hSenid Business Solutions PLC reported some solid financial results for the three months to September 2022 coming from its existing suite of human resource management software solutions and their advanced versions, in both home and overseas markets.
The company reported revenues of Rs.397.2 million in the July – September quarter, up 89 percent from the same period last year, driven by improvements in operations across all segments, particularly by its core ‘PeoplesHR’ products, the company said.
The revenue grew by 27 percent in US dollar terms measured on the constant currency basis. The company generates nearly 50 percent of its revenues from foreign markets.
Its flagship ‘PeoplesHR’ products generate the lion’s share of revenues and its cloud and the on-premise version contributed 39 percent and 29 percent respectively to the top-line just prior to it going public last December.
Reflecting this phenomenon, 44 percent of recurring revenues came from PeoplesHR Cloud while it contributed to 59 percent of the Rs.131 million worth of new deals the company struck during the quarter with Sri Lanka being a key contributor in the region.
These new deals also recorded a healthy growth of 49.3 percent from the same period last year.
The company in last December raised Rs. 692 million, selling 20 percent of its shares in an Initial Public Offering (IPO) becoming the first enterprise software solutions company to go public in Sri Lanka.
However, after 9 months, the company has utilised only Rs.72.8 million from the IPO proceeds—Rs.43.3 million and Rs.29.5 million each on product and market development activities against the Rs.202.0 million and Rs.140.0 million allocated for the two activities. Although the company aspired to spend Rs.350 million for acquisitions in the APAC and East African regions, it is yet to make any of such deals perhaps due to the adverse market conditions for corporate deal making. Cocktail of worrying economic factors from high inflation to rising interest rates to significant market volatility have sapped the confidence of buyers and sellers, putting damper on corporate deal making.
Meanwhile, the significantly devalued local currency against the US dollar may have also prompted the company to pause on searching for acquisition targets as it will cost them higher in rupee terms. However, technology companies which rose to their highest valuations by the end of last year due to pandemic-driven shift to technology and digital services and record low interest rates saw their share prices plummeting this year on the back of people returning to pre-pandemic habits and rising interest rates, erasing billions of their market value.
Advertising which accounts for the biggest share of their revenues has also come down significantly as companies cut down on ad spending due to the slowdown in consumer spending. hSenid however said it will continue to focus on strategic objectives set forth in its IPO prospectus, including product development, market expansion and potential strategic acquisitions in the APAC and the East African regions. Meanwhile, the company also said its expansion to Bangladesh remains on track after closing several large ticket deals during the quarter. “In addition, the second phase of the Ugandan government project is expected to be implemented during the second half of FY23,” hSenid CEO Sampath Jayasundara said. “PeoplesHR Turbo continued to gain traction in India with the product being successful in on-boarding a number of new clients during the quarter. We continue to focus on expanding the product within India and expect Turbo to be a key product catering to SME businesses in the APAC region,” he added.
The company reported earnings of 21 cents a share or Rs.57.9 million for the quarter under review, compared to 7 cents a share or Rs.15.3 million in the year earlier period, recording 280 percent increase.
While the operating costs soared during the quarter, higher interest income further boosted the earnings during the quarter as unutilised IPO funds are invested in interest bearing mutual funds, including government securities of which the yields jumped from the time the company raised its IPO money in December last year.
