Any current/future new fundraising through debt or equity?

The board approved a capital raising plan of approximately Rs.150 Crores (around USD 20 million) for Blockedge Technologies Inc., a 100% subsidiary of SecureKloud, to be presented for shareholder approval at the AGM on September 30, 2021. The subsidiary fundraise is planned as equity investment (capital raising). Regarding Healthcare Triangle’s NASDAQ listing, the company is anticipating raising around USD 25 million, but the exact dilution or pricing is not yet determined as it awaits SEC clearance. SecureKloud aims to keep dilution low by raising around USD 25 million in funds but has

Any current/future capex/capital investment/strategic investment?

The board approved a capital raising plan of approximately Rs.150 Crores (USD 20 million) for Blockedge Technologies Inc., a 100% US-based subsidiary of SecureKloud. The approval was given on the day of the call (August 6, 2021), with shareholder approval planned for the AGM on September 30, 2021. The funds raised will be used to support sales and marketing efforts specific to the Blockedge platform. SecureKloud is continuing to invest in sales and marketing, including hiring new sales personnel to drive growth. Investments in product development and enhancements continue for platform-

Future growth expectations in sales/revenue/volumes?

Revenue growth expected in the next two quarters as the company witnesses shift from one-time revenue to recurring revenue model. Addition of new sales force and investment in sales & marketing to speed up customer acquisition. Growth potential in Blockedge blockchain platform with dedicated sales team planned, aiming to increase revenue substantially. Expansion into new verticals such as pharma, automotive, insurance, land registry, and government sectors. Geographic expansion in Europe, Middle East, Japan, UK, India, US, and other markets. Multiyear contracts and recurring revenues from exis

Future growth expectations in earnings/operating earnings/profits/EPS?

Revenue growth is expected in the next few quarters due to increased sales efforts and a healthy sales pipeline, especially with new client acquisitions and expansion in various geographies including Europe, Middle East, Japan, UK, and India. Transition from one-time revenue to recurring revenue models (SaaS/platform as a service) is anticipated to support sustainable growth and improve margins. Gross margins were impacted by higher low-margin revenue share, subcontracting costs, and salary revisions, but operational improvements like automation and productivity enhancements are planned to off

Current/ Expected Orderbook/ Pending Orders?

SecureKloud has a strong order backlog in Life Sciences and Healthcare verticals. New logos acquired in the last two quarters, including seven new logos in the current quarter from India and the US. Expansion plans in Europe, Middle East, and Japan aimed at reducing dependency on large customers. Healthy sales pipeline with promising traction in new client opportunities. Top five to ten customers contribute the majority of revenue. Expect revenue uptick to start reflecting in the next couple of quarters. Multiyear agreements being discussed with customers in healthcare for implementation, supp

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SecureKloud Technologies LtdQ2 FY21IT - Services

SecureKloud Technologies Ltd Q2 FY21 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹19.1Market Cap: ₹77 CrSector: IT - Services

Management growth scorecard

Revenue

Category 3

Margin

Category 2

Fundraise

Yes

Order

Yes

Capex

Yes

3 of 5 growth signals are positive.

Full analysis

Revenue guidance

Category 3

→Revenue growth expected in the next two quarters as the company witnesses shift from one-time revenue to recurring revenue model.
→Addition of new sales force and investment in sales & marketing to speed up customer acquisition.
→Growth potential in Blockedge blockchain platform with dedicated sales team planned, aiming to increase revenue substantially.
→Expansion into new verticals such as pharma, automotive, insurance, land registry, and government sectors.
→Geographic expansion in Europe, Middle East, Japan, UK, India, US, and other markets.
→Multiyear contracts and recurring revenues from existing and new clients enhancing revenue visibility.
→Collaboration with consortiums in pharma and automotive to broaden customer base.
→Anticipated steady growth in recurring revenues, currently at 36.9%, led by Life Sciences and Healthcare sectors.
→Focus on platform-as-a-service business model for higher enterprise value.

Margin guidance

Category 2

→Revenue growth is expected in the next few quarters due to increased sales efforts and a healthy sales pipeline, especially with new client acquisitions and expansion in various geographies including Europe, Middle East, Japan, UK, and India.
→Transition from one-time revenue to recurring revenue models (SaaS/platform as a service) is anticipated to support sustainable growth and improve margins.
→Gross margins were impacted by higher low-margin revenue share, subcontracting costs, and salary revisions, but operational improvements like automation and productivity enhancements are planned to offset these.
→Investment in sales and marketing has been substantial; benefits of this will reflect in revenue growth and margins in coming quarters.
→Focus on platform-based services such as CloudEz, DataEz, and Blockedge, with potential in pharma, automotive, and government sectors, is expected to drive high-value enterprise growth.
→Profits should improve sequentially as revenue grows and operational efficiencies increase.

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Fundraise plans

Yes

→The board approved a capital raising plan of approximately Rs.150 Crores (around USD 20 million) for Blockedge Technologies Inc., a 100% subsidiary of SecureKloud, to be presented for shareholder approval at the AGM on September 30, 2021.
→The subsidiary fundraise is planned as equity investment (capital raising).
→Regarding Healthcare Triangle’s NASDAQ listing, the company is anticipating raising around USD 25 million, but the exact dilution or pricing is not yet determined as it awaits SEC clearance.
→SecureKloud aims to keep dilution low by raising around USD 25 million in funds but has capacity to raise more if needed.
→No specific mention of new debt fundraising was made in the call.
→Overall, current focus is on equity fundraising for growth initiatives particularly for Blockedge and Healthcare Triangle's listing.

Order book

Yes

→SecureKloud has a strong order backlog in Life Sciences and Healthcare verticals.
→New logos acquired in the last two quarters, including seven new logos in the current quarter from India and the US.
→Expansion plans in Europe, Middle East, and Japan aimed at reducing dependency on large customers.
→Healthy sales pipeline with promising traction in new client opportunities.
→Top five to ten customers contribute the majority of revenue.
→Expect revenue uptick to start reflecting in the next couple of quarters.
→Multiyear agreements being discussed with customers in healthcare for implementation, support services, and Disaster Recovery as a Service (DRaaS).
→Some past customers have returned due to positive engagement and service quality.

Capex plans

Yes

→The board approved a capital raising plan of approximately Rs.150 Crores (USD 20 million) for Blockedge Technologies Inc., a 100% US-based subsidiary of SecureKloud.
→The approval was given on the day of the call (August 6, 2021), with shareholder approval planned for the AGM on September 30, 2021.
→The funds raised will be used to support sales and marketing efforts specific to the Blockedge platform.
→SecureKloud is continuing to invest in sales and marketing, including hiring new sales personnel to drive growth.
→Investments in product development and enhancements continue for platform-based services such as DRaaS, CloudEz, and DataEz.
→The company focuses on building a platform-as-a-service business model with recurring revenue streams.

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