Confident With 25% Guidance Due To Strong Pipeline: Happiest Minds CFO On FY24

Bengaluru-headquartered Happiest Minds Technologies reported its Q4 FY23 revenue from operations at Rs 377.98 crore, up from Rs 300.57 crore in the corresponding quarter in fiscal 2022. But the company interestingly missed its Q4 revenue target by about 1.3 per cent due to certain ‘right-shifting of Q4 revenues’.

The company’s Q4 FY23 profit after tax (PAT) was recorded at Rs 57.66 crore, which grew from Rs 52.11 crore in Q4 FY22. The revenue from the US and India maintained resilience, while Europe in Q4 FY23 saw a marginal decline in comparison to Q4 FY22.

Keeping in line with FY23 guidance, Happiest Minds has given the revenue guidance of 25 per cent for FY24. Also, the company plans to hire 1,300 employees in FY24.

BW Businessworld’s Rohit Chintapali spoke with Venkatraman N, MD & CFO at Happiest Minds Technologies, to understand where the optimism for FY24 stems from for the company to maintain a 25 per cent guidance despite tough market conditions. Excerpts:

You have given a guidance of 25 per cent in FY24. Are you confident of achieving it given the market conditions?

This year we have done 24 per cent in constant currency. Next year, this (25 per cent) is the base. Last year we had set 25 per cent and we touched 24 per cent (23.7 to be precise). Going ahead, that is the number that we are holding onto.

What makes you confident on this?

What gives us the confidence is how we are looking at the pipeline. In Q4, everybody was right-shifting with revenue. Everyone was cautious because they thought something was happening all around and they paused. Now, they are all coming back, except maybe in some of these banks or one-off cases. About 92 per cent of our business comes from existing customers. And you build your plan for the next year on that basis. We feel there is a nice trend of customer retention and revenues.

So, you remain optimistic?

50 per cent of our revenues come from customers who have been with us for greater than five years. In fact, it has gone to 53 per cent this quarter (Q4 FY23). So, there is a sense of predictability with the existing set of customers. Obviously, we are on the lookout for new customers even as our customer numbers have increased to 237.

Happiest Minds’ BFSI revenue showed resilience despite a noted disturbance in the space. Why?

For us, BFSI is largely not related to core banking. Our BFSI is more of digital enhancement for the banks. We help them a lot with the security infrastructure. And these spends are not negotiable for banks. Hence, it has been resilient. We have a couple of large payroll service providers in our BFSI customer base and there are a few consulting companies who take security from us for onward implementation for of their customers. We are still in discussion with customers and prospects.

You are hiring 1,300 new employees in FY24 ...

Net hiring would be 1,300. Out of this more than 400 would be campus joiners (freshers). They would come onboard in June-July.

Do you see utilization getting affected with the new hiring?

No. While they are in training for the three to six months, they are not in utilization. They are coming from Q1, which is what has happened to 250 people. So, they will come in December of this year. That’s when they come into the billable workforce. The standards we follow means that it takes six months of training to get people into billing. Typically, you need at least six to nine months of training because you have to do a lot of unlearning and re-learning.

How are you looking at the deals valued at over USD 1 million? What is your plan to bring more clients onboard in this category?

We are at 43 right now. If we have to add to this, we are talking about additional revenues. So, let us say USD 178 million in FY23 growing to 25 per cent by FY24 end. That is USD 21-22 million to bring in. When our average revenue per customer is about USD 800,000 to USD 1 million and existing customers are growing, then I think we need to add another five to eight million-dollar customers or two or three million-dollar customers. This will add to the way we are building for the next year.

Will acquisitions play a big role in your growth in FY24?

Yes. This is integral to what we are doing. We are looking at companies to acquire. It is not something that we have been very successful with right now, other than a couple. But we would like to do more.

Also Read: Happiest Minds Technologies: Q4 Revenue Growth Misses Target, Company To Hire 1,300 In FY24