Latent View Analytics Ltd (LATENTVIEW) Q2FY27 Concall Transcript - Sep-2026 Qtr
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Moderator: Ladies and gentlemen, good day, and welcome to Latent View Analytics Limited Q2 FY '27 Earnings Conference Call. As a reminder, all participants' lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Pratik Jagtap from EY and Investors Relations. Thank you, and over to you, sir.
Pratik Jagtap (EY): Thank you, ma'am. Good morning, everyone, and welcome to Q2 FY '27 earnings call of Latent View Analytics Limited. The results and presentation have already been mailed to you and you can view them on the website, www.latentview.com. In case anyone does not have the copy of press release and presentation, or
Pratik Jagtap (EY): not marked in the mail, please do write to us and we will be happy to send you the same. To take us through the results today and to answer your questions, we have with us CEO of the company Sonal Ramrakhiani. My bad, Sonal Ramrakhiyani, strategic advisor to the CEO, Rajan Sethuraman, to whom we will referring as Rajan, and CFO of the company, Rajan Venkatesan, to whom we will referring as Raj. This is just to avoid confusion while doing the transcript. We will start the call with brief update by Sonal, which will be then followed by Raj who will take us through the financial performance. After the management remarks, we will open the floor for Q&A session. As usual, I would like to remind you that anything that is mentioned on the call that reflects any outlook for the future, or which can be construed as a forward-looking statement, must be viewed in conjunction with the risks and uncertainties that we face. These risks and uncertainties are included, but not limited to what we have mentioned in the prospectus filed with SEBI and subsequent annual report that you can find on our website. Having said that, I will now hand over the floor to the management. Over to you, Sonal.
Sonal Ramrakhiani (Latent View Analytics Ltd): Thank you so much, Pratik. And thanks everybody for joining the call and good morning to everybody. Happy to report our Q2 results and as we've shared, we are back on the growth trajectory. We have reported a 2% sequential growth in terms of dollar terms. And glad to share that the growth was broad-based. We are seeing good traction in our automotive business, and the gains that we've seen in the past in Financial Services continue, and CPG and Retail is also showing good signs. Specifically, I did want to call out that AI continues to be an important growth lever. It is scaling across our business. We are seeing, you know, efficiency and productivity improve across the board. And we continue to leverage top tier, you know, tech technology, and as well as you know invest on the ecosystem partnerships. So fairly positive feedback from customers on the AI support that we've been providing, and the way that we've been working on accelerating their adoption. We have called out that in the short-term and especially in the context of, you know, the macroeconomic senti- sentiment, maybe the midterm elections in the US, which is our largest market, and I'm sure all of you have familiar with the headwinds that we're seeing in the technology sector, some of our largest customers have announced some changes over the last couple of weeks. While on the tech side we are seeing that, we are fairly confident in our medium to long-term growth prospects and working actively on balancing the portfolio in order to buffer some of the headwinds that we are seeing on the tech side. So we will continue to invest for the future. We are investing in our sales and go-to-market channels, you know, continuing to expand our geographic presence. So Europe is, and will be an important area for us to grow in, and specifically we had called out investment last quarter as well in terms of the CTAIO function. So that is something that we're doing as far as senior leadership investment to advance our overall technology and AI offerings. I'll talk a little bit about our plans slightly longer term and then deep dive a little more on Q2 and some of the key client wins and some of the specifics that we're seeing as far as AI is concerned. So fundamentally from a strategic perspective and we are we have put together a fairly detailed plan around our growth aspirations of 200 million in 2 years. That's something we'll come back to you separately on to deep dive and share specifics, but basically there are three specific growth levers from a revenue perspective. We will continue to deepen our customer relationships with the existing customers that we have, but also at the same time, broaden those relationships which means more of cross-sell. There is a fair bit of activity and initiatives that we have started emphasizing further on and deep diving into as far as making sure that our pyramid of accounts and the growth from the top five is also replicated in the next set of accounts. So there's lots more emphasis on that and at the same time our teams have started working on you know, emphasizing more on multi-year
Sonal Ramrakhiani (Latent View Analytics Ltd): and ensuring less dependence on a few customers. Rebalancing across industries is something that again is part of our strategic tenets. So, you've already seen financial services has yielded good results, we are continuing to invest in that. Consumer goods, you know, overall consumer ecosystem is reviving, showing steady signs of growth and at the same time, on technology we are conscious we have some great relationships, so we will continue to mine those in order to buffer some of the headwinds that are there. At the same time, from a industry perspective, we have called out in the past that we are continuing to invest in healthcare and life sciences and all in all this will ensure that, you know, the growth comes from multiple engines and not, you know, one industry focus. From a geographic perspective, again diversification is important. Europe is an important element of this growth strategy. We're being very deliberate on how we will grow in Europe. The emphasis will be on verticals like automotive, CPG and retail as an entry point into Europe, and to chase, you know, higher impact AI projects from a readiness and activity perspective we believe that these mark these markets, these units are, you know, will be a little quicker in the uptake. Needless to say, and I'm sure you will appreciate this, financial services, healthcare tech tend to be more regulatory, and therefore may have a slightly longer sales cycle. But we are looking at helping customers there in the context of, you know, data for AI services, the idea being that, you know, we can act as the wedge for more governance and data foundation work and help them you know be ready as some of the rules and regulations settle. So, basically, in terms of the areas that we'll be focusing on, we are quite clear that it will be industry solutions, rebuilding some of the industry specific AI solutions and make sure that we focus on shorter sales cycles. Just to call out specifically on AI and a little bit around technology, and I've been meeting a lot of customers over the last few months, there is a lot of recognition and appreciation for the work that LatentView does across the board in ensuring that customers can get true business impact as far as AI is concerned. A lot of our customers have been struggling with, you know, what we call the imperfection of data. They have not been able to, you know, at their organization level, they've not been able to get that whole standardization of data in place which is, you know, a basic foundation for the initiatives around AI and you know, the productivity gains and the monetary gains that they expect to realize. And that's where they've been seeing a lot of value working with LatentView. So, that's that is a differentiator for us. We'll continue to do that. So, that is a foundation data for AI will continue to be a primary focus area, and we are looking at of course scaling around agentic AI and decision intelligence. At the same time, we are quite actively focused on specific services for the industries that we are looking at. You know, industry specific blueprints. That work that's that's also playing out and so, the data for AI ladder will be, you know, the emphasis that we will be driving and clear proof of the depth that we have. You know, just to call out we already have a whole portfolio of services, we have accelerators, you know, like MigrateMate, ObserveMate, ContextMate. In fact, even this quarter, we've had a few good wins with these accelerators because customers have seen their benefits in terms of shortening the time to AI readiness and these have helped us as a tip of the spear solution as well, right? So, AI continues to be an important area of focus and in order to double down and ensure that we are focused from a strategic perspective and driving this very, very actively, we are constituting a new CTAIO office, a CTO office. We are in advanced stages of discussions with candidates, so that's fairly confident on early joining. Obviously, at this point of time, I won't report exact dates, but that's something that's very actively being, it's in the works. Specifically, the leader for the CTAIO function will look at multiple things. You know, one is of course, unified development of the reusable IP and AI products, making sure that there's thought leadership, you know, almost like a studio, building solutions/products for our clients. There is a lot of work that we need to do around partnerships, because, you know, the partners as well as customers would appreciate accelerators and solutions which were
Sonal Ramrakhiani (Latent View Analytics Ltd): them you know ramp up faster, execute faster and that does become a differentiator for us when we do co-selling with our partners. So, that's an important role again that the function will play. We do have this already, but the idea is to kind of cement this across the organization and have it as a unified channel. And, of course, you know, building the AI capability. So, there is a whole element around the AI DNA that we are working on actively. So, that's as far as the investments are concerned. I'll do a quick call out of some of the key wins that we had in this quarter just to give you a flavor of the kind of work that we're winning and where we're winning against you know, the kind of competition that we're winning against. So, we had an engagement with with a leading apparel manufacturer, which came through one of our partnership channels, so there was a joint pitch that we did there. That particular company got acquired. This was a supply chain project that we had done, company got acquired by a larger industry player, and we treated the acquisition as an expansion opportunity and there is significant credibility from our delivery in the past. So, we made sure that you know, we positioned our capabilities and won a project, agentic AI project with the parent organization. So, it's a good example of, you know, partnerships scaling and as well as the AI work that we do. For a large financial services company, a top financial services company, I spoke a little earlier about some of our solutions, so ObserveMate, which is our Agentic AI accelerator on data observability, demonstrated very great value through a POC, and we have given now a full enterprise data observability program that we are driving for this customer. And incidentally, we are seeing good traction working with both the, you know, the corporate as well as the GCC in this case. So, Interestingly, this one was won against a very large SI. So, our ability to win business and go head-to, go toe-to-toe with some of the larger companies is also very clearly something that we, that is visible. For another large global tech company, we have won another fairly large project for their financial, finance controllership team. And the idea over there was around how do we cross-sell into the account. We have a large relationship there. So, we started working with some of the enabling functions also in that organization, and the whole role over there is, you know, the finance team deals with a lot of old, unstructured code, and that's being moved to a standardized platform. The agent is doing a lot of work that's around restructuring, rewriting legacy scripts and making it compliant ready for production. And what was interesting, and the customer called out, you know, the support that we provided and the fact that the migration time was cut by around 95% and very high level of transformation accuracy, which was 9.5 on on 10, right? So, those were some of the key wins that we had from an accounts and revenue perspective. And of course, I did want to share more details around some of the industry recognition that we've had. You've probably seen the updates that we have shared in the past, but won a few awards from AIM. You know, one of them is Innovative Practice Best Industry Application and I'll share a little bit about you know what we did. The customer had fragmented messaging, this is for a tech customer. 5,000 marketers, different audience segments, lot of manual iteration, and like very limited ROI and the way that we've managed to work on it, the customer has already realized some $10 million plus realized impact, time saved is 90%, and multiple devices reached and you know that entire set of marketers was enabled. We also won the Best AI Solution Showcase Technology. That was something which was again, you know, for a financial services company, for a global payments leader. And we did a fair bit of work with them on for their prospects, and you know, the research that they were doing, and how we actually ended up helping them reduce the research time from 14 days to 10 minutes. It just enabled faster intelligence gathering, you know, more effective sales outreach, which is a direct impact for the customer. So, good recognition from the industry on the work that we're doing. And I also want to call out you know, the investments that we're doing on talent. There's a good recognition for in the industry for some of the work that we're doing there. We've got Best Firm certification for Data Engineers and AI Engineers. We have
Sonal Ramrakhiani (Latent View Analytics Ltd): you know, received an award from Databricks service part for the Databricks Service Partners 2026 in the leadership quadrant. And also happy to report that for some of our talent as well, we have seen good recognition and specific individuals in our management team have also been called out, you know, whether it's the Women in Digital Awards or 40 Under 40 AI builders. So, just just a quick update from me overall. And I will hand over to Raj now for an update on the financials.
Rajan Venkatesan (Latent View Analytics Ltd): Thank you, Sonal. Good morning, everyone. As as Sonal already highlighted, we are happy to be back on a positive growth trajectory, right? For this quarter, with our USD revenues growing by about 2% sequentially, in relation to Q1. And in INR terms, of course, the revenue came in at about 2.5% higher, right? The growth was, like Sonal mentioned, quite broad-based, with FS continuing to grow very strongly. We had a 3.5% sequential quarter-on-quarter growth, and and this growth, again, was broad-based within the FS vertical. And, we are also particularly excited by the strength that specifically the wealth management and the asset management business within the FS is showing. I mean, we've you would have seen that in this particular quarter, we've reported close to about 10 plus wins, happy to report that, you know, three out of those 10 were specifically in the asset management/wealth management side and and that is a business that we are particularly excited about. We were also, you know, we are also happy to report that CPG and retail for this quarter again, came back to sort of the positive territory and they grew by about 2.7% sequentially. More specifically, within the CPG and retail, retail continues to, I would say, exhibit a fairly strong growth momentum. We had a a couple of good wins, new logos that that we added during this quarter. One particularly the apparel manufacturer that that Sonal just spoke about, right? I mean the the the solution, the agentic solution that we're building for this apparel manufacturer based in the US, where we are trying to optimize DO and SEO. So, that's that's a fairly large project win. So, retail continues to to to exhibit fairly strong growth momentum. Industrials again, we are very very pleased that, you know, for this quarter came in at about 2 21.4% sequentially. The growth in this specifically was led by auto and auto component manufacturers. There again we continue to see one a rapid expansion in in a fairly large logo and we we are poised to go past the $4 million mark almost for on a full year basis with this one large logo and there is another logo which we won on the back of the Databricks relationship about a year back and we are already poised to go past a million dollar mark as far as the auto component logo is concerned. So, I would say good momentum across auto and auto components which is driving the growth in industrials. Sonal did speak about the macroeconomic sentiment and in particular the headwinds that we continue to see in the tech vertical, right? So, this particular quarter again, we did see impact of consolidation as well as budgetary cuts in the tech vertical relative to the previous quarter. One of our large accounts where, you know, the the annual renewals and budgeting cycle happens in June while while we've managed to renew most of our book of work with this particular large account, there was some amount of consolidation and as well as budgetary cuts that that that happened in the gaming business with this large technology company, and and that led to shrinkage on a full-year basis you know, for for for this particular account. We also do see that in our largest account, there is I would say continued consolidation as well as impact of some of the AI investments that they're making, which is resulting in budgetary cuts, and that has continued to happen even during this quarter. While we we managed to win new pieces of work across other business streams, the largest business that we work with for this technology player is the video streaming business and there we've seen, you know, continued headwinds, right? Which But but we, you know, I think we are fairly confident that at this point in time, we're almost at the bottom of all the consolidation that we witnessed in the technology vertical. We will, of course, as we head into the renewal season
Rajan Venkatesan (Latent View Analytics Ltd): and, we are in November already, most of the renewals for our top technology accounts happen in the month of November, December and January. So, when we do come back for the Q3 update, we will give you an update in terms of how the outlook for the technology vertical is for the next year. I'll talk a little bit about profitability and our margins. You would have seen that I mean, the last time when we did report numbers, we did call out that this would be the last time we'd be reporting on an adjusted EBITDA metric, and while that was true at that point in time, you would all note that the difference between the adjusted EBITDA and the reported EBITDA numbers are were primarily owing to transaction-related bonuses that were payable to the Decision Point employees, and these were transaction-related costs and hence, we were showing it as an adjustment to reported EBITDA numbers. While all the provisions were already booked as of end of last quarter, the actual payouts for those retention bonuses happened in in Q2, and there was some forex fluctuation of close to about 80 lakhs in INR, which was what was reported as a transaction-related cost and hence the adjusted EBITDA metric continues for this quarter as well. You will see us not reporting adjusted EBITDA going forward and and the next quarter, you will have one line which will be the reported EBITDA line. I also wanted to quickly touch upon what has really moved the adjust you know, the EBITDA numbers for this quarter related to the last quarter. You will see that our gross margins for this quarter came in lower than the the previous quarter. I would say there were 2 to 3 reasons for for for for this. One, of course the wage increments or the wage corrections for our all our management and above which is you know, L4 and above category of within the organization happened with effect from 1st of July, and we did wage corrections ranging between 8% to 10% in India and about 4% to 5% in the US, and that had an impact of close to about 1% to 1.2% on on an overall basis across the board. Apart from that, you also would notice that our utilization levels for this quarter came in at about 84% related to the 85% last quarter. We have been carrying, I would say a sizable bench in anticipation of a few large project wins that that got pushed out in this particular quarter. We are happy to report that the the projects are likely to start beginning 1st of November, but the the initial anticipation was that the projects would kick off effective 1st of September, and so we were carrying a bench in anticipation of the large project kickoff and that resulted in further sort of compression on the gross margins. Lastly, we as you would have noted in the investor presentation, our spends on COE, which is specifically you know, comprised of folks on the Databricks side as well as you know, the the AI COE, our spends on the COE has come down. But, in reality, what has happened is many of the the AI engineers as well as some of the Databricks talent that we had, were redeployed onto active engagements because in in in a few of these cases, we wanted to capitalize on on immediate revenue opportunities. You will see, of course, you know, and we'll talk about the the the the COE initiatives as well as the COE spends separately. Sonal did touch upon the fact that we are in the midst of bringing on a CTAIO, who will spearhead all our initiatives on specifically on the capability building as well as the COEs, but you will see it's it's it's it's more of a I would say, a one-time adjustment. You will see us continuing to focus on building out our our COE capabilities. So, that's a little bit about why gross margins for this particular quarter trended close to about 2% lower relative to the the quarter that that that went by earlier. I know all of you guys would also want you know, some sort of commentary on on specifically the why the the the PAT margins for this quarter, again, came in despite having slightly better PBT margins, our PAT margins came in at a little lower at about Sorry. Hello? Yeah. Sorry. Why our our PAT margins was was higher in fact sorry, my my bad, was was higher than than the PAT margins for the last quarter. And that is primarily because of a one-time benefit on deferred taxes that that we had.
Rajan Venkatesan (Latent View Analytics Ltd): ESOPs that was recorded in this particular quarter owing to some of the leadership hires that we had done. You will see that going forward, our ETR will remain in the range of 26% to 28% and that will be consistent throughout. On the outlook for the full year, I would want to, also highlight that we do while Sonal spoke about the macroeconomic headwinds, as well as the continued muted demand outlook for the tech growth. On a full-year basis, specifically, I want to start with the Financial Services vertical. We do anticipate that we will be delivering anywhere between 45% to 46% growth on a full-year basis for FY '27 relatively by '26, as far as the FS vertical is concerned. Yeah. For Industrials, the outlook is that we will be delivering between 60% to 65% growth on a full-year basis relative to the previous year. The CPG and Retail business, depending on how a few of the large deals that we spoke about should be almost flat-ish. But the Retail vertical specifically will continue to do well, but CPG and Retail on a full-year basis maybe flat-ish relative to the previous year because of primarily the impact that we saw from some of the leadership exits that happened immediately after the Decision Point earn-out was concluded. Specifically on tech, while we did anticipate that we will have a flat-ish year for FY '27 relative to FY '26, the outlook right now is that on a full-year basis, the Tech business specifically will have a negative sort of growth of about 5% on a full-year basis, which will mean that for the full year right now, the visibility that we have is closer to about $127 million of revenue, relative to the 119.5 that we clocked the last year, which will be a 6% plus growth. Now, please bear in mind, the reason why we want to put this guidance out is this is like the number that we have a lot of confidence in delivering. This, of course, is all organic. Inorganic, if any, will be on top of this. Right? And, specifically on inorganic, as we continue the conversation, we will give you a little more update in terms of what our current initiatives are. But at this point, this is the number that we're comfortable guiding to. With that, Sonal, did you have anything else to add on to what I said?
Sonal Ramrakhiani (Latent View Analytics Ltd): Yeah, I think, just on that last point, I wanted to reiterate that, having come in, come and looking at all the granularity of the numbers, the 127 aligns with making sure that we deliver well there, but by no means, are we holding ourselves back on that. There's a lot of, you know, work that's being done on seeing how we can get better as far as that is concerned. But obviously, from a guidance perspective, we will look at coming back to you, as those numbers start getting cemented. So, a lot of background and work that's being done on getting better there, but we are very focused and confident in medium to long term around, the potential that's there in the business. The foundation is extremely strong, and just having come in, you know, I guess 110 days, 10th day today, I am, very, very positive from the perspective of the depth of domain expertise, the confidence that our customers have, the depth of the logos that we already have, the relationships that we have, and as well as, the teams and the talent that we carry. That's just a quick closing comment from me. Thank you.
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