Map My India (MMI) : The Map Company
25 Year Old Company flowing downstream with Internet and Digital Revolution, Will it hit the rocks ? or Find a way to the End?
Welcome to The Money Carnival ! With the background of Business Analyst and Finance, starting this newsletter to share my views and analysis on different businesses and hopefully learn much more in the journey as we move along.
[Disclosure: I hold small position in Map My India and Nothing in this piece is an investment advice]
Hi Friends,
Happy New Year !
Today, we are going to delve deeper into the map industry with its various use cases and will try to figure out the growth prospects and probabilities for MapMyIndia (MMI) in this space.
This article will be divided into below topics :
Company's Business Model
Industry Landscape and Competition
Metrics that matter (Financial Analysis)
Way Forward : Opportunities and Vulnerabilities
Closing Thoughts
Company's Business Model
The Origin
Rakesh and Rashmi Verma in 1995, returned back to India from their Corporate Jobs in US and found opportunity in providing location related information to companies, which also helped them to create digital maps of various geographies in India, mindful of the fact that 80% of the businesses will need location related information in future.
In late 90s, Verma(s) saw opportunities through international companies such as Coca-Cola, Cellular One, Motorola, Ericsson which are facing operational challenges in India on account of limited availability of accurate maps. They obtained contracts to create digital maps that contained specific company information such as bottlers’ territories or topographic features such as high ground suitable for cell towers. Operating on Customer Funded Business Model (Advance payment from clients) , they have been able to survive for a long time while developing their own products for wider set of clients. Moving forward they expanded in terms of geographical coverage beyond the coverage under their early contracts and kept the IP rights with themselves to be able to license it to wider set of clients across industries.
In 2004, company launched its digital map portal. Fast forward to today, company has mapped 10.5 M unique destinations, 6.4 M km of road, ~ 7500 cities at street level, 80 at address level, 3D, 2D landmarks in 86+ diff cities which is being updated Daily.
Product Offerings
Consolidating the buzz words and Jargon, Product Offerings from the company can be summarized into below :
1. Navigation Assistant Device
This is a navigation device (main purpose is to show route to specific location) embedded in dashboard of your 4W or 2W.
These are 3-5 years contracts with automotive makers.
Clients includes MG motors, Honda in 4W and Suzuki, TVS in 2W.
Company claims to have 80% market share in this segment.
They earn revenue per vehicle per year basis. Revenue will depend on no. of vehicle manufactured with MMI Navigation in a given year.
2. SaaS Products
SaaS (Software as a Service). Any software or app provided to you with a minimal learning curve (User Friendly) deployed on cloud is termed as SaaS. Common SaaS products of which, you must be familiar with are Netflix, Zoom, Uber, Canva, Spotify, Airbnb, Whatsapp
(a) InTouch - IoT Platform & Telematics Platform
(Also, pitched as Digital Vehicle Twin)
This is cloud platform with various use cases majorly related to mobility like
Customizable Analytics Dashboard (Graphical representation of various parameter important to end user)
Live Tracking of Vehicle (includes drones), Vehicle level information - Speed, Location, Altitude , IoT GPS device status
Geo-fence Management
Geo-fencing is marking specific areas with geometrical figures (Polygon, Circle, etc) and tagging them as per business demand which will help in further location based analysis.
Route Management - Creating Fastest, Shortest, Safest, Economical Routes, Adding Stops, Finding Nearby Locations, etc.
Trip Management - Tracking a complete shipment / trip on several parameters
Fleet Management - Organizing database of vehicles with important information like Maintenance.
Vehicle Health Projections based on historical data, Alerts, Log Reports
Clients include OLA, AVIS, FedEx, Safe Express, TCI, Mahindra Logistics, Ultratech
Company also provide bespoke solutions as per business requirements
~ 10k Downloads in Google Play store with 3.4 / 5 Rating.
Revenue Model - Subscription Based and as per Use Case
Vehicle Telematics : It includes GPS systems, onboard vehicle diagnostics, wireless telematics devices, and black box technologies to record and transmit vehicle data, such as speed, location, maintenance requirements and servicing, and cross-reference this data with the vehicle's internal behavior.
(b) WorkMate
This Product intended to help companies with managing their field staff, location analysis for their clients, assigning tasks and generating reports related to same data
It's also capable of working completely offline and gets automatically sync when back in internet connectivity
Display and branding is customizable to client
Clients includes PrintJet, Fullerton India, EMRI, Greenstarm SD Fine chem ltd.
~ 5k Downloads on Google Play store with 4/5 rating
Pay as you go model - revenue based on licenses per user per month.
(c) mGIS Tool
This is a visualization tool to perform analytics on geo-spatial data.
Some of the common metrics that could be tracked through this software like
Customer Location Visualization
Trade Area Analysis
Advanced Arithmetic Operations involving Elevations and Altitudes on 3D maps
Revenue Model - Subscription Based and as per Use Case
3. APIs / SDKs
API (Application Programmaing Interface) : In a nutshell, it is a piece of code that helps communication between two applications. So, if I need to insert a digital map or its related features in my personal app, I can use MapmyIndia API (Code) to get that data into my app and use it as per requirement. A simple analogy will be to think of a music streaming apps where IP remains at Music Labels / Singers (MMI in this case) while many streaming apps can use that content for their business at subscription fee.
SDK (Software Development Kit) : A kit or a package of tools, libraries, documentation, code samples, processes. Think of it as putting together a Squat Rack in your gym or that bed you bought from IKEA, you'll need the base items, tools needed to put them together, assembly instructions and hence forth. An SDK might consists of several APIs and few other features around them.
All APIs / SDKs are subscription based freemium models and revenue depend on scale of client and number of transactions getting performed on application. There are several APIs / SDKs as below that company provides
Search APIs
Explore any address, location, place, Auto suggest, Nearby Places with Geo code or Reverse Geo code
Real time Map Updates, Auto Scalable, eLoc (a unique 6 char digital address of a particular house level location)
Apps includes McDonald's, Yulu, PhonePe, Airtel
Routing and Navigation APIs / SDKs
Functions like Vehicle (Car, Bike, Truck, Pedestrian) Routing, Predictive ETA, Snap to Road, Turn-by-turn navigation, Drive range polygon (which will help in analysis of certain marked area)
Client includes MG, Mahindra, Amazon, HDFC, TVS, Suzuki
Intouch Platform APIs - APIs for Device details, Event Data, Drive Data, GeoFences, Alarms
WorkMate APIs - APIs to get several data items from WorkMate App
mGIS APIs - Map and Location APIs, widgets, plugins and tools for developers to build advanced location-based applications - map visualizations in 2D/3D, Geo coding, search, routing, Geo-spatial analysis, AI-powered image analysis and more.
Global APIs - Map for 238 countries available
Personalization SDK
It helps build dynamic O2O (Online to offline) profiles for users or customers. This SDK help analyse profiles using algorithms to deliver personalized recommendations for products and services.
This also tracks buying patterns and create localised marketing campaigns
This has use cases in almost every major growing industry
4. IoT Products (Hardware Products)
IoT Products include GPS products to track vehicles, drone trackers, asset trackers. Other than that they also provide Drone cameras and various set of sensors
Map MyIndia's Move App is used to track location, share location, Route summary and alert notifications
Some of the clients using their IoT products include Safe Express, TCS, AVIS
The Flywheel
Flywheel is when small wins accumulate over time, creating momentum that keeps your business growing.
Industry Landscape and Competition
There are few players in this industry providing map data which suggests the consolidated nature of industry. There is a clear first mover advantage when it comes to creating database for digital maps and location, it needs high resources to continuously update the data and on top of that regulations create a moderate barrier of entry in this industry.
Regulation : Liberalization of Geo-spatial Sector
In Feb 2021, the Ministry of Science and Technology announced the deregulation of the Geo-spatial sector in India.
In the new Geo-spatial policy, there is no requirement to get approvals for the collection, preparation, storage and dissemination of Geo-spatial data and maps within India for Indian owned or controlled companies.. It restricts foreign companies from doing granular level mapping - with a binding threshold of one meter in horizontal and three meter in vertical mapping making it difficult to create accurate maps for ADAS, HD, 3D, 360-degree street view, doing terrestrial survey and Indian territorial waters survey.
Since most of the foreign companies like TomTom and HERE use ADAS and HD tech for Navigation Maps, they'll have to license the same through APIs from Indian Players.
Now, Let's take a look at the ecosystem of this industry and the competition in these segments :
Navigation Assistant Device and Mobility Related SaaS Products
Automobile Industry has been a major revenue contributor to map providers since last several years. This segment is consolidated among few players in particular region. MMI in India, TomTom and HERE Tech in UK and Map Box in US , has captured majority of the market.
This segment has been stagnant in last 2-3 years because of global automotive slowdown but is expected to pick back up in coming years as we are moving towards spectrum of autonomousity of vehicle, navigation system will become a integral part (both 4 and 2 wheeler).
After liberalization of Geo-spatial sector, we could see increased competition from other Indian Players getting aggressive in this space and we can also see some market share shift from foreign entities.
One of the recent news includes MG motors moved from TomTom to MMI in Aug 2021 in recently launched new models.
API / SDKs
As we discussed earlier, most of the application developers / companies prefer to include some functionalities of Location and Maps in their apps. APIs are highly preferred by companies to scale and grow their product quickly instead of re-inventing the whole wheel.
It is a fairly competitive space which leads API providers to spend on customer acquisitions through sales, getting interest of developers, free offerings upto a certain scale and at the same time, updating tech and investing in RnD.
Major competitors in this segment are Google Maps, TomTom, HERE Tech, Map Box, ESRI ArcGIS, Sales force Maps, Azure Maps, MapQuest
This segment is growing at a much faster pace, creating space for all competition to co-exist. With increasing penetration of internet and smartphones, growth will come from increasing use of location based apps, hence more transactions and increase in new applications using location based APIs.
The geo-spatial analytics space in India comprises of foreign players like ESRI, AutoDesk and Trimble. In addition to this, there are several other players like Rolta, RMSI, Infotech Enterprises.
Google : Elephant in the room
Ofcourse, Google is one of those companies you can’t ignore. Let’s see how they are placed in each segment :
Ad-sense -Google Maps earns majority of its revenue from Google's Ad words and charges companies to advertise on google map app. For instance, if you search for Mumbai in Google Maps, it'll show places, restaurants, cafe to visit.
APIs - Google Maps also provides APIs for different location based data and it's pretty famous among developers however their prices are premium as comparison to other players and they also don't provide HD, 3D Maps to doorstep level which might be a requirement for some e-commerce companies.
Navigation Assistant - Google stayed away from this segment until March 2017 when Google and Intel together with Volvo and Audi developed an Android Automotive Operating System (AAOS) combined with Google Automotive Services (GAS) which is a collection of applications and services like google maps, play, assistant, etc that OEMs can license and integrate into their in-vehicle infotainment systems. Volvo, Ford and GM are using AAOS with GAS.
In April 2019 Google opened up the APIs for developers to start developing applications for Android Automotive
Renault-Nissan-Mitsubishi alliance, one of the world's top-selling automakers, has decided to go with Google's Android operating system to run its dashboard information and entertainment features. A key reason cited previously by TomTom for Google’s contract wins was drivers’ desire to use a familiar, easy interface in their cars that is similar to the ones they are familiar with from their cell phones.
In September 2021, Honda announced that it would use Google’s Android Automotive OS in its cars starting in 2022.
Over the years, carmakers has been hesitant in giving full access of dashboard to Google due to data privacy concerns and willingness to own the branding for their dashboard. However, now with leading OEMs joining hands with google and well known superior quality product / brand of google, it will be the biggest risk for players in this segment like MMI, TomTom, HERE.
Metrics that Matter - Financial Analysis
Moving to my favorite part, numbers !
Scalability
Overall Revenue Growth for company is flattish since 2018 but is expected to show high growth this year (31 % ▲ ) as per 1H22 Annualized numbers.
One of the reason for flattish performance is decline in IoT Products (GPS products) as they are mostly related to automotive industry which itself is facing strong headwinds from last few years and there is also a lot of local and foreign competition in hardware product market.
However, things get interesting when we look at segmental revenues below.
Another reason for overall revenue trend is Revenues from Automotive and Mobility (translates to Navigation Assistant, InTouch Platform and GPS products) has been declining rapidly majorly due to Slowdown in Automotive Industry. It has shown strong performance in 1H22 and expected to show high double digit growth in 2022.
Even with sharp decline in Automotive Segment, Consumer and Enterprise Segment (translates to APIs, SDKs, Customized Solutions and Analytics) is growing at rapid pace on account of exponential rise in digital economy over the globe.
Orderbook, which is projected on the basis of current orders + expected volume growth of clients for the next 3 Years and is subject to change in future based on Indutry demand, hence should be considered with pinch of salt. That being said, numbers provided for Orderbook are growing at exponential pace and should translate to high growth in Revenues, if all went well.
"70% of orderbook is based on projections of volumes from OEMs. The volume projections are based on either the projections shared by OEMs or based on the historical usage trends amongst certain other parameters. Our customers may terminate contracts before completion, negotiate adverse terms of the contract or choose not to renew contracts, which could materially adversely affect our business, financial condition and results of operations"
Margins
Contribution Margin is termed as revenues minus the variable cost per unit.
Variable cost in case of MMI are Software License Fee / Material Cost, Cloud Hosting Fee, Customer Customisation / Servicing. Contribution margin has been increasing over the years mainly due to decline in Software License Fee and Customer Customization which generally relates to Automotive and Mobility Segment.
EBITDA Margins has also increased primarily because company has decreased non-permanent employees workforce and because of stable fixed cost and high contribution margin, EBITDA margins should be expected to increase in future with the rise in revenues.
Profit After Tax has also shown double digit growth because of increase in margins and one time exceptional 'other income' in 2021 after selling some investments / mutual funds.
Survival
Company has been surviving since two decades, on the basis of healthy cash flow generation. Due to asset light nature of business, EBITDA generally flows almost completely to Profits, CFO and Free Cash Flow. CFO in 2021 looks optically high because of changes in Financial Assets / Liabilities which will probably revert back to mean in coming years.
Growth Opportunities
Drone Industry
Drone industry is rising over the globe with the increased use cases and improved technology. Drone helps in quick field surveys, Supplying Essentials, Sensor Equipped for defense purposes, Geographic mapping, Safety Inspections,Crop monitoring, shipping and delivery.
Since GPS / GNSS (Global Navigation Satellite System) is a regulatory requirement for Drones, this could be a opportunity for MMI to strike deals at a nascent stage.
Rise in Electric Vehicles and Semi Autonomous Vehicles
As we move towards autonomous vehicle spectrum, Navigation Assistant will be required in most of the vehicles
Since, Automobile industry has seen increase in volumes, we can expect it to reflect in MMI Revenues
However, Google will remain a Challenge and need to have a keen eye how Google and other players are exploiting this market
Licensing of Maps
After the Geo-spatial liberalization in 2021, licensing of maps could appear as one of growth driver for MMI as Foreign Entities that provide HD and 3D Maps (TomTom and HERE Tech) will have to license map APIs from Indian Entities.
This could also benefit them bagging deals with potential clients
API revenue growth
Major Growth is surely expected from the APIs / SDKs which will be driven by
Increased traffic and transactions in existing clients like Paytm, PhonePe, Yulu
Addition of new clients which is expected with increased internet penetration, new start-ups and advancement of technology.
Vulnerabilities and Risks
Expansion of Google's Android Automotive Operating System
Google is continuously finding ways to make Maps as its next billion dollar business. It was clear in 2018 when google did exponential price hike in APIs and then entered into Automotive segment .
Even though, currently main focus is in US and UK markets but it is a matter of time until google will try to capture the market in India.
Low RnD Spend
Considering its peers and being a tech company, RnD Spend is very low for MMI.
This could limit their scalability and could end up losing clients. They have also lost clients in previous years.
APIs/ SDK space is competitive.
API/ SDK segment, though highly profitable is competitive and price sensitive.
Switching Cost is moderate, Many companies have switched from using google map APIs to other providers after they've increased prices in 2018.
Increase of Supply
After new regulation, where Indian entities need no approvals for Map Data, new competition may arise from Indian players, hence challenging the economics of this industry
Customer Concentration
In the last three Financial Years, the number of customers that accounted for 80% of our revenue from operations were 17, 22 and 25 in Financial Years 2019, 2020 and 2021, respectively.
Though company is moving towards diversifying the revenue pool, losing key clients is a big risk to subscription revenues.
High Dependence on End User Industry
A large chunk of revenue comes from Automotive sector, hence revenues can get impacted in case of draw down in industry.
Closing Thoughts
Apparently, there's always lot of buzz words going around which will make IPOs look shiny and full of potential. Nevertheless, it's exciting to see SaaS (API economy) business listing in Indian Markets. There are certain opportunities that could support high profit growth for next few years but there will be challenges along the way and we'll have to keep a keen eye to see how company will be able to navigate through these.
There are certain optionalities like Regulation Easing and Scalability of Drones, Adoption of Telematics in Motor Insurance, GPS based FastTag Toll Method. These could provide boost in revenues in future, if played out.
As the company got listed recently, there is only limited information available. We'll get to know more about tracking metrics after few quarters.
About Valuations ! Surely not undervalued. Just beware of people giving extreme projections (both sides) based on past results or futuristic fancy tech words.
Thank you for reading,
Until next time.
If you liked this article, consider sharing it with a friend! You can also comment below or connect me on Twitter with your views and any feedback.
[Disclaimer: I'm not a registered Investment or Financial Advisor. Any information in this article is from personal research and is not intended as, and shall not be understood or construed as , financial advice. It's very important to do your own analysis and reviewing the facts before making any investment based on your own personal circumstances. Kindly seek professional advice before taking investment decision.]