Please check #Subex on twitter. Some genuine threads available.
A little bit of management misguidance
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Any update on subex ltd looked promising with the reliance tie up etc but stock not moving… does it look like the next big IT stock or is it a dead case…plz give inputs
Founded in 1992, Subex is a telecom AI product company that works in the space of Digital Trust i.e. it is focused on privacy, security, risk mitigation, predictability and confidence in data mainly in the telecommunication space focusing on products for communications service providers (CSPs) globally.
Through their HyperSense line of offerings, Subex empowers communications service providers and enterprise customers to make faster, better decisions by leveraging Artificial Intelligence (AI) across the data value chain. Subex leverages its award-winning product portfolio in areas such as Business Assurance and Fraud Management and enhances them with the power of HyperSense to help CSPs reduce risk, combat fraud and thereby ensure profitability.
Key Points:
1.Products based on Digital trust
Digital Trust is a concept that enables users to carry out business transactions in a safe, secure, ethical and reliable manner. Some of the products the company offers Revenue Assurance, Network Analytics, Fraud Management, Identity Analytic, Partner Ecosystem Management, IoT Security, Analytic Center of Trust and Anomaly Detection.
2.Debt-Free
From the 1990’s to the 2000’s the company acquired companies using equity and its revenue grew at a compounded annual rate of 33% between 2000 and 2007. However, with the acquisition of Syndesis using cash of $165 million, the company became debt-free in FY21. Now company is almost debt free with debt to equity ratio of 0.07 only.
3.Revenue Split by Service
Managed services: 28%
Support Services & Others: 31%
Implementation, Customization and License: 41%
4.Geographical Split
Europe, Middle East, Africa (EMEA): 60%
Aisa-Pacific (APAC) Region: 20%
Americas: ~18%
India: ~2%
5.Clients
Some of the major clients include - Airtel, Optus, VI, Jio, etc., which include 75% of the world’s top 50 telecom companies.
It has 98% customer retention. Approximately 60% of revenue is annuity/recurring.
Key Developments/Announcements
The company has joined the ORAN Alliance to support the development and standardization of Open RAN (radio access networks). The company will work with Skylab to offer Internet of Things (IoT) and OT cybersecurity solutions and services in the maritime sector. The company has announced the launch of HyperSense, an end-to-end augmented analytic platform.
Subex extended its partnership with Robi to upgrade its existing Integrated Revenue Assurance and Fraud Management (iRAFM) system.
Restructuring
The company completed the restructuring of Subex Assurance into Subex Ltd. Another exercise was the successful shift of revenue maximization solutions to the parent company. The RMS business of Subex Assurance LLP was transferred to the company by way of a slump sale for a lump sum consideration of Rs.95 crore.
Focus
(a.)Jio platforms partners with Subex HyperSense AI to augment its 5G product line.
(b.)The U.S. Patent and Trademark Office granted the company a patent that defines the future of revenue maximization for telecoms.
(c.)5-year contract with Dhiraagu (the leading telecom operator in the Maldives) for integrated revenue assurance and fraud management.
(d.)Horizon 1 (Enhance the core): Business from Tier-I customers keen to refreshing outdated technologies
(e.)Horizon 2 (Growth in new areas): Highly dependent on the growth of 5G Technology. It includes IoT Security (a multi-vertical product) & Analytics Center of Trust.
(f.)Horizon 3 (Invest in Emerging Areas (Multi-Vertical SaaS)): It includes CrunchMetrics, an automated anomaly detection software and IDcentral.
(g.)Making inroads in the multi-vertical IoT Security space and incubating virtual startups within the organization to diversify into new areas and verticals. Subex is investing heavily in new areas like artificial intelligence (AI)/machine learning (ML), Augmented analysis, and deep learning-based anomaly detection.
Financials:
Q1 FY24 results show a 42% increase in revenue y-o-y basis.
Optimizing costs and enhancing operational efficiency.
Timeline for achieving a positive bottom line in about a year.
Need to improve sales team performance and top-line growth.
Strategic Initiatives:
Secured three new logos in core business domain, focused on expanding footprint in strategic accounts.
Investing in talent development and reshaping skills in evolving technology landscape.
Collaborating with a leading strategic player and exploring opportunities in blockchain technology.
Partner Ecosystem Management and IoT security offerings are gaining traction.
Product Offerings:
1. HyperSense Fraud Management System
Traditional monitoring and fraud detection methods are proving to be inadequate in the face of heightened risks because of rapid digitization, new technologies and innovative techniques used by fraudsters.
Subex’s AI-First Fraud Management on HyperSense is an end-to-end fraud management solution that provides 360-degree protection across various service offerings. It leverages AI at every step of the fraud management process to effectively combat fraud and security risks. With a state-of-the-art AI engine at its core, it helps fraud teams increase business-coverage, accuracy, agility and enables them to use AI sustainably. It is designed to build digital trust by leveraging explainable AI capabilities that provide complete transparency on how decisions are made.
2. Network Security
The network security suite utilizes multi-layered detection with signatures, heuristics and machine learning being the main proponents to detect and prevent network attacks early in the kill chain. Its solution delivers quick return on investment (ROI) by reducing threat activity both upstream and downstream. The solution can also scale seamlessly across geographies, device numbers, architectures and connectivity flavors.
3. Business Assurance
In today’s hyper-competitive environment, revenue assurance has rapidly evolved from assuring revenues (with a primary business focus on EBITDA) to assuring business models as business assurance. 80% of RA business requirements today are looking to explore analytics solutions. Further 70% of Tier-1 telecoms are looking to re-engineer their risk framework to suit new business models. These numbers are further substantiated by the TM forum which mention that 100% of business data flows require the delivery of intelligent analytics. This new environment has necessitated a shift in mindset from traditional RA to active risk intelligence (ARI) with business assurance. With ARI, operators enable efficiency & optimization and embrace AI driven robotic process automation & identification of unknowns. With its re-imagined assurance product stack, operators can assess and address impacts in near real-time or in some cases, proactively. In today’s reality of multi-service, multi-disciplinary offerings (eg. banking, retail, digital content etc.), the comprehensive AI/ML capabilities in the solution will help its telecom partners.
4. Partner Ecosystem Management
Expand business capabilities while working with traditional partners and digital disruptions to introduce new-age products and services. Partner Ecosystem Management enables collaboration between communication services providers (CSP) and their partners to manage all aspects, from partner on-boarding to billing and dispute settlement, taking care of entire partner life-cycle management through a transparent process.
5. Network Analytics
Improve decisions towards making the right network investments and getting the most from your existing spending. Through advanced analytics, you can ensure that you always make the right capacity spends while having complete visibility of your network assets. This can help you reduce your operational expenses, while keeping the capex in check.
6. Analytic Center of Trust (ACT)
A solution framework built to help organizations transform from a traditional business to a digital one through the power of data analytics. ACT enables you to build trust in your data and analytic program making it a powerful factor in driving business through data driven decision-making. It focuses on multiple dimensions of people, process, technology and data to drive transformation across the business.
7. Anomaly Detection
Conventional methods based on a reactive approach to responding to alarms triggered by static thresholds fail to meet the needs of modern-day organizations. What organizations need is a solution that can automatically look through billions of records, identify unusual patterns, intelligently correlate these patterns with their context of occurrence, and flag outliers that can cause business impact – all in real-time. Towards this end, Subex delivers AI-based anomaly detection for digital businesses through its subsidiary.
S W O T Analysis:
Strengths
Leader in the Telecom AI and analytics space, it helps businesses thrive by creating connected experiences.
Sticky Revenue Model: About 60% of revenue is annuity/recurring and > 98% customers retention.
Investing heavily in new areas like Genarative AI.
Established market position with strong client relationships in the telecom software service segment.
Received significant industry validation and market recognition for its AI offerings.
Growth in Net Profit with an Increasing Profit Margin (QoQ).
Growing revenue every quarter for the past 2 quarters.
Rising profits every quarter for the past 2 quarters.
FIIs / FPIs or Institutions raise their shareholding.
Now company is almost debt-free with debt to equity ratio of 0.07 only.
Weakness
The company has low interest coverage ratio.
Declining RoCE & RoE over the last 2 years.
Opportunities
Stock with Low PE (PE < = 10)
Threats
The group derives almost its entire revenue from the telecom segment. Any slowdown in the telecom segment could adversely impact the group.
Disclaimer :
I am not a SEBI registered advisor and this report is solely for educational purposes. The information provided does not constitute any form of recommendation. Therefore, please conduct your own analysis before engaging in any trades or consult your financial advisor. I holds no responsibility for your intended decisions and any resulting financial losses.
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