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Firstsource Solutions Ltd. Investor Presentation 2022

Aug 4, 2022

61977_rns_2022-08-04_9337f70f-b634-4205-a526-8b4dbafbcded.pdf

Investor Presentation

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4[th] August 2022

To:

National Stock Exchange of BSE Limited (Scrip Code: India Limited (Scrip Code: FSL) 532809) Exchange Plaza, Phiroze Jeejeebhoy Towers, Plot no. C/1, G Block, Dalal Street, Bandra-Kurla Complex Mumbai - 400 001 Bandra (East), Mumbai - 400 051

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 ended 30[th] June 2022.

We request you to take the above on record.

Thanking you,

For Firstsource Solutions Limited

POOJA SURESH Digitally signed by POOJA SURESH NAMBIAR NAMBIAR Date: 2022.08.04 13:37:37 +05'30'

Pooja Nambiar Company Secretary

Encl.: A/a

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Q1 FY2023 Earnings Update

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© FIRSTSOURCE 2021 | 3 August 2022

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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.

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© FIRSTSOURCE 2021 | 3 August 2022

Summary of Performance for the Quarter ended June 30, 2022

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REVENUES OPERATING MARGIN
₹ 14,724 Million ₹ 1,171 Million
(US$ 191 Million) (Margin 8.0%)
YoY degrowth of 0.8%
YoY degrowth of 34.9%
Constant Currency degrowth of 2.7%
PROFIT AFTER TAX EARNINGS PER SHARE
(Diluted)
₹ 851 Million ₹ 1.21
(Margin 5.8%) per share
YoY degrowth of 36.7%
Q1FY’22 at ₹ 1.91 per share on reported basis
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© FIRSTSOURCE 2021 | 3 August 2022

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REVENUE SPLIT BY VERTICALS
Q1 FY23 Q1 FY23 46.3% 32.1% 20.2% 1.4%
Q4 FY22 49.0% 30.3% 19.0% 1.7%
Q3 FY22 48.3% 30.3% 19.6% 1.8%
Q2 FY22 48.9% 29.6% 19.5% 2.0%
Q1 FY22 51.7% 26.7% 19.6% 2.0%
Banking & Financial Services Healthcare
Communication, Media & Tech Diverse Industries
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REVENUE SPLIT BY SERVICE LINES
Q1 FY23 Q1 FY23 46.6% 32.7% 20.7%
Q4 FY22 44.4% 36.5% 19.1%
Q3 FY22 45.9% 44.0% 10.1%
Q2 FY22 46.8% 45.6% 7.6%
Q1 FY22 46.3% 47.6% 6.1%
Digitally Empowered Contact Centre Intelligent Back Office
Platforms, Automation & Analytics
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© FIRSTSOURCE 2021 | 3 August 2022

Client Concentration

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Q1 FY23 Q1 FY23 15.2%
20.5 years
Total Tenure
Q4 FY22 14.8%
Q4 FY22 Q1 FY23 36.4%
18.3 years
Average Tenure
Q4 FY22 35.9%
Top Client
Top 5 Clients
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4 of Top 15 2 of Top 6 6 of Top 15
Mortgage servicers in Retail banks in the UK Mortgage Lenders in
the US the US
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7 of Top 10
1,000+
Health insurance/ managed
Hospitals in the US
care companies in the US
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1 of Top 3
Utility companies in the
UK
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5 of Top 10
Credit card issuers in the
US
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1 of Top 2 2 of Top 6
Broadcasting and media Telecom and broadcasting
companies in the UK companies in the US
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© FIRSTSOURCE 2021 | 3 August 2022

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Annexure

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© FIRSTSOURCE 2021 | 3 August 2022

Financial Performance (Quarterly)

In ₹ million Q1 FY 2021 Q2 FY 2021 Q3 FY 2021 Q4 FY 2021 Q1 FY 2022 Q2 FY 2022 Q3 FY 2022 Q4 FY 2022 Q1 FY 2023
Income from services 10,537 11,783 13,510 14,496 14,780 14,182 14,456 15,239 14,524
Other operating Income 85 94 142 132 68 104 182 201 199
Revenue from operations 10,622 11,877 13,652 14,628 14,848 14,286 14,638 15,439 14,724
Revenue from operations (USD Mn) $ 141 $ 160 $ 185 $ 200 $ 201 $ 193 $ 195 $ 206 $ 191
QoQ Growth % - Constant Currency -4.3% 12.2% 14.6% 7.0% 0.5% -4.0% 1.4% 5.2% -5.1%
YoY Growth % - Constant Currency 1.6% 13.1% 23.8% 31.7% 38.5% 18.5% 4.9% 3.1% -2.7%
Personnel Expense 7,128 7,985 9,503 10,057 10,219 9,728 9,676 9,845 9,597
Operating Expense 1,826 2,016 2,046 2,229 2,246 2,171 2,583 3,146 3,316
Operating EBITDA 1,668 1,876 2,103 2,342 2,383 2,388 2,379 2,448 1,810
Operating EBITDA % 15.7% 15.8% 15.4% 16.0% 16.1% 16.7% 16.3% 15.9% 12.3%
Depreciation / amortization 498 519 513 534 584 597 617 697 639
Operating Margin 1,170 1,358 1,590 1,809 1,800 1,791 1,762 1,751 1,171
Operating Margin % 11.0% 11.4% 11.6% 12.4% 12.1% 12.5% 12.0% 11.3% 8.0%
Other Income / (expense) (7) 16 7 (29) (10) 0 (5) (15) 54
Interest Income / (expense), net (128) (119) (122) (127) (136) (148) (143) (177) (177)
Profit Before Taxes and exceptional item 1,035 1,254 1,476 1,652 1,654 1,644 1,614 1,560 1,048
Profit Before Taxes and exceptional item % 9.7% 10.6% 10.8% 11.3% 11.1% 11.5% 11.0% 10.1% 7.1%
Exceptional Item - - - (1,099) - - - - -
Profit Before Taxes 1,035 1,254 1,476 553 1,654 1,644 1,614 1,560 1,048
Profit Before Taxes % 9.7% 10.6% 10.8% 3.8% 11.1% 11.5% 11.0% 10.1% 7.1%
Taxes and Minority Interest 148 201 265 87 309 293 259 236 197
Profit After Tax 887 1,053 1,210 467* 1,345 1,350 1,355 1,324 851
Profit After Tax % 8.3% 8.9% 8.9% 3.2% 9.1% 9.5% 9.3% 8.6% 5.8%
Diluted EPS (₹ /Share) 1.27 1.50 1.72 0.66 1.91 1.96 1.92 1.88 1.21

Note: Numbers have rounding off impact

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© FIRSTSOURCE 2021 | 3 August 2022

  • 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 FY2022
Income from services 31,617 34,569 34,315 37,867 40,502 50,327 58,657
Other operating Income 556 987 1,038 396 484 453 554
Revenue from operations 32,173 35,556 35,352 38,263 40,986 50,780 59,212
Revenue from operations (USD Mn) $ 491 $ 530 $ 548 $ 548 $ 578 $ 685 $ 795
YoY Growth % - Constant Currency 2.0% 12.9% 2.8% 2.0% 6.6% 17.9% 14.6%
Personnel Expense 21,727 23,834 23,955 25,573 27,735 34,672 39,468
Operating Expense 6,545 7,342 6,809 7,336 6,962 8,065 10,145
Operating EBITDA 3,901 4,380 4,589 5,355 6,289 8,042 9,599
Operating EBITDA % 12.1% 12.3% 13.0% 14.0% 15.3% 15.8% 16.2%
Depreciation / amortization 609 590 659 744 1,852 2064 2,494
Operating Margin 3,292 3,790 3,930 4,610 4,437 5,979 7,105
Operating Margin % 10.2% 10.7% 11.1% 12.0% 10.8% 11.8% 12.0%
Other Income / (expense) 77 (21) (11) (26) 17 (13) (30)
Interest Income / (expense), net (507) (400) (338) (225) (512) (496) (604)
Profit Before Taxes and exceptional item 2,862 3,369 3,580 4,359 3,942 5,469 6,471
Profit Before Taxes and exceptional item % 8.9% 9.5% 10.1% 11.4% 9.6% 10.8% 10.9%
Exceptional Item - - - - - (1,151) -
Profit Before Taxes 2,862 3,369 3,580 4,359 3,942 4,318 6,471
Profit Before Taxes % 8.9% 9.5% 10.1% 11.4% 9.6% 8.5% 10.9%
Taxes and Minority Interest 257 569 315 581 545 702 1,097
Profit After Tax 2,605 2,800 3,265 3,778 3,397 3,617* 5,374
Profit After Tax % 8.1% 7.9% 9.2% 9.9% 8.3% 7.1% 9.1%
Diluted EPS (₹ /Share) 3.72 4.08 4.73 5.45 4.89 5.13 7.62

Note: Numbers have rounding off impact

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  • For FY2021, PAT excluding the exceptional charge is INR 4,499 Mn or 8.9%

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© FIRSTSOURCE 2021 | 3 August 2022

Balance Sheet and Cash Flow Statement

In ₹ million As at 30-Jun-22 As at 31-Mar-22
Equity And Liabilities
Share Capital 6,970 6,970
Reserves & Surplus 24,236 23,360
Non- Controlling Interest 3 4
Borrowings 9,267 10,097
Other Non - Current Liabilities 7,471 8,672
Current liabilities 9,112 7,986
Total 57,059 57,087
Goodwill on Consolidation 28,325 27,208
Fixed Assets 9,753 10,258
Cash and Cash Equivalents 1,407 898
Current Investments 528 1,185
Trade Receivables (Billed + Unbilled) 9,505 9,605
Non - Current Assets 5,349 5,409
Current Assets 2,193 2,523
Total 57,059 57,087
In ₹ million Quarter ended 30-Jun-22
Cash Flow from Operating Activities
Operating Margin 1,171
Adjustment: Non-Cash and Other Income / (Expense) (6)
Operating Cash before Working Capital 1,164
Add: Working Capital Changes 335
Less: Income Taxes Paid (90)
Net cash generated from operating activities (A) 1,408
Cash Flow from Investing Activities
Capital Expenditure (net) (170)
Proceeds from current investments 667
Net cash generated from Investing activities (B) 498
Cash Flow from Financing Activities
Net decrease in Borrowings (829)
Net Interest Paid (192)
Payment of lease liabilities (392)
Proceeds from share application money under ESOP plan 15
Net cash used in Financing activities (C) (1,399)
Net increase in cash and cash equivalents 507
Cash and cash equivalents at the beginning of the period 898
Foreign exchange gain on translating Cash and cash equivalents 1
Closing Cash and Cash Equivalents (incl other balances with bank) 1,407
Cash and Cash Equivalents including Investments 1,935

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Note: Numbers have rounding off impact

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© FIRSTSOURCE 2021 | 3 August 2022

Key Performance Indicators

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Return on Equity Return on Capital Employed
17.6% 17.6%
17.7%
16.0%
13.9% 13.9% 15.6% 14.1%
12.9% 13.0% 12.3%
12.3%
FY18 FY19 FY20 FY21 FY22 Q1FY23 (TTM) FY18 FY19 FY20 FY21 FY22 Q1FY23 (TTM)
Note: FY21 ROE will be 16.1% excluding for exceptional item
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Cash Flow

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Debt Position
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8,921
10,097
7,870
7,225 7,141 9,267
8,433
6,723
6,045 6,950
4,000 4,104 5,577 6,003
3,151 2,913 3,156 3,490 8,013
2,526 8,341 7,332
6,526 4,367
5,273
1,408 5,390
1,238 3,885 3,846
3,233 3,147 3,264
187 92 1,678
FY18 FY19 FY20 FY21 Adj FY22 Adj Q1FY23 FY18 FY19 FY20 FY21 FY22 Q1FY23
Operating Cash Flow Free Cash Flow Long term Debt Short term Debt Net Debt
including current portion
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Note: FY21 and FY22 OCF and FCF adjusted for advance received from customers

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© FIRSTSOURCE 2021 | 3 August 2022

Operating Metrics

Particulars Q1 FY2021 Q2 FY2021 Q3 FY2021 Q4 FY 2021 Q1 FY 2022 Q2 FY 2022 Q3 FY 2022 Q4 FY 2022 Q1 FY23
Revenue by
Vertical
Banking & Financial Services 51.2% 51.9% 52.0% 52.2% 51.7% 48.9% 48.3% 49.0% 46.3%
Healthcare 29.9% 27.1% 25.3% 24.8% 26.7% 29.6% 30.3% 30.3% 32.1%
Communications Media & Tech 16.2% 18.8% 20.5% 20.8% 19.6% 19.5% 19.6% 19.0% 20.2%
Diverse Industries 2.7% 2.2% 2.2% 2.2% 2.0% 2.0% 1.8% 1.7% 1.4%
Revenue by
Service Lines
Digitally Empowered Contact Centre 47.8% 49.1% 48.9% 47.2% 46.3% 46.8% 45.9% 44.4% 46.6%
Intelligent Back Office 44.2% 42.9% 44.8% 47.9% 47.6% 45.6% 44.0% 36.5% 32.7%
Platforms, Automation & Analytics 8.0% 8.0% 6.3% 4.9% 6.1% 7.6% 10.1% 19.1% 20.7%
Revenue by
Geography
US 69.1% 68.1% 67.1% 67.4% 67.6% 68.4% 69.8% 70.7% 68.4%
UK 29.7% 30.6% 31.5% 31.5% 31.1% 30.1% 28.5% 27.5% 30.1%
Rest of World 1.2% 1.3% 1.4% 1.1% 1.3% 1.5% 1.7% 1.8% 1.5%
Revenue by
Delivery
Offshore 24.8% 27.0% 29.8% 30.6% 29.3% 31.0% 30.8% 27.0% 27.4%
Onshore 75.2% 73.0% 70.2% 69.4% 70.7% 69.0% 69.2% 73.0% 72.6%
Top Clients
Revenue
Top client % 13.7% 16.2% 17.5% 17.5% 16.3% 15.8% 15.2% 14.8% 15.2%
Top 5 client % 39.9% 40.4% 41.4% 42.3% 42.0% 41.2% 37.6% 35.9% 36.4%
Other Metrices Total employees (end of period) 21,831 23,960 26,618 28,004 27,916 27,835 27,398 26,557 25,234

Employees in India
11,684 13,536 15,381 16,289 16,677 16,976 16,826 16,045 14,769

Employees outside India
10,147 10,424 11,237 11,715 11,239 10,859 10,572 10,512 10,465
Net Addition 628 2,129 2,658 1,386 (88) (81) (437) (841) (1,323)
Offshore Attrition (180 days+) 15.1% 26.3% 28.8% 28.6% 29.2% 36.2% 45.2% 45.9% 43.8%
Onshore Attrition (180 days+) 30.2% 47.3% 34.6% 40.0% 54.8% 68.8% 59.5% 50.2% 56.9%

Attrition data for Onshore and Offshore till FY2022 was depicted on a quarterly annualized basis. Effective Q1FY23 it will be depicted on a Trailing Twelve Months (TTM) basis

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© FIRSTSOURCE 2021 | 3 August 2022

Forex Hedges

Outstanding FX hedges at $52.5 million for USD and £25.9 million for GBP

GBP-INR GBP-INR USD INR USD INR
Period Hedged Average Rate Hedged Average Rate
0-12 Months £ 25.9 ₹114.4 /£ $ 52.5 ₹79.1 /$

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© FIRSTSOURCE 2021 | 3 August 2022

Prior Period Reports

(Hyperlinks)

ANNUAL REPORT PUBLISHED RESULTS PUBLISHED RESULTS PUBLISHED RESULTS PUBLISHED RESULTS PUBLISHED RESULTS INVESTOR PRESENTATIONS INVESTOR PRESENTATIONS INVESTOR PRESENTATIONS INVESTOR PRESENTATIONS INVESTOR PRESENTATIONS PRESS RELEASE PRESS RELEASE PRESS RELEASE PRESS RELEASE PRESS RELEASE
FY2022 FY2023 Q1 FY2023 Q1 FY2023 Q1
FY2022 Q1 Q2 Q3 Q4 FY2022 Q1 Q2 Q3 Q4 FY2022 Q1 Q2 Q3 Q4
FY2021
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
FACT SHEET FACT SHEET FACT SHEET FACT SHEET FACT SHEET TRANSCRIPTS TRANSCRIPTS TRANSCRIPTS TRANSCRIPTS TRANSCRIPTS SHAREHOLDING PATTERN SHAREHOLDING PATTERN SHAREHOLDING PATTERN SHAREHOLDING PATTERN SHAREHOLDING PATTERN
FY2023 Q1 FY2023 Q1 FY2023 Q1
FY2022 Q1 Q2 Q3 Q4 FY2022 Q1 Q2 Q3 Q4 FY2022 Q1 Q2 Q3 Q4
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 FY2020 Q1 Q2 Q3 Q4
FY2019 Q1 Q2 Q3 Q4 FY2019 Q1 Q2 Q3 Q4 FY2019 Q1 Q2 Q3 Q4

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© FIRSTSOURCE 2021 | 3 August 2022

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Leader in US non-bank lender Top 3 in the chosen Revenue Leading CX service Top 5 Consumer debt
market Cycle Management segments providers in the UK across collections agency in the
in US Healthcare Media and BFS segments US
Customer Service Mortgage Operations
Voice | Chat | Chat Origination | Servicing | • Asset Finance​ • Hospital Providers
bots | Text | Social Title, Closing & Escrow • Credit Cards​ • Health Plans Eligibility & Receivables
Enrollment Services Management
Digital Collections • Mortgages​ • Health Services
Compliance and Risk
Management • Retail & SME Banking​ • Med. Devices Debt Collections Intelligent Automated
• FinTech Eligibility & Enrollment
Dispute Management
Complaints Handling &
Remediation Digital Mailroom Intelligent Data
Factoring & Discounting Operations Capture
Lead Management, Sales
Conversion & Onboarding Claims Adjudication Telehealth Tech
Default Management
& Adjustments Support
Analytics and Business
Intelligence Fraud Management
Meter 2 Cash Self-Service /
Operations Digital Deflection Onboarding Inbound Sales and
Outbound Sales
Inbound Sales
Customer Insights / Tier 1 & Tier 2 Retention
and Outbound
Automation Customer Support and Loyalty
Sales & Service
• Utilities • Streaming Services Self-Service / Customer Insights /
Level 1 & Level 2 • Government Entities • Cable TV, Broadband Contact Avoidance Analytics
Customer Support Complaints handling and Telephony
• Consumer Tech Complaints Handling Revenue
• E-Commerce and Remediation Generation
Retention Debt Management • Shared Economy
and Loyalty
PDATE
U
ARNINGS
Q1FY2023 E
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Strong Domain Driven Operating Model

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© FIRSTSOURCE 2021 | 3 August 2022

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US UK PHILIPPINES
About Us 4,473 16 5,302 10 653 2
14,769 13
37 1
INDIA
MEXICO
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Established in 2001

Revenues of INR 59.0 Billion

(approximately $795 Million) in FY2022

25,234 Firstsourcers

across US, UK, Mexico, India and Philippines

Leaders in chosen segments

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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

across Banking & Financial Services, Healthcare, Communications, Media & Technology and Diversified Industries

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© FIRSTSOURCE 2021 | 3 August 2022

Part Part Part Part Part Part Part of RP-Sanjiv Goenka Group
Carbon Black
Power
of RP-Sanjiv Goenka Group
Carbon Black
Power
of RP-Sanjiv Goenka Group
Carbon Black
Power
of RP-Sanjiv Goenka Group
Carbon Black
Power
of RP-Sanjiv Goenka Group
Carbon Black
Power
of RP-Sanjiv Goenka Group
Carbon Black
Power
Consumer & Retail Media & Entertainment
Education & Infrastructure IT-Enabled Services Combined
Revenues of
$4.14 Billion
Sports in FY2022

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Select Awards

ISG

Everest Group

Ranked as top Business Leader in ISG Provider Process Services (BPS) Lens™quadrant report for provider in ‘BPS Top 50™’ Contact Centre – Customer report. Experience Services for Firstsource was also Europe placed as Top 10 Service Providers by Growth by the industry research firm.

  • Everest Group BPS Top • SILVER in the Most • Customers at the Heart • Business Services Project 50™ Effective Distributed of Everything™Gold of the Year Workforce category Winner • Customer Driven Business Change and Transformation, GOLD Winner

  • • Best Customer Service, GOLD Winner

Industry Associations

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© FIRSTSOURCE 2021 | 3 August 2022

Corporate Management Senior Leadership

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Vipul Khanna

MD & Chief Executive Officer

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Prashanth Nandella Randall Shafer Operations Healthcare

Dinesh Jain Finance

Randall Shafer Venkatgiri Vandali Rajiv Malhotra Healthcare Healthcare & Europe Business Provider Lifesciences

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Arjun Mitra Steven Schachter Shuchika Sahay Collections Mortgage Human Resources

Shuchika Sahay Sundara Sukavanam Rajlakshmi Raghavan Human Resources Digital Services Marketing & Communications

Arjun Mitra

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© FIRSTSOURCE 2021 | 3 August 2022

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

© FIRSTSOURCE 2021 | 3 August 2022

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