CTOS Digital (CTOS) Q3 2024 earnings summary

Executive summary

• 9M 2024 revenue rose 21.1% YoY to RM228.0m, with PATAMI up 19% YoY to RM73.9m, driven by growth across all segments and international expansion.

• International operations revenue grew 47% YoY for 9M 2024, with segment profit surging due to the Philippines acquisition.

• Associates' contribution rose 10% YoY for 9M 2024 and 30% YoY for 3Q 2024.

• Legal update: Plaintiff's motion to appeal to the Federal Court was dismissed, upholding the CoA decision.

• Profit before tax grew 1.0% YoY to RM79.2m, supported by higher share of profits from associates but offset by increased depreciation, amortisation, and finance costs.

Financial highlights

• 3Q 2024 revenue: RM79.8m (+20% YoY); PATAMI: RM27.6m (+13% YoY).

• 9M 2024 revenue: RM228.0m (+21% YoY); PATAMI: RM73.9m (+19% YoY).

• Gross profit for 9M 2024 was RM164.8m, up 13.2% YoY; gross margin at 72.3%.

• EBITDA margin improved QoQ in 3Q 2024 due to higher associates' contributions.

• Lower tax expenses due to tax incentives from the 2nd 5-year income tax exemption (Nov'21–Nov'26); effective tax rate at 9.5%.

Outlook and guidance

• FY2024 revenue target revised to RM315–320m (21–23% YoY growth); FY2025 target RM370–390m (17–22% YoY growth).

• EBITDA target for FY2024 maintained at RM130–140m; FY2025 revised to RM155–165m.

• Normalized PAT target for FY2024 maintained at RM110–115m; FY2025 revised to RM125–130m.

• Management remains positive on growth prospects, citing strong digital adoption, regional expansion, and ongoing engagement with associates.

• The group expects continued revenue growth from all customer segments and further contributions from international operations.