Enea Interim Report January-September 2021
Cybersecurity generates increased revenues
July – September 2021
- Net sales amounted to SEK 256.6 million (206.4), equivalent to a 24 percent increase. Net sales increased by 26 percent in fixed currency rates.
- Operating profit amounted to SEK 48.1 million (42.8), corresponding to an operating margin of 18.7 percent (20.7). Operating profit, excluding non-recurring items related to the acquisition of AdaptiveMobile Security, amounted to SEK 60.5 million (47.6), equivalent to an operating margin of 23.6 percent (23.0).
- Net profit after tax amounted to SEK 50.2 million (31.1).
- Earnings per share amounted to SEK 2.33 (1.44).
- On July 15th Enea announced the acquisition of AdaptiveMobile Security. The acquired company is market leading in technology for the protection of signaling and messaging in mobile networks. AdaptiveMobile Security is acquired at an enterprise value of EUR 45 million. Transaction costs of SEK 12.5 million are included in administrative non-recurring costs in the quarter.
January – September 2021
- Net sales amounted to SEK 696.4 million (667.1), equivalent to a 4 percent increase. Net sales increased by 10 percent in fixed currency rates.
- Operating profit amounted to SEK 154.9 million (124.5), corresponding to an operating margin of 22.2 percent (18.7). Operating profit excluding non-recurring items amounted to SEK 167.3 million (148.4), equivalent to an operating margin of 24.0 percent (22.3).
- Net profit after tax amounted to SEK 145.7 million (94.9).
- Earnings per share amounted to SEK 6.76 (4.43).
Statement by the President and Chief Executive Officer
We’re continuing to consolidate our positioning as a leading software company in 5G and cybersecurity. New telecom networks are being prepared to manage high data volumes securely and efficiently, and we are already deploying new, innovative solutions at some of the largest operators. We acquired AdaptiveMobile Security in the quarter, which expanded our customer base in cybersecurity—a key building-block of future telecom networks. This acquisition brings us a unique offering in Network Solutions, and creates opportunities for synergies in sales.
Continued growth for Network Solutions
Third-quarter sales were SEK 257 million, a 26 percent increase in fixed currency rates. The increased sales are backed by revenues from two acquisitions—Aptilo in October 2020 and AdaptiveMobile Security in July 2021. Operating profit excluding non-recurring items was SEK 61 million, corresponding to an operating margin of 24 percent. I’m pleased that once again, we succeeded in achieving our margin target, thanks to a high software sales share, combined with good cost control. Cash flow from operating activities was SEK 28 million, which is lower than last year due to a higher ratio of large projects with different payment flows. The acquisition of AdaptiveMobile Security, completed on 17 July 2021, enhances our customer base and offering in cybersecurity for telecom. This new business unit had sales of SEK 47 million in the quarter and was a contributor to our largest product group, Network Solutions, growing by 46 percent. This product group continues to grow in significance, now representing 77 percent of total sales. Our other two product groups, Operating Systems and Software Development Services, represented 12 and 11 percent of total sales, respectively. The decrease in revenue from Operating Systems is continuing as customers introduce open source software in new products. Sales of Software Development Services have been impacted by the pandemic, with a declining need in sectors including the aviation industry, which was partly offset by higher demand from customers that deliver sophisticated medical devices.
Trailblazing 5G projects
We’re continuing to develop products for data management in 5G systems, and to deliver to major customers across Europe and North America. These customer projects involve innovative ways to build core networks and products from multiple vendors that interwork based on the new 5G standard. We passed major milestones on these projects as our software has been trialed commercially with a large user base. Tests with major customers indicate that our systems for data management in telecom systems are significantly more resource efficient than competing offerings. These trials demonstrate how it’s possible to reduce energy consumption by up to 50 percent, thanks to unique functionality to manage and store information. This presents us with a competitive edge, and an opportunity to reduce the climate footprint of the world’s telecom systems.
Growing cyberthreats to telecom
In recent months there have been several examples of telecom networks being targeted in sophisticated cyberattacks. These include the Pegasus Project, which revealed how key individuals in many countries had their mobile phones hacked. AdaptiveMobile Security is a world-leading vendor of products and analysis services to improve security within and between the world’s telecom systems. This acquisition is enabling us to play a key role in countering cyberthreats, and we’ll be developing this business through customer contacts, technology and expertise from other parts of the company. This will give us an opportunity to address a market expected to grow as cyberthreats against individuals and national infrastructures increase.
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 revenues robustly, while maintaining good profitability, through organic growth in Network Solutions plus complementary strategic acquisitions that advance our market positioning.
We’re starting to witness the return to a more normal business situation, even if restrictions resulting from the corona pandemic remain across large parts of the world. Accordingly, we’re anticipating some delays in customer projects and barriers to new business sales in forthcoming quarters. Overall, we expect sales growth on the previous year and an operating margin above 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 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: October 26, 2021
- Time: 8.30 a.m. CEST
- Link for webcast: https://financialhearings.com/event/13203
- Phone numbers for conference call:
+46 8 5664 2692 (Sweden)
+44 33 3300 9272 (UK)
+1 646 722 4902 (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 services for mobile subscribers, enterprise customers, and the Internet of Things. 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