CE Info Systems Ltd

NSE:MAPMYINDIA

Earnings Call Analysis

Strong Start for MapmyIndia in FY '25 with 13.5% Revenue Growth

MapmyIndia began FY '25 on a strong note, with a 13.5% increase in revenue to INR 101 crore. EBITDA grew by 14.3%, reaching INR 42.8 crore, while profit after tax rose by 12% to almost INR 36 crore. The Map-led business notably contributed INR 78 crore, and the IoT-led business added INR 23.5 crore, despite a recent dip in hardware sales. The company remains on track to achieve its long-term milestone of INR 1,000 crore by FY '27/'28, buoyed by new contracts and a robust INR 1,300 crore open order book. Management is confident in meeting their ambitious growth targets despite quarterly variations.

Robust Financial Growth Indicators

In Q1 FY '25, C.E. Info Systems, also known as MapmyIndia, reported a 13.5% growth in revenue, reaching INR 101 crores. The EBITDA disclosed a rise of 14.3%, amounting to INR 42.8 crores, with a profit after tax (PAT) increase of 12%, progressing from INR 32 crores to INR 36 crores compared to the same quarter last year. Such growth metrics signal a positive trajectory for the company, suggesting effective operational strategies and market positioning.

Revenue Breakdown: Mapping vs. IoT

The revenue sources are split primarily into Map-led and IoT-led segments. Of the total revenue, INR 78 crores originated from the Map-led business, while INR 23.5 crores were generated from IoT services. Notably, hardware sales decreased from INR 15.1 crores in Q1 FY '24 to just INR 8.9 crores this quarter. However, this decline was offset by a rise in service sales, which grew from INR 7.7 crores last year to INR 14.6 crores this quarter, illustrating a strategic pivot towards higher-margin service offerings.

Navigating Hardware Sales Challenges

The drop in hardware sales was attributed to limited funds impacting their IoT arm, Gkopi. However, with the recent shareholder approvals improving the financial position, MapmyIndia anticipates a recovery in hardware sales moving forward. This adaptability indicates management's responsiveness to operational challenges, a crucial aspect for potential investors to consider.

Strong Performance in Software and SaaS Growth

The software segment displayed a robust performance with a growth of approximately 16% in SaaS revenue. This increase showcases the company's shift towards recurring revenue models, enhancing profitability. The health of the SaaS part of the IoT business reflects a growing installed base, which will drive future revenue expansion and greater margins for the company.

Automotive Sector Developments and Contracts

MapmyIndia captured significant automotive contracts, including collaborations with leading electric commercial OEMs and utility vehicle manufacturers. These contracts are expected to drive future revenue as they ramp up usage of MapmyIndia’s innovative automotive solutions. Furthermore, the new Hyundai agreement, valued at over INR 400 crores, promises substantial revenue in future quarters as the rollout gathers traction.

Long-term Growth and Strategic Roadmap

With an existing open order book of INR 1,300 crores, MapmyIndia is confident in achieving its revenue target of INR 1,000 crores by FY '27-'28, implying a growth rate of 30-40%. The company's focus on maintaining its growth trajectory underscores its plans for continued innovation and market penetration, particularly in the IoT and automotive domains.

Investment in R&D and Customer Engagement

MapmyIndia expressed its commitment to high-margin segments through continuous investment in product innovation and marketing efforts. These initiatives are aimed at strengthening brand presence and unlocking additional growth potential in both domestic and international markets. Such strategies can appeal to investors looking for growth-oriented companies with robust research and development capabilities.

Addressing Competition and Market Position

Despite the competitive landscape with new entrants in the mapping sector, management reassured stakeholders of its premium market positioning and customer loyalty. By adapting swiftly to market changes and maintaining high-quality service offerings, MapmyIndia aims to capture market share while mitigating risks from aggressive pricing strategies by competitors like Google.

Future Outlook and Conclusion

Looking forward, MapmyIndia is poised for growth bolstered by strong fundamentals, strategic partnerships, and a commitment to innovation. The management's outlook remains optimistic, viewing FY '25 as a pivotal year for executing its long-term strategic goals. As potential investors consider MapmyIndia, the combination of its strong revenue growth, effective management strategies, and expansive market potential presents a compelling investment opportunity.

Earnings Call Transcript 2025-Q1

[Operator]

Ladies and gentlemen, good day, and welcome to the C.E. Info Systems, MapmyIndia, Q1 FY '25 Earnings Conference Call hosted by Anand Rathi Shares and Stock Brokers. [Operator Instructions] I now hand the conference over to Mr. Shobit Singhal from Anand Rathi Shares and Stock Brokers. Thank you, and over to you, sir.

[Shobit Singhal, analyst]

Thank you, Steve. Good morning, everyone. On behalf of Anand Rathi Shares Institution Equities, we welcome you all to Q1 FY '25 conference call of C.E. Info Systems, MapmyIndia. We have with us today Mr. Rakesh Verma, Co-Founder and Chairman of the company; Mr. Rohan Verma, CEO and Executive Director of the company; Mr. Anuj Jain, CFO; and Saurabh Somani, Company Secretary.

I will now hand over the call to Mr. Rakesh Verma for his opening remarks [indiscernible] we will open the floor for Q&A session. Thank you, and over to you, sir.

[Rakesh Verma, executive]

Thank you, Shobit and I'm Rakesh Verma. Good morning to everybody. The company has shown growth across all the financial metrics, revenue, EBITDA or PAT. It has been a good start for the fiscal year '25. The revenue grew at 13.5% to INR 101 crore. The EBITDA has grown 14.3%, INR 42.8 crore margin and the profit after tax, PAT, has also grown 12% from INR 32 crores to almost INR 36 crores.

If I give the business-wise breakup between Map-led and IoT-led, the total out of total revenue of INR 101 crores, INR 78 crores was contributed by Map-led business and INR 23.5 crores was contributed by IoT-led business.

The sale of hardware, specifically I wanted to address, that out of INR 8.9 crores of sale of hardware, this number shows less than FY '24 Q1 of INR 15.1 crores. Now this reduction in the sale of hardware was compensated by the sale of services, which grew from INR 7.7 crores in FY '24 Q1 to INR 14.6 crores. This was by some strategic design on one side. And the second also, the nonavailability of funds to [ Gkopi ], which is our IoT arm, and that has been solved with the approval from shareholders on the 9th of this month. So we'll see now again, the rise of hardware sales as the time goes wise.

EBITDA -- if you look at it, the EBITDA has gone -- for Map-led business has gone up INR 36 crores to INR 39 crores year-on-year and from INR 1.4 crores to [ INR 3.7 crores ] for the IoT-led business on a year-on-year, which translates into 50% margin for the Map-led business and 15.7% EBITDA margin for IoT-led business.

Now the profit and loss statement that has been shared with all the shareholders in the stock exchange, 1 or 2 small detailed analysis or explanation I would like to give so that you can understand it better. There's a expense area of what is called technical services outsourced, and that has gone up to INR 11 crores in this quarter, as is it was -- out of that INR 11 crores of technical outsourcing services primarily, these services costs were incurred to support the revenue which you find in sale of software of INR 92 crores. So other than that, the rest of the expenses are pretty much in [ line ] with what was [ informed ] and what was in Q1.

Now with this little financial details, I'll ask Rohan to share with you his thoughts and explanations on the various other financial and nonfinancial part of the business.

[Rohan Verma, executive]

Good morning, everybody, and thanks, Mr. Verma. As Mr. Verma said, we got off to a good start in the quarter. A&M revenue grew 9.5% and C&E revenue grew 16.9%. Basically, new customer acquisition was good across -- in terms of upselling, cross-selling, new use cases. I think all of those, we've seen good kind of progress on.

When it comes to automotive, it's been interesting. We won a leading electric commercial OEM as well as a utility -- large utility vehicle OEM. And also, bunch of interesting key go-lives across ICE and EV, whether it's for XUV3XO or the BYD -- and in the 2-wheeler segment, electric scooters like Mappls -- next or the -- M77 premium electric bike.

Similarly, kind of an advanced E-Horizon, ADAS and advanced EV software, basically, which tells about the road ahead to support autonomy functions like intelligent assist or highway assist as well as for giving range prediction to consumers. Those have started to see the adoption. And so premiumization of vehicles that is happening, EV or ADAS is seeing increased adoption of our [indiscernible].

Similarly, on the fleet side, whether it's monitoring of mine vehicles or large metals or video telematics for employee transportation, all kind of schools are deploying our solutions. All of that is seeing growth.

And on the C&E side, growth has been 16.9% and very, very interesting use cases with flood modeling as well as water management in East Indian cities. This involves 3D digital mapping, which we are doing as well as go-lives include, for example, the Tile 112 project a few people lease as well as a prestigious Indian Army Defense project, which leverage our capabilities. But also on the corporate world, there's e-commerce, QSR, delivery and mobility companies which are using our APIs for various use cases, like -- personalization or the desk capture. And also, in the -- and retail sectors, multiple companies are using us for analysis like credit assessment or store-wise sales, sales and analytics for business expansion, et cetera. So I mean, that kind of -- that bodes well.

Like we started the year with a INR 1,300 crore open order book. We are well on track to achieve our milestone that we've set for FY '27, FY '28 of INR 1,000 crores and more or more adoption of our solutions as well as innovation we're doing in the product set us up well.

We also added in this last quarter the offering for AI-driven data analytics and consulting for the company. And that gives us more kind of wallet share, closer access and closer engagement with customers and gives us more reason why customers will work with us.

I also want to address besides the regular business update, something that has come up in the last few weeks. We've tried to stay quiet about it, not making public statements, not responding to media inquiries because it's a matter we're pursuing legally. But post the quarter results, as part of our quarterly media interactions, we were asked -- about it, so we had to address it. This is to do with a legal notice that we have served to [ Ola Electric ] for breach of terms and conditions of our contract.

Just for context for you all, as you know, MapmyIndia has been building digital maps and pioneered this space and building it from the ground up since 1995 servicing many, many customers. In 2015, Ola AI technologies are licensed and got access to our map data and in -- which they continue to use. And in 2021, Ola Electric licensed our APS and SDKs, or software development kits and application programming interfaces for their navigation in the vehicles and continue to use us. So for -- because we have seen certain breaches of terms and conditions, we have started the process -- or legal process. I'm not going to comment further on that, just to say that we are there to defend the rights of our company and our shareholders.

And separately, also, let me just print because there's been a lot of noise in the marketplace around competition that is coming up, whether -- Maps has been talking about things from the product point of view or from the pricing point of view as well as Google Maps has also been making statements around pricing. Two points I want to make.

MapmyIndia is the premium provider in the country, offering the best value to customers. And so we are pretty confident about our market position and these different dynamics that are at play, actually, we don't see a risk to our business. We only see kind of with more noise and more awareness, more adoption happening. And we are -- we believe we will be the winner -- disproportionate winner in the market that gets added on due to all this activity.

Just mapping is a very difficult business. It's a very serious business. It requires long term expertise, investment, time, capital and a track record of servicing customers across industry verticals for use cases that stress test the map in different ways for its accuracy and usability. And only that creates a map that customers would like to choose. There have been hundreds, if not thousands of companies globally that have tried to get into mapping. In India itself, there have been tens, if not hundreds of companies. We faced competition for the last 20, 30 years. But in the world, you can count on your fingertips, 4, 6, 8 companies that have sustained and succeeded. And India, it is us. So we are there from an accuracy and quality point of view.

And also, we are not just standing still. We are innovating not just on the 2D side, but 3D high-definition, updation, near year time. So 4D so many features, so many different solutions. We are not a single product company. We're a multi-product, multi-industry company where our maps are being used across the board, and we have solutions on top of it. So we are pretty confident on our competitive positioning.

When it comes to pricing, we actually price based on value for customers in mutual agreement, and we do see an impact of this pricing that, at least the foreign player on it because in any way were price conscious. And if you look at kind of the history of other players, sometimes giving it free, sometimes charging, sometimes charging a lot, sometimes reducing. We've been fairly predictable, reliable and value-based for our customers. And in our conversations, this is not something where we are overtly concerned, but we are deeply engaged with customers. We are also increasing awareness about our products and solutions because the more that people know about our solutions, we feel that, that will give us more market.

So I'll conclude my remarks with that.

[Rakesh Verma, executive]

Thank you, Rohan. I guess -- so Shobit will take over from me now.

[Operator]

[Operator Instructions] The first question is from the line of Shobit Singhal from Anand Rathi Shares and Stock Brokers.

[Shobit Singhal, analyst]

Sir, I have two questions. So first one is, sir, with the government focus on -- mapping. So -- maps target of having georeferencing of around 6.5 lakh -- of which around 3 lakh Indian -- have been done. So are we part of it and how to look at revenue [indiscernible]?

[Rohan Verma, executive]

Sure. Shobit, this is Rohan here. Yes, land sectors and cadastral mass this is something the government in general over the last 10-plus years has been focused on. There's both a rural angle and an urban angle to this. And we've been participating in it. This is part of our addressable market. We are quite well positioned for this year. We are able to do the mapping of land records, not just 2D but also now 3D with our drone-based -- capabilities. We are also able to offer software solutions on top of that through our geos platform, whether for property tax management systems so that municipalities can earn property tax based on land records, all through our geospatial platform to help in urban or rural planning as well as linking to this [ Alpin ], which they're calling the unique land cluster identification numbers, what we call is Mappls Print, which is a unique digital address for every place.

And so we can link the two [ Alpine ] and Mappls Pin so that anybody can get their land parcel can be uniquely identified and services can be delivered to them, not just the location information. And so there are very interesting ways in which we are deeply involved when it comes to a mapping or software or other solutions in this. And so we are happy the government has put an impetus on us. It will aid in our addressable market and our growth in the time to come.

[Shobit Singhal, analyst]

Okay. And sir, my second question is in -- So hardware so around 42% year-on-year decline in revenue and around 60% Q-on-Q. So why -- alignment? Are we taking any challenges here? And typically, what is the gestation period for said income to flow once the hardware is sold?

[Rakesh Verma, executive]

So I don't know if I understood your question very well, but let me try. And if I -- if you think that you didn't get the answer, you can ask me again. See, IoT, we are pretty bullish and it's going on the very nice track. And like the away from INR 8 crores to INR 50 crores to INR 100-plus crores growth you have seen in the last 3 years since we got serious into the IoT business.

This is also -- I'm pretty confident that we'll have a pretty good growth in the IoT business. You look at the Q1, I think I tried to answer that right in the beginning that one was lack of funds with [ the trophy ], which we need to get approval from in our shareholders, which we have gotten approval now. So going forward, you will not see that as a reason for not having the growth. Growth will be there.

But the good thing also, if you look at the SaaS part of the IoT business, it has shown very good results. I think it's almost like 16%, something like that. 90% growth in the SaaS business of IoT.

[Operator]

The next question is from the line of Chandramouli Muthiah from Goldman Sachs.

[Chandramouli Muthiah, analyst]

My first question is just a follow-up on the IoT business. Thanks for your earlier comments on that. So just trying to understand the interplay between the software part, the IoT business and the hardware part of the IoT business. You think that the hardware part is sort of an installed base on which the software bit can be annualized potential revenue there? This quarter, we've seen a meaningful pickup in software part of the business, which I'm guessing is slightly higher margin. So just trying to understand how interplay between sort of hardware installed base and software annualized revenue should ideally work in your plans going forward?

[Rohan Verma, executive]

Thanks, Chandra, for the question. This is Rohan here -- SaaS is definitely a higher margin. And as you said, hardware -- we treat hardware as an installed base. So when we install hardware, then that customer takes the SaaS from us going forward. So it generates those SaaS annuities. So the more our installed base, the more our SaaS revenue will grow.

Sometimes, actually, this kind of quarter pause or quarter reduction in hardware just kind of shows you the strength of the SaaS business also of the IoT with a meaningful pickup in SaaS income and enhance margin. But there's such a large addressable market out there, and we have such great hardware, and we're going deep into the design and engineering of these hardware also so that we can make really specialized solutions or appropriate solutions for the different segments of the Indian market, whether it's in the auto OEM side, where a line fit, for example, we had talked about last year, or whether it is in the aftermarket for various sectors, there so many sectors where IoT can be useful, energy, logistics, mobility, consumer gadget.

So there's a huge headroom. We're very excited. Key this quarter as a one-off when it comes to hardware. We are very focused on growth of the IoT business and they both kind of support each other last areas will keep happening. And then as hardware base grows, that further gets the filing.

[Chandramouli Muthiah, analyst]

Got it. That's helpful. My second question is just on the INR 1,000 crore target that you've set for yourselves in FY '27, '28, that would imply sort of mid-30s to maybe 40% realized top line growth. Just looking through your financials over the past 3 years, it looks like 1 out of 4 quarters, sometimes because it's a B2B business, might be a little slower versus that run rate. So just trying to understand in FY '25, how to think about that slight lumpiness in the business. Is this sort of the one-off quarter that you foresee in your business planning for FY '25? And do you see the balance 3 quarters as being on track with 35% to 40% growth rate that you've set out there?

[Rohan Verma, executive]

Chandra, you're right. Like if you look at -- I mean, let me answer it in nuance really. So if you look -- our revenue is predictable based on our open order book, right? And so you've seen over the last few years, the track record of our open order book and new order bookings, that has grown significantly. I mean it was INR 1,300 crores at the beginning of this year. It was INR 900 crores, if I'm not wrong, the year before. And the year before, I think it was INR 700 crores, INR 629 crores. So -- and that will all add up revenue in the coming time. So that's what makes us fully very confident, fully confident of achieving our revenue milestone of INR 1,000 crores by FY '27, FY '28.

In our business, this is an annual business, as we've explained before, yes, there'll be lumpiness. So quarter-on-quarter movement can vary from here and there. We are not concerned overly about it because we know if something doesn't work out in our quarter, it will work out in the coming quarters. So in that sense, I just want to give that -- I mean, reiterate that we are confident about our revenue milestone and the business is building up in that division very nicely.

[Chandramouli Muthiah, analyst]

Got it. That's helpful. And my last question is around the Hyundai contract that you've discussed over the past couple of quarters. I think there was some commentary in the investor presentation for this quarter that there was a ramp down in some of the older contracts. So just trying to understand, is the ramp down related to some of the older Hyundai business ahead of the pickup? And when exactly would you say the new Hyundai contract, I think the INR 400-plus crores that you mentioned over a period of time, when exactly is that flowing through into your business plan?

[Rohan Verma, executive]

Yes, Chandra, you're right. We -- this ramp down was in fact with the old program of Hyundai, Kia, and the ramp up has actually begun. If you notice, all Hyundai, Kia cars on the road currently, in fact, actually have already switched MapmyIndia on, which was on the road. And even their companion app now has MapmyIndia. So we are very excited and grateful to Hyundai.

It's the most -- one of -- if not the most, one of the most advanced automotive players when it comes to technology and they're fully leaning into all the advanced tech for what we call -- case for the next generation. And we have a very close and strong relationship with them. So Q2 ramp-up of the next generation has begun. And over the course of time, this fairly lucrative contract for us will unfold in terms of revenue.

[Operator]

The next question is from the line of [ Ike Naredi ] from Naredi Investments.

[Unknown Analyst]

So my -- like my -- the basic question is on business. So on our Map-led business. So like I question -- my first question is why your maps are not updated with current geographical changes? Like I think it's 6, 7 months old, I think, and to talk about the geographical change.

And my second question is your maps not work through Apple Car Play or Android Auto? Can you please guide me with this?

[Rohan Verma, executive]

Sure. I mean if you look -- if you use Mappls App, it actually fully works with Apple Car Play and Google Android Auto. Maybe we can take it offline to discuss what specific issues they are facing. A fair number of consumers are using our Car Play and Android Auto compatible Mappls App and quite liking it.

And again, on the map update point, actually, we have the most kind of agile way of updating our maps, we call it Real Time. So when the new bridge opens or a new road opens up or a new place is inaugurated, it is first on Mappls App. Of course, India is a very vast country. So there could be places here and there, for sure, which are not updated. But the moment we get to know, and we are continuously proactively tracking through all sorts of methods, automated and semi-automated based on our customers' usage and our consumer usage, our own teams data acquisition pipeline, surveys, et cetera, we are able to kind of ingest -- I mean, first validate then ingest and then publish immediately.

So any specific kind of map feedback if you have or if it's related to some specific cars, which was an old cars of an OEM, which they have Internet, the earlier generations, those may be the reasons why you might be seeing old geography -- But otherwise, if you're using Mappls App, I mean -- or our connected automotive solutions that are coming to market or our APIs, you can -- I mean, the most frequent map of this.

[Unknown Analyst]

Okay. Okay. And my last question is like, if you talk about the -- maps and Google Maps all things. Do you think is there any pricing pressure on us or in future or maybe like if we talk about -- is it easy to switch customers the companies like Ola Maps or Google Maps? Can you please comment on this? Is it easy to switch?

[Rohan Verma, executive]

Yes. I kind of in my opening remarks, talked about it. See, one side, if a product is really, really bad, the product option for customers, then regardless of the price customer not going to take it, right? So that -- one kind of competitor.

And the second part is we've been dealing with competition for so long. And competition has been pretty arbitrate with pricing whereas we've kind of stuck close to the customer and price based on what value we give to the customer, and it's been of mutual agreement. So obviously, the response on pricing for the foreign company, not to a new entrant who just came a month ago. I don't think big tech companies are that agile. It's obviously a response to us. And yet it's not -- it probably doesn't go enough, but that's the best that they could do.

And I think we are fairly close to our customers. They are fairly confident and happy to continue working with us. And I think these things show -- these pricing activities show a little bit the hand that others believe their products are not actually strong enough that they have to use such drastic pricing as a lever.

And the second part is how easy is it to switch, it's not that easy, to be honest, depending on how deeply integrated the solution is in a use case. And so MapmyIndia tends to work with fairly large end prices or large tech companies who actually have the ability to pay meaningful amounts of money. And the solutions are deeply integrated. This also means, of course, where as a new customer acquisition mode. We also have to work hard to migrate customers from another map to ours, and that's kind of a B2B enterprise life cycle journey.

So is there an immediate threat or even a medium-term, long-term threat to our existing customer base? No. And based on our value of our product and the pricing and gold value proposition, do we see us getting a meaningful share out of the growth in the market? Answer is yes.

[Operator]

The next question is from the line of Moez Chandani from AMBIT Capital.

[Moez Chandani, analyst]

My question was more on the partnership that we had with [ Clarity X ]. So just wanted to see, has there been any incremental revenues coming in from this partnership already? And also, how do the revenue and profitability sharing agreements work in this partnership?

[Rakesh Verma, executive]

I think Rohan talked about MapmyIndia is keen to develop its AI-based data analytics and consulting business. Now you brought Clarity X into the picture the idea of Clarity X is to provide that kind of activity so that MapmyIndia's business grows. That's the fundamental relationship between MapmyIndia and Clarity X. So the revenue is accrued totally to MapmyIndia and the profits accordingly.

[Moez Chandani, analyst]

Okay. So all the revenue is accrued directly to MapmyIndia business?

[Rakesh Verma, executive]

Yes.

[Moez Chandani, analyst]

All right. Understood. And secondly, on some of the new initiatives that we've talked about earlier, international markets, drones as well as consumers, any update in terms of growth there or any incremental revenue contribution or new projects that we've seen here?

[Rakesh Verma, executive]

On international, actually, things are building up quite well. We say that in the next couple of quarters, you'll hear some serious announcements from us. So -- I mean, I would say stay tuned for that. It's very interesting. We are quite bullish on international. I think we are quite well positioned.

On drones, yes, things are very -- going quite well. More and more of our solutions, whether for government or for infrastructure clients, warehousing clients, so public sector, private sector, this whole 3D digital twin mapping is picking up at the fact that we are full stacked drone solution providers. But even going deeper into design engineering when it comes to drones. So besides the fact that obviously, we have a geospatial platform called NGIS, fully in 3D, our 3D maps other kind of abilities or IoT. So it does -- it is building up well.

Of course, it's the third pillar of our business. It's coming up soon. And so just the way you've seen IoT grow, we are quite bullish about how the drone-based business will grow in the time to come.

And finally, on consumers, you are seeing consumer adoption just increasing rapidly, whether from Mappls App or Mappls Gadgets. And there's a whole host of kind of announcements of product enhancements that we'll be talking about it. And so yes, these are what we see things that we are doing for the various long-term. We're working hard -- and enjoying it, making good things, innovative things, unique things, valuable things for customers and users.

[Operator]

The next question is from the line of Anmol Garg from DAM.

[Anmol Garg, analyst]

A couple of questions. Firstly, on the last 2 quarters, we are seeing increase in the technical services outsourced cost. If you can indicate what this pertains to and what can be the normalized level that we can expect for those expenses?

[Rakesh Verma, executive]

It was told -- majority of it was related to the projects for which we have earned revenue, which is shown in the financial statement. So these are, from time to time, depending upon the projects such costs get incurred. We do not want to build that kind of -- by increasing the people within the company because they are project specific.

So if you're asking the question, what kind of this cost will happen in the future? It will depend on the nature of the projects that we take -- undertake and try to convert it into revenue.

[Anmol Garg, analyst]

Sure, sure. Secondly, just a continuation on the Hyundai and Kia contract. So as contract comes in 2Q, can we expect a strong increase in auto revenue going ahead in second quarter? And also, in continuation of that, in this quarter, particularly, so if you include the IoT business as well, then it looks like that the auto business actually grew ex-IoT despite the Hyundai and Kia impact. Is my understanding right over this?

[Rakesh Verma, executive]

See, I mean, Anmol, like we've said, we are not a quarter-on-quarter business. Look at us annually. It will help everybody understand us better. Obviously, directionally, the fact that Hyudai, Kia has gone live, that will start building up the revenue, and it's a fairly large amount over a period of time. So I don't want to kind of say quarter specific.

On the IoT side, as Mr. Rohan explained already, the -- there was a reason why hardware sales was reduced by design. And obviously, that situation has changed now. And so overall, the -- was still good, considering the ramp down of various programs in the past. And -- so I don't want to go into specific customers, and because of that, what the specific impact is on revenue because we have a portfolio of customers across that.

[Operator]

The next question is from the line of [ Abhishek Kumar ] from JM Financial.

[Unknown Analyst]

First is on IoT. I just first want to understand, given that the fund approval has come just last week, and that means essentially almost half of Q2 also gone. So are we looking at a softer Q2 also? Or is there kind of a pent-up demand in hardware, and we can make up for the lost time in Q2?

[Rakesh Verma, executive]

Yes. The -- if you are looking -- thinking that is that business lost, answer is no. The business also has -- you keep it alive. And so going forward, now that the funds issue is not there, you will see the increased hardware also happening because as Rohan also pointed out that the more the hardware we sell, the more the SaaS revenue for the future happens. So I don't think there is anything to worry about IoT business growth from the last year where we were at INR 100 crores, you will see the good growth in that in this year, too.

[Unknown Analyst]

Okay. Second, on the SaaS revenue itself, my understanding was that this kind of sticky on the installed base. So I was a little surprised at the sequential decline from Q4 level of the software revenues. So is it because some of the hardware where we have given a kind of annual subscription were not renewed? And if that's so, if you can just give us a percentage of retention...

[Rakesh Verma, executive]

That's not exactly true because along the hardware also some SaaS revenue happens.

[Unknown Analyst]

So I understand that. But if it was INR 18.5 crores last quarter, that must be linked to some hardware, which is already sold. So a decline from that level, I'm just curious...

[Rakesh Verma, executive]

Okay. So now as I said, part -- some of the hardware -- the hardware also sales happens in a couple of different ways. One is with the software subscription. The other is without software subscription. So unless -- until one that digs into the details, will not know. In my mind, I don't think it has gone down from the subscription level.

[Rohan Verma, executive]

And you should look at it as -- not quarters. I mean quarter-to-quarter, this is not necessarily a quarterly subscription. It could have been that it is an annual subscription also, which might have gotten a -- to the Q4.

[Unknown Analyst]

Okay. Okay, understood. Fine. And one maybe last question. We have -- you think that we should look at it on an annual basis, the revenue. So while we have a 35% to 40% kind of revenue CAGR to achieve our target, every year from now until FY '27, '28, could we look at the growth in that ballpark 30%, 35%? Or it's more like a back-ended kind of revenue that we are looking at to achieve INR 1,000 crore target?

[Rohan Verma, executive]

I mean, it's -- like we said, I mean, look at -- I think I talked about this earlier. You look at the open order book, how it's progressed from INR 700 crores to INR 900 crores to INR 1,300 crores, fairly predictable that the revenue will grow based on these open order book growth as well. So we have the confidence, we are seeing it again that we will cross this revenue milestone by FY '27, FY '28 of INR 1,000 crores. And business is building up in that.

We don't want to give specific guidance on specific dates beyond what we have said and we have a focus on executing fully and things are looking good.

[Operator]

The next question is from the line of Nitin Sharma from MC Pro Research.

[Nitin Sharma, analyst]

Sir, firstly, can you please talk about how did the 3D digital -- project is and how much time did it take to complete it?

[Rakesh Verma, executive]

Sorry, Nitin, we couldn't hear the question clearly.

[Nitin Sharma, analyst]

Yes. So can you please talk about how big is this 3D digital twin project is? And how much time will it take you to create it?

[Rakesh Verma, executive]

Okay. No, I guess kind of specific customers, we probably can't talk about size, et cetera. I mean sometimes the stock exchange requirement because which we have to do, but on our own we -- if it's not required, we won't talk about individual customers.

But yes, project is very interesting. It's to help in kind of modeling flooding in the city, which obviously means that it has to be 3D map because you need to see kind of where water builds up and where water can flow out from. A complex project, geospatial project. And 3D mapping of that -- getting a 3D discipline of that is required, and we have all the capabilities across ground-based or even like inside water-based and of course, aerial-based capabilities to do that from data acquisition to processing to kind of the platform. So, yes.

[Nitin Sharma, analyst]

Is there a rough time line for this project or any project of a similar nature in your understanding? And just related to it. Have you -- based on your conversation, do you think that the whole -- in -- opens opportunity for you from other state government are you looking [indiscernible]?

[Rakesh Verma, executive]

Huge. I mean -- yes, typically -- mean, again, on about the special, but you can imagine a couple of quarters the stake. It's not an overnight solution to do all that. But a couple of quarters, years and not a couple of years either. These are like -- the type of logic tend to take, we've always said is things that we can choose, things that we can deliver, things where customers will pay us. We are fairly picky in what we focus on, at least we try to be.

And yes, each of our use cases are applicable, and that becomes very interesting. So each of these opens up more opportunities for other cities and other flood-prone areas and that will be the endeavor to kind of show that we could do it here, so we can do it somewhere else. And that's how the business will grow over time.

[Nitin Sharma, analyst]

And if I can squeeze in a small question. So the 40% EBITDA margin guidance -- year, is it impact, right?

[Rakesh Verma, executive]

You're talking about the EBITDA guidance -- EBITDA margin guidance?

[Nitin Sharma, analyst]

Yes, margin guidance.

[Rakesh Verma, executive]

See, there's like multiple parts to our business, right? You know that's a high-margin business from a MaaS, PaaS point of view. But we also want to continuously invest in our products to keep making innovations -- cutting edge innovations which are world-class. I mean, we are not stopping at just making enough product or a bad product. So we really want to make products that are superb. So -- and we have to invest for that. We want to invest for that.

The other is that we really do believe that one of the things that will unlock growth for us is more people getting to know about us and our solutions. And so we are starting to do that activity. You may have seen recently. I mean it's not topic, but you may have seen recently in the India, Sri Lanka kind of [ ODI CDs ], we are very prominently placed as a sponsor. And so more people knowing about us will make them curious about what we do and give them trust that we are large enough for them to entrust us with their time and their money and as a consumer or the enterprise.

So there's a bunch of investments we want to do in products and marketing to unlock further growth. So EBITDA is an outcome of that also. And so I don't want to kind of say a specific number, just that we have this mind that we are a profitable growing business, and we're working towards that.

[Operator]

The next question is from the line of Vidyadhar Ginde from Sohum Asset Managers.

[Vidyadhar Ginde, analyst]

So my first question also is our annual report who have discussed in detail about addressable market size in various areas such as drones as a service, drone solutions and B2C digital map center, which is et cetera, a lot of -- maps markets and you saw -- and what is the addressable market size improvement slightly increased slightly up to [ 30,030 ]. So how should we understand this that is also like I presume -- this will also start contributing to revenue over the next few years and probably will contribute something to your revenue by FY '27 and FY '28 when you are targeting INR 1,000 crores of revenue. So should we expect that we need revenue to come from these new areas to move INR 1,000 crores? Or if anything comes from these areas it will be -- it will take your revenue to a level higher than INR 1,000 crores?

And would you also at some stage give us more clarity just as you have given on your road map to INR 1,000 crores from the areas which you had mentioned. Will you at some stage give us a road map of revenues from these areas also so that we have much better clarity on your overall revenue?

[Rakesh Verma, executive]

Business is ongoing. Product technology and innovation is also ongoing. So when you think like that and a year back, we had given our road map of INR 1,000 crores. We drilled it down that where and how it will happen. Now do we have all the contract orders that will give us that INR 1,000 crore today? The answer certainly is no. But I guess we look at holistic picture and then say that this is how the big market is there and within that, we carved out our addressable market. And within that, we mentioned that you would like to achieve INR 1,000 crore.

Now that's a very good milestone we have set for ourselves, and we have communicated to every investor. So whether it will come from the new one or whether it will come from the existing one, there's nothing like that existing one is only that INR 1,300 crore -- order, if you want to think of. But every year, like from 699, 700 to 900 to 1,300 well built up, the team -- business team -- the sales team is building continuously more and more orders every year. So that's how the business is run. I hope you will understand and appreciate that.

[Vidyadhar Ginde, analyst]

No, no, what I'm saying is, for example, the road map, which you gave us of your INR 1,000 crores, certainly did not include B2C digital maps and services, the advertisement in app advertisement as well as going headwind to any SCA road maps and I presume you will do that before FY '27, FY '28. So that was my question. So if you put...

[Rakesh Verma, executive]

We have to indication for that B2C advertising or whatever you are calling it. We have not given you that. Now -- and we have not said that we'll be earning revenue from that. If earned, we'll let you know that what -- that it is happening. As of today, we are not making that statement.

[Vidyadhar Ginde, analyst]

So are you saying that these are unlikely to contribute significantly to revenue FY '27, FY '28?

[Rakesh Verma, executive]

I think we've answered the question well. I mean...

[Vidyadhar Ginde, analyst]

Okay. So my second question was on this Clarity X thing from -- So you give to one of your earlier questions suggest that in this post the entire revenue will go only to map mind and nothing to Clarity X, is that correct?

[Rohan Verma, executive]

Yes, MapmyIndia is going to generate the revenue from it. MapmyIndia is selling these solutions. See, if you look at it from a MapmyIndia's angle, we're a product and platform company, meaning that we are selling our maps, our software, our APIs, et cetera. But at the end of the day, we want to solve customers' problems. And if we, as a company, have our DNA being product and platform, but customers need solutions and where the customer needs analytics and consulting, this is more bespoke and more professional [indiscernible].

And then there are other expertise also that is required, we use AI models for analytics, where geospatial data is only one component. There might be other components, too. So these two companies together, MapmyIndia and ClaritiX can deliver on a larger set of needs of customers. I mean in the specific area of AI-driven analytics and consulting.

So for MapmyIndia, what it does is it increases basket of offerings. So we can have a higher net share. We can be closer to strategic planning and monitoring of the customers. It gives us more opportunity to upsell and be engaged, but we don't have to build that -- capacity around that, for which ClarityX is building that expertise, and we have good strong close collaboration with. So revenue will, of course, accrue to MapmyIndia, and that's kind of what will help grow the business.

[Operator]

It's from the line of [ Deepak ] from [ Mutual Fund ].

[Unknown Analyst]

Sir, earlier, you made a comment on maps and that the product quality is not up to the mark. And Google maps, there is no pricing consistency on and whatever is happening in the mapping space. So can you please explain the small example, let's say, taking an auto complete or direction map APIs, what could be the pricing differential between, let's say, Google Maps or Ola Map to you on an API basis? What is the price differential, post this...

[Rohan Verma, executive]

I mean first, so I think anybody who's using that map on the products that power that map, I think, first, you should talk to them or try it yourself and then figure out whether it's even worth the time, forget about the money. So I don't want to go into kind of comparing to a product that has no track record and just look at -- just search on Google or Twitter on what people are talking about it. I mean, it's -- I don't think it's manage too much discussion.

Now when it comes to Google, which is a serious player in this space, there are customers using them, I think we are much more agile as a company when it comes to providing solutions and providing value. So if it's taken so many years for a big tech company to respond in one way, whether it comes to pricing or even product, I mean I'll just give you that example. We launched 3D Junction views. Actually, it's been there in our automotive product for many, many years, actually, starting with BMW and Hyundais and all of that for like 5, 7, 8 years. But people started to take note of it with Mappls App 2 years ago, Mappls App became popular. And people just really loved the feature.

Now we noticed that just in the last month, we announced a feature called Flyovers, where it verbally tells you take a flyover. Now India is, first of all, it's not just flyovers. There's not one type of flyover. There are like complex flyovers in India. There are underpasses. There are other complex intersection. So I would say this is a very weak way of solving the very specific needs of Indian customers. I mean if you want to solve it, solve it the way that we get that 3D junction views visually, realistically, what that junction is going to look like and which turn you have to take.

So -- I mean we are just much more agile, much more hyper local. We understand the nuances of customers. And so pricing-wise also and product-wise also, I think we offer better value. Of course, we'll have to fight it out. It's a competitive market, all of those things and those are what we are doing. And then there's a whole host of solutioning that we do around maps that these other people are much further back because over 30 years, we've innovated so many solutions, so many use cases where they're not even a factor. So it's a small fraction of our business, where we intersect with these players. And even in that small intersection, I think we are fairly well placed. I mean.

[Operator]

The next question is from the line of Amit Chandra from HDFC Securities.

[Amit Chandra, analyst]

So my question is on the continuation of the operating intensity that you have mentioned. So in light of the higher competition, how do we see the margins of the Mappls App segment? Obviously, you are on the -- we have seen [indiscernible] 50%. But with the higher investments that you're planning in total technology, can we see some contraction there over the longer term?

And also in terms of pricing, obviously, the pricing we have, and we have the high market share in the auto segment. So have you ever seen the OEMs asking for any pricing discount? Or we believe that the pricing that we have is still very low and there is a scope of improvement there?

[Rakesh Verma, executive]

If you're talking about the auto segment, the auto segment -- auto OEM customers typically go for 4, 5 years of contracts, okay? So now the earlier Hyundai, Kia, we went -- our contract has ramped down and the new contract is in place, and the revenue has started this quarter. So it's not that every day we sit down with auto OEM customer for negotiating or not -- prices.

Now we are always providing through our [ NK solutions ] some upselling. Now if there is an upselling new features then we sit down and negotiate additional addendum, whatever you call it, to that agreement. So that's how the automotive OEM is happening.

Now I don't know if you're talking about the pricing for the one Google type of competition versus the new entrant. The new entrant is giving everything for free. So let that happen, let them do it. And any serious user, I doubt will ever think of using something doesn't work.

Coming to the other one, we have reduced the prices, I don't think very concerned about that either because as Rohan said before, that probably they were responding to our pricing, and that's what took them that time. And it's just a matter of coincided at the same time, the new entrant also talked about it.

[Rohan Verma, executive]

And just like the nuance of that pricing is for small customers, this is a headline number, it's misleading small customers, that discount is actually up to 70. For large customers, there's no change. So there's too many -- still marketing versus actual kind of on ground, there's differences. So -- I mean just like for small developers who have very low propensity to pay very low volume, very low value. And we also have free plans. I'm just -- we are cognizant of it. We are watching it carefully, and we are addressing what has to be addressed.

[Amit Chandra, analyst]

So is there any clause of any volume-based discounts because now we have the dominant market share? So as the volume increases, is there any chance of any operating discounts from that the OEM can not because we have seen that happening with other players and who was pretty closely going?

[Rohan Verma, executive]

So automotive is a different market and this API and developers is a different market. I'm sorry, maybe you should have been clear. This pricing that these people have done is to do with API and developer market. It is not a relevant topic in the automotive OEM space.

[Operator]

Ladies and gentlemen, that was the last question for today's conference call. I would now like to hand the conference over to the management for their closing comments.

[Rakesh Verma, executive]

Well, I would like to thank all the participants and I would like to say with a high level of confidence that we are pretty much on track. And year FY '25 has started in a nice way. So let's hope that we continue doing a good job in the year -- quarters and years to come. But again, the small statement that please look at us on a year-to-year basis, and this quarter-to-quarter, will happen through either lumpy or whatever reasons. So that's my request to all of you.

[Operator]

On behalf of Anand Rathi Shares and Stock Brokers, that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.