CROC Reports Full 2019 and Q1 2020 Results
CROC’s revenue approached as much as ₽31 billion in 2019, with business solutions, infrastructure, consulting and product practices demonstrating the highest growth. In Q1 2020, revenue increased by 37%, with computing infrastructure projects leading the way in terms of total share (17%)1.
IT company CROC has reported its performance and financial results for 15 months: the whole of 2019 and first quarter of 2020. From January to March 2020, revenue grew by 37% YoY, with the company recording an 11% rise in customers (496 active2), 19% increase in number of projects (1,069 active) and a 16% higher average project price.
The fastest growing business line in Q1 2020 was computing infrastructure3, showing a 22% increase against Q4 2019 and generating 17% of total revenue in the first quarter of 2020. This follows the trend towards development and adoption of smart data processing, which is now prioritized in Russia. In 2019, computing capacity procurement for storing and processing big data accounted for almost half (49%) of AI technology implementation costs4. Most projects in this category aim to improve customer experience via comprehensive analysis of consumer behavior and personalized communications, as well as to make business more efficient and transparent. In pursuit of new growth opportunities, companies are testing new development scenarios, rearranging priorities, and responding to market changes even faster than before the pandemic. To achieve success, companies utilize a comprehensive range of technologies related to data and business processes.
In Q1 2020, the fastest revenue growth by industry5 occurred in:
- Energy: 87%
- Retail: 27%
- Finance: 26%.
The Covid-19 pandemic has reshaped market requirements. CROC saw skyrocketing revenue from computing infrastructure, communication platforms, and information security projects. In addition, there was also escalating demand for Robotic Process Automation and Business Processes Management (RPA and BPM), as well as remote e-document management systems.
"The pandemic will inevitably spur technological development, especially within the cloud segment and IT infrastructure outsourcing, with demand for AI and Big Data solutions also set to rise. This trend was highlighted by events during the first quarter of this year, with the decision to switch to online operations by a huge number of businesses in response to quarantine restrictions increasingly appearing like a natural evolution. Most companies have successfully gone through stage one of this transition, but still have a long journey ahead. We all did our best to adapt to the current situation, with companies now switching their focus from operating outside the office to exiting the economic tailspin. Obviously, pre-crisis business and threat models never included such risks and all action plans will thus have to be revised. Businesses will also rethink logistics in light of the risks of globalization highlighted by the crisis, especially within the manufacturing sector. Digital transformation of society is thus about to take another step forward – healthcare is just the beginning. We have announced a portfolio of solutions that address the crisis aftermath and will give our customers a competitive edge to accelerate business growth," ," said Boris Bobrovnikov, Founder and CEO, CROC.
To help companies in urgent need of transitioning employees to remote work, on March 23, CROC released a portfolio of 20 different express solutions to meet the needs of all businesses, irrespective of size and industry specifics. On May 8, CROC unveiled another portfolio of anti-crisis solutions designed to help businesses gradually leave business isolation mode, optimize investments leveraging IT, and ensure process stability, no matter the direction chosen by management: save, diversify or develop.
CROC performance and financial results in 2019
CROC’s revenue increased by 1.2% YoY to reach ₽30,670 million in 2019, with the number of customers (+15% to 768, including subsidiaries) and projects (+7% to 2,530) also rising. Furthermore, our high life-time value customers increased in number (up to 380)6, and brought us 19% more revenue.
One of our greatest accomplishments in 2019 was geographical expansion both in Russia and abroad. Last year, the company covered 342 cities (+13%) in 82 of 85 Russian regions (+8%) and started international relations with three more countries: Belarus, Croatia, and Israel.
CROC’s industry-focused business lines7 showed positive results in 2019, posting growth ranging grew from 9% to 65%. This excellent performance highlights the effectiveness of management’s strategic plan to deepen industry expertise.
In 2019, the strongest contributors to revenue growth were8:
- Computing infrastructure: +32%9;
- Network solutions10: +19.5%;
- Software development: +18%;
- Information security: +55%;
- Multimedia systems: +61.5%;
- Infrastructure solutions: +29%;
- Unified communications11: +62%;
- Digital manufacturing: +84%.
Transformation: a strategic solution portfolio
CROC’s digital transformation plan was officially launched back in early 2018 and continued to be rolled out in 2019, achieving the following key results:
- New positioning;
- Sales department transformation: development of industry expertise, launch of loyalty program for key customers, and new sales models;
- More effective operations after comprehensive restructuring of internal processes, improved visibility of available resources and competencies, and adoption of new digital tools for business management;
- Development of company sub-brand ecosystem;
- Development of partner ecosystem for quick business scaling and attracting unique competencies;
- Strategic solution portfolio update in line with market needs and regular feedback from customers and partners.
It has been a year, since CROC announced its new positioning and divided its entire business into five main focus groups: traditional projects, services (public CROC Cloud, XaaS, and SaaS2), digital (blockchain, Big Data, VR/AR, artificial intelligence, machine learning, IoT, BIM, smart city, machine vision, chatbots, RPA, etc.), consulting, and off-the-shelf products.
In 2019, the company’s products line led the way by tripling its revenue, followed by consulting (doubled), services (+12%) and digital12 (+2.4%).
CROC started this year by further shaping and refining its strategic solution portfolio to address the current needs of the IT market. Now, the company’s business lines are grouped into three clusters: business solutions13, infrastructure solutions, and engineering and multimedia systems. Based on this new breakdown, results for 2019 were as follows:
- Business solutions: +16.5%
- Infrastructure solutions: +7.5%
- Engineering and multimedia systems: -31% (reduction in general construction works).
Forecasts and development plans for 2020
By the end of 2020, CROC expects a further increase in average annual revenue due to the tailoring of its strategic solution portfolio to the current market situation and a 25% increase in number of projects as a result of booming demand for services and managed services.
CROC plans to enter new markets in 2020 and continue expanding its industry expertise within both current and new geographic regions around the world. This year’s strategic drivers will be ongoing expansion and the sharing of digital transformation expertise and methodology, while the promotion of import substitution programs for technological products and software will speed up our Software Development and Digital Manufacturing practices.
Furthermore, the new business plan also includes performance improvement: 10% increase in net revenue per employee; creation of an ecosystem of resources and competencies; as well as SLA compliance regarding allocation of qualified resources and talent management14.
For more details, please contact CROC's PR team: PR@croc.ru
CROC is one of the Russian IT market leaders, creating a new digital ecosystem for society and completing projects in 42 different countries. The company provides a comprehensive range of IT solutions, including systems integration and managed B2B and consulting services. In addition, CROC also offers off-the-shelf products and promising end-to-end technologies, such as Big Data, blockchain, artificial intelligence, virtual and augmented reality, Internet of Things, robotics, and machine learning.