Intense Technologies - Company and Q4FY24 Earnings Analysis
Is it a phoenix emerging from ashes or a company that will repeat its past?
About Company:
Intense Technologies (NSE: INTENTECH) incorporated in 1990 and headquartered in India is a a global enterprise software products and services company with customers across 4 continents; with 20+ years of experience in telecom and BFSI domains. Their flagship platform, UniServe™ NXT, leverages AI, machine learning, and robotic process automation to streamline customer onboarding, communications, and experience orchestration, enhancing business efficiency and customer engagement.
Industry Analysis:
Technology-enabled businesses have emerged rapidly in recent years, with data at the core of this transformation, driving insights and informing decisions. Data governance, crucial for security and access, plays a significant role in this landscape. The global data analytics market, valued at USD 30 billion in 2022, is projected to exceed USD 393.35 billion by 2032, growing at a CAGR of 29.4% from 2023 to 2032. The integration of cloud, automation, and AI is simplifying business operations and fostering innovation. By leveraging machine learning and AI for operational data analysis, organizations can unlock significant value. According to IDC, enterprise intelligence relies on AI-driven technology platforms that synthesize information, enhance learning capacity, and apply scalable insights.
According to IDC, the AI software market grew rapidly in 2021 and is projected to reach $791.5 billion in revenue by 2025, with a CAGR of 18.4%. The AI-centric segment alone is expected to reach $192.6 billion, growing at a CAGR of 31.2%. Despite high inflation and recession concerns, investment in AI and automation technologies continues robustly. Technology leaders believe that lessons from past economic downturns highlight technology as a crucial business driver, essential for future-proofing their enterprises.
Solution Offerings:
As cloud and data technologies advance, the adoption of AI is set to accelerate further. Intense Technologies harnesses the power of data, AI, and cloud to help companies build resilience, elevate customer experiences, and embrace an open and scalable ecosystem. With a focus on data management, cloud computing, low-code development, and automation, Intense revolutionizes organizational operations and growth in the digital landscape. Their offerings include
UniServe™ Reach, a marketing automation platform that enhances customer relationships through personalized engagement, integrating real-time customer data, intelligent loyalty management, and AI-driven analytics.
Additionally, Intense provides scalable services in cloud, data, talent-as-a-service, and enterprise application development, supporting strategic business growth through advanced technology.
Their full low-code application lifecycle services simplify platform adoption, driving efficiency and innovation.
Intense Technologies, with its IP-enabled services and strong focus on cloud solutions, has partnered with major hyperscalers such as AWS, Azure, and IBM. This makes them a preferred partner for customers looking to leverage advanced cloud capabilities.
Uniserve NXT Marketing & Communication Hub:
The company’s flagship product Uniserve is the market leader in Customer Communication Management. According to Gartner:
“Customer Communications Management (CCM) software is both a strategy and a market that focuses on enhancing the creation, delivery, storage, and retrieval of outbound and interactive communications. It facilitates the production of personalized customer messages, marketing materials, new product announcements, and transaction documents. By integrating content from various sources, CCM software enables enterprises to communicate effectively with customers, prospective customers, and business partners through targeted and relevant electronic and physical channels. These communications can be delivered via mobile, email, SMS, web pages, social media, and print. Evolving from document generation and output management technologies, modern CCM solutions now include design tools, composition engines, workflow/rule engines, and multichannel output management.”
On Gartner Peer Insights, Uniserve was ranked as the No. 1 CCM with a 4.9 rating.
Top competitors in this segment include names like Adobe:
Customer Profile:
Intense Technologies boasts an impressive clientele that includes the top five private banks, top five insurance providers, and the top two telecom service providers in India. They focus on leveraging technology to deliver mission-critical, enterprise-class applications at scale, driving significant business impact.
Holding over 50% market share in India's insurance and telecom sectors, their scalable solutions generate more than 5 million statements and over 400 million notifications daily.
Financial Highlights Q4FY24:
The financial highlights for Intense Technologies in FY24 reflect robust growth and improved profitability. Key insights include:
Revenue Growth: The company saw a substantial 27% increase in revenues, rising from 9,184 lakhs in FY 23 to 11,650 lakhs in FY 24. This growth is distributed across all four quarters, indicating consistent performance throughout the year.
Comments: The company has shown around 8-15% of revenue growth historically. This year’s revenue growth was exceptionally high due to company being in a transition phase where they have implemented new sales strategies to cross-sell their other product offerings to the existing customers. The company has crossed 100 crores of revenue for the first time in history of their operations.
EBITDA and Margin Improvement: EBITDA increased by 22%, from 1,863 lakhs in FY 23 to 2,271 lakhs in FY24. The EBITDA margin remained strong at approximately 20%, underscoring effective cost management and operational efficiency.
Profit After Tax (PAT) and Margin: PAT grew by 14%, from 1,375 lakhs in FY 23 to 1,564 lakhs in FY 24. This indicates healthy bottom-line growth, reflecting the company's ability to convert revenues into profits effectively.
Earnings Per Share (EPS): EPS increased by 14%, from ₹5.86 in FY 23 to ₹6.66 in FY 24. This growth benefits shareholders by enhancing the value and return on their investment.
Comments: Historical EPS has been as high as ₹8.49 in FY22. The company has mentioned that due to company being in a transition phase, they are spending on their growth and as a result EPS will remain subdued for another 2 years before reaching an ATH.
Overall, Intense Technologies demonstrated strong financial health and growth in FY24, with significant improvements in revenue, profitability, and shareholder returns.
Past Issues:
Continuously Missing Guidance: Intense Technologies has a mixed track record regarding meeting its financial guidance. Over recent years, the company has faced challenges in consistently meeting its projections, which has influenced investor sentiment and the company's stock performance.
Questions being raised by investors during Q4FY24 Earnings Call BSNL Contract: Initially, Intense Technologies had secured a significant contract with BSNL aimed at streamlining customer onboarding and enhancing billing processes through their Uniserve platform. The contract between Intense Technologies and BSNL was cancelled due to various operational and compliance challenges.
DSO: Investors in the past have perpetually raised questions on DSO which is unusually high. The company has attributed this to having government contracts and making some mistakes in the past. While, the DSO has reduced for FY24, company still had to write of Rs. 60 lakhs of bad debt during Q4FY24.
Project Butterfly - Heading for a Turnaround?
"Project Butterfly" is a 3-year initiative launched by Intense Technologies focused on scaling and expanding their tech-enabled service offerings to current customers and driving new opportunities to enhance revenue and profitability. The project symbolizes transformation, leveraging IP and technological innovations to achieve time and cost efficiencies, thereby supporting both the company’s and its customers' success in a fast-paced market.
Some of the initiatives under the project butterfly are:
There is a shift in the primary focus of the organization from being tech-driven to more sales-driven organization.
More focus on sales farming and as a result, each key account has been allotted a dedicated account manager.
Bringing in talent with 15+ experience in BFSI.
Creating ESOP Trust scheme to incentivize segment leaders.
Personal Opinion:
The company gained my attention when they reported their Q4FY24 results last week. Looking at the just the fundamentals where the company has cross Rs. 100 crores of revenue for the first time, strong order pipeline, all the major banks being their customers, and their flagship product being a market leader, it mostly checked all the points.
However, reading about the management and its erroneous activities in the past, it just eroded away all my confidence in the company. Reading about experiences of knowledgeable investors on Valuepickr, just didn’t help in adding conviction. Although, the company now claims that they are in a transition phase and the young blood are taking over, however this is not the first time management has over-promised and failed to deliver. I am avoiding the stock for now.
Great