The profit margins of three out of four listed tech firms in Nigeria rose to 7.73 percent in nine months of 2024 from 4.43 percent in the same period in 2023, data compiled by BusinessDay shows.
Profit margin is a financial ratio that measures the percentage of profit a company earns from its revenue. Expressed as a percentage, it indicates how much profit the company makes for every dollar of revenue generated
The firms analysed are CWG Plc, eTranzact International Plc, and Chams Holdco Plc, The figures indicate that for every N100 in sales, the firms generated a profit of 7.62 percent, while the remaining 92.38 percent covered costs.
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However, NCR Nigeria Plc reported a negative profit margin of 102.9 percent in 9M’24 from a negative of 109 percent in the same period of 2023, this indicates that the firm’s expenses are greater than its revenue.
Experts say the profit margin increase comes against a backdrop of mixed global economic indicators. While high interest rates and inflation have dampened consumer spending in some sectors, the tech industry’s innovative capacity and agility have allowed it to remain a growth leader.
The Central Bank of Nigeria’s September purchasing managers index disclosed that the information and communication sector grew by 57.2 percentage points from 46.6 percentage points in August 2024.
Reading above 50.00 indicates an expansion in business activities, while below 50.0 points indicates a contraction in business activities.
Further analysis of the three tech firms’ reveals that their profit rose to N5.48 billion from N2.34 billion and its revenue increased by 36 percent to N71.9 billion from N52.8 billion.
This implies that tech firms are increasingly adopting resilient models, balancing innovation with prudent financial strategies.
Analysis of individual firms:
eTranzact
eTranzact, a Nigeria payment and switching company after-tax profit rose to N2.14 billion in the nine months of this year from N1.56 billion as of the same period in 2023.
Revenue fell to N21.6 billion from N25.6 billion, bringing its profit margin to 9.86 percent.
Chams Holdco
Chams’ after-tax profit rose to N1.07 billion at the end of nine months of 2024 from N255 million in the same period of 2023.
The firm’s revenue increased to N13.1 billion from N7.5 billion. The profit margin rose to 8.17 percent from 3.40 percent.
Chams provides integrated identity management and payment solutions. The company was incorporated in 1985. It started as a private business before it went public. It initially started as a computer hardware and maintenance firm.
It has worked with government agencies to deploy its identity management solutions. It has worked with Nigeria’s electoral commission INEC and NCC. NCC is the Nigeria Communications Commission.
Read also: Firm calls for local production of smartphone batteries
CWG
CWG, an integrated hardware, communications, and software organisation. after-tax profit grew to N2.27 billion as of September 2024 from N534 million in the same period of 2023. Revenue increased to N18.3 billion from N34.7 billion from N18.2 billion.
NCR Nigeria
NCR Nigeria reported an after-tax loss of N1.39 billion from N2.65 billion as high operating costs gulped the firms’ revenue generated during the period. Its revenue fell to N1.35 billion from N2.43 billion.
NCR (Nigeria) PLC is a technology company that provides products and services to help businesses connect with customers.
The company offers a range of products, including ATMs, self-service kiosks, and point-of-sale (POS) terminals. They also offer software applications that allow customers to interact with businesses from their mobile devices or computers.
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