NTG Clarity Networks: Questions to Ashraf Zaghloul | Value Bridge
Archieve - Everything Ashraf Zaghloul Said
Business Summary
NTG Clarity is a Canadian-listed IT services and software company with over 30 years of operating history and more than 20 years in Saudi Arabia. The business employs approximately 1,300 staff, mainly in Egypt, leveraging cultural alignment, Arabic language skills, and a lower cost base compared to global competitors. Its service lines span offshore and on-site IT outsourcing, digital transformation projects, and its proprietary NTG Apps platform. In 2024, NTG delivered revenue of $56,000,000 with gross margins of 35–40% and an adjusted EBITDA margin of 22%, supported by a backlog that grew to about $100,000,000. Offshore services rose to 50% of revenue by early 2025, while NTG Apps grew 150% year-over-year in Q1 2025 with 50% gross margins. Contracts are expanding in both size and duration, including a $53,000,000 three-year deal and a $22,000,000 contract that later grew by more than 50%. The company raised $9,000,000 in August 2025 to support office expansion and hiring, with $2,500,000 earmarked for debt repayment. With insider ownership around 36%, NTG remains aligned with shareholders while reinvesting in one of the world’s fastest-growing ICT markets, valued at roughly $50,000,000,000 and growing at 8.5% CAGR.
Catalysts & Milestones
2022 - Reported over $3,000,000 in cash, no long-term debt, and nearly $2,000,000 operating cash flow in first nine months
2023 - Expanded Cairo office with first right of refusal on new floors to support Saudi contract scaling
2023 - Secured a $53,000,000 three-year Saudi contract, billed monthly
2023 - Opened two NTG vocational high schools in Cairo to strengthen long-term talent pipeline
2024 - Revenue reached $56,000,000, up 102% year-over-year, with 22% adjusted EBITDA margin
2024 - Backlog expanded to $83,500,000, improving visibility from one to three years
2024 - Signed a $22,000,000 three-year contract in December, later expanded by more than 50%
2025 - Q1 revenue of $19,700,000, up 68% year-over-year, with NTG Apps revenue growing 150%
2025 - Closed $9,000,000 financing, with majority taken up by institutional investors
2025 - Backlog reached $100,000,000, providing strong multi-year visibility into revenues
Investment Highlights
Revenue grew 102% in 2024 to $56,000,000 with 22% EBITDA margin
Backlog expanded from $20,000,000 in 2023 to $100,000,000 in 2025
NTG Apps revenue up 150% YoY in Q1 2025, with 50% gross margin
Raised $9,000,000 in 2025, strengthening balance sheet and reducing debt
Offshore services rose to 50% of revenue in 2025, from 0% in 2021
Future Growth Drivers
Expansion of NTG Apps from 6% of revenue in 2024 toward 15–20% by 2026, driving margin uplift
Multi-year Saudi contracts, including $53,000,000 and $22,000,000 deals, underpin revenue visibility
Deep talent pipeline in Egypt via NTG Academies and two vocational high schools
Growth of Saudi ICT market from $50,000,000,000 in 2024 toward $80–90,000,000,000 by 2030
Expansion into Iraq and Oman, with Iraq contributing 2% of revenue and long-term growth potential
Risk Factors
Top five customers represent 70% of revenue; no single client above 20%, but concentration risk remains
Q1 2025 receivables rose $2,100,000, constraining short-term cash flow
FX volatility caused a $1,000,000 headwind in Q2 2025 revenue
Canadian corporate tax payable at 26.5% beginning 2025 after loss carryforwards exhausted
Heavy reliance on Saudi Arabia, with about 95% of revenue concentrated in the Kingdom
I joined the MicroCapClub community this year, and you should too!
Click below in order to apply and get access to +1300 pitches and +300 multibagger ideas 👇
Capital Allocation
13/11/2024 How will you allocate free cash flow outside of working capital?
Our top priority remains reinvestment into operations to fuel growth in Saudi Arabia. Beyond working capital, management salaries will stay aligned with industry standards as reviewed by the independent compensation committee, so no extraordinary increases are planned.
Dividends and share buybacks are not a priority at this stage, as reinvestment into sales, office expansion, and employee hiring offers higher returns. Debt repayment is a higher priority than distributions, with $150,000 per quarter allocated, or more as cash flow permits. The focus is firmly on driving long-term growth through reinvestment.
16/04/2025 What is your plan for expected cash flow—will you pay a dividend?
Our first priority is reinvestment to sustain organic growth in Saudi Arabia, a $50,000,000,000 market where our share is just 0.1%. That means hiring, training, and onboarding staff to meet contract demand, plus corporate investments in systems and processes. Second, we may pursue acquisitions, either in Saudi Arabia or the Gulf, to acquire customers we don’t yet serve. Third, we will continue debt repayment, reducing interest expense. Only after establishing a strong foothold on these priorities would we revisit capital allocation and consider returning cash to shareholders.
16/04/2025 Are acquisitions under consideration, or is organic growth the focus?
Organic growth in Saudi Arabia is the top priority. That said, we are exploring acquisitions of IT services firms either in Saudi Arabia with customers we don’t yet serve, or elsewhere in the Gulf where our outsourcing model could add value. Targets would ideally have long operating histories and established networks in those markets. For now, acquisitions remain a medium- to long-term consideration, with organic growth taking precedence.
29/05/2025 Will you uplist to the TSX this year?
We frequently get questions about a TSX uplist. The pros include broader investor exposure, more investors able to buy in, and added confidence for shareholders. The main cons are cost and administrative burden.
We estimate incremental costs of $300,000 to $1,000,000 per year. Even as a venture-listed company, we have had no trouble reaching investors and securing interest. An uplist is on our radar, but we will wait until the incremental costs make sense relative to the value.
29/05/2025 Are warrants being exercised now that the stock is above $2?
Yes. The warrants from the brokered life offering we closed last September are beginning to be exercised as the share price has stayed above $2. We are starting to see those warrants trickle in, which brings additional cash onto our balance sheet.
We expect this trend to continue, further strengthening the balance sheet in the near future. It is an exciting development and a positive signal of investor confidence.
06/08/2025 What is the biggest challenge NTG faces today?
Our sales pipeline is strong, with new customers often coming through referrals. The main challenge is scaling our talent pipeline to fulfill contracts once they are signed. Recruiting and training remain top priorities, and we’ve invested heavily in building relationships with Egyptian universities and running our own vocational high schools. This makes NTG a preferred employer for tech graduates in Egypt and Saudi, positioning us well. Still, ensuring we can keep up with demand by maintaining a steady flow of skilled talent is what we monitor most closely.
06/08/2025 What are the details and uses of the recent $9 million financing?
We closed a $9 million life offering last Thursday. The main purpose is to support growth in Saudi Arabia, which comes with significant upfront expenses. Large contracts often require securing and renovating new office space, hiring and training dozens of employees, and equipping them with laptops and office furniture. We sometimes even hire resources ahead of finalizing contracts to ensure rapid deployment, which temporarily impacts operating expenses before those staff become billable.
Proceeds from the raise will fund these upfront investments to prepare for the next stage of growth. Roughly $2.5 million is also earmarked for debt repayment. This debt has been on the balance sheet for about six years, carries minimal interest, and is management-owned. Reducing it further strengthens our financial position and demonstrates to enterprise clients that we have the cash and balance sheet strength to execute large-scale contracts.
06/08/2025 Will NTG need to raise additional equity in the future?
We are cash-flow positive from operations, so we can fund organic growth without new equity. Management is cautious about dilution, holding over one-third of the float, and would only raise additional capital for opportunities that create significant value. Examples include pursuing another large $50 million contract that requires balance sheet support, or an accretive M&A deal. At present, we have no immediate plans to tap equity markets again, but we continually reassess based on growth opportunities.
06/08/2025 Who participated in your recent $9 million financing?
Unlike our September 2024 raise, which was mostly retail, the majority of this most recent financing was taken up by institutions. That’s an exciting development for us, as we are beginning to build relationships with institutional investors who view NTG as a long-term growth story. Their participation strengthens our shareholder base and signals growing confidence in our strategy.
12/08/2025 How do you prioritize capital allocation with a strong balance sheet?
We have been consistently cash flow positive from operations, with free cash flow emerging as we scale. Our number one priority is to reinvest into organic growth, especially in Saudi Arabia. That means expanding offices in Egypt to support offshore delivery and hiring more resources to service new contracts.
M&A is a secondary consideration. It is an attractive way to accelerate growth, but the size of the organic opportunity in Saudi Arabia is so large that it remains our main focus for capital allocation.
Competitive Advantage
13/11/2024 What is NTG’s background and market focus?
NTG was founded in 1992 and has delivered IT digital transformation services for more than 30 years. We have operated in Saudi Arabia for over 20 years, serving Tier 1 telecommunications, finance, and government clients. Longstanding relationships with senior decision makers, plus recognition of our service quality, drive our strong growth in the region.
A major differentiator is our workforce of over 900 IT and engineering professionals, mostly based in Egypt. Unlike India or the Philippines, Egypt provides cultural alignment, same time zone, and language advantages for Saudi clients, while maintaining a lower cost base. Our delivery center in Egypt has operated for more than 20 years, making NTG a top employer known for overseas opportunities in Saudi Arabia. We also invest heavily in education through initiatives like NTG School, which runs two secondary schools with technology-focused curriculums, and NTG Academies that train university students and new graduates. These programs build a steady pipeline of skilled talent to support our growth.
06/08/2025 What differentiates NTG from other offshore software development providers?
Our main differentiator is our talent pool based in Egypt, just across the Red Sea from Saudi Arabia. Like other offshore destinations such as India or the Philippines, Egypt provides significant cost savings—sometimes up to 50% compared to hiring locally in Saudi. But what sets us apart is the operational and cultural fit. Egyptians speak Arabic, share the same time zone, and understand the cultural background of our Saudi clients. This makes collaboration smoother, like working with a close neighbor.
We provide full end-to-end software development teams that support clients’ digital transformation roadmaps. Because Saudi’s local tech talent pool is still developing, companies look to NTG for resources ranging from front-end and back-end developers to solution architects, project managers, and business analysts. Engagements typically run one to three years, billed monthly based on the number of resources we provide. While we can work on-site, our offshore Egypt-based model is the most in demand today, allowing us to scale quickly and cost-effectively for large Saudi enterprises.
06/08/2025 What are NTG’s key advantages in winning business in Saudi Arabia?
Our success comes down to three factors. First, we have deeply entrenched relationships built over two decades in the region. Many people we worked with 15 years ago are now directors, VPs, or even C-suite executives, and they continue to award us larger contracts because of the quality of our work. Second, we focus heavily on talent development in Egypt. We partner with universities and colleges, run upskilling programs, and even opened two NTG vocational high schools in Cairo in 2023. These schools combine traditional subjects with software-focused training taught by NTG staff, ensuring a steady pipeline of skilled talent.
Third, we are starting to replicate this educational investment in Saudi Arabia, partnering with universities and training institutions to build relationships with the next generation of technology and business leaders. This not only secures our talent pipeline but also deepens our connections to future decision makers, reinforcing our long-term position in the market.
12/08/2025 How competitive is the Saudi IT services market?
Competition is increasing, given the rapid growth and its low correlation to the North American market. The Saudi tech talent pool is still immature, so companies need external providers like NTG and its competitors. Recently, for example, TELUS Digital opened an office in Dubai.
We already compete with global players like Accenture, IBM, and Tata. NTG edges them out by leveraging our Egypt base, which provides up to 50% cost savings versus hiring in Saudi Arabia, while also offering cultural alignment through shared language, time zone, and background. We also have twenty years of presence in Saudi Arabia, strong local connections, and the ability to deliver pricing at roughly 70% of multinationals. These factors make us highly competitive.
Operations
13/11/2024 What are NTG’s main business lines and revenue mix?
Our primary business is outsourced software development services, which made up 97% of Q3 revenue. Clients include large telecom operators, banks, and government departments that lack in-house expertise or manpower. NTG provides full lifecycle support, from front-end and back-end developers to architects, QA testers, and project managers. Work is performed either on-site in Saudi Arabia or offshore from our Egypt delivery center. Offshore services now account for 37% of revenue, up from 0 in 2021, with on-site services contributing 60%.
The remaining 3% of revenue comes from proprietary software products, mainly NTG Apps, our digital transformation platform. NTG Apps can be deployed as enterprise resource planning solutions, IT ticketing systems, or telecom network management platforms. Its strengths are customizability, quick deployment through no-code tools, and strong integration with both NTG modules and third-party systems. While NTG Apps’ revenue share has declined due to faster growth in services, its absolute contribution continues to rise.
13/11/2024 How does Egypt’s role as a delivery center affect segment reporting?
Since 2021, we have transitioned Egypt into a pure delivery center for offshore services. As a result, Egypt’s revenue contribution fell from 10–12% historically to about 1–2% now, while expenses remain booked there. This is intentional, as we aim to collect revenue in strong currencies like the Saudi riyal, pegged to the U.S. dollar, while paying expenses in Egyptian pounds.
Therefore, Egypt’s financials should not be viewed in isolation. Consolidated results best reflect performance, with Egypt operating as a low-revenue, high-expense delivery center, balanced by higher revenue and lower expense reporting in Canada where most sales are recorded.
13/11/2024 What operational challenges come with scaling 100% growth, and how are you addressing them?
The first challenge is office space. To support offshore expansion, we secured first right of refusal on additional floors in our Cairo office building when we opened the new office in late 2023. We already expanded by adding another floor in August to prepare for the $53,000,000 contract, and we can continue scaling office space as needed, making the process straightforward.
The second challenge is recruiting and staffing. Cairo is a mega city with tens of millions of people and a strong technology talent pool. NTG has been in Egypt for over 20 years, building a reputation as a reliable employer offering competitive opportunities with Gulf-region exposure. Our NTG Schools prepare secondary students with technology skills, and our NTG Academies train university students and new graduates. This long-established talent pipeline ensures we can recruit effectively to match rapid growth. Overall, while scaling is the main challenge, we are well prepared on both office space and talent acquisition fronts.
29/05/2025 Q1 margins were impacted by higher headcount. How long to ramp productivity?
That is an excellent point. We added about 15% more headcount in the general and administrative line, mainly technologists to be deployed on future projects. Typically, there is about a one-quarter lag before new employees are fully billable.
We expect most of these employees to be rolled out by Q2 and nearly all by Q3. This profile would be similar to what we saw toward the end of 2024.
06/08/2025 How important is offshore work versus on-site services, and what role does NTG Apps play?
We began offering offshore services in 2021, and by the end of 2024 they made up 35% of revenue. In Q1 2025, that number grew to 50%, making offshore our largest offering. Clients appreciate the cultural alignment, shared language and time zone, and cost savings of up to 50%, while still getting high-quality engineering talent. That said, on-site placements remain important, and some customers want team members working in their offices daily. In those cases, we handle relocation and work permits to move Egyptian resources to Saudi Arabia. Together, offshore and on-site services accounted for about 94% of 2024 revenue.
The other 6% comes from our proprietary software products, led by NTG Apps. It follows the no-code/low-code paradigm, enabling customers to roll out software without developers through drag-and-drop workflows and UI builders. NTG Apps has been deployed as a full enterprise resource planning system for SMBs, a trouble ticketing platform, or as field service and network inventory management tools for telecom operators. By the end of 2024, 47% of our customers were piloting NTG Apps, and in 2025 many pilots are converting into full projects. Year-over-year growth for NTG Apps in Q1 2025 was about 150%, faster than the overall business. Gross margins for NTG Apps run near 50%, compared to 35–40% for services, so it offers long-term revenue growth and margin expansion.
06/08/2025 How is NTG using AI in its operations and offerings?
AI is an opportunity rather than a threat for us. Internally, we’re piloting tools to boost developer productivity, such as copilots and coding assistants. We’re also embedding AI into NTG Apps and other solutions. For example, with one financial services customer we’re piloting an M&A screening bot that ingests financial statements, crunches ratios, and makes recommendations. Internally, we’re training a chatbot on historical NTG sales data to help account managers scope and price projects. These efforts are designed to increase productivity, open new product lines, and deliver more value to customers.
12/08/2025 How was NTG’s talent infrastructure in Egypt set up and scaled?
Talent is a huge consideration for us. We have the relationships to win contracts in Saudi Arabia and the Middle East, but filling those seats requires strong recruiting. Our long track record in Egypt helps because we offer candidates highly sought-after, well-paid IT jobs, often with the opportunity to work in the Gulf where salaries carry a premium. That makes us a preferred employer in the region.
We are also active in community involvement. We run university and college training programs in Egypt and have opened two vocational high schools in Cairo. These schools combine traditional subjects with software development and engineering courses, giving students early exposure to IT. This builds goodwill and creates a long-term pipeline of talent.
28/08/2025 Of the 1,300 employees, how many are outside Saudi?
Out of 1,300 employees, around 50 to 75 are currently outside Saudi Arabia.
Competition
06/08/2025 What does the competitive landscape look like in Saudi Arabia and Egypt?
Competition comes from two sides. On one hand, there are smaller, homegrown offshore shops in Egypt, usually just a few dozen employees. They struggle to secure large-scale contracts or replace staff quickly when needed. By contrast, NTG has first-mover status, scale, and a proven track record, which allows us to compete effectively.
On the other hand, the Middle East’s rapid investment growth has attracted global consulting and IT firms like IBM, PwC, and Tata Consultancy Services. These firms usually offshore from India or Pakistan, not Egypt, which gives us an edge in cultural alignment with Saudi clients. Our ability to price at 70–80% of their bids, thanks to lower overhead, often helps us win business against multinationals while offering closer cultural fit and language advantages.
06/08/2025 Will NTG compete directly for large Saudi contracts like the recent $8.5 billion STC Solutions award?
Saudi Telecom Company (STC) has been a customer of ours for nearly two decades, and we also work with STC Solutions, their system integrator arm. Government organizations often prefer to award contracts to Saudi companies, which then partner with us to staff projects. When a system integrator like STC Solutions wins a large contract, it’s usually positive for NTG because we provide resources under a partnership model. So rather than competing head-to-head, we benefit by being a trusted partner delivering staffing and offshore services on those contracts.
12/08/2025 How sensitive are Saudi customers to pricing?
Cost is always a consideration, but Saudi customers are primarily focused on results. With oil revenues backing their investments, they emphasize quality talent and successful execution.
Our clients usually prioritize whether employees have the right skills and can integrate seamlessly into their teams. Price is typically a secondary factor, which supports our ability to compete on both quality and cost.
Growth
13/11/2024 How does Saudi Arabia’s market environment support NTG’s growth?
Saudi Arabia accounts for 97% of our revenue and is among the three fastest growing economies in 2024, driven by the Vision 2030 plan to diversify away from oil into services. This includes major investments in infrastructure, tourism, finance, sports, and entertainment, all underpinned by digital architecture. The government created a digital authority to move citizen services into apps and is partnering with the private sector for telecom and IT projects.
The country is politically and economically stable. U.S. News ranks it just below the United States for stability, and Moody’s assigns it A ratings, comparable to Japan. Over 180 multinationals, including PepsiCo, Google, Unilever, and Siemens, moved regional headquarters to Saudi Arabia in early 2024, bringing $12,000,000,000 in foreign investment. Unlike new entrants, NTG has operated there for more than 20 years, offering competitive pricing with Egypt-based teams that share language, culture, and time zone advantages. This position helps us deliver consistent 100% revenue growth while remaining profitable.
13/11/2024 Is NTG planning to diversify beyond Saudi Arabia?
Saudi Arabia remains our top priority, as it is one of the three fastest growing economies in 2024. We believe the best use of capital is to maximize growth there rather than diverting resources elsewhere. That said, our business model—leveraging Egyptian employees who share language, culture, and time zone alignment with customers—positions us to expand into similar markets.
Iraq is one example. With oil-financed resources and an urgent need to digitize, Iraq has been a natural extension, and we have already sold some of our proprietary software products there. While currently contributing only 1–2% of revenue, we see it as a growth area. Overall, investors should view NTG primarily as a way to gain exposure to the Saudi Arabian tech market, with potential expansion into similar regional economies.
13/11/2024 What challenges come with sustaining 100% year-over-year growth?
It is certainly a good problem to have, but the main challenge is scaling operations to meet demand and service requirements across all contracts. This involves both expanding our delivery capacity and ensuring we have the infrastructure, people, and processes in place to sustain growth.
We think about it in two main categories: expanding resources to deliver projects effectively and strengthening organizational systems to handle larger volumes of business. Managing this scaling efficiently is the key challenge in maintaining such rapid growth.
16/04/2025 What is the sustainable growth rate in Saudi Arabia after Vision 2030 is complete?
We do not see Vision 2030 as the end of growth in the Kingdom. Its purpose is to diversify the economy and set up long-term strength in finance, technology, sports, entertainment, and tourism. For example, Saudi Arabia is hosting the World Cup in 2034. The ICT market there is roughly $50,000,000,000 annually and growing at an 8.5% compound annual growth rate through the decade. We expect demand for IT services to remain strong beyond 2030, supported by the broader digital transformation of the Saudi economy.
16/04/2025 Are other Gulf countries pursuing digitization strategies, and how could NTG benefit?
Yes, nearly all Gulf countries have versions of Vision 2030 aimed at diversifying their economies away from oil and gas. We already operate in Oman and Iraq, which together contribute about 12% of revenue. Success in these markets requires years of relationship building to gain the network needed for major business wins. For now, our top priority is maximizing the Saudi ICT market, where we are fully embedded, while treating the rest of the Gulf as a midterm opportunity. Our Egyptian offshoring model is well suited to serve the region when the timing is right.
16/04/2025 What are expectations for NTG apps growth, and how would 10% revenue contribution impact margins?
NTG apps grew 18% in 2024, generating $3,400,000. About half of our customers are trialing or running proofs of concept. While still early, adoption should continue increasing into 2025. Current projects run at about 50% gross margin, with potential to scale toward SaaS-like recurring revenue streams—license, hosting, and support—where margins can reach 70% or higher. If NTG apps grows from its current 6% share of revenue to 10% or more, we would expect gross margins and overall profitability to expand meaningfully.
29/05/2025 Was Q1 NTG apps growth from existing clients or new? What is the revenue goal by Q4 2025 and 2026, and margin impact if NTG apps reach 15–20%?
The 50% year-over-year growth shows proof-of-concept projects transitioning into full contracts. Most of that growth came from existing customers expanding their engagements with us through NTG apps. Forecasting growth is difficult since it depends on pilot cycles, but if momentum continues, NTG apps could reach about 12% of revenue by the end of this year. In 2026, 15–20% would be an excellent outcome.
The gross margin impact would be significant. NTG apps is a software business with roughly 50% gross margins and potential for more with scale. By comparison, on-site services are about 34–36% and offshore services 36–40%. If NTG apps reached 20% of total revenue, overall gross margin could rise to about 40%, a 600-basis-point improvement from this quarter. We are very excited about the opportunity NTG apps represents.
29/05/2025 How many new clients do you expect per quarter?
New client acquisition has historically been uneven. We signed two new clients in Q1, but there have also been quarters with none and others with multiple.
The real driver of revenue growth has not been new customer acquisition, but rather nurturing and expanding existing customer contracts once we prove our value. That continues to be the main growth engine for the business.
06/08/2025 Can you give us an overview of NTG Clarity and its focus in Saudi Arabia?
Thanks very much for having me. NTG is an IT services company with a special focus on the growing technology sector in Saudi Arabia, which is where 95% of our revenue comes from. The perception used to be that Saudi was just an oil-dependent desert economy, but the reality is very different today. The government is executing its Vision 2030 plan, earmarking $1.3 trillion to diversify into finance, sports, tourism, and most importantly digital transformation. Software development and digitization are key pillars of that plan, and that’s where NTG plays a central role.
We’ve been active in Saudi for more than 20 years and have also been listed on the TSX Venture for that same time. We see ourselves as offering Canadian and North American investors a unique way to gain exposure to the Middle East technology space. With our three-year compounded annual revenue growth rate above 60%, we’re targeting about $78 million in 2025 revenue, all reported in Canadian dollars. Our clients are enterprise-level Saudi telecom operators, financial institutions, and system integrators serving the government.
06/08/2025 How are customer contracts evolving in size and duration?
Over the last year we’ve seen accelerating contract wins with customers signing on for larger and longer engagements. Historically, contracts averaged one year, but recently three key customers have signed three-year agreements. In August we secured a $53 million three-year deal, followed in December by a $22 million three-year contract that has since expanded by more than 50%. First-year billings on that December deal are now projected at $11–12 million instead of $7 million. These wins demonstrate customer satisfaction and willingness to expand contracts over time. Today, our backlog sits at about $100 million in purchase orders and signed agreements.
Customer retention metrics are strong. Between 2023 and 2024, the number of customers increased 25%, driven largely by referrals. Retention was about 90%, and 54% of customers expanded their engagements. Roughly 85% of our revenue is recurring or reoccurring, as most contracts are multi-year or renewed annually. This structure provides predictable visibility into future revenue streams.
06/08/2025 What is the immediate addressable market for NTG in Saudi Arabia?
We’re very excited about the Saudi technology market and are positioning ourselves to provide services across all areas, from software development to DevOps, testing, QA, and project and product management. The Saudi ICT market is currently around $50 billion in size, while our 2024 revenue was about $50 million, or just 0.1% of that market. The opportunity is significant—capturing even 5–10% of the market would be transformative. Moreover, the market itself is projected to grow to $80–90 billion by 2030 as Vision 2030 investments flow through, which makes the growth potential even more compelling.
06/08/2025 How has Egypt’s role in NTG’s revenue mix changed, and what is your market focus going forward?
In the past, Egypt represented a meaningful share of revenue—20–30% a few years ago and closer to 50% if you go further back. As of the most recent reporting period, Egypt contributed only about 2%. The slowdown reflects fewer local projects to bid on and the weaker currency reducing project values. For now, Egypt is primarily an employer base and delivery center servicing Saudi clients, where the economy is far more active. That said, recent development and construction activity in Egypt suggests signs of recovery, so we remain optimistic about medium- to long-term opportunities there.
06/08/2025 Are you considering expanding into other markets beyond Saudi Arabia and Egypt?
Yes. Our Egypt delivery model is tailored for Saudi Arabia, but we see similar opportunities in neighboring Gulf states like Kuwait, Qatar, and Oman, each of which is running Vision 2030–style initiatives to diversify their economies. Saudi remains 95% of our revenue and our top priority, but we also operate in Oman and Iraq, which together contribute about 2–3% of revenue. Looking forward, we see both organic expansion and potential M&A as growth paths. With additional capital from our recent raise, we’re evaluating acquisitions of smaller regional firms with strong customer relationships that could be integrated into our Egypt offshoring model.
12/08/2025 What limits exist to expanding contracts beyond current size?
We are at a good stage with our product offering, which is foundational to our customers’ needs. Our developers are building end-to-end solutions that support Saudi Arabia’s digital transformation. The software offering is well suited to the Saudi market.
That said, we need to continuously invest in expanding this business model. Connections are helpful, but scaling requires recruiting, hiring, and onboarding talent to serve new contracts. This is why we have invested significantly in talent and new office space this year, and we expect that trend to continue as growth accelerates.
12/08/2025 How large is the Saudi IT market today and how fast is it growing?
The Saudi information and communications technology market is very large. Estimates as of 2024 put it around $50,000,000,000, with NTG holding about 0.1% of that. There is a huge amount of room for growth.
The market is also expanding quickly. Government and private sector investment is driving growth at about 8.5% compounded annually. Some estimates suggest it could reach $8,090,000,000,000 by 2030. It is both a large and rapidly growing market.
12/08/2025 How do you measure customer satisfaction and retention?
We track KPIs around customer satisfaction, with retention as the clearest indicator. In 2024, we had a 90% customer retention rate, showing that most clients are satisfied with our services.
We also look at contract expansion. In the first quarter, average engagements grew about 60% in size. Customers not only stay but also significantly expand contracts, and much of our new business comes from referrals. This demonstrates strong satisfaction and trust in our services.
12/08/2025 Can Cairo’s talent pool support NTG’s long-term growth needs?
Cairo is a megacity of nearly 19,000,000 people, and Egypt’s population exceeds 100,000,000. It is also the tech hub of the region, with many of the top technical universities. Strong talent flows from all areas of Egypt into Cairo to work in technology.
Given the depth of this pool, we are confident that Cairo alone can supply sufficient talent for our growth over the coming years.
12/08/2025 How recurring are revenues and what role does NTG Apps play?
NTG Apps is our software offering, similar to no-code or low-code platforms, allowing customers to deploy enterprise-grade applications without building them in-house. Deployments range from full enterprise resource planning platforms for small and medium-sized businesses to niche tools like IT ticket management.
The team has succeeded in driving adoption among our base. By 2024, about 47% of customers had at least piloted NTG Apps. Many of these pilots evolve into full projects, making NTG Apps a key driver of more recurring and scalable revenues alongside our traditional software development services.
12/08/2025 What growth have you seen in NTG Apps and how does it impact margins?
In Q1 2025, NTG Apps revenue grew 150% year over year. We see this as a major growth driver, not just for revenue but also for margin expansion. Current gross margins are about 50% since the product is still early stage. Over time, as the offering matures, margins could move into the 60–70% range, similar to typical software profiles.
This is why NTG Apps is a priority. It combines top-line growth with the potential to lift overall company margins as adoption increases.
12/08/2025 How do NTG Apps licensing agreements work?
Typically, NTG Apps projects are structured around annual licensing agreements, which include support and maintenance fees. In addition, we provide professional services for implementation and integration with customers’ existing software stacks. That creates both recurring licensing revenue and incremental services revenue.
While NTG Apps is explicitly recurring, much of our core software services business is also recurring by nature. Saudi customers rely on NTG to staff their IT and software development teams, not just deliver one-off projects. Employees roll through multiple projects in a customer’s roadmap, making them deeply embedded. Overall, more than 80% of NTG’s revenue is recurring or reoccurring through multiyear contracts and renewals.
12/08/2025 What are NTG’s expansion plans beyond Saudi Arabia?
Our core value proposition—an Egypt-based workforce serving Arabic-speaking Gulf states in their time zone and cultural context—applies across the region. We already generate a few percent of revenue from Iraq and Oman, and markets like Kuwait, Qatar, and the UAE are pursuing Vision 2030-style initiatives that create strong demand.
Still, Saudi Arabia is the largest and fastest-growing market, where we are only 0.1% of the total opportunity. That remains our primary focus. Beyond that, we may look at M&A to accelerate entry into adjacent markets by acquiring smaller IT services firms with long track records, strong customer relationships, and blue-chip clients. This could replicate NTG’s own path and add new growth channels.
28/08/2025 What proportion of NTG Apps revenue is implementation versus recurring?
That's a really good question. The majority of the NTG Apps revenue this quarter came from implementation services, probably in excess of 80%. The benefit is that we can provide tailor-made solutions for individual customers, which makes the relationship very sticky and long-lasting. The remaining percentage comes from ongoing license, maintenance, and support.
Over time, as our product line matures and the customer base grows, we expect to do less bespoke work and see a larger share from general licensing, support, and maintenance fees. These license packages typically include the right to use the product as well as support resources for error resolution and user training. So it is essentially a bundled deal of license and user support.
28/08/2025 What are NTG’s geographic expansion plans beyond Saudi, and what revenue impact do you expect?
It is an exciting time to be in neighboring geographies. Iraq, in particular, is similar to where Saudi Arabia was a decade ago: strong oil and gas revenues but starting from scratch in digital transformation. This creates a huge growth opportunity. That said, Iraq contributed only about 2% of revenue this quarter despite strong year-over-year growth.
We are focused on establishing a local presence there through offices and sales staff. Our CEO has said Iraq could eventually be as significant as Saudi over a 5–10 year horizon. However, for now and the near future, Saudi Arabia will remain the dominant source of NTG revenue.
28/08/2025 Which sectors are NTG Apps targeting in Saudi Arabia and nearby countries?
Our historic focus has been telecom, financial institutions, and IT companies. We’ve found success working with existing customers in those sectors and using NTG Apps as a cross-sell or upsell. For example, some customers come to us for outsourced software development, but we can instead implement NTG Apps to meet their needs. For now, oil and gas is not a strong focus.
That said, as we consider expansion and M&A, we will look for companies with exposure to oil and gas, since it will remain a large part of the regional economy. Another growth area is small and medium-sized businesses, which are central to Saudi’s Vision 2030. We are already working with SMBs, offering NTG Apps-based ERP systems, and see this as a key opportunity across the Gulf.
28/08/2025 How is AI impacting NTG’s business?
We view AI as an opportunity, not a threat. We don’t see software developers being fully replaced anytime soon, but tools like Copilot and Cursor can improve productivity. Our customers value the systems and infrastructure we build, and AI allows us to deliver more value efficiently.
On the product side, we are integrating AI into NTG Apps. Early-stage projects include a chatbot to train sales teams and models that crunch investment feasibility data for financial services clients. Overall, AI helps us enhance developer productivity and augment the value of our software platforms.
Financials
13/11/2024 Can you detail Q3 2024 financial statement highlights?
Q3 revenue was $14,600,000, up 109% year over year. Year-to-date revenue reached $38,900,000, up 100%. Gross margin was 38% for the quarter and year to date, within our target band of 35–40%. Margin depends on revenue mix, with higher margins in software products and offshore services compared to on-site. Discounts for new business and temporary contractor use can also affect results.
Operating expenses rose to 18% of revenue, reflecting expected investments in our Egypt offshore center, Saudi sales office, and new staff. Adjusted EBITDA reached $3,200,000, up 140% year over year, representing a margin above many IT services peers. This measure normalizes for discretionary expenses and foreign exchange fluctuations, giving a clearer picture of profitability alongside our strong top-line growth.
13/11/2024 How did foreign exchange and net income develop in Q3 2024?
Foreign exchange gains were $31,000 this quarter, compared to a $100,000 loss last year. Year to date, the gain is $350,000 versus a $728,000 loss in 2023. This improvement stems from the devaluation of the Egyptian pound in Q1, since we pay expenses in pounds while collecting revenue in Saudi riyals, which are pegged to the U.S. dollar. Currencies have since remained stable, but Q1 gains lifted results
Net income for Q3 was $2,100,000, up 303% year over year, and $6,900,000 year to date, up 272%. Earnings per share rose to $0.05 for the quarter and $0.16 year to date, compared to $0.00 and $0.01 in the prior year. Even after accounting for the 5-to-1 share consolidation, EPS more than tripled. While net income has been about 18% year to date, we guide to 14% for full-year 2024 due to expected Q4 investments in new office space, staff hiring, and training tied to major contracts like the $53,000,000 deal signed in August.
13/11/2024 What are the highlights from the Q3 2024 balance sheet?
Cash stood at $5,400,000, supported by proceeds from the September financing and positive operations. This is the strongest cash position in at least five years and likely in NTG’s history. Working capital improved to $9,800,000 versus a $2,100,000 deficit at year end. Receivables increased about 150% due to rapid revenue growth, but collections improved significantly, with 92% of delayed receivables from Q2 recovered and only 1% past due beyond 180 days.
On liabilities, $6,100,000 of long-term debt is held by NTG’s CEO and president, with favorable terms and an effective interest rate below 1%. Repayments totaled $150,000 in Q3 and $450,000 year to date, consistent with the ongoing plan. Overall, this is the strongest balance sheet in NTG’s history, positioning us well to invest and grow.
13/11/2024 Can you summarize Q3 2024 cash flow performance?
Operating cash flow was positive but somewhat lower due to receivables growth tied to revenue expansion. Collections were a record $13,100,000 in Q3, the highest quarterly level ever, and continued into October with $7,200,000, the best monthly result to date. This demonstrates strength in collections despite receivables temporarily acting as a drag on cash conversion.
Financing inflows were $4,700,000, compared to a $359,000 outflow last year, driven mainly by the September offering. Debt repayment remained consistent at $150,000 for the quarter and $450,000 year to date, reducing long-term debt by $540,000 overall. Cash outflows from investing declined compared to 2023 as we stopped capitalizing NTG Apps development after it reached a steady state. Overall, cash flow remains strong, with positive operating results, record collections, and financing proceeds supporting future growth.
13/11/2024 How will the $53,000,000 Saudi contract impact cash flow?
The contract, signed in August, is a three-year fixed-bid agreement billed monthly, typical of our engagements. In the near term, we are incurring startup costs for office expansion, employee hiring, training, and equipping staff. These expenses will weigh on cash flow in Q3 and Q4.
However, once the contract reaches steady state in early 2025, we expect it to contribute positively to cash flow. From that point forward, we do not anticipate material drag from this agreement, and it should be a consistent cash generator.
13/11/2024 What drives NTG’s 22% adjusted EBITDA margin, and is it sustainable?
Our adjusted EBITDA margins exceed many IT services peers due to the structure of our business model. Variable expenses flowing to the bottom line are minimal, primarily general and administrative items like office space, sales and marketing, and employee equipment.
Because our cost structure is lean and we emphasize strong cost control, we are confident these margins are sustainable. As revenue scales, this efficiency should continue to translate into strong profitability.
13/11/2024 Why isn’t July’s $6,000,000 receivables collection visible in Q3 cash flow?
Despite record collections, cash flow is affected by the pace of top-line growth. Q3 revenue was $14,000,000, and expenses including debt repayment and investments in our Egypt and Saudi offices offset some of the inflow. Q3 collections totaled $13,200,000, the strongest in NTG’s history, and continued with $7,200,000 in October.
The apparent compression of cash flow is therefore a function of rapid growth, not collection issues. Aged receivables are minimal, with less than $1,000,000 carried from Q2 and only about 1% past due beyond 180 days. Collections remain very strong, and we are confident in our position as growth continues.
16/04/2025 Can you explain 2024 cash conversion and working capital drivers?
For 2024, we generated $12,100,000 in operating cash before changes in net working capital. The primary driver was accounts receivable, which is a natural byproduct of our rapid revenue growth. In Q4, about 90% of receivables were billed that quarter, 9% in Q3, and 1% prior to Q3. This shows we are billing and collecting within roughly a quarter. Our days sales outstanding averaged 72 days for the year, which fits within our target range of 60 to 90 days, reflecting the longer payment cycles of our blue-chip, enterprise-level Middle Eastern customers.
After working capital changes, operating cash flow was $2,600,000. We invested about $1,000,000 in property, plant, and equipment for two new office locations, along with furniture and computer equipment to support 2024’s scaling. This left us with $1,600,000 in free cash flow. We also repaid $1,400,000 of debt, including loans payable and half of our outstanding bank indebtedness, and plan to continue reducing debt to clean up the balance sheet and lower interest expenses. As working capital moderates in 2025, we expect stronger free cash flow conversion.
16/04/2025 What corporate tax rate should we assume going forward?
That’s right, we’ve used up our accumulated tax losses, so corporate tax will be payable in Canada in 2025. This shift was one of the reasons we moved from net income to adjusted EBITDA guidance. We expect to pay Canadian corporate taxes at a rate of 26.5%.
29/05/2025 Will working capital balance out this year after Q1 cash flow pressure?
You are right to point out the more moderate revenue growth we have seen so far. Due to the nature of our billing cycle, the working capital drag from accounts receivable is about equal in magnitude to revenue growth. So with more moderate revenue growth, we expect the drag to also moderate.
As the year continues, we anticipate seeing more cash flow come through. The one caveat is the Eid holiday coming next week, which slows payment cycles and deal signings, much like Christmas in the West. We saw the same last year in Q2. But collections and contract activity picked up in Q3 after the holiday, and we expect a similar pattern this year with more cash flow showing up in the second half.
29/05/2025 Gross margin was 34% in Q1, down from usual. How should we think about it?
You are correct that amortization of our intangible asset, NTG apps, is now included in cost of goods sold because of the revenue we are deriving from it. That is a good problem to have, but it pushed gross margin down to 34%, slightly below the 35–40% range we typically see.
There were also temporary factors. We were rapidly setting up new offshore offices, whose expenses fall into cost of goods sold. Bonuses for the strong performance of our technologists last year also hit Q1 as a onetime cost. We expect gross margins to recover by about 200 basis points, and potentially more, as we move into Q2, Q3, and Q4 when projects are in steady state.
29/05/2025 How should we think about accounts receivable drag on cash flow?
Accounts receivable is a natural byproduct of revenue growth given how our billing system works. Generally, incremental revenue growth is matched by a similar change in working capital.
In Q1, revenue increased by about $2,500,000, while receivables rose by about $2,100,000. This is consistent with our expectation that receivables will move in proportion to revenue growth. While it constrains cash flow, it reflects the growth trajectory of the business.
29/05/2025 What does accounts receivable aging indicate about collections?
Our revenue growth is moderating a little, and we are seeing less impact on cash flow from changes in accounts receivable. Another way to look at it is through the aging of receivables, as noted in our financial statements. This quarter, 91% of receivables were billed in Q1 and another 5% in Q4.
These figures are improvements over Q4 and show very strong collections within about a quarter, which is what we expect. Looking at both the proportion between revenue growth and receivables change, and the aging profile, it is clear our collections are strong. The cash flow drag is simply a natural byproduct of the significant revenue growth we have experienced.
06/08/2025 What is NTG’s capital structure and insider ownership?
We reain in a strong financial position. Our balance sheet carries minimal debt, primarily extremely low-interest, management-owned debt dating back to 2019 when we pivoted into our current offshoring model. The effective rate is less than 1%, so it has no meaningful impact on cash flow.
As of now, we have about 42.5 million shares outstanding, with insider ownership at roughly 40%. Following a recent financing that added about 4 million shares, insider ownership stands closer to 36%. Regardless, management continues to hold a significant stake in the company, ensuring their interests are well aligned with shareholders.
06/08/2025 How are customers billed for services?
Billing is primarily monthly. If a client has 10, 20, or 50 NTG resources on their team, we submit timesheets and work reports, then invoice based on negotiated monthly rates for those resources. This provides predictable, recurring revenue streams for NTG while aligning directly with resource utilization.
06/08/2025 How concentrated is NTG’s customer base?
As of the last reporting period, about 70% of revenue came from our top five customers. Historically, it was not unusual for a single client to represent 20–30% of revenue. However, diversification has improved. Today, no single customer accounts for more than 20% of revenue. We view this as a positive trend, showing both customer satisfaction and broader adoption of our services.
12/08/2025 How does NTG’s business model support growth and margins?
Our model is straightforward. Customers contract resources for one to three years, and we bill monthly based on the number of deployed resources. Gross margins typically range from 35% to 40%. Offshore contracts lean toward the higher end, on-site work in Riyadh toward the lower end, while NTG App software has higher software-style margins.
Below the gross margin line, scaling costs appear. Ideally, sales would be 5% of revenue and G&A 10%, but in practice, newly hired resources sit in G&A until deployed. That impacts profitability during growth phases. For example, in Q1 2025 adjusted EBITDA margins were closer to 15%, compared with 20% in 2024 when the mix was optimized. Growth requires investment in new employees and office space, which temporarily compresses margins.
28/08/2025 Was the $1 million FX headwind at the top line or bottom line?
We get FX impacts on both the top line and the bottom line. We bill in Saudi riyals, which are pegged to the US dollar, while many expenses are also in Saudi riyals, but some are in Egyptian pounds and Canadian dollars.
As a point of comparison, if Q2 FX rates had been the same as in Q1, we probably would have seen over $1 million more in top-line revenue, closer to a $20 million quarter, with improved bottom-line margins. Net income would likely have been closer to $1.3 or $1.4 million. So FX shows up in both lines for sure.
28/08/2025 Will NTG return to positive operating cash flow in Q3 after receivables increased in Q2?
Cash flow was constrained in Q2 due to higher accounts receivable. But Q3 is already showing strong collections, similar to last year. After summer and Eid holidays, billing and collection cycles are normalizing. As of now, we are on track to make up the deficit, with a dampened or potentially net zero change in receivables, supporting a return to positive operating cash flow in Q3.
Outlook & Guidance
13/11/2024 Can you summarize Q3 2024 performance and key drivers?
Q3 was our 8th consecutive record-setting quarter, with revenue up 109% year over year to $14,700,000. Year-to-date revenue rose 100% to $38,900,000. Growth is driven by customers recognizing our ability to deliver quality digital transformation teams and services at competitive prices, leading them to sign larger, longer contracts. This success reflects the dedication of our NTG Clarity team, including about 100 new hires this quarter to support growth.
Net income rose 303% to $2,100,000 in Q3 and 272% year-to-date to $6,900,000. We introduced adjusted EBITDA as a new profitability measure, which increased 140% year over year to $3,200,000, representing a 22% margin versus 19% last year. Profitability and growth are further supported by our largest-ever three-year $53,000,000 contract signed in August, bringing total work on hand to $83,500,000. We also closed a brokered offering, leaving $5,400,000 in cash on the balance sheet. With this momentum, we reaffirm full-year 2024 guidance of $55,000,000 revenue at a 14% net income margin, increased from prior guidance of $50,000,000 and 10%.
13/11/2024 How large is the backlog and how has it changed year over year?
Our current backlog is $83,500,000 with three-year visibility, a significant improvement from about $20,000,000 one year ago, when backlog was usually only one year out. Customers have shifted from month-to-month or quarterly commitments to multi-year contracts, including the $53,000,000 contract in August and the $7,500,000 contract earlier that month.
This change reflects customer confidence in our service quality and pricing. The backlog growth and longer duration provide much stronger visibility into future revenues than we had in past years.
13/11/2024 Why is Q4 2024 net income guidance lower despite strong YTD performance?
Our philosophy is to provide guidance we can reasonably achieve. While net income margins year to date have been about 18%, we guided to 14% for the full year. This reflects expected Q4 investments tied to new contracts, particularly the $53,000,000 engagement.
We anticipate costs for office expansion, renovations, new equipment, and the hiring and training of staff before they are fully deployed. These investments will temporarily reduce net income margins in Q4, but they are necessary to support larger contracts and future growth.
13/11/2024 Can you provide early insight into 2025 guidance and contracts?
Formal 2025 guidance will be released in Q1, similar to last year. Directionally, we expect continued momentum from the Saudi market, where demand is accelerating. Customers recognize our ability to deliver large-scale digital transformation teams efficiently and at competitive prices, and our 100% quarterly growth reflects this.
We expect growth to continue into 2025, but more detailed guidance, including contracts and commitments, will be shared in Q1.
16/04/2025 What revenue growth are you targeting for 2025?
For 2025, we are targeting $75,000,000 in revenue, representing $19,000,000 in incremental revenue or about 34% year-over-year growth. While the percentage is lower than 2024’s growth, the absolute dollar increase is similar. We are mindful of scaling responsibly without sacrificing quality in delivery.
Market tailwinds remain strong, supported by Saudi Vision 2030 spending and robust customer demand. Our backlog of purchase orders and contracts exceeds $105,000,000. With strong products, services, and a dedicated team, we are confident in sustaining growth into 2025 and beyond.
16/04/2025 Why are you shifting profitability guidance from net income to adjusted EBITDA?
We are moving to adjusted EBITDA guidance in 2025 for two reasons. First, while we are largely insulated from U.S. trade wars and tariffs, we remain exposed to foreign exchange. Most revenues are billed in Saudi riyals, pegged to the U.S. dollar, while expenses also include Canadian dollars and Egyptian pounds. Currency fluctuations are beyond our control, so stripping them out makes profitability metrics clearer.
Second, we will begin paying Canadian corporate income tax in 2025, as we have fully utilized prior accumulated tax losses. Removing tax effects makes our results more comparable to previous years. Accordingly, we are guiding for adjusted EBITDA margins in the 16% to 20% range, below Q4 and full-year 2024 levels.
16/04/2025 What drives your 2025 adjusted EBITDA margin guidance of 16–20%?
We expect gross margin to remain consistent, and marketing and sales should benefit from operating leverage despite incremental investment. The main variable is general and administrative expenses, which depend on the balance between employees in training and those already billable. Employees in training are booked under G&A, while billable employees move to cost of goods sold.
Guiding to a 20% margin gives us room to onboard and train staff properly before deployment, ensuring client satisfaction and maintaining quality standards. We view the ability to invest in readiness as worth a few margin points, given the long-term strategic benefit of delivering high-quality resources.
16/04/2025 How do you summarize NTG’s position entering 2025?
2024 was a fantastic year, proving our profitable and scalable business model. We continue to deliver products and services that customers, particularly in Saudi Arabia, demand. In 2025, NTG offers investors unique exposure to the fast-growing Middle Eastern market, which remains relatively insulated from volatility and tariffs affecting North America. We are well positioned for continued growth and value creation.
16/04/2025 What are your expectations for changes in working capital and cash flow in 2025?
The key metric is accounts receivable, which will stay somewhat elevated due to growth. Collections remain within our target, typically about a quarter after billing, and days sales outstanding is in line with expectations. As working capital stabilizes, we anticipate solid cash conversion flowing through in 2025.
16/04/2025 Did the $53,000,000 contract impact margins, and should we expect one-off costs in Q1 2025?
You’re right that margins in Q4 came in strong, showing the power of our model when the ratio of employees in training versus deployed is managed well. While 2025 could play out similarly, our guidance already builds in flexibility to front-load hiring and training as needed. This could pressure margins to the lower end of the range, but it ensures quality when rolling out resources to clients.
16/04/2025 Should we expect seasonality in Q1 2025 due to Ramadan?
Yes, to some extent. Ramadan in late Q1 brings shorter working hours and lighter sales activity, but the bigger impact is in Q2 when both Eid holidays fall. As in 2024, we expect billing and collections delays in Q2, leading to temporarily higher receivables. These typically normalize the following quarter, much like how year-end holidays affect cycles in North America.
16/04/2025 Does Trump’s tariff policy affect your guidance for 2025?
Direct impacts are minimal, as our operations are in Saudi Arabia, where tariffs don’t apply to our sector. While second-order effects such as oil price shifts or global slowdowns are possible, IT investment in Saudi Arabia remains strong. If spending is cut, it typically affects prestige projects rather than core digital transformation, which is central to Saudi’s future economy. We continue to reaffirm our 2025 guidance of $75,000,000 in revenue with adjusted EBITDA margins of 16–20%.
29/05/2025 Was Q1 NTG apps growth from existing clients or new? What is the revenue goal by Q4 2025 and 2026, and margin impact if NTG apps reach 15–20%?
The 50% year-over-year growth shows proof-of-concept projects transitioning into full contracts. Most of that growth came from existing customers expanding their engagements with us through NTG apps. Forecasting growth is difficult since it depends on pilot cycles, but if momentum continues, NTG apps could reach about 12% of revenue by the end of this year. In 2026, 15–20% would be an excellent outcome.
The gross margin impact would be significant. NTG apps is a software business with roughly 50% gross margins and potential for more with scale. By comparison, on-site services are about 34–36% and offshore services 36–40%. If NTG apps reached 20% of total revenue, overall gross margin could rise to about 40%, a 600-basis-point improvement from this quarter. We are very excited about the opportunity NTG apps represents.
29/05/2025 Are most 2025 investments complete, or should we expect similar growth spending?
We spent heavily in Q1, particularly on building our professional services roster and expanding the sales team. Q1 is expected to have the highest operating expenses this year. As we move into Q2, Q3, and Q4, we expect expenses to settle into a more sustainable run rate and deliver full-year adjusted EBITDA in the 16–20% range.
That said, as the Middle East holiday season ends, we will reopen negotiations for new contracts, renewals, and expansions. Depending on the pipeline, we may need a few more investments. This is why our guidance includes flexibility between 16–20%. But broadly, we see the bulk of investments as already made in Q1, with improved bottom-line performance going forward.
29/05/2025 Why does forward guidance look flat after Q1 $19.7M revenue?
Our guidance is built mainly on backlog and expected renewals. What it does not capture as well is new work or expansions from existing customers. That can make guidance appear conservative.
Qualitatively, we continue to see strong appetite for growth from our customers and ongoing momentum in the Saudi economy. On the ground, we expect growth to continue through the year and beyond, even if guidance looks flat based on backlog alone.
06/08/2025 How has NTG performed financially, and what are your 2025 expectations?
Revenue growth has been the headline of our story. Our three-year compounded annual revenue growth rate is about 60%. 2024 was a breakout year with 102% growth, bringing revenue to $56 million. For 2025 we’re targeting $78 million, a 40% increase, which reflects the law of large numbers but still represents strong absolute growth. Importantly, we’ve paired growth with profitability. Gross margins have been steady at 35–40%, typical for our services. In 2024 we delivered a 22% adjusted EBITDA margin, highlighting the scalability of our model.
In 2025 we’re guiding EBITDA margins slightly lower, to 16–20%, as we invest in office space, new hires, and equipment to sustain growth. Q1 2025 revenue was up 68% year-over-year, though adjusted EBITDA margin was about 15%, below the target range, due to these upfront investments. We expect profitability to improve as new staff and facilities become productive throughout the year. Overall, the business remains cash-flow positive from operations and well-positioned for continued expansion.
06/08/2025 How quickly can NTG convert its $100 million backlog into revenue?
The backlog consists mainly of signed purchase orders and contracts, most of which are one-year terms. Larger contracts, like the $53 million and $22 million three-year agreements and another $7 million three-year deal, will be billed across their durations. The balance of backlog is generally billed within a year. Overall, our backlog aligns with our history of revenue recognition: contracts typically start generating revenue in or around a one-year timeframe, with multi-year contracts providing extended visibility.
06/08/2025 How does the devaluation of the Egyptian pound affect NTG, and what is your outlook?
The sharp decline of the Egyptian pound has historically been a net positive, since many of our costs are in pounds while revenues are pegged to the US dollar. That said, last year’s steep devaluation was triggered when Egypt allowed its currency to float as part of a deal with Gulf nations. It was essentially a one-time reset. Going forward, we expect more stability, with fewer sharp moves, which should reduce uncertainty while still preserving the cost advantages we enjoy from operating in Egypt.
06/08/2025 Where do you see NTG in five years?
Our vision is to continue capturing market share in Saudi Arabia’s IT services sector. We’ve spent two decades building the relationships needed to thrive there, and the market is entering its strongest growth phase. Over the long term, we aim to evolve into a multinational IT consulting house serving clients across the Middle East. The primary endgame is sustained growth, profitability, and expanding our role as a leading technology services provider in the region.
06/08/2025 How is artificial intelligence affecting NTG’s business and strategy?
AI is a major area of focus. While we don’t see it replacing outsourced software development anytime soon, it provides a productivity boost for developers. Tools like coding copilots help our teams work faster and deliver higher quality, which makes our services more competitive. Ensuring our workforce stays current with these tools is a top priority.
We’re also integrating AI into our proprietary products. NTG Apps, for example, is being enhanced with AI capabilities, and our internal AI department is running pilot projects with customers. Our strategy is to use AI both to improve the efficiency of our core outsourcing model and to expand into AI-enabled solutions that deepen client value.
06/08/2025 What catalysts or metrics should investors track to gauge NTG’s progress?
Backlog growth is a key metric. Our backlog grew from about $20 million at the end of 2023 to $100 million today, even excluding new three-year contracts. Watching how much existing customers expand their contracts is also important—for example, a $22 million contract signed in December 2024 has already been increased by more than 50%. We issue press releases every month or two with new contract wins and expansions, which are reliable signals of momentum.
Customer satisfaction and retention also matter, since our largest clients are blue-chip Saudi enterprises like the big telecoms and banks. Their appetite for technology is enormous, and our ability to capture more of their IT budgets is a strong indicator of growth.
06/08/2025 What is the key message you want investors to take away?
NTG offers something unique. We’re Canadian listed with a Canadian board and auditor, but 95% of our business is in Saudi Arabia, one of the world’s fastest-growing technology markets. For investors seeking diversification and exposure to emerging markets with strong investment behind them, NTG is a pure play.
We’ve been operating for 20 years, we’re cash-flow positive, and we have a profitable, scalable business model. Our goal is to capture as much of the extraordinary growth in the Middle East technology sector as possible, while delivering shareholder-aligned, sustainable expansion.
28/08/2025 Should G&A step down from Q2 levels given the guidance?
The intention behind hiring additional senior resources, which are more expensive and harder to find, was to prepare for the next leg of projects. We feel well staffed now, so we expect G&A expenses to plateau here.
As we roll these resources into client projects in the back half of 2025 and into 2026, we expect G&A to step down in absolute terms, aligning with the 16–20% adjusted EBITDA guide. So the trend should be a plateau followed by a step down.
28/08/2025 How will NTG Apps affect gross margins over the next 18–24 months?
We are very excited about NTG Apps becoming a larger proportion of revenue, since the licensing, support, and maintenance components naturally carry higher margins. In the short term, most of the revenue is still service-based from bespoke implementations, which is similar to our on-site and offshore billing. That has expanded margins modestly but not dramatically.
Over the longer term, as the bespoke services portion shrinks and recurring licensing and support expand, we expect margins to reach more traditional SaaS levels. These could be 50–60%, with some platforms achieving 70%. In the near term, though, margins will likely stay at the higher end of the 35–40% range, closer to 40% as we have been seeing.
28/08/2025 Will FX recovery in Q3 offset Q2 losses?
Yes. Just as FX losses accumulated quickly in Q2 to about $1 million, recoveries can also come rapidly, which we’ve seen historically. Up until Q2, FX had been a tailwind with gains driven by the strong US dollar and high USD revenue exposure. If the dollar continues to recover, as early Q3 trends suggest, we expect those Q2 losses to be offset in coming quarters.
28/08/2025 With NTG Apps driving growth, are other segments declining?
Yes. NTG Apps grew 1600% and offshore services grew 90%, but on-site services declined about 16% year over year. Customers increasingly recognize the value of offshore work and NTG Apps. Offshore developers in Egypt provide quality service at lower cost, in the same time zone and language.
Clients are shifting from on-site work to offshore and NTG Apps implementations, rather than building infrastructure from scratch. We are fine with this shift, since offshore services and NTG Apps are higher margin and more scalable than on-site offerings.
28/08/2025 Final remarks on Q2 and outlook for Q3?
Q2 was a strong quarter despite headwinds and investment needs. We delivered continued year-over-year revenue growth and see momentum carrying into Q3. The opportunity is there, customer demand is strong, and we believe there is still a long runway for growth in the Saudi IT services market.
Risks & Macro
16/04/2025 Will Trump’s tariffs affect your growth?
We see very limited direct impact from U.S. tariffs given our Middle East focus and client base. Secondary or tertiary effects, such as shifts in oil prices or global slowdowns, are harder to predict. Historically, spending cuts in Saudi Arabia focus more on prestige projects, while core digitization initiatives—where we operate—remain prioritized. We believe NTG’s offering is well protected from both primary and most secondary effects of tariffs.
29/05/2025 With oil at $60, are Saudi client budgets declining?
That is a really good question. One of the strengths of our business is that many of our core customers are not in oil and gas. They are telecom operators, banks, financial institutions, and system integrators whose revenues are not directly tied to oil prices. That said, large government investments are still funded by oil and gas.
Another strength of our model is that the Saudi government recognizes technology and software development as a key pillar of Vision 2030, helping diversify the economy away from oil. From what we can tell, there are no impacts on client budgets for digital transformation. Where we see some scaling back is in prestige infrastructure projects, but what we focus on is central to Saudi’s digital transformation goals, which remain well funded.
29/05/2025 Is Saudi seen as a more stable place to invest given improved US relations?
Definitely yes. In my recent conversations with investors, I have seen growing interest and intrigue about opportunities in Saudi Arabia. The recent diplomatic mission to Saudi Arabia and the Middle East was widely discussed on social media and really opened minds to the potential of the region.
Investors increasingly see stability and long-term suitability for investment in Saudi Arabia. Improved relations between Western countries and Saudi are making the opportunity more attractive, and we are excited about what that means for future investment.
06/08/2025 Do you face challenges with receivables or cross-border payments, and how does currency impact your business?
Receivables are actually very strong. While our Q1 cash flow statement showed $2.5 million in operating cash flow before working capital changes but only $400,000 in reported operating cash flow, this was simply a function of rapid growth inflating receivables. Customers pay on time, with average days sales outstanding of about 75 days, which we see as normal for large enterprise clients. In Q1, 90% of receivables were billed in that same quarter, another 5% in Q4, leaving only a small portion that is older and not at risk of default. So collections are solid, and the apparent ballooning is just a by-product of doubling revenue year-over-year.
On currency, our model has historically benefited from foreign exchange dynamics. We bill primarily in Saudi riyals, which are pegged to the US dollar, and report in Canadian dollars. Many of our costs, however, are in Egyptian pounds, which have seen significant devaluation. That combination has been a tailwind, lowering effective costs and boosting reported results. More recently, volatility in North American currencies and some weakening of the US dollar has softened the benefit, but overall FX has been favorable for us.
06/08/2025 Do you face regulatory challenges operating in Saudi Arabia?
Regulation is relatively straightforward. There are requirements such as employing a certain number of Saudi nationals, which we comply with, but overall the business environment is supportive. Saudi Arabia is actively trying to attract international companies to set up regional headquarters and deliver services locally. The framework is designed to encourage investment and growth, so from our perspective it’s smooth sailing on the regulatory front.
12/08/2025 How is generative AI affecting NTG’s business?
AI is widely discussed, but our experience is that it supplements developers rather than replaces them. It is especially useful for debugging and simple coding tasks, boosting productivity for our teams. We see it as a tool to equip developers, enhancing the value they deliver to customers.
It also has margin implications. With AI, we can execute larger projects with fewer resources, and if competitors are not adopting these tools, we may even price at a premium. Beyond internal use, we are integrating large language models into NTG Apps, such as chatbots for user training and AI-generated reports. We are also piloting AI to help sales staff scope and price opportunities more efficiently. These initiatives can improve efficiency, pricing power, and product capabilities.
28/08/2025 Has the Israel–Gaza conflict impacted NTG’s operations in Saudi or nearby regions?
There has been no change in our situation. The Gulf States remain focused on economic diversification and development, making every effort to maintain peace and avoid regional conflict. The prevailing philosophy is stability and growth, and we expect that to continue.
Personal Questions
13/11/2024 Do you expect further dilution?
We ended Q3 with $1,600,000 in operating cash flow and $5,400,000 in cash on the balance sheet, thanks to positive operations and the September financing. Given this strong cash position, we do not anticipate needing to raise capital or issue additional shares in the near future.
13/11/2024 Closing remarks on Q3 2024 earnings call
Thank you to everyone who submitted questions and tuned in. Q3 was another exciting quarter, with record revenue growth and the strongest collections in NTG’s history. We are confident in sustaining this momentum into Q4 and beyond.
We are grateful to our customers for their trust and to our employees for their dedication and hard work. With strong contracts, robust collections, and the investments underway to support scaling, we look forward to finishing the year strong and continuing our growth trajectory. Onward and upward into year-end 2024.
06/08/2025 Can you share an example of a large project NTG delivered in Saudi Arabia?
A recent case study involves offshore software development for a major Saudi system integrator that holds government contracts with ministries such as Interior and Tourism. We worked on both mobile applications and internal government systems related to the Hajj and Umrah pilgrimages to Mecca, which are among the largest annual gatherings in the world. Our role included building a visitor-facing app for booking visits to holy sites, along with logistics and crowd management systems to ensure capacity limits were maintained.
This engagement highlighted both our relationship-driven sales model and our ability to scale talent quickly. The CTO selected us based on a referral from a long-term client who valued our pricing and quality. We were able to deploy 10 senior architects within weeks, and the project grew to about 200 resources over two years, making it our largest engagement today. As one of the earliest movers into Egyptian offshoring, we believe NTG is now one of the largest, if not the largest, offshore provider from Egypt to Saudi Arabia.
Disclaimer:
The following transcript and Q&A have been generated with the assistance of Artificial Intelligence (AI). While we strive for accuracy, completeness, and clarity, the content may contain errors, inaccuracies, or misinterpretations. Neither the company featured in this document nor ValueBridge assumes any responsibility or liability for the accuracy, reliability, or completeness of the information presented.
This material is for informational purposes only and should not be construed as official company communication, financial advice, or a definitive representation of the company's views. Readers should independently verify any information before making decisions based on it.
Sources
Earnings calls