Happiest Minds Technologies reported an 11.2 per cent quarter-on-quarter (QoQ) growth in revenue at ₹463.83 crore in the first quarter of FY25, compared to ₹417.29 crore in the previous quarter. Venkatraman Narayanan, Managing Director & CFO,

told businessline: “This quarter, we have shown expansion in our topline and the profitability metric of EBITDA. EBITDA as a percentage is higher than our forecast of 20-22 per cent for this year because we made some large acquisitions during the first quarter with PureSoftware and Aureus Tech Systems.”

After consolidating about 40 days of results from both companies into the company’s books, he said Happiest Minds was confident the profitability and growth profile of said the companies were in line with their expectations during the due diligence phase. “They might add to both our capabilities from a business and financial standpoint.”

EBITDA in the quarter ended June grew to ₹116.71 crore sequentially at 7.8 per cent from Q4FY24’s ₹108.22 crore. EBITDA as a percentage was 23.9 per cent in Q1, down from 24.5 per cent last quarter. However, the company saw a 29.1 per cent dip in profit after tax (PAT) this quarter. PAT in Q1 was ₹51.03 crore as opposed to last quarter’s ₹71.98 crore.

“Last quarter we had a write-back of ₹13 crore and this quarter, we had a one-off expense of acquisition cost of about ₹6.5 crore. 

Removing this noise, the PBT would be similar to last fiscal’s Q1 and Q4 results in absolute terms. In percentage terms, we would be slightly lower because of the one-off cost in terms of the noncash charges taken for amortization, goodwill, and finance costs. This will be covered through the business growth from acquired entities,” Narayanan added.

For Happiest Minds, revenue share in terms of geographies was dominated by the US at 66.5 per cent in the quarter, followed by India at 16.9 per cent.

Revenue share

Joseph Anantharaju, Executive Vice Chairman & CEO - Product and Digital Engineering Services (PDES), said, “The share of North America has gone from 69 per cent to 66.5 perc ent. The reason is that PureSoftware has around 2 per cent of its revenue coming from South East Asia and 1.5 per cent from Africa. Earlier, we had no revenues coming in from either region.” He said the acquisition allowed the company to diversify its revenue base and decrease its reliance on North America.

“It’s a move in the right direction. We would like for other geographies to grow at a faster pace and reduce reliance on the North American market.”

While edtech remains the largest vertical for Happiest Minds in terms of revenue share, this quarter, it came down to 21.5 per cent from Q4’s 22.3 per cent. BFSI, on the other hand, grew to 16.8 per cent from last quarter’s 11.4 per cent.

“If you look at Edtech, even though the revenue share came down, it grew 6.6 per cent. In the last two quarters, we had been flattish but were able to grow. Quite a bit of it is contributed by Macmillan Learning India, where we broke in and rebadged their India operations after they saw synergies with the work we were doing,” Anantharaju said, adding that there was a drop in the manufacturing space because of two factors.

“Two decent-sized accounts were reclassified - one into industrial and another one into high-tech. We also had a few large customers in this space for whom we finished phase one of implementing the project implementation for them. Now, we are discussing phase two’s needs and will get started. Going forward, in QoQ terms, we see manufacturing growing,” he added.

The jump in BFSI was attributed to the revenues from PureSoftware and Aureus. The former has banking and financial services as its largest vertical and the latter, insurance. 

Speaking of campus hires, the company had around 40 to 50 campus recruits join in April from last year’s batch. “These folks have undergone training and will be allocated to projects and business units. We will look at utilization business needs before making any decisions on hiring in this cycle,” said Anantharaju.

In the upcoming fiscal, the company has a forecast of 30 to 35 per cent for revenue growth. 

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