Q2 2011/12 Sify Technologies Ltd Earnings Conference Call
Oct 28, 2011 AM EDT
Thomson Reuters StreetEvents Event Transcript
E D I T E D V E R S I O N
SIFY - Sify Technologies Ltd
Q2 2011/12 Sify Technologies Ltd Earnings Conference Call
Oct 28, 2011 / 12:30PM GMT
==============================
Corporate Participants
==============================
* Christopher Chu
Grayling - Contact
* Raju Vegesna
Sify Technologies Ltd. - Chairman and CEO
* Vijay Kumar
Sify Technologies Ltd. - CFO
==============================
Conference Call Participants
==============================
* Jeff Osher
Harvest Capital - Analyst
==============================
Presentation
------------------------------
Operator [1]
------------------------------
Greetings and welcome to the Sify Technologies second quarter 2011 to 2012 financial results. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions). As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host, Christopher Chu, with Grayling. Thank you, Mr. Chu, you may begin.
------------------------------
Christopher Chu, Grayling - Contact [2]
------------------------------
Thank you, operator. I would like to extend a warm welcome to all of our participants on behalf of Sify Technologies Limited. I am joined on the call today by Raju Vegesna, Chairman and CEO, and M.P. Vijay Kumar, Chief Financial Officer, of Sify Technologies. Following our comments on the results, there will be an opportunity for questions. And if you do not have a copy of the press release, please call us at Grayling, 646-284-9400, and we'll have one sent to you. Alternatively, you may obtain a copy of the release at the investor information section on the Company's corporate website at www.sifycorp.com.
A replay of today's call may be accessed by dialing in on the numbers provided in the press release or by accessing the webcast and the Investor Information section of the Sify corporate website.
Some of the financial measures referred to during this call and in the earnings release may include non-GAAP measures. Sify's unaudited results for the year are according to the International Financial Reporting Standards or IFRS and will differ somewhat from the GAAP announcements made in previous years. A presentation of the most directly comparable financial measures calculated and presented in accordance with GAAP and a reconciliation of such non-GAAP measures and of the differences between such non-GAAP measures and the most comparable financial measures calculated and presented in accordance with GAAP will be available on Sify's website.
Before we continue, I would like to point out that certain statements contained in the earnings release and on this conference call are forward-looking statements rather than historical facts and are subject to risks and uncertainties that could cause actual results to differ materially from those described. With respect to such forward-looking statements, the Company seeks protection afforded by the Private Securities Litigation Reform Act of 1995. These risks include a variety of factors including competitive developments and risk factors listed from time to time in the Company's SEC reports and public releases.
Those lists are intended to identify certain principal factors that could cause actual results to differ materially from those described in the forward-looking statements, but are not intended to represent a complete list of all risks and uncertainties inherent to the Company's businesses.
I would like to now introduce Mr. Raju Vegesna, Chairman and CEO of Sify.
------------------------------
Raju Vegesna, Sify Technologies Ltd. - Chairman and CEO [3]
------------------------------
Thank you, Chris. Good morning. Thank you for joining us on the call. I am happy to report our Q2 financial results against a backdrop of two exciting news. The first is that our recaps of the business sector is beginning to show increasing results, and this quarter the draft of the government of India's new technology policy is released. We are glad to note that the Ministry is recognizing the need for a general reform on alignment with the market practices and conditions. The coming months will see a lot more clarity on associated matters like taxes, technology, and pricing, etc.
Now let me spend a few minutes on our different business lines and their performances. This quarter, the Enterprise business registered about 7.5% growth and that includes about 18,000 growth on our networking which is a very important factor in our business. And -- from the last quarter. And our international wireless business remains strong. We added an audio conferencing as we said to our Enterprise offering.
Our hosting business has grown about 77% from the previous quarter and our IQs this year, or our security series has grown almost 100%. And our cloud series has also grown by 100% from the same quarter last year. And our Commercial and Consumer division has also reached an impressive growth, SOHO/SMB business has grown 60% with 55% growth coming from the Tier II, Tier III cities. And My-Life outlet is nearing 2,000 marks with just [our portal]. Sify.com has grown by 19% year-over-year. Enterprise application has grown by 14% and e-Learning division added one of the largest pharmaceutical companies to their client list.
The Government segment is now showing interest in one of our test platforms, which helps us to do an online testing and that has a growth of about 58%.
While the overall outlook for the growth in India is positive, we will continue to invest in expanding our infrastructure. That means, our network and our data centers and commissioning of our cable landing station and proceeding as per the plan. As I said before and I will want to reiterate, we are here for a long term -- long run.
Now I will ask Vijay Kumar, our CFO, to expand on the financial highlights of our performance after which I will summarize this call. Vijay Kumar?
------------------------------
Vijay Kumar, Sify Technologies Ltd. - CFO [4]
------------------------------
Thank you, Raju, and good morning, everyone. I will now provide detailed financial results for quarter two of financial year 2011/12.
Sify's revenues for the quarter were $37.10 million as against same quarter previous year revenues of $35.08 million. Immediately preceding quarter one, the revenue was $46.3 million, which as we reported last time, included a one-time revenue of $9.4 million for a project executed for a large telecom company. I am happy to share with you that a big job for the quarter has increased to $3.33 million as compared to $1.10 million in the corresponding quarter previous year.
The Enterprise Services revenue grew 7.5%. Software Services revenue grew 22% over the corresponding quarter previous year.
I am equally happy to share that the next loss before tax for the quarter reduced to $1.39 million as against a net loss of $2.74 million in the corresponding quarter previous year. The operating expenses have been contained within our operating cash flows [fully] on the quarter and capacity utilization is improving.
The promoters for their part have paid in capital loss 100 gross by not approximately $23 million, pursuant to the subscription agreement. CAPEX for the quarter is $2.6 million and cash balance at the end of the quarter; consequent to the capital inflows is $20 million and there is also an undrawn line of credit of $3 million.
Taking up from Raju and the proposals in the telecom policy which have either dropped (inaudible) announced with the government of India. That includes not telecom projects within the funding ambit off, a government-sponsored organization. India entrusts such a finance company will open up more funding options for this sector and accelerate growth. It is also expected to extend its [X Ops] enjoyed by the infrastructure industry to the telecom sector as well.
I will now hand you over to Raju for his final comments. Raju?
------------------------------
Raju Vegesna, Sify Technologies Ltd. - Chairman and CEO [5]
------------------------------
Thank you, Vijay. Given the trying economic environment, this year's growth has come in the reforms like [conviction in CP and our people are now forces].
As we have stated in our earlier quarterly communications, we are here for the long haul. Our integration of (technical difficulty) and subsequent business wins are pointers that we are moving in the right direction. It is my firm belief that whether it is made of larger enterprises that SMB out of SOHO markets of the government, correct end solutions are similar. It is only the adaptability and the environment and scale that makes the difference. Let me assure you that that is -- that it is now only a matter of the time.
That said, I thank you for joining us on this call. I will now hand over to the operator for questions. Operator?
==============================
Questions and Answers
------------------------------
Operator [1]
------------------------------
Thank you. (Operator Instructions).
Jeff Osher with Harvest Capital.
------------------------------
Jeff Osher, Harvest Capital - Analyst [2]
------------------------------
Hello. Thanks for taking my question. (technical difficulty) I guess, what was the change? I know there's been -- you guys have had a couple of different auditors. Is that why the revenue changed from the quarter you reported to this quarter? I am looking at your June quarter and I was trying to reconcile the numbers and your revenue that you originally reported was $50.7 million, but in this press release it says $46.3 million. What was the -- and I noticed you didn't call that out in the transcript or the press release. What was the reason for the massive revenue reduction?
------------------------------
Vijay Kumar, Sify Technologies Ltd. - CFO [3]
------------------------------
I will answer that. The exchange rate between the last quarter which is used for convenient translation from Indian rupees which is a functional currency to US dollars which is a presentation currency, the Indian rupee has depreciated over the last three months.
Last quarter when we reported the results, the exchange rate was $1.4462 and the exchange rate for translation for this quarter is [$48.93]. So in Indian rupees the revenue is the same. For convenience translation, the difference in exchange rate has contributed to the dollar revenues appearing lower.
------------------------------
Jeff Osher, Harvest Capital - Analyst [4]
------------------------------
Great, that's very helpful. And is that the way I should look at all historicals when you state them? Is -- are you updating the translation based on the current exchange rate or are you leaving historicals -- you are not leaving historicals intact in your press releases?
------------------------------
Vijay Kumar, Sify Technologies Ltd. - CFO [5]
------------------------------
Yes, we are -- I don't think a uniform translation rate for the release which is done. So all the financials that you are seeing in the release have a uniform exchange rate.
------------------------------
Jeff Osher, Harvest Capital - Analyst [6]
------------------------------
Great, so (multiple speakers).
------------------------------
Vijay Kumar, Sify Technologies Ltd. - CFO [7]
------------------------------
So the past figures are consequently, suitably revised.
------------------------------
Raju Vegesna, Sify Technologies Ltd. - Chairman and CEO [8]
------------------------------
Yes, that is -- to answer the question, we are to avoid this confusion, we intend to bring and just put it in the rupees. Because our market is in the rupees, our expenses are in the rupees. So we intend to in -- probably from the next quarter, we will report it in one currency. So rupees -- that's really our income, you know.
------------------------------
Jeff Osher, Harvest Capital - Analyst [9]
------------------------------
Yes, that would be helpful and get rid of the -- (multiple speakers). Thanks for taking my question.
------------------------------
Raju Vegesna, Sify Technologies Ltd. - Chairman and CEO [10]
------------------------------
Thank you, thank you.
------------------------------
Operator [11]
------------------------------
(Operator Instructions). Gentlemen, it appears we have no further questions at this time. I will now turn the floor back over to management for closing remarks.
------------------------------
Raju Vegesna, Sify Technologies Ltd. - Chairman and CEO [12]
------------------------------
Thank you for everyone joining us on the call. We look forward to interacting with you all through this year and financial -- through the financial year. Thank you again and goodbye.
Thank you. Bye-bye.
------------------------------
Vijay Kumar, Sify Technologies Ltd. - CFO [13]
------------------------------
Thank you.
------------------------------
Operator [14]
------------------------------
Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time and we thank you for your participation.
------------------------------
Definitions
------------------------------
PRELIMINARY TRANSCRIPT: "Preliminary Transcript" indicates that the
Transcript has been published in near real-time by an experienced
professional transcriber. While the Preliminary Transcript is highly
accurate, it has not been edited to ensure the entire transcription
represents a verbatim report of the call.
EDITED TRANSCRIPT: "Edited Transcript" indicates that a team of professional
editors have listened to the event a second time to confirm that the
content of the call has been transcribed accurately and in full.
------------------------------
Disclaimer
------------------------------
Thomson Reuters reserves the right to make changes to documents, content, or other
information on this web site without obligation to notify any person of
such changes.
In the conference calls upon which Event Transcripts are based, companies
may make projections or other forward-looking statements regarding a variety
of items. Such forward-looking statements are based upon current
expectations and involve risks and uncertainties. Actual results may differ
materially from those stated in any forward-looking statement based on a
number of important factors and risks, which are more specifically
identified in the companies' most recent SEC filings. Although the companies
may indicate and believe that the assumptions underlying the forward-looking
statements are reasonable, any of the assumptions could prove inaccurate or
incorrect and, therefore, there can be no assurance that the results
contemplated in the forward-looking statements will be realized.
THE INFORMATION CONTAINED IN EVENT TRANSCRIPTS IS A TEXTUAL REPRESENTATION
OF THE APPLICABLE COMPANY'S CONFERENCE CALL AND WHILE EFFORTS ARE MADE TO
PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS,
OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE CONFERENCE CALLS.
IN NO WAY DOES THOMSON REUTERS OR THE APPLICABLE COMPANY ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER
DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN
ANY EVENT TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S
CONFERENCE CALL ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE
MAKING ANY INVESTMENT OR OTHER DECISIONS.
------------------------------
Copyright 2016 Thomson Reuters. All Rights Reserved.
------------------------------