Sify Technologies Ltd
NASDAQ:SIFY
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Sify Technologies Ltd
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Greetings. Welcome to the Sify Technologies Financial Results for First Quarter and Fiscal Year 2023-2024. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Praveen Krishna. You may begin.
Thank you, Holly. I would like to extend a warm welcome to all our participants on behalf of Sify Technologies Limited. I'm joined on the call today by Raju Vegesna, our Chairman; M.P. Vijay Kumar, Executive Director and Group CFO; and Kamal Nath, CEO.
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 Grayling Global at (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.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 Standard, 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 Sify's website.
Before we continue, I'd 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 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 the complete list of all risks and uncertainties inherent to the company's business.
I would now like to introduce Mr. Raju Vegesna, Chairman of Sify Technologies Limited. Chairman?
All you know, we gave a growth story. This is an exciting time India is going through. And we have to build our services and how do we make a stable destination, the availability of the relevant resources tools and significant untapped demand for the Indian enterprises. The government has been consistent using IT as an enablement tool to implement [ thoughful ] measures and this is the contributed to a really matured [indiscernible] system. And our next phase of the growth will leverage this favorable enrollment by introducing innovative and cost effective to digital forces leases for our customers. [Technical Difficulty] Our next phase of the growth will leverage this favorable advantage by introducing innovative and cost effective digital solution services for our customers.
Let me now bring Kamal Nath, our CEO, to expand on some of our business highlights for the past quarter. Kamal?
Thank you, Raju. As enterprises are pursuing their digital transformation and digitalization objectives, they are also recalibrating their digital infrastructure across hybrid cloud, network, security and edge infrastructures. This is a great opportunity for us to monetize our infrastructure, design for digital IT and transform the way digital infrastructures are managed through our digitalized services. We are topping that up by continuously building our core digital portfolio to support our customers' innovation journey. This portfolio places Sify in a unique position for all around customer engagement across their digital life cycle, which we believe would augment our growth strategy.
Let me now expand on the business highlights for the quarter. The revenue split between the businesses for the quarter was, data center colocation services at 32%, digital services at 28% and network services at 40%. As on June 30, 2023, if we provide services via 910 fiber nodes across the country, a 10% increase over the same quarter last year. The Network Connectivity service has now deployed 6,541 SG1 service points across the country. During the quarter, Sify has invested USD 193,000 in startups in the Silicon Valley area as part of our corporate venture capital initiative. To date, the cumulative investment stands at USD 5.57 million. 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, who will elaborate on the financial highlights for the quarter. Vijay?
Thank you, Kamal. Good morning, everyone. Let me briefly -- some of the financial performance for the first quarter of financial year '23, '24. The revenue was INR 8,547 million, an increase of 11% for the same quarter last year [Technical Difficulty]
Holly, did the line drop?
Yes, one moment, I will connect speakers line again.
Connecting again. Please Proceed, Vijay.
EBITDA was INR 1,724 million, an increase of 13% over the same quarter last year. Profit before tax was INR 149 million. And profit after tax was INR 95 million, a decrease of [Technical Difficulty]
It looks like we lost speaker line again. One moment while we reconnect again.
Holly also connect on the other alternate number I gave you.
Okay. One moment. Connecting. The speakers line is connected.
Capital expenditure during the quarter was INR 1,436 million. Sify and Sify Infinit Spaces Limited, a wholly owned subsidiary of Sify, which operates data center colocation business have entered into an agreement with Kotak data center fund on July 20, 2023, under which the fund will invest up to INR 6,000 million [Technical Difficulty]
It looks like we lost the line again. One moment while we reconnect again.
Please try and back up number also.
Okay we have the speaker line reconnected.
Sify and Sify Infinit Space Limited, a wholly owned subsidiary of Sify, which operates the data center colocation business have entered into an agreement with a leading investment bank-led fund Kotak Data Center Fund on July 20, 2023, under which the fund will invest up to INR 6,000 million, approximately USD 73 million on today's exchange rate in the form of compulsively convertible debenture of Sify Infinite Spaces Limited. Sify Infinite [Technical Difficulty]
One moment. It looks like we lost the speaker line again.
This landline is not even going through.
We have the speaker line connected.
Sify Infinit Space Limited will use the profits for the expansion of data centers, including land acquisition for new data center capacity, investment in procuring alternate source of power and repayment of debt. Fiscal [Technical Difficulty]
One moment. It looks like we lost the speaker line again.
Holly. Try the other line 2, he is just beside him.
We have the speaker line reconnected.
Yes. fiscal discipline will remain the corner stone of our growth strategy as we scale investments into our data centers and networks. By judicially allocating investments and resources, we will seamlessly expand our infrastructure in new resources and build competencies and scale. While we expect to see these investments impact profitability in the near term, they should enable us to aggressively pursue digital transformation engagements in the future. We will continue to prioritize resource optimization and sustainability fortifying our [Technical Difficulty]
One moment. It looks like we lost the speaker line again. We have the speaker line reconnected.
The cash balance at the end of the quarter was INR 3,240 million. I will now hand over to our Chairman for his closing remarks.
Thank you, Vijay. At the beginning of this financial year, we enabled our ambition to become the digital bid for enterprises who are either adopting or being [Technical Difficulty]
It looks like we lost the speaker line again. Just one moment. We have the speaker line reconnected.
Our immediate milestone is to become the enabler of the choice of this transformation. And we are well on our way. Thank you for joining on this call. I will now hand over to the operator. So I know we are having a lot of corrections. please reach our IR person for any questions. But I'm more than happy to connect -- answer any questions we have at this point. Operator?
[Operator Instructions] Your first question for today is coming from Greg Burns at Sidoti & Company.
So in terms of co-tax investment, what is their total investment now, including the first round of investment that they did, I guess, little over a year ago. I'm assuming that's fully pulled now, but where do they stand in terms of their investment into Sify Infinit Spaces? And the conversion rates on the notes, how much -- what percent of equity does that convert into.
[Technical Difficulty]
Holly, do you have M.P Vijay for us.
It look's like the speaker line has dropped again. Just one moment.
Holly. That's okay. My suggestion is that my CEO, Mr. Kamal Nath, can take this call. Kamal.
Praveen. Vijay has to take this call. So he'll be...
Okay. I can ask another -- I have another question. So maybe it's better for us all, but -- okay. Yes. So you mentioned like a new kind of phase of growth and taking advantage of moving beyond just kind of infrastructure and emphasizing digital services. So when you talk about that, is that just putting more resources behind the digital services that you're already reporting? Or does that envision something beyond that, some new services that you're bringing to market? Because I saw on your website, you had something called Marketplace. And I don't know if that's new and part of this initiative, but maybe if you could elaborate on your -- what you mean by digital services and your vision there for how that drives growth for Sify?
Yes, very good. So yes, it's a good question. So we have -- so our entire portfolio can be logically divided it into -- can be looked at from a customer's point of view in 3 parts. One, of course, are the infrastructures for digital IT, cutting across data center network, cloud, et cetera, et cetera. The second set of services we are calling them digitalized services, which are basically services to better manage the digital infrastructure to get the best out of the digital infrastructure when the digital applications are being run on the infrastructure. so those are the digitalized services. And some of the digitalized services -- some of these services were basically were existing earlier also, but they have got digitalized by insertion of digital technologies like AMS-IX So a lot of our [indiscernible] services have got digitalized by enabling them with AMS technologies. The third set of services, which we call the core digital services, [indiscernible] of digital platforms. So we have invested, as we gave in our quarterly calls in multiple deep tech companies new [ engineered adopted ] companies, which are by using those platforms, we offer digital services to our customers. So customers can build digital business models or can digitalize their services based on those platforms.
So we will be continually adding more and more portfolio around those core digital platforms. And in the coming days, I'm sure we'll be able to announce some more exciting partnerships in that regard. So from a customer standpoint, we are engaging with the customers for their core infrastructure. We are engaging with them for managing the core infrastructure better and also in the customer's innovation journey. So that's how I would like to put. And in that way, we are able to engage with customers cutting across their entire life cycle of their digital journey.
Okay. Great. And I don't know if this is -- one for Vijay or not. But can you just give us an update on your data center footprint, I think the last report was around 11 DCs and about 100 megawatts of power. What's the road map like for this year? How much capacity in fiscal '24? Are you bringing online? And what's the timing of that?
Yes, we are in fact -- Vijay you there.
Yes. [indiscernible] here. Yes. So we have 3 greenfield projects which are currently under construction. One of them is expected to go live later this quarter. And that particular capacity is designed for about 38 megawatts and will get occupied by the customer in a phased manner. The other 2 facilities, the civil construction will get completed in the quarter 4 of the fiscal year. And the basis, our customer engagements will create the initial IT capacity required for the customers.
Okay. So between those 3, how much -- I guess you mentioned 38 megawatts and the one that's coming online. But how much added capacity is that put you at? And then, I guess, could you just remind us of what your longer-term targets are in terms of your data center investments? And does the new investment from Kotak increased that year outlook -- increase your goals in terms of investment in capacity? .
I lost a part of your question because I got disconnected. I guess you are referring to additional capacities to be created in the future based on the new capital, which is coming from Kotak.
Yes.
That is for new capacities, which we intend to create over the next 18 to 24 months beyond the 3 greenfield projects which are currently under construction. The new capacities, we are currently completed our land acquisition. The design and planning work is in [Technical Difficulty]
One moment while we connect the CEO.
That's okay. I could -- we could connect off-line and do this at another time.
Okay. I'm back here. So it's basically for new capacities beyond the current greenfield project. What we have done is financial closure ahead of new projects to be started.
[Operator Instructions] There appear to be no further questions in queue. I would like to turn the call over to the management for closing remarks.
Thanks for your time on this call. We look forward to interacting with you through the year. Thanks very much. Have a great day.
This concludes today's -- thank you. This concludes today's conference. You may disconnect your lines at this time.
Holly, if you don't mind. To everybody on the call, we're sorry about the interruptions that have been frequently happening. But if you have any further questions, you can reach out to me marked in the press release. My e-mail ID and my coordinates are there. Thank you very much, Holly.
Thank you. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.