Latest / Investor Exchange / Captii Limited Posts Lower Q3 2025 Revenue But Delivers Strong Surge In Profit

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Captii Limited Posts Lower Q3 2025 Revenue But Delivers Strong Surge In Profit · Investor Exchange

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  Time for another Investor Exchange podcast. Here are your hosts, Matt and Sally.
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  Welcome to the Deep Dive. Today, we're taking a scalpel to the interim financial
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  statements of CapTi Limited.
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  We're looking at their third quarter and the first nine months of 2025.
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  Our mission is to really cut through the noise. All these numbers are in thousands
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  of Singapore dollars and we need to figure out what's really driving their performance.
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  Exactly. And you know, the first thing that jumps out at you is this dramatic shift. How so?
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  Well, the revenue figures are a bit mixed, but the net loss,
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  it improves so much compared to 2024 that it signals something big is happening,
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  at least, you know, on the surface.
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  Okay, let's start right there then. The profit and loss statement.
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  This reduction in losses, it's staggering.
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  It really is. It looks like a near total reversal of fortune.
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  So what are the actual numbers, the net loss attributable to the owners?
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  Okay, so for Q3 2025, the loss was just C0.104 million dollars.
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  Just over 100,000. Right.
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  Now compare that to Q3 last year, 2024, where the loss was 2.761 million dollars.
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  Wow, that's a reduction of what? Over 96 percent?
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  It's a 96 percent drop. They basically eliminated their quarterly loss.
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  That needs a moment to sink in.
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  And it's not just a one-quarter thing. The nine-month figures show the same
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  trend. The loss for the first nine months of 2025 shrank to Spesso $0.347 million.
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  Compared to? Compared to a loss of $5.245 million for the same period last year.
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  So what about on an operational level? I see they're talking about EBITDA here.
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  Right. And this is another huge piece of the puzzle. The company actually moved
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  to a positive EBITDA of CEPO 148 million dollars for the third quarter.
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  OK, so for listeners who might not live and breathe this stuff,
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  what does that EBITDA swing actually mean in practical terms?
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  So EBITDA is earnings before interest, taxes, depreciation and amortization.
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  It's a way to measure the core profitability of the business itself.
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  Before all the financing and accounting stuff. Exactly.
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  It tells you if the day-to-day operations are making money. And in Q3 2024,
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  they had an LBDA, a loss of over $4 million.
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  So they went from a $4 million operational loss,
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  Two, making a little bit of money. A huge operational success story.
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  It shows there's running the business much, much better.
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  Okay, that's an incredible swing. But this is where it gets a little more complicated.
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  Because the top line, the revenue, didn't exactly follow that same amazing trajectory.
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  Not at all. For Key3, revenue actually decreased by a lot, 23.6%.
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  A pretty sharp drop for the quarter. It is. But if you zoom out to the full
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  nine months, the picture's a bit more stable. It's up slightly,
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  about 1.9%. So sales volume kind of leveled out year to date,
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  but Q3 saw a big slowdown. What's the real story then?
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  I'm looking at the gross profit margin that seems to be trending up.
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  That's the real operational win right there. Their margin improved significantly.
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  How much? For Q3, it went up to 62.2% from around 59.
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  And for the nine months, a huge jump from about 54% all the way up to almost
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  62%. So they're making more profit on every dollar of sales.
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  Much more. They're getting way more efficient at managing their cost of sales.
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  So let's get into the why. How did they pull that off, especially when revenue
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  in Q3 was actually shrinking?
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  It really comes down to being more selective. They started prioritizing high
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  margin work. And dropping the bad stuff. Pretty much.
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  The report says the margin on their managed service contracts went up because
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  of a lower revenue contribution from certain lower margin contracts.
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  So they chose to walk away from deals that weren't really worth it.
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  Exactly. And the second piece is their system sale contracts.
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  The margins there rose to over 80% in Q3.
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  80% is huge. It is. And that's because a lower portion of that revenue came
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  from their subsidiary, Globo SS, which usually has lower margins because it
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  uses more third-party products.
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  Okay, hold on. That sounds like smart management.
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  You know, shedding the dead weight. But it does raise a strategic question, doesn't it? Go on.
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  If your margins are going up just because you're dropping clients,
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  are you really more efficient or are you just shrinking your market?
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  Are they hiding a volume problem with better profitability?
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  That is the essential tension here. They optimize the portfolio,
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  but that comes with risks. Look at their segments.
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  Unified comms. Their revenue decreased in Q3 in over the nine months.
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  And the reason given is lower managed service contracts.
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  They're actively shrinking that recurring base. And GloboSS is even wilder.
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  A massive 40% revenue drop in Q3. A huge drop.
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  But, and this is the weird part,
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  GloboSS is the only reason the overall nine-month revenue went up at all.
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  It grew over 14% for the nine months. All from system sales earlier in the year. That's right.
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  The longer-term trend is a big shift in the sales mix.
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  Managed services, which is your predictable recurring revenue,
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  That's down as a percentage of the total. From what to what?
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  From about 76% of revenue last year down to 66% this year.
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  And that gap was filled by a huge 43% increase in the more volatile one-off system sale contracts.
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  So they traded predictable revenue for lumpy, high-margin project work.
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  That's the trade-off in a nutshell.
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  Okay, so that explains the weird revenue picture and the margin success.
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  But now we have to get back to the main event. That $5 million loss from last year just vanishing.
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  Where did those huge multi-million dollar savings come from?
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  This is the single most important thing for you to understand from this whole report. Okay.
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  The massive improvement was driven almost entirely by something non-operational.
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  Net expenses went down by an incredible 67% in Q3.
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  67%. Why? The reason is the absence of a fair value loss on the group's venture investment portfolio.
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  Okay, let's unpack that. Fair value loss. What does that actually mean? Right.
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  So a fair value loss, especially for venture investments, means the company
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  had to legally write down the estimated market value of the startups they've invested in.
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  So it's a paper loss. It's not cash going out the door. It's a non-cash accounting adjustment.
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  It hits your profit and loss statement hard. And in the first nine months of
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  2024, they took a crippling $6.388 million fair value loss.
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  So the reason they lost over $5 million last year was almost entirely because
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  of this paper write down on their venture bets.
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  Precisely. And in 2025, that just stopped.
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  That massive headwind just disappeared. It vanished. So they weren't necessarily
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  making a ton more money from operations, but they stopped losing a massive amount
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  of paper value on their investment portfolio. That explains almost the entire bottom line shift.
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  We should point out, though, it wasn't all cost cutting.
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  They did actually increase some operational spending.
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  Yes, that's a good point. Technical support and distribution expenses actually
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  went up a bit. Why was that?
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  Management said it was linked to a headcount increase at Globo SS,
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  probably to handle those bigger, more complex system sale projects that boosted
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  the nine-month revenue.
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  Okay, let's pivot from the P&L to the balance sheet.
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  How is the group's actual financial health looking after all this?
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  The balance sheet looks much, much healthier, which is great news for their liquidity.
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  Total liabilities dropped by over 38 percent compared to the end of last year.
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  From what, about $5 million down to $3 million? Yep, from nearly $5 million
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  down to just over $3 million.
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  And a big part of that was paying down debt. Oh, that's always good to see.
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  They reduced borrowings for payable within one year from almost a million dollars down to zero.
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  Two nil. That's a very clear sign of discipline management.
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  It is. And then you look at the cash flow statement and it's just phenomenal.
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  What's the number? Net cash from operations.
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  Last year, for the first nine months, it was basically nothing.
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  S, $71,000. This year, $3.94 million.
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  Wow. Where did all that cash come from? Aggressive working capital management.
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  They got much, much better at collecting money owed to them.
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  Trade receivables went way down. They just got tougher on collections.
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  It looks like it. And that instantly boosts your cash position. So to sum it up.
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  They got rid of the venture losses, they paid off their debt,
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  and they got way better at generating and collecting cash. But what's management
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  saying about the future?
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  Can this continue? They're being, I would say, cautiously optimistic,
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  but they're also very blunt about the headwinds.
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  For their core businesses, Unified Comms and Globo SS, the outlook,
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  and I'm quoting here, remains challenging.
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  Challenging how? They're seeing continued underperformance on some big managed
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  service contracts, intense pricing pressure everywhere, and frustrating delays in closing new deals.
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  So the same pressures that probably forced them to drop those low margin contracts
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  in the first place. It seems so.
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  And on top of that, they admit the market for CapDI Ventures,
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  their investment arm, also remains unfavorable.
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  So the cautious optimism seems to come from their own internal discipline,
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  not from expecting the market to get any easier.
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  So the key takeaway for you, the listener, seems to be what?
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  I'd say it's this. CapDI did a fantastic job of containing the financial damage
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  from its venture portfolio.
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  They cleaned up their balance sheet and dramatically improved their liquidity.
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  They are a much healthier company today. But the core technology business is
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  still facing some really tough market pressures on pricing and just winning new work.
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  Right. That financial cleanup is necessary, but it's not really enough for long-term
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  growth, is it? No, it's stage one. Which brings us to the real tension going forward.
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  Their profitability surged. because they shifted their revenue mix.
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  They took on these big one-off system sales and shed recurring lower margin work.
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  A very deliberate trade-off. So the big question for you to think about is this.
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  The success of their next report is going to depend almost entirely on whether
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  they can keep winning those big projects in what they themselves call a challenging market.
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  Is this shift towards less predictable system sales a stable foundation for the future?
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  Or did they just sacrifice long-term stability for a great looking quarter?
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  That's the trade-off to why. Thank you.