TLDR;
This video features an interview with Mr. Apurva, the promoter of Exato Technologies, who shares insights about the company's business model, growth strategy, and future vision. Key points include:
- Exato Technologies specializes in customer experience analytics, providing solutions to B2B clients across various sectors.
- The company is transitioning from one-time revenue models to cloud-based subscription models for long-term contracts and increased profitability.
- Exato is focusing on international expansion to tap into a larger market and achieve higher margins.
Intro and Exato Technologies Overview [0:00]
The video starts with an introduction to Exato Technologies. Mr. Apurva explains that Exato Technologies works in customer experience analytics, helping businesses retain their customers by analyzing interaction data. When a customer calls an enterprise, Exato records the call for quality and compliance purposes. They then analyze this data to provide insights to their B2B customers, such as banks and IT companies, helping them improve service and customer retention. The company operates in a niche but strong sector, estimated to be a $15 billion market globally, and serves about 12 global locations from India, with 8-10 international customers.
Apurva's Professional Journey Before Exato [1:03]
Apurva shares his background, starting from a small town in Bihar where government jobs are highly valued. Despite this, he pursued engineering and an MBA, driven by a passion for innovation. He began his career at a startup focused on mapping before Google Maps existed, where he learned the intricacies of running a startup. He then worked at TCS and Wipro, managing global alliances and product development in customer experience. Later, he joined Nice Systems, an analytics company, where he led partner alliances for South Asia. This experience inspired him to start Exato Technologies in 2016, identifying a gap for a mid-sized company in the analytics space.
Exato's Business Model [5:19]
Apurva explains Exato's business model, which revolves around customer experience analytics. They serve B2B customers across various sectors, including banking, insurance, and travel. When a customer calls an enterprise, Exato records the call for quality and compliance, as mandated by RBI. They analyze this data to provide actionable insights, helping their clients improve customer service, retention, and lifetime value through cross-selling and upselling. Besides software analytics, Exato also provides infrastructure and communication solutions, such as high-end telephony solutions for banks. They leverage the vast amount of data available to provide valuable outputs to their customers, enabling them to serve their customers better.
Client Verticals and the Role of AI [9:17]
Exato serves a wide range of sectors, including banking, insurance, retail, healthcare, telecom, and travel. Clients include MakeMyTrip, WNS BPO, and RBL Bank. Apurva emphasizes the importance of customer experience and the potential of AI to improve it. AI can provide agents with prompts based on past interactions, enabling faster and more accurate responses, leading to happier customers and cost savings for the bank. With the advancement of AI, customer service will become available 24/7, providing instant solutions to customer queries, such as unlocking a credit card in the middle of the night. The market potential in India and globally is significant, with Exato growing at a CAGR of 18-20% and the market expected to reach $30 billion by 2030.
Revenue Recognition Model and Order Book [13:04]
Exato has two revenue models: one-time license and solution costs, and a cloud-based subscription model. Customers are increasingly preferring the subscription model, which provides long-term contracts. Exato's order book has grown from ₹50 CR to ₹515 CR in the past 2-3 years, with ₹165 CR already executed and ₹350 CR yet to be executed. These contracts are non-cancellable, providing a strong market position. Exato has also developed its own IP, such as connecting workforce management solutions with payroll solutions, and a solution to disconnect calls when recording stops for compliance reasons.
R&D Investments and Partnerships [16:00]
Exato partners with global companies to acquire customers and knowledge, allowing them to stay updated with less R&D cost. They work with a leading customer experience company with a $9 billion cap, leveraging their knowledge to develop their own IP in complementary solutions. This model is similar to Hero's partnership with Honda, where they learned and eventually launched their own motorcycles. Exato is a consulting services company that partners with global product companies, providing their products, customizing services, and offering their own IP.
Revenue Growth and Margins [17:37]
While Exato saw a 50-60% topline growth in FY24, growth slowed to around 10% in FY25. This is due to customers shifting from one-time licenses to subscription licenses. Although one-time revenue was significant in FY24, the subscription model is more beneficial in terms of bottom-line growth, with an 80% jump in bottom line. This shift provides stickiness with customers, long-term contracts, and more service opportunities. Margins are expected to improve drastically as Exato expands internationally, focusing on the US and UK markets. The delivery model will remain in India, with a 24/7 delivery center. The target is to exceed the industry CAGR of 18-20% in both revenue and margin.
Payment Cycle and Vision for the Future [21:22]
Exato's payment cycle is typically 75 to 90 days due to the cloud instance setup time. Some receivables are outstanding due to milestone-based payments, but these are expected to be received, with most payments already received in H1. The company aims to grow much higher than the market CAGR by expanding its global footprint. The current order book is close to ₹515 CR, with ₹165 CR serviced and ₹350 CR to be serviced in the next 3 years. The vision is to address a significant chunk of the global total addressable market, which is a couple of billion dollars.
Final Message and the Story Behind "Exactto" [25:01]
Apurva expresses excitement about the journey ahead and looks forward to scaling the company to the next level through more partnerships. He highlights Exato's advanced capabilities, strong client base, and the potential for growth in the international market, which is much larger than the Indian market. The name "Exactto" comes from a Spanish/Portuguese word meaning "to the point," reflecting the company's target focus and aggressive approach. Exato aims to combine a consulting approach like McKinsey with a strong service skill set like TCS to solve customer problems effectively.
