Vertoz Limited (VERTOZ) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q3 and Nine Months FY '25 Conference Call of Vertoz Limited. Please note that this conference call may contain forward-looking statements about the company based on the beliefs, opinions and expectations of the management as of the date of this call. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Joining us today from the management is Mr. HirenKumar Shah, Promoter and Managing Director; we will commence the call with Mr. HirenKumar Shah taking you through the operational and financial performance for the third quarter and 9 months ended December 31, 2024. Following this, we will open the forum for Q&A. With that said, I now hand the conference over to Mr. HirenKumar Shah, Promoter and Managing Director, for his opening remarks. Thank you, and over to you, sir.

Thank you, and Good evening, everyone. I would like to extend a warm welcome to Vertoz's earnings conference call for the third quarter and 9 months ended financial year '25. Thank you all for taking the time to join us. I'm happy to share that our latest results reflects a remarkable quarter growth in key financials across all our businesses. Before delivering into our quarterly performance, I would like to provide a brief overview for the company. Significant growth has been observed and projection in both domestic and international market. Vertoz is a new age tech leading AI-driven MadTech and CloudTech company operating across domestic and international markets. Our 2 large segment of revenue are MadTech and CloudTech, which are further divided into B2B and P2P. Performance highlights for the third quarter ended December 31, 2024. Revenue for the quarter was INR66.204 crores in quarter 3 financial year '25, compared to INR55.23 crores in quarter 3 of financial year '24, registering a growth of 19.8%. EBITDA stood at INR8.28 crores in quarter 3 financial '25, as compared to INR6.05 in quarter 3 FY '24, growing up by 36.86%. That stood at INR7.35 crores in quarter 3 financial year '25, compared to open INR500 crores in quarter 3 financial year '24, up by 62.97%. Revenue for the 9 months was -- performance highlights for the 9 months ended December 31, 2024. Revenue for the 9 months was INR190.02 crores in 9 months financial year '25, compared to INR126.80 crores in 9 months financial '24 registering a growth of 49.86%. EBITDA stood at INR24.4 crores in 9 months financial year compared to INR16.57 crores in 9 months financial '24 growing up by 45.08%. PAT stood at INR19.64 crores in 9 months financial year '25, compared to INR13.18 crores in 9 months financial '24, up by 49.01%. Operational highlights. Contribution from MadTech and CloudTech is approximately 80% and 20%, respectively. 80% of our business is international, while 20% business is domestic. Expanded our geographical footprint by opening branch in Pune, expecting the company's revenue to grow at 30% for financial year '25 and '26. Revenue of the company have been growing at 27% and profit at 17% for the last 5 years, successfully executed campaigns for top-tier media agencies and corporates, particularly in BFSI, real estate, hospitality and travel sectors. We are very confident that we will continue to do well on the organic growth front, expanding geographically and assuring all our investors that we are looking forward tentatively of achieving INR250 crores revenue for the current year with around 10% of PAT margin in financial year '25. Given the economic policies of the newly elected U.S. administration and their make the country great campaign, we anticipate increased spending and economic expansion, which aligns well with our business strategy. Both our business segments, MadTech and CloudTech are directly influenced by economic growth in industries such as BFSI, travel and real estate and financial services. And start-up fundraising as the spending on brands, travel and financial products are the major contributors of growth drivers for our businesses. Having said that, India is coming up very well on this front as a number of new start-ups raising funds to build their brands across the segment. Real estate, on the other hand, is also doing well besides travel has been very strong for the last 5 years. The allocation of advertising spend towards digital and programmatic advertising for awareness and lead generation, conversion is increasing in the overall types of advertising and growing the expense of print and television. The adoption of OH and connected TV, CTV advertising is also raising rapidly. DOH digital out-of-home advertising is also becoming the standard while CTV transforming how audiences consume content on OTT platforms. We are on a journey of reaching around INR100 crores profit after tax in the next 3 financial years through both organic and inorganic growth. We will make the investments required for achieving this growth, and we have already the recruited right team for this journey. CloudTech market is globally growing at 13.7%, whereas MadTech market is growing even faster at 19.8%. Besides cloud computing is growing at 14.1%, whereas domain industry growing at 8%. The rates are better than any industry standard and gives us enough headroom for our growth. Rising focus on our personalized marketing and AI, analytics, video ads and interactive content on the platforms like YouTube, Instagram, TikTok, IMRC are driving our campaign growth both domestically and international market. Over to you ma'am.

We have a first question from the line of Sanjeev Zarbade from DreamLadder Investment Advisors. Please go ahead.

Sir, my first question is regarding the outlook for margin expansion. Is there any scope you see for further expansion in the margin?

Sanjeev, nice talking to you. So if you look at overall, our current focus is to see that how we are able to grab more market share. But definitely, we have a specific internal guidelines to do not go for the EBITDA and PAT percentage. But at this point, our major focus is to do how do we expand ourselves heavily in the market, and we are investing a lot on the people, geographical expansions and many other things. So -- but definitely, the moment we start getting that gear of that particular thing, because of the multiple products which we have, that will help us in adding more ARPU and that is the reason why overall margin will grow. But at this moment, if you look at our EBITDA range is between 12% to 15% and PAT is what internal guidelines, what we have that we should have between 8% to 12% range. And you can see in the last quarter, we did roughly around 10%.

Okay. And what would be the growth strategy in cloud business?

So cloud business, if you look at the worldwide, I mean, there are a lot of awareness and a lot of expectations that are happening from individual enterprises as well as the government side, specifically it related to data, right? So that is the reason why there are a lot of requirement of this cloud is going to happen. Obviously, AI is another push to that because for the AI also you required a huge amount of web infrastructure to execute the same thing. So there is a lot of demand we are also expecting on that, and we feel that there's a great scope over here to achieve good growth.

And any other...

Overall market is roughly $2 trillion globally, market opportunity. Sorry, you are saying something.

Yes. Last question was regarding any other market you see apart from U.S. market where you can kind of target growth?

Correct. So currently, if you look at the overall India and the U.S. is 2 major market which we are focusing. The third market we started with the MENA region. Fourth is that we already have started our setting up initial footprint at U.K. market to cover the U.K. and the Europe, and we did some setup in the HK to cater the SouthEast Asia market and China market. But those are in pipeline. Soon we'll start keep announcing that as soon as we are ready with the further expansion on those places.

We'll take our next question from the line of Kashish an individual investor.

Sir, my question is the company dilution has highly worsened in the past few days which is highly concerning for the individual investors despite we all know the market is going through a bad phase. But are you confident that the things would improve in the coming days despite the change in the government regime from the U.S.

I'm sorry, can you repeat? Is there any...

Yes, sir, I was saying the valuations of the company has worsened in the last few days, so which is highly concerning for the individual investors. Moreover, there is a change in the government regime for the U.S., which is our major contributor. As you said, 80% revenues come from U.S., right? How do we see ourselves being positioned in the change in the regime of the government? And are we confident that things would improve in the coming days?

Sure. So first of all, I would like to clear here that our 80% business is outside India, which is international business. This includes definitely U.S. business significantly but we are not only at only in the U.S. but our business is also spread across the globe. Number one. Number 2, if you look at the current U.S. administration, which has got changed, they have their first country is kind of their, I mean, they are more focusing on internal businesses more. If you look at our business model is more about advertising or providing a platform. So we help each enterprises to grow further. So definitely, this is going to help us to grow further instead of we are seeing any negative on this part.

All right, sir. Sir, what is the contribution from the CloudTech and the MedTech business? Is it a 50-50 contribution coming from both the business?

No, no. So I just mentioned a few minutes back, it's around 70% to 80% on the MedTech side and 20% to 30% roughly on the CloudTech side.

Sir, one last question. Is there any plans of the dividend payout and the improvement in the book value of the company because the book value is really low and then there is no dividend payout in the past few years, in fact. So are we focusing on that part also in the interest of the individual investors?

Perfect. Thank you so much for this question and I really appreciate this. So basically, if you look at the company has shown if you look at the last 3 years data, we have grown and we've given roughly 80% to 90% growth year-on-year. So our focus right now is to see that whatever maximum money which you can deploy and the reserve which you can deploy to grow the further company, that is what is our requirement. See, if you look at the market size, India itself is roughly INR50,000 crores market of digital media last year and this year going to be around INR69,000 crores to INR70,000 crores. And globally, it is roughly $4 trillion MedTech and $2 trillion CloudTech. So we expect there's a lot of growth space available. So at this point, our focus is to grow further internally, whichever way we can grow. That is the reason we have not yet started. But yes, as soon as the Board decides and anything comes up on that, we'll definitely start working towards what is the requirement.

Right, sir. Sir, the book value is really low. I mean, that's really concerning. Is there any particular reason the book value has been kept so low for the share for the equity?

I didn't get you.

The book value, I said the book value is on the lower side. I mean, in the accounting of the book, the book value of the company has been kept on a very lower side. Is there any reason for this? Or it's just...

No, I said, there is no reason for that.

There is no reason as such.

If you still have any specific question, I can have my IR team get back to you on this.

We'll take our next question from the line of Harsh Vora from DRChoksey FinServ Private Limited. Please go ahead.

I have a list of questions. Starting with the first, if you could throw some light on the campaign performance metrics. If you can provide insights into the number of campaigns executed during the year and the key performance trends that you must have observed, specifically with regards to the domestic business, the kind of agencies we are working with and the brands, etc, et cetera.

Sure. So first of all, we have different businesses with different platforms under Vertoz. I hope you've seen the 6 platforms, major platform, which will list on our website as well. And we keep working with various different brands, either it is a P2P model or B2B model. P2P is a partner-to-partner and then for the business and B2B is directly to business. So if I take example of any mutual fund company, who is a customer of an agency and agency is our customer. So now that agency, when we do business with the agency that is called as a P2P business model. And then P2P partner has a further maybe 10 mutual funds and maybe 1 mutual fund, 1 bank, 1 another NBFC or anything as their customer, and they are serving that. And then they further giving it to us. That is 1 model. And second model is definitely a B2B, where we are directly working with those mutual funds and helping them to grow their brands globally. So our business model is specifically designed to this thing. Now when it comes to marquee customers, I mean, when you talk about the agencies in India, so we work very closely with WPP Group, Dentsu Group and many other public, medicines, are all top agencies and we keep working with them on a very close way. And we keep executing the campaign as and when it comes to us. I hope I answered your question.

Sir, from the presentation, I read there are about 2,000-plus campaigns delivered. If you can just quantify how much have been executed in this particular quarter?

So I do not have the right number in front of me in terms of how many exactly campaign had happened this year but this quarter. But we are constantly keep getting more-and-more inquiries and we are constantly adding more-and-more sales team, which is getting more number of campaigns on a month-on-month and week-on-week basis. But I can definitely get back to you on how many campaign we executed in person.

Sure, sir. Second question with regards to the acquisition strategy and progress. I mean what is the estimated size of the planned acquisition? And where do we currently stand in terms of progress for the acquisition?

Okay. So you're talking about the inorganic growth, right?

Yes, sir.

We have a team inside who is working very closely with various different companies to identify good targets. And we are very positive about a few of the news, which can come very soon, okay? And as soon as it comes, we'll definitely inform the exchange about our next move for that. But yes, we believe that there is a good opportunity in this space where consolidation can help to grow. And obviously, that can complement each other to grow further fast.

Right, sir. So this is regarding the acquisition of a North American company that you have mentioned in the presentation. I'm just going to it right now. You are talking about that, right?

Yes. So we have a few North American companies as a part of a target list and we are very closely working with them and a few of the places we also got an LOI, and we are just working towards to get how good they could be fit with us. The moment we are able to do all due diligence, we'll definitely announce at the exchange.

Right, sir. Sir, regarding your domain business, if you can just update about how it is going and what shape is it facing right now?

So domain business, we currently have around 2.2 million domains under our portfolio and we are just helping and we are growing at roughly 8% to 10% CAGR and that particular on the domain side, if you look at the industry-wide as well. We are India's second largest domain registrar after maybe if you have the number 1, okay? So and we keep growing that. That kind of business is also growing and adding more-and-more customers from India as well as abroad.

Right, sir. And any other major competitors? I mean, how do we see the competitive landscape changing going forward?

First of all, I would like to say here that India or global, the COVID was a blessing in disguise, which has helped everyone to grow further fast on digital side. So I believe that there is a lot of requirement of companies like us, which can help us in growing and helping those enterprises to grow faster. See, basically, if you look at the companies like us enable the companies to grow. So we are generally kind of an apart partners with any of the companies. So I believe that there's a lot of requirement for companies like us to come and serve the customers at the moment because the pie is constantly increasing and this pie requires those companies to serve them. So I believe these companies are not competition, but we are complementing each other. If you look at like I mean last year, we had around INR50,000 crores as India market share as per the Dentsu's latest report. And then this year, this is crossing around INR69,000 crores, INR70,000 crores. So if you look at that 19% CAGR growth is what even everyone is expecting on that side. So I believe that instead of competition, we have to see that as a complement to each other and grow further on that.

Right, sir. So as of now, in the market, you don't see anybody else offering the same services and offerings as your company, right?

No, there are companies who is operating like us. And definitely, we are complementing each other, okay? I mean, from giant to small as well on both sides.

Right, sir. And any new product or service segments that you are going to enter in the future that are in talk right now or something like that?

So our R&D team and our internal product team are constantly evolving and they're constantly working on developing new products. The moment the product is finalized and we get the right GTM or it is a go-to-market strategy decided, we'll definitely inform the exchange that we are ready with those products.

Right, sir. And the last question, if you could just throw some light on AI and how are you going to integrate AI, I mean, as a business, in the business offerings?

Yes. So basically, at Vertoz, we are early adopters of AI. We started using AI and ML since long, till the time. I mean, AI has become very name, I mean, word-in-mouth name kind of thing with recently by various tools, which has come, which is an end-user tool. But when it comes to companies like us, we had such things in the past because we are constantly working on a huge data, okay? So for example, like we have a few terabytes of log files getting created on our platform on a daily basis. And we have to keep analyzing those data by using various machine learning structures. So we are constantly using it and more-and-more AI structures become more easy and adaptable for users also. We're also implementing more-and-more better things on our front panel as well, where we can start have our users to use AI in a more better way. So AI is constantly helping us, and I'm sure that in the future also, AI will help us grow further fast.

This is the last question. Sir, how do you see business potential in the U.S. market following Trump's administration? And what are the other geographies that you're looking to expand?

So if you look at Trump, their election agenda, the campaign was to make the country great. So now, whenever anybody in any country wants to have such agendas, obviously, they help create a lot of opportunities for internal companies and enterprises to grow further. So whenever, even they want to grow, they obviously would like to have such advertising as a major thing to do to broadcast themselves. So I believe that these are positive points for us. And definitely, this can help us to get more-and-more business from the enterprises, who are growing further fast in the U.S. Like the U.S., obviously, there is a lot of good opportunity in the MENA region and Southeast Asia as well as Europe. So, all of these regions, I mean, a few of these regions have a few things very advanced places. And at the same time, a few of the places, are in development, but good opportunity. So they are constantly evolving. But definitely, at this moment, our major focus was India, the U.S., the MENA region, and another part of the world, but the majority in the 3 regions. But slowly and steadily, we are growing and expanding. As I said in one of the last questions, we already had done a setup in the U.K. so that we can cater to the Europe market, but not yet started fully operational. Same way in HK, we have done the basic background structure ready, so that we can target the Chinese and Southeast Asia markets. But still it is under structure, and we have still not yet started a lot of recruitment over there. The moment we are ready with that, we'll definitely start on this.

So, the INR100 crores PAT that you are estimating in 3 years, that will be mostly inorganic acquisition or organic also will play some major part in this?

So we are hoping to get a few inorganic as well as part of it. So this will be a combination of organic and inorganic both.

We'll take our next question from the line of Kashish, an individual investor. Please go ahead.

Sir, you mentioned the PAT, which could be INR100 crores in the coming 3 years. Is there any forecast about the turnover as well, the revenues in the coming 2 to 3 years down the line?

Yes. So generally, as I mentioned, we'll be in the range of PAT of around 8% to 12%, okay? And that is what our expectation is that we should be in between that range. But definitely, it again depends on like what kind of acquisition we're able to do. A few may be strategic, a few may be the revenue generated, or maybe a profit-generated acquisition. So obviously, that will purely depend on how we further progress on those sides of inorganic growth.

Sir, one more question. Despite all the fast-paced growth, there has been a consistent downfall in the share prices. Is there any particular reason? I mean, is there any promoter selling the stakes, FII lowering the stakes, or the mutual funds moving out of the stock? Or it's just the macro sentiment of the market?

See, basically, I mean, industry has its own, secondary market has its own way of behaving towards the various different regions across the globe, okay? So, we are not sure having a right person to comment on the secondary side, secondary market side. But on the company side, we can definitely say that your company is growing, and we are working very hard to grow it further faster on this.

All right, sir. But there is no ongoing concern kind of thing because there has been a sharp decline and consistent downfall of the equity prices in the past few months.

No, I can understand the pain over there, Kashish, but there's something which is out of our purview. We are focused more on the business side than on looking at down in the stock price.

Ladies and gentlemen, we'll take that as the last question for today. On behalf of Vertoz Limited, that concludes this conference. Thank you all for joining the call.