Over the years, Tracxn Technologies’ growth has largely been on the back of customer addition but your average revenue per customer has remained stagnant. What is the plan to grow from there?
That is correct. We have grown our user base at a fairly good pace, I would say at nearly 30% across the last three years. What happens is typically a lot of the incoming customers basically start small and the other initiative that we also do is work with the existing customers to grow them over time. That is one of the benefits of having subscription revenue. A lot of your revenue in any year is from the customers that you have already acquired in the previous years.
So I would say it is a mix of both and that a lot of the incoming customers basically start small and then we also have a team that works with the existing customers to increase the penetration over time.
We want to hear about the high attrition rate. It is not specific to you, it is across the board but if you were to look at the IT enabled sector, there are already double digit attrition levels. What are you doing to curb all of this?
Like most other companies, this is one of the things that one has to build over time. One of the contributing factors is that we hire a lot of freshers or people just one or two years out of college. Typically, attrition is a little bit higher in those segments.
In our company, one of the things that has really worked is tha Having said that, it is one thing that every company has to improve across the years.
You managed to report some profits in Q1 FY23 on account of the operating leverage. How should an investor look at your profitability from here on?Is it going to be a consistent uptrend?
While building a global data platform like ours, one has to do a lot of initial investment and that is why we had raised Rs 113 crores in private markets from various investors, angel investors across the years. If you look at our initial five to six years, most of our team was in the technology product data building functions because one has to invest a lot in building global data across the different countries. Once you are able to do so, you can leverage a lot in the platform that has already been built.
For instance, in the last 12 months, most of our headcount addition has been in the sales and marketing engines. A couple of the things that the investors actually have found very interesting in our business is that across the years, we have had a continuous EBITDA expansion.
So across three years, our revenue has increased by 30% while the cost has increased by only 4% and that is why we could see margin expansion that has happened very consistently across the last three years.
Even if you look at this quarter versus last quarter, there is an EBITDA expansion of more than 8% on a year-on-year basis. The other thing is increasing free cash flow. In addition to being bottom line positive, we do prepaid billing and so we do cash invoicing upfront for the entire subscription period and that is why our cash flows actually move ahead of the revenues and that is why last year we generated Rs 5 crore positive free cash flow if we exclude the IPO expense which is reimbursable to the company and which is increased to a run rate of Rs 5.9 crore within the first quarter.
That is the other interesting thing and people have found it very interesting that we generate free cash flow and that has been also increasing across the years.