Subex historically made acquisitions, which impacted its financials and led to higher debt. It also led to the exit of its founders. Over the years, the company has managed to reduce debt significantly and stabilise its operations
BENGALURU: Subex Ltd is poised to grow at a CAGR of 18-20% in coming years, ICICI Securities said in a report based on a virtual analyst meet with the management.
Subex believes its core business--95% of revenues--can grow at 10% while its new business, accounting for 5% of revenues, is expected to grow from $2 million to $18 million in coming years.
The company has embarked on a three-horizon strategy for a turnaround. Horizon 1 includes core traditional products focused on risk management, contributing 95% to the total revenue. “It is a cash cow and more of an annuity kind of business," the report said.
Subex caters to over 200 telecom customers, including British Telecom, its largest client. It claims that 20% of global telecom traffic goes through it. It is expected to grow 10% per annum over the next two to three years aided by the 5G rollout.
Horizon 2 includes products focused on internet of things (IoT), security, and analytics and Horizon 3 includes products focused on analytics and automated anomaly detection offering. Horizon 2 and 3 are growth products based on subscription models. The company can sell these products not only to telecoms but also to other verticals like banking, financial services and insurance (BFSI), manufacturing, fintech, and e-commerce.
“Horizon 2 and Horizon 3 can be quickly embedded to the customer’s current solution. Hence, they do not have to go through with the long process of changing whole old model and switch to new mode," the report said.
Founded in 1992, Subex provides software products and related services to communication services providers globally. Subex historically made acquisitions, which impacted its financials and led to higher debt. It also led to the exit of its founders. Over the years, the company has managed to reduce debt significantly and stabilise its operations.