IRIS net SaaS revenues up 18%, Covid takes toll on growth and profitability

A near 3 fold YoY growth in SaaS revenues from the US and a near doubling YOY of EU SaaS revenues, helped global Regtech IRIS Business Services Limited fight off Covid headwinds in FY 22.

The company grew its Net Annual Recurring Revenues (ARR) 17%. ARR went up to Rs 47 cr in FY 22 from Rs 40.23 cr in the year preceding. Gross ARR was higher at Rs 50.5 cr.

However, Covid took its toll on the overall revenue growth which registered a modest YoY revenue growth of 8%. "Covid hurt us badly," says company Founder & CEO, S Swaminathan. Explaining how, he points to three factors. The Collect Division has shrunk yet again for the second year running in the absence of any new regulatory mandates due to Covid. "But we are finally seeing evidence of things picking up now," Swaminathan said.

The pressure on the Create Division came from two sources. In countries like South Africa, companies have been given extra time to file their annual returns. This means that our revenues will be deferred, not lost, Swaminathan explains. On the other hand, in the UK, the number of clients served by the company has fallen sharply. "We are working with a partner who has chosen to manage more of their clients' compliance filings inhouse, and have therefore reduced the number of clients they were passing on to us," Swaminathan said. Because of the developments in South Africa and the UK, the total number of enterprises served by IRIS dropped to a little under 6000 from a little over 7000 in the year preceding.

Elaborating on the financial performance, company Founder & CFO K Balachandran points out that the erosion in the profitability is because of the 18% jump in expenses. This is attributable to the sharp increase in the wage bill. "Even though we offered generous increments, many people left, with attrition hitting an all time high of 21%," he says.

"On the revenue side the wins in the USA and Europe gives us a solid foundation to build on," says Company Director and Founder, Deepta Rangarajan. "This was the first time we were putting in efforts to acquire customers in both markets and the results are very satisfying, given how small our sales team is and how little marketing resources we deployed to back them up," she added.

Balachandran says that the highlight of the year lies in the subtext. "You will see that our cash flow from operations is negative. That is because we used it to clear employee dues completely, leaving the company stronger than we have been in a long long time" he says with satisfaction. "I had declared that I will not take a salary until employee dues are cleared. Now, that that has happened, I am finally able to take a salary," company CEO, Swaminathan chipped in.

Shares of IRIS Business Services Ltd was last trading in BSE at Rs. 82.70 as compared to the previous close of Rs. 84.30. The total number of shares traded during the day was 1183 in over 80 trades.

The stock hit an intraday high of Rs. 86.00 and intraday low of 82.00. The net turnover during the day was Rs. 99335.00.

Source : Equity Bulls

Keywords

IRISBusinessServices INE864K01010 SaaSRevenue FY2022 ResultUpdate