Enea Interim Report January-March 2021
Stable revenues and increased profit
January – March 2021
- Net sales amounted to SEK 214.0 million (221.7), equivalent to a 3 percent decrease. Net sales increased by 4 percent in fixed currency rates.
- Operating profit amounted to SEK 44.7 million (22.6), corresponding to an operating margin of 20.9 percent (10.2). Operating profit excluding non-recurring items amounted to SEK 44.7 million (40.5), equivalent to an operating margin of 20.9 percent (18.3).
- Net profit after tax amounted to SEK 43.5 million (17.0).
- Earnings per share amounted to SEK 2.02 (0.80).
Statement by the President and Chief Executive Officer
Increased network traffic generating stable revenues
Net sales were SEK 214 million in the first quarter of 2021, a 4 percent increase on the corresponding period of the previous year, currency adjusted. Our sales vary between quarters, depending on the number of larger deals and associated license revenue. Most of our revenue in the first quarter 2021 was sourced from current business accounts upgrading their mobile systems to address increasing capacity and quality constraints, and from partners using our software in systems and products for telecom and enterprise networks. Our acquisition of Aptilo, completed in October 2020, was another contributor to net sales in the first quarter of this year. Our operating profit for the quarter was SEK 44.7 million, equivalent to an operating margin of 20.9 percent. Operating profit increased by 21 percent on the corresponding period of the previous year (currency adjusted, excluding non-recurring items) largely due to rationalizations previously executed in development and administration. In addition, less travel and the cancellation of trade events were contributors to reduced selling expenses. Cash flow before changes in working capital was SEK 79.9 million. We have a stable financial position, which gives us the potential to keep investing in growth segments. The Corona pandemic has drastically altered people’s everyday lives worldwide, involving increased remote working, more virtual meetings, and greater consumption of video and networked games. We think the demand for secure and reliable communication will keep increasing, even after the pandemic, and we are well positioned for customers’ investments that will result.
The IoT creating growth opportunities
The base of connected devices is forecast to grow through coming years, and operators have started to address the market for the Internet of Things (IoT). Northern European telco Telia is a leader in this segment and has recently launched a new enterprise offering for global IoT connectivity. Our Aptilo IoT Connectivity Control Service (CCS) is part of this solution, which enables companies to connect devices on a large scale securely, easily manage their connectivity, and ensure routing of data traffic to the right locations. Our ambition is to keep building on this success, win more market shares and increase our sales in the IoT.
5G for private networks
Private networks have become an attractive application segment for 5G standalone technology. Our 5G Core software has been created for state-of-the-art cloud platforms, so it has the openness and scalability that are also necessary for private enterprise networks. We have launched a solution called 5G MicroCore, which we integrate and sell through collaborative partners and sales channels. We expect this market to expand through the coming years as commercial installations are deployed.
Market leader in traffic intelligence
Our packet inspection software, Qosmos ixEngine, is the market’s leading solution for identifying network traffic and optimizing connectivity to Internet-native services. NetQPro is one of the latest in a series of customers to deploy our product, which is based on sophisticated solutions to assure quality of service in mobile networks. We recently launched an innovation called First
Packet Advantage, which enables customers to identify and classify traffic streams faster. This technology, which is unique on the market, improves service quality to end-users more effectively, and offers enhanced protection against malicious and unwanted traffic. This new technology will further sharpen our competitiveness in traffic intelligence for telecom and cybersecurity.
A broader-based virtualization proposition
Function virtualization at network edges is becoming more significant to enterprise networks based on SD-WAN technology. Our virtualization platform, currently in evaluation by several customers, can be installed on hardware platforms from different vendors, with applications from a variety of software developers. Nexcom has recently joined this list of hardware platforms, and we have jointly demonstrated how SD-WAN applications based on open source can be used to create a highly competitive and cost-efficient complete solution. We are currently expanding our channel strategy and proposition under the Enea Edge banner to address more markets and applications, such as video analysis, public Wi-Fi systems, and private 4G/5G networks. Even if the Corona pandemic has caused market lag, we expect that in time, this technology will prevail over supplier-specific systems, because it enables greater flexibility and cost benefits for customers.
The market for data management in 5G, virtualization, 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 revenue robustly through organic growth in Network Solutions plus complementary strategic acquisitions that advance our market positioning.
However, due to the corona pandemic, the short and medium-term uncertainties remain substantial. Its consequences will probably cause further delays in customer projects, and other negative effects on our businesses, risking impacting earnings through coming quarters. Despite these uncertainties, our target for 2021 is to create sales growth year over year, and an operating margin of over 20 percent.
The full Interim Report 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 Interim Report. The presentation will be conducted in English by Jan Häglund, President and Chief Executive Officer, and Björn Westberg, 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: April 27, 2021
- Time: 8.30 a.m. CEST
- Link to Audiocast with teleconference: https://financialhearings.com/event/13201
- Phone numbers for conference call:
+46 8 5055 8357 (Sweden)
+44 33 3300 9272 (UK)
+1 833 823 0587 (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 suppliers of innovative software for telecommunication and cybersecurity. Focus areas are cloud-native, 5G-ready products for data management, mobile video traffic optimization, edge virtualization, and traffic intelligence. More than 3 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