Friday, October 10, 2003
Hughes Software Systems held its conference call on October
9 2003, a day after it announced its September quarter results.
Arun Kumar, the managing director of the company addressed
the conference.
Highlights of the conference call
HSSL reported fifth consecutive quarter of growth in revenues
and profitability on sequential basis.
The company is confident of improvement in financials in
the future, based on the current backlog and strong visibility.
Also the emerging signs of improvement in software telecom
space are an encouraging signal.
The company`s optimism is based on various factors flowing
from customer interaction that the management had over the
last few quarters. HSSL has also witnessed more client engagements,
evaluations and rise in customer queries during the second
quarter.
Worst for the telecom software industry `may be' over.
Macro picture of telecom industry is improving, which will
boost the demand and the customer has definitive plans for
future. However, the company seems cautious, as Kumar said
it is difficult to predict the timing and extent of revival
in the industry.
During the quarter, HSS added 14 new customers for products
and services.
The company`s optimism is based on various factors flowing
from customer interaction the management has had over the
last few quarters. HSS has witnessed more client engagements,
evaluations and rise in customer queries during the second
quarter.
Another sign of change is industry fortune could be seen
in hiring trend, which is likely to escalate further. The
company hired 90 people (net) during second quarter and the
management expects hiring to go up further in the remaining
half of the current fiscal. The company has so far visited
14
college campuses, which will be inducted next year. The employee
addition in the current and fourth quarter would be higher,
compared to the second quarter.
The current employee strength of software firm stood at 2,055.
It has strengthened its marketing team based in US, Europe
and Japan. The company has declined to give the onsite offshore
break up of employees. However, the management said 8% of
its man made efforts are onsite based.
Moreover, the company reported a high utilization rate of
95% during the fourth quarter ended September 2003.
Other highlights
PAT rose 105% in the September 2003 quarter. This prompted
the management to raise its guidance for FY 2003-04 from 60-70%
to 80%.
For the third quarter ending December 2003, the company expects
its sales to rise by 55-60% and PAT to rise by 60-65% over
December 2002 quarter.
Financial highlights
Y-o-Y results
For the quarter ended September 2003, sales grew by 63% to
Rs 85 crore. However, due to 79% rise in staff cost at Rs
4.29 (as a % to sales up from 45.9% to 50.5%) its OP rose
by a lower 43% to Rs 24.40 crore. A part of the sharp rise
in staff cost can be attributed to the 91 new employees added
during the quarter. The company has managed to save smartly
on its travelling (down from 10.6% to 6.2%) and other expenditure
(down from 24.2% to 18.0%) front.
Other income fell 6% to Rs 1.70 crore and depreciation rose
4% to Rs 5.40 crore. PBT before Deferment of product development
cost (net of amortisation) was higher by 51% to Rs 20.70 crore.
Deferment of product development cost (net of amortisation)
cost fell by 60% to Rs 1.40 crore. This boosted the PBT, which
grew by 89% to Rs 19.30 crore.
Provision for taxation increased by 21% to Rs 2.30 crore,
taking the PAT up by 105% to Rs 17.00 crore.
Sequential performance
Sequentially, the company's sales have grown by 11% and OPM
has fell from 29.3% to 28.7%. Other income fell 32% and depreciation
rose 4%. PBT before Deferment of product development cost
(net of amortisation) was up 9%.
Deferment of product development cost (net of amortisation)
fell 22% to Rs 1.40 crore, taking up the PBT by 12%. After
providing for tax (up 15%), PAT increased by 12%.
Half yearly performance
Two quarters make a half. And two wonderful quarters make
a super half. The solid growth observed in the first two quarters
saw its revenues growing by 62% to Rs 161.50 crore and Due
to OPM improving from 18.4% to 24.6% in Q1, OPM for the six
month improved from 28.8% to 29.0%. OP grew by 63% to Rs 46.80
crore.
Other income fell by 17% to Rs 3.50 crore and depreciation
cost rose 2% to Rs 10.60 crore. This took PBT before Deferment
of product development cost (net of amortisation) up by 76%
to Rs 39.70 crore. Deferment of product development cost (net
of amortisation) fell 57% to Rs 3.10 crore taking the PBT
up by 139% to Rs 36.60 crore.
A relatively slow growth in taxation (yet up a huge 65% to
Rs 4.30 crore) took its PAT higher by 154% to Rs 32.30 crore.
The PAT of Rs 32.30 crore for the half year ended September
2003 is close to its annual 2002-03 PAT of Rs 37.90 crore.
FY 2002-03 results
For the FY ended March 2003, its revenues had fallen by 6%
to Rs 220.40 crore and PAT was down by 27% to Rs 37.90 crore.
Last updated : February 2, 2004
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