Tracxn Technologies - Riding On Operating Leverage Ahead: Systematix

BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Systematix Research Report.Tracxn Technologies Ltd. is one of the leading companies that provides market intelligence data of private companies globally and is among the top five players in terms of number of companies profiled that offer private market data across sectors and geographies. The company was founded by Ms. Neha Singh and Mr. Abhishek Goyal in 2012. While some of its angel investors include Mr. Ratan Tata, Mr. Sachin Bansal and Mr Binny Bansal, NRJN family (Nandan Nilekani), Accel, Elevation, Sequoia, etc., are venture capital investors in the company. Tracxn platform has 1,236 customer accounts and 3,467 users. The company generated Rs 781 million revenue from operations in FY23 and is a 100% subscription based model. Its platform is used by its clients to source deals, identify mergers and acquisition targets, conduct due diligence, and track emerging themes, etc. It has an international revenue share of 68%..Investment RationaleScalable and secure technology platform conceptualised and developed in house. Tracxn’s platform is based on a combination of technology and human analysts that can process vast amounts of data. The platform conceptualised and developed in house, is scalable, reliable and flexible in launching new features. The platform has been designed and built primarily using new-age technologies for hosting on-cloud infrastructure. The platform has over one million curated entity profiles mapped to over 49,000 different business models, searchable in near real-time through a set of search tools built in-house using an open search engine and analytics solution..Huge cost advantages from India India-based operations Tracxn’s ability to develop and deploy the platform in India renders them with significant cost advantages compared to those having majority of their staff based out of North America or Europe. This is primarily because the remuneration of employees in India is almost 1/10th that of the countries mentioned above, which enables Tracxn to incur minimal cost to scale and launch additional services..Growth strategy Private equity firms, venture capital firms and investment banking companies are the biggest consumers of private market data services. Funding arms of M&A subsidiaries of large corporates too are the next biggest users of private market data services. The company intends to capitalise on these opportunities and serve the growing market by constantly expanding its customer base and the revenue share amongst existing customers. It is looking to tie up with educational institutions as a part of its growth initiatives..Financials: The company sees an increase in its user base as a key growth driver, also anticipating a moderate price increase (typically, annual price per user is Rs 2.5 lakh and the same per account is around Rs 6.5 lakh). Management expects ~25% revenue growth to be sustainable in the near foreseeable future, largely to be driven by increasing users/account. Given the limited costs required to serve incremental customers, there exist operating leverage opportunities as well. About 84% and 77% of FY21 and FY22 incremental revenues have trickled into the Ebitda, although FY23 was an exception year, when incremental Ebitda margin was only 31% due increase in headcounts for various growth initiatives. Tracxn believes these investments are now behind, and hence expects sustainable incremental Ebitda margin to be in 45-50% range in the foreseeable future, which would help in strong Ebitda margin expansion and consequently profitability. We expect operating cash flow to increase on profitability improvement and free cash flow too to rise incrementally on minimal capex requirements..Valuation and view The company does not have a comparable listed peer, while few unlisted peers include Pitchbook, Crunchbase, CBInsights and Bloomberg. On trailing twelve months basis, the stock is trading at 9.5 times midcap to sales..Click on the attachment to read the full report:.SBI Life Appoints Amit Jhingran As MD And CEO From Oct. 1.DISCLAIMERThis report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Tracxn Technologies - Riding On Operating Leverage Ahead: Systematix

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