Edarat shows robust performance in H1 2022; SAR 95 mln projects under construction: CEO

Erick Baduy, CEO of Edarat Co. for Communication & Information Technology (Edarat) 

Edarat Co. for Communication & Information Technology (Edarat) showed excellent performance in the first half of 2022, as revenue reached SAR 28.54 million, soaring 163.5% compared with a year earlier, CEO Erick Baduy told Argaam.  

He added that the company's net earnings amounted to SAR 6.3 million in H1 2022, which may reach nearly SAR 15 million in 2022. 

The company is expected to record further growth in 2023, especially in cloud computing that aims to transfer customers' workloads and operate them in a sovereign cloud in the Kingdom, the CEO said.

He added that Edarat looks forward to providing comprehensive facilities management services to its clients, as well as opening new markets to maintain the growth momentum.

The value of under-development projects amounted to SAR 95 million, of which SAR 60 million are for 2023.

Baduy also highlighted the company's services and data center project services for banks and telecom operators in a number of markets, as well as their plans for investment in cloud computing infrastructure and data centers.

Here is the interview with Baduy:

Q: What are the services provided by Edarat?

A: The services provided are based on cloud computing, as Edarat owns its own cloud computing network, which was assigned the highest rating of 'C' by the Communications, Space and Technology Commission (CITC). This rating qualifies it to host highly confidential information. The company also has a large base of local and international customers that provide their services through this network, and there is significant growth in this field.

Edarat provides design, supervision and operational services for data centers, as the company participated in the design and supervision of the largest data centers in the Kingdom and the GCC, as well as issuing certification certificates for these centers, in cooperation with Uptime Institute. In addition, the firm offers consulting services in the field of information technology.

Q:  What is the nature of the company's contracts with its clients from the government, semi-government and private sectors in terms of the type of services provided and the contract period?

A: As for the nature of contracts for data center projects, they are different, as most of them last three to five years. In addition, the hosting contracts last three years, and the renewal is made annually upon client request.

As for data center contracts, our work begins with conducting a feasibility study, selecting a site, presenting a detailed design package, as well as supervising construction, testing and operation, in addition to ensuring that data centers comply with international standards. Our customers are banks, telecommunications companies, and government agencies (security and defense).

Our cloud services target any entity looking to run customer workloads on a sovereign cloud in the Kingdom, as Edarat is one of the first companies licensed by the CITC to provide hybrid and available cloud services.

We have been able to attract various types of long-term contracts to include fintech companies, banking and insurance services, government agencies, and industrial sector, as well as international software companies (ISVs) looking to provide Software as a Service (SaaS) in the Kingdom.

Q: How was the company's financial performance until the end of June 2022?

A: Thankfully, the financial performance was very excellent, as the company witnessed significant growth in revenue and profit in the first half of 2022. Revenues surged 163.5% to SAR 28.54 million, compared to SAR 10.83 million a year earlier.

Profit also reached SAR 6.3 million in the six-month period, compared to SAR 832,000 a year before. We expect the company to log nearly SAR 15 million earnings in 2022.

Q: How much is the expected value of contracts for the semi-government and private sectors by the end of 2022?

A: We expect the value of contracts to range between SAR 90 million to 100 million by the end of 2022.

Q: How much is the value of extended customer-service contracts until 2023?

A: The total value of pipeline projects is SAR 95 million, including SAR 60 million for 2023. We expect significant growth in the next year, especially in the field of cloud computing for the government, semi-government and private sectors, in addition to international companies.

Q: What about the available opportunities in other fields within the IT sector? 

A: We are looking forward to providing comprehensive facility management services at data centers. This will allow Edarat to maintain its growth momentum. Long-term contracts enable the company to extend its agreements with the current clients beyond five years and create internal jobs for the company’s team, which has long experience in data center projects. 

For cloud services, Edarat eyes new markets, in addition to being a key player in the Kingdom. We will remain focused on developing our services catalogue, maturing our cloud platform and enhancing our capabilities to attract more opportunities//duties. Edarat currently seeks to open new areas in different countries across Europe and the MENA region. Further, adding new regions to the existing three in the Kingdom will qualify us to be a distinguished regional cloud services provider.

Q: How do you evaluate demand for Edarat’s services in markets of operation? 

A: As explained in our financial statements, we provide services for clients in many countries, including the GCC. We manage data center projects for banks and telecom operators. 

We also provide services for clients in the UK, India, China and the UAE. We are targetting to boost our revenue in these countries, as well as other markets, as part of our expansion strategy. We expect accelerated growth over the coming years. 

Q: What about Edarat’s goals from listing shares on Nomu?   

A: By this listing, we seek to maintain the company’s growth and corporate governance, to benefit from incentives offered by the Saudi government to listed companies. 

Q: Do you have any future projects? 

A: Edarat works on increasing investments in its cloud computing infrastructure for services development. We also work with our clients on many data center projects.