Conference Call with R Systems Management and Analysts on Q4FY20 and Full Year Earnings Performance and Outlook. Listen in to the full transcript.
Call Participants: Mr. Rekhi Singh - Managing Director, Mr. Nand Sardana - CFO, Mr. Avirag Jain - CTO
Introductory Remarks from Rekhi Singh
Good morning everybody and thank you for being a part of this investor call. I want to reiterate what Kumar said. We are all going through unprecedented times and I hope everybody is staying safe and healthy. The company has implemented the required work from home guidelines to ensure the health and safety of our associates while we continue to provide seamless services to our customers. We are working closely with our customers and our vendors as a long term partner to handle these challenges together. There is still uncertainty in the global economy. However, R System with a strong balance sheet and deep product engineering and services offering is well positioned to tackle the near term challenges and to emerge as a stronger, agile and dynamic organization. Further, in these challenging times, the various governments like the USA and Singapore have also offered certain financial stimulus packages to support the businesses.
R Systems will continue to closely monitor any material changes to the future economic conditions. During the first quarter of 2020, we have reported revenues of Rs 209 crores, $28.9 million. We had a reasonable growth of 7% against the same quarter last year. The EBITDA for the year was Rs 20 crore which is 9.6% as against 9% in same quarter, last year and 10.2% in previous quarter. The margin was impacted by yearly salary raises and conservative AR provisions as offset by rupee depreciation. Profit after tax was Rs 9.5 crore as against Rs 12.38 crore same quarter, last year and Rs 23.23 crores in the previous quarter. Net profit after tax was impacted by mark to market loss of Rs 6.85 crores on lease statement of forward covers.
We saw 25 million-dollar customers during the quarter including five customers contributing $3 million plus revenues. Also, we added 5 key customers who continue to contribute 40% of our revenues. We have however started witnessing softness in the demand towards the end of Q1 2020 due to the global lockdown.
As I have mentioned, we have implemented the required work from home guidelines to ensure that we are able to provide seamless services to our customers and at the same time ensure the health and safety of our associates. We have a strong balance sheet with shareholders fund at Rs 350 crores and cash and bank balances of Rs 218 crores to support our liquidity and growth.
Detailed financial analysis from Mr. Nand Sardana
Good morning to all. Thank you everybody for attending the call. I do hope that everybody is staying safe and are adapted to this new normal. Let me go into detail of each line item of our profitability statement.
Revenue for the quarter was Rs 209.9 crores, QoQ decrease of 1.7% and YoY increase of 6.6% in rupee terms. Traditionally Q1 is a weak quarter as clients are still in the process of releasing their IT budgets. We started reasonably well in 2020 with 6.6% YoY growth.
We have added 5 key elements in the quarter and 75 plus associates during the quarter. We started feeling softness in demand due to Covid-19 towards the end of the quarter when several economies announced lockdown. It seems that it will impact our Q2 and Q3 to some extent and as our business gets tuned to this normal, we can see a regular Q4.
Getting down to gross margin, it was 30.04% in this quarter compared to 36.04% in the last quarter and 33.66% in the same quarter, last year. Reduction of 100 basis point QoQ is mainly due to the impact of imperial decrease in utilization as offset by the acquisition. Covid-19 challenges will have impact on our revenue as correspondingly it will impact the margins. However, we have taken certain cautionary measures to protect the margins.
As you know that in this pandemic, the travel and hospitality sector and retail to some extent has been impacted, R System’s exposure is not more than 5% in these sectors. Infact, more than 30% of revenue comes from the telecom sector which has been a beneficiary. So our telecom sector and most of the computerised part of the business which is mainly into telecom have kind of performed well in this quarter and we are hopeful that it will perform well in the quarters to come.
We have some exposure in BFSI, but more or less we are not majorly impacted. Coming on to the challenges, I think most of the customers are dependent on our project delivery. It is a difficult time for them as you know that 65% of our business comes from the US. As of now, to some extent there is an impact but we feel that as the lockdown ease and things start moving, maybe from the start of July things will start moving to normal.
