I rarely pay up for a company, but for my first write-up of 2026 I’m willing to do so.The business generates approximately 80% recurring revenue, has delivered double-digit revenue growth over the past three years, and has steadily improved gross customer retention to above 90%. The company has launched a few new services recently that have been scaling quickly. At the same time, it has been expanding into new countries and is already seeing strong growth, with revenue from these countries more than doubling over the past few years. Info-Tech Systems (ITS.SI)Market Cap - S$200 millionEnterprise Value - S$169 million Info Tech is a Singaporean microcap that IPO’d in July. They are a SaaS business that provides cloud based HR software and accounting software targeting small and medium size businesses and has an estimated 9.8% of the market share in Singapore.Info-Tech was founded in 2007 and initially operated as an IT and business infrastructure solutions provider rather than a SaaS company. Over the past 19 years, the business has progressively evolved into a predominantly SaaS model, with approximately 80% of revenue now recurring.2007-2010 - Info-Tech built on-premise attendance, payroll, and leave systems, which were typically sold together with physical hardware like barcode scanners, RFID cards, fingerprint readers, and later facial recognition devices. They also introduced employee self-service tools, including, tax documents, and personnel records.2016 - Info-Tech launched their cloud-based SaaS HRMS which fundamentally shifted the business from on-premise systems and hardware sales to a cloud based recurring subscription model.The HRMS system at this time had 4 modules HR Software - The central system that stores and manages employee records, employment details, and HR data in a cloud-based platform.Time Attendance - Tracks employees working hours, check ins/check outs, and overtime that can have biometric integrationsPayroll - Automates salary calculations by pulling in attendance, leave, overtime, and allowances, and handles statutory deductions and pay slip generation with minimal manual input.Leave Management - Allows employees to apply for leave digitally and managers to approve it in real time, with approved leave automatically syncing into attendance and payroll.2017 - They added 4 more modules to their HRMS systemClaims Management - Allows employees to submit work-related expenses and lets managers review, approve, and reimburse those claims in one place.E‑Scheduling Software - Helps employers plan and manage employee shifts efficiently, linking schedules to attendance tracking and payroll to control labor costs and avoid understaffing or overtime overruns.Performance Appraisal - Provides a structured framework for evaluating employee performance, enabling managers to document reviews and link outcomes to promotions, bonuses, and compensation decisions.Project Costing - Tracks labor time and related costs by project, allowing businesses to see how employee hours, payroll, and expenses accumulate against specific projects to assess profitability, control budgets, and improve pricing decisions.2022- Created Info-Techs accounting software to simplify accounting for small businesses by offering an easy to use platform that does not require technical expertise.Info-Tech also started payroll outsourcing and now provides payroll outsourcing to over 100 companies.2023 - Created Jobs Lah which is an AI-driven job portal which currently has over 100,000 job seekers and 7,000 employers.Created DigiSME which is a simplified version of their HRMS package for smaller companies that may not need all the features.Created the academy which offers WSQ training which is a skills qualification system in Singapore.2024 - AI Talent Acquisition & Onboarding HR Solution which screens resumes, candidate matching, guided onboarding experiences and interactive chatbots to ensure comprehensive support throughout the recruitment and onboarding process.A Info Tech AI chatbot that integrates into HRMS which can provide answers based on the customers HR data and uses analytics for performance tracking and expense trends2025- Launched a Learning Management System in Malaysia and Hong Kong, allowing businesses to deliver and manage employee training remotely.While based in Singapore, the company expanded into Malaysia in 2011, Hong Kong in 2018, and India in 2019, with these markets now driving an increasing share of the companies revenue. Revenue Segments(Financial data is only available from 2022 and on)Info-Tech breaks down its revenue into three segments subscription, hardware, and servicesSubscriptionThe subscription segment is the most important segment as the revenue is recurring and is the largest revenue segment.HRMS is the largest part of Info-Tech’s business as it accounted for 78% of the company’s total revenue in 2024. HRMS has grown steadily since 2022 growing at a 10% CAGR. HRMS revenue growth from Singapore has slowed down but it has been growing in Malaysia and other countries (Hong Kong and India).Info-Tech Accounting Software has been growing rapidly since being created in 2022. Info -tech has said that now 25% of HRMS users now use their accounting software which has helped grow the revenue from the software from just S$26k in 2022 to S$1.76 million. Hardware - The hardware segment includes the sale, installation, and maintenance of physical security and door access systems, primarily to SME customers in Singapore and Malaysia. While hardware sales are one off sales and lower-margin than software subscriptions, the installed base generates ongoing repair and maintenance revenue which is partially recurring as they have contracts to maintain the systems they’ve previously installed.Services- Services include payroll outsourcing, academy training, and other services. Overall this is the fastest growing segment as the academy and other services has been growing very quickly.Since 2022 revenue has grown at a 18% CAGR while maintaining 85% gross margins and 34% operating margins.The most impressive part of this growth is the companies gross customer retention as while they have been growing revenue at a 18% CAGR since 2022 they’ve also managed to improve their customer retention rate every year since 2022. What makes this even more impressive is according to customer feedback the main reason for non renewal isn’t because they had issues with the product but rather that the business was closing down.While HR software is a sticky business in general these numbers are incredibly high and got even higher in H1 as their gross customer retention rate went up to 94%. While the retention is largely due to having a great product another important factor is the companies customer service. They put a emphasis on having good customer service as they have a 183 employees specifically for customer service which is a huge number considering they have 509 total employees. H1 2025Revenue up 5% YoY to S$22.4m (from S$21.4m).Cost of sales up 16% YoY to S$3.3m (from S$2.8m).Gross profit up 3% YoY to S$19.1m (from S$18.6m).Operating profit down 24% YoY to S$6.3m (from S$8.3m).Profit before tax down 24% YoY to S$6.2m (from S$8.2m).Net profit down 23% YoY to S$5.1m (from S$6.6m).EPS down to 2.28 cents (from 2.95 cents).Info-Techs H1 wasn’t particularly special by just looking at the numbers as revenue grew 5% but net profit was down to S$5.1 million but the results look worse than they are due to S$2 million in IPO related costs and one off cost as they relocated their Malaysia office. Revenue from Singapore remained largely flat but revenue from Malaysia grew 28% to S$4.9 million while other countries (Hong Kong and India) grew 29% to S$1.6 million. Accounting software also grew as total customers grew 28% and they now have roughly 1,400 customers.The only true negative in the H1 report was revenue from academy which was down yoy. While they didn’t give an explanation as to why revenue dropped they mentioned they added 7 new courses to the academy in June and expect a material uplift in revenue from the academy in H2.Balance SheetInfo-Tech has an incredibly strong balance sheet as they have S$33 million in cash and have no debt. The companies biggest liability is contract liabilities which in total is S$26.7 million. Contract liability is unearned revenue paid in advance, and given the SaaS model, most of the associated delivery costs are fixed, with limited incremental cost as revenue is recognized. Future Growth There are 2 main areas of growth in the future that I see for Info-TechGrowth in New CountriesInfo-Tech Systems began operations in Singapore and has since expanded into Malaysia, Hong Kong, and India. As these markets have scaled, revenue from outside Singapore has grown rapidly, supported by increasing adoption of cloud-based HR and payroll software among SMEs. Revenue from Malaysia has nearly doubled since 2022, while revenue from other countries has more than doubled over the same period.Due to the nature of the business, expanding into new countries is not capital intensive. Entering a new country does not require significant upfront capital investment beyond adapting the software to local payroll rules, tax regimes, and regulatory requirements. The core HRMS and accounting platforms remain largely unchanged, while development, infrastructure, and a substantial portion of customer support are centralized. This allows Info-Tech to enter new countries efficiently, with limited incremental capital, attractive marginal economics, and strong operating leverage. As these newer markets continue to mature, they represent a long runway for revenue growth.New ProductsInfo-Tech Systems has expanded its product offering with the goal of becoming a one-stop software provider. The company has built additional software products, including accounting software, training through its academy, and recruitment tools, that work closely with the core HRMS. As more of these systems are adopted together, they become increasingly embedded in day-to-day operations, raising switching costs and making it meaningfully harder for customers to replace Info-Tech with a competing product. Management has mentioned that additional software systems are planned for launch in 2026, including a CRM platform targeted for launch in February, further expanding the ecosystem around HR and finance. To support this, S$7.0 million of IPO proceeds have been allocated to research and development of new product lines. The company also has not yet monetized Jobs Lah, its job portal, as management is prioritizing the growth of its job seeker and employer database before introducing paid features or employer-facing monetization.ValuationSo we have a SaaS company that has 80% recurring revenue, 35% operating margins, and a rock-solid balance sheet, while still growing revenue and adding new services that make the software even stickier than it already was.Info-Tech trades at 12x EV/FCF, which is more expensive than what I normally invest in. That said, the company is growing faster than most businesses I invest in and is higher quality, which is why I’m willing to pay up for it.Income Statement and Cash Flow Statement