(TheNewswire)
Toronto, ON / T heNewswire / April 12, 2022 / NTG Clarity Networks Inc. (TSXV:NCI) reports its fourth quarter and year end results for thefiscal year ended December 31, 2021 (all figures in CanadianDollars).
2021 was a very good year for NTG that has seen anincrease in revenue and a turnaround towards profitability. Revenuesfor 2021 were up 50% to $11.895M compared to $7.9M in 2020. Profit was$1.36M compared to a loss of $1M in 2020. The gross margin in 2021improved to 55% compared to 28% in 2020 primarily because of licensefees that have a higher margin.
Our Q4 2021 revenue is the highest q uarterly revenue since 2016 and wehave been profitable for a sixth straight quarter. Revenue for Q4 2021was $4,132,046 and the net income was $416,748; compared to a revenueof $1,547,766 and a net profit of $267,776 in Q4 2020. We expect thesestrong quarterly results to continue in 2022 due to the new contractsannounced in December 2021.
We have capitalized on our track record and experience,and the goodwill we have built with our customers and partnersthroughout the years. NTG is now recognized as a provider of top-tier,high quality services with very competitive pricing, and we have addednew clients to our customer base, especially in the financial sectorwhere we have been focusing expansion this year. This sector isoutside our traditional telecom vertical and is an important growthopportunity for us as they are going through a digital transformation.We are working hard to capitalize on the booming demands for IT andtelecom services and on establishing NTG as a major offshoring hub fortechnology and IT services.
Going forward, we are focusing on promoting andexpanding our product offerings that provide a high profit margin. Weare focused on our NTGapps digital transformation platform thatintegrates with our Network Asset Management product. DigitalTransformation is one of the current key objectives of mostorganizations and NTGapps provides a tool to help organizationsachieve this goal while integrating with their legacy systems. Webelieve that NTGapps is one of the best digital transformationplatforms available. It enables our customers to consolidate theirend-to-end business software and integrate with specialty third-partyplatforms, enhancing operational efficiency and saving clients timethat can instead be used to create new revenue streams.
IncomeStatement Highlights for the Year Ended December 31, 2021 and2020
December 31, 2021 | December 31, 2020 | ||||
REVENUE | $ | 11,895,943 | $ | 7,906,989 | |
COST OF SALES | 5,307,491 | 5,673,356 | |||
GROSS PROFIT | $ | 6,588,452 | $ | 2,233,633 | |
Operating Expenses | 3,992,545 | 3,394,410 | |||
Other Expenses | 1,225,819 | 471,676 | |||
Net Income (loss) | $ | 1,363,958 | $ | (1,098,617) | |
per share (basic) | $ | 0.01 | $ | (0.01) | |
per share (fully diluted) | $ | 0.01 | $ | (0.01) |
December 31, 2021 | December 31, 2020 | |||
Total Assets | $ | 6,490,706 | $ | 3,406,422 |
Total Liabilities | $ | 14,409,518 | $ | 15,942,492 |
Shareholder’s Equity | $ | (7,918,812) | $ | (12,536,069) |
Canada
Before 2021, our Canadian operations were relativelysmall compared to our international operations. This year, Canadiancustomers account for 14% of NTG’s revenue. In December 2021, wewere awarded two projects through our Canadian office to:
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license and install NTG’s NTS Asset Management,Network Discovery, Discrepancy and Reconciliation software, includingour new low-code NTGapps digital toolbox. The license revenue includedin 2021 was approximately $1.22M for this new customer. Futureimplementation revenue over the next 15 months (PO announced December9, 2021) is expected to be $1.3M.
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license, install and support our NTS Utility Billingsoftware. The USD$360K contract includes a license amount of USD$126Kthat was invoiced and received in January 2022. Future milestonebilling for the balance is expected over 8 months (contract announcedJanuary 5, 2022).
Egypt
Egypt continues to be a challenging place to dobusiness with restrictions on using foreign currency for businessoperations and on moving funds out of the country. We mitigate much ofthe risk of doing business in the country as our expenses and themajority of our contracts in Egypt are both in the local currency.Additionally, most of the technical and professional services foroffshoring and outsourcing are based in Egypt, allowing NTG to provideexperienced resources and expertise at extremely competitive prices.This has proven to be a successful strategy as the offshoring ofresources to Egypt is increasingly popular.
We are also working to diversify our customer base inthe country. In addition to our 2 major customers who represent 50% ofEgypt’s annual revenue (2020: 75%), we are increasing work withother existing customers and have added 7 new customers (6% ofrevenue) in the financial and telecom sectors.
In addition to offshoring and providing professionalservices to customers in Egypt, we have focused efforts more on ourcore software products and our NTGapps low-code development platform.We have sold our NTGapps software product to 4 of our existingcustomers in Egypt.
In 2021, Egypt’s revenue contribution continues to bestrong with the subsidiary contributing 23% of the Corporation’srevenue (2020: 26%).
Subsequent to year end, in March 2022, Egypt devaluedits currency by 14%, prompting an increase in interest rates andinflation in the country. The effects on NTG’s operations are notyet quantifiable. We anticipate, as in 2016, there will be more growthopportunities as other companies leave the marketplace because ofreluctance to do business in the local currency. We also expect toincrease some salaries to retain our highly skilled personnel.
Kingdom of Saudi Arabia (KSA)
NTG has been doing business in KSA for over 15 years,and ongoing initiatives continue to show returns with 70% of ourprofessional service work and 58% of our revenue being from KSA (2020:79% and 63% respectively). NTG has developed good brand recognitionand a solid track record over the years, which is an asset to our workin the region.
During the year, COVID-19 travel restrictions slowedthe movement of personnel to customer sites. We were required toquarantine our personnel for two weeks in another country (Bahrain orMaldives) prior to arriving in KSA. This resulted in significantincreases in travel and accommodation costs during the year.
We have sold our NTGapps software to new and existingcustomers in the country, and product demos show promising interestacross multiple sectors.
Our KSA revenue has increased by 42% over 2020revenues. Additionally, customers in the banking and in public sectorsare contributing significantly to our revenue (26%).
Oman
In 2021, we continued work for our customer in Oman,who is using our NTS Network Inventory and Project Management modules.Recurring revenues in Oman from product maintenance, support, andchange requests as well as professional services contributed 5% toNTG’s revenue in 2021 (2020: 11%).
Outlook
Customers have been recognizing our quality of work andtrack record and this has resulted in increased work from our majorcustomers, including sales of our NTGapps software product. KSA’seconomic rebound, due in large part to increasing prices for oil, hasshown increasing demand for our products and services. Our Q4 2021revenue is the highest quarterly revenue since 2016 and we have beenprofitable for the sixth straight quarter.
Subsequent to year end, most of the marketplaces weoperate in have relaxed or eliminated COVID-19 requirements and we areseeing many of our customers and activities return to normal. However,some customers have retained some form of the “work from home”model and some are making use of the technical, IT and professionalservices we offer through our Egypt Offshore Centre. We are excitedabout the increasing demand for this offering model as we expand ourbusiness into new verticals that include government and financialsectors. We expect the additional travel and accommodation costs thatwere necessary in KSA this year will be greatly reduced going forward,however this remains a concern.
Finally, with the increased demand for our softwareproduct; NTGapps digital toolbox, we anticipate being able to furtherexpand into new verticals. We are expanding the focus of NTGapps toinclude tools related to small and medium enterprise (SME) end-to-endbusiness operations. We are already seeing demand in the financial andgovernment sectors and we see this as an opportunity to present ourproduct for use in the medical sector. Of particular note is the PO wereceived in March of this year for a new customer in the medicalsector to deliver their digital products on the NTGapps platform. Formore information, visit www.ntgapps.com. We are also seeing anincreased demand for our Utility software and Network Asset Managementand feel this will lead to new customers and increased recurringrevenue.
In an unrelated matter, the Company announced thatshare options will be issued for each member of the Board of Directorsfor the Company; Ashraf Zaghloul and Kristine Lewis will receive750,000 share options each; Saleem Siddiqi and Zeeshan Hasnain willreceive 350,000 share options each. Each option will be exercisable ata price of $0.05 per share and will vest immediately.
About NTG Clarity NetworksInc.
NTG Clarity Networks’ vision is to be a global leaderin providing networking solutions. As a Canadian company established30 years ago in 1992, NTG Clarity has delivered networking, IT andnetwork enabled application software solutionsto network service providers and large enterprises. More than 350network professionals provide design, engineering, implementation,software development and security expertise to the industry’sleading network service providers and enterprises.
Forward Looking Information
Certain statements in this release, other thanstatements of historical fact, are forward looking information thatinvolves various risks and uncertainties. Such statements relating to,among other things, the prospects for the company to enhance operatingresults, are necessarily subject to risks and uncertainties, some ofwhich are significant in scope and nature.
These uncertainties may cause actual results to differfrom information contained herein. There can be no assurance that suchstatements will prove to be accurate. Actual results and future eventscould differ materially from those anticipated in such statements.These and all subsequent written and oral forward looking statementsare based on the estimates and opinions of the management on the datesthey are made and expressly qualified in their entirety by thisnotice. The Company assumes no obligation to update forward lookingstatements should circumstances or management's estimates or opinionschange.
The TSX Venture Exchange does not accept responsibilityfor the adequacy or accuracy of this release.
For Further Information:
Kristine Lewis, President, NTG Clarity NetworksInc.
Ph: 905-305-1325
Fax: 905-752-0469
Email: klewis@ntgclarity.com
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