Bad Q2 Results for Subex

Subex, the Indian revenue assurance and service activation vendor, has announced poor figures for its second quarter. You can read the press release from Subex here and the results here. Despite the optimistic tone of the press release, there is no hiding that the days when Subex forecast annual revenues in excess of USD120m have now receded from memory. Annual turnover of USD100m now looks to be a tough stretch for the would-be worldbeater. Halfway through its financial year, Subex has net consolidated revenue of USD48m, down 15.4% year-on-year. Q2 revenues were USD22.4m, a fall of 22.7% year-on-year. Reducing costs led to a small increase in EBITDA for the quarter when measured year-on-year, and improvement in the earnings ratios. However, yet another increase in interest costs left Subex with only the slimmest of profits before tax and exceptional items. Swapping from the consolidated figures to those of the core company, Subex Ltd, shows that a much higher proportion of the group’s revenues and costs are now going through the books of Subex Ltd. This confirms the impression that management has reigned in costs by concentrating production from its Indian base.

In the press release Subash Menon noted that

Business has stabilized along with order intake, and the future looks positive.

Stability is good, especially if revenues look to have reached their plateau and further sales are tough to find in a viciously competitive marketplace. Breaking even is a major turnaround from the disastrous losses Subex reported in 2008. However, current optimism is a lot more muted than that enjoyed during the heady days of growth where Subex’s star was ascending. The question for the revenue assurance market is whether Subex has reached its zenith and will have to settle with a new, lower level of ongoing sales, and what that means for its competitors.