Enea Annual Statement 2021
Focus on Cybersecurity and 5G
October – December 2021
- Net sales amounted to SEK 279.2 million (248.0), equivalent to a 13 percent increase. Net sales increased by 13 percent in fixed currency rates.
- Operating profit amounted to SEK 61.1 million (64.2), corresponding to an operating margin of 21.9 percent (25.9). Operating profit, excluding non-recurring items amounted to SEK 83.1 million (73.1), equivalent to an operating margin of 29.8 percent (29.5).
- Net profit after tax amounted to SEK 54.5 million (47.4).
- Earnings per share amounted to SEK 2.54 (2.20).
- Enea signs a 4-year contract for traffic classification worth USD 3.1 million and 3-year contract for secure authentication worth EUR 3.1 million.
- Enea decides to discontinue the product line Edge and reports in the fourth quarter a write-down of capitalized development costs amounting to SEK 20 million.
January – December 2021
- Net sales amounted to SEK 975.6 million (915.1), equivalent to a 7 percent increase. Net sales increased by 11 percent in fixed currency rates.
- Operating profit amounted to SEK 216.0 million (188.6), corresponding to an operating margin of 22.1 percent (20.6). Operating profit excluding non-recurring items amounted to SEK 250.4 million (221.5), equivalent to an operating margin of 25.7 percent (24.2).
- Net profit after tax amounted to SEK 200.3 million (142.3).
- Earnings per share amounted to SEK 9.30 (6.63).
Statement by the President and Chief Executive Officer
We concluded 2021 with a quarter when software sales on new and current business accounts generated double-digit net sales growth and an operating margin of 30 percent. We’ve consolidated our market position as one of the leading vendors in cybersecurity and data management.
Sales in the fourth quarter 2021 were SEK 279 million, a 13 percent increase on the previous year. A high share of these revenues is sourced from customers upgrading their networks and systems with new functionality and more capacity, as the requirements on mobile infrastructure and business networks globally become more demanding. Our operating profit including non-recurring items for the quarter was SEK 83 million, equivalent to an operating margin of 30 percent. This strong operating margin is backed by a high share of software sales. Operating cash flow was SEK 142 million, which helped strengthen our financial position.
Our Network Solutions product group is continuing to grow, now representing 77 percent of total net sales thanks to recurring revenues, new business, and the positive progress of our recent acquisition AdaptiveMobile Security. Sales of products and services from this new business unit were SEK 56 million in the quarter. The change for other parts of the Network Solutions product group was -8 percent, explained by variations in licensing and royalty revenues between individual quarters.
Strategic deals and innovation awards
We’re delighted to have secured a number of deals of strategic significance to our market positioning and future revenues in the fourth quarter. One of these contracts is for traffic intelligence software, where our product was selected by yet another North American system vendor of cloud services and virtualization. This deal offers further corroboration of our leadership in embedded traffic intelligence, and the contract generates recurring revenues over the next four years. Another major contract with a leading European telecom operator is for software for secure authentication to the mobile network for users and connected devices. This contract expands our base of direct customer relationships with major mobile operators, offering potential for future sales of 4G and 5G products. Finally, we secured a contract with Compal, one of the world’s largest contract electronics manufacturers, who is investing in a proprietary network for its facilities based on the new 5G standard. Compal selected our software because of its unique product characteristics in terms of scalability and open interfaces with other applications.
Some of our 5G, cybersecurity and Internet of things (IoT) solutions won prestigious awards in the quarter. Aptilo IoT Connectivity Control Service was recognized as the best IoT Innovation at the World Communication Awards 2021. We were especially honored to share this award with our customer Telia and collaborative partners Fortinet and Amazon Web Services. We also secured another award for the Best 5G Security Solution at the Fierce Telecom Awards 2021. Cyberattacks on mobile networks are likely to increase as 5G systems proliferate to critical business and societal communication. We are well positioned to deliver products and services to counter these cyberthreats.
Prioritizing growth segments
We’re seeing great potential in 5G and cybersecurity, and I’m delighted that our new business unit AdaptiveMobile Security is progressing so well. That’s why we’ll keep prioritizing resources for these growth segments, while simultaneously reducing our costs and investments where market potential and synergies are lower. Consequently, we’ve decided to discontinue our Edge product line, whose market has also progressed more slowly than expected. This triggered a write-down of SEK 20 million of capitalized development expenses, which has been charged to the fourth quarter 2021. In the first quarter of 2022, we’re also planning to rationalize and streamline our Operating Systems organization to address the continued decline of demand. Overall, these changes affect some 30 staff in several countries, and are expected to result in us charging SEK 30 million of restructuring expenses next quarter. These actions will reduce our cost base by SEK 45 million annualized as early as from the second quarter 2022. Overall, these actions will offer us scope that we’ll use to keep upscaling our sales and product development initiatives in 5G and cybersecurity.
The market for data management in 5G and advanced cybersecurity is entering an exciting phase, where we can challenge established competitors and win market shares with innovative products and new business models. Our ambition is to increase revenues briskly, while maintaining good profitability, through organic growth in Network Solutions plus complementary strategic acquisitions that advance our market positioning.
The uncertainty prevailing during the pandemic is starting to taper off, but some restrictions are still having an impact in parts of the world. We’re heading back towards a more normalized business situation, and anticipate progressively fewer delays to customer projects and barriers to new business sales. Individual deals and licensing revenues may cause variations in revenues between individual quarters. Overall, we expect net sales growth on the previous year and an operating margin above 20 percent.
The full Annual Statement is attached to this press release and has been published on the Enea website (see references below).
Enea is pleased to invite investors, analysts, and media to a presentation of the Annual Statement. The presentation will be conducted in English by Jan Häglund, President and Chief Executive Officer, and Ola Burmark, Chief Financial Officer, and will be concluded by a questions and answer session. It can be attended through a webcast or conference call and the presentation material as well as a recording of the presentation will be published on the Enea website (see details and references below).
- Date: February 2, 2022
- Time: 8.30 a.m. CET
- Link for webcast: https://financialhearings.com/event/41510
- Phone numbers for conference call:
+46 8 5055 8369 (Sweden)
+44 33 3300 9034 (UK)
+1 646 722 4904 (US)
- Webpage for Enea financial reports
- Webpage for Enea financial presentations
Jan Häglund, President and Chief Executive Officer
E-mail: [email protected]
Lotta Trulsson, Executive Assistant
E-mail: [email protected]
Enea is one of the world’s leading specialists in software for telecommunications and cybersecurity. The company’s cloud-native products are used to enable and protect services for mobile subscribers, enterprise customers, and connected devices. More than 4.5 billion people rely on Enea technologies in their daily lives.
Enea is headquartered in Stockholm, Sweden, and is listed on Nasdaq Stockholm.
For more information: www.enea.com