Digital marketing firm LS Digital (formerly Logicserve) demonstrated stable growth with an over three-fold jump in its profit in the fiscal year ending March 2023 as compared to FY22.
LS Digial’s revenue from operations surged 35.1% year-on-year to Rs 696 crore in FY23 from Rs 515 crore in FY22, its consolidated financial statements sourced from the Registrar of Companies (RoC) show.
LS Digital is a martech firm which provides services such as advertising, communication and other marketing tools including SEO, SEM et al. Revenue from marketing services formed 94.8% of the overall operating revenue which increased 42.2% to Rs 660 crore in FY23. The rest of the revenue came from consulting and assessment.
See TheKredible for the detailed revenue breakup.
Expense Breakdown
https://thekredible.com/company/ls-digital/financials
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https://thekredible.com/company/ls-digital/financials
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- Employee benefit
- Advertising promotional
- Legal professional
- Rates and taxes
- Others
For the digital marketing firm, advertising cum promotional cost emerged as the largest cost center, accounting for 83% of the overall expenditure. This cost increased by 25% during FY23.
The firm’s employee benefits, legal-professional, payment gateway, information technology, and other overheads took the overall cost to Rs 669 crore in FY23 from Rs 508 crore in FY22.
Head to TheKredible for the complete breakdown.
The decent growth in scale and effective cost mechanism enabled LS Digital to beef up its profits by 3.36X to Rs 18.4 crore in FY23. Its ROCE and EBITDA margins improved to 20% and 3.2% respectively. On a unit level, it spent Rs 0.96 to earn a rupee in FY23.
The Mumbai-based company has raised Rs 133 crore so far and has diluted very little since incorporation. According to the startup data intelligence platform TheKredible, its founding team holds over 80% of the stake in the company.
In a fiercely competitive market, the digital marketing business served by LS Digital is a direct function of the quality of people, and ability to control costs. Margins are thin, with issues like managing fraud, delivery and longer deal tenures becoming increasingly important. A larger shift to tactical marketing has kept firms on their toes, as unlike traditional print or broadcast advertising, clients do shop around for digital marketing work. Thus, while LS Digital needs to be credited for building scale, it will take a deeper look into its profile to see the share of different clients and the kind of work that brings in the largest share of revenues.
FY22-FY23
| FY22 | FY23 |
| EBITDA Margin | 1% | 3.2% |
| Expense/₹ of Op Revenue | ₹0.99 | ₹0.96 |
| ROCE | 14% | 20% |
A 1,200 strong team offering services across Media, UI/UX, Creative & communication, Data & Insights, CX and Tech & Innovations means a sticky cost structure that is likely to grow, even if not proportionately, with volumes/revenues. Standardized SaaS products in some of these areas, even small, might help the firm build a stronger base for the future.
