Interview with Rahul Kanodia, Vice Chairman and CEO of Datamatics

In Q1FY24, the company’s revenue soared by 19.64% from Q1FY23 to Rs 391.1 crore, while the net profit surged by 28.13% from last year’s same quarter. What were the contributing factors to the company’s strong performance? We have started the year on a strong note with respect to both revenue and profitability. Our revenue stood at Rs 391.1 crore which is a growth of 19.6% on a YoY basis. Our EBIT stood at Rs 58.6 crore compared to Rs 39.3 crore in the same period last year. This translates to a growth of 49.2% in our EBIT which is a very healthy growth.

In Q1 of FY’24, we added 14 customers, most of them in the US and European markets. We have done well in all the three segments in which we operate – Digital Technologies, Digital Operations and Digital Experiences. In Digital Technologies revenue growth was contributed on account of revenue accrual from a Metro project as well as the addition of clients in the BFSI domain. In Digital Operations we have seen strong business growth in Digital Content business. In Digital Experiences, we have seen strong business growth in existing clients. All these factors have contributed to the company’s strong performance.

Digital Technologies segment witnessed a growth of more than 18% on a YoY basis to Rs 157.90 crore. What were the contributing factors for the growth? Also, what is your outlook on the Digital Technologies segment of the company for the next few quarters? Digital Technologies revenue was at Rs 157.9 crore, a growth of 18.6% on a Y-o-Y basis. Digital Technologies EBIT margin was at 6.2%. We have a marked improvement in the performance of Digital Technologies business as compared to last year.

Our strategy of focusing on hyperscalers is progressing well. We have deepened our relationship with Microsoft, Salesforce and AWS and assigned a new relationship with Crowdbotics, a Company focused on low-code and no-code development. These have started generating good opportunities for us in Digital Technologies resulting in a healthy pipeline. We are also working on a few AFC opportunities which we believe we are in a good position to win.

Education and publishing vertical contributes 20 per cent to the total revenue. What is your outlook on this vertical for the next few quarters? In terms of industry footprint Education and Publishing & e-retail vertical is the second-largest segment for us contributing to 20% of total revenue. All of these primarily deal with Digital Content services, which is a part of our Digital Operations. We have seen good growth in this vertical in Q1 and expect to maintain the momentum in the coming quarters.

Given the global shift towards AI, what are the strategies to leverage this trend effectively for the benefit of your company? Artificial Intelligence (AI) is the most exciting and transformative technology and is fast becoming integral to our daily lives. The capacity of AI to analyze vast volumes of data and unearth intricate relationships and patterns is nothing short of awe-inspiring. We see this as an opportunity for Datamatics to showcase our capabilities in AI. We have already integrated AI into our operations, services, and products. For example, our teams use AI to process 15 million balance sheet documents for global credit agencies annually. We have also integrated Gen AI capabilities into TruBot RPA and TruCap+ IDP to offer an enhanced automation experience. In Data Labs, our innovation hub, we work on multiple projects using AI and customer service chatbot for L1 and L2 support is one of the many projects we are working on. We have established an AI Centre of Excellence, and the team is developing robust offerings around AI that we can take to the market in the coming months.

At the moment, what are your top 3 strategic priorities? The top 3 strategic priorities for Datamatics include,

1. Deep in Digital. We are well-positioned to deliver end-to-end digital solutions and help enterprises go ‘Deep in Digital’ to boost their productivity, customer experience, and competitive advantage. Datamatics has been chosen by numerous companies to lead their digital transformation journeys, resulting in several successful project launches and several more deals in the pipeline.
2. Focus on US and Europe markets. The company sees a significant potential market in these two regions and plans to capitalize on the opportunities by expanding its presence and partnerships. Our efforts have resulted in a significant increase in pipeline from these geographies.
3. AI-first Approach. Artificial Intelligence is transforming how we live and conduct our businesses. We have been investing in our AI capabilities for several years, and Generative AI has only enabled us to double down on those efforts. We are constantly incorporating AI in our Technologies, Operations, Experiences, and Products businesses. It reflects our commitment to enable our customers to go Deep in Digital in their transformation journey.