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Happiest Minds Technologies Limited Investor Presentation 2021

Feb 10, 2021

61298_rns_2021-02-10_67de197f-1b14-4d72-9fed-5c00a3bbb88c.pdf

Investor Presentation

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Happiest Minds Technologies Limited

(formerly known as Happiest Minds Technologies Pvt Ltd) Regd. Office : #53/1-4, Hosur Main Road, Madivala, Bangalore-560068, Karnataka, India CIN of the Co. L72900KA2011PLC057931 P: +91 80 6196 0300, F: +91 80 6196 0700 www.happiestminds.com

February 10, 2021

Listing Compliance & Legal Regulatory Listing & Compliance

BSE Limited National Stock Exchange of India Limited

Phiroze Jeejeebhoy Towers Exchange Plaza, Bandra Kurla Complex

Dalal Street, Mumbai 400 001 Bandra East, Mumbai 400 051

Stock Code: 543227 Stock Code: HAPPSTMNDS

Dear Sir/Madam,

Sub: Earnings Presentation on the financial results of Q3 & nine months for FY’21

Pursuant to Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, please find enclosed a copy of the Earnings Presentation of the financial results of the Company for the quarter and nine months ended as on December 31,2020 that will be circulated to the Investors/Analysts for the Earnings Call scheduled on February 11, 2021.

This is for your information and records.

Thanking you, Yours faithfully,

For Happiest Minds Technologies Limited

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Praveen Kumar Darshankar Company Secretary & Compliance Officer Membership No. F6706

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February 2021

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This presentation may contain certain forward-looking statements, which involves risks and uncertainties that could cause our future results to differ materially from those in such forwardlooking statements. The COVID-19 pandemic could decrease our customers’ technology spend, delaying prospective customers’ purchasing decisions, and impact our ability to provide services; all of which could adversely affect our future revenue, margin and overall financial performance. Our operations could also be negatively impacted by a range of external factors not within our control those due to the We do not undertake to of our including pandemic. update any forward-looking statements that may be made from time to time by us or on our behalf.

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www.happiestminds.com

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Next Generation Digital Transformation, Infrastructure, Security and Product Engineering Services Company

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IPO

Digital Digital

Agile

Active clients

RoCE[1]

In September 2020

  • 38 Fortune2000 / Forbes200 / Billion $ corporations

  • 93% of repeat business [2]

  • 100 % digitally executed IPO

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  • Heavily oversubscribed with healthy listing gains Reflects

RoE

Mission Statement

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Happiest Minds

  • Ranked IT Services

  • • Top India’s Best Workplaces rating for Women

  • • Top India’s Best Workplaces on Glassdoor • Top India’s Best Workplaces #2 for Indian IT Services

  • for IT/IT-BPM

  • Our growth and profitability

  • Management Team & Corporate governance

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SMILES Values across 7 Countries

Sharing, Mindful, Integrity, Learning, Excellence, Social Responsibility

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2019
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Promoter

Ashok Soota

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*All logos are properties of their respective owners Note 1: Trailing 12 months Revenue from existing customers; 2: ROCE / ROE is nine months annualized

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IoT Blockchain
DevOps & RPA Cloud
Software Defined Networking / NFV BPM & Integration
Big Data & Adv. Analytics Security
BFSI Edutech Hi-Tech
Mfg/Industrial Retail Travel & Hosp.
4
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4 www.happiestminds.com

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Learning Excellence
Integrity
Social
Responsibility
Mindful
Sharing
Our Mission
Happiest People . Happiest Customers
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Achieve a very Be the Be known as the Happiness successful IPO by or for each Evangelists before FY23 and in the company with highest other, our standards of interim provide a Customers and monetization event for Corporate Society Governance investors/team by FY20

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Happiest Minds is the first Indian IT firm to be The Mindful IT Company

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Be recognized for Be a leader in Thought Leadership in Social Responsibility our focused areas of initiatives technology and solutions

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Business Agile
Transformation Organization
Agile
Business
CREATING
MINDFULLY
DIGITAL
AGILE
CAPITAL
Platformize and Agile
Modernize Delivery
Reimagining Engineering &
Customer Experience Operational Excellence
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Particulars Q3 FY 21 Q2 FY 21 QoQ Q3 FY 20 YoY 9M FY 21 9M FY 20 YoY
Revenue ($'000) 26,202 24,712 6.0% 24,085 8.8% 74,358 72,735 2.2%
Revenue (₹ lakhs)1 20,129 18,791 7.1% 17,557 14.6% 57,433 52,402 9.6%
EBITDA (₹ lakhs) 5,969 4,939 20.9% 2,811 112.3% 15,690 8,749 79.3%
EBITDA % 29.7% 26.3% 337 bps
16.0%
1364 bps
27.3%
16.7% 1062 bps
PAT (₹ lakhs) 4,215 3,408 23.7% 2,138 97.1% 12,641 6,641 90.3%
PAT % 20.9% 18.1% 280 bps 12.2% 876 bps
22.0%
12.7% 934 bps

Note: 1. Total Income

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Digital
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Agile
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% of Revenue % of Revenue
92.8% 92.8%
90.2%
87.9%
97.2% 96.9% 97.1%
96.6%
96.3%
71.1%
FY 19 FY20 Q1 21 Q2 21 Q3 21 FY19 FY20 Q1 21 Q2 21 Q3 21
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Total Revenue EBITDA Total revenue mix (Q3 FY 21) [1]
(₹ Lakhs) % Margin
Total Income (₹ Lakhs)
4.2%
1.6% 11.0% 15.8% 25.6% 26.3% 29.7% 21.5%
71,423
60,181
48,912 11,312 49.5%
24.8%
6,628 5,969
4,782 4,939
18,699 18,791 20,129
762
IMSS DBS PES Oth Inc
FY18 FY19 FY20 Q1 21 Q2 21 Q3 21
FY18 FY19 FY20 Q1 21 Q2 21 Q3 21
High FCF [2] conversion Utilization & Happiest Minds, offshore/onsite Voluntary Attrition % [3]
(₹ Lakhs) % FCF Conversion Utilization %
85.2% 98.8% 99.6% 99.8% 99.8% 99.2% 68.4% 77.3% 76.9% 74.9% 78.7% 81.6% 25.2%
2,253 2,462 2,666 2,658 2,721 2,885 18.7%
11,266 16.0%
14.1%
13.1%
6,549
5,920
4,772 4,931 95.3% 94.6% 95.4% 95.3% 95.1% 95.0%
649
4.7% 5.4% 4.6% 4.7% 4.9% 5.0%
FY18 FY19 FY20 Q1 21 Q2 21 Q3 21 FY18 FY19 FY20 Q1 21 Q2 21 Q3 21 FY19 FY20 Q1 21 Q2 21 Q3 21
Onsite Offshore
Note: 1. Calculated based on total income split, 2. FCF Conversion = FCF/EBITDA and FCF = EBITDA – Capex. 3. Attrition % for TTM Trailing 12 Months 10
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Revenue model
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Q3 21
Model Geography Digital Revenue [1] Vertical [1]
7.0%
3.8% 11.0% [3.4%] 6.9%
22.2% 13.4% 24.9%
41.0% 7.0%
14.4%
10.6%
17.4%
8.7%
20.2%
72.2%
77.8% 21.6% 14.4% 2.2%
Digital Infra / Cloud SAAS
T&M FP Americas Europe India ROW Edu Tech Hitech Retail TME
Security Analytics / AI
BFSI Industrial MFG Others
IoT Others
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Revenue Concentration [3]
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Million $ Customers [2]
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(% Revenue)
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(#)
66.5%
49.4%
34.4%
14.8%
Top 1 Top 5 Top 10 Top 20
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25 23 24 25
21
16
FY18 FY19 FY20 Q1 21 Q2 21 Q3 21
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Notes: 1. TME: Travel, Media and Entertainment, 2. Based on quarter revenues on an annualized basis. 3. Top 20 includes Top 1, 5 & 10

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Onsite/Offshore Avg. annual revenue / active customer
By Revenue (USD ‘000)
683
659
615 615
502
78.6% 78.0% 77.5% 79.0% 78.1% 81.0% 471
21.4% 22.0% 22.5% 21.0% 21.9% 19.0%
FY18 FY19 FY20 Q1 21 Q2 21 Q3 21
FY18 FY19 FY20 Q1 21 Q2 21 Q3 21
Onsite Offshore
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FY18 FY19 FY20 FY21Q1 FY21Q2 FY21 Q3 FY21 9M
Customer Industry group
Edutech 18.0% 21.3% 21.3% 27.0% 27.0% 24.9% 26.3%
Hitech 24.6% 21.0% 21.0% 20.5% 19.5% 20.2% 20.1%
BFSI 17.9% 18.2% 17.5% 17.4% 16.3% 17.4% 17.0%
Entertainment (TME) 11.0% 13.8% 17.1% 12.9% 13.0% 14.4% 13.5%
Retail 7.0% 6.9% 7.5% 5.7% 4.5% 2.2% 4.1%
Industrial 6.2% 8.1% 7.0% 6.4% 6.9% 7.0% 6.8%
Manufacturing 3.2% 3.8% 3.7% 5.6% 6.8% 6.9% 6.5%
Others 12.3% 6.9% 4.9% 4.6% 6.0% 7.0% 5.9%
Digital Service Offerings
Digital infrastructure/Cloud - 40.9% 31.2% 43.7% 41.1% 41.0% 41.6%
SaaS - 28.6% 29.4% 23.6% 24.6% 21.6% 23.4%
Security solutions - 10.2% 14.9% 7.6% 7.4% 8.7% 7.6%
Analytics/AI - 9.1% 11.6% 12.1% 13.5% 14.4% 13.4%
IoT - 8.4% 9.8% 9.3% 10.5% 11.0% 10.9%
Total - 97.2% 96.9% 96.3% 97.1% 96.6% 96.8%
Automation as a % of total
revenue
20.7% 24.2% 24.3% 27.8% 25.5%

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FY18 FY19 FY20 FY21Q1 FY21Q2 FY21 Q3 FY21 9M
Location of external customer
USA 73.5% 75.5% 77.5% 77.3% 77.3% 72.2% 75.5%
India 11.7% 11.9% 11.9% 10.9% 10.9% 13.4% 11.8%
Europe 11.4% 9.5% 7.2% 9.8% 9.2% 10.6% 9.9%
ROW 3.4% 3.1% 3.4% 2.0% 2.6% 3.8% 2.9%
Number of customers based on quarter
revenues on an annualized basis (#)
$ 10 M + 1 1 1 1 1 1
$ 5M to $ 10M 2 2 - 1 - 2 2
$ 3M to $ 5M 2 1 9 4 6 5 5
$ 1M to $ 3M 12 17 15 17 17 17 17
Total 16 21 25 23 24 25 25
Revenue mix by delivery
Onsite 21.4% 22.0% 22.5% 21.0% 21.9% 19.0% 20.6%
Offshore1 78.6% 78.0% 77.5% 79.0% 78.1% 81.0% 79.3%
Revenue by Contract type
Fixed Price 18.4% 16.8% 19.0% 18.8% 19.3% 22.2% 20.7%
Time and Material 81.6% 83.2% 81.0% 81.2% 80.7% 77.8% 79.3%
Active customers
# of active customers 173 163 157 148 152 155 155
Fortune2000 / Forbes200 / Billion $
corporations
# of customers 37 36 39 38 38

14 www.happiestminds.com

Note: 1. Offshore: Revenues from customers served from India

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FY18 FY19 FY20 FY21Q1 FY21Q2 FY21Q3 FY21 9M
Happiest Minds
Onsite 105 132 123 124 133 145 145
Offshore 2,148 2,330 2,543 2,534 2,588 2,740 2,740
Total 2,253 2,462 2,666 2,658 2,721 2,885 2,885
Happiest Minds by delivery centres
Onsite 4.7% 5.4% 4.6% 4.7% 4.9% 5.0% 5.0%
Offshore1 95.3% 94.6% 95.4% 95.3% 95.1% 95.0% 95.0%
Diversity
Women Happiest Minds 22.0% 23.0% 24.0% 23.4% 23.3% 24.0% 24.0%
Utilization
Utilization % 68.4% 77.3% 76.9% 74.9% 78.7% 81.6% 78.5%
Days Sales Outstanding
Billed 74 80 60 51 51 46 48
Unbilled 6 11 23 32 26 31 32
Total DSO (Days) 80 91 83 83 77 77 80
EPS (₹ Per Share)
Year / Nine Months 5.36 8.91
Capital Return Ratios %
Return on Capital Employed (Year /
Nine Months)
28.9% 36.2%
Return on Equity (Year / Nine
Months)
27.1% 33.2%

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Note: 1. Offshore: Revenues from customers served from India

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(All figures in ₹ Lakhs) FY18 FY18 FY19 FY19 FY20 FY20 FY21Q1 FY21Q1 FY21Q2 FY21Q2 FY21Q3 FY21Q3 FY21 9M FY21 9M
Revenue by Business Units
Infrastructure Management &
Security Services
9,862 20.2% 12,943 21.5% 15,361 21.5% 3,641 19.5% 3,959 21.1% 4,334 21.5% 11,934 20.8%
Digital Business Solutions 15,403 31.5% 18,090 30.1% 19,167 26.8% 4,598 24.6% 4,710 25.1% 4,985 24.8% 14,293 24.9%
Product Engineering Services 21,024 43.0% 28,003 46.5% 35,293 49.4% 9,463 50.6% 9,615 51.2% 9,965 49.5% 29,043 50.6%
Total Revenue 46,289 94.6% 59,036 98.1% 69,821 97.8% 17,702 94.7% 18,284 97.3% 19,284 95.8% 55,270 96.2%
Other income 2,623 5.4% 1,145 1.9% 1,602 2.2% 997 5.3% 507 2.7% 845 4.2% 2,163 3.8%
Total income 48,912 100.0% 60,181 100.0% 71,423 100.0% 18,699 100.0% 18,791 100.0% 20,129 100.0% 57,433 100.0%
EBITDA 762 1.6% 6,628 11.0% 11,312 15.8% 4,782 25.6% 4,939 26.3% 5,969 29.7% 15,690 27.3%
PAT -2,247 -4.6% 1,421 2.4% 7,171 10.0% 5,018 26.8% 3,408 18.1% 4,215 20.9% 12,641 22.0%

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Note: EBITDA % and PAT % are calculated as a % of total income

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Summary Profit & Loss statement Summary Profit & Loss statement Summary Profit & Loss statement Summary Profit & Loss statement Summary Profit & Loss statement Summary Profit & Loss statement Summary Profit & Loss statement Summary Profit & Loss statement
(All figures inLakhs) FY18 FY19 FY20 FY21 Q1 FY21 Q2 FY21 Q3 FY21 9M
Income
Operating revenue 46,289
59,036

69,821

17,702

18,284

19,284

55,270
Other income 2,623
1,145

1,602

997

507

845

2,163
Total income 48,912
60,181

71,423

18,699

18,791

20,129

57,433
Cost of revenue 32,652
36,987

42,927

9,978

10,401

11,155

31,534
Gross margin 13,637
22,049

26,894

7,724

7,884

8,129

23,737
% 29.5% 37.3% 38.5% 43.6% 43.1% 42.2% 42.9%
SG&A cost 15,498
16,566

17,184

3,939

3,452

3,005

10,210
EBITDA 762
6,628

11,312

4,782

4,939

5,969

15,690
% 1.6% 11.0% 15.8% 25.6% 26.3% 29.7% 27.3%
Depreciation 2,075
2,478

2,023

512

512

516

1,540
EBIT (1,313) 4,150
9,289

4,270

4,427

5,453

14,150
% -2.7% 6.9% 13.0% 22.8% 23.6% 27.1% 24.6%
Finance cost 995
1,594

802

186

160

126

472
**PBT before exceptional items *** (2,308) 2,556
8,487

4,084

4,267

5,327

13,678
% -4.7% 4.2% 11.9% 21.8% 22.7% 26.5% 23.8%
Exceptional Items+ - 1,258 1,126
-
- - -
**PBT *** (2,308) 1,298
7,361

4,084

4,267

5,327

13,678
% -4.7% 2.2% 10.3% 21.8% 22.7% 26.5% 23.8%
Income tax expense (61) (123) 190
(934)
859
1,112
1,037
**PAT *** (2,247) 1,421
7,171

5,018

3,408

4,215

12,641
% -4.6% 2.4% 10.0% 26.8% 18.1% 20.9% 22.0%

* PBT before exceptional items, PBT and PAT " for FY18 & FY19 are restated as per IndAs, forming part of our offer documents.

[+] Exceptional items for FY19 & FY20 refer to Impairment of Goodwill.

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Condensed Balance Sheet Condensed Balance Sheet Condensed Balance Sheet Condensed Balance Sheet Condensed Balance Sheet Condensed Balance Sheet Condensed Balance Sheet
(All figures inLakhs) 31.03.2018 31.03.2019 31.03.2020 30.06.2020 30.09.2020 31.12.2020
Assets
Non-current Assets
Property, plant and equipment 264 214 93 77 60 72
Goodwill 2,961 1,736 610 610 611 611
Financial & Other assets 7,685 6,003 5,598 6,266 5,788 5,040
Total non-current assets (A) 10,910 7,953 6,301 6,953 6,459 5,723
Current assets
Financial & Other assets
i. Trade receivable 9,437 12,927 11,487 9,851 10,302 9,765
ii. Cash & Cash equivalents, Investments & Other financial
assets
16,928 19,610 31,967 39,196 52,387 54,286
iii. Other assets 1,424 862 1,060 1,308 1,721 1,531
Total current assets (B) 27,789 33,399 44,514 50,355 64,410 65,582
Total assets (A + B) 38,699 41,352 50,815 57,308 70,869 71,305
Equity and Liabilities
Total equity (A) (10,888) (6,605) 26,531 31,901 46,380 50,836
Non-current liabilities
Financial liabilities 5,797 3,814 1,863 1,674 1,518 1,248
Provisions & Deferred tax liability 935 940 1,255 1,508 1,513 1,662
Total non-current liabilities (B) 6,732 4,754 3,118 3,182 3,031 2,910
Current liabilities
Financial & Contract liabilities
i. Trade payable 2,498 2,878 3,442 3,600 6,307 3,781
ii. Others 38,866 38,591 15,947 15,907 12,402 10,931
Provisions & Other current liabilities 1,491 1,734 1,777 2,718 2,749 2,847
Total current liabilities (C) 42,855 43,203 21,166 22,225 21,458 17,559
Total liabilities (D = B + C) 49,587 47,957 24,284 25,407 24,489 20,469
Total equity and liabilities (A + D) 38,699 41,352 50,815 57,308 70,869 71,305

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[email protected]

India | United States | United Kingdom | Canada | Australia | Dubai

www.happiestminds.com