Sify Technologies - Q4 2024
April 22, 2024
Transcript
Operator (participant)
Good morning, everyone, and welcome to Sify Technologies Financial Results for the Fourth Quarter and Fiscal Year 2023 to 2024. At this time, all participants have been placed on a listen-only mode, and the floor will be open for questions after the presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Praveen Krishna. Praveen, over to you.
Praveen Krishna (Head of Investor Relations)
Thank you, and good morning, Jenny. I would like to extend a warm welcome to all of our participants on behalf of Sify Technologies Limited. I'm joined on the call today by my Chairman, Raju Vegesna, my Executive Director and Group CFO, Mr. M.P. Vijay Kumar, and my Chief Executive Officer, Mr. Kamal Nath. Following our comments on the results, there will be an opportunity for questions. If you do not have a copy of our press release, please call Weber Shandwick at +1 212 546 8260, 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.sifytechnologies.com/investors. 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 in 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 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 made available on our 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 therefore 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 protections 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 business. I would now turn the call over to Mr. Raju Vegesna, Chairman of Sify Technologies. Chairman?
Raju Vegesna (Chairman)
Thank you, Praveen. Good morning, and thank you for joining us on the call. India's potential continues to attract the attention of the international business leaders. Their confidence reflects positively on our business environment, attracting investment and fostering partnerships. I am committed to fostering this growth, ensuring that India continues to thrive on the world stage, and Sify has a central role to play. Let me bring Kamal, our CEO, to expand on some of the business highlights for the past year. Kamal?
Kamal Nath (CEO)
Yeah. Thank you, Raju. As enterprises advance their digital transformation and digitalization goals, they are strategically realigning their digital architecture across applications, hybrid cloud, network security, and edge environments. Customer experience, business continuity, cybersecurity, application modernization, and artificial intelligence enablement are the pivotal catalysts driving this recalibration. Our robust infrastructure investments and comprehensive services portfolio are structured to precisely address customer objectives. Concurrently, we are maintaining proactive engagement with our clients, identifying their distinct requirements, and customizing our offerings to align with their evolving needs. Let me now expand on the business highlights for the year. Revenue from data center colocation services for FY 2023-2024 grew by 9% over last year. Revenue from digital services for FY 2023-2024 decreased by 1% over last year. Revenue from network-centric services for FY 2023-2024 grew by 10% over last year.
The revenue split between the businesses for the year was data center colocation services at 31%, digital services at 28%, network services at 41%. As of March 31, 2024, Sify provides services via 1,033 fiber nodes across the country, a 16% increase, respectively, over the same quarter last year. As of March 31, 2024, Sify has deployed 7,835 contracted SD-WAN service points across the country. At close of financial year, Sify has invested a cumulative of $7.22 million in startups in the Silicon Valley area as part of our corporate venture capital initiative. A detailed list of our key wins is recorded in our press release, now live on our website.Let me bring in Vijay, our Executive Director and Group CFO, to elaborate on the financial highlights for the year. Vijay?
M P Vijay Kumar (CFO)
Yeah. Thank you, Kamal. Good morning, everyone. Let me briefly present the financial performance for the financial year 2023-24. Revenue was INR 3,563.4 million, an increase of 7% over last year. EBITDA was INR 675.6 million, an increase of 7% over last financial year. Profit before tax was INR 232 million, a decrease of 77% over the last year. Profit after tax was INR 49 million, a decrease of 93% over last year. Capital expenditure for the year was INR 1,237.7 million. Our three businesses have unlocked tailored growth avenues, attracted targeted investments, and fostered valuable partnerships.
Our investment philosophy encompasses expanding data center presence to new locations for sustained growth, increasing capacity at existing facilities to meet the foreseeable demand, and fortifying our network infrastructure and cloud interconnectivity. Simultaneously, we are prioritizing the expansion of our people, capabilities, and competencies, equipping them with essential skills, tools, and processes to drive innovation and efficiency. All the while, we remain steadfast in our commitment to cost effectiveness and fiscal prudence. Cash balance at the end of the year was INR 5,835 million. I will now hand over to our chairman for his closing remarks. Chairman?
Raju Vegesna (Chairman)
Thank you, everyone. And, you know, as I outlined, India is continuously growing, and we are, you know, in the midst of this progress, and we are going to continuously grow. Operator?
Operator (participant)
Thank you very much. We are now opening the floor for questions. If you have any questions, please press star one on your phone keypad now. A confirmation tone will indicate that your line is in the queue. You may press star two if you would like to remove your question from the queue. For anyone using speaker equipment, it might be necessary to pick up your handset before you press the keys. Please hold a moment while we poll for questions. Thank you. Your first question is coming from Greg Burns of Sidoti & Company. Greg, your line is live.
Greg Burns (Senior Equity Analyst)
Good morning. Could you just talk about the rationale behind the proposed rights offering versus maybe some other form of capital?
M P Vijay Kumar (CFO)
So as far as the rights offering is concerned, the objective was to finance the expansion of our data centers and also to invest in our digital services business growth. Considering that we also incidentally are in the 25th year of listing at Nasdaq, it was an opportunity to engage with all the existing shareholders to participate in the next phase of growth, and hence the rights issue instead of raising any external capital.
Greg Burns (Senior Equity Analyst)
Okay. What is your projected CapEx for this coming fiscal year?
M P Vijay Kumar (CFO)
The projected CapEx will be similar to what we have done in the last two years. Last two years, we have done on an average about 1,400 crore INR, 1,400 crore INR. We will have a similar run rate.
Greg Burns (Senior Equity Analyst)
Okay. And then maybe you could talk about the roadmap of your, your data center roadmap a little bit. I know the Tower Five in Mumbai came online, and I think there was a tower in Noida, maybe, that was coming online in April. Is that online currently? And what do you have in the roadmap for fiscal 2025 and 2026?
M P Vijay Kumar (CFO)
Yeah. For the fiscal 2025, there are two greenfield projects which will go live, one at Noida, which is the National Capital Region, Delhi, another at Chennai. These two facilities will go live. In the next fiscal, there will be additional capacity which will come up in Mumbai, and in another of the cities, which we are at the early stages of finalizing our design and plans for the same.
Greg Burns (Senior Equity Analyst)
Okay, maybe could you quantify maybe in terms of, like, added capacity? Like, what, what's your existing capacity now, and maybe what that, I guess, the roadmap that you just laid out adds?
M P Vijay Kumar (CFO)
Yeah. The existing capacity is about 120 megawatt of IT power capacity. The two new facilities which are going to go live this year will have a design capacity of 26 megawatt each, but these capacities will be made operational in phases over the next two years.
Greg Burns (Senior Equity Analyst)
Okay. And then maybe we could just to that idea of like things coming on in phases. I guess the Tower Five in Mumbai, I guess it's around 40 megawatts of total capacity. What has been sold, or what's currently operational, and how does that get rolled out now that the-
M P Vijay Kumar (CFO)
Out of-
Greg Burns (Senior Equity Analyst)
Tower is up and running?
M P Vijay Kumar (CFO)
Yeah. So that's a 38 MW facility, of which, by end of this fiscal, March 2025, nearly two-thirds of the capacity will be fully occupied, and the rest will get occupied in the following year.
Greg Burns (Senior Equity Analyst)
Yeah. Okay. And then maybe we could just focus in on this quarter a little bit. Could you just talk about network services? They were a little bit stronger. The growth there was a little bit stronger than, than we were looking for. Could you just talk. Was there anything unusual about the quarter, or is that a good growth rate to, or a good number to, to build off of for our models going forward?
M P Vijay Kumar (CFO)
Yeah. The network business performance has been fairly organic. The quarter four was relatively better, but importantly, we continue to expand on our network infrastructure. And similar to data center, we are committed to substantial investments for expanding our network infrastructure, given the fact that edge data centers will come into play in the country, and we will continue to invest there.
Greg Burns (Senior Equity Analyst)
Okay. And then the digital services were down a little bit from a year ago. Was there anything in particular of note driving that, or not?
M P Vijay Kumar (CFO)
The outlook in the market is looking good. Our engagements with the customers are getting deeper. We are continuing to invest in building people's capability, and we should start seeing results in the foreseeable future.
Greg Burns (Senior Equity Analyst)
But within that digital services, were cloud services up and maybe integrate-- technology integration services down? Was there any within the
M P Vijay Kumar (CFO)
Yeah
Greg Burns (Senior Equity Analyst)
the category of digital services, what was the mix driving that 1% down?
M P Vijay Kumar (CFO)
Yeah. The integration services, the projects, are lower than in the past, but the cloud and the network managed services continue to scale.
Greg Burns (Senior Equity Analyst)
Okay. Okay, perfect. And then what is the status of the data privacy law? Has it been is it being implemented yet, or are they, they're still trying to
M P Vijay Kumar (CFO)
Yeah, yeah.
Greg Burns (Senior Equity Analyst)
Sorry, go ahead.
M P Vijay Kumar (CFO)
Oh, sorry. I didn't get the question. Privacy law, that Indian, Indian oh, data privacy law. Okay. As far as data privacy law is concerned, it's yet to become effective. The law has been pronounced, but the rules are yet to be issued. Most likely, after the new government is formed, we should see that law becoming effective.
Greg Burns (Senior Equity Analyst)
Okay. With that timeline in mind, are you seeing an increase in inbound activity or, you know, pipeline activity, or have you seen any impact from that law on your business yet?
M P Vijay Kumar (CFO)
No, I, I think, Indian data center growth and network growth is independent of the data privacy law. I don't think, localization per se, is something which is driving demand. I think, we have bigger drivers of demand in the form of, AI and, ML, activities. I think, those are, much bigger drivers. Apart from, the digitalization programs of the Indian enterprises, I think those are, driving demand much stronger. I, I don't think, a regulatory support is going to make a huge delta.
Greg Burns (Senior Equity Analyst)
Okay. All right, great. Thank you very much.
M P Vijay Kumar (CFO)
Thanks.
Operator (participant)
Thank you. Thank you very much. Just as a reminder, if there are any remaining questions, please press star one on your phone keypad now. Okay, I'm not seeing any further questions come into queue. I'll now hand back over to the management team for any closing comments.
M P Vijay Kumar (CFO)
Thank you. Thank you for joining us and, continuously interacting with the rest of the year. Thank you.
Operator (participant)
Thank you very much, everybody.
M P Vijay Kumar (CFO)
Thank you, Jenny.
Operator (participant)
Thank you. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.