NTG Clarity: The One I Almost Missed

Founder-led IT services firm quietly compounding and a delivery model that beats the big guys on fit, not just cost

Estimated Reading Time: 10 Minutes

From 0 to 500+ — and Still Learning

When I started 10x Radar almost six months ago, I didn’t really know what it would become. I just wanted a place to log ideas — to track my thinking in public, build a bit of discipline, maybe connect with a few like-minded investors along the way.

I didn’t expect much. But somehow, this month, we crossed 500 subscribers.

It’s not a big number by Substack standards. But it means a lot to me. Because this little writing habit has quietly become the most useful tool in my investing process.

Writing forces clarity. Publishing forces accountability. And every now and then, it pulls me back to names I would’ve otherwise overlooked.

NTG Clarity Networks ($NCI.V) is one of those names.

Late to the Party

I passed on NTG Clarity last year. Outsourcing. Looked cheap. Seemed forgettable.

But after hearing them speak at Planet MicroCap and digging back in — I changed my mind.

100%+ yoy growth. C$105M backlog. Real FCF.

Here’s what I missed 👇

1. Saudi Core, Egyptian Engine
   NTG is listed in Canada, but 95% of revenue comes from Saudi Arabia. Delivery is powered by 1,000+ Egypt-based developers — same language, time zone, and culture as clients. That matters more than you'd think.

2. Backlog 5x’d in 12 Months
   From ~C$20M to C$105M. Mostly multi-year contracts with banks, telcos, and ministries.

3. Exceptional Capital Efficiency
   ~40% ROIC in 2024. Reinvestment is high now (ramping delivery), but if it moderates, you’re looking at ~20%+ sustainable growth at just ~10x 2025E NOPAT.

4. They Win Where Giants Struggle
   Clients are leaving Accenture/TCS for NTG — not just for price, but because NTG’s teams “speak the language,” literally and culturally. Less friction = more trust = long-term stickiness.

5. Optionality in NTGapps
   47% of clients are piloting their internal low-code tool. It’s not core to the thesis — but if it scales, SaaS-like margins come into play.

6. The Setup
   EV: ~C$90M
   Net debt: minimal

   Capital-light, founder-led, 41% insider ownership

   ~60% revenue CAGR, 90%+ NOPAT CAGR over the last 3 years
   

   My base-case fair value: C$3.50 (75% upside)

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Why Now?

The investor deck and conference video do a great job explaining NTG’s business, so I won’t rehash it all.

🔗 NTG Clarity Q4 and Year End 2024 Earnings Conference Call

🔗 NTG Investor Deck

🔗 Planet MicroCap Vegas 2025 Presentation

Below are my personal thoughts — what caught my attention, how I’m thinking about visibility, defensibility, and capital efficiency, and why I finally started a position.

Canadian Shell, Egyptian Engine, Saudi Core

NTG is a Canadian-listed IT services company, but 95% of its revenue comes from Saudi Arabia. Their delivery engine is in Egypt, where they employ over 1,000 developers, project managers, QA engineers, and analysts.

So what does NTG actually do? Most of their work falls into a few core buckets:

• Custom app development — like building mobile apps for banks or telecom customers

• Government digitization — replacing paper-based workflows with cloud-based systems

• Enterprise software modernization — upgrading billing systems, CRMs, and internal dashboards

• Ongoing tech support and staff augmentation — embedding engineers directly into client teams to keep systems running smoothly

They’re essentially exporting tech talent from Egypt into Saudi’s Vision 2030 digitization boom — building systems for banks, telecoms, and government clients. And they’re doing it at scale.

The model clicked for me when Adam Zaghloul (VP Strategy) said this:

“It’s not just about cost. It’s about culture. Our developers speak the same language, work in the same time zone, and understand the client environment.”

That landed. Because...

A Quick Detour: My Background

A few years back, I worked in outsourcing consulting. Not for long, but long enough to know the nitty-gritty: how deals get won, how delivery breaks down, what clients actually care about.

In the Middle East — especially in Saudi — cultural fit matters way more than people realize. It’s not just about price. You need teams who understand the business context, speak the language (literally and figuratively), and can collaborate without friction.

NTG gets this. That’s why they win against global giants. Not because they’re cheaper — but because they’re better suited. Their model isn’t just efficient. It’s sticky.

That was the first thing that changed my mind.

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Vision 2030: A Strategic Pivot Beyond Oil

Vision 2030 is Saudi Arabia’s national blueprint to diversify its economy and reduce its dependence on oil.
It wasn’t born from ambition alone — it was born out of necessity, a direct response to the 2014–2015 oil crash that forced the Kingdom to think beyond hydrocarbons. At the heart of it lies a robust digital transformation agenda.

The government’s digital mandate is crystal clear:
→ Digitize government services
→ Grow tech’s share of GDP from 1% to 5% by 2030
→ Deploy over $1B into digital infrastructure and cloud services

That’s exactly where NTG Clarity fits in. Their Egypt-to-KSA model is tailor-made for this moment — culturally aligned, cost-effective, and already embedded in multi-year contracts with banks, ministries, and telcos.

🌪 On Risks (Tariffs, Slowdown)

There’s been a visible pullback in some areas of Vision 2030 spending — driven by volatile oil prices and fiscal tightening. Large-scale real estate and tourism ventures like NEOM and The Line are seeing delays and scope reductions.

But digital hasn’t been touched.

During the Q&A in Vegas, someone asked about macro risks: tariffs, Saudi fiscal pressure, project slowdowns.

Adam Zaghloul didn’t dodge it. He acknowledged the NEOM headlines and fiscal tightening — but emphasized that core IT spending remains intact.

“The first things to get cut are the prestige projects. The digital projects — the ones enabling actual economic diversification — are sticking.”

Because NTG relocates Egyptian engineers on Saudi work permits and embeds them onsite, they’re better insulated from tariff-type shocks.

That’s the key. Digital infrastructure — the kind NTG builds — is no longer a “nice to have.” It’s become part of the country’s critical path.

Saudi’s Information and Communication Technology (ICT) sector is projected to grow at a 8.5% CAGR through 2030 — powered by continued investments in cloud infrastructure, AI, and enterprise platforms.

🔗 Saudi Arabia’s Vision 2030 enters final phase

🔗 Saudi Arabia unveils $1.78bn investments to advance AI, digital talent

🔗 ICT Market Outlook

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🧭 What Happens After 2030?

A natural question — and one that matters.

NTG’s growth today is clearly fueled by Saudi Arabia’s Vision 2030: a massive economic diversification initiative that’s pumped billions into digital infrastructure, public sector modernization, and private enterprise systems. But what happens when that clock runs out?

I asked myself the same.

Here’s how I see it:

• Vision 2030 isn’t a finish line — it’s a foundation.
  The goal isn’t to end digital investment — it’s to seed it. Once systems are built, they need to be maintained, scaled, and upgraded. NTG’s long-term contracts and embedded teams position them well for that continuity.

• Global events extend the cycle.
  Saudi Arabia is set to host Expo 2030 (Riyadh) and the FIFA World Cup in 2034. Both events demand huge investments in smart infrastructure, digital ticketing, identity systems, crowd logistics, and real-time support— all things NTG already delivers. The government’s digital priorities don’t stop in 2030; they evolve into execution and delivery.

• Private sector demand is just getting started.
  NTG is moving from ministries into banks, telcos, and enterprise IT. These clients may have piggybacked off the government’s transformation push — but they’ll need continued modernization long after Vision 2030 is over.

• The Gulf is bigger than KSA.
  Kuwait, Oman, and Qatar are launching similar digital blueprints. NTG has early exposure to Iraq and Oman — but longer term, they’ve hinted at acquisitions to accelerate presence in untapped Gulf markets using the same Egypt-based delivery model.

• Market share tells the real story.
  NTG did ~$56M in revenue last year. Saudi’s ICT market is ~$50B/year. That’s a 0.1% share. Even a moderate increase in penetration post-2030 could drive years of growth.

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🛡️ What Makes This Defensible

The cultural fit clicked for me first — but what I didn’t fully appreciate until Vegas was how long NTG has been building this.

Many of their current client contacts in Saudi first worked with NTG 10–15 years ago. Now they’re CIOs and CTOs — and they’re still calling NTG back.

• 85%+ of clients are recurring or “re-occurring” (multi-year renewals)

• They’re winning bigger, longer-term contracts — and getting invited back

“We’ve cultivated trusted relationships with IT professionals across all levels — many now in leadership roles.”

That matters. Because in places like Saudi, trust is everything. And NTG has played the long game.

They’ve even gone upstream: launching vocational tech schools in Egypt, in partnership with the government, to train and pipeline talent into the business. That’s not just delivery scaling — that’s ecosystem building.

The whole thing feels designed for staying power.

And it all ties back to one quote from the annual report that really stuck with me:

“With the pace of investment in Saudi Arabia increasing and our team’s growing reputation, 2024 is just the start.”

That’s the energy I’m buying into.

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The Capital Efficiency Unlock

This was the part that really got me thinking.

In 2024, NTG generated ~40% ROIC on a relatively stable capital base. Yes, reinvestment was >100% — they’re onboarding aggressively and ramping up for big contracts. But that should normalize.

If they maintain anywhere near 40% ROIC with even 50%+ reinvestment, you’re looking at a sustainable growth rate of ~20-30% — which is elite for a business trading at ~10x NOPAT

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Optionality: NTGapps

This is the wildcard.

It’s not core to my thesis, but the idea that 47% of clients are already piloting a productized internal toolset (NTGapps) is promising. If it takes off, it could create software-like margins and stickier revenue — layered on top of already-sticky services.

No hype here — just something I’m keeping an eye on.

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DCF Math (And Margin of Safety)

I’ll drop my base-case DCF below, but the short version is this:

Even if growth moderates and NTGapps adds zero value, I land around C$3.50/share — roughly 75% upside from here. That’s with conservative assumptions and no credit for Gulf expansion or software margin lift.

If they continue converting backlog and scaling with quality, I think this story gets better before it gets crowded.

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🚩 Red Flags & Risks

1. Extreme Customer & Geographic Concentration

• 95% of revenue comes from Saudi Arabia.

• 70% of total revenue comes from just five customers.

• 73% of accounts receivable is tied to four customers.

This is not just a regional risk — it’s effectively a concentrated book of work embedded within a single national digital transformation agenda. Any change in Saudi fiscal policy or leadership could be a direct threat to NTG’s revenue base.

2. Receivables Ballooning → FCF Drag

• C$10.4M increase in receivables in 2024 vs. just a C$359K increase in payables.

• Unbilled revenue (contract assets) jumped from C$199K → C$3.6M.

• While FCF was positive at C$1.6M, it’s significantly below NOPAT due to WC pressure.

This isn’t a red flag yet — but it’s a drag. The fact that 90% of AR was invoiced in Q4 and DSO is under 75 days is actually encouraging. If growth slows as guided (to ~35%), AR should stabilize, and FCF could meaningfully inflect higher.

What they said in Vegas:
Management acknowledged this head-on, noting that the receivables spike is a natural byproduct of doubling revenue. As growth moderates to ~35%, they expect working capital drag to ease and FCF to improve over time.

3. Currency & Inflation Risk in Egypt

• The Egyptian pound devalued ~34% in 2024.

• Interest rates hit 19%, and inflation was ~24%.

• NTG is raising salaries quarterly to offset cost-of-living pressures.

Egypt is their talent engine — but it’s a volatile economy. Currency swings could eat into margins or force higher labor costs than modeled.

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Final Thoughts (Why I’m Long)

Nothing here is risk-free. Saudi concentration is real. So are geopolitical overhangs, oil-driven fiscal cycles, and customer concentration. These are all things I’m watching closely.

But for now, NTG seems to be managing those dynamics well. It’s founder-led, aligned, and has executed quietly and consistently. And the market it’s playing in — digital infrastructure across the Gulf — still feels like early innings.

I like the setup: long-term contracts, strong capital efficiency, meaningful insider ownership, and real cash flow. If they keep doing what they’re doing, I think NTG earns its way into a much higher valuation.

I’ve sized this as a starter position — with room to build if execution and cash conversion hold up.

I’m also reaching out to management to better understand the story — especially around backlog conversion, capital allocation, and margin durability. If you’re also tracking NTG or want me to ask something specific, feel free to reply. Always happy to learn together.

I thought this would be a five-minute read. Turned out closer to ten. Funny how the act of writing can pull more out of you than expected.

Thanks for reading. Let’s see where this one goes.

Disclaimer

This is not financial advice. I hold what I write about — but I’ve learned the hard way that being early and being wrong can look a lot alike. Do your own homework. All opinions are my own, I haven’t been compensated by any company to write this

Follow me on Twitter: @The10xRadar