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Firstsource Solutions Ltd. Investor Presentation 2021
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Investor Presentation
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10th November 2021
To:
National Stock Exchange of India Limited (Scrip Code: FSL) Exchange Plaza, Plot no. C/1, G Block, Bandra-Kurla Complex Bandra (East), Mumbai - 400 051
BSE Limited (Scrip Code: 532809) Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai - 400 001
Dear Madam/ Sir,
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 half-year ended 30th September 2021.
This is for your information and record.
Thanking you,
For Firstsource Solutions Limited POOJA SURESH NAMBIAR Digitally signed by POOJA SURESH NAMBIAR Date: 2021.11.10 15:59:44 +05'30'
Pooja Nambiar Company Secretary & Compliance Officer
Encl.: A/a
1 © FIRSTSOURCE 2021 | 10 November 2021
Q2 FY2022 Earnings Update
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 professionals, 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.
Summary of Performance During the Quarter
Summary of Performance During First Half
REVENUE SPLIT BY VERTICALS REVENUE SPLIT BY SERVICE LINES
Client Concentration
4 of Top 15 Mortgage servicers in the US
2 of Top 6 Retail banks in the UK
6 of Top 15 Mortgage Lenders in the US
1,000+ Hospitals in the US
7 of Top 10 Health insurance/ managed care companies in the US
1 of Top 3 Utility companies in the UK
16.3%
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 | Q2 FY 2020 | Q3 FY 2020 | Q4 FY2020 | Q1 FY 2021 | Q2 FY 2021 | Q3 FY 2021 | Q4 FY 2021 | Q1 FY 2022 | Q2 FY 2022 |
|---|---|---|---|---|---|---|---|---|---|
| Income from services | 9,715 | 10,446 | 10,673 | 10,537 | 11,783 | 13,510 | 14,496 | 14,780 | 14,182 |
| Other operating Income | 134 | 89 | 132 | 85 | 94 | 142 | 132 | 68 | 104 |
| Revenue from operations | 9,849 | 10,535 | 10,804 | 10,622 | 11,877 | 13,652 | 14,628 | 14,848 | 14,286 |
| Revenue from operations(USD Mn) | $ 140 | $ 148 | $ 149 | $ 141 | $ 160 | $ 185 | $ 200 | $ 201 | $ 193 |
| QoQGrowth % -Constant Currency | 1.1% | 4.7% | 0.6% | -4.3% | 12.2% | 14.6% | 7.0% | 0.5% | -4.0% |
| YoYGrowth % -Constant Currency | 4.5% | 8.3% | 8.2% | 1.6% | 13.1% | 23.8% | 31.7% | 38.5% | 18.5% |
| Personnel Expense | 6,722 | 7,053 | 7,350 | 7,128 | 7,985 | 9,503 | 10,057 | 10,219 | 9,728 |
| Operating Expense | 1,803 | 1,816 | 1,813 | 1,826 | 2,016 | 2,046 | 2,229 | 2,246 | 2,171 |
| Operating EBITDA | 1,325 | 1,666 | 1,641 | 1,668 | 1,876 | 2,103 | 2,342 | 2,383 | 2,388 |
| Operating EBITDA % | 13.4% | 15.8% | 15.2% | 15.7% | 15.8% | 15.4% | 16.0% | 16.1% | 16.7% |
| Depreciation / amortization | 455 | 484 | 474 | 498 | 519 | 513 | 534 | 584 | 597 |
| Operating Margin | 870 | 1,182 | 1,168 | 1,170 | 1,358 | 1,590 | 1,809 | 1,800 | 1,791 |
| Operating Margin % | 8.8% | 11.2% | 10.8% | 11.0% | 11.4% | 11.6% | 12.4% | 12.1% | 12.5% |
| Other Income / (expense) | 65 | 2 | (16) | (7) | 16 | 7 | (29) | (10) | 0 |
| Interest Income / (expense), net | (129) | (148) | (121) | (128) | (119) | (122) | (127) | (136) | (148) |
| Profit Before Taxes and exceptional item | 806 | 1,036 | 1,031 | 1,035 | 1,254 | 1,476 | 1,652 | 1,654 | 1,644 |
| Profit Before Taxes and exceptional item % | 8.2% | 9.8% | 9.5% | 9.7% | 10.6% | 10.8% | 11.3% | 11.1% | 11.5% |
| Exceptional Item | - | - | - | - | - | - | (1,099) | - | - |
| Profit Before Taxes | 806 | 1,036 | 1,031 | 1,035 | 1,254 | 1,476 | 553 | 1,654 | 1,644 |
| Profit Before Taxes% | 8.2% | 9.8% | 9.5% | 9.7% | 10.6% | 10.8% | 3.8% | 11.1% | 11.5% |
| Taxes and Minority Interest | 132 | 140 | 115 | 148 | 201 | 265 | 87 | 309 | 293 |
| Profit After Tax | 674 | 895 | 916 | 887 | 1,053 | 1,210 | 467* | 1,345 | 1,350 |
| Profit After Tax % | 6.8% | 8.5% | 8.5% | 8.3% | 8.9% | 8.9% | 3.2% | 9.1% | 9.5% |
| Diluted EPS (₹ /Share) | 0.97 | 1.29 | 1.31 | 1.27 | 1.50 | 1.72 | 0.66 | 1.91 | 1.96 |
* For Q4 FY21, PAT excluding the exceptional charge is INR 1,309 Mn or 8.9%
Financial Performance (Yearly)
| In ₹ million | FY 2016 | FY 2017 | FY 2018 | FY 2019 | FY 2020 | FY2021 | H1FY22 |
|---|---|---|---|---|---|---|---|
| Income from services | 31,617 | 34,569 | 34,315 | 37,867 | 40,502 | 50,327 | 28,962 |
| Other operating Income | 556 | 987 | 1,038 | 396 | 484 | 453 | 172 |
| Revenue from operations | 32,173 | 35,556 | 35,352 | 38,263 | 40,986 | 50,780 | 29,134 |
| Revenue from operations(USD Mn) | $ 491 | $ 530 | $ 548 | $ 548 | $ 578 | $ 685 | $ 394 |
| YoYGrowth % -Constant Currency | 2.0% | 12.9% | 2.8% | 2.0% | 6.6% | 17.9% | 27.9% |
| Personnel Expense | 21,727 | 23,834 | 23,955 | 25,573 | 27,735 | 34,672 | 19,946 |
| Operating Expense | 6,545 | 7,342 | 6,809 | 7,336 | 6,962 | 8,065 | 4,417 |
| Operating EBITDA | 3,901 | 4,380 | 4,589 | 5,355 | 6,289 | 8,042 | 4,771 |
| Operating EBITDA % | 12.1% | 12.3% | 13.0% | 14.0% | 15.3% | 15.8% | 16.4% |
| Depreciation / amortization | 609 | 590 | 659 | 744 | 1,852 | 2064 | 1,180 |
| Operating Margin | 3,292 | 3,790 | 3,930 | 4,610 | 4,437 | 5,979 | 3,591 |
| Operating Margin % | 10.2% | 10.7% | 11.1% | 12.0% | 10.8% | 11.8% | 12.3% |
| Other Income / (expense) | 77 | (21) | (11) | (26) | 17 | (13) | (9) |
| Interest Income / (expense), net | (507) | (400) | (338) | (225) | (512) | (496) | (284) |
| Profit Before Taxes and exceptional item | 2,862 | 3,369 | 3,580 | 4,359 | 3,942 | 5,469 | 3,297 |
| Profit Before Taxes and exceptional item % | 8.9% | 9.5% | 10.1% | 11.4% | 9.6% | 10.8% | 11.3% |
| Exceptional Item | - | - | - | - | - | (1,151) | - |
| Profit Before Taxes | 2,862 | 3,369 | 3,580 | 4,359 | 3,942 | 4,318 | 3,297 |
| Profit Before Taxes% | 8.9% | 9.5% | 10.1% | 11.4% | 9.6% | 8.5% | 11.3% |
| Taxes and Minority Interest | 257 | 569 | 315 | 581 | 545 | 702 | 602 |
| Profit After Tax | 2,605 | 2,800 | 3,265 | 3,778 | 3,397 | 3,617* | 2,695 |
| Profit After Tax % | 8.1% | 7.9% | 9.2% | 9.9% | 8.3% | 7.1% | 9.3% |
| Diluted EPS (₹ /Share) | 3.72 | 4.08 | 4.73 | 5.45 | 4.89 | 5.13 | 3.82 |
* For FY2021, PAT excluding the exceptional charge is INR 4,499 Mn or 8.9%
Addition of Q1 & Q2 EPS nos will not add up to H1FY22 EPS due to change in no. of shares
Balance Sheet and Cash Flow Statement
| In ₹ million | As at 30-Sep-21 | As at 31-Mar-21 | ||
|---|---|---|---|---|
| Equity And Liabilities | ||||
| Share Capital | 6,970 | 6,961 | ||
| Reserves & Surplus | 22,737 | 21,032 | ||
| Non -Controlling Interest | 5 | 5 | ||
| Borrowings | 5,556 | 6,045 | ||
| Other Non -Current Liabilities | 7,930 | 5,438 | ||
| Current liabilities | 6,186 | 8,816 | ||
| Total | 49,385 | 48,297 | ||
| Goodwill on Consolidation | 22,275 | 21,948 | ||
| Fixed Assets | 8,649 | 8,028 | ||
| Cash and Cash Equivalents | 1,230 | 1,373 | ||
| Current Investments | 947 | 826 | ||
| Trade Receivables (Billed + Unbilled) | 8,267 | 8,431 | ||
| Non -Current Assets | 5,972 | 6,008 | ||
| Current Assets | 2,045 | 1,683 | ||
| Total | 49,385 | 48,297 |
| In ₹ million | Quarter ended 30-Sep-21 | Six Months ended 30-Sep-21 | ||
|---|---|---|---|---|
| Cash Flow from Operating Activities | ||||
| Operating Margin | 1,791 | 3,591 | ||
| Adj: Non Cash and Other Income / (Expense) | 788 | 1,373 | ||
| Operating Cash before Working Capital | 2,579 | 4,964 | ||
| Add: Working Capital Changes | 107 | (1,729) | ||
| Less: Income Taxes Paid | (257) | (561) | ||
| Net Cash generatedfromOperating Activities | 2,429 | 2,674 | ||
| Cash Flow from Investing Activities | ||||
| Capital Expenditure (net) | (158) | (281) | ||
| (Investments)/ Proceeds from Current Investments | (121) | (104) | ||
| Proceeds from redemption of Debentures | 2 | 2 | ||
| Net Cash used in Investing Activities | (277) | (384) | ||
| Cash Flow from Financing Activities | ||||
| Net Increase / (Decrease) in Borrowings | (646) | (488) | ||
| Purchase of Non-controlling Interest in a subsidiary | (887) | (887) | ||
| Net Interest Paid (as per Ind AS 116) | (155) | (302) | ||
| Payment of Lease Liabilities | (265) | (508) | ||
| Increase in Shareholder's Funds | 9 | 37 | ||
| Purchase for Employee Stock Option Trust | (306) | (306) | ||
| Net Cash used in Financing Activities | (2,251) | (2,455) | ||
| Net Increase / (Decrease) in Cash and Cash Equivalents | (99) | (165) | ||
| Opening Cash and Cash Equivalents | 1,340 | 1,373 | ||
| Earmarked Balances with Banks | (0) | 20 | ||
| Foreign Exchange (Gain) on Translating Cash and Cash Equivalents | (11) | 2 | ||
| Closing Cash and Cash Equivalents | 1,230 | 1,230 | ||
| Cash and Cash Equivalents Including CurrentInvestments | 2,177 | 2,177 |
Key Performance Indicators
Return on Equity
Note: FY21 and Q1 FY22 OCF and FCF adjusted for advance received from customers
Operating Metrices
| Particulars | Q2 FY 2020 | Q3 FY 2020 | Q4 FY2020 | Q1 FY 2021 | Q2 FY 2021 | Q3 FY 2021 | Q4 FY 2021 | Q1 FY 2022 | Q2 FY 2022 | |
|---|---|---|---|---|---|---|---|---|---|---|
| Banking & Financial Services | 40.4% | 42.9% | 42.8% | 51.2% | 51.9% | 52.0% | 52.2% | 51.7% | 48.9% | |
| Revenue by | Healthcare | 34.5% | 32.4% | 31.3% | 29.9% | 27.1% | 25.3% | 24.8% | 26.7% | 29.6% |
| Vertical | Communications Media & Tech | 22.0% | 21.9% | 22.9% | 16.2% | 18.8% | 20.5% | 20.8% | 19.6% | 19.5% |
| Diverse Industries | 3.1% | 2.8% | 3.0% | 2.7% | 2.2% | 2.2% | 2.2% | 2.0% | 2.0% | |
| Digitally Empowered Contact Centre | 51.6% | 49.8% | 51.2% | 47.8% | 49.1% | 48.9% | 47.2% | 46.3% | 46.8% | |
| Revenue byService Lines | Intelligent Back Office | 42.8% | 45.0% | 42.5% | 44.2% | 42.9% | 44.8% | 47.9% | 47.6% | 45.6% |
| Platforms, Automation & Analytics | 5.6% | 5.2% | 6.3% | 8.0% | 8.0% | 6.3% | 4.9% | 6.1% | 7.6% | |
| US | 61.6% | 63.3% | 63.2% | 69.1% | 68.1% | 67.1% | 67.4% | 67.6% | 68.4% | |
| Revenue byGeography | UK | 36.9% | 35.3% | 35.3% | 29.7% | 30.6% | 31.5% | 31.5% | 31.1% | 30.1% |
| Rest of World | 1.5% | 1.4% | 1.5% | 1.2% | 1.3% | 1.4% | 1.1% | 1.3% | 1.5% | |
| Revenue by | Offshore | 22.8% | 25.2% | 25.6% | 24.8% | 27.0% | 29.8% | 30.6% | 29.3% | 31.0% |
| Delivery | Onshore | 77.2% | 74.8% | 74.4% | 75.2% | 73.0% | 70.2% | 69.4% | 70.7% | 69.0% |
| Top Clients | Top client % | 19.8% | 19.5% | 20.3% | 13.7% | 16.2% | 17.5% | 17.5% | 16.3% | 15.8% |
| Revenue | Top 5 client % | 39.5% | 42.1% | 42.2% | 39.9% | 40.4% | 41.4% | 42.3% | 42.0% | 41.2% |
| Total employees (end of period) | 20,001 | 20,482 | 21,203 | 21,831 | 23,960 | 26,618 | 28,004 | 27,916 | 27,835 | |
| Other Metrices | •Employees in India | 10,493 | 10,982 | 11,450 | 11,684 | 13,536 | 15,381 | 16,289 | 16,677 | 16,976 |
| •Employees outside India | 9,508 | 9,500 | 9,753 | 10,147 | 10,424 | 11,237 | 11,715 | 11,239 | 10,859 | |
| Net Addition | 1,451 | 481 | 721 | 628 | 2,129 | 2,658 | 1,386 | (88) | (81) | |
| Offshore Attrition* | 40.0% | 36.0% | 33.5% | 15.1% | 26.3% | 28.8% | 28.6% | 29.2% | 36.2% | |
| Onshore Attrition* | 54.6% | 45.8% | 41.9% | 30.2% | 47.3% | 34.6% | 40.0% | 54.8% | 68.8% |
Q2FY2022 EARNINGS UPDATE
Forex Hedges
Outstanding FX hedges at $81.6 million for USD and £46.7 million for GBP
| GBP-INR | USD INR | |||||
|---|---|---|---|---|---|---|
| Period | Hedged | Average Rate | Hedged | Average Rate | ||
| 0-12 Months | £ 34.3 | Rs 110.4 /£ | $ 71.6 | Rs 76.9 /$ | ||
| 13-24 Months | £ 12.4 | Rs 117.1 /£ | $ 10.0 | Rs 80.2 /$ |
Prior Period Reports
(Hyperlinks)
| ANNUAL REPORT | PUBLISHED RESULTS | INVESTOR PRESENTATIONS | PRESS RELEASE | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| FY2021 | FY2022 | Q1 | Q2 | FY2022 | Q1 | Q2 | FY2022 | Q1 | Q2 | ||||||
| FY2021 | Q1 | Q2 | Q3 | Q4 | FY2021 | Q1 | Q2 | Q3 | Q4 | FY2021 | Q1 | Q2 | Q3 | Q4 | |
| FY2020 | 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 | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| FY2022 | Q1 | Q2 | FY2022 | Q1 | Q2 | FY2022 | Q1 | Q2 | ||||||
| FY2021 | Q1 | Q2 | Q3 | Q4 | FY2021 | Q1 | Q2 | Q3 | Q4 | FY2021 | Q1 | Q2 | Q3 | Q4 |
| FY2020 | Q1 | Q2 | Q3 | Q4 | FY2020 | Q1 | Q2 | Q3 | Q4 | |||||
| FY2019 | Q1 | Q2 | Q3 | Q4 | FY2019 | Q1 | Q2 | Q3 | Q4 | FY2020 | Q1 | Q2 | Q3 | Q4 |
| FY2018 | Q1 | Q2 | Q3 | Q4 | FY2018 | Q1 | Q2 | Q3 | Q4 | FY2019 | Q1 | Q2 | Q3 | Q4 |
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Strong Domain Driven Operating Model
Established in 2001
About Us
Revenues of INR 51.0 Billion
(approximately $685 Million) in FY2021
27,835 Firstsourcers
across US, UK, India and Philippines
Leaders in chosen segments
across Banking & Financial Services, Healthcare, Communications, Media & Technology and Diversified Industries
Domain driven BPM services company
Leveraging a 'Digital First, Digital Now' approach to solve key customer problems
150+ 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
Select Awards
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 NEAT Evaluation for 'Overall Mortgage & Loan Services' and 'Support for New Digital Business Models'
Positioned as a 'Leader' in its 'Intelligent Automation in Banking NEAT 2021' report
"A-100" by SecurityScorecard™
2021: Rated 'A-100' by SecurityScorecard ™ - a testament to our robust security posture across technology platforms, cloud solutions and applications, and our best practices-based security protocols.
Ranked as top Business Process Services (BPS) provider in 'BPS Top 50™' report.
Firstsource was also placed as Top 10 Service Providers by Growth by the industry research firm.
Industry Associations
Corporate Management Senior Leadership
Dinesh Jain
Finance
Prashanth Nandella Operations
Randall Shafer
Healthcare Provider
Shuchika Sahay
Venkatgiri Vandali
Healthcare
Sundara Sukavanam
Digital Services
Deb Biswas
Communications, Media & Technology
Rajlakshmi Raghavan
Marketing & Communication
Siddharth Parashar
Europe Business
Arjun Mitra Collections
Steven Schachter
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
20 © FIRSTSOURCE 2021 | 10 November 2021 © Firstsource Solutions Limited | Confidential | 10 November 2021