Initiating Coverage: Latent View Analytics
23-06-2023

About the Company

LatentView Analyticsis a global digital analytics Company that inspires and transforms businesses to excel in the digital world by harnessing the power of data and analytics. The Company provides a holistic view of the digital consumer, enabling companies to predict new revenue streams, anticipate product trends and popularity, improve customer retention rates and optimise investment decisions.

The business model is characterised by offerings of Business Intelligence & visualisation, Business Intelligence & Visualisation services and Strategic insights. In terms of level of engagement, there are Pilot consulting engagements & proof of concepts, fixed fee & duration projects and Long-term managed services

The Company is a partner to enterprises worldwide, and serves over 30 Fortune 500 in the Retail, Consumer, Financial, Technology, and Healthcare sectors. LatentView currently has 1,116 employees. To support the goals and growing client base, company plans to triple its go-to-market team, has quadrupled the marketing spend in 2 years, achieved a Premier Partnership with Snow?ake and is ramping up strategic cloud investments with Azure and AWS.

(Source: Company data, Moneyworks4me.com)

(Source: Company data, Moneyworks4me.com)

About the Industry:

Data & Analytics (D&A) has emerged as one of the fastest-growing segments of digital spending. Enterprises are adopting D&A aggressively to drive business strategy owing to evolving consumer preferences and behaviour. Subsequently, D&A has been a dominant force in increasing the transparency, speed, and decision-making capabilities of organizations and it will continue to be a driving force in the coming years. Across industries and geographies, enterprises are dealing with the massive volume of data that is made available by accelerated Digital Transformation, Cloud and Internet of Things. This data is made useful and turned into actionable insights by Analytics, Machine Learning, and Artificial Intelligence (AI).

Financial Services, Consumer & Retail, and Technology verticals are at the forefront of D&A investments, driving nearly 70% of total spends. As per Zinnov Report, the Data and Analytics industry is expected to remain on a promising growth trajectory growing at an 18% CAGR between 2020 and 2024 to reach $ 333 billion.

Competitors: MuSigma, Fractal

Business Verticals:

Technology: It Involves Marketing Analytics, Supply chain Analytics, Risk Analytics, Subscription Analytics. The global D&A spending in Technology vertical is expected to reach US$ 32 billion in 2024, registering a 19% CAGR between 2020 and 2024(Zinnov Report). The Technology sector in North America is the third-largest contributor to regional data & analytics spends. Increased use of SaaS-based applications across several verticals has led software vendors to adopt subscription based models, resulting in increased consumer usage and interaction data for vendors.

Industrials: It Involves Customer Analytics, Marketing Analytics, Supply chain Analytics. Today, the Industrial Internet of Things (IIoT) and Digitalization are no longer a choice. Across industries, including Manufacturing, it has become imperative to drive things by leveraging analytics and automation to provide significant results and insights for increased effciency and accuracy. The global D&A spending by Industrials is estimated to reach US$ 16.8 billion in 2024, registering a growth of 20% CAGR between 2020 and 2024(Zinnov report).

Consumer & Retail: It involves the services of Customer Analytics & Supply chain Analytics.

Financial Services:It involves the services of Fraud Analytics, Customer Analytics, Marketing Analytics.

Business Performance:

For FY 2023, Latentview achieved a full-year growth of 32% in rupee terms. However, during Q4, the growth rate was 20% year-on-year, which was lower than the previous quarter due to market uncertainty and sluggishness. The margins for Q4 were negatively affected by investments in front-end and marketing activities, as well as lower revenue compared to the previous quarter.

The company faced margin contractions in the current fiscal year primarily due to lower revenue (250bps impact on EBITDA) and a significant exercise on ESOP in the US (50bps impact on EBITDA). The company's PAT for Q4 amounted to Rs. 342 crores, representing a decrease of 3.9% compared to Q4 of FY '22. Looking ahead, the company anticipates maintaining similar levels of EBITDA margins for the next few quarters. However, they remain hopeful that operating leverage will come into play as growth improves.

Key Financial Ratios:

(Source: Company data, Moneyworks4me.com)

Click here to checkout 10 year X-ray

Business Outlook:

Latentview currently holds Rs. 541 crores of cash and intends to utilize this capital for strategic acquisitions. The company aims to pursue either one significant acquisition or two medium-sized acquisitions. The company has identified opportunities worth $50 million in its pipeline, which can contribute to revenue growth. However, the trajectory for the full year might be influenced by uncertainties within the pipeline, potentially impacting the timing of revenue growth starting in either Q1 or Q2.

Management expresses confidence in surpassing the industry's growth rate by 5-10%. They anticipate achieving growth rates of 20-25% over the next three years, indicating a strong growth trajectory. The company expects the prevailing uncertainties to be resolved within the next couple of quarters, allowing the revenue trajectory to rebound significantly. This anticipation suggests a positive outlook for the company's future performance.