Cloud services firm Zoho posted a strong set of earnings numbers, both in terms of topline and bottomline, for the financial year 2018-19, led by a strong sales growth.
The Chennai-based company’s consolidated revenue from operations grew 37% during the year to Rs 3,307 crore from Rs 2,412 crore in the previous year. Its net profit grew to Rs 516 crore, up 26% compared to the previous year at Rs 408 crore.
“The excellent performance is attributed to the increased acceptance to our evolved products by our customers… With our products, enriched by constant technological innovation, we would further strengthen our position as one of the top global players,” the company said in a regulatory filing with the Ministry of Corporate Affairs.
Most of the revenue Zoho earned came from its overseas operations. In FY19, the company’s export revenue stood at Rs 3,186 crore against Rs 2,412 crore in the previous year.
Zoho has a customer base of around 50 million users, as per information on its website, and its global clientele includes Netflix, PayPal, Loreal, Facebook and Renault. It counts HDFC Life Insurance, Royal Sundaram General Insurance, Tata Projects, Mahindra Group and Times Internet among its domestic clients.
Despite the robust increase in sales, Zoho’s total expenses grew faster than its revenue at 47% to Rs 2,557 crore in FY19 from Rs 1,949 crore in the previous year, leading to a decrease in profitability. Its operating margin fell to 0.32% in FY19 from 1.28% in the previous year on account of higher spending. The company’s total expenses also rose as the company showed a Rs 278 crore capital expenditure for the year.
It also almost doubled its advertising spends to Rs 1,122 crore in FY19, which is about 44% of its total expenditure.
Going ahead, the company plans to expand to new geographies, broaden its product pipeline and improve its existing portfolio, it said.
Zoho has its operations divided into three divisions: mainstay web-based applications for businesses such as human resources, sales, support and accounting; Manage Engine, which provides software to manage information technology assets; and WebNMS, which provides internet of things (IoT) services.
In October, ManageEngine launched PAM360, a privileged access solution for security teams. In April, Zoho started a new platform Commerce Plus, which focused on small and medium enterprises looking to tap the internet for growth.