Veefin Solutions Limited (543931) Earnings Call Transcript & Summary

Hello, everyone, and welcome to Veefin's earnings conference call. Thank you for joining us today for the discussion on Veefin Solutions Limited financial results for the second half year and full year ended 31st March 2025. The financial results, investor presentation have been made available on both BSE Limited website and company's official website for your reference. We are pleased to have our leadership team here with us today to discuss the results in detail. Present on the call are Mr. Raja Debnath, Chairman and Managing Director; Mr. Gautam Udani, Chief Operating Officer and Whole Time Director; and Ms. Payal Maisheri, Chief Financial Officer. I will now hand over the call to Mr. Raja, who will provide the key highlights of the results. Following his presentation, we will have a Q&A session where our management team will be happy to address all your questions. [Operator Instructions] Before we proceed, I would like to remind everyone that any forward-looking statements made during today's presentation, including those related to business plans and growth prospects are based on current expectations. These statements are intended to qualify for the safe harbor provisions under the applicable securities laws and should be viewed in the context of potential risks that are faced by the company. With that, I now request Raja to begin the briefing. Thank you.

Thank you. Can you hear me? Thanks, everyone, for taking the time out and coming for this presentation. And let me start off -- let me just try to drag this in the right place. So let me start off by sharing some very, very good numbers. And our revenues on a stand-alone basis have gone up by 67%, okay? So just some numbers here. We'll take some time on these. The main number here, I would want to pull your attention...

The slide is still on the introduction slide.

Let me just start again. So our revenue, as I was saying, our revenues have gone up by 67%, okay? And the key numbers here are that this year, we have signed 25 new deals -- mind you, 25 new deals we have signed and there have been 21 go-lives. So 21 new clients have gone live with their systems. And something else which will interest a lot of you investors who have been with us for long is that the disbursement annual run rate is now at INR 325,000 crores. That's the kind of number that we are on. So just let it sink in that this platform is now able to handle such large transaction volumes, and this will only continue increasing. And as a SaaS company, the more clients keep getting added on to this platform who continue using this on a SaaS pricing model, better for us. So our EBITDA numbers, as you are seeing, they have gone up over the last year by 99%, close to 100%, both on the EBITDA and on the PAT, okay? If I -- this is something which is -- which is we are very proud of. If you remember last year also, this year is the second year when there's a global supply chain finance vendor comparison study which has happened. There's only the second time when it has happened. Last year also, we were in the industry leader category. This year also, we are in the industry leader category. People who were there last year in the category have dropped off. We are the only ones who are consistent last year as well as this year. And just look at some of these names, these are large names. These are large names, these are global names, and that is what we are doing. We're competing with all of these tech vendors in the supply chain finance space at a global level. And this is something that the entire industry is seeing. And the way to look at this chart is this is strength of offering, okay, which says what -- how good your functionality is -- and the second one is the market presence, which is what kind of clients you have signed and what is the spread of clients that you have signed at a global level. So on both these parameters, we are right at the top here. And this is something which will continue taking us from strength to strength. One more, many awards. So I will not go into all of these awards, but the key awards here are the fact that we have, again, for the third year got Great Place to Work certified. Second year, again, we have become -- we have been named a future-ready organization by Economic Times. And there are multiple. So there are some of these awards that we have mentioned here, which we think showcase our ability of delivering value to our clients. whether it's the #1 in the sales league table. Now what this means is the maximum number of supply chain finance solution deals have been signed by us globally. So that's being #1 on the sales league table, that's what it means, okay? Best in terms of a supply finance implementation or in lending and collection implementation. These are the kind of awards that tech companies like us are always vying for. Staying on these clients, there are some very important clients that we signed this year, and I thought let me take some time out on this. The first one here is it is our first multi-country implementation across 5 different countries in Africa, okay? Simultaneously, we are doing a digital transformation for the entire tech stack in these 5 countries. We also signed our first banking client in the UAE this year, okay? We also -- this is very, very important. PSB Exchange, we'll spend some more time on it. But you remember, PSB Exchange was signed by PSB Exchange as a project is meant to get lenders and the fintech platforms together on the same platform. But UCO Bank has actually gone ahead and not just signed us for the platform, but has taken the entire tech stack, whether it's the LOS, whether it's the LMS in supply chain financing, the onboarding solution, everything. So not only will they do business in PSB Exchange through us, but even what they will source outside will now flow through the PSB Exchange platform. Now that is exactly what we at surmise will happen, and we have got multiple banks now who have taken exactly the same approach. This year was also the year that we signed the first global MNC bank. HSBC became our client this year. We again signed a very large bank in Rwanda, the largest bank, in fact. And this is important because it's the first joint implementation that we are doing of Easy and Veefin. So the easy LOS and the Veefin supply through the LMS, bringing strength to both parties, and that's the reason why we acquired Easy. That's the first implementation that we are doing in Rwanda. Jiofinance, it's the first place where a non-supply chain finance loan management system was deployed. And I stress on this fact because loan management systems are the heart. It is not the LOS, which is the heart of business. It's the loan management systems. So the more implementation that we do in loan management systems, whether it's on supply chain finance or the other loan management systems, it makes us and our proposition stronger. Staying on business. We have a very, very healthy pipeline. So the future is very bright. As of 1st April, we are sitting on over 250 active pursuits. And we have started -- we have created a large sales team now. We were doing pursuits in a particular way. Over the last year, we have got senior level hires who have come in. We now have a Chief Business Officer who has come in, who comes in with a pedigree of haVeefing set up sales organization in some of the large global tech vendor companies. And he has come in now. He's putting in our sales processes into place, which is again now looking very bright. So the 250-odd active pursuits that we have, we should be able to convert a lot many more from there. So this year, -- we have won 23 pursuits. That means last year, we won 23 pursuits. We lost 23, but that's a very good ratio, a 50-50 ratio of anybody who comes on the Veefin doorstep, our ability of closing them is that much higher. Out of the 250 active pursuits that we have, if we continue with the same ratios, we are talking of 120 pursuits we will win at some point in time over the next couple of years. And that's the size of pipeline that we are sitting on. So this is just to share with you how robust the platform is in terms of being able to churn out business and bring in business from our global prospective clients also. So what's new? This is -- you'll see this slide, this slide, we will also end with -- we'll end with this slide again and take some time out because this is what is going to define what VEEFIN's trajectory is going to be. So over the next 12 months, okay, we have started from Jan, but what we have shown here is in this calendar year, what are the things that we are actually -- what are the new products, what are the new initiatives that we are taking. So the first in January, we launched was a KYC, KYB, let's know your customer, know your business, API gateway. So if you remember in one of our investor calls, we had said that now because we own the underwriting platform, our clients, our lending clients do not have to go and sign KYC and KYB APIs from multiple vendors. They sign with Veefin now and they get access to all of these. So these are, again, pay as you go. You pay on every hit. So whether it's your Adhaar, whether it's a GST, whether it's your banking, whether it's MCA data, all of this data is now available through the Veefin API gateway. In February, we launched the Veefin SCA 4.0. The Veefin SCA 4.0, we'll talk about it a little more. That is the latest version of our SEF platform, which has now been rolled out. Our first client on that platform was HSBC. So HSBC went live with this platform in the month of February. PSB Exchange, it is the biggest -- how would I say it? It's really the biggest product or proposition that Veefin has in its entire repertoire. And the PSB Exchange, we have gone live with it. We have now got our first bank, which has already given a limit to the first corporate on the platform. Now that's something very, very exciting. All the banks are signing up on the PSB exchange, all the public sector banks are signing up on this, and you'll see more on this later. You are all reading a lot about Gen AI, Gen AI, Gen AI. And what we have done is we have brought GenAI into our companies. The impact of this is actually -- can only has to be seen to be believed. Now there was a particular work that we did in the month of April. It was 150 days of work, 150 mandates of work, which was completed in 25 days using AI. So what you are seeing, all of these new products which are going to be rolled out, all of these new products are being rolled out using Gen AI. So -- we are all using these Gen AI products in our personal lives. Large companies have started using this in their development work. Veefin has also embraced this, and we are seeing very, very good results on this. So that's something which I want to share with all of you all. What that means for us is with the same number of people, we will be able to generate and develop far more products at a faster pace than what we would have been able to do last year. And that is the reason why this year, you are seeing so many more products which are going to be launched. And each one of these products is a product which is a stand-alone superstar. So for example, securitization platform is not available in the market. That's something which will be rolled out next month. Co-lending, we have already completed our co-lending journeys on supply chain financing. Again, we'll be the first ones who have a supply chain finance co-lending journey, but the non-supply chain finance co-lending journey will be ready in June. Trade finance, that is the big baby, Trade finance in July, in November, cash management. Those are the Trinity of supply chain finance, trade finance and cash management completes the transaction banking suite. And that is what by end of this year, we will have all three. So that means you can count the number of players globally on one hand who have all of these three products together. On top of it, add Islamic finance because we have a lot of representation of our clients as well as focus in the Muslim countries, in MENA, there are parts of Asia where there's a lot of demand for Islamic finance. And then the asset distribution engine. This is again something not available in the market. This is where large banks are able to create large portfolios of trade receivables and then sell it off to other banks, okay? That's what a distribution engine is all about. So this is what is going to drive the future. So once these products are complete, imagine our sales team, when they are talking with a bank, a bank requires all of these products. Each of these products other than Gen AI, which is for us, everything else is used by a bank. So our ability to go to a bank or a lender and sell becomes that much more stronger because you have something or the other which a bank requires, which you can sell to the bank. This is a very, very busy slide, very busy, and I will take a moment here, okay? Because this is something which we are very proud of because it is the first time globally someone has come up and had built what I spoke about on the transaction banking, cash, trade and supply chain, all on a single platform using a micro service architecture. What that means is if to a bank, we go in and sell, say, supply chain finance 4.0, then tomorrow, we have to go and sell cash. There are many micro services which we may have deployed in supply chain finance itself, which will now be used for cash. So Veefin 4.0 ecosystem becomes like a menu card of micro services, which depending on what the bank is choosing, they pick up those micro services. The value of this micro services also, therefore, is that when there are legacy players and large players, large old players, and we know all of them, who do not want to invest in their platform and they -- because they are still entrenched in the bank, the bank is afraid of doing a migration. They can just subscribe to some of these micro services and improve their platform. So suddenly, now a bank rather than haVeefing to replace the entire platform can buy a few of our micro services and improve their current business. They don't need to change the entire system on day 1. They can start using some of our micro services and at a later stage, can replace the entire platform. So that is the power that we'll be heading into the market with. And we are seeing a lot of demand for this in the market because, as I said, most players in the market are all old legacy platforms, all 20-year-old platforms. None of them have invested in new technology and the world is moVeefing at such a fast pace that banks demand new technology, which can be delivered at a very fast pace. That's what we are doing. Going back to PSB because as I said, PSB is the jewel in the crown and the PSB exchange is now not only going to go live with -- has gone live with public sector banks, but in the next phase, we are also bringing in private sector banks and NBFCs joining the platform, okay? So that's what you remember for people who have joined this call earlier also, they know that there's a custom onboarding module, the underwriting and the loan management system. So when we say a bank signs for the entire tech stack, it means they not only want leads from here, but they say, please give me your entire technology stack here, that is underwriting and loan management so that -- even business that we generate outside, we will then pass through your platform because your platform is far better and robust than what we have. I think the financial performance numbers, we have shared some numbers earlier, but let me take you through the year-on-year numbers. So as you see, we have spoken about the revenue growth and where they have moved. So we have -- Veefin numbers have now moved to INR 41.7 crores of revenue. That's where we are with a healthy EBITDA of INR 21.5 crores. That's our EBITDA with a PAT of over INR 15 crores. And this you are seeing EBITDA and PAT are close to 100% increase over the last year, okay? EBITDA numbers on a stand-alone basis itself, our EBITDA numbers have improved. So from 43% EBITDA, they have gone up to 52%. Same on the PAT. From a 30% PAT, they have gone up to 36%. And something else to look at our days sales outstanding, we've improved over last year. Now despite this year being a heavy year in terms of -- in the second half of the year, we have signed a lot of deals, but our DSO has still improved over the last year. And one more important point here. All the deals that we have signed this year, every single one of them are all SaaS pricing model deals. Not a single license deal has been signed this year. So with that, 87% of all our clients are now on a SaaS pricing model. That means every year, our numbers will only keep going up. Our annualized ARR, which are there, those numbers itself are going up. okay? And that's the reason all deals this year, which have been signed are SaaS. My penultimate slide, okay? So there have been acquisitions which have happened, but the number to be looked at is Veefin Solutions is India, Veefin solutions, Dubai and Veefin Solutions Bangladesh. These were just operational companies. They are 100% subsidiaries. They are operational companies just for ease of billing that we have in these countries. Total of these -- these are the revenue figures of INR 41.7 crores, our EBITDA of INR 21.5 crores and a PAT of INR 15 crores. This is the way to look at the Veefin numbers. Then we have another company that we have acquired, okay? And these acquisitions have happened at various points in time. Because please remember, it's very difficult for us to give guidance of a group number because all of these, our term sheets get done, but the takes some time for signing, then you have the compliances which happen, due diligence, which take time. Therefore, those companies continue operating that the we are operating. But because we get those numbers only maybe for a month to 2 months, they don't reflect in these numbers. But they will obviously reflect the next year. So numbers have not gone anywhere. The numbers have just shifted for us to be able to showcase them in our group structure to next year. Next year, we'll get the full numbers for Regime, GlobeTF, Infini, Easterefine, all of these and our other subsidiaries. We get full year for next year. White Reverse Media, again, that's a large number in terms of top line, which is going to come in. There everything has got done. We're just in the final stages of compliances, which hopefully over the next 45 days should get closed. So we should be able to get bulk of White Reverse Media for next year. This is where we are in terms of numbers. And before I move to Q&A, I'm leaVeefing this slide with you because this is what Veefin is, and this is what the investors should be looking at in terms of where are the big ticket numbers, what are the products that are coming in, in this year? And how are we going to go about converting all those active pursuits that we have into some of these products. That's where we are. So with this, I will stop sharing and happy to take questions now.

Let's start with the Q&A round. So we -- the first question is from Mr. Dev. Promoters currently holds 35% holding and an additional 5% by the management. Is there any plan for further dilution by promoters from here?

No. So there are no plans of further dilution. There are -- the numbers will only -- at all points in time, these numbers will remain constant or they'll go up from here.

Also one more point, Raja, there are the share warrants, which the promoters are going to subscribe. So by -- before September. So that is also -- which will increase the promoters.

Second question from Mr. Krish Jay. Any particular reason for high receivables.

Receivables, what happens in our business is our AMCs, which are there, our AMCs, our usual large change requests, they are bunched at the end of the year. That's one. Second, we have signed some large deals where we have some implementation fees, which are coming in with the African banks. So these have been signed just at the last quarter. So we have received some money from those also, but we are not able to show them in our March numbers. But if you also look at one more thing, our 90% of our receivables are less than 90 days, right, Payal?

Yes.

Next question from Mr. Nishant. As of now, there are 4 exchanges for Tread business. Receivable Exchange of India, 33% market share, Tread Limited, 33% market share; MI Sol Private Limited, 33% market share, C2FO.Is Veefin solution an exchange or something else? There are 12 PSB alliance members ideally, all PSU banks. What probability do you see that all banks of this alliance will go for this product? As of now, are they using any other product inferior to what is offered by Veefin?

There are multiple questions in them. So let me just unravel the question one by one. First is the PSB exchange platform that we talk about, that is a platform which is connecting corporates, fintechs, B2B marketplaces, logistics marketplace with one single connection to the entire banking ecosystem. That is completely different from what a Tread platform is. Tread platform has only one product out there, which is a receivable discounting product, which -- on which the recourse is on the corporate. So that's the first big difference. The second is the PHB Exchange platform, when it sources this business, they can get money because of use of technology. They can also be paid because of pure sourcing of the business itself. So it's not necessary for, let's say, a State Bank of India to leave the technology that they are using and use PSB technology, but they will still pay PHB Exchange for the business that they generate from here. There are banks which are using the entire technology stack. There are some banks which are using only the sourcing business. So choice there. This is not only for PSB -- the public sector banks, as I said. The name is public sector bank exchange. However, this is exchanges open for NBFCs, small finance banks, private sector banks, MNC banks, everyone. And these are banks who are also joining in. It's just that because it's a PSB exchange platform, we said that the first batch of banks which come in will be public sector banks. That's the only difference. But all banks will be coming on to this platform.

Okay. Next question from Mr. Uday. How do Veefin charges any bank or NBFC? For example, UCO bank, which you have mentioned, will take almost all the tech stack of VEEFIN outside PSB Exchange too. So does that mean we get extra transaction fees for every use case or feature Veefin provides?

Yes. So when we give them the entire tech stack, as I said, if they were to take only the sourcing business from PSB Exchange. And remember this, when BFIN sells the tech stack, BFIN could have sold its tech stack, which is the supply chain finance tech stack to a bank separately. So Veefin will get paid a few basis points of the AUM on the platform. That's one we're getting paid. Now if PHB Exchange goes and sells to the same bank where Veefin is already sold, then the bank will not take technology from Veefin, where the bank then will pay what? The bank will pay sourcing fees for sourcing of the business which PHB Exchange is doing. If any bank does not use VEEFIN and they want to use the PHB Exchange tech stack and the sourcing, they will pay both technology and sourcing. That's the way to think of it.

Next question from Ms. Neha. Please explain drastic jump in employee cost on consolidated numbers and total ESOP cost.

So in the consolidated numbers, the raise in the employee cost, one of the major reason is one of our acquisitions that we have done, wherein there is 370-plus employees, which is into IT services. So there, there is a huge employee cost, one. Again, the second question about the ESOP expenses. Out of the total employee cost, the ESOP expenses is INR 3.3 crores.

Next question from Mr. Neerav. Why EBITDA has come down? Why high employee benefit expense?

Payal, can you take that? I think something is wrong with numbers.

Yes. So no, the EBITDA has definitely not come down plus the employee cost. If you see the employee cost percentage to our revenue, it is reduced on a stand-alone basis for Veefin, employee cost has reduced from 29% to 21% of the revenue. So which means that with the increase in revenue, we are actually increasing our PAT and EBITDA margins and trying to do it in a much more effective and a productive manner.

I think one key point which you all should look at and understand is Veefin is not a standard how do I say, a onetime license-based company that is usually seen in the market. Veefin bulk or as I said, 87% of Veefin customers are SaaS pricing. What that means is we get paid over a period of time. We do not get paid right upfront. So if today, we stopped doing any product development, and this is very critical hear me out. If today, we stop doing any product development, we stopped doing any -- we stopped getting any more employees. We reduce our employees, we will make far more money right now. because our products are already in place. Our products have been given out to our clients. Our clients are using it. If we don't go to our clients for the next 1 year, 2 years, their clients will still continue paying us. So the choices are that when do we want to continue investing, should we continue investing right now? Should we continue growing the product? Should we continue building more modules? That is the company's choice right now. And because of that choice, we are creating the ecosystem. So the vision that we have of creating this world's largest working capital ecosystem is unparalleled. And because of this model, like once trade finance comes in, cash management comes in, you will see the same thing. What Veefin has done in supply chain financing by bringing in a SaaS pricing model, Veefin will do the same thing in trade finance and cash management. That is also unheard of in the market globally. people do not do trade and cash on a SaaS pricing model. So you have to just wait and see what fire you see in the market with BFI and supply chain -- sorry, cash and trade finance. Same logic.

Next question from Mr. Ashish. I'm quoting management. What was discussed in H1 earnings call, the management is focused on achieving a revenue target of INR 110 crores by end of FY '25. What's guidance for FY '26 now?

As I explained, given a guidance when you're doing acquisitions. So that's something which we have learned. Giving guidance when you're doing acquisition becomes an extremely difficult task because you have lots of compliances and these due diligences and there's a lot of government paper, which are involved. So these things do take time. So it's only once we do the consolidation, that's when we do the actual signing, that's when we are able to actually recognize the revenues. So therefore, the numbers can keep going up and down. But because these are all companies which are running concerns, those numbers still are there. So once we get those companies actually signed on completely, we will then get those numbers. And staying on that point, one more thing which we are doing, which will happen is we are simplifying the entire defense structure. So we have got some very strong minds now working with us in terms of simplifying this entire corporate structure that we have, wherein we have just one Veefin solution, which has all our product companies, all products, all product companies getting involved in that. And then you have a services arm, which takes care of everything else. So that will make it much more simpler over the next 12 to 18 months, but that's the kind of time it will take. You will see a lot more simplification in the corporate structure, which will also help in our corporate governance.

Next question from Mr. Paras. Where will the money be spent if raised?

Our money -- our bulk of the money when it is raised goes into our employee salary costs and marketing expenses. These are the 2 big costs. always. It's employee salary costs and marketing expense because that's what our -- we are not buying any assets. So that's not where our money is going. We'll continue doing the same. But we'll see a tapering. So what we also see is we see a tapering on our employee cost, as I said, because of what's happening in the world with Gen AI. So we'll see a lot more improvement in the top line, and we'll see an improvement in our EBITDA numbers because we'll be able to deliver much more with smaller teams.

Next question from Mr. Paras. What's the status of our USD 13 million fundraise round as of now?

Which is...

So the current rate that we were doing...

Current. So we are doing an equity come debt deal. So we are just signing papers right now. So a lot of the equity money has come in. The debt signing is happening as we speak. So we should complete all of these over the next 30 days. And that's the reason I said that the White River Media over the next 45 days, we should get those numbers in.

The next question Neerav. What is product and services are segment revenue? Why is service revenue same for half year and full year.

Payal you take the financial numbers.

Can you repeat the question?

What is product and service in your segment revenue?

Given the disclosure, basically out of the entire INR 78 crores, INR 46 crores is our product and services are INR 32.49 crores.

Next question from Mr. Deepak Poddar. He has 2 questions. First one, INR 300 crores year-on-year addition in intangible goodwill in FY '25, what's the nature of this?

Yes. So the goodwill of INR 300 crores includes the acquisitions that we have done and the difference between the acquisition cost and the net asset value of those companies. So out of this entire goodwill, -- these are the 3 entities wherein that goodwill is coming up.

Second question, INR 189 crores acquisition we have spent and INR 175 crores is coming in goodwill, which is the risk of future impairment of this?

We don't see any major risk in the future impairment of these goodwill because the companies that we have acquired are actually cash positive EBITDA and PAT positive EBITDA, having a good track record of 5 to 10 years performance orally and good client background. So all of that considering and doing our due diligence at the time of acquisitions, as of now, we do not see any kind of impairment cost. Also, the goodwill that stands in our books is INR 176 crores, just to correct.

Next question from...

Let's see final 1 or 2 questions, but this is an important question that given the new product launches in this calendar year, when will these initiatives convert into numbers? And how should the investors look at the company with respect to growth in sales and margin? So all of these products that you saw out there on the list, they are all going to be live this year. So they are not going to be prepared and you will have paying customers for all of those products this year. And some of those, for example, trade and cash, those are large numbers by themselves. So if you look at the market, I can't tell you exactly, but that will be wrong. But if you look at the numbers and the deals that happen of these kind of products in the market, they are very, very, very large. And that's the market that we're getting into, again, using the same logic that we have done with supply chain financing of going on a SaaS pricing model with the best product available in the market, period. The best product available in the market at the lowest cost for a lending institution so that lending institutions are able to invest in the best technology so that they can service the MSMEs and the corporates, and they make money, so we make money. That's the philosophy of VEEFIN always.

The last question for today from Krish Jain. With so many verticals, moving parts and subsidiaries, it's difficult to predict accurate numbers, but still, would you like to give some top line or bottom line guidance for '25, '26?

As I said, I will refrain from giving a guidance, but I've given you the entire story for you to get some understanding in terms of the kind of growth that we are showing. So whatever growth you are seeing in our numbers, that is a given that will continue. So those kind of run rate, those kind of growth rates will continue. Over and above that are all the consolidation benefits that we'll get to the various products, the various companies and the new launches that we are doing. So on a stand-alone basis, you've seen the recent numbers. Those will continue, the same kind of growth trajectory. It's only the addition which will happen with the acquisitions and the new product launches. So I think that will give you a fair understanding of where we are headed with our numbers. Thank you, everyone, for joining the call.

Thank you. Thanks, everyone. Thank you.