Earnings Release • Apr 19, 2023
Earnings Release
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Results marked by the collapse of sales of infrastructure equipment for the deployment of the Helium network
Thorigné-Fouillard, France – 19 April 2023, 6 p.m.
Kerlink ALKLK - FR0013156007), a specialist provider of networks and solutions for the Internet of Things (IoT), is today publishing its 2022 consolidated full-year results and revenue for Q1 2023.
As announced on 24 January, revenue for the financial year 2022 came to €18.9 million, down 5% on 2021. This fall in revenue can be explained by the collapse in sales of infrastructure equipment for the deployment of the Helium network as a result of the drop in price of Helium's HNT cryptocurrency since spring 2022.
This particular context has weakened some of the Group's customers whose business model was based on the stability of HNT. At the end of the financial year, the Group had to cancel certain orders for equipment placed by customers that could no longer offer the necessary solvency guarantees and record a provision on a receivable presenting a risk of non-recovery.
An impairment of inventories and a provision for the loss in value of the HNT held by the Group also automatically weighed on the results of the financial year.
At its meeting on 19 April 2023, the Board of Directors approved the consolidated financial statements for the financial year ended 31 December 2022.
| In thousands of euros | 2022 | 2021 | |
|---|---|---|---|
| Revenue | 18,897 | 19,875 | |
| Cost of sales | -10,839 | -11,839 | |
| O/w impairment of inventories | -924 | +77 | |
| Gross margin | 8,059 | 8,036 | |
| Gross margin rate | 42.6% | 40.4% | |
| Other operating costs | -10,115 | -8,190 | |
| O/w provision for doubtful receivable | -831 | -- | |
| O/w provision for loss in value of HNT held | -473 | -- | |
| EBITDA | -2,057 | -154 | |
| Depreciation and amortisation • |
-1,410 | -1,559 | |
| Operating income (expense) • |
- 3,467 | -1,713 | |
| Net financial • income |
-13 | -109 | |
| Income tax • | -29 | -12 | |
| Group net income (expense) | -3,509 | -1,834 | |
| IFRS – Audited financial statements |
Sales of infrastructure equipment accounted for 75% of the sales of IoT solutions in 2022. They fell by 12% to €14.2 million in 2022 after the cessation of deliveries for the deployment of Helium networks, which would have represented revenue of nearly €3 million in 2022. Sales of services, however, continued on a positive trend, rising by 21% to €4.6 million, reflecting the Group's steady development in this segment.
The Group showed gains in the EMEA region, with business up 12%, bringing together private operators, service integrators, historical telecom operators and alternative operators. Revenue for the region came to nearly €15 million. Sales in the Asia Pacific region (APAC) were strong, growing by 73% versus 2021. The Americas (NCSA) region was marked by a decline in deliveries to customers involved in the deployment of Helium networks.
The gross margin came to 42.6% for 2022 compared with 40.4% in 2021, illustrating, on the one hand, the increase in the product mix in favour of services and, on the other hand, the Group's ability to pass on some component price increases to its sales prices. However, this increase is offset by a decision to book an inventory impairment of €0.9 million to take into account orders that were not delivered to the contributors of the Helium network. Thus, despite lower revenue, the gross margin in value terms remained stable in 2022.
Operating expenses totalled €10.1 million compared with €8.2 million the previous year. This increase includes the €0.8 million provision booked on a receivable that has not been recovered and for which legal recourse has been initiated, and a provision of €0.5 million relating to the loss of value of the HNT cryptocurrency recorded in the wallets held by the Group.
EBITDA therefore came out at -€2 million versus -€0.2 million in 2021 after taking into account the provision for a doubtful receivable, the provision for impairment of HNT and the impairment of inventories.
After recognition of depreciation and amortisation charges at €1.4 million (versus €1.6 million in 2021), the Group made a net loss of €3.5 million versus a loss of €1.8 million in 2021.
At 31 December 2022, the Group's shareholders' equity stood at €12.6 million compared with €15.7 million in 2021, mainly due to the consolidated net loss of €3.5m.
As previously explained, at the end of 2022, the Group decided to stop delivering orders placed by customers involved in HNT cryptocurrency projects that no longer offered sufficient solvency guarantees. As purchases of electronic components and equipment production had been initiated, this decision led to an increase in inventories at the year-end, with an automatic impact on the cash position, which stood at €5.7 million at 31 December 2022 compared with €14.5 million at the end of 2021.
Inventories therefore increased by €7.5 million over the period to €14.2 million at the year-end, after factoring in impairment of €0.9 million. Operating cash flows were therefore impacted by the negative change in WCR (-€10.1 million).
The Group points out that the equipment stored at the end of 2022 is not specific and can be used for the customers of its core IoT business.
To enable it to finance this increase in its inventories, the Group signed new four-year bank loans during summer 2022 with five partner banks for a total of €6 million.
Financial debt at the period-end (excluding lease liabilities under IFRS16) was €13.9 million (of which €1.3 million factored) versus €9.2 million (of which €3.2 million factored) at 31 December 2021.
| In thousands of euros | 31 December 2022 | 31 December 2021 |
|---|---|---|
| Net assets and other non-current assets | 6,342 | 5,497 |
| Current assets | 22,199 | 13,060 |
| Cash and cash equivalents | 5,746 | 14,534 |
| Total assets | 34,287 | 33,091 |
| Shareholders' equity | 12,586 | 15,674 |
| Long- and medium-term financial liabilities | 10,602 | 5,009 |
| Other non-current liabilities | 441 | 539 |
| Current financial liabilities | 4,369 | 4,611 |
| Other current liabilities | 6,288 | 7,258 |
| Total liabilities | 34,287 | 33,091 |
IFRS – Audited financial statements
Against this backdrop, the Group continues to focus primarily on its commercial development and purging its inventories of electronic components and finished products in its core IoT business. This will enable it to meet the needs of players in its priority markets, Smart Building & Industry, Smart City & Quality of Life and Smart Agriculture & Environment, under good conditions.
Beyond this, KERLINK is focused on three major challenges for 2023:
These actions should allow Kerlink to gradually return to the trajectory set out in the "Serve IoT 2025" strategic roadmap.
Revenue in the first quarter was down 11% to €3.4 million, compared with €3.8 million in the same period the previous year. The first quarter of 2022 includes around €1 million in sales of infrastructure equipment to customers involved in the deployment of the Helium network. Q1 2023 revenue was generated from the core IoT business line and the Group's historical activities, which rose by 12% on a like-for-like basis versus Q1 2022.
Sales of services continued to grow in line with the trends seen the previous year. They came to €1.1 million, an increase of 12% compared with Q1 2022.
| Revenue by type of sales In thousands of euros |
Q1 2023 | Q1 2022 | Change |
|---|---|---|---|
| Equipment | 2,196 | 2,753 | -20% |
| Services | 1,171 | 1,044 | 12% |
| Total | 3,367 | 3,798 | -11% |
| IFRS – Unaudited figures |
Geographically, sales were stable in the EMEA region and increased in the Asia-Pacific region (APAC). Sales in the Americas (NCSA) show a sharp decline, Q1 2022 revenue in this region having mainly been generated on deliveries to customers participating in the deployment of Helium networks.
| Revenue by geographical area In thousands of euros |
Q1 2023 | Q1 2022 | Change |
|---|---|---|---|
| NCSA (Americas) | 195 | 696 | -72% |
| APAC (Asia-Pacific) | 330 | 292 | 13% |
| EMEA (Europe, Middle East & Africa) | 2,842 | 2,809 | 1% |
| Total | 3,367 | 3,798 | -11% |
| IFRS – Unaudited figures |
| Revenue by business line In thousands of euros |
Q1 2023 | Q1 2022 | Change |
|---|---|---|---|
| Historical and alternative telecom operators | 185 | 609 | -70% |
| Private operators (incl. €1m in revenue on Helium in Q1 2022) | 3,182 | 3,188 | 0% |
| Smart Cities & Quality of Life | 1,282 | 683 | 88% |
| Smart Building & Industry | 1,417 | 2,248 | -37% |
| Smart Agriculture & Environment | 478 | 195 | 145% |
| HNT Cryptocurrency Revenue | 5 | 62 | -92% |
| Total | 3,367 | 3,798 | -11% |
IFRS – Unaudited figures
Kerlink Group is one of the world's leading providers of connectivity solutions for the design, rollout and operation of public and private networks dedicated to the Internet of Things (IoT). Its comprehensive portfolio of solutions includes industrial-grade network equipment, best-of-breed network core, network operations and management software, value-added applications and expert professional services, backed by strong R&D capabilities. More than 200,000 Kerlink installations have been deployed at more than 350 customers in 70 countries. Kerlink is a founding member and board member of the LoRa® Alliance and the uCIFI™ Alliance. It is listed on Euronext Growth Paris under the symbol ALKLK.
For more information, please visit our website at www.kerlink.com.
Kerlink®, Wirnet® and Wanesy® are registered trademarks of Kerlink SA and its subsidiaries around the world and must not be used without authorisation. All rights reserved.
Actifin Isabelle Dray +33 (0) 1 56 88 11 29 [email protected]
Actifin Benjamin Lehari +33 (0)1 56 88 11 25 [email protected]
Mahoney Lyle Sarah-Lyle Dampoux +33 (0) 6 74 93 23 47 [email protected]
Next publication H1 2023 revenue: 12 July 2023 after the market closes www.kerlink.com
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