WSFx Global Pay Limited (511147) Earnings Call Transcript & Summary

Ladies and gentlemen, good evening, and welcome to investors conference call of WSFx Global Pay Limited formerly known as Wall Street Finance Limited. [Operator Instructions] Please note that this conference is being recorded. Material and information in this conference call is general background about the company's activities as on date of this presentation. Information in this presentation should not be considered as an advice or a recommendation to investors or potential investors in relation to holding, purchasing or selling securities and does not take into account your particular investment objectives, financial situations or needs. This information is given in summary form and does not purport to be complete. I now hand the conference to Mr. Srikrishna Narasimhan, CEO and Whole Time Director; and Ms. Pooja Mishra, Chief Financial Officer. Thank you, and over to you, sir.

Thank you. Good evening, everyone. This is Srikrishna, CEO of the company, along with Mrs. Pooja Mishra, CFO. It's a pleasure once again to connect with our investors and present the WSFx performance for the quarter and the year-ended June 30, 2024. And I would like to give a small presentation of the company's performance as of quarter 1 and the various strategic initiatives the company has been undertaking. We have already uploaded the presentation on the company's website as well as on BSE website. Now we quickly get into the presentation. As always, an introduction about the company. It's a 30-plus year old company. We are an Authorized Dealer Category II dealing in foreign exchange and cross-border remittances. We're listed in BSE. We're also ISO 27001 Certified. We have upgraded ourselves to ISO 27001-2022 certification. From a product perspective, we deal in foreign currencies, ForEx prepaid cards and outward remittances. These are the main products. We say that there are a lot of ancillary products like students account opening, et cetera. We operate through a network of 19 branches, and we're a 310 plus strong team working in the company. We have partnered with multiple banks. For cards we're dealing with Thomas Cook, HDFC Bank. We have our own BIN-sponsor card with YES Bank. For remittances, we deal with around six to seven banks, which includes Indusind Bank, YES Bank, ICICI Bank, Axis Bank, HDFC bank, et cetera. Talking about our Smart Currency Card, we launched it 5 years back. It has gained great acceptance. It has got 14 foreign currency wallets and one INR wallet. From a digital perspective, the company has got multiple platforms for every segment of the ForEx ecosystem, covering corporates, agent partners, retail customers. The company is catering to lot of key customers like Ernst & Young, Zoho, Reliance, Tech Mahindra, Accenture, Siemens, L&T Infotech, Titan, HDFC Credila etc. We have around 600-plus corporate customers and around 500-plus agent partners who deal with the company. Going to the next slide. This gives information about the various digital solutions. As mentioned earlier, we are one of the select companies, which has got platforms for all customer segments. We have a smart corporate platform. Nearly 40% of our business comes through our corporate platform. We have a B2B platform for smart agents, which also has got a FPaaS integration, which we call WSFx Global Pay, which enables them to offer our solutions digitally. We also have a WSFx Global Pay app and web portal wherein a retail customer can order his foreign exchange, be it currency, card or outward remittances and also manages Smart Currency Card, already explained to you on WSFx Smart Currency card, which is a multicurrency Visa ForEx and INR card, which is co-branded with YES Bank, and it has got a smart app management and it has got worldwide acceptance. Quickly getting into Q1 results. It has been a good Q1 for us, because historically, for us, since our strategic focus has always been on corporate and students. Q2 and Q4 are peak quarters and Q1 and Q2 -- Q3 are generally less in terms of business. But this Q1, we have been turned -- we have been able to turnaround this factor, and we have clocked the PAT of INR 1.03 crores. If you compare it with last year same period, we had only clocked around INR 11 lakhs. So we can say that we have constant trend, and we have started growing in quarters, which are not really favorable to us. We have grown in all sectors and segments, be it our corporate or agent base, and we have been also able to onboard some pretty good accounts. Obviously, there's an impact of certain geographies which has visa restrictions. And as of now, Canada's visa restrictions do affect our student segment. So in a snapshot, we did around gross turnover of INR 1,143 crores. Revenue from operations was INR 18.74 crores. Other income was around INR 45 lakhs, and we closed with a PAT of INR 1.03 crores. From a digital perspective, we have 33,000-plus app users who use our app either for procuring foreign exchange or for managing the Smart Currency Card. We have also upgraded to ISO 27001-2022 ISMS Certification. Obviously, we have given one update about our ForEx prepaid card issuance launch in this quarter. We have signed our primary membership agreement with Visa for launch of our own ForEx prepaid card, which we expect to be a game changer in future. Next slide gives a comparison of Q1 over Q4 and Q1 over -- Q1 of this year versus Q1 of last financial year. So from -- when you look at the comparison between Q1 and Q4, gross turnover had a marginal dip. But if you look at revenue from operations because of a better yield we were at INR 18.74 crores against INR 18.13 crores, which is a 3% increase. At PAT level, we are at INR 1.03 crores against INR 0.93 crores for Q4. When we compare Q1 of this year with last year's Q1, you can see we have grown 57% from INR 726 crores last year to INR 1,143 crores this year. Revenue from operations also grew by 55% from INR 12.13 crores to INR 18.74 crores. At the PAT level, we were able to close at INR 1.03 crores against last year's INR 11 lakhs. The next slide gives you a comparison of the last 10 months, where you can see that we have been steadily growing by building our business, and it gives you and while holding costs in control. This just is a more from a trend perspective, you can have a look at it. We go to the next slide, which looks at comparative chart Q-on-Q on revenue and expenditure. So if you look at the last 8 to 10 quarters, we have been growing. Obviously, Q2 will always be a spike for us because of student segment. But other ways, if you look at it, Q1 -- we have started growing in Q1 also, which is historically a weak quarter for us. So this is a good sign for the company. And selling general and administration expenses remain stable. Now quickly looking at our priority customer segments in the next slide. If you see, our growth has been constant -- consistent and an upward trajectory, except for Q2 where it just spiked because of students where we have a good hold on. But overall, if you see both cards and outward remittances, Q1, we've grown, because normally Q1 is always is a weak quarter. This is the first time we can say. Relatively, Q1 is now moving towards what it was like Q4, which is good for us because which is a positive sign if you look at it from historical trends. Next slide gives you the financial results, which as I already told you, we had declared a PAT of INR 1.03 crores, and this is a representation of the same. The last slide talks of what we are looking forward in the -- for the future. We are very consistent with our strategy. Last 3, 4 years, we're persistent with the digital strategy, which has proved that we made the right choices. So we will continue in the same line of pushing our smart corporate platform, smart agent platform, global pay portal and app because we feel this is the way forward, this is the future. And also in line with that growth, we're also going to launch our prepaid ForEx card, which is a big priority for us in the next 6 to 9 months, launching the card and also getting the business and expansion of the same. Parallel to that we are also trying to add multiple products, which can act as a kind of solution for the student community. We are also trying to look at various allied solutions, which can complement our existing customers. Our idea has always been to be focused, build value for the shareholders. So we will always be in the forefront in terms of bringing in ForEx payment tech products and solutions and with shareholders' value in the top of our priority. With this, I come to the conclusion of this presentation. Thank you so much. I would now like to hand over the conference with the moderator.

[Operator Instructions] The first question is from the line of [ Aniket Gada, ] who is an individual investor.

Congratulations on good set of results. But then going on the company's performance, I would like to ask basically the industry outlook for the year and the quarter that has gone by.

Sorry, I didn't hear it.

I would like to get your insight about the industry outlook for the current year, financial year, and the quarter that has gone by.

So if you look at the quarter, the quarter refers the route. See from industry perspective, there are multiple lines of businesses. What Wall Street has always focused on is corporate business and students business. We would say that the Q1 has been favorable to us, because historically, Q1 has always never been favorable for us. So we can say that we had a good Q1 considering historical trends. Students business was good. Corporate business was good. And leisure business has also picked up. That is people traveling overseas for site-seeing or tourism. That was also picked up. And there, our focus has been there, which again will become a strategic focus for us down the line. So when you look at outlook for the future, see, this year, we see -- see students business is in upswing. You have so much of data, which is available, which say -- which also collaborate the fact. So we feel that the students business is going to be robust. Obviously, there are certain challenges when it comes to certain geographies like Canada, which was one of the major geography for us in terms of people traveling, especially from places like Punjab, Gujarat. Canada has visa restrictions, that has impacted the business. But when one thing goes down, there are other opportunities which come up, there is an upswing in intakes in other locations like Australia, New Zealand, U.K., U.S. is also pretty optimistic there. So overall, the -- there is a trend towards -- or how do you say that? There is a huge demand for studying overseas, which I feel will only ensure that things go upward. So student segment is pretty positive. Corporate is consistent, slowly growing. It has not gone to the level of pre-COVID where you saw explosive growth because of work-from-home, collaboration through video conferencing and all has reduced the amount of corporate travel. But one area which is showing explosive growth is leisure. Leisure segment where every other person is traveling that shows a lot of promise even though the ticket size is small. We feel that is an area to look out for, which will outstrip the growth in the other segments.

Yes. Thanks for the detailed insights. I would like to just ask if this 50% plus top line growth that we did for quarter 1, could you just say what could be that -- could you add -- what could it be to attributed to? And secondly, can we assuming that this trend will continue for the full year?

So essentially, when you have a good Q1, obviously, we are also positive that it should be positive unless there is some macroeconomic changes. We are positive for the future also because I don't want to be speculative about it, but we are positive we had a positive Q1. As far as the numbers and all I cannot commit. When you look at why we have grown that is because we have been consistent. That's what we always say that we are not gone with fashionable trends. We have a runoff business as a solid base, as a regulated player. We are not trying to disrupt for the sake of disruption. We have tried to build on our customer base, added customers, added corporates. And I think we have also given good service where our customer has stayed with us. And that is what I will say, simply, we are onboarding customers, being a little innovative in terms of digital, creating solutions, which customers want. And that's about it. That is what I will say, a good market, plus good way of sales and marketing. That's how I look at it.

Okay. I just wanted to ask like a financial question for Ms. Pooja. What is the average yield per transaction for the current quarter?

Average yield to go somewhere, so 0.7% to 1%.

1%. Can we assume that this to be the same for the full year?

Yes, it is. It remains same for the full year. The only thing is segment-wise it keeps changing.

Also the percentage of commissions Y-o-Y, if we compare commissions Y-o-Y as a percentage of value, it has grown a tad bit. Do we think that this is because maybe we have new agent tie-ups or something like that? Or -- and can we assume it to be in the same range as a percentage of revenue?

So essentially, let's see, today, as a B2B driven company, we have prepaid commissions, right? And it's all based on slabs and volumes. When we try to get higher and higher of volumes, there will be a small impact on the commissions also that you end up paying a little bit more. So that will be, and maybe as I said, when you go for higher volumes, there will be a little bit of impact on the performance, profitability.

But the range would be similar, like 51 to 50, 2.5 or something like that?

Essentially, if you look at it we always look at it on 0.6% is the fees which we have always look at. We try to keep on improving that. But then again, as I said, the commission, it's a negotiation, right, depending on the relative largeness of the customer or largeness of the partner, be it also in corporate, your pricing depends on the volumes, right? So essentially, as I said, our aim will be always to maintain our margins.

There was a latest update about opening up new branches in Goa and Vijayawada, could you explain the rationale behind opening those two branches?

So essentially, Goa, where we already had a branch pre-COVID. We had two branches, Madgaon and Panjim. And subsequently, during COVID we closed one of the branches. Now the business has picked up and both from a logistics perspective and also to take care of the market requirements, we are also reopening the Panjim branch. Vijayawada is concerned, it is logical, because from a students perspective, Andhra is one of the largest in terms of sending students overseas. And we feel we need to have a better coverage. We only have one branch in Hyderabad. So we thought strategically it will be very useful if we open a branch in Vijayawada, which is to ensure that we will be able to better cover the Telangana and Andhra market.

Not talking about numbers, but like what could be the volume that you might see from Goa, the reopening of Panjim branch and Vijayawada as compared to the existing branches, the growth may be or the basic -- number something.

So essentially, it's very difficult to tell without a number. But what I will always say is all our branches we try to be profitable to add value. And Vijayawada, we are expecting it to be a very high-growth branch because we have done some sort of calculations and also some sort of a research where it shows that a lot of students travel from Vijayawada, Guntur and all. So we feel there can be very high growth from that branch. As far as Goa, Panjim is concerned, we feel that it will contribute the same the way Madgaon branch contributes. So today, if we are doing 1x, we are expecting our contributions to go from 1x to 1.5x to 2x.

Okay. For a year, you're saying?

No, actually, on a monthly basis, suppose I met an X revenue. And Goa, we expect with the new branch, it will go to around 1.5x to 2x. Vijayawada on a standalone basis itself, we are expecting it to be a highly profitable branch where we expect it, to over a period, obviously, it will take a couple of months for us to establish ourselves, maybe 3 to 6 months. But we are confident with the market and the way things are moving that Vijayawada will be a very profitable branch may brush shoulders with our Hyderabad branch. We're very selective about our branch opening. So we analyze a lot of facts.

I guess that because we have other peers we have like a lot of branches like Thomas Cook and others, they have a lot of branches. So compared to them like we are comparatively selective, I get it. I hope to ask about the last conf call, we had talked about the FFMCs. Have we done any ties with them?

No, actually, that ruling has not come yet. So we cannot do anything till RBI comes out with the regulation.

But it's going to happen, right? It's going to happen.

Yes. Once it happens only, we can officially do anything. This is -- then we have to just wait. We are also waiting in anticipation.

But we -- I don't want to like push further. But do we have any idea with whom we want to tie up with?

So essentially, if you look at the regulation, it's sort of two things. One is FFMCs' licenses will not get renewed. And also FFCs, they have to become FFCs. So obviously, the first choice will be all the FFMCs, right?

Yes.

So that is the idea. But once the regulation happens, then we can act on it.

Okay. So on the app front, we have grown like around 10% quarter-on-quarter. Could we see the same [Technical Difficulty] more and more people using the app or can we see the same kind of growth for the next quarter? And is it a sticky business?

So, app may, as I did last time also, I think I replied back to you, we are not running the business just for doing transactions. We keep a small margin and do the transactions while competition keeps no margin. So B2C is a long-term goal for me, not a very, very short-term goal where I just get numbers with negative profitability. We feel when we provide a service, there is a small cost associated with the service, which we try to factor in. And we have customers who transact with us. We don't have huge numbers as of now. But there is stickiness. People have transacted second time, third time, fourth time with us. They like the transparency in my app, which says, what is the margin you take, unlike others who talk something at in the end of the journey add additional charge. We have tried to keep ours very simple and we make it very clear. This is what you pay. And if they are comfortable, we do the transaction. So as I said, my B2C is a little long term in nature. But definitely, we will build a good franchise.

Okay. And about the trade remittances, last time you talked to like a huge markets. Do we have any strategy in place or something that we are looking forward to get some market share from this?

Where, what?

The trade remittances. See, last in huge market of $800 billion market.

As I said, now that is a product for the future, once the regulation comes through, that we also have to explore banks here then we have to explore the market. As I said, once the regulation comes in, becomes, then only the traction starts. Before that, it is just on Facebook. So today, we are very busy with our current business, but I see it as a huge opportunity, which will be for the future. Maybe not for this current year, it may not -- it will have zero impact.

Okay. Maybe like 5 years, 10 years down the line we might have.

No, 1 year later. Once the regulation comes through after 6 months, it will become very important for us. Because the certain banks will form up that because everything has to be done through a bank. So obviously, banks will form up their sort of tie-ups with us. And then we go ahead and serve the customers.

Okay. So we're talking about AD1 tie-ups with banks and getting the business to there?

Yes, trade remittance, when it comes through, first the bank has to productize it, then we will be able to serve the customers.

Okay. That's it for me. Thanks a lot for answering all my questions, and a good look for future.

[Operator Instructions] As there are no further questions, I would now like to hand over the conference to Mr. Srikrishna and Ms. Pooja Mishra for closing comments.

Thank you, everyone, for joining us. And if you have further queries, please visit our website or you can reach out to our company secretary. I now request the moderator to conclude the call.

On behalf of WSFx Global Pay Limited, we thank you for joining us, and you may now disconnect your lines.