Tracxn posts flat scale in FY24; profit declines 80%

Data and research platform Tracxn demonstrated a flat scale with a mere 5.9% increase in its revenue during the fiscal year ending March 2024. Moreover, the profits for the 12-year-old firm dwindled by 80% in the same period.

Tracxn’s revenue from operations grew 5.9% to Rs 82.7 crore in FY24 from Rs 78.1 crore in FY23, its annual financial statements disclosed in the stock exchange filing show.

On a sequential basis, the company posted a 3.9% decrease in revenue to Rs 20.31 crore in Q4 FY24 from Rs 21.14 crore in Q3 FY24.

The income from the sale of subscriptions to access the data and software was the sole source of revenue for Tracxn in FY24. The company added Rs 4.3 crore from non-operating sources tallying the total revenue to Rs 87 crore in the last fiscal year.

Importantly, Tracxn’s 70% of the collections came from outside India. It has a major presence in the international markets including America, APAC (excl. India), Singapore, the UK, Germany, and others.

In line with other internet companies, its employee benefits formed 88.3% of the overall expenditure. This cost increased by 3.39% to Rs 69.25 crore in FY24 from Rs 66.98 crore in FY23.

Its legal, traveling, advertising, depreciation, information technology, and other overheads took the overall cost up by 3.5% to Rs 78.4 crore in FY24 from Rs 75.7 crore in FY23.

The flat scale and arrangement of deferred tax expenses (explained in the following paragraph) during FY23 led to an 80% decrease in its profits to Rs 6.5 crore in FY24 from Rs 33.1 crore in FY23.

Note: During the quarter that ended March 2023, the management recognized deferred tax assets on carry-forward business losses based on the availability of future taxable profits. This deferred tax helped Tracxn register Rs 33.1 crore profits in FY23. If we ignore the same, the profit would be Rs 9.94 crore in FY23.

On a unit level, it spent Rs 0.94 to earn a rupee in FY23. On Monday, Tracxn’s shares closed at nearly Rs 94 with a total market cap of Rs 982 crore. Backed by the likes of Peak XV, Accel and Elevation Capital, Tracxn listed on the Indian stock exchange in October 2022. 

While the market cap might look like a stretch, the market usually expects margins to improve significantly in such knowledge-based businesses. Plus, a high international presence will also provide hope to investors that big wins are possible. On the other hand, despite the low margins, competition for the right people is tough in the business, which will always be a drag on margins expansion. All In all, with its significant scale and global spread, Tracxn needs to find a cheaper way to sell, or newer segments to target.