Latent View Q1 FY27 earnings call

Latent View Analytics reported Q1 FY27 revenue of INR 287 crores, marking a 21.6% year-on-year growth. However, in USD terms, revenue was $30.3 million, experiencing a sequential shrinkage of 3.5%, which was higher than the anticipated 1.5-2%. Despite this, the company maintained its full-year revenue growth guidance of 12%, driven by strong execution in financial services and a 4% QoQ growth in the TMT practice, which helped offset softness in the CPG sector.

The higher-than-expected QoQ shrinkage was attributed to several factors, including one-off^📎 projects in the CPG practice from Q4 FY26 not extending into Q1 FY27 (impacting by INR 0.08-0.085 crores), and insourcing in a large tech account that eroded $7-8 million in business, with a Q1 impact of INR 0.05 crores. Additionally, a client-specific volume discount in the BFSI space reduced revenue by approximately $0.4 million. Management anticipates a significant bounce back in the consumer goods practice, expecting over 25% QoQ growth in Q2, and a positive trajectory for the tech account.

Latent View is actively leveraging the convergence of data, analytics, and AI, with 80% of Q1 work incorporating an AI element, and 35% being primary AI solutions. The company is building an 'agent foundry' platform and accelerating internal AI capabilities, with over 200 employees undergoing Anthropic certification. A new Chief Technology and AI Officer organization is being established to integrate AI products, agents, partnerships, and service delivery excellence, aiming to drive industry-specific solutions and market opportunities.

The adjusted EBITDA for Q1 FY27 stood at INR 58.6 crores, resulting in an adjusted EBITDA margin of 20.4%. This was impacted by wage revisions for 70% of the workforce, leading to a 2.7% impact on overall margins, and a 1% negative impact from revenue shrinkage. Seasonally high visa and marketing costs also played a role, though partially offset by lower travel costs. Management reiterated its full-year EBITDA margin guidance of 21-22%, stating that strategic investments in the new AI organization and partnerships will offset any benefits from dollar appreciation.

The company is actively seeking opportunities to deploy capital through partnerships, leadership hiring, and M&A, particularly in data engineering and life sciences. Management noted one or two strong M&A opportunities in the pipeline. Transaction-related expenses, which were a factor in Q1, are expected to cease from Q2 FY27 onwards. The long-term target of achieving $200 million in revenue by FY28/29 will be pursued through a combination of organic growth, particularly in financial services, healthcare, retail, and industrial sectors, complemented by strategic inorganic opportunities.

Latent View emphasizes its deep expertise in front-end value chain analytics, including customer and marketing analytics, fraud, risk, and compliance. The company believes its ability to help clients navigate the complexity of integrating AI within their 'walled garden' environments, aligning infrastructure with LLMs and RAG models, provides a competitive moat. While large organizations typically work with 20-30 partners, Latent View focuses on its niches and strong relationships to secure wallet share.