Press releases | Archive 2003
RBC exceeds full-year revenue and net income forecasts due to strong performance in core businesses
- Revenue exceeds expectations and rises 62% due to impressive volume growth in IT Services and Advertising.
- Net income up 51%, which is substantially more than projected by equity analysts, due to strong operational performance.
- RBC was named among top 100 fastest-growing technology companies on the Deloitte Touche Tohmatsu ranking of the European Technology Fast 500.
Moscow, February 13, 2003 - Commenting on full-year 2002 results of RBC Information Systems (RTS: RBCI; MICEX: RU14RBCI4001) German Kaplun, Chairman and CEO, said: "We are pleased to report that we are approaching our first ten years with results better than forecast. In 2002 all of our businesses demonstrated significant growth due to substantial increases in demand for our diversified product range. We also attribute this impressive growth to RBC's strong leadership in the business media and online advertising markets and an enhanced competitive position in foreign markets as an IT solution provider.
We expect that a stable political environment and a strong Russian economy, combined with our focus on the media and IT high-performing sectors, will result in continued solid performance. And, by investing in RBC TV, the first Russian business TV channel, we are creating a new distribution path for RBC's "business content". This venture will reinforce RBC's position as a leading provider of business information in Russia."
Revenue rises 62% to $27.52 million
Top-line growth was driven mainly by dynamic expansion in IT Services and Advertising. By the end of the year, the target audience of RBC's online resources had increased significantly, which allowed the company to generate higher advertising revenues without increasing advertising rates. In the areas of general and offshore programming healthy revenue streams came from installation of custom-built solutions, expansion to the CIS and other foreign markets, and successful promotion of off-the-shelf products intended for small and medium-sized companies.
Net income up 51% to $9.5 million
Sales and operating performance were strong throughout the year, and net income increased from $6.3 million in 2001 to $9.5 million in 2002, a 51% rise over the previous year.
RBC's workforce increased to 790 employees, primarily due to the RBC TV project. The company also increased the number of IT engineers, and strengthened its sales force. In order to sustain further growth, RBC completed the restructuring of its middle management, bringing in quality people from other companies and promoting efficient employees.
RBC became a public company after conducting the first Russian IPO and placing 16% of its stock simultaneously on RTS and MICEX in April 2002. The company raised $13.28 million in IPO proceeds from Russian and foreign investors.
In October 2002 the MICEX Exchange Council shifted RBC shares to its second-level listing, recognizing them as a reliable market instrument with stable trading volume.
At the end of 2002, RBC ranked No. 72 on Deloitte Touche Tohmatsu's 2002 European Technology Fast 500, a list of the 500 fastest-growing technology companies in Europe.
Business revenue breakdown
3 Unaudited breakdown of revenue from IT services for 2001 and 2002.
Revenues from IT Services were up 82% from $7.12 million in 2001 to $12.97 million in 2002, outpacing the overall growth of the Russian IT market, which reached 17 to 30% according to various assessments. In 2002 RBC continued to expand its own product range and offerings of products of leading international software vendors such as Microsoft, Saba Software and Documentum. In 2002 RBC expanded its IT customer base by approximately 50% by exploiting cross-selling opportunities with the company's media business. RBC maintains a diversified portfolio of IT orders, with no client accounting for more than 5% of the total IT revenue.
General Programming. Revenue from General Programming more than doubled from $3.92 million in 2001 to $7.97 million in 2002, driven by rapid growth in domestic IT spending and increased focus on banks and other financial institutions. In 2002 RBC designed solutions for logistical and insurance companies, created an Intranet system for the head office of Philips in Russia and established a hosting center. RBC provides services to many Russian companies, including East Line and Eurosib. The company also completed projects for more than 10 government agencies and well-known state organizations such as the Russian State Library, the Moscow Kremlin and the Russian Chamber of Commerce and Industry.
Offshore Programming achieved an impressive 93% increase in revenues from $1.55 million in 2001 to $3 million in 2002, outpacing the overall growth in Russia's programming exports, which reached 50% (According to EDC/Market Visio assessment). The top-line growth was driven by foreign companies' needs to cut their IT costs. RBC management expects this tendency to continue in 2003. As a result of active marketing, RBC won programming orders from the USA, England and Australia. The company also entered the CIS market, installing business automation systems at two major banks in Kazakhstan and adding clients in Georgia and Ukraine.
By the end of 2002 RBC had built sales and foreign client support teams, bringing in new people from other companies, including specialists from Western banks, who are currently developing a Portfolio Management system for financial institutions. In response to market demand for offshore programming, RBC established an international subsidiary.
System Integration posted an increase of 21% to $2 million, which is in line with overall market growth. Considering the non-core character of this business for RBC, the branch preformed well, driven by clients' desire to use RBC as a "one-stop shop" for a complete range of services.
RBC further extended its leadership as a business content provider for the Russian market. Overall, Media Services posted significant growth of 48% from $9.84 million in 2001 to $14.55 million in 2002. Consistent strong performance in Advertising and Information Services, premium quality brand, and an exclusive business audience position the company to establish RBC TV, a new distribution channel for existing content. This will dramatically enhance RBC's media position. RBC management is confident that the launch of RBC TV will increase revenue from advertising, as the company will be able to fully satisfy clients' advertising service needs.
Information Services delivered a healthy top-line increase of 15% to $2.4 million primarily due to the launch of new information products. Their introduction required thorough marketing studies, given intensified competition. RBC increased its focus on the two key customer groups of the business information market - fuel and energy companies and financial institutions. In 2002 the company launched Oil & Gas Newsline and various products designed for the above-mentioned consumers. Higher demand for analytical materials from small and medium-sized Russian companies resulted in the creation of a Market Research database with an average price of $300 per market research report. Last year the company prepared several new information products that will be available in 2003 and are expected to increase RBC's average revenue per client.
Advertising. RBC's advertising business, consisting of Online Advertising and Marketing Communications, posted double-digit sales growth, driven by strong brand recognition and higher advertising spending, which was fueled by the buoyant state of the Russian economy. Overall, advertising revenue was up 57% from $7.75 million in 2001 to $12.15 million in 2002. The advertising client base increased by approximately 20% to 1,200 and became more diversified.
Online Advertising achieved robust growth of 31% to $7.65 million in revenues, driven by the increased popularity of RBC's resources and the restructuring of advertising space in response to an influx of advertisers. By the end of 2002 the monthly audience of the company's business sites exceeded 2 million users, with the total audience of all RBC's resources reaching 3 million. Last year the company redesigned www.rbc.ru to make the main portal more efficient for advertisers and increase the number of options for displaying advertisements. RBC estimates its share of the Internet advertising market at about 50% in the context of overall market growth. RBC's share on the segment of Internet advertising to a business audience further strengthened and amounted to more than 90%. RBC management expects this segment to grow proportionately with the growth of the online advertising market.
Marketing Communications more than doubled its revenues from almost $2 million in 2001 to $4.5 million in 2002 (Unaudited breakdown of revenue from advertising for 2001 and 2002). This branch provides value-added services, such as promotional campaigns and special events, for RBC advertising clients seeking to enhance their brand recognition and increase sales volumes. In 2002 RBC introduced the "Person of the Year" business award program in addition to the "Company of the Year" competition in order to strengthen RBC brand awareness. The company also held two international investment conferences in Geneva and Amsterdam.
RBC management reiterates its commitment of keeping the corporate strategy on course for growth and expects the total revenue from existing businesses to increase by at least 25% in 2003, based on existing contracts, new product launches and active, cost-conscious entrepreneurial action. This is a conservative forecast and takes into account the ongoing recession on Western markets and its possible affect on Russia's economic performance. The company will pursue a well-targeted investment strategy to sustain continuous growth. RBC management connects further growth perspectives with the launch of RBC TV in the 2nd quarter of 2003. RBC will introduce this project to the public and press at a news conference scheduled for March 2003.
Cautionary note regarding forward-looking statements
This press release contains statements of future expectations and other forward-looking statements. These expectations are based on management's current views and assumptions and involve known and unknown risks and uncertainties. It is possible that the company's actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. For a discussion of some of the risks and important factors that could affect the firm's future results, see "Risk Factors" in the company's IPO Circular on www.rbcinfosystems.com. RBC assumes no obligation to update any forward-looking information contained in this document.
Further reporting dates
(subject to change)