BlackBuck Limited (BLACKBUCK) Earnings Call Transcript & Summary

Welcome, everybody, to our fifth earnings call after going public. And this will be the month where I think being a public company, we'll probably complete an year. That will happen on November 22. So first of all, thank you so much for really supporting us. And thank you so much to all the shareholders for really supporting us and getting us to this place and having the faith and belief in us that we would execute well. And yes, so let's begin, and I will take you through the earnings presentation of the second quarter FY '26. Starting off with a snapshot of numbers. We did a total income, which includes the interest income and everything, about INR 167 crores in the last quarter, which is a 61% growth on a year-on-year basis. Last year, the same number was INR 104 crores. On an EBITDA basis, we did INR 37 crores approximately, which is a 150% -- 143% growth on a year-on-year basis. Last year, the same number was roughly INR 15 crores. From INR 15 crores, this has moved to close to INR 37 crores. Like subsequently, the profit after tax number is INR 29.2 crores this year. Last year, obviously, because of multiple exceptional items, the number was a negative of INR 270 crores. So that's a strong turnaround in the whole business. Relevant to this because most of the business is determined by the key KPIs moving upwards, the whole transacting customer base for us has roughly touched about close to 8 lakh customers, which is a growth of roughly about 13% on a year-on-year basis. Metric, which determines usage of our services more deeply by our users, users who use more than [indiscernible] services, roughly close to 4 lakh users, which is a 21% growth on a year-on-year basis. Payments being one of the critical parts, components of the revenue for the company, we report this separately. We did close to about INR 6,800 crores of GTV of payments, which is a 29% growth on a year-on-year basis, right? So broadly, summarizing this with a headline that like as we've always spoken in the last five earnings calls, we continue to grow leveraging the tailwinds of the industry, leveraging the strong product portfolio, which we have built, leveraging the new product portfolio, which we keep experimenting and continue to launch. While doing that, we deliver profitability on a consistent basis because the profitability comes from the core businesses, which have matured over the course of the years and continue to compound on revenue, continue to compound on profitability. And newer businesses, we continue to keep reinvesting our profits and keep scaling them. As always, for the benefit of new shareholders joining the call, we like take a few minutes to repeat what our strategy is. A good part about the strategy is that it's been consistent over the last six, seven years. We obviously iterated -- the company started in 2015. We iterated through our way and probably landed upon this strategy maybe by 2018, 2019 and have been doing the same thing consistently the last seven, eight years, and this has delivered us results. Very simply put, 3 parts to the strategy. We create, we innovate for our customers. We are in this industry to really reimagine everything how it works in the transportation world. So we keep launching offerings for our customers, right? Our customer centrally being the truck operator. And a truck operator, typically, an average 3 to 5 truck ownership is what India has. And keeping that in mind, we build products. These products because everything is digital, are launched on our platform. And by launching newer and newer products on our platform, platform keeps getting stronger and stronger and customers use this platform repeatedly and more deeply. And nature of our customers, largely middle aged, uneducated and hence, a distribution has to be unique. So that's something which is very unique to our strategy, and we continue to deepen and deepen on this. Offerings, as you know, our flagship offerings of tolling and vehicle tracking are our core products, which also drive majority of the revenue and profits today with continuously launching adjacencies to these products, be it fuel sensor, be it fuel payments, right? And leveraging all of this data, consumer insights to launch loads, to launch vehicle finance as we continue to build. And obviously, many such offerings are under the hood, which we continue to like experiment, continue to launch. By the virtue of this, like our platform continues to get strengthened. As you can see, the minutes a customer uses the app is probably in the B2B world, one of the highest. For us, how we use a browser, how we use a social media app, a trucker for his business uses this app. So we have close to 8 lakh transacting customers, which is as near as about 25% of India's truck operators. Our app is very relevant for a large capacity truck user and for a long-distance truck user. And hence, relevant market share may be much higher, but then like our products long term will be relevant for everybody. So that's why we keep measuring this market share. Year after year, because we launched new products, we become -- we are becoming more and more relevant for our users, the usage continue to deepen. On the distribution, we are present everywhere. It's like -- because our users need to be explained what our product value proposition is and their trust with digital is not that high. We basically build trust with the offline network, which explains and onboards our customers. So there's a 10,000 people touch point network comprising full-time workforce engaged by us, channel partners, variabilized workforce, [tele channel] like our technicians who basically install, repair a GPS device or a fuel sensor, everything put together, we have a 10,000 people feet on street network through which we touch, service our customers. And obviously, present very widely, probably this presence is now closer to 90% of the districts all across the country. So that's what we do, right? And this is a strategy which is really compounding and delivering the results which you are seeing us deliver. Coming to the key KPIs of the business, which is largely all the key KPIs are trending in the way they've been trending over the last four, five quarters, be it monthly transacting truck operators, be it using people using more than two services, time spent on the app, the GTV of payments, the payment transactions. Coming down to the revenue level. Revenue from operations, removing the interest income from the total income has grown about 53% on a year-on-year basis from last year, INR 99 crores to this year INR 151 crores. Net revenues from this has grown by about close to 38%, INR 99 crores to INR 136 crores this particular quarter. Contribution margin has grown slightly higher 41% on a year-on-year basis. And on an adjusted EBITDA basis, which basically does not include the ESOP cost, has grown from INR 19 crores to INR 43 crores, which is a 123% on a year-on-year basis. Most of these numbers would reflect the same trend on a full -- on a half year basis of this year. Every six months, we give a half year picture. Reading out some of the key things over there. On an adjusted EBITDA basis, we've already clocked close to INR 90 crores in this particular half year of the full financial year. And the same number last year on a half year basis was INR 31 crores, which is close to a 190% growth on a half year basis. And similar narration would be for the remaining key KPIs. Taking these results and giving a little bit of voice over on what's really happening, right? First, narration, more on the overall revenue part. As a company, on the total income, we have grown about 61% on a year-on-year basis and on a net revenue basis, 38%. If we split this number between the core business and the new businesses, the core businesses ended up growing 37% on a net revenue basis on a year -- on an overall revenue basis on a year-on-year basis. And on a sequential basis 3%. As you all know, July, August, September is a rainy season, like -- and it coincides with the little bit of trough in the overall trucking industry. Every industry, which is like, let's say, has primary metrics from a trucking perspective, be it sales of trucks, be it loans and trucks, et cetera, typically has a bit of a low season quarter and starts picking up from the September, October month with the festivities coming in, right? So despite the low season quarter, on a sequential basis, we were able to do a 3% growth in revenue. And on the overall core business from a year-on-year basis have grown at about 37%. This year, important to note is that even in the core businesses, we have invested higher. As you can see on a -- at a company level in this quarter, year-on-year, our costs have grown up by roughly about 18%. And on a sequential basis, we have grown cost by about roughly INR 8 crores. Some part of these costs, not majority, have actually gone into the sales and distribution for the core business as well. And obviously, as you know, in our strategy, even in the core business, we've got a lot of adjacencies, which we invest into and grow and for a lot of these activations, we need to really reinvest back. So as you can see one of the signs there, fuel sensor, which was one of the new launches probably about 2, 3 quarters back, has already gotten bolstered as part of its overall sales portfolio. And in the last quarter, on a sequential basis, we've been able to grow about 55% on the fuel sensor. So that's the narration on the core businesses. Coming to growth businesses, as you all are aware that under growth businesses today, 2 relevant businesses for us are Superloads business and the vehicle finance business. Both of them have made good progress in the last quarter. And overall basis -- overall basis, overall revenues on growth businesses have grown by roughly about to 26%, on a sequential basis have grown by about 19%. And largely, the gross revenue growth is because of the Superloads business. As you are all aware, today, we are in the -- we are present in 4 hubs, largely materially present only in 2 hubs and the other 2 hubs were largely for the return loads in a Superloads business. From there --from the 4 hubs over the next course of 6 months, we plan to open 10 new hubs and take this number in the range of 14, 15 hubs over the course of the next 6 months. So that's where I would like to say that the update is that the whole playbook building, probably we are in the zone of 60%. And I think we've learned newer things. We've hit a few milestones, which were internally important for us for us to test ourselves to know that whether we really know how to scale this business. And happy to share that some of those experiments have gone well. Some of those scale milestones have got hit in some of these critical hubs. And we plan to sow the seeds because whenever you typically launch a new hub, it has its own ramping up timeline. So we've decided that we will expand to 10 new cities over the course of the next 6 months and ramp them up while we continue to deepen in these 2 hubs where we are building our playbook. So that's the narrative on overall top line and overall growth. Moving into profitability. As I've narrated, we have seen a growth of 123% on a year-on-year basis in adjusted EBITDA, growing from INR 19 crores last year same quarter to this year INR 43 crores. That's a 123% growth. And as a percentage of net revenue, that's a 19% to a 31% kind of a -- number on a year-on-year basis, right? And largely, the story remains same. This growth in EBITDA is led by like delivery of operating leverage. We are in a business where most of our revenue comes from -- most of the revenue comes from line items which are recurring in nature and our customer retention is very strong and has a very high contribution margin. So if you look at on a quarter-on-quarter basis, the operating leverage is 65% because of the reinvestment in business which we are doing. If you look at on a half year to half year number because last quarter, we have presented the operating leverage of 85%. So if you look at half year to half year, the number still stays at 77% from an operating leverage perspective. Giving you a bit of narration on EBITDA on a sequential basis, if you compare to Q1 '26 to Q2 '26, there's a small shrinkage in EBITDA. If we wouldn't have intensely driven investments in our newer businesses and our core businesses, obviously, this EBITDA sequentially would have increased. But primarily roughly anywhere in the range of INR 2 crores to INR 3 crores of investments have increased at a quarter level because of doubling down on Superloads and because of expansion of sales and marketing efforts in the core businesses, right? And another INR 1 crores to INR 2 crores each in the investments driven by like in the subsegments of the core businesses, namely fuel sensor and AIS GPS growth and obviously, the annual salary increments as they happen on a regular course, right? So, there are 4 line items, which typically materially have led to the small reduction from a sequential EBITDA perspective. That brings me to giving you a snapshot on the P&L basis. Overall income in this quarter, INR 167 crores, as I narrated. If you remove the interest income, the number flows down to INR 151 crores. Overall, net revenue is INR 136 crores, which is a growth of 37 -- 38% on a year-on-year basis. If you remove the direct cost, direct cost largely similar on a year-on-year basis, you get the contribution margin and then total expenses. If you see on a year-on-year basis, this is probably the first quarter after going public, we have like, let's say, probably loudly invested. That's why you see on a year-on-year basis, it's roughly about 20% growth, growth of INR 71 crores to INR 84 crores on a overall expense basis. And on a sequential quarter basis, it has moved from INR 75 crores, INR 76 crores to INR 84 crores from a total expenses basis. On -- and the same numbers largely hold good at a half year basis. If you see revenue growth is basically 55% on a year-on-year basis. Net revenue growth is 40% on a year-on-year basis -- on a half year basis. Adjusted EBITDA INR 90 crores from last year INR 31 crores, which is a 190% growth on a year-on-year basis, right? And then removing the ESOP expenses coming to EBITDA. Last year, EBITDA was INR 15 crores. This year, EBITDA is INR 37 crores, which is roughly about 143% growth on a year-on-year basis, 229% growth on a half year basis from INR 23 crores to INR 77 crores. And commensurately, even the PATs, PATs not comparable because of a lot of onetime items. At this point in time, also want the shareholders to note that EBITDA in our business largely mimics the cash flow. So if you look in the annexures, the overall cash flow of the company in first half of this year is INR 130 crores, which is far higher than the adjusted EBITDA of INR 90 crores. INR 90 crores is the adjusted EBITDA, which generally directly moves into cash flow, plus because our revenue is amortized largely, so there's a deferred revenue element of INR 10 crores, which shows up in cash flow. So that's a real cash flow of INR 100 crores. And we had a onetime working capital rollback in our other part of the businesses, which contributed to INR 30 crores in increase in cash flow. That's why you see the overall INR 130 crores. But then always, as I've been guiding, adjusted EBITDA typically equals cash flow. A little bit goes higher because of the growth in the business and deferred revenue gets -- comes into the cash flow, but doesn't come into revenue. Moving forward, giving you, let's say, like a broader view of probably the last 2, 2.5 years. As you can see, we continue to consistently compound in profitability, moving from like Q1 '24 of negative INR 11 crores to this quarter of INR 43 crores, which is basically a huge turnaround over the course of 2 years. And if you look at the same numbers on a H1 '24 to H1 '25 basis to H1 '26 basis, again, a huge turnaround in terms of numbers. Again, reiterating, if you look at the H1 '25 adjusted EBITDA of INR 31 crores moving to INR 90 crores, that's a growth in INR 59 crores in adjusted EBITDA. At the same timeline, the growth in revenue was INR 77 crores. That's a 77% delivery of operating leverage. So our strong track record of delivering profitability, delivering operating leverage and consistent growth in revenue continues, and we'll do our hard work and hope god helps us keep growing that consistently and keeps luck by our side as we keep moving forward. Summarizing our strategy, I'll take this point to like reinforce on our strategy of what we are trying to do, right? As all of you know, our core businesses deliver more than majority of the profits, more than 100% of our profits for us. And tolling and vehicle tracking have been the leading vectors of our revenue mix. They have been silently being added to by the fuel cards business and the AIS GPS business, which is largely a mandatory business in multiple states, which basically has helped us compound on revenue stronger, right? And by launching new verticals like fuel sensor. And obviously, there are many experiments under the hood, which we keep doing, which will keep becoming core part of the revenues, right? So that is our strategy in core businesses that we will keep innovating in adjacencies, which will materially have the same revenue model, like be it a payments revenue model, be it telematics revenue model and which will materially be using the same sales and distribution workforce to really leapfrog in revenues. So that part will keep growing, right? So there, again, very key focus. Tolling, by far the market leaders, like our market share is inching very close to 50% on tolling. We will continue to compound like on tolling. As you saw our payments GTV numbers and if you compare that relevant to the NETC numbers, right, we've done like far better than the overall industry averages, right? So our focus there is to keep sharpening our axe, keep making material investments, right, and keep like leveraging the tailwinds and keep growing consistently, right? And there, one of the important things we have done is that like probably our paybacks -- blended paybacks in core businesses was as aggressive as like seven, eight months. Now we've continued to invest back and see that even if this payback shifts to like nine, ten months, we are okay with, but we have to keep doubling down on our market share and keep growing in that direction, right? So that's the approach in core businesses where we will compound on revenues, which will help us compound on profitability because of operating leverage and not be too -- like very, very, very, very profit focused, but because the business model will deliver profits, but keep like expanding market shares, right? So that will be the focus ahead, right? As you've seen us in the last two quarters, we will keep doing that. Moving into the growth businesses, right? Growth businesses is where, again, like namely on the loads, there are 2 lines of businesses classifieds, which has a material market share on loads, has grown like 65% to 70% on a year-on-year basis, right, for us. And that has led us to the birth of Superloads, which is essentially the transition of the classifieds business model into a transaction business model to Superloads, right? And Superloads, as I gave a narration that we believe that we have got material evidence in terms of the playbook building, and we are really going aggressive on the Superloads side, right? And while the other businesses -- because classifieds has found its own sweet spot, continues to grow all across the country, continues to digitize loads, makes the whole, I would say, playground ready for Superloads to really enter into these markets in an easy basis, right? Vehicle finance, again, partner-led calibrated growth because we're dependent on partners, partners have various strategies of looking at growth in these businesses. So we work with them to grow their loan book, and we are an origination tool on a majority basis, right? So on growth businesses, as always maintained because we are as a company with thick balance sheet, we are a very young company. Our journey in really digitizing trucking and building the future of Indian trucking has just started and probably line verticals, which are of very high relevance and changes customers life have really not yet got built out, and we are in the -- like our endeavor in growth businesses is that. So we will always be keeping a very strong aggressive investment outlook in the growth businesses, right? So summarizing, while growth businesses will continue to compound on profitability, we will ramp up new investments in the growth businesses and continue to really stay true our long-term vision of building the whole digital version of freight, which is needed to really debottleneck logistics and really make trucking very efficient and predictable for the country. So with that, I think we will pause and open the floor for questions.

Thanks, Rajesh, for the update. [Operator Instructions] The first question is from the line of Abhishek.

Yes. Like some of our larger fleet management system competitors that are there in U.S. like Samsara, they are integrating AI in their offerings. Like are we looking forward into such a possibility in our future? I wanted to know your comments on that.

Yes. Thank you for your question [indiscernible]. So basically, the most important -- I mean, the easy answer to this is yes, because at least our view of AI is that like it will largely be synonymous to like electricity because anything you do, you want that to be more intelligent, less manually dependent. And so you would essentially, in the long term, embed AI in like almost virtually every product offerings which we have. And today, if you're asking me whether application of AI we use across all our product offerings, answer is very much yes. Now helping you understand like in terms of products in Samsara versus products what we have, right? So if you look at the whole suite of products of Samsara, they start from basic vehicle tracking, as they call as ELD to their advanced GPS devices to dash cams to like various different sensors for monitoring industrial applications, they have a very wide range of products, right? Now if you look at the same context in the Indian market, right, Indian market, the entire go-to-market in telematics has been more price dependent, right? So for a product which on an average price is priced between $20 to $100 per month for a GPS device in the U.S. markets and the European markets. In India, the right product market fit was like for us happened only at like $2.5, which is like INR 200 plus plus is what we can make from our customers, right? So that's point number one. Point number two, the -- so hence, in India, we've been largely successful in low spec, like very thin use case kind of products, right? Point number two, in terms of, let's say, the places where AI is much more useful and like where you can really create a difference is basically in the area of video analytics in the dash cam sector, right? That particular product for us still is in the -- like in the experimentation phase. We're still figuring out the product market fit, figuring out the utility, figuring out the price points, figuring out how to create this at a price point which these customers would love, right? And so what I would say is that, let's say, now if you are asking me where are we using? We are using this in probably the fuel sensor product like to be able to really show accurately the levels of fuel, clean the whole data, et cetera. We use AI a lot in our Superloads business, right? We use AI a lot in our classifieds business to be able to show the right load to the customer in terms of the ranking of the load when he is looking at it to the right repositioning of the asset for him in terms of where he has to go. Those are the [indiscernible] statements we are using AI today.

Okay. And like what is our -- do you have any data as to what is our market share in the loads business as of now?

So market share in the loads business can be measured in two ways. One is digitized loads, what is the percentage which we drive. With reasonable confidence, I think in India, on a digitized loads platform, I think we are, by far, by a big margin, the biggest. So I think there, our market share probably would be upwards of 90%. But in terms of being able to digitize the loads of India's loads digitized, our broad estimate is that FTL line haul loads, which are long distance loads, typically in a day, 7 lakh to 8 lakh loads happen, right, typically. And on a live loads market share basis, they can broadly estimate anywhere in the range of like 7% to 8% of the loads, which typically are live at any point in time on our classifieds platform.

Okay. So there is a role of network effect in our businesses, right? Once we have big market share, competitors will have difficulty entering ...

Of course.

The next question is from Gaurav Malhotra. [Operator Instructions]

So I was just saying that in tolling, your market share would be roughly give or take, around 50-ish percent. Where do you think this market share can potentially go up to?

So basically, the acquisition market share is materially higher than the current market share on the flow-through. So we believe that like -- and that acquisition market share has been also climbing over the years continuously. So till the time the acquisition market share is materially higher and way higher than the current flow-through market share, it will always keep catching up to that number.

And in terms of gold subscription, if you can give us some sense of where you are at in terms of penetration, what's happening over there? Any details that you can share with us?

It was in the early 20s, maybe a year back, now more inching towards the mid part of the 20s, right? But it will be in that range roughly.

So that will be the penetration amongst your users, the truckers?

Yes.

Just one or two small more questions. In terms of fuel sensor, that seems to have picked up in terms of within the users who obviously were having the tracking system, where would we be in the penetration in that journey? Or is it a completely new set of users who is basically taking it.

90% of the users are all existing users of the platform -- 95%, I would say, 95% plus. And in terms of penetration levels, it's very early days because we have 8 lakh users. And I think -- yes, I mean, very early days. I think the whole penetration game is still yet to be fully played out. And like in the minds of the consumer, he is thinking of more as -- that I had a vehicle tracking device, now I'm upgrading into a fuel sensor, which gives me a vehicle tracking as well as the fuel sensing ability. So yes, so that's how it works. And obviously, it has a very high value proposition in terms of fuel pilferage, theft monitoring, managing driver, et cetera. So that really gets the ROI [indiscernible].

Just last one question. In Superloads, you mentioned that you're going from 4 to 14. So this will still be like within South or you are now sort of going to go a little bit wider in terms of ...

We'll be going pan-India.

Okay. But would like a 14-ish kind of a hub kind of a system be like dense enough from a Superloads perspective? How should we think about it? Or in other ways, like is 14 sort of the starting point and obviously, it has to go much...

So basically, let's say, for example, we want to go to West. We want to go to East, for example, right? So you will start up in Kolkata, right? And then you will figure things out after that. I mean, because if you have -- if you have the option in East to go to one place, you'll only go to Kolkata, right? But then if you want to further deepen then you'll start Patna, you’ll start Guwahati, like you'll start expanding, right? So this is the first probably points to just touch upon and then like figure things out. On a data basis, India has roughly 350 to 400 like industrial hubs all across the country, right? And like the top probably 50 to 100 are very material ones. And in that, like right now, it's really less of a choice, more of a rejection that where our product will probably fly much stronger, where our penetration and supply is like super normal. So we are just choosing those as sort of a very easy hubs to move into.

The next question is from the line of Sachin Dixit.

Hi Rajesh, congratulations again on a decent set of results. So to start with, I wanted to understand the replicability of Superloads model, right? So obviously, you are currently in 4 hubs. And let's say, tomorrow, you are present in 12 hubs, right? Can we build a thesis that, yes, this business works and you will be present in the most major hubs of the country and you can have a sustainable business there.

Yes, so to appreciate the modularity of this, right? See, basically, I mean, we are not like recreating this business or it's not a technology innovation, which is leading to a creation of a service. This is a matchmaking service, which exists in the industry as an offline industry today. And as I mentioned also previously on calls that this kind of a matchmaking business is done by like 2.5 lakh brokers in the country today, right? And like -- and if you look at a typical activity of a matchmaking activity, right, it's nothing but you need to build demand, you need to build supply, you need to do the matchmaking, you need to manage payments, you need to manage in transit, right? So this is like a modular activity, right? So the confidence which we've been able to get is that, like, first of all, our approach to this was to break this down into all these logical activities and all these are independent teams. And these independent teams need to do their independent activities, right? At the same time, supply is nothing, but driven by the whole platform. And then demand has to be raised by demand team like we do in the classifieds business. Fulfillment is done by a team which is separate, like payments is processed by a team which is separate, right? So the -- this has been successfully executed in the hubs of Bangalore and Hyderabad at a sufficient scale. Assuming that we need to reach let's say, a business size of maybe $2 billion, $2.5 billion in flow-through or $200 million in net revenue roughly, right? So in that scale, you probably -- let's say, for example, you need 40 hubs to do that at like X orders in every hub, for example, right? So with the reasonable confidence, we've been able to prove X/2 at least, right? So for a very large-scale business, if you like push that down to a particular hub level, we've gotten to that 50%, 60% like proof point at one hub level. Now to do that at a hub level, the pods, like each of these pods like essentially have been created and they run independently basis metrics data, right? And you basically hire teams, they come in, they are trained, they learn the industry. They work with us for two, three months. And then they get to a particular productivity levels where we breakeven, right, which is generally within three to four months, right? So that has been proven successfully within -- let's say for example Bangalore. Bangalore, when I'm saying a Bangalore hub for us, Bangalore is actually a micro hubs of 4 points. So this has been successfully proven across these 4 micro hubs. Similarly, Hyderabad for us is 3 micro hubs and Chennai and Mumbai has been 1 micro hub, right? So like though it is 4 hubs, micro hubs have been like closer to 10, and we've been able to prove this across these micro hubs. That gives us a confidence to say that the granularity in replicability is there, and we would be able to do that across 10 incremental new locations. And so the important point to actually build when we move from 4 to 14 is that what is the expansion strategy? How does expansion happen? How does activation happen? Because let's say, for example, the Bangalore hub, I would visit this hub probably with a very high frequency. But these 14 hubs, I would not be able to. So then what are these processes metrics? How do you create layers in execution? So that will be the -- probably those will be the questions than the replicability of the unit model.

Understood, understood, thanks for the clarity, really appreciate it. My second question was on the sort of incremental adjusted EBITDA side that we used to carry in your previous presentations. Obviously, you did highlight over the earlier commentary that you did that, basically you will try to put pedal on growth even if, let's say, the payback period extends by a few months, et cetera. So should we be expecting slightly more -- I do understand you will still deliver like $1 billion adjusted incremental adjusted EBITDA. But should we expect a slightly toned-down version of it going ahead considering that growth pedal is more important at this point?