Hsenid Business Solutions Plc · CSELK:HBS.N0000
Hsenid Business Solutions — H2 FY2023 Earnings Presentation
21 slides from Hsenid Business Solutions's earnings presentation, June 2023
Slide 1: Half-yearly Investor Forum 2H FY2023
hSenid Business Solutions PLC Half-yearly Investor Forum 2H FY2023
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation may contain forward-looking statements for which there are risks, uncertainties, and assumptions. Forward-looking statements may include any statements regarding strategies or plans for future operations; any statements concerning new features, enhancemen
Slide 3: Contents
Contents # Description Speaker 1 Business overview and key developments Sampath Jayasundara, CEO 2 Finance and strategy update Nilendra Weerasinghe, CFO Page 3 Page 3
Slide 4: Business overview
Business overview Sampath Jayasundara Chief Executive Officer Page 4
Slide 5: HBS at a Glance
HBS at a Glance Offering a comprehensive $10 Bn+ TAM Seamless Connection to Third-Party Systems OpenAPIs to connect to third-party ERP, Accounting and range of HRIS solutions other software solutions Market Opportunity APAC and MEA Geared to Handle Large and Complex Organisations $2.3 Mn Exit ARR* L
Slide 6: Key Business Updates
Key Business Updates Product and Talent ▪ Product development o Obtained cloud security certification for PeoplesHR product (ISO 27017 certification on top of ISO 27001 obtained in 1HFY23) o Launched a comprehensive dashboard with enterprise analytics o Launch of workforce planning module o Relaunch
Slide 7: Key Business Updates
Key Business Updates Sales and Marketing ▪ Undergoing transformation as a "Sales-led" organisation o Revamp of sales team and new hires brought in to fill country specific responsibilities o Strengthening of local sales teams in key markets o Focus on adoption of sales automation tools to achieve sc
Slide 8: New Deal Bookings
New Deal Bookings USD mn ▪ USD 2 Mn in New deal closures - down 10% in 2.5 FY23 compared to FY22 o Increased scrutiny in IT procurement and delays in purchase decisions owing to business uncertainty has led to longer sales 2.0 cycles ▪ Channel Partners accounted for ~48% of new 1.5 deal bookings in
Slide 9: Financial & strategic update
Financial & strategic update Nilendra Weerasinghe Chief Financial Officer Page 9
Slide 10: Quest to be the Most Preferred HR Tech Player in APAC and MEA
Quest to be the Most Preferred HR Tech Player in APAC and MEA On-Prem to Cloud shift taking place as expected APAC and MEA accounted for 43% of FY23 revenues 9% 15% 14% 14% 17% 22% MEA Other † 5% 24% 26% 4% 5% 9% PHR Outsourcing 4% 9% 10% Tracking Solutions 7% 29% 25% APAC 29% 31% 25% 25% 37% PHR On
Slide 11: Business Segments PHR On-Premise and Cloud
Business Segments PHR On-Premise and Cloud PHR On-Premise revenues LKR mn 3yr CAGR +0% 450 (-16% in USD cc) ▪ PHR On-Premise revenues stabilising in LKR 400 -33% YoY growth (-55% in USD cc) terms owing to: 350 o Lower invoicing on Government of Uganda (GoU) 300 250 project as it moves towards subseq
Slide 12: Business Segments PHR Outsourcing and Tracking Solutions
Business Segments PHR Outsourcing and Tracking LKR mn Tracking Solutions revenues Solutions 3yr CAGR +32% 160 (+34% in USD cc) 140 120 ▪ Tracking Solutions maintaining strong momentum with 100 +23% YoY growth (+20% in USD cc) 80 packaged solutions in new HRIS deals 60 o Growing demand for kiosks for
Slide 13: ARRs Grown at a CAGR of 32% in the Past 3 years
ARRs Grown at a CAGR of 32% in the Past 3 years Core-recurring† revenues reached 49% in FY23 Annual core recurring revenues LKR mn 800 3yr CAGR +32% 36% 35% 45% 41% 49% 51% 700 600 500 +57% YoY growth 400 64% 65% 55% 59% 300 51% 49% 200 100 FY20 FY21 FY22 FY23 2H FY22 2H FY23 - Non-recurring Core -
Slide 14: Revenue Drill Down
Revenue Drill Down 3Yr CAGR YoY growth All in LKR millions FY20 FY21 FY22 FY23 2H FY23 (in LKR / USD cc) (in LKR / USD cc) PHR On-premise 359 374 408 362 217 Implementation 70 154 136 137 88 Licensing 186 110 162 116 +0% / -16% 71 -33% / -55% Support† 103 110 109 108 58 PHR Cloud 208 278 372 672 348
Slide 15: Cost of Sales Drill Down
Cost of Sales Drill Down All in LKR millions FY20 FY21 FY22 FY23 3Yr CAGR 2H FY23 YoY growth On-site and third-party implementation costs† 58 58 59 94 +18% 43 +9% Infrastructure costs†† 25 34 53 170 +90% 92 +183% Cost of devices sold 25 28 54 64 +38% 33 -9% Mobile solutions related costs 121 103 72
Slide 16: Analysis of Normalised EBITDA
Analysis of Normalised EBITDA 56% 56% 28% 15% 29% 29% 49% 24% 47% 13% 12% 13% 12% 43% 24% 16% 16% 13% 7% 1% FY20 FY21 FY22 FY23 2H FY23 FY22 FY21 FY20 FY23 FY20 FY21 FY22 FY23 2H FY23 2H FY23 FY20 FY21 FY22 FY23 2H FY23 Normalised EBITDA margin † COGS as a % of sales Admin expenses as a % of sales††
Slide 17: Summarized Income Statements
Summarized Income Statements In LKR millions FY20 FY21 FY22 FY23 2H FY23 Revenue 955 961 1,091 1,447 742 Gross profit 491 513 617 640 327 Gross profit margin 51% 53% 57% 44% 44% Normalised EBITDA 227 280 313 107 7 EBITDA margin 24% 29% 29% 7% 1% FX gain 11 27 287 71 (123) Net interest income 4 3 27
Slide 18: Cash Position and IPO Fund Utilization
Cash Position and IPO Fund Utilization Cash position at LKR 1.6 Bn IPO fund utilization at 24% LKR mn LKR mn 700 1,600 600 166 1,400 1,200 500 1,000 400 800 300 526 600 200 92 350 400 100 74 110 200 66 - - Market Product Potential Total allocation Development Development Strategic FY19 FY20 FY21 FY2
Slide 19: WC Discipline Improved in Q3-Q4 of FY23 to drive FCF Generation
WC Discipline Improved in Q3-Q4 of FY23 to drive FCF Generation Annual free cash flow generation Quarterly free cash flow generation in FY23 LKR mn LKR mn 0 300 (82) 200 (50) 100 (100) - (150) (100) (200) (200) (250) (300) FY20 FY21 FY22 FY23 (300) Operating cash flow Capex Free cash flow to the fir
Slide 20: Deep Dive on Margin Erosion
Deep Dive on Margin Erosion One part of the margin erosion is related to the business mix: ▪ When a software business pivots from an on-prem to SaaS model, this causes a natural erosion in margins ▪ However, the margins expand and normalise over time with the compounding effect of subscription reven
Slide 21: Q&A Session
Q&A Session You can use the Q&A functionality in zoom to send in your questions; OR ALTERNATIVELY Click on the "Raise your hand" button to be given an opportunity to unmute your microphone and pose your questions. Investor Relations Contacts Nilendra Weerasinghe – Chief Financial Officer +94 11 462
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