Geometric Software held a conference call on 20th January 2009 to discuss third quarter ended December 2008 performance and future prospects. Dr Ravi Gopinath, MD & CEO, with other management members, addressed the call.
Highlights of the call
- For the quarter ended December 2008, Geometric reported 7% sequential growth in operating revenues at Rs 163.08 crore. However in US$ terms the company’s revenue declined by 4% sequentially to 33.31 million US$.
- The OPM of the company improved significantly from 8.9% to 14.8% sequentially due to rupee depreciation as the average exchange rate increased from 44.04 to 48.95. Further the increase in contribution of offshore and offsite to services revenue from 55.7% in Q2 FY09 to 58.7% in Q3 FY09 also positively impacted the OPM.
- FO the 590 bps increase in OPM, about 400 bps is due to Rupee depreciation and about 190 bps from internal efficiency.
- The services revenues dipped 4.9% in US$ terms sequentially. The offshore revenue decreased by 1.1%, offsite revenue increased by 10.4% and onsite revenue came down by 11.5%. Software services revenues decreased by 4.8% due to a significant drop in revenues from strategic partner segment. Overall engineering services revenue decreased by 4.9%, while US engineering revenue decreased by 2.7%. On the other hand products revenue increased 11.3% sequentially.
- PAT before prior period adjustments decreased 61% sequentially from Rs 4.72 crore to Rs 1.83 crore. This was mainly on account of FOREX losses of Rs 18.93 crore.
- Reduction in USD operating revenue is largely due to USD strengthening against other currencies (as non USD business constitutes 15% of total revenue) and a significant number of smaller customers dropping off.
- 7 new customers were added during Q3, taking the total number of active customers to 123. Total value of new business closed in Q3 is USD 5.4 million as compared to USD 6.7 MM in Q2 FY09. Slowdown in order closures for Q3 is to some extent attributable to lengthening of the sales cycle and decisions on many deals getting pushed back to Q4.
- Engineering has order book of US$ 1.99 million and PLM has US$ 2.44 million. Order book from USA stood at US$ 2.01 million and from Europe stood at US$ 2.87 million.
- For the quarter, software services contribution decreased to 59.4% of total revenue against 60% in the sequential previous quarter, engineering services declined to 33.3% against 33.7% in the sequential quarter whereas products revenues grew to 7.3% against 6.3% in the sequential quarter.
- The employee base of the company stood at 3181 in Q3 FY09 against 3247 in Q2 FY09. Total recruitment for the quarter was 171 and annualized attrition for the quarter was 17.1% as compared to 18.7 % in Q2 09.
- The utilization including trainees improved 140 bps sequentially to 85.7% and excluding trainees improved by 320 bps to 87.7%.
- Top client contribution remained flat to 26% sequentially while Top 5 client contribution and Top 10 client contribution increased by 100 bps each to 52% and 67%.
- The capex for the quarter was Rs 5.22 crore. Cash & Cash equivalents at the end of the quarter stood at Rs 43.64 crore. The debt on books was Rs 88.7 crore.
- As on 31st December 2008, company has outstanding forward contracts of USD 60 million at an average rate of around Rs 42.5/USD.
- The company expects that the global slowdown will hit the company and new customer flow will decline. The company will focus on client retention while improving operational efficiency.