Blackbuck (NSE:BLACKBUCK) Q2 2027 Earnings Call

0:09 Good evening, ladies and gentlemen. We'll start the meeting in a minute or so. Good

1:46 evening, ladies and gentlemen. Welcome to the q two and h one FY twenty seven Earnings Conference Call of BLACKBUCK LIMITED hosted by RADI Capital. As a reminder, all attendees will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. If you have any questions, please feel free to press the raise hand button. We'll call you in turn and unmute your line so you can speak. Important note, if you need to ask a question, please ensure Microsoft Teams has permission to access your microphone when you log in. Otherwise, you will not be able to unmute. Please note that this conference is being recorded. Kindly also note that the audio of the earnings call is a corporate material of BLACKBUCK LIMITED and cannot be copied, rebroadcasted, or attributed in the PR media without specific and written consent of the company. Please note that anything said on this call that reflects the outlook towards the future, which can be construed as a forward looking statement, must be reviewed in conjunction with the risk that the company faces.

2:46 A copy of the disclosure is available on the Investor Relations section of the website as well as on the stock exchanges. To give you an in-depth understanding of the company and answer all your queries, we have from the management side today, Mr. Rajesh Kumar Naidu Yabaji, Chairman, Managing Director and CEO and mister Sathyakam, chief financial officer. I now hand over the conference over to Rajesh for his opening remarks. Thank you, and over to you, Rajesh. Thanks. Thank you, Nidav, for the introduction. You're able to hear me clearly? Yes. Yes. Loud and clear. Cool. So, ladies and gentlemen, welcome to our q two FY twenty seven earnings presentation.

3:33 It's been a good start to the year. I think, last quarter, we had presented to you guys, you know, good results. As we, get into the second half of the year, I think q two FY twenty seven also, worked out, really well for the company, largely because of the fundamentals and the quality of business we have built and... Which basically rides on larger industry tailwinds, high quality of product, very strong distribution, and that has been the result of the compounding, you know, nature of results, you know, you're seeing with us. So starting off with the snapshot numbers, on an overall basis, the company did about $2.53 crores of total income, which is a growth of about 51% on a year on year basis. EBITDA, close to 51 crores, which is a 40% growth on a year on year basis. Profit after tax, 41.4 crores, which is a 42% growth on a year on year basis.

4:39 Functional metrics, more KPIs, which are the platform KPIs where, you know, we report metrics which are under the hood, which help us achieve the, revenue goals, the outcome metrics. Transacting customers, nine hun... Close to nine lakh transacting customers growing at about 13% year on year basis. Covers large part of the, you know, medium and heavy heavy commercial vehicle customers, which are relevant for the intercity trucking audience. Users who are power users use more than equal to two services, growing at about 20%. Roughly, more than half of these users are power users, which is close to four lakh eighty thousand. GTV of tolling, which is large part of the payments business we do, growing healthy at about 17% on a year on year basis, you know, broadly about 7,070 crores this quarter.

5:34 So so, yes, as as I mentioned, overall, you know, a strong quarter results largely, you know, in the business as usual way with a lot of exciting things happening on new initiatives and continuing to preserve the nature and the quality of profitability of the core business. Calling out again the crux of the strategy, as I mentioned, all the quality of results are basis a strong business model. The business model is about solving, you know, the truck operators' problems. We we exist to solve their problems. We exist to help them get operationally better.

6:19 We exist to help them make more revenue. So these are plethora of offerings. We keep building. We keep launching. And, you know, by launch of a newer offering, it it adds back the strength to the older offerings with cementing the whole, you know, user using the platform more and more. On the platform side, transacting customers continue to grow. The overall app usage, you know, a very, very, very good number continues to hold. On the distribution front, again, 10,000 touchpoint network continue to continues to scale, you know, in the relevant areas, and 80% districts, we continue to be present. Right? So, again, iterating the strategy. We build offerings which are launched on our platform. Every new offering gives rise... Gives strength, you know, of its own, at the same time strengthening the older offerings.

7:05 We sell, service, distribute these offerings to our customers through a physical touchpoint network, which is very, very, very essential for the nature of users, you know, what we have. And it's widespread, which means a trucker whose trucks are mobile, wherever he buys a service, he can get it serviced anywhere. He gets basically taken care of with such a wide distribution network. So, and... Yeah. So using this strategy is what, you know, you're seeing the results sort of coming through. Moving forward, giving an update on the key KPIs. Some of them we've already touched upon going into the revenue from operations apart from their starting, which is about 56% on a year on year basis. And on a h one basis, roughly about 49%.

7:53 Coming to the... A more better quality metric on revenue is basically the net revenues where... Which typically is... Are the real revenues which we make as a company. That is basically about one eighty three crores, which have grown by about close to 35% on a year on year basis. Both the core and the growth businesses have grown very strongly, you know, this quarter. Contribution margin profile continues to be the same, you know, much north of 90% levels. High quality technology revenues, product based revenues, and hence such kind of a quality contribution margin. That also grew by about 33%. You see a slight dip because telematics revenues, as we give an update in the previous quarters, have started to accelerate which I'll give you a bit of narrative ahead, but continued to accelerate this quarter as well. So you'll see the slight blip because in the, like, host of revenues, telematics have bit of a lower contribution margin.

8:50 On the adjusted EBITDA basis, that's 55 crores, which is growth of about close to 30%. Again, I want to remind you here that there's a blended metric of the in... The investments we're doing in our newer and emerging businesses. So think of it as we continue to scale our EBITDA by, you know, by whatever contents you're seeing while absorbing the increasing costs of investment into new businesses, which sooner or later at a later date, we would be helping you understand them by providing you splits, you know, of those as well. Moving forward into narrating some of the highlights, As, we mentioned, the headline metric, revenues grew about 56. Sequentially, we grew about 15% on a sequential quarter basis, you know, this particular quarter.

9:39 In that, splitting it, core businesses grew by 31% on a year on year basis and roughly 11% on a sequential quarter. Like... And as many of you know, this generally is a seasonally low quarter because of rains, and, also because this time, the first quarter had a bit of dip in movement, all of that got compensated with a good q two. One of the highlights within this is that, obviously, the GDP growth in tolling was 17%, which is strong growth. But within that, the whole full stack business on on tolling where we have our own fast tags using our own subsidiary, BLACKBUCK, t z f, you know, t z f which... Where we have our PPI entity, You know, we saw a significant uptick in issuing our tags as well. So that was a good story for this quarter of, you know, under tolling business.

10:32 Telematics business, as I was giving a narrative on contribution margin, is actually scaling the newer heights. We reported last quarter that we did highest, you know, new device sales in that quarter. This quarter, we continued to break that, and there was a newer high achieved. You can... You don't find the impact of this directly in this quarter. As you can see, the deferred revenue item on the balance sheet continues to increase because the revenue recognition of the telematics happens across the year. It does not does not happen in the month we sell the devices. So you'll see the good news of this not only coming, which you've seen in this quarter, but continue... Would continue to come in the quarters to come. So so so, basically, we have a core business where there are businesses which are matured and are growing in higher teens, above 20% levels. But there are multiple newer streams which are emerging out within the core, which are helping us propel stronger growth in the overall core part of the business.

11:38 Coming into growth businesses, which are basically largely the loads business and the vehicle finance business, continue to have the similar narrative as before. We're growing very strongly. Year on year growth is roughly about 2.7 x, which is 166 growth on a year on year basis. Sequential quarter growth of about 25%. And here again, know, throwing some color on super loads. As you all know, we have scaled into newer cities, so those are scaling well. Existing cities are compounding, you know, with the productivity improvements, etcetera. We've done a lot of, you know, a lot of work on AI, because it... The whole process works on matchmaking. Right? So we've done a lot of work on AI to improve productivities.

12:23 Right? We've seen a significant uptick in productivities of people and of the cost we are investing in the existing existing sort of cities. And a very strong quarter from a, you know, growth of unit economics as well because we've tried to get into the margin levels in some of the, you know, existing cities at a level which basically prove the long term profitability nature of the business as well. So, like, if you make... If you essentially try to make more money and if the business essentially continues to compound, which means you've created a high quality business. So we're playing around a lot of that, and, we've seen, like, good results, in all of those dimensions. Talking about, vehicle finance, where we give a give a narrative at the start of the year that this will be the year of EBITDA breakeven. We're on track to achieve that.

13:12 It is, again, know, it's it's a largely partner led model. And at the end of day, the partners are in the business of lending. So it has its own steady growth rate on which the business continues to grow. And the AUM management partners with us continues to steadily climb, and that will help us get to the EBITDA breakeven point. Commenting on profitability, as you all have seen, there's a close to 30% growth on an adjusted EBITDA basis on a year on year, getting this to 55 crores. As we mentioned, core story is largely same. Right? It continues to deliver consistent profitability and operating cash flows. Right? Core businesses used to... Core businesses used to deliver anywhere in the range of 70 to 85% or even 100% of operating leverage, right, before.

14:03 Now we've got a lot of areas in which we could invest more in. That's why you saw... You've seen that the operating leverage in this business is in the range of that 50% despite so many so many investments we've done in customer acquisition upfront in this quarter. Right? So the nature of core business continues to be the same strong operating cash flow machine for the company. We are giving its due investments wherever it is needed, and we are seeing in lot of niches strong uptick in customer acquisition and revenue growth. While that story continues to compound and continues to grow at a consistent basis, we have stepped up our investments in super loads, and we will continue to do that as we have more clarity on how this business is getting built out, as we have more clarity on how the playbook is getting built out, we would continue to invest and scale this business. Right?

14:56 Then moving into giving a bit of commentary on the total expenses, which have grown by 36% on a year on year basis, which generally would have been in the teens level in the past, largely because of growth across core businesses and the investment in Superloads. Right? So it's... There are two parts which were the flavor of the growth and also would appear for you in the cost. Giving a bit of voice over, largely a repeat on the P and L overview. Most of these line items you've touched, total income grew by about 51%, revenue from ops higher by 56%, net revenues grew by 35%, like... And your adjusted EBITDA grew by 29%, EBITDA by 39%, to 51 crores and back to 41 crores by 42%. So largely mimicking the numbers which we discussed in the previous slides.

15:47 So that's all from our side, you know, and would love to take questions, from all of you. Thank you. We will now open the call for questions. Kindly raise your hand to ask a question. We will unmute your line. Please announce your name and organization name before you ask a question. As a reminder, we request all participants to restrict themselves to two questions and come back in the queue. First question is from Gaurav Malhotra. Gaurav, please go ahead and unmute your line. Yeah. Hi. Am I audible?

16:33 Yes, Gaurav. Yes. You are. Hi. Hi. Hi. Hi, Rajesh. Rajesh, just few questions. You know, first of all, why... You know, you understand that this is a seasonally slow quarter for... Because of free and everything. But, essentially, the GDP of tolling has been in the same, you know, ballpark of around 7,000 crores, $687,000 crores over the last, like, three, four quarters. So how should we think about this, sort of growth moving ahead, say, in the in the second half of the year? Yeah. So, basically, I think the way to...

17:24 Because it was a bit of a, you know, mixed year. Right? The first the first quarter was obviously the whole, you know, the entire oil crisis and the movement being a bit of, you know, deceleration led to the first quarter, you know, downward sort of a trend. Like, otherwise, it could have been better. And, like, this quarter, bit rains always has been a seasonally weak quarter, and, generally, we see a degrowth, you know, from the previous quarter by about, you know, few percentage points. Right? And if you typically see the last year numbers also, because this time... Because last time there was a request, to understand this, we have provided, you know, the last, you know, eight, ten quarters data on the tolling GTV as well. So, typically, the q three, q four is when the whole sort of, you know, industry picks up. Similar to the trend of the last year, if you see in q three is where you typically start seeing the growth. And because of a very high market share, largely, our pattern would also be indexed to how the market will work. Right? I would say that at this moment, you know, whatever is is largely happening from a context of, you know, October, how the movement is picking up in the first few weeks, etcetera, Largely, I would say that it is business as usual as it was in the previous years as well. Yeah.

18:48 Okay. Cool. Thank you. Just couple of more questions. One more on tolling. Adi, you mentioned about, you know, some of the fast tags being, you know, rolled out on your own PPI license. So, so this is the incremental fast tags or this is also the existing? Some of them are being replaced, with it. Just trying to understand how we think about the MDR and and Yeah. Yeah. Going forward. See, basically, long term, as we've always maintained, it will be a partner led model. Right? We will, you know, everything will be essentially coexisting, and, maybe the part... With partners will still be doing majority of the numbers. Right? And of the existing business, what we have with partners, none of that is the representative of what we were talking. Whatever incremental we were issuing, in that, there is a significant uptick in the BLACKBUCK Fast Tax. Yeah. Okay. And just last question on super loads. You know, if you can give us give us some sense of, you know, how many hubs you are present in, you know, some some sort of impact on working capital loads?

19:55 Just some some some some additional data on super loads will be helpful. I think, same numbers as before, you know, the... Like, you know, Gauravich, we had mentioned that we're present in 14 cities, and now that two cities are, like, the earlier cities and the remaining 12 are, you know, the newer cities. And, as we always mentioned, it's, like, largely a cash and carry business where we receive the advance from the customers at largely along the time of, you know, the way the vehicle is essentially getting loaded. But it's it's it's it's a very working capital light business, maybe having few days of working capital on a overall basis. I think, that's the that's the nature and, largely similar nature from a business context perspective.

20:45 If I may squeeze in one last question on telematics. You know, you mentioned that there has been an acceleration. So this acceleration is, you know, on account of that new technology, that AIS adoption, which is sort of making it to new push or you guys are becoming sort of more aggressive into this segment and and essentially, you know, any sense on, you know, what what kind of devices are being added? Is it from a multi technology, single, etcetera, please? Yep. I think, answering your question, very small part of the acceleration is attributed to new product launches like the fuel sensor and the, you know, dashcam, which we are walking into, which are getting into in a in a big way over the years. Fuel sensor, we've been giving the commentary and dashcam we are piloting as we speak. Right? The large part of the acceleration is because of the AIS mandations, which are happening across states for various different use cases. And inside that, we are playing basically a material role, towards...

21:45 Like, in in the... In that, like, you know, we're playing a material role by capturing incremental market share, and that is leading to higher sales of devices, you know, incrementally every quarter. Got it. Thank you so much. I'll come back in the queue, please. Thank you. Next question is from Abnish Sharma. Abnish, please unmute your line and go ahead. Hi, team. Thanks for the opportunity. My first question is with respect to this MDR. Like, what share of, tooling revenue in the margins could be impacted by this MDR on UPI? Know, on a GTO of 7,000 crore, point 4% MDR, I think, could be substantial. So just wanted to understand management's view on the same.

22:30 Yeah. So, basically, in this context, roughly about 50% of our, over 50% of our transactions are sub 2,000. Right? Number one. And, for the remaining transactions, one of the specific use case which is open for FastTag is basically a predebit PDN method of basically recharging, you know, the fast tag. Right? Pre debit note... Zero PDN mandate route. Right? So through that, the remaining part of the transaction essentially gets covered. So through a method of... Obviously, some are below 2,000 and the ones which are above, they're using a, you know, the... A pre debit notification mechanism, which does not work on a latency of twenty four hours to get the to get the debit and the credit done. And that's specifically alert for FastX. Right? So using a mix of these strategies, we believe the impact on, MDR on UPI will be, significantly, like, you know, close to, like, zero possibly, right, for our business.

23:32 So... Mhmm. Like, we might have to nudge our customers of paying about two about 2,000, you know, start using this. But, initially, that option for this PDN thing could not be as fast as we are expecting. So anything on that? Like, how are we, you know, going to do this? Yeah. So, Avnish, while we'll understand understand the actual impact only once it is implemented, we have done some pilots, in the first week of October. And, broadly, what Rajesh mentioned broadly, it followed... The pilot followed that where given the either people were doing below 2,000 or they were using the zero PDN mandate route. So even though we'll understand the actual impact, only post implementation, it should largely be contained, in our view.

24:22 Okay. Understood. My other question is with respect to this core revenue. So it grew around 31% year on year and 11% q on q. But the GT was largely flat q on q, and the tooling transactions fell around 2% q on q. So just wanted to understand, what drove the q on q growth in core? It was telematic devices fuel or just a better take rate on tooling? Yeah. I think a significant... A large part of it was attributable to telematics. Like, Rajesh mentioned, we did record numbers of new device sales in the current quarter. On the, tooling side as well, there were some, minor one off benefits that, kind of gave a kicker on the revenue this quarter. But otherwise, nothing material changes on the take rate on the tolling side, as seen in the past quarters. Telematics, hopefully, with the AIS tailwind, we should continue to grow faster.

25:17 Understood. And, lastly on, the depreciation expense, so it's roughly doubled year on year and the CapEx currently is around $771,000,000. So just wanted to understand the trajectory for the depreciation expense and any CapEx guidance for, current year. Yes. So, on depreciation, it is largely linked to the telematics growth. Right? I think if you would have, on the... Because we have also given the half year balance sheet, you would have seen that the growth on deferred revenues also has been 56% type on a year on year basis. Right? I think it has grown strongly even, I think, four four to five times that of the absolute growth in depreciation. Right? So we continue to, touch newer highs in telematics. So that growth path, as we figure out, depreciation will follow that route. Currently, no guidance on how it will pan out.

26:11 Okay. Okay. That was helpful. Thank you. All the best. Thank you. The next question is from the line of Prateek. Prateek, go ahead with your question. Unmute yourself. Hi. I'm now audible. Yes, Pratik. Please go. Hi. Thanks for the opportunity. So, we met a few field owners in Delhi, and what we heard was that most new trucks now come with GPS installed by the manufacturer. And they provide around twelve to eighteen months of free subscription. And most of the wind renewal, correct me if I'm wrong, is somewhere around 7 to 10,000 a year while you guys are still to 4 k. So I think the price gap and the convenience that...

26:59 Like, BLACKBUCK's one app, you can drive multiple brands is the reason that people switch to you guys. So two things on this. So if you could share the... You know, what percentage of your telemetry revenue comes from, like, relatively newer trucks where people switch after the OEM subscription ends versus secondhand or older trucks? And secondly, let's say if the manufacturers bring their renewal pricing closer to you, like, what price you guys have, how do you see that affecting your telematics growth? Yep. So, basically, I think the way to think through is that, first of all, the GPS is not mandated. Comes with a... It's a... Basically, it's a optional, you know, accessory a person wants. Right? So it was mandated, you know, few years back, actually, and then it led to a lot of friction. So it, I think, was rolled back.

27:51 So it's an optional, first of all. Second is, remember that all the repeat buyers of trucks, right, already have fleet of trucks. Right? So they would want to manage their, end to end telematics, kind of operations management of looking where the drivers are and sharing the location with customers, etcetera, at one place. Because we've got a very heavy, wallet share in the existing base already, most of our customers typically buy the incremental new trucks, whatever they're buying, they buy with the same software. Right? So, we obviously don't have data on how many new, like, trucks which got into the market right now and how many we fix. Like, we don't have the data, and hence, we are not able to share. But then it's literally, like, there is, you know, first of all, there's a... As you rightly said, on pricing and everything, they're so competitive that, like, people, you know, use us. Second thing is that on the AIS side, there is a lot of operationally... Operational complexity with respect to how the, you know, whole device gets activated, how the device has to be kept, you know, you know, sort of on with a very high service level. Right? And and and it needs a lot of integrations with a lot of different, you know, government portals, etcetera.

29:01 So that is, again, a very specialized game which needs a very, you know, sort of a very focused approach at a state level. I don't think, you know, that's that's an area where I would I would say that OEMs are are playing sort of at this point in time. And the third thing is that, we have a very strong Pan India service network, which in the scheme of things for us, because it's a very important business for us, we do that really well. Right? Anywhere, you know, a truck is down, etcetera, we get that done, like, get the repairs done very fast. So I think all of this compounded together always has given us this edge and has kept us sort of, you know, much ahead in terms of how we are perceiving this business, you know, than, obviously, the OEMs what you're talking about. We've, like, received this question many times, but, yeah, I mean, this is how it is.

29:50 And whatever I'm saying, the the result of that is in the numbers, you know, and how how it is growing and how the numbers are, like, developing. Understood. So I completely agree on the app and tracking part. But I just wanted to understand if they choose to, like, match your price, would that have an impact on the growth of the delivery? That... That's what I explained. Right? Like, when there... When when a guy is buying a new truck, he already has 10 trucks. The guy is buying a new truck, he's generally a repeat purchaser. Right? Like, if you go and understand, like, new truck purchase is generally done by repeat truck buyer. It's not done by a guy entering the business. So because he is already... Has a fleet of trucks and is using a BLACKBUCK software. Right? He, first of all, for a new truck itself doesn't, you know, use something else. He uses us.

30:38 Right? So there is no question on getting... Letting this customer go to anyone, first of all. Right? So the question doesn't arise, number one. And number two, like, you know, obviously, with the kind of service, with the kind of efficiency in the AIS devices, with the kind of upkeep in the AIS devices, which is one of the biggest sold, biggest quantity sold devices in at least 14 cities. Right? So, so with all of this, it's very hard for, you know, others to compete at this point in time. K. Got it. Thank you. Thank you. The next question is a follow-up question by Gaurav again. Gaurav, please go ahead with your question. Yeah. Hi.

31:24 Thanks thanks for the opportunity again. I just I just wanted to, you know, just to spend some time on on the on the OpEx. You mentioned that obviously, you know, Superloads is where you guys are are investing in. But you also mentioned that even in the core business, are seeing some increase in in OpEx. So can you just help us understand where this investment is going between tolling and telematics? And and what are you guys doing over there? So... Yeah. So so so, Gaurav, as you know, the... In our core business, the nature of our business is generally that whenever we, like, acquire a customer or we are doing incremental sales, speed of devices or speed of fast tags or speed of any other product, we typically incur upfront customer acquisition cost.

32:12 Right? And, typically, we make the LTVs over the lifetime of the customer. They are with us. Right? Whenever our sales grow strongly, in that quarter, we basically incur a larger expense because our sales engine is largely variabilized. So that leads to more acquisition, more cost comes into this quarter, and you see suppressed EBITDA, but for long term, higher growth and higher catch up of EBITDA. Right? That is why if you if you go back and see our numbers few years back, when there was no base of revenue, but we are going through a heavy customer acquisition cycle, we would make a very high loss. Right? Then we kept our customer acquisition largely constant, you know, for a few years. Right? Then you saw, like, you know, the whole EBITDA compounding.

33:04 Right? But, like, we didn't make... Keep it constant because we wanted to be profitable. We kept it constant because beyond that, it was a little, like, unprofitable obviously to acquire. Now wherever we're seeing opportunities, we are expanding and we are gaining more market share. So as and when there are spots of increase in customer acquisition comes up, the EBITDA suppresses in that particular quarter. So, basically, if if telematics is sort of doing very well and there's there's massive growth coming there, there is a, there is an upfront CAC involved, which obviously you guys will recoup through the life of the customer. That that would be one sort of way to think about it. Right? Correct. That's that's the way to think about it, and that's why you can see that telematics is actually very easy to understand because in telematics, you also have a deferred revenue component.

33:53 That also, if you can see, that scales. Right? You can see it's on the balance sheet. So, yeah, so you can see most of this revenue accruing over a period of time. Okay. Cool. Thank you. Yep. Thank you. Participants, kindly raise your hand to ask a question. That was the last question for the day. Thank you again for your time and participation. On behalf of BLACKBUCK LIMITED, this concludes today's conference. For any questions, please feel free to write to us on the email IDs mentioned on the invite. We appreciate your engagement. You may now disconnect your lines.