Management Discussion and Analysis
Cautionary statement Certain statements in this release concerning our future growth prospects are forward-looking statements, which involve several risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to risks and uncertainties regarding fluctuations in earnings, our ability to manage growth, intense competition in IT business, including those factors, that may affect our cost advantage, wage increases in India, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on immigration, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks,
Continue to build engines of scale We continue to enhance our internal organizational systems and processes (which we define as “engines of scale”) to support our growth plans. We plan to invest in scalable and sustainable systems and processes, strengthen our cybersecurity infrastructure, expand our incubator and start-up ecosystem and invest in our integration processes. We are building sustainable processes for a seamless working experience at Fractal for all our stakeholders. For our clients, we strive to have well-defined processes which make it easy for them to do business with us. As we continue to selectively pursue acquisitions to enhance our existing capabilities and build new capabilities, we target to further strengthen our M&A integration engine. We have distilled our learnings based on our previous acquisitions to define integration principles that we expect will continue to guide us in future acquisitions. Our dedicated integration team works with the founders and executive teams of the target to prepare them for the acquisition and structure the organisation and various processes to accelerate synergies and enable a successful integration. We intend to continue developing our integration engine with each acquisition to enable seamless integration into Fractal. As part of our goal of building our company for the long term, we wish to evolve into a responsible global citizen. We have reported our GHG emissions on the CDP portal 3 years in a row and have obtained a B Score for the FY 2022-2023. Financial review FY 2024 has witnessed 11% revenue growth and EBITDA growth of 139% and 12 pts increase YoY. Fractal.ai contributed to majority of the growth with scaled client relationships and large deals contribution. We have sustained a superior Net Promoter Score in FY 2024 which is a key testimony to our client success. We expanded our offerings with significant pace in Generative AI driven solutions for varied use cases. We launched products like Marshall Bot and Kalaido which have captured the success of our research in FY 2024 and we continue to strive for more advanced applications and solutions.
our ability to complete and integrate potential acquisitions, liability for damages on our service contracts, withdrawal of Governmental fiscal incentives, political instability, and unauthorized use of our intellectual property and general economic conditions affecting our industry. Fractal.AI, from time to time, makes additional written and oral forward-looking statements, including statements contained in our reports to shareholders. The Company does not undertake to update any forward-looking statement that may be made from time to time by or on behalf of the Company.
C in Million Total (Group)
Fractal Alpha
Intersegment elimination
Year
Fractal.ai
FY 2024 FY 2023
21,615 365 19,691 190
(17) (27)
21,963 19,854
Fractal Group revenue is driven by two segments: Fractal.ai (AI solutions) and Fractal Alpha (AI businesses). Majority of the revenue is driven by Fractal.ai and has growth at 10% YoY. Fractal Alpha has grown at 92% YoY growth leading to overall growth of 11% for Fractal Group.
C in Million
Geography
FY 2024 FY 2023 FY 2024 % FY 2023 %
America
13,339
14,323
67% 17% 15%
65% 19% 16%
APAC & Others Europe & UK
3,467 3,048
4,209 3,431
Revenue
19,854
21,963 100% 100%
Geographical revenue basis location of the customer with majority from America with 67% of the revenue in FY 2024 vs 65% revenue in FY 2023.
₹ in Million
Year
FY 2024 21,963
FY 2023 Growth (%)
Revenue EBITDA
19,854 (1,884)
11%
734
139% -128%
PAT
(547)
1,944
In FY 2024, the company initiated a margin expansion program encompassing pricing, operational efficiencies, engines of scales and restructuring of products businesses. In terms of operating expenses, majority is driven by employee benefit expense growing in conjunction with overall headcount increase in the company. Other expenses have grown at a slower pace than revenue yielding operating leverage and thereby margin expansion. Refer to the Standalone and Consolidated financial statements in this Annual Report for detailed schedules and notes. Risk management We aim to foster a culture of effective risk management by encouraging appropriate and monitored risk-taking to achieve our strategic priorities. We analyse internal and external factors that could impact our operations, finances, reputation, and other areas of the business. The goal of our risk management policies is to develop strategies. It plans to mitigate or avoid risks and to ensure that the company can continue to operate effectively and achieve its goals, even in the face of uncertainty or adverse events.
C in Million
Year
FY 2024 FY 2023 Growth (%)
Revenue
21,963
19,854
11%
The revenue increase was primarily on account of growth in existing clients’ revenue. Owing to slow industry growth in first half of the year, growth momentum is majorly contributed from second half of the year.
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Fractal Analytics Limited | Annual Report 2023-24
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