AI assistant
Firstsource Solutions Ltd. Interim / Quarterly Report 2021
61977_rns_2021-02-10_774206d4-0830-475c-a841-c87b95a1ea9e.pdf
Interim / Quarterly Report
Open in viewerOpens in your device viewer
10th February 2021
To:
National Stock Exchange of India Limited (Scrip Code: FSL) Exchange Plaza, Plot no. C/1, G Block, Bandra-Kurla Complex Bandra (East),
BSE Limited (Scrip Code: 532809) Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai - 400 001
Dear Madam/ Sir,
Mumbai - 400 051
Sub: Post intimation of Analyst/ Institutional Investor Call
Pursuant to Regulation 30(6) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, we are enclosing herewith a copy of the presentation regarding conference call held with the analysts and investors, on the financial results of the Company for the quarter and nine months ended 31st December 2020.
This is for your information and record.
Thanking you,
For Firstsource Solutions Limited
POOJA SURESH NAMBIAR Digitally signed by POOJA SURESH NAMBIAR Date: 2021.02.10 12:37:08 +05'30'
Pooja Nambiar Company Secretary & Compliance Officer
Encl.: A/a
Q 3 F Y 2 0 2 1 E A R N I N G S U P D A T E
Partnering with World's Leading Brands
Disclaimer
Certain statements in this presentation concerning our future growth prospects are forwardlooking statements, which involve a number of risks, and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to risks and uncertainties regarding fluctuations in earnings, our ability to manage growth, intense competition in BPO services including those factors which may affect our cost advantage, wage increases, our ability to attract and retain highly skilled professional, time and cost overruns on client contracts, client concentration, our ability to manage ramp-ups and growth, our ability to manage our international operations, reduced demand in our key focus verticals, disruptions in telecom infrastructure and technology, our ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, performance of our subsidiaries, withdrawal of government fiscal incentives, political instability, legal restrictions on raising capital and acquiring companies outside India, unauthorized use of our intellectual property and general economic conditions affecting our industry. Firstsource may, from time to time, make additional written and oral forward-looking statements, including our reports to shareholders. The company does not undertake to update any forward-looking statements that may be made from time to time by or on behalf of the company.
STRONG ALL-ROUND PERFORMANCE
- Revenue growth of 23.8% in constant currency YoY in Q3
- Sales momentum remains strong. We added 18 new clients this quarter, taking the tally to 43 new clients in this fiscal so far
BUSINESS MOMENTUM IS STRONG
- Strong demand environment
- Ramp of recent wins coupled with volume recovery driving growth in CMT
- BFS trending strong; continued momentum in mortgage and volume growth in our UK market
- Volumes remain subdued in healthcare; new wins partly offsetting impact. PatientMatters integration underway
FY2021 GROWTH ESTIMATES REVISED
- Revenue expected to grow between 16-17% in constant currency
- Operating Margin expected to be in range of 11.25-11.50%
Summary of Performance During the Quarter
Summary of Performance For the Nine Months
Revenue Splits
VERTICALS
- Growth momentum continues in BFS
- Volume recovery coupled with new ramps driving growth in CMT
- Volume compressions owing to COVID19 partially offset by new deal wins and strong pipeline in Healthcare
- Diverse Industries remains stable
- Digitally Empowered Contact Centre growth attributed to volume recovery across key clients
- Growth in Intelligent Back-office driven by broad based growth across business
- Steady progress on Platform based services with new wins
Client Concentration
5 of Top 10 Mortgage servicers in the US
3 of Top 6 Retail banks in the UK
4 of Top 10 Lenders in the US
950+ Hospitals in the US
5 of Top 10 Health insurance/ managed care companies in the US
1 of Top 3 Utility companies in the UK
19.0 years
Total Tenure
Average Tenure
5 of Top 10 Credit card issuers in the US
1 of Top 2 Broadcasting and media companies in the UK
2 of Top 6 Telecom and broadcasting companies in the US
Annexure
Financial Performance (Quarterly)
| In ₹ million | Q3 FY 2019 | Q4 FY 2019 | Q1 FY 2020 | Q2 FY 2020 | Q3 FY 2020 | Q4 FY2020 | Q1 FY 2021 | Q2 FY 2021 | Q3 FY 2021 |
|---|---|---|---|---|---|---|---|---|---|
| Income from services | 9,723 | 9,642 | 9,669 | 9,715 | 10,446 | 10,673 | 10,537 | 11,783 | 13,510 |
| Other operating Income | 129 | 30 | 129 | 134 | 89 | 132 | 85 | 94 | 142 |
| Revenue from operations | 9,852 | 9,672 | 9,798 | 9,849 | 10,535 | 10,804 | 10,622 | 11,877 | 13,652 |
| Revenue from operations (USD Mn) |
\$ 137 | \$ 137 | \$ 141 | \$ 140 | \$ 148 | \$ 149 | \$ 141 | \$ 160 | \$ 185 |
| QoQ Growth % - Constant Currency |
0.9% | 0.7% | 2.0% | 1.1% | 4.7% | 0.6% | -4.3% | 12.2% | 14.6% |
| YoY Growth % - Constant Currency |
3.5% | 3.8% | 5.2% | 4.5% | 8.3% | 8.2% | 1.6% | 13.1% | 23.8% |
| Personnel Expense | 6,565 | 6,344 | 6,611 | 6,722 | 7,053 | 7,350 | 7,128 | 7,985 | 9,503 |
| Operating Expense | 1,927 | 1,943 | 1,530 | 1,803 | 1,816 | 1,813 | 1,826 | 2,016 | 2,046 |
| Operating EBITDA | 1,361 | 1,384 | 1,657 | 1,325 | 1,666 | 1,641 | 1,876 | 2,103 | |
| Operating EBITDA % | 13.8% | 14.3% | 16.9% | 13.4% | 15.8% | 15.2% | 15.8% | 15.4% | |
| Depreciation / amortization | 191 | 190 | 439 | 455 | 484 | 474 | 498 | 519 | 513 |
| Operating Margin | 1,170 | 1,195 | 1,217 | 870 | 1,182 | 1,168 | 1,170 | 1,358 | 1,590 |
| Operating Margin % | 11.9% | 12.4% | 12.4% | 8.8% | 11.2% | 10.8% | 11.0% | 11.4% | 11.6% |
| Other Income / (expense) | (3) | (25) | (34) | 65 | 2 | (16) | (7) | 16 | 7 |
| Interest Income / (expense), net | (60) | (57) | (115) | (129) | (148) | (121) | (128) | (119) | (122) |
| PBT | 1,107 | 1,112 | 1,069 | 806 | 1,036 | 1,031 | 1,035 | 1,254 | 1,476 |
| PBT % | 11.2% | 11.5% | 10.9% | 8.2% | 9.8% | 9.5% | 9.7% | 10.6% | 10.8% |
| Taxes and Minority Interest | 126 | 130 | 157 | 132 | 140 | 115 | 148 | 201 | 265 |
| PAT | 981 | 982 | 912 | 674 | 895 | 916 | 887 | 1,053 | 1,210 |
| PAT % | 10.0% | 10.2% | 9.3% | 6.8% | 8.5% | 8.5% | 8.3% | 8.9% | 8.9% |
| Diluted EPS (₹ /Share) | 1.41 | 1.42 | 1.32 | 0.97 | 1.29 | 1.31 | 1.27 | 1.50 | 1.72 |
Note: Operating Margin implies EBIT (Earnings Before Interest and Taxes)
Financial Performance (Yearly)
| In ₹ million | FY 2016 | FY 2017 | FY 2018 | FY 2019 | FY 2020 | 9M FY2021 |
|---|---|---|---|---|---|---|
| Income from services | 31,617 | 34,569 | 34,315 | 37,867 | 40,502 | 35,831 |
| Other operating Income | 556 | 987 | 1,038 | 396 | 484 | 321 |
| Revenue from operations | 32,173 | 35,556 | 35,352 | 38,263 | 40,986 | 36,151 |
| Revenue from operations (USD Mn) |
\$ 491 | \$ 530 | \$ 548 | \$ 548 | \$ 578 | \$ 485 |
| YoY Growth % - Constant Currency |
2.0% | 12.9% | 2.8% | 2.0% | 6.6% | 13.1% |
| Personnel Expense | 21,727 | 23,834 | 23,955 | 25,573 | 27,735 | 24,616 |
| Operating Expense | 6,545 | 7,342 | 6,809 | 7,336 | 6,962 | 5,888 |
| Operating EBITDA | 3,901 | 4,380 | 4,589 | 5,355 | 6,289 | 5,648 |
| Operating EBITDA % | 12.1% | 12.3% | 13.0% | 14.0% | 15.3% | 15.6% |
| Depreciation / amortization | 609 | 590 | 659 | 744 | 1,852 | 1,530 |
| Operating Margin | 3,292 | 3,790 | 3,930 | 4,610 | 4,437 | 4,118 |
| Operating Margin % | 10.2% | 10.7% | 11.1% | 12.0% | 10.8% | 11.4% |
| Other Income / (expense) | 77 | (21) | (11) | (26) | 17 | 16 |
| Interest Income / (expense), net | (507) | (400) | (338) | (225) | (512) | (369) |
| PBT | 2,862 | 3,369 | 3,580 | 4,359 | 3,942 | 3,765 |
| PBT % | 8.9% | 9.5% | 10.1% | 11.4% | 9.6% | 10.4% |
| Taxes and Minority Interest | 257 | 569 | 315 | 581 | 545 | 615 |
| PAT | 2,605 | 2,800 | 3,265 | 3,778 | 3,397 | 3,150 |
| PAT % | 8.1% | 7.9% | 9.2% | 9.9% | 8.3% | 8.7% |
| Diluted EPS (₹ /Share) | 3.72 | 4.08 | 4.73 | 5.45 | 4.89 | 4.48 |
Note: Operating Margin implies EBIT (Earnings Before Interest and Taxes)
Balance Sheet and Cash Flow Statement
| ₹ million |
As at 31-Dec-20 | As at 31-Mar-20 |
|---|---|---|
| Equity And Liabilities | ||
| Share Capital | 6,956 | 6,938 |
| Reserves & Surplus | 22,630 | 20,716 |
| Non - Controlling Interest |
6 | 6 |
| Borrowings | 5,054 | 8,433 |
| Other Non - Current Liabilities |
5,957 | 4,874 |
| Current liabilities | 7,903 | 4,903 |
| Total | 48,506 | 45,871 |
| Assets | ||
| Goodwill on Consolidation | 22,418 | 22,324 |
| Fixed Assets | 7,445 | 6,385 |
| Cash and Cash Equivalents | 2,189 | 1,907 |
| Current Investments | 824 | 0 |
| Trade Receivables (Billed + Unbilled) | 7,790 | 7,540 |
| Non - Current Assets |
6,150 | 6,119 |
| Current Assets | 1,689 | 1,596 |
| Total | 48,506 | 45,871 |
| ₹ million | Quarter ended 31-Dec-20 | Nine Months ended 31-Dec-20 |
|---|---|---|
| Cash Flow from Operating Activities | ||
| Operating Margin | 1,590 | 4,118 |
| Adj: Non Cash and Other Income / (Expense) | 499 | 1,920 |
| Operating Cash before Working Capital | 2,089 | 6,038 |
| Add: Advance received from customers | 1,797 | 1,797 |
| Add: Working Capital Changes | 198 | 900 |
| Less: Income Taxes Paid | (198) | (485) |
| Net Cash generated from Operating Activities |
3,886 | 8,250 |
| Cash Flow from Investing Activities | ||
| Capital Expenditure | (636) | (1,098) |
| (Investments)/ Proceeds from Current Investments | (112) | (806) |
| Acquisition of Patient Matters LLC | (950) | (950) |
| Earmarked Balances with Banks (Dividend Escrow) | 0 | (15) |
| Net Cash used in Investing Activities | (1,699) | (2,868) |
| Cash Flow from Financing Activities | ||
| Net Increase / (Decrease) in Borrowings | (1,016) | (3,379) |
| Net Interest Paid (as per Ind AS 116) | (121) | (381) |
| Payment of Lease Liabilities | (266) | (827) |
| Increase in Shareholder's Funds | 27 | 57 |
| Purchase of treasury shares (Employee Stock Option Trust) | (90) | (599) |
| Net Cash used in Financing Activities | (1,466) | (5,129) |
| Net Increase / (Decrease) in Cash and Cash Equivalents | 722 | 252 |
| Opening Cash and Cash Equivalents | 1,453 | 1,907 |
| Earmarked Balances with Banks | (0) | 15 |
| Foreign Exchange (Gain) on Translating Cash and Cash Equivalents | 13 | 14 |
| Closing Cash and Cash Equivalents | 2,189 | 2,189 |
| Cash and Cash Equivalents Including Current Investments |
3,013 | 3,013 |
Key Performance Indicators
Note: 9MFY21 OCF and FCF adjusted for advance received from customers
Q3FY2021 EARNINGS UPDATE
Operating Metrices
| Particulars | Q3 FY 2019 | Q4 FY 2019 | Q1 FY 2020 | Q2 FY 2020 | Q3 FY 2020 | Q4 FY2020 | Q1 FY 2021 | Q2 FY 2021 | Q3 FY 2021 | |
|---|---|---|---|---|---|---|---|---|---|---|
| Banking & Financial Services | 34.6% | 36.1% | 35.6% | 40.4% | 42.9% | 42.8% | 51.2% | 51.9% | 52.0% | |
| Revenue by Vertical |
Communications Media & Tech | 28.5% | 27.5% | 27.2% | 22.0% | 21.9% | 22.9% | 16.2% | 18.8% | 20.5% |
| Healthcare | 34.1% | 33.2% | 33.5% | 34.5% | 32.4% | 31.3% | 29.9% | 27.1% | 25.3% | |
| Diverse Industries | 2.8% | 3.2% | 3.7% | 3.1% | 2.8% | 3.0% | 2.7% | 2.2% | 2.2% | |
| Digitally Empowered Contact Centre | 55.2% | 51.6% | 49.8% | 51.2% | 47.8% | 49.1% | 48.9% | |||
| Revenue by Service Lines |
Intelligent Back Office | 45.0% | 42.5% | 44.2% | 42.9% | 44.8% | ||||
| Platforms, Automation & Analytics | 5.2% | 5.6% | 5.2% | 6.3% | 8.0% | 8.0% | 6.3% | |||
| Revenue by Geography |
US | 55.2% | 55.3% | 57.0% | 61.6% | 63.3% | 63.2% | 69.1% | 68.1% | 67.1% |
| UK | 43.8% | 43.6% | 41.6% | 36.9% | 35.3% | 35.3% | 29.7% | 30.6% | 31.5% | |
| Rest of World | 1.0% | 1.1% | 1.4% | 1.5% | 1.4% | 1.5% | 1.2% | 1.3% | 1.4% | |
| Revenue by | Offshore | 18.1% | 18.5% | 22.5% | 22.8% | 25.2% | 25.6% | 24.8% | 27.0% | 29.8% |
| Delivery | Onshore | 81.9% | 81.5% | 77.5% | 77.2% | 74.8% | 74.4% | 75.2% | 73.0% | 70.2% |
| Top Clients | Top client % | 24.9% | 24.6% | 24.9% | 19.8% | 19.5% | 20.3% | 13.7% | 16.2% | 17.5% |
| Revenue | Top 5 client % | 41.2% | 42.3% | 41.2% | 39.5% | 42.1% | 42.2% | 39.9% | 40.4% | 41.4% |
| Total employees (end of period) | 18,595 | 18,712 | 18,550 | 20,001 | 20,482 | 21,203 | 21,831 | 23,960 | 26,618 | |
| • Employees in India |
8,621 | 8,968 | 9,305 | 10,493 | 10,982 | 11,450 | 11,684 | 13,536 | 15,381 | |
| • Employees outside India |
9,974 | 9,744 | 9,245 | 9,508 | 9,500 | 9,753 | 10,147 | 10,424 | 11,237 | |
| Other Metrices | Net Addition | 226 | 117 | (162) | 1,451 | 481 | 721 | 628 | 2,129 | 2,658 |
| Offshore Attrition* | 39.3% | 41.5% | 45.3% | 40.0% | 36.0% | 33.5% | 15.1% | 26.3% | 28.8% | |
| Onshore Attrition* | 45.8% | 42.9% | 46.8% | 54.6% | 45.8% | 41.9% | 30.2% | 47.3% | 34.6% |
Forex Hedges
Outstanding FX hedges at \$90.5 million for USD and £63.0 million for GBP
| GBP-INR | USD INR | |||||
|---|---|---|---|---|---|---|
| Period | Hedged | Average Rate | Hedged | Average Rate | ||
| 0-12 Months | £ 34.71 | Rs 103.31 /£ | \$ 76.72 | Rs 76.33 /\$ | ||
| 13-24 Months | £ 24.60 | Rs 114.15 /£ | \$ 13.80 | Rs 77.93 /\$ | ||
| More than 24 Months | £ 3.70 | Rs 119.83 /£ |
Q3FY2021 EARNINGS
UPDATE
Prior Period Reports
(Hyperlinks)
| ANNUAL REPORT | PUBLISHED RESULTS | INVESTOR PRESENTATIONS | PRESS RELEASE | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| FY2020 | FY2021 | Q1 | Q2 | Q3 | FY2021 | Q1 | Q2 | Q3 | FY2021 | Q1 | Q2 | Q3 | |||
| FY2020 | Q1 | Q2 | Q3 | Q4 | FY2020 | Q1 | Q2 | Q3 | Q4 | FY2020 | Q1 | Q2 | Q3 | Q4 | |
| FY2019 | FY2019 | Q1 | Q2 | Q3 | Q4 | FY2019 | Q1 | Q2 | Q3 | Q4 | FY2019 | Q1 | Q2 | Q3 | Q4 |
| FY2018 | FY2018 | Q1 | Q2 | Q3 | Q4 | FY2018 | Q1 | Q2 | Q3 | Q4 | FY2018 | Q1 | Q2 | Q3 | Q4 |
| FACT SHEET | SHAREHOLDING PATTERN | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| FY2021 | Q1 | Q2 | Q3 | FY2021 | Q1 | Q2 | Q3 | FY2021 | Q1 | Q2 | Q3 | |||
| FY2020 | Q1 | Q2 | Q3 | Q4 | FY2020 | Q1 | Q2 | Q3 | Q4 | FY2020 | Q1 | Q2 | Q3 | Q4 |
| FY2019 | Q1 | Q2 | Q3 | Q4 | FY2019 | Q1 | Q2 | Q3 | Q4 | FY2019 | Q1 | Q2 | Q3 | Q4 |
| FY2018 | Q1 | Q2 | Q3 | Q4 | FY2018 | Q1 | Q2 | Q3 | Q4 | FY2018 | Q1 | Q2 | Q3 | Q4 |
Click Here To subscribe for future updates
Our Global Footprint
Established in 2001
Revenues of INR 41.0 Billion (approximately \$578 Million) in FY2020
26,618 firstsourcers
across US, UK, India and Philippines
Leaders in chosen segments
across Banking & Financial Services, Healthcare, Communications, Media & Tech
100+ global clients including
17 Fortune 500 companies and 9 FTSE 100 companies
Publicly Traded on Indian Stock Exchanges
NSE: FSL BSE: 532809 Reuters: FISO.BO Bloomberg: FSOL@IN
Part of RP-Sanjiv Goenka Group Since 2012
Power & Natural Resources Carbon Black
Retail & FMCG Media & Entertainment
Education & Sports
Combined Revenues of \$3.8 Billion in FY2020
Select Awards
Top Patient Engagement Solutions Provider
2019: Healthcare Provider business awarded 2020 Top Patient Engagement Solutions Provider by Healthcare Tech Outlook
International Customer Experience Awards
2020: Firstsource, jointly with a client, won Silver Award for Best Customer Experience Strategy
Contact Centre Network Northern Ireland Awards
2020: Best Homeworking Programme for Derry Center
2019: Outsourced Contact Centre of the Year award with our client
2018: Won in the Support Team of the Year category
Welsh Contact Centre Awards
2020: Contact Centre Manager of the Year
2019: Gold for People Engagement
2018: Gold for Outsourced Contact Centre of the Year and People Engagement
NelsonHall
Positioned as a 'Leader' in NelsonHall's NEAT Evaluation both for 'Overall Mortgage & Loan Services' as well as 'Support for New Digital Business Models'
Industry Associations
Corporate Management – Senior Leadership
Vipul Khanna
MD and Chief Executive Officer
Finance
Deb Biswas Communications, Media & Technology
Operations
Siddharth Parashar Europe Business
Healthcare Provider
Human Resources Digital Services Marketing & Corporate Communications
Health Plans & Healthcare Services
Steven Schachter Mortgage
Helping customers stay ahead of the curve through transformational technologies and capabilities
Firstsource Solutions Limited, an RP-Sanjiv Goenka Group company, is a leading provider of transformational solutions and services spanning the customer lifecycle across Healthcare, Banking and Financial Services, Communications, Media and Technology and other industries.
Our 'Digital First, Digital Now' approach helps organizations reinvent operations and reimagine business models, enabling them to deliver moments that matter and build competitive advantage.
With an established presence in the US, the UK, India and the Philippines, we act as a trusted growth partner for over 100 leading global brands, including several Fortune 500 and FTSE 100 companies.
www.firstsource.com
