VCI Global Limited (VCIG) Q2 2023 Earnings Report, Transcript and Summary

Good morning, everyone, and welcome to VCI Global First Half 2023 Financial Results Conference Call. Thank you for joining us today. Today’s call is hosted by VCI Global’s CEO, Victor Hoo; and CFO, Zhi Feng Ang. At this time, your lines should be in listen-only mode until we reach the question-and-answer session of our call. [Operator Instructions] I’d now like to hand the conference over to IR Consulting from ICR, Michael Bowen.

Thank you, operator. Welcome, everyone, to VCI Global’s inaugural earnings conference call for the second quarter and first half of fiscal year 2023. A press release, which contains operational and financial highlights are now available on the Company’s IR website, which you can see in our press release. Joining me today are Victor Hoo, our CEO; and Zhi Feng Ang, our CFO. Before we start, I would like to remind you that this call may contain forward-looking statements, which are subject to future events and uncertainties. Statements that are not historical facts, including, but are not limited to, statements about the Company’s beliefs and expectations are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties and our actual results may differ materially from these forward-looking statements. All forward-looking statements should be considered in conjunction with the cautionary statements in our earnings release and risk factors included in our filings with the SEC. This presentation also includes certain non-GAAP financial measures, which we believe can be helpful in evaluating our performance. However, those measures should not be considered substitutes for the comparable GAAP measures. The accompanying reconciliation information related to those non-GAAP and GAAP measures can be found in our earnings press release issued earlier today. I will now turn the call over to our CEO, Victor Hoo. Victor?

Thank you, Michael. I’m delighted to be speaking with you today on our first conference call as a public company. We are proud of our team’s execution that led to exceptional first half results [Technical Difficulty]. We are very proud of the team’s execution that led to an exceptional first half. We are also very pleased with our results and progress now that we are a publicly traded company. As we will illuminate on this call, VCI Global demonstrated strong growth across our entire business and, in particular, our Business Strategy Consultancy and Technology Solution segments and we are optimistic regarding the remainder of 2023 and beyond. As demonstrated in our record-breaking revenue, which more than doubled year-over-year, our team has worked hard to advance all segments of our business. Starting with our Strategy Consulting segment. We are becoming the advisor of choice for high potential companies seeking to go public. Some of our NASDAQ IPO means are helping to elevate and validate our positioning. As companies require guidance navigating dynamic markets, we see significant potential to expand our IPO advisory engagements. We are also making inroads with major development projects, and anticipate being appointed a key consultant for some new exciting projects in Malaysia during the balance of 2023. Our business strategy expertise is driving consulting growth. Turning to Technology Solutions. We had tremendous success capitalizing our robust demand for AI services. Our new collaboration with Fusionex provides exclusive access to leading AI capabilities that we can offer clients. We were also selected by Cogia as the exclusive distributor for their groundbreaking messenger product in Southeast Asia. The AI-powered military grid communications should enable privacy, security, and tailored business solutions. And just last month, we signed an agreement to be exclusive licensee of [SQ AI modeling platform] across nine Asia Pacific region. With AI spend growing over 50% annually, these partnerships position us strongly in this high-growth space. Supported by our strong performance and expanded capabilities, we see significant opportunities ahead. We expect full-year revenue growth of at least 90%. We will continue targeting higher margin consulting services and partnership to drive improved profitability, and we are aggressively evaluating potential acquisitions to further enhance our capabilities. VCI Global is successfully executing our strategy for growth and value creation. I want to thank our employees for their commitment and our shareholders for their ongoing support. With that overview, I will turn the call over to our CFO, Zhi Feng Ang, to review our financials.

Thank you, Victor. We are proud that we delivered what we considered to be exceptional first half performance, achieving record revenue that grew 108% period-over-period to $9.5 million. This substantial growth was driven by strong performances across all our business segments. Our strategy consulting revenue increased by 83% to $4.5 million, primarily due to [March] IPO advisory wins. As of June 30, 2023, we are advising four clients who are currently undergoing the profit of going public on NASDAQ, which is helping to enhance our reputation in this attractive market. Our Technology Solutions segment grew 104% to US$4.2 million. We provided IT consultancy and system development in the fintech industry, which focuses on financing management system and e-commerce platform development. We have also added financing services, which contributed to about $0.8 million in the first half. With discipline cost management, operating expenses were 54% of revenue versus 65% last period. This led to operating income growing over at times to $226,000, net income increased by 37% to $4.3 million, our earnings per share grew 33% to $0.12 per share. Our balance sheet remains healthy with cash and equivalents of $3.3 million, providing flexibility to fund growth. Overall, we are very pleased with our record topline growth and profitability. I will now turn the call over to the operator to begin our Q&A period. Thank you.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] :

Thank you, operator. This is Michael Bowen from ICR. While we are assembling the roster questions, we’ve had a couple of questions coming in online, so I will address those now with the management team to get things started in the Q&A session. So question number one, with regard to financials. Your revenue growth in the first half was very impressive. Do you believe you can sustain this level of growth or were there any circumstances related to this revenue, for instance, one-time or lumpiness that could lead to lower revenue growth in future periods? Thanks.

Hi. Yes, we certainly believe that we can sustain this level of growth as we have a [healthy partners] of IPO clients in the second half as well as going into 2024.

Okay, great. Thank you for that. And then we have another question that came in also, and I’ll ask that now. With regard to your key performance indicators or your KPIs, what would you consider the best KPIs that investors should measure and track in order to determine the health and growth prospects for your business on a go-forward basis? Thank you.

All right. Our key performance indicators definitely are revenue growth and profitability. We believe these are the best indicators for the financial and the operating health of our company. Thank you.

Operator, I’ll turn it back over to you.

Thank you. [Operator Instructions]

Operator, while you’re reassembling, I’ll ask one other question that came in via email to us from a client. What is the average length of your business consultancy retainer engagements? Thank you.

Our retainer and [indiscernible] on a yearly renewal basis, however, most of these clients usually stay with us on a long-term basis. Thank you.

Operator, back over to you.

[Operator Instructions] All right. I’m showing no question. I’ll now turn the conference back to the management team for any closing comments.

Hi. So thank you, everyone, for attending this conference call. We hope that you can get a lot of insight in regards to our business progression as well as our results. So hopefully, we will see you guys, again in the next conference earning call. Thank you, and good morning.

Thank you. And with that, we conclude our conference for today. Thank you for participating. You may now disconnect.