Offshore software and services provider for the financial sector Kanbay International Inc. has reported strong growth in both revenue and profit in its second quarter.
For the three months ended June 30, Rosemont, Illinois-based Kanbay reported a net profit of $6.43 million compared to a profit of $2.2 million in 2003, on revenue that grew 73% to $44.8 million. Despite this however, the company saw its cash and cash equivalents decline rapidly during the period, ending the quarter with just $6.62 million in the bank compared to $17.4 million at the end of December 2003. The company said that it is on course to achieving a long term operating margin objective of 20%. Currently Kanbay’s operating margin stands at 6%.
These are the first sets of results that Kanbay has released following its initial public offering (IPO) on Nasdaq in March 2004. The company managed to raise some $93 million through offering 7.15 million shares of common stock priced at $13 per share, however this was at the low end of its $13 to $15 range. It also pointed out that it would use some $45 million of the proceeds to invest in a new software development center in Hyderabad, and expand its existing facility in Pune, India.
Kanbay provides IT consulting, software development and systems integration services for clients including HSBC, Household International, Morgan Stanley, CitiFinancial, Development Bank of Singapore, ABN Amro and Sun Life Financial. Household International is the company’s largest client, accounting for some 53% of Kanbay’s entire revenue, and Morgan Stanley ranks as its second largest client accounting for 13% of business.