Theta Edge Berhad, a familiar name in Malaysia’s digital transformation landscape, recently released its unaudited financial results for the first quarter ended 31 March 2025 (Q1 2025). While the numbers reflect a challenging start to the year with a significant decline in revenue and increased losses, the report also unveils a strategic repositioning and an ambitious roadmap for a turnaround, particularly eyeing the second half of 2025. This quarter’s performance underscores the dynamic nature of the ICT and Telco sectors, highlighting the critical need for adaptability and forward-looking strategies.
Core Data Highlights: A Challenging Quarter
Let’s dive into the core numbers that tell the story of Theta’s Q1 2025 performance. The overall financial picture shows a substantial contraction when compared to the same period last year.
Q1 2025
Revenue: RM4.69 million
Loss After Tax: RM5.179 million
Loss Per Share: 4.39 sen
Q1 2024
Revenue: RM16.547 million
Loss After Tax: RM2.919 million
Loss Per Share: 2.47 sen
This represents a steep
and a
compared to Q1 2024. The primary reason cited for this significant decline is the reduced revenue from the Telco segment, which has entered a warranty phase, coupled with unrealised new revenue projections for both the ICT and Telco segments.
Segmental Performance
Breaking down the performance by business unit reveals where the impact was most felt:
- Information Technology Segment: Revenue for this segment saw a significant drop from RM5.9 million in Q1 2024 to RM1.8 million in Q1 2025, a
69% decrease
. This was attributed to unrealised new revenue projections.
- Telecommunication Services (Telco Services) Segment: This segment experienced an even sharper decline, with revenue falling from RM10.6 million in Q1 2024 to RM2.9 million in Q1 2025, a
73% decrease
. The report states this was primarily due to lower revenue recognition following the completion of the Jendela project, with the remaining contract covering sites currently under warranty.
Sequential Quarter Performance
A look at the sequential performance from the immediate preceding quarter (Q4 2024) further illustrates the challenging trend:
Q1 2025
Revenue: RM4.69 million
Loss After Tax: RM5.179 million
Q4 2024
Revenue: RM14.712 million
Loss After Tax: RM4.222 million
Revenue decreased by
from RM14.7 million in Q4 2024 to RM4.7 million in Q1 2025. This was mainly due to the completion of installation and supply for ICT and Telco projects. Consequently, the loss after tax also increased by
from RM4.2 million in Q4 2024 to RM5.2 million in Q1 2025.
Financial Status
On the financial health front, the Group’s borrowings saw a positive trend, while lease liabilities increased significantly:
- Borrowings (Hire Purchase): The Group’s total borrowings, primarily hire purchase, decreased to RM4.883 million as of 31 March 2025, down from RM10.783 million in the corresponding period last year. This reduction indicates a positive move in managing debt.
- Lease Liabilities: In contrast, lease liabilities rose substantially to RM23.201 million in Q1 2025, from RM5.735 million in Q1 2024. These liabilities are primarily related to the lease of office units and computer equipment, reflecting operational expansion or renewals.
Risk and Prospect Analysis: Eyeing a Second Half Turnaround
Despite the challenging Q1 2025, Theta Edge Berhad remains optimistic about a turnaround in the second half of the year. The Group emphasizes its proactive repositioning, cost optimization efforts, and strategic prioritization of recurring revenue projects as key drivers for recovery, with results anticipated to begin in Q3 2025.
Key Revenue-Generating Initiatives on the Horizon:
- Ampang Jaya Smart City (MPAJ) Project: This flagship 20-year Smart City concession with the Ampang Jaya Municipal Council is expected to enter its operational phase in Q3 2025. This project is poised to deliver a consistent income stream through IoT-based city management, smart solutions for small businesses, digital billboards, and AI-based building permit applications. It marks Theta’s strategic pivot towards Smart State solutions nationwide.
- PERKESO Project: Theta anticipates revenue realization from its ongoing engagement with the Social Security Organization (PERKESO) in Q3/Q4 2025. The project, currently in the hardware delivery stage, is reportedly proceeding as scheduled.
Strategic Continuity & Future Growth:
The Group’s joint venture with Digital EG Sdn Bhd is highlighted as a critical milestone for scalable, government-grade digital platforms. Digital EG is designed to be a national delivery platform for digital government services, offering end-to-end solutions for licensing/permit approvals, data integration, and workflow automation. This initiative is expected to generate recurring income and strengthen Theta’s role in Malaysia’s digitalization journey.
Theta also continues to leverage its extensive bid pipeline in Smart City, AI infrastructure, and telecommunication engineering to capture new revenue streams. With a clear execution roadmap, strategic partnerships, and strong alignment with national digitalization goals, the Group believes it is well-positioned to deliver sustainable growth and long-term value.
Summary and Outlook
Theta Edge Berhad’s Q1 2025 results certainly present a challenging picture, marked by a significant decline in revenue and increased losses, primarily due to the completion of major projects and unrealised new revenue. However, the report also outlines the company’s clear strategic pivot towards recurring revenue models and highlights several key projects that are expected to come online in the second half of 2025. The focus on Smart City initiatives, government digital platforms, and a robust bid pipeline indicates a proactive approach to navigating the current market challenges.
While the immediate financial performance was weak, the Group’s forward-looking strategies, particularly the Ampang Jaya Smart City project and the PERKESO engagement, offer a glimpse into potential future revenue streams. The emphasis on cost optimization and strategic partnerships further underscores their commitment to a turnaround.
Key challenges for the Group include:
- Significant revenue volatility due to the project-based nature of their previous business, as seen with the completion of the Jendela project.
- The immediate impact of “unrealised new revenue” on current financial performance, highlighting the time lag between securing and recognizing revenue from new projects.
- The need to successfully transition to and scale recurring revenue models to stabilize financial performance.
From a blogger’s perspective, while the Q1 2025 financial results for Theta Edge Berhad are undoubtedly sobering, it’s crucial to look beyond the immediate numbers and consider the strategic shifts underway. The company is clearly aware of the challenges and is actively repositioning itself for long-term growth through smart city initiatives and digital government services. The success of these new projects, particularly the Ampang Jaya Smart City and PERKESO engagements, will be pivotal in determining Theta’s trajectory in the coming quarters.
Given these strategic moves and the ambitious targets for the second half of the year, do you think Theta Edge Berhad can successfully pivot and achieve sustainable growth in the coming quarters? Share your thoughts in the comments below!
