tTech makes a wager on future business
A decision by junior market firm tTech Limited to take the lead on a project with a foreign partner drove up the company's cost of business fivefold in the June quarter and dampened its margins.
But the company still came out ahead with a big spike in net profit. Revenue grew 47 per cent and tTech was able to retain most of that gain at the bottom line, with profit rising 41 per cent.
Company CEO Christopher Reckord said the thinner margin at the second quarter was worth it as a pay down on future business, as the investment project would give tTech greater visibility on a bigger stage.
"We took a strategic decision that in the case of one particular project that was on the table, rather than execute in a minor role we would take the lead. That meant taking on subcontractors and putting in those additional resources necessary to execute. We wanted to show tTech delivering in a space where overseas expertise would normally operate," the tTec CEO told the Financial Gleaner.
tTech is mostly involved in information technology, infrastructure management, IT security services, voice/PBX Systems, cloud services and consulting.
By taking the top spot with its Canadian partner Loris Technologies, tTech also hopes to drive home to Jamaican businesses that top IT expertise is available to them in their own backyard. It's the company's own outreach on services import substitution in the tech space.
"The truth is that big companies out there bring in overseas consultants at great cost. We at tTech are saying that the capability exists right here in Jamaica - we can handle the large projects," Reckord insisted.
During the June quarter, tTech launched the FileNexsus Enterprise Document Management System in partnership with Loris. It captures and archives information in support of automated work flow.
tTech staff have been pitching the system to companies, and have been sending out proposals to prospective clients, with Reckord reporting that so far they have landed one major contract with a large Jamaican firm.
He would not name the firm nor the value of the contract, citing market disclosure rules.
Notwithstanding a spike in cost of sales from $4.7 million to more than $22 million in the quarter, tTech reported revenue of $75 million, up 47 per cent from $51 million. That pushed its top line income at half-year to $145 million, up nearly 35 per cent over the previous year's $108 million.
Profit in the quarter rose 41 per cent from $6.9 million to $9.7 million, while half-year profit climbed by 44 per cent, from $11 million to $16 million.
Reckord expects the second half-year out-turn to maintain the current trend, and says the company would likely expand its team even further to push for more contracts.
"We're hopeful as regards the coming months. The board is looking favourably on the developments for FileNexsus. We really put the word out about this application and already we're seeing the benefit," the CEO said.