Great analysis! I also really liked the charts you shared from the analyst presentation. Coincidentally, I delved deep into Reply over the last three weeks too and recently shared my thoughts on the business.
There are a few things I noticed when I was reading annual reports of its competitors (such as Accenture, Cognizant, Infosys, Epam Systems):
- no comprehensive information about their top customers and revenue drivers from specific sectors, which makes it challenging to assess customer concentration
- lack of information about attrition levels, which I believe is very relevant for evaluating the operational performance and health
- no information available about the revenues from Reply's own platform solutions (any recurring revenues ?)
I'd love to hear your thoughts on these points. Thanks!
I can only speak for Reply (not the other companies)
- Top 10 clients are around 30%-35 of revenues, although no one is more than 10%. Top clients by sectors are auto manufacturers (FCA/Stellantis, BMW, Volkgwagen, Daimler) and banks/insurances (Intesa, Generali, Unicredit, BNP, …), followed by telco (Vodafone, Deutsche Telekom)
- Correct: most of these companies only say “hey, we have recurring revenues”, but that’s not the same as software licenses, it’s more “clients are coming back to us asking for more solutions in more countries” (which is true)
When the underlying market is growing nicely, attrition is not a big issue: when it starts maturing and competition increases, then it suddenly matters...
Great analysis! I also really liked the charts you shared from the analyst presentation. Coincidentally, I delved deep into Reply over the last three weeks too and recently shared my thoughts on the business.
There are a few things I noticed when I was reading annual reports of its competitors (such as Accenture, Cognizant, Infosys, Epam Systems):
- no comprehensive information about their top customers and revenue drivers from specific sectors, which makes it challenging to assess customer concentration
- lack of information about attrition levels, which I believe is very relevant for evaluating the operational performance and health
- no information available about the revenues from Reply's own platform solutions (any recurring revenues ?)
I'd love to hear your thoughts on these points. Thanks!
I can only speak for Reply (not the other companies)
- Top 10 clients are around 30%-35 of revenues, although no one is more than 10%. Top clients by sectors are auto manufacturers (FCA/Stellantis, BMW, Volkgwagen, Daimler) and banks/insurances (Intesa, Generali, Unicredit, BNP, …), followed by telco (Vodafone, Deutsche Telekom)
- Correct: most of these companies only say “hey, we have recurring revenues”, but that’s not the same as software licenses, it’s more “clients are coming back to us asking for more solutions in more countries” (which is true)
When the underlying market is growing nicely, attrition is not a big issue: when it starts maturing and competition increases, then it suddenly matters...
Thank you very much for the information!
Why excluding Globant?
As it says in note 10, it's because it seems more a software technology developer than an IT consultant: but it's just my hunch, so I can be wrong