Letter to Shareholders
Over the last two years there has been a pattern of pleasantcoincidence around the timing of this letter.
The Annual IBS Sales League Table ratings based on the number ofsuccessful deals were being released around the same time. Intellect has been winning #1Ranking in the key Banking verticals - Retail Banking and Corporate Banking. In June 2021our third key vertical - Insurtech joined this Club winning the #1 Rating. As is done inSports the natural expectation was to look for a "hat trick" at this juncture.We precisely achieved that this year - we have won the #1 Rating for both Retail - sixtimes in a row - and Corporate Banking - thrice in a row as well as for Insurtech - twicein a row apart from adding Retail Lending to the list now. Having won the pole positionin these 4 products we have also been ranked #2 in Digital Banking and in PrivateBanking/ Wealth Management. These apart we have also won the #1 position in GlobalLeadership in terms of Product Breadth and #2 in terms of Geographic spread apart fromemerging #1 - as a Regional Leader for ASEAN region.
A consistent endorsement from such an independent external ratingexercise is a strong validation of our growth our success across Product lines andgeographies and a gratifying evidence of our increasing Brand power.
FY21 had as I wrote in my last communication proved to be asignificantly successful year for Intellect despite the impact of the pandemic withsubstantial improvement in profitability and cash flows apart from revenue growth. I amglad to report that FY22 built further on the strong foundation laid towards profitablegrowth in FY21. Our revenue growth further accelerated to 27% over FY21 to INR 19187 Mn.Our License linked revenues - License plus Maintenance (AMC) plus Subscription / SaaSrevenues - a metric that is very pertinent for an IP led organisation such as Intellect -moved upto nearly 57% of revenues against 54.25% in the prior year. This was supported bya strong growth in our Subscription and SaaS (Software as a Service) revenues by 112% overthe year ago. Our annual recurring revenues also moved up to about 38% of revenues against32% in FY21 pointing that an increasing share of our revenue is derived from stablerepeatable streams. We registered 35 Wins in FY22 including 13 transformational platformwins. More than the numbers the nature of deals won the rigour of the evaluationprocesses the logos acquired and the sophisticated competition against which these werewon - all of these collectively prove the 'depth' and 'edge' of our Technologies Productsand Platforms.
On profitability the increase in our Gross margins outpaces revenuegrowth - moving up by 30% against year ago against the revenue growth of 27% - driven bythe quality of revenues increased salience of IP led revenues and design thinking leddelivery efficiencies. With no compromise on our Research spending as well as Marketinvestments our Earnings before Interest Tax Depreciation and Amortization (EBITDA)have further grown 33% over year ago to INR 4721 Mn. Supported by higher treasury incomearising out of higher cash balances Profits before tax grew 43% over year ago and Profitsafter tax grew by 32% to INR 3504 Mn. Our strong collection record helped move our cashbalances to INR 5588 Mn with zero debt on the balance sheet. We have proposed our maidendividend to celebrate the success of this year.
THE PROGRESSION FROM PRODUCTS TO PLATFORMS TO MARKETPLACES
While hosting the second edition of our Technology Day in December Ihad outlined our journey of evolution from Technologies to Products to Platforms andeventually to Marketplaces.
Our Products journey commenced on a strong foundation of low code-nocode technologies such as Canvas Technology for User Experience design and AnalyticsFabric Data for Artificial Intelligence Intelligent Document Extraction (IDX) forHyperautomation iTurmeric API & Integration studio and ARX for multi-layer securityand entitlement management. Our unified architecture was based on a microservicesframework API led and cloud ready with an option to be offered as a headless platformthus rendering us MACH compliant. This technology stack provides us the 'edge' to winagainst new age FinTechs which offer a few user journeys on a light App - while ourProducts and Platforms are enterprise grade benchmarked and certified for performance andsecurity amongst others. In addition our deep domain expertise built in working withGlobal leaders in Banking Insurance & Financial services for over three decades hasresulted in over 300+ distinct user journeys and 900+ APIs across 12 products and 5platforms. This breadth of rich functionality provides us the 'depth' which equips us towin against established players in the Industry. This repository of user journeys alsoequip us with 'Composability' in being able to curate solutions that most suit a specificbusiness context ignoring conventional Product boundaries while the data platformrenders Contextuality.
As our customers' business models and Go To Market strategies adapt tosuch evolving market needs across traditionally defined domains our Products graduate topowerful Platforms that aggregate the functionality of individual products whilesimultaneously leveraging the unified architecture integration engine and Digital 360framework to offer seamless experience data flow and straight through processing.
As the next logical step of journey we visualise ourselvesestablishing rich ecosystems working with our Partners who offer complementingfunctionalities/services to provide holistic experiences to our Customers. We have madesubstantial progress in this direction in our Consumer Banking and Wealth domains. At theopportune moment we will leverage the AIF - Alternative Investment Fund - vehicle tosupport chosen partners in our journey. Our cloud partnerships and success in deployingour products and platforms in the cloud model provide us the confidence of our continuedsuccess in this direction. We will continue to stay focused in spotting Market andTechnology trends early in the game adapting ourselves quickly to leverage these anddelivering greater value to all our stakeholders
LIVING OUR DREAM
In my Technology day address I had also highlighted our achievementsthus far across the six Capitals of Business summarised by the acronym BELIEF -viz Brandand Sales End Customer Leadership/Talent IP Execution and eventually their collectiveimpact on the Finance Capital.
I had also provided proof points of recent success stories how some ofthe deep engagements with our Customers have borne fruit for mutual growth and successover time the business opportunities and pipeline that these successes point to the newagenda of Partnerships that we have embarked on and our strong Design Thinking led cultureof innovation that is the key differentiator driving our agenda.
The constancy of our purpose and dream continues to fire our spiritsand our pursuits - of bringing significant positive impact in the lives of our Customersof inspiring and challenging our associates to build and demonstrate expertise andexcellence of delivering calibrated predictable profitable growth to our shareholdersand of contributing to the holistic and sustainable development of the society andcommunities around us - not merely in monetary terms but by investing our time andcollective efforts. I must gratefully acknowledge - FY22 was a great milestone in allthese aspects and we will continue to 'live our dream' every day as we progress in thisjourney.
I take this opportunity to thank our Board of Directors Advisoryboard Leadership teams all our Associates Customers Vendors Partners and Bankers fortheir trust and confidence in us and for the support through this exciting journey.
Chairman & Managing Director