Unicommerce Esolutions Ltd (UNIECOM) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, the conference will begin shortly. Please stay connected. Thank you.
Moderator: Ladies and gentlemen, good day, and welcome to Unicommerce Esolutions Limited Q2 and H1 FY '27 earnings conference call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all part
Moderator: 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 touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Kapil Makhija, Managing Director and CEO of Unicommerce eSolutions Limited. Thank you, and over to you, Mr. Makhija.
Kapil Makhija (Unicommerce Esolutions Ltd): Thank you. Good morning, everyone, and thank you for joining us for the Q2 FY '25 earnings call. I am joined today by Anurag Mittal, our Chief Financial Officer, along with our Investor Relations advisor Strategic Growth Advisors. Let me begin with a brief update on our performance. We continued to build on the growth momentum of the past few quarters. Both Uniware and Shipway delivered double-digit year-on-year growth in Q2 FY '25, supported by continued progress on our growth initiatives. At the consolidated level, our revenue grew 15% year-on-year to INR 59.1 crores during Q2 FY '25. There are three developments from this quarter that I that I would particularly like to highlight. First, Shipway has crossed INR 100 crores in annualized revenue run rate. The business grew 15.7% year-on-year. Second, our newer offerings within Uniware are beginning to scale and contribute to revenue growth even at an early stage, contributing nearly 2.5% of Uniware revenues. And third, we demonstrated nearly 65% growth to end the quarter at INR 104.4 crores of cash balance. I'll now spend some time explaining how we intend to drive organic growth in our business. We have been working on three key levers and are continuing to deepen our efforts across each of them. The first is acquiring new clients across all our platforms. We continue to strengthen our sales and marketing capabilities and improve go-to-market efficiencies to reach more clients. The second is expanding our relationships with existing clients by increasing adoption of additional products. This includes upselling newer UniReco and UniCapture modules and cross-selling Shipway's offerings to our existing client base. And the third is increasing clients' value and usage through AI-led product innovations. Our objective is to make our products more comprehensive, help clients operate more efficiently, and expand the range of business problems we can solve for them. These three drivers complement each other. A larger client base creates more opportunities for product adoption, while broader offerings help us deepen client relationships and increase revenues. Let me now take you through how these initiatives are progressing across Uniware and Shipway. Starting with Uniware, we continue to see an improvement in Uniware's growth trajectory supported by new client acquisitions and higher revenue from our existing client base. During Q2 FY '25, we added 121 enterprise clients compared with 103 clients in the same quarter last year, representing a growth of 17.5%. These additions included both traditional enterprises and digital-first brands across multiple categories, including United Colors of Benetton or UCB, Amul Macho, Furlenco, Pushp Masale, JK Maini by Raymond, and Nish Hair, to name a few. Beyond India, our international business continues to grow. International markets now contribute approximately 6% of Uniware revenues compared with around 3% at the time of our listing couple of years ago. Its revenue contribution has doubled over two years, and the business remains profitable while growing faster than our domestic business. Coming to our existing client base, we are focused on increasing adoption of newer products and modules through upsell. Historically, much of Uniware's growth came from acquiring new clients and increasing transaction volumes as those clients scaled. With newer modules and products, we have an additional opportunity to grow revenue from the same clients. UniReco and UniCapture have crossed an annualized revenue run rate of over INR 3 crores, representing around 2.5% of Uniware revenues. During quarter
Kapil Makhija (Unicommerce Esolutions Ltd): 27, more than 150 clients were using these products. Currently, 7% to 8% of Uniware enterprise clients use UniReco, while 5% to 6% use UniCapture. We see significant headroom to grow this contribution through higher adoption and new offerings. As I mentioned in our previous call, enterprise software products typically require sustained development, client feedback, and refinement before they reach maturity. As our newer products mature and adoption increases, we see the potential for their contribution to increase to more than 10% of Uniware revenue over the next two to three years. Moving to Shipway. The business grew more than 15% year-on-year. With this growth, Shipway has crossed INR 100 crores in annualized revenue run rate. Last three quarters, we were focused on building a strong foundation and investments to ensure sustainable growth, which is expected to be visible in the coming quarters. When we acquired Shipway, we saw an opportunity to build a much larger logistics technology business by combining its product capabilities with our client relationships, technology, and go-to-market strength. During FY '26, we focused on improving business fundamentals and building a sustainable operating model. Having established that foundation, we stepped up our investments in FY '27 to support faster growth and greater scale. Looking ahead, we see two complementary opportunities to grow Shipway. The first is cross-selling Shipway services into our existing Uniware client base. Today, there is approximately 10% client overlap between Uniware and Shipway. However, almost 20% to 25% of Shipway shipment volumes are already generated by clients who use Uniware. This provides significant headroom to increase cross-selling within the Uniware ecosystem. The second is independent growth in the broader market. Shipway addresses a much larger client universe than Uniware alone. Based on our internal estimates, we currently have less than 5% market share, leaving substantial room for growth. Our strategy is to pursue both opportunities in parallel, leverage our established Uniware relationships to accelerate cross-selling while continuing to acquire new clients independently. Together, these provide us with two complementary avenues to scale Shipway over the coming years. Beyond client acquisition, upselling and cross-selling, AI-led product innovation is a third important driver of our growth. Our approach is to expand our product capabilities in two directions. The first is increasing the breadth of our offerings. We are developing new products and adding features within our existing products to address a wider range of client use cases. This allows us to solve more problems for our clients and offer more services, strengthening client stickiness. The second is increasing the depth of our existing products. As our clients grow, their operations become more complex. They manage more sales channels, higher transaction volumes, larger warehouse networks, and more complex business processes. We are enhancing our products to support these increasingly complex, large-scale operations. AI is an important enabler of both these efforts, helping us develop capabilities that were previously difficult to deliver while also speeding up product development. Our earnings presentation for Quarter 2 FY '27 covers several of these enhancements, but I will highlight one important launch. Within Uniware, we have launched DNA, our second generation AI companion. Traditionally, our systems executed workflows and served as a system of record. DNA takes this further by identifying signals and potential anomalies early, helping client teams shift their focus from daily operations to faster decision-making. It also enables automated corrective actions, either independently or with human intervention, based on client preferences. As we refine DNA through client feedback, we see the potential to transform how operations are managed and optimized, moving our software from a system of record towards a system of action. Let me now conclude with our outlook for the remainder of
Kapil Makhija (Unicommerce Esolutions Ltd): FY27, we remain confident of delivering more than 15% year-on-year revenue growth in Uniware from Q4 FY27 onwards. For Shipway, we continue to expect year-on-year revenue growth to accelerate to more than 20% from Q4 FY27 onwards. On profitability, we expect the pace of incremental investments to moderate in the second half of the year. For Shipway specifically, we expect the business to achieve adjusted EBITDA profitability starting Q3 FY27, followed by PAT profitability starting Q4 FY27. Due to this, at a consolidated level, we expect profitability and margins to improve during the second half of FY27, supported by continued revenue growth and increasing operating leverage. To summarize, we entered the second half of the financial year with multiple avenues for organic growth and a clearer path towards improving profitability. Our focus remains on disciplined execution and building a larger, more profitable Unicommerce. With that, I'll love I'll now hand it over to Anurag to take you through the details of our financial performance for the quarter and first half of the financial year. Thank you.
Anurag Mittal (Unicommerce Esolutions Ltd): Thank you, Kapil. Good morning, everyone. I will now take you through our financial performance for Q2 FY27. Our revenue stood at 59.1 crore, representing growth of 15% year-on-year compared with 51.4 crore in Q2 FY26. This was supported by continued double digit growth across Uniware and Shipway. Adjusted EBITDA stood at 10 crore compared with 11.4 crore in the corresponding quarter last year. Our adjusted EBITDA margin was 17% compared with 22.2% in Q2 FY26. As we had indicated at the beginning of the year, profitability during the first half reflects the planned investments in product development, talent, sales and marketing. Profit after tax for the quarter stood at 6.4 crore compared with 5.8 crore in Q2 FY26. For the first half of FY27, our consolidated revenue stood at 110.4 crore compared with 96.3 crore in H1 FY26, representing year-on-year growth of 14.7%. Adjusted EBITDA for H1 FY27 stood at 18.1 crore with adjusted EBITDA margin of 16.4%. Profit after tax for the first half stood at 11.1 crore. Uniware remained a strong contributor to revenue while Shipway continued to scale and increase its share of the overall business. Kapil has already described our positive traction on new acquisition and progress across our up-sell and cross-sell initiatives that will help us scale further going forward. Our AI-led product innovations to increase the width and depth of our platforms will enable both additional opportunities for revenue and to increase our client stickiness with a differentiated product offerings. A combination of these three levers with focused execution will enable us to grow sustainably. Coming to profitability. The investments made during H1 FY27 have resulted in higher operating expenses during the period. We funded these investments through a portion of our operating cash flows
Anurag Mittal (Unicommerce Esolutions Ltd): with incremental investments expected to moderate from quarter three. Continued revenue growth should support improving adjusted EBITDA and operating leverage during H2 FY27. Our balance sheet remains strong, supported by continued cash generation. Cash and bank balances stood at 104.4 crore as of the end of quarter two FY27, compared with 96 for 3.4 crore as of quarter two FY26. Compared with Repeating again, compared with 63.4 crore as of quarter two FY26. Cash flow from operations grew 20.6% year-on-year to 11.6 crore during the quarter, reflecting continued strength in our cash generation. Our focus for the remainder of the year will be on sustaining revenue momentum, improving operating leverage, and building a larger and a more profitable business. With that, we would now like to open the floor for questions. Thank you.
Moderator: Thank you. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on a touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question comes from the line of Praneeth with SG Investments. Please go ahead.
Praneeth (SG Investments): Hi, sir. Thank you for the opportunity. Sir, first hand I wanted to understand Great work, but I wanted to understand in terms of the average realization for order, we have not been doing very well. I think it's coming down over the last few quarters. Could you explain why that is? Because we're growing in enterprise clients, but the revenue is not growing as fast. Could you explain why that is? That we're not able to grow the average realization for order?
Kapil Makhija (Unicommerce Esolutions Ltd): Sure. See, compared to last year, we have now been able to get the business back on track to get to double-digit growth. We've seen five quarters of consistent improvement in our growth over the last five quarters. This is on the back of strong stronger client acquisition. We continue to compared to when we listed we were onboarding 85 to 90 clients a quarter, to now we are onboarding anywhere between 120 to 150 clients a quarter. So, we've seen a healthy improvement in the number of clients being acquired. On top of that, the investments we made in FY24 and '25 in building the new products, which is UniReco and UniCapture, we are now seeing a healthy adoption of those solutions also. Now 150-plus of our clients are actually using these products and these products, within a less than a year of their launch, are now contributing to 2.5% of Unicommerce revenue. Having said that, in terms of our rate per transaction, see when we listed our transaction mix was very homogeneous where where we were only catering to B2C transactions. But as quick-commerce started to gain scale, we expanded our offerings to B2B and quick-commerce as well. Today, B2B and quick-commerce offerings of ours are being used by 45% to 50% of our client base. Which Which meant that our transaction mix became heterogeneous. So hence, rate for transaction is not a metric that we anyway were proactively tracking within our business. The three ways to model our business are growth of our existing clients, for which we report a metric called NRR, acquisition of new clients, which we report every quarter, and the profits that we're delivering in the business. These are the three metrics that we used to track our business. And we are honestly not really proactively great for transaction, and anyways not like-to-like comparison anymore ever since the contribution of B2B/quick-commerce has increased in our transaction mix.
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