IPVG profit jumps 40% to P167.56M

Information technology and gaming conglomerate IPVG Corp. reported a 40- percent jump in net profit for the nine months ending September this year on the back of record revenues, mainly coming from its data center and online gaming units.

IPVG’s net earnings reached P167.56 million during the period, from P119.68 million the previous year.  Revenues rose more than four-fold to P2.78 billion from P612.85 million, lifted by contributions from key acquisitions Prolexic (Distributed Denial of Service) and business process outsourcing (BPO) firm Influent.

In the third quarter alone, IPVG’s net income surged 71.8 percent to P130.86 million from only P76.17 million. Revenues amounted to P130.86 million or more than three times the P76.17 million recorded a year earlier.

IPVG president and chief finance officer Enrique Gonzalez said the company is well on track to meeting its P3.3-billion revenue target for the year of given its robust performance.

He pointed out that the company has been growing by over 350 percent year-on-year in terms of revenues since 2007.

IPVG’s gross profit likewise increased 318 percent from P294.6 million to P1.23 billion in 2008.

However, consolidated operating expenses surged 509 percent to P1.11 billion from only P182.18 million due to the consolidation of expenses of its overseas operations. Salaries and payroll-related expenses, for instance, increased as total group-wide employees increased to 2,723 as of September 2008 from only 257 a year ago. Manpower cost accounts for 17 percent of gross revenues.

The group’s combined capital expenditure also went up due to significant IT investments and existing fixed assets of the new subsidiaries. This increased the depreciation charges by  253 percent.

Earnings before interest, depreciation and amortization (EBITDA) climbed 63 percent to P236.6 million. In the period July to September 2008, however, EBITDA fell 41.8 percent to P52.34 million from P89.95 million as Influent, the company’s BPO arm in the US, started to feel the impact of the economic crisis and the group’s aggressive but necessary investments in human capital and strategic acquisitions weighed on its operating expenses.

Moving forward, the company said it is adopting a cautious stance in view of the current global economic downturn which has resulted to the closure and sale of some big investment banks. To stay afloat, IPVG is cutting back on its expenditures and putting acquisitions on hold, Gonzalez said.

IPVG, which has lost more than 70 percent of its market value in the past six months, has  spent more than $20 million for acquisitions

Gonzalez, however, said IPVG is in a much better position to survive the ongoing financial crisis than other corporations, noting that   the sectors they are in are fairly resilient.

He said the group intends to contain its overall expenses in the coming months as the new subsidiaries are assimilated and synergies are employed for more efficient operations.

“Next year is going to be a very difficult year for a lot of corporations because of the global economic slowdown. The Philippines hasn’t felt the effects yet but it will next year. I believe strong companies will emerge from this crisis and IPVG is one of them,” Gonzalez said.

Gonzalez said IPVG’s strategy would be to focus on organic growth by acquiring new customers and to preserve capital.  “We will be prudent in taking a look at opportunities,” he said.

He said the company stands to benefit from the acceleration of offshore and outsourcing requirements.  “There is certainly short-term shock in the system, but this will lead to an increase in amount of work being migrated to the Philippines,” Gonzalez said.

As of end-September this year, IPVG’s total consolidated assets grew 106 percent to P2.9 billion while its liabilities increased 222 percent as interest-bearing loans went up by P802.4 million.

Gonzalez said the company expects to conclude negotiations with prospective investors by the end of the year.