BlackBuck Limited (BLACKBUCK) Earnings Call Transcript & Summary

Good evening, ladies and gentlemen. Welcome to the Q1 FY '27 Earnings Conference Call of BlackBuck Limited hosted by Raadhi Capital. [Operator Instructions] Please note that this conference is being recorded. Kindly also note that the audio of the earnings call is a corporate material of BlackBuck Limited and cannot be copied, rebroadcasted or attributed in the PR media without specific and written consent of the company. Please note that anything said on this call that reflects the outlook towards the future, which can be construed as a forward-looking statement must be reviewed in conjunction with the risks that the company faces. A copy of the disclosure is available on the Investor Relations section of the website as well as on the stock exchanges. To give you an in-depth understanding of the company and answer all your queries, we have from the management side today, Mr. Rajesh Kumar Naidu Yabaji, Chairman, Managing Director and CEO; Mr. Satyakam G. N., Chief Financial Officer. I now hand over the conference to Mr. Rajesh for his opening remarks. Thank you, and over to you, Rajesh.

Thank you. You're able to hear me, hear my voice?

Yes, loud and clear.

Cool. Good evening, ladies and gentlemen. Welcome to FY '27 Q1 earnings presentation. We'll walk you through what happened this quarter and we'll discuss the flavor and the usual proceedings. So at a summary basis, on the total income of the company, we grew by about 38% on a year-on-year basis. On the EBITDA, we grew by 23% on a year-on-year basis, reaching closer to INR 50 crores of EBITDA this quarter. On a PAT basis, we grew 25% on a year-on-year basis, reaching INR 42 crores in PAT basis. On some of the key KPIs, which typically indicate the health of the platform, we had close to about 900,000 transacting customers on the platform this quarter, monthly average transacting customers this quarter, which is a 13% growth on a year-on-year basis. Users who use the platform more deeply by the metric of who use more than or greater than equal to two services, there we grew about close to 20% on a year-on-year basis. GTV of tolling, which is one of the lead metrics of how the flow-through in the -- on the platform is happening, on that, we grew by about 16% on a year-on-year basis. As we highlighted last earnings call that Q1 FY '27, we were -- because we were having the earnings call into the month of May, we had highlighted that some macro headwinds were impacting the whole logistics movements. Despite a very probably tough April month from a movement perspective, I think there was a decent recovery through end of May and June, which has enabled the business deliver strong results and something which has helped us get back on track and do well from a BAU perspective. So just reiterating the core crux of the strategy. As you are aware, the whole work of BlackBuck to disrupt and organize the trucking space, like it sort of surrounds around the life of a truck operator, where we design offerings for him. As you know, tolling, vehicle tracking, fuel payments, all these offerings have been live for a good enough time, and we continue to build and innovate on new offerings. And our BlackBuck App, which is the product which our customers use, continues to scale on engagement, continues to scale on the breadth of the users who are using this. We are reaching close to 900,000 transacting customers and the usage continues to be the same, hovering around 45 minutes daily. And on distribution, as we've always discussed, we are present in almost every relevant trucking village in the country. We continue to go deeper and we continue to be with our customers in the market to help them get onboarded on our products or get them serviced on our products. On the key KPIs basis, broadly, I've already touched some of them in the introduction. Going into -- if you see the metric on number of tolling transactions, which has grown by 12% on a year-on-year basis and has actually declined sequential quarter by 3%, largely because of the headwinds. And as you've seen, the GTV of tolling on a year-on-year basis has grown by 16%, which probably at an NETC level has grown by a very small single-digit percentage number. And then if you compare that to CV number would probably be in a little bit of a higher single digit. Despite that, because of the value prop of the platform and the widespread distribution, we have continued to compound at 16%. And as the country grows, as India grows, as India invests in infrastructure, we believe some of the secular trends in the way tolling has grown in the past are going to sort of come back. By doing all of this, revenue from operations, which is at a gross level, we have grown by about 42% on a year-on-year basis. And on a sequential basis, that's roughly about close to 10%. Coming to net revenues, year-on-year basis, we've grown by 25%. Contribution margin continues to be at that 93% level, showing the quality of business. We continue to build is of the same quality. And on an adjusted EBITDA basis, we have grown from INR 47 crores to INR 55 crores this quarter from a year-on-year perspective, a 16% growth on a year-on-year basis. So that is the narrative on overall business. Just wanted to highlight that on a PAT numbers, which you've seen in the headline, sequentially, you would see a decline largely because of the deferred tax asset, which has got recognized in the previous quarter. So if you remove that impact, largely most of the metrics move in line with adjusted EBITDA in the business, which is business as usual over the past. Now moving into giving a bit more color into what's really happening. As we saw 42% is the growth in operations -- revenue from operations in the year-on-year basis. If we split that out, the core businesses grew by about 21% year-on-year, continued to maintain its growth path while the industry headwinds were negative, which is a strong metric and tolling in that continued to deliver 16% on a year-on-year basis. What is very important to note is that we've been in the telematics business now probably for more than half a decade. And the last quarter, we saw the highest sale of new devices at a quarter level, which was very encouraging. This is a record number not only on the AI side, but also on the non-AI side and also on the other specialized tracking -- specialized telematics devices which we are building. So the telematics vertical is gaining strength to strength. And you will see that because the revenues of telematics devices, despite this we onboard the customer with the annual subscription revenue onetime, most of the revenues are spread out over the course of 12 months. So you would see the strength of the revenues kicking in over the course of the year. And you will not see a sudden spike in this year. That's how the whole revenue accounting is built out. And what's also more interesting is that because in the future, the renewals of these devices will kick in, which are largely come at a very, very -- if you look at only the revenue -- renewal revenue, they largely come at a very, very, very high contribution margin and the flow-through to EBITDA is very strong. So net-net, the narrative on the core business is that the -- in the payments business, we continue to compound strongly. And telematics, I think we are achieving ever highest numbers on sale of new devices, which will result in very strong profitability and very strong revenue growth in the quarters to come. Coming on the growth business narrative, as you can see, at a gross level, there is a growth of close to about 2.5x on a year-on-year basis. And more importantly, an acceleration of revenue growth in the recent quarter. So there used to be questions around that we're investing in the Superloads business. We need to be seeing probably a faster growth. And I always had admitted that some of that will come as we step into the future. So last quarter, sequentially, we grew about 20% in our growth businesses on a sequential basis. This quarter, that number of 20% has accelerated to 44% on a sequential basis, which is largely delivered by compounding in obviously, both the businesses, both in Superloads and Vehicle Finance. But in Superloads businesses, both the existing cities have strongly compounded largely because of -- because that business is evolving as an AI-led business, and there have been a lot of productivity gains, which we've been able to deliver in the last quarter, which has resulted in such compounding. And the newer cities which have been formed have also caught in momentum. So that's a very positive news from the Superloads side. Coming to the commentary on profitability, as we've always highlighted, I think our view on going at profitability would always be segmented that core businesses would continue to deliver profitability. So core businesses have again delivered a record quarter from a profitability and cash flows perspective despite the macro headwinds. The operating leverage story there between 60% to 85% of revenue growth converting into EBITDA continues to be delivered every quarter. And as we have always highlighted, Superloads is an opportunity, which is a clear opportunity to invest in, and we are calibrating our investments, which are stepping up every quarter, and we continue to increase in investments over there. And that's the sort of a two-pronged story on the whole profitability. And as we've maintained at beginning of this year that Vehicle Finance would converge into profitability in this particular -- by the end of this financial year, and that continues to happen, the conversion continues to sort of flow through. So largely on the color on numbers, BAU with very strong signs on growth compounding and everything else consistent with the strategy outlined over the past 4 to 6 quarters, we continue to execute. And that's a good news because we are able to bet on the same strategy. As the strategy matures, more results come in. Our strategy is getting more and more stronger, and we continue to go in the same direction. P&L overview, summarizing whatever we said. On the total income, growth of about 38%, which is revenue from ops growth of 42%, core 21%, growth 153%, net revenue year-on-year growth of 25%. And as you see the direct cost of the business growing largely in line with the growth in revenues about of 42% [ versus ] 27%. Contribution margin growth of about 25% on a year-on-year basis. Adjusted EBITDA, INR 55 crores, which is 60% -- 16% growth on a year-on-year basis and similar walk-through on EBITDA, PBT and PAT. As I highlighted in my commentary, if you look at PAT of Q4 FY '26, which is INR 66 crores, the drop of PAT from there to INR 42 crores is largely the deferred tax line item, which is causing that on an adjusted PAT basis, adjusted to the deferred tax line item, largely it is in line with EBITDA and PBT. So that's the summary from our side. Happy to answer any questions.

Thank you, Rajesh. [Operator Instructions] The first question is from Gaurav Malhotra.

Yes. Yes. Can you hear me?

Yes, we can.

Yes. Just wanted to get some better sense on the Superloads business. If you can give us a sense on which all hubs you are present in, right? What kind of monthly daily loads is being carried? What kind of traction you're seeing in the -- beyond the Bangalore, Hyderabad hubs? And where do you sort of see this business, say, in the next 1 to 2 years?

Yes, Gaurav, as we've highlighted at the moment, we'll continue because it's a very new business. We'll continue to have limited disclosures. But giving you a bit of color, as we've always maintained, we had initial first 4 cities launched, which was largely Bangalore, Hyderabad, Mumbai, Chennai, right? And we launched another 10 cities in sort of -- you can imagine the launch happened by March, April, the other 10 cities. So now we're present in 14 cities, and we are in a very strong investment phase. And the growth outlook of next 1 year, obviously, we would be doing everything it takes to sort of mature our first 4 cities and then also put these 10 cities in the same direction as these 4 cities are maturing. I think building of playbook is what is continuing. But every quarter after quarter, we're getting better, and we are able to better understand the growth levers. We are able to better understand what is giving results. We are able to get hold on productivities. We are able to get hold on -- deliver predictability on contribution margins, able to get predictability on obviously, the demand growth on the platform, the ability to add supply. So it works as a flywheel, right? Because you need to generate demand, you need to start fulfilling and do the whole ops and then make margin out of it, right? So I think the whole playbook building, we're learning newer things every quarter, and that's causing us to also go to a newer scale frontier. I think that's what is happening at the moment. And yes, it's a very, very nascent business. But yes, you would always expect that we would continue to invest aggressively in this direction because we are definitely far better than what we were last quarter. The last quarter, we were definitely far better than what we were probably 2 quarters back. So as I was giving in my narrative as well, the sequential growth in Superloads also has been pretty strong. It has been closer to 50% on a sequential basis, up from 23%, 24% a quarter back. So that's a strong indicator of how we are going in this business.

The next question is from Atul Borse.

My first question is this macro headwinds that we are talking about in tolling and in fueling, do you see them tapering down in 2Q or at least in FY '27? And how should we look at this steady-state growth for tolling or fueling business? If you want to give some color on that.

Yes. So 2 parts. I think both of them had very different flavors. Talking on the tolling part of the business, right? Tolling part because the inherent movement was showing very high volatility between days and through the first half of April and whole April actually. We were observing normalized metrics, normalized metric like for a particular type of trucks, which are like largely the intercity movements. We were observing how many swipes were they typically normally doing, right, on a sequential basis and a year-on-year basis. So we are observing a very sharp contraction in the normalized metrics in the month of April. Most of that impact largely has got normalized. So I would say that the narrative on something we need to be a bit cautious, which we iterated last quarter, that cautiousness has gone away and largely a BAU has got restored. That's on tolling, right? So whatever narrative we've explained in terms of how we can model tolling in terms of like road growth, in terms of inflation on toll fares, in terms of number of trucks growth, we can go back to that normal way of modeling that, right? That's on tolling. Coming to the other part, which is fueling, which is obviously a very small portion of our revenue, right? Because the uncertainty in the -- and as we were mentioning in the last quarter as well, the whole loyalty margin is a discretionary spend to drive sales, right? Because supply is short, the reason to spend on that was basically lower, right? As we speak, there is a partial recovery because the crude touched low prices early part of this month, and then there is a partial recovery, partial strong recovery in that business. But I would say that till the time some of this fully stabilizes, we don't see full recovery happening on the fuel. So I would say I'm still more cautious from a fuel recovery perspective, but obviously, we are much better -- we are in a much better position compared to where we were when we were giving you the commentary 3 months back. But I don't have a full hold on or, let's say, to give you a guidance on when will the full recovery sort of set in. So that's the commentary on tolling and that's the commentary on fueling. I hope I've answered your question.

Yes, yes, understood. And I have one more question more from a strategic point of view. So Delhivery in their recent filing that highlighted that they might enter into this overall tolling, fueling and even vehicle financing business for truck operators. So do you feel that this could be a substantial threat to BlackBuck business, not -- may not be in a near term, but let's say, from a medium-term perspective?

Yes. So I see this as a very positive direction in the industry because there is hardly any qualified competition in the space. And there are so many problems to solve. The space is hard. The space has -- needs more investment. So I would see this more as a positive move that there are very good players from whom we can really learn a lot. But at this point in time, I think, because as I've always explained the business model, there's a lot of legwork on the ground. There's a lot of ploughing the ground to get to the business model, get to the value delivery to the customer. So yes, as you rightly articulated, we don't see much of near-term threat. But yes, we'll always be cautiously watching how things are moving. And we would, at any point in time, would want to like keep a very strong hold on market share in this business and continue to compound. As I gave the commentary, largely tolling growth in line with what we are observing. Telematics, we've been like supremely happy with delivering a very record quarter there. And even on top of that, we probably will have further good quarters as well in telematics. So yes, so I think on an absolute position, I think we're doing fantastically good.

Our next question is from [ Abhisek Banerjee ].

Just a couple of questions from my side. The transacting user base has gone up double digits this quarter on a Y-o-Y basis. So what is driving that? And also on the minutes of usage, honestly, I would have thought that with Superloads that can go up more, right? So if you can give some color on what percentage of your transacting customers are using Superloads? And what would be the minutes usage for those customers? That would be very interesting.

Yes. Abhisek, so first of all, the 13% growth in transacting base has been a secular growth trend always for us. So if you pick up any quarter in the last like 10, 12 quarters, we've grown in the range of that 20% to like 13% because the base continues to grow bigger. That's why the growth rate is now 13%, right? What drives that, as we've always maintained for us, the whole, acquiring customers on tolling, acquiring customers on telematics and acquiring customers on the classifieds part of the marketplace platform adds users on the platform because most of these basically use cases are first-time use cases for these customers, right? So that adds users on the platform. So the story behind how users grow on the platform has largely been same for us in the last like 6, 7 years, right? That's point number one. Coming to explain the minutes of usage, right? If you're aware of history of the platform as well, right, we attempted at solving the whole loads marketplace using an enterprise business in a full stack approach, which did not work for us, right? That's when we learned that loads is actually the most infrequent use case for a truck operator. Because a truck operator who has like 3 trucks, like, let's say, would be doing 15 to 20 loads a month in intercity cities. So he essentially is using for loads once in like 2 days. And because he also has his own proprietary network of demand, the use case essentially goes down a lot, right? And that's why the whole story of building a digital platform change towards first building the whole payments platform, then the telematics and so on and so forth because all other use cases are very high-frequency use cases, right? So answering your question, even in the long term, even though like, for example, if more than 50% of our users also use Superloads or the loads, the usage time will be still driven by high involvement use cases like the payments use cases or the telematics use cases. The highest usage at a session level or a usage at a product level is actually in telematics because he tracks his driver. That consumes a lot of time, right? Payments because he's actually recharging every alternate day and checking the balances continuously. That consumes a lot of time, right? So that's the answer towards, first of all, like, let's say, broadly, how to track usage. Now coming to the question on the usage on Superloads, right? Superloads, India has like 300-plus industrial hubs, right? Superloads is live only in like 14 cities at this moment. So the share of users for whom Superloads is, first of all, relevant is a very small proportion. So extrapolating Superloads into the minute usage is a very -- is not something which will ever correlate, right? So, because, a, as a use case, it consumes lower time, number one, and we would want it to be having lower time. Number two, we are, first of all, in Superloads very, very early. We are like in less than 5% of the hubs across the country. So that will never move the metric on basically usage.

Understood. Understood. This is very helpful. And just one more thing. So from what I have understood speaking to you on Superloads is that as the number of routes kind of increase, the number of connections kind of increase at [indiscernible], right? So if you're increasing, say, one route, the number of connections increase much more. And that kind of brings in a lot of scale benefits, right? So are you kind of seeing that in the older nodes that you kind of started?

Yes, of course. In the older cities and older lanes we have started, there is obviously pretty much very strong repeat and very strong recollection of the product, very strong customer retention on both the sides and of course, thereby the impact on margin as well. So everything generally compounds with densities.

Got it. So any clarity on how much kind of time it will take to mature for a typical load? Can you help on that one?

Yes. So I mean, yes, I've always answered this in the metric of loads per day. I think we believe that in a hub being able to do 5,000 loads a month, which is roughly about 250 loads a day, 200 loads a day, 250 loads a day is a place where some of these become really relevant. Some of these network effects will come to very strong fruition. And I think in the first hub of ours, I think we have gotten like decently close to that milestone. I think on the playbook building, I think every quarter, we are advancing by 5 to 10 percentage points. And I think that would be the -- that is the progress. And I think that's how we -- that's the right direction, and we will continue in that direction.

The next question is from [ Monica Joshi ].

Can you hear me?

Yes, we can.

Monica, we can hear you.

Rajesh, you've been extremely consistent in your commentary. Thanks a lot for that. Just wanted to understand, you did mention that you're getting better in the subsequent city that you launched. If you could share a couple of learnings that you would have made or done, mistakes you would have done earlier, which you are implementing in newer cities that would help us understand how this playbook really works. So from one city to the other, I believe the time will contract for you to reach that milestone of 5,000. So what are those 2, 3 learnings that you had from your initial experience to what it is today?

Yes. So I think the whole strategy -- I mean, the biggest learning is the whole strategy in the new cities was very layered because you experiment one and then it works, you onboard it and you scale that strategy. Then you experiment few more things, what works, you layer it and then you scale that strategy. I think I would say that -- I would say that from a mistake, mistake point of view, I mean, generally, we look at it more like we run three experiments and one works and then we onboard that and we keep moving forward, right? So I would say that the strategy was more layered because we learned everything -- every 3 to 4 months, we'll have a new learning. We'll like incorporate that in our strategy and then we'll keep moving forward, right? In terms of pace of scale, in terms of market, be it like from a demand perspective, like serving 3PL transporters, serving SMEs, in SMEs, the mid-market, the top end of the market, the lower end of the market, right? And then in terms of how do you work with them, how would collection processes work, how would execution work, how would pricing work, right? So I think in each of these, there have been like largely, I would say, transformation of processes from one maturity to the other and layering of these processes when to do what. I think that's been probably one of the strongest learning where, when we are launching a new city, we know that this gets cracked very easily. I think we should go in that direction first. And then we can do 3 to 4 things pretty much simultaneously rather than doing one thing once and the second thing in the second time, right? So I would say that the biggest -- like, I think this has been the biggest probably learning which we are taking forward from existing to the new. And other one, obviously, is that earlier, we saw this business as a lot like, let's say, the way the offline market works is broker-centric, and then we are essentially thinking how could we enable that within using technology processes. But I think another thing which has happened in the last 2 years is basically AI, which has really transformed how we build people-led workflows really better. And I think incorporation of that has like resulted in a strategy, which is sort of also AI first and very less people-dependent, much more granular, much more easier to scale. I think all those have been newer things which were not available before, we are able to do now much more powerfully.

Very helpful. So if we can put some clarity on this, may not be accurate numbers, but you're closing in on 5,000 loads per month in Bangalore, right? And it has taken you about, what, 1.5 or 2 years to get there. How are you seeing this time line...

No, it will -- sorry, Monica, I'll correct you. There is some more time to sort of get there, but I would say that we are good -- in terms of playbook building, we probably are 65%, 70% there. But yes, in terms of numbers, we may be more than halfway there, yes.