Latent View

Latent View reported a robust Q3 FY25, with revenue reaching INR 228 crore, marking an almost 9% sequential growth and a 37.5% year-on-year increase. In dollar terms, revenue stood at $27.2 million, up from $25.1 million in the previous quarter. This performance was significantly bolstered by strong traction with existing accounts, including the largest single-value Statement of Work (SOW) secured to date. The company also successfully added over 9 new accounts, with 3 being re-engagements from past collaborations, indicating strong client mining and acquisition capabilities.

While the adjusted EBITDA margin for Q3 FY25 was a healthy 26.1%, the reported EBITDA margin came in at 22.1%. This difference was primarily due to a one-time^📎 forex loss of INR 6.8 crore, stemming from intra-group loans to subsidiaries in the UK, Netherlands, and Germany, exacerbated by INR versus GBP/Euro currency movements. The PAT for the quarter was INR 42.6 crore, with a margin of 17.6%, also affected by the forex loss and a higher effective tax rate resulting from the loss of SEZ benefits and ESOP carry-forward benefits from the previous year. Management is implementing corrective actions to mitigate future forex volatility.

Latent View is making significant investments in Generative AI (GenAI) and Databricks capabilities, recognizing these as key growth pillars. Approximately 10% of the current fiscal year's work is in GenAI, with projections indicating that almost 20% of the pipeline for the next year will be GenAI-related. The company has developed four GenAI solutions and is integrating Agentic AI. Furthermore, Latent View has achieved elite partner tier status with Databricks and has a lead nominated to the Databricks Partner Advisory Board, underscoring its commitment to data engineering excellence.

The BFSI (Banking, Financial Services, and Insurance) vertical demonstrated exceptional performance, crossing the $10 million revenue mark and achieving over 40% year-on-year growth. This was attributed to new client wins and successful re-engagement with past accounts. Conversely, the CPG (Consumer Packaged Goods) space experienced headwinds due to challenging general market conditions, subdued performance of CPG companies, and increased cost-cutting initiatives. Management is actively reallocating efforts and resources to navigate these challenges within the CPG sector.

For Q4 FY25, Latent View anticipates a sequential revenue growth of 2% to 3%. Looking further ahead, the company projects an 18% to 20% revenue growth for FY26. Long-term EBITDA margins are targeted to remain between 20% and 25%, with subsequent quarters expected to be in the 24% to 25% range. The long-term PAT margin is guided at 20%. The company also expects a 'good 35% kind of a jump' in its order book by the end of Q4 FY25 compared to Q4 FY24, reflecting strong future visibility.

Management acknowledges that GenAI will drive significant productivity benefits, potentially shifting the business model from traditional FTE (Full-Time Equivalent) services to product and solution-based offerings. The company's strategy is to develop licensable solutions and assets to partake in these productivity gains, rather than passing all benefits to clients. This approach aims to maintain revenue run rates and enhance margins by leveraging proprietary technology and domain expertise, while also advising clients on navigating the complex GenAI ecosystem.