big swings...people took off and just went back to their hometown. That can knock off 1-1.5% of growth, so that's a huge impact," says Anantharaju.
QUARTERLY PERFORMANCE
The company's consolidated revenue for the December quarter rose 3.2% sequentially to 3.67 bln rupees, lower than the 5% growth it had been consistently delivering for the past nine quarters, largely driven by volume growth.
The company gets about 90% of its revenue from existing customers. "We are very comfortable (with repeat business) because the rest will come from new logos and new business," says Anantharaju. Happiest Minds doesn't measure total contract value, which is an aberration from other IT companies.
The company posted a 3.1% decline in net profit at 575.8 mln rupees for the quarter ended December. The bottomline was also affected by an extraordinary item of 60 mln rupees incurred towards paying an earnout to its subsidiary Pimcore Global Services, which it acquired in 2021.
Earnout is a contractual provision that guarantees a seller additional compensation if the business achieves certain financial goals.
So the payout, if you look at it (from a) fundamental level, is because of the superlative performance of the acquired asset," says Managing Director and Chief Financial Officer Venkatraman Narayanan. This was the second instalment year of the earnout being paid, with the last year of payment remaining.
Narayanan also hinted that the Bengaluru-based information technology services provider would soon close its second acquisition, but did not divulge any details.
On the human resources front, the IT company said utilisation levels would come down a few percentage points as new recruits were in the process of completing their training, and were likely to join the talent pool sometime during the present quarter.
"The advantage is that we'll be able to deploy these people on projects, and therefore they would have an impact on the average cost and other things," says Anantharaju. The company also expects attrition level to come down further from the current 20.9%, and get into the upper teens going forward.
When asked about a guidance for the operating margin, Narayanan says the company will continue to deliver over 25%, but retain the original guidance of 22-24% to have headroom in case there is any investment to be made.
At 1215 IST, shares of the company were down 1.7% at 862.55 rupees on the National Stock Exchange. End
Edited by Maheswaran Parameswaran
For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.
Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.
Informist Media Tel +91 (22) 6985-4000
Send comments to feedback@informistmedia.com
© Informist Media Pvt. Ltd. 2023. All rights reserved.
Informist, Wednesday, Jan 25, 2023
By Reshab Shaw
MUMBAI - The December quarter was an unprecedented one for Happiest Minds Technologies Ltd. An extra day of furlough and a sharp rise in leaves taken by employees hit growth and cost the company as much as $1.5 mln in revenue.
"We really didn't expect the leaves to be this high, and the one-day loss is something that we had sort of factored into our plan and that's what has resulted in that 2% or so differential (from the revenue growth in the past several quarters)," Executive Vice-Chairman Joseph Anantharaju tells Informist in an interview.
Furloughs refer to the practice of clients in regions such as the US and Europe not paying for outsourced employees from Indian IT firms for several days at a time when their operations are shut due to festivals or other reasons. This hits the margins of outsourcing companies based in India, as they still have to pay full salaries to their employees even though they cannot bill the client for the furlough period.
A quarter typically has 62-63 working days and one working day equals revenue of $800,000 from a client, the company said.
The Bengaluru-based company also said many employees took leaves in December as this was the first full-fledged year when neither COVID-related restrictions nor fears about it held back people from celebrating long holidays and this too impacted growth in the quarter.
"We know what the trend is, we plan for it, but sometimes like this, (there are) unusually big swings...people took off and just went back to their hometown. That can knock off 1-1.5% of growth, so that's a huge impact," says Anantharaju.
QUARTERLY PERFORMANCE
The company's consolidated revenue for the December quarter rose 3.2% sequentially to 3.67 bln rupees, lower than the 5% growth it had been consistently delivering for the past nine quarters, largely driven by volume growth.
The company gets about 90% of its revenue from existing customers. "We are very comfortable (with repeat business) because the rest will come from new logos and new business," says Anantharaju. Happiest Minds doesn't measure total contract value, which is an aberration from other IT companies.
The company posted a 3.1% decline in net profit at 575.8 mln rupees for the quarter ended December. The bottomline was also affected by an extraordinary item of 60 mln rupees incurred towards paying an earnout to its subsidiary Pimcore Global Services, which it acquired in 2021.
Earnout is a contractual provision that guarantees a seller additional compensation if the business achieves certain financial goals.
So the payout, if you look at it (from a) fundamental level, is because of the superlative performance of the acquired asset," says Managing Director and Chief Financial Officer Venkatraman Narayanan. This was the second instalment year of the earnout being paid, with the last year of payment remaining.
Narayanan also hinted that the Bengaluru-based information technology services provider would soon close its second acquisition, but did not divulge any details.
On the human resources front, the IT company said utilisation levels would come down a few percentage points as new recruits were in the process of completing their training, and were likely to join the talent pool sometime during the present quarter.
"The advantage is that we'll be able to deploy these people on projects, and therefore they would have an impact on the average cost and other things," says Anantharaju. The company also expects attrition level to come down further from the current 20.9%, and get into the upper teens going forward.
When asked about a guidance for the operating margin, Narayanan says the company will continue to deliver over 25%, but retain the original guidance of 22-24% to have headroom in case there is any investment to be made.
At 1215 IST, shares of the company were down 1.7% at 862.55 rupees on the National Stock Exchange. End
Edited by Maheswaran Parameswaran
For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.
Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.
Informist Media Tel +91 (22) 6985-4000
Send comments to feedback@informistmedia.com
© Informist Media Pvt. Ltd. 2023. All rights reserved.
Informist, Wednesday, Jan 25, 2023
By Reshab Shaw
MUMBAI - The December quarter was an unprecedented one for Happiest Minds Technologies Ltd. An extra day of furlough and a sharp rise in leaves taken by employees hit growth and cost the company as much as $1.5 mln in revenue.
"We really didn't expect the leaves to be this high, and the one-day loss is something that we had sort of factored into our plan and that's what has resulted in that 2% or so differential (from the revenue growth in the past several quarters)," Executive Vice-Chairman Joseph Anantharaju tells Informist in an interview.
Furloughs refer to the practice of clients in regions such as the US and Europe not paying for outsourced employees from Indian IT firms for several days at a time when their operations are shut due to festivals or other reasons. This hits the margins of outsourcing companies based in India, as they still have to pay full salaries to their employees even though they cannot bill the client for the furlough period.
A quarter typically has 62-63 working days and one working day equals revenue of $800,000 from a client, the company said.
The Bengaluru-based company also said many employees took leaves in December as this was the first full-fledged year when neither COVID-related restrictions nor fears about it held back people from celebrating long holidays and this too impacted growth in the quarter.
"We know what the trend is, we plan for it, but sometimes like this, (there are) unusually big swings...people took off and just went back to their hometown. That can knock off 1-1.5% of growth, so that's a huge impact," says Anantharaju.
QUARTERLY PERFORMANCE
The company's consolidated revenue for the December quarter rose 3.2% sequentially to 3.67 bln rupees, lower than the 5% growth it had been consistently delivering for the past nine quarters, largely driven by volume growth.
The company gets about 90% of its revenue from existing customers. "We are very comfortable (with repeat business) because the rest will come from new logos and new business," says Anantharaju. Happiest Minds doesn't measure total contract value, which is an aberration from other IT companies.
The company posted a 3.1% decline in net profit at 575.8 mln rupees for the quarter ended December. The bottomline was also affected by an extraordinary item of 60 mln rupees incurred towards paying an earnout to its subsidiary Pimcore Global Services, which it acquired in 2021.
Earnout is a contractual provision that guarantees a seller additional compensation if the business achieves certain financial goals.
So the payout, if you look at it (from a) fundamental level, is because of the superlative performance of the acquired asset," says Managing Director and Chief Financial Officer Venkatraman Narayanan. This was the second instalment year of the earnout being paid, with the last year of payment remaining.
Narayanan also hinted that the Bengaluru-based information technology services provider would soon close its second acquisition, but did not divulge any details.
On the human resources front, the IT company said utilisation levels would come down a few percentage points as new recruits were in the process of completing their training, and were likely to join the talent pool sometime during the present quarter.
"The advantage is that we'll be able to deploy these people on projects, and therefore they would have an impact on the average cost and other things," says Anantharaju. The company also expects attrition level to come down further from the current 20.9%, and get into the upper teens going forward.
When asked about a guidance for the operating margin, Narayanan says the company will continue to deliver over 25%, but retain the original guidance of 22-24% to have headroom in case there is any investment to be made.
At 1215 IST, shares of the company were down 1.7% at 862.55 rupees on the National Stock Exchange. End
Edited by Maheswaran Parameswaran
For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.
Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.
Informist Media Tel +91 (22) 6985-4000
Send comments to feedback@informistmedia.com
© Informist Media Pvt. Ltd. 2023. All rights reserved.
