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Net Insight
Interim / Quarterly Report • Jul 18, 2023
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Interim / Quarterly Report
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INTERIM REPORT JANUARY – JUNE 2023
April – June 2023
- Net sales amounted to SEK 126.3 (110.1) million, an increase of 14.7% year-on-year. In comparable currencies net sales increased by 7.4%.
- Operating earnings amounted to SEK 9.9 (9.4) million, corresponding to an operating margin of 7.8% (8.5%). Excluding foreign exchange rate differences of SEK -1.7 (-0.2) million, operating earnings were SEK 11.6 (9.5) million.
- Net income for the period was SEK 10.9 (11.8) million.
- Earnings per share diluted was SEK 0.03 (0.03).
- Total cash was SEK -12.4 (-23.8) million. Excluding the cash impact from repurchase of own shares, the cash flow was SEK -7.7 (-23.8) million.
January – June 2023
- Net sales amounted to SEK 252.9 (219.8) million, an increase of 15.0% year-on-year. In comparable currencies net sales increased by 6.6%.
- Operating earnings amounted to SEK 21.9 (20.1) million, corresponding to an operating margin of 8.7% (9.1%). Excluding foreign exchange rate differences of SEK -3.0 (0.4) million, operating earnings were SEK 24.9 (19.7) million.
- Net income for the period was SEK 21,3 (19,9) million.
- Earnings per share diluted was SEK 0.06 (0.05).
FINANCIAL HIGHLIGHTS
• Total cash was SEK -42.2 (-25.0) million. Excluding the cash impact from repurchase of own shares, the cash flow was SEK -29.1 (11.7) million.
Q2 in brief
- Continued strong growth in media
- Pilot order in time synchronization from major US operator
- First units of new time
- synchronization product Zyntai delivered to customers
- Upgrade doubles Nimbra capacity
| Apr-Jun | Jan-Jun | Jul 2022- | Jan-Dec | ||||||
|---|---|---|---|---|---|---|---|---|---|
| SEK millions | 2023 | 2022 | Change | 2023 | 2022 | Change | Jun 2023 | 2022 | Change |
| Net sales | 126.3 | 110.1 | 14.7% | 252.9 | 219.8 | 15.0% | 508.2 | 475.1 | 7.0% |
| Operating earnings | 9.9 | 9.4 | 5.7% | 21.9 | 20.1 | 9.1% | 62.3 | 60.5 | 3.0% |
| Operating margin | 7.8% | 8.5% | 8.7% | 9.1% | 12.3% | 12.7% | |||
| Net income | 10.9 | 11.8 | -7.7% | 21.3 | 19.9 | 6.9% | 55.4 | 54.0 | 2.6% |
| EBITDA | 28.5 | 24.6 | 16.1% | 58.1 | 50.1 | 15.9% | 130.7 | 122.7 | 6.5% |
| EBITDA margin | 22.6% | 22.3% | 23.0% | 22.8% | 25.7% | 25.8% | |||
| EBITDA-2 | 3.2 | 1.4 | 123.8% | 8.1 | 6.4 | 25.8% | 36.7 | 35.1 | 4.7% |
| EBITDA-2 margin | 2.5% | 1.3% | 3.2% | 2.9% | 7.2% | 7.4% | |||
| Net Income | 10.9 | 11.8 | -7.7% | 21.3 | 19.9 | 55.4 | 54.0 | 2.6% | |
| Net margin | 8.6% | 10.7% | 8.4% | 9.1% | 10.9% | 11.4% | |||
| Total cash flow | -12.4 | -23.8 | -42.2 | -25.0 | -64.3 | -47.0 |
For definitions and calculation of KPI's, see pages 16-19.
CEO´s Statement
A quarter with continued stable growth
A stable start to the year was followed by another strong quarter, with continued steady growth in the media business, despite the more challenging macroeconomic environment. The development of Zyntai, the new time synchronization product for 5G, continues according to plan. We have delivered the first units and received the first pilot order in the US.
Active marketing efforts, coupled with the introduction of new products and functions in recent quarters, have ensured favorable conditions for continued growth, and the growth trend remains strong in APAC. In the quarter, the market has been somewhat more cautious as a result of macroeconomic conditions, which has meant longer sales cycles, mainly in Americas.
Sales in the second quarter were SEK 126.3 million, an increase of 14.7% year-on-year (7.4% in comparable currencies). Operating earnings totaled SEK 9.9 million, compared to SEK 9.4 million in Q2 2022. A favorable mix of revenue,
alongside successfully offsetting cost increases, resulted in an increased gross margin for the quarter (62.1% compared to 60.8%). However, continued investments in developing and strengthening the time synchronization organization, together with inflation-driven cost increases, generated higher year-on-year costs in the quarter.
A strong quarter in the media business with currency-adjusted growth of 11% in year-on-year terms. Revenue from time synchronization was lower than in the comparative period as customers are waiting for delivery of our new product in Q4. The order book for time synchronization exceeded SEK 160 million at the end of the second quarter, an increase of some SEK 10 million on the previous quarter.
Upgrade doubles Nimbra capacity
In order to meet growing demand for increased capacity, we are doubling capacity for Nimbra 1060. The upgrade, which will start delivery in the fall, saves space and energy, and makes the platform more scalable. Already installed Nimbra 1060 units can also be upgraded.
Delivery of first Zyntai units
Following the launch of our latest generation of 5G time synchronization products, designed for large scale installations in mobile networks, the first units have now been manufactured. We were able to deliver the first units to selected customers for initial tests as early as in the second quarter. This is a milestone. The commercial release of the complete Zyntai solution has been scheduled for Q4 this year.
Pilot order in the US and strengthened sales
organization
Our hard work aimed at growth in synchronization on the North "First delivery of Zyntai and important breakthrough on the US market."
American market is beginning to pay off. In the quarter, we received our first pilot order from a leading US operator. In order to satisfy growing customer interest in
Zyntai, we have established a local sales team in the region, initially focusing on the US and Canada.
Increased interest in Europe
We are also seeing growing interest in our time synchronization products from adjacent industries in Europe, such as power utility networks. We have also initiated tests alongside a European power company.
Stable foundation for growth
I am very satisfied with our sustainable growth and key product launches in media during the first half-year. The time synchronization pilot order in the US, plus the start of three new PoCs (Proof of Concept), indicates that we are on the right track. Our continued rapid technological progress and commercial advances provide us with a stable foundation for achieving our longterm financial goals.
I would like to extend my sincere thanks to all my colleagues for their substantial commitment and drive.
Crister Fritzson, CEO
Solna, Sweden, July 18, 2023
REVENUES
Net sales in the second quarter of 2023 were SEK 126.3 (110.1) million, an increase of 14.7%. In comparable currencies, sales increased by 7.4%.
In comparable currencies, the growth in the media business amounts to 11% compared to the same period last year. A certain caution, involving, among other things, longer sales cycles in the Americas, which has been compensated by continued strong development in the APAC region. Previously implemented launches of new functionality have contributed to increased sales volume of our newest media platform Nimbra 1060, which also affected the margin positively as the software share on this platform increased. Recurring revenue from software license and support also contributes to the growth in the quarter. Revenues from time synchronization for 5G amounted to SEK 8.9 million in the quarter, compared to SEK 11.4 million the previous year. The previous year's first quarter included higher revenues linked to delivery of the existing product. The first units of the newly developed time synchronization product for 5G (Zyntai) were shipped during the quarter, but a general commercial launch and larger sales volumes are expected to begin only in the fourth quarter. While waiting for the new product, the revenue from the existing product decreases. As mentioned earlier, however, we can state that the order backlog is growing ahead of a broad launch at the end of the year.
Net sales for the six-month period of 2023 amounted to SEK 252.9 (219.8) million, an increase of 15.0%. In comparable currencies, sales increased by 6.6%.
For the first six-months period, growth in comparable currencies for the media business amounts to 10% year-on-year. Revenue from 5G time synchronization during the first half of the year amounted to SEK 17.4 million, compared to SEK 22.7 million the previous year. The decrease in sales compared to the previous year is, as previously mentioned, a consequence of broad commercial delivery of the new product by end of 2023.
The company has no direct seasonal variation, however there is a certain variation in revenue between quarters due to the concentration of larger deals in certain quarters.
EARNINGS
April-June
Gross profit for the second quarter was SEK 78.4 (67.0) million, an increase by 17.1%. The increase is partly due to the increased revenue, partly due to an increased share of license and support revenue. Gross profit included amortization of capitalized development expenditure of SEK -14.4 (-11.6) million. Gross margin excluding and including amortization of capitalized development expenditure was 73.5% (71.3%) and 62.1% (60.8%) respectively. The increase in license and support income as well as implemented price adjustments in combination with a scale effect, since part of the costs are fixed, have contributed to the increased gross margin.
Operating expenses in the second quarter of SEK -67.6 (-57.5) million, an increase of 17.5% compared to last year. The increase is driven by strengthening of the organization (primarily in time synchronization for 5G, but also in the areas of IP and cloud). The increase is also due to cost increases driven by inflation, increased sales costs linked to the increased sales and the weakening of the Swedish Krona.
Sales and marketing expenses were SEK -38.5 (-31.4) million, and administration expenses to SEK -16.2 (-13.3) million. Development expenses were SEK -12.9 (-12.8) million and the total development expenditure, i.e., before capitalization, were SEK -38.2 (-36.0) million. The increase in sales and marketing costs relates primarily to building up the organization for the offer within time synchronization for 5G as well as increased costs for customer and marketing activities. The sales and marketing costs in the quarter are also affected by a negative currency effect as a significant part of these costs are in USD. The increase in administration costs is partly due to an ongoing project regarding the implementation of a new ERP system.
Other operating income and expenses were SEK -1.0 (0.1) million, of which foreign exchange rate differences of SEK -1.7 (-0.2) million. During the year, the parent company received a government electricity subsidy of SEK 0.6 million (-).
Operating earnings amounted to SEK 9.9 (9.4) million, corresponding to an operating margin of 8.8% (8.5%). Excluding foreign exchange rate differences of SEK -1.7 (-0.2) million, operating earnings were SEK 11.6 (9.5) million. See also table Material profit and loss items on page 20.
Financial targets 2023-2027:
* an organic average annual growth of at least 15% * an operating margin (EBIT%) that within the period will reach 20%
EBITDA and EBITDA-2 (including reversal of capitalization of development expenditures) amounted to SEK 28.5 (24.6) million and SEK 3.2 (1.4) million, respectively, which corresponded to an EBITDA margin of 22.6% (22.3%) and an EBITDA-2 margin of 2.5% (1.3).
In the second quarter, net financial items amounted to SEK 4.4 (4.5) million, of which foreign exchange rate differences of SEK 2.6 (4.7) million and net interest income of SEK 1.8 (-0.1) million. The increased net interest income is due to increased interest income due to higher market interest rates.
Profit before tax was SEK 14.3 (13.9) million, and net income was SEK 10.9 (11.8) million, corresponding to a net margin of 8.6% (10.7%).
January-June
Gross profit for the first six-month period was SEK 153.2 (135.0) million, an increase by 13.5%. The increase is due to the increased revenue and a favorable revenue mix. Gross profit included amortization of capitalized development expenditure of SEK -27.8 (-22.8) million. Gross margin excluding and including amortization of capitalized development expenditure was 71.6% (71.8%) and 60.6% (61.4%) respectively. During the first half of the year, the increase in license and support revenue has not fully compensated for lower event-base services revenue compared to the previous year. In the first six-months period, we also had costs of one-off nature of some SEK -1.8 million linked to purchases made on the spot market.
Operating expenses in the second quarter of SEK -129.4 (-115.4) million, an increase of 12.1% compared to last year. The increase is also due to cost increases driven by inflation, strengthening of the organization, increased marketing related expenses and the weakening of the Swedish Krona against the USD.
Sales and marketing expenses were SEK -74.0 (-62.4) million, and administration expenses to SEK -31.3 (-26.8) million. Development expenses were SEK -24.1 (-26.2) million and the total development expenditure, i.e., before capitalization, were SEK -74.2 (-69.9) million. The increase in sales and marketing costs as well as development expenditure relates primarily to building up the organization for the offer within time synchronization for 5G as well as increased costs for customer and marketing activities. The sales and marketing costs in the first six-months period are also affected by a negative currency effect as a significant part of these costs are in USD.
Other operating income and expenses were SEK -2.0 (0.5) million, of which foreign exchange rate differences of SEK -3,0 (0,4) million.
Operating earnings amounted to SEK 21.9 (20.1) million, corresponding to an operating margin of 8.7% (9.1%). Excluding foreign exchange rate differences of SEK -3.0 (0.4) million, operating earnings were SEK 24.9 (19.7) million. See also table Material profit and loss items on page 20.
EBITDA and EBITDA-2 (including reversal of capitalization of development expenditures) amounted to SEK 58.1 (50.1) million and SEK 8.1 (6.4) million, respectively, which corresponded to an EBITDA margin of 23.0% (22.8%) and an EBITDA-2 margin of 3.2% (2.9).
In the first six-months period, net financial items amounted to SEK 5.9 (4.4) million, of which foreign exchange rate differences of SEK 2.6 (4.6) million and net interest income of SEK 3.3 (-0.2) million. The increased net interest income is due to increased interest income due to higher market interest rates.
Profit before tax was SEK 27.7 (24.5) million, and net income was SEK 21.3 (19.9) million, corresponding to a net margin of 8.4% (9.1%).
| Apr-Jun | Jan-Jun | Jul 2022- | Jan-Dec | |||
|---|---|---|---|---|---|---|
| Key Ratios | 2023 | 2022 | 2023 | 2022 | Jun 2023 | 2022 |
| Net sales, SEK millions | 126.3 | 110.1 | 252.9 | 219.8 | 508.2 | 475.1 |
| Net sales YoY, change in % | 14.7% | 17.1% | 15.0% | 27.8% | 18.6% | 24.8% |
| Gross earnings | 78.4 | 67.0 | 153.2 | 135.0 | 315.9 | 297.7 |
| Gross margin | 62.1% | 60.8% | 60.6% | 61.4% | 62.2% | 62.7% |
| Operating earnings | 9.9 | 9.4 | 21.9 | 20.1 | 62.3 | 60.5 |
| Operating margin | 7.8% | 8.5% | 8.7% | 9.1% | 12.3% | 12.7% |
| EBITDA | 28.5 | 24.6 | 58.1 | 50.1 | 130.7 | 122.7 |
| EBITDA margin | 22.6% | 22.3% | 23.0% | 22.8% | 25.7% | 25.8% |
| EBITDA-2 | 3.2 | 1.4 | 8.1 | 6.4 | 36.7 | 35.1 |
| EBITDA-2 margin | 2.5% | 1.3% | 3.2% | 2.9% | 7.2% | 7.4% |
INVESTMENTS
The investments in the second quarter were SEK 25.6 (24.2) million, of which SEK 25.4 (23.2) million related to capitalization of expenditure for development. The investments in the first six-month period were SEK 51.7 (45.6) million, of which SEK 50.1 (43.8) million related to capitalization of expenditure for development. The increase in capitalized development expenditure relates to the investment in 5G time synchronization.
Depreciation and amortization in the second quarter totaled SEK -18.7 (-15.2) million, of which SEK -14.4 (-11.6) million related to amortization of capitalized expenditure for development. Depreciation and amortization in the first six-month period totaled SEK -36.3 (- 30.1) million, of which SEK -27.8 (-22.8) million related to amortization of capitalized expenditure for development. Launches of new products have increased the amortization.
Net value of capitalized expenditure for development was SEK 220.4 million at end of the period, against SEK 198.2 million as of December 31, 2022.
CASH FLOW AND FINANCIAL POSITION
Cash flow from operating activities in the second quarter amounted to SEK 20.0 (0.9) million and for the first six-month period to SEK 27.3 (59.7) million. The increase in inventory during 2022 and the first six-month period of 2023 is a consequence of securing components with longer foresight than normal due to the prevailing component shortage. The continued growth, especially in the APAC region, has led to increased accounts receivable in 2022 and 2023. During the first quarter 2022, SEK 28.2 million was received for the second half the NRE (non-recurring engineering)-fee from the 5G time synchronization business with Türk Telekom, a prepaid revenue that is recognized as revenue during the development of the new products for 5G synchronization.
The total cash flow for the second quarter amounted to SEK -12.4 (-23.8) million and for the first six-month period to SEK -42.2 (-25.0) million. The first six months increased investments in development projects compared to the previous year are offset by a reduced repurchase of own shares. Excluding the cash impact from repurchase of own shares, cash flow fort the second quarter was SEK -7.7 (-23.8) million and for the first six months to SEK -29.1 (11.7) million. More information about the buyback program can be found on page 12.
Cash and cash equivalents were SEK 266.3 million at year-end, against SEK 308.3 million as of 31 December 2022.
The remaining tax loss carryforwards of SEK 12.9 million that the group companies had as of December 31, 2022, has been used during the year. For more information, see the section Tax on page 12.
Equity was SEK 614.1 million at end of the period, against SEK 605.1 million as of 31 December 2022. The equity/assets ratio was 72.2%, against 71.6% as of 31 December 2022. That equity did not increase in line with the earnings during the year is due to the repurchase of own shares. For information about warrants, share repurchases and share structure, see the section Contributed equity on page 12.
EMPLOYEES
The average number of employees and consultants at Net Insight during the second quarter and for the six-month period was 189 (175) and 186 (171), respectively, of which 154 (141) and 152 (139), respectively, in the parent company Net Insight AB (publ.). The increase is
primarily attributable to the investment in 5G time synchronization, which began in the last quarter of 2021.
PARENT COMPANY
Net sales for the parent company were SEK 126.3 (110.1) million in the second quarter, and net income was SEK 10.3 (7.2) million. Previous years' net financials included a capital loss of -4.3 MSEK when consolidating of the number of legal entities. In the second quarter, intragroup sales totaled SEK 0.0 (0.0) million, and intra-group purchases SEK -21.1 (-17.3) million.
Net sales for the parent company were SEK 252.3 (219.8) million in the first six months, and net income was SEK 20.0 (14.7) million. Previous years' net financials included a capital loss of -4.3 MSEK when consolidating of the number of legal entities. In the first six months, intragroup sales totaled SEK 0.0 (0.0) million, and intra-group purchases SEK -40.9 (-32.9) million.
Progress in the parent company during the year and its financial position largely shadowed group progress as indicated above (except for intra-group transactions).
RISK AND SENSITIVITY ANALYSIS
Net Insight's operations and results of operations are affected by a number of external and internal factors. The company conducts a continuous process to identify all risks present, and to assess how each risk should be managed.
Primarily, the risks the company is exposed to are market-related risks (including competition, technological progress, and political risks), operational risks (including product liability, intellectual property, disputes, customer dependency and contract risks) as well as financial and sustainability-related risks.
At the end of 2021, the current situation of component shortages has meant increased uncertainty. In 2021, we did not see any significant negative effects of this. During 2022 and 2023, we worked to manage the shortage situation and we estimate that the uncertainty will continue gradually decrease during 2023. The war in Ukraine that began in the first quarter 2022 has contributed to increased uncertainty and risk associated with operations and the implementation of events, especially in Ukraine, Russia, and Belarus. The company's exposure to these markets is extremely limited and the decision to comply with the sanctions in force at the time of reporting is therefore not considered to have any material impact on the company's operations, assets, or earnings. However, how the war develops is difficult to predict and the company makes ongoing evaluations of the need to take action.
Except for this, no additional critical risks and uncertainty factors, other than those reviewed in the Annual Report for 2022, arose during 2023 or are anticipated in 2023.
The risks and uncertainty factors are essentially the same for the parent company and the group as a whole.
For a comprehensive review of the company's risk and sensitivity analysis, and its risk management process, see pages 49-51, 54-55 and 72-74 of the Annual Report for 2022.
CONSOLIDATED INCOME STATEMENT, IN SUMMARY
| Apr-Jun | Jan-Jun | Jul 2022- | Jan-Dec | |||
|---|---|---|---|---|---|---|
| SEK thousands | 2023 | 2022 | 2023 | 2022 | Jun 2023 | 2022 |
| Net sales | 126,279 | 110,123 | 252,908 | 219,836 | 508,190 | 475,118 |
| Cost of sales | -47,862 | -43,147 | -99,692 | -84,870 | -192,276 | -177,454 |
| Gross earnings | 78,417 | 66,976 | 153,216 | 134,966 | 315,914 | 297,664 |
| Sales and marketing expenses | -38,467 | -31,402 | -74,000 | -62,421 | -141,600 | -130,021 |
| Administration expenses | -16,229 | -13,270 | -31,266 | -26,804 | -57,215 | -52,753 |
| Development expenses | -12,865 | -12,824 | -24,087 | -26,164 | -49,302 | -51,379 |
| Other operating income and expenses | -963 | -118 | -1,984 | 474 | -5,467 | -3,009 |
| Operating earnings | 9,891 | 9,362 | 21,878 | 20,051 | 62,329 | 60,502 |
| Net financial items | 4,401 | 4,541 | 5,854 | 4,410 | 9,824 | 8,380 |
| Profit before tax | 14,292 | 13,903 | 27,732 | 24,461 | 72,153 | 68,882 |
| Tax | -3,420 | -2,126 | -6,415 | -4,526 | -16,755 | -14,866 |
| Net Income Net income for the period attributable to the |
10,871 | 11,777 | 21,316 | 19,935 | 55,397 | 54,016 |
| shareholders of the parent company | 10,871 | 11,777 | 21,316 | 19,935 | 55,397 | 54,016 |
| Earnings per share, based on net income attributable to the parent company's shareholders |
Apr-Jun | Jan-Jun | Jul 2022- | Jan-Dec | ||
|---|---|---|---|---|---|---|
| during the period | 2023 | 2022 | 2023 | 2022 | Jun 2023 | 2022 |
| Earnings per share | ||||||
| -Basic, SEK | 0.03 | 0.03 | 0.06 | 0.05 | 0.15 | 0.15 |
| -Diluted, SEK | 0.03 | 0.03 | 0.06 | 0.05 | 0.15 | 0.15 |
| Average number of outstanding shares in thousands | ||||||
| -Basic | 355,662 | 368,758 | 356,002 | 371,737 | 359,501 | 367,083 |
| -Diluted | 359,540 | 371,813 | 360,191 | 374,792 | 363,587 | 370,840 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| Apr-Jun | Jan-Jun | Jul 2022- | Jan-Dec | |||
|---|---|---|---|---|---|---|
| SEK thousands | 2023 | 2022 | 2023 | 2022 | Jun 2023 | 2022 |
| Net income | 10,871 | 11,777 | 21,316 | 19,935 | 55,397 | 54,016 |
| Other comprehensive income | ||||||
| Translation differences | 512 | 827 | 449 | 1,018 | 752 | 1,321 |
| Total other comprehensive income, after tax | 512 | 827 | 449 | 1,018 | 752 | 1,321 |
| Total other comprehensive income for the period | 11,383 | 12,604 | 21,765 | 20,953 | 56,149 | 55,337 |
| Total comprehensive income for the period attributable to the shareholders of the parent |
||||||
| company | 11,383 | 12,604 | 21,765 | 20,953 | 56,149 | 55,337 |
CONSOLIDATED BALANCE SHEET, IN SUMMARY
| SEK thousands | 30 Jun 2023 | 31 Mar 2023 | 31 Dec 2022 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Capitalized expenditure for development | 220,417 | 209,432 | 198,200 |
| Goodwill | 38,751 | 38,751 | 38,751 |
| Other intangible assets | 1,360 | 1,517 | 1,673 |
| Right-of-use assets | 28,339 | 30,711 | 32,129 |
| Equipment | 14,608 | 16,006 | 16,095 |
| Deferred tax asset | 2,576 | 1,089 | 3,719 |
| Deposits | 4,911 | 4,902 | 4,902 |
| Total non-current assets | 310,962 | 302,408 | 295,469 |
| Current assets | |||
| Inventories | 98,527 | 91,938 | 84,249 |
| Accounts receivable | 141,327 | 138,892 | 129,415 |
| Other receivables | 32,841 | 23,579 | 27,716 |
| Cash and cash equivalents | 266,279 | 278,479 | 308,347 |
| Total current assets | 538,974 | 532,888 | 549,727 |
| TOTAL ASSETS | 849,936 | 835,296 | 845,196 |
| EQUITY AND LIABILITIES | |||
| Equity attributable to parent company's shareholders | |||
| Share capital | 14,754 | 14,750 | 14,750 |
| Other paid-in capital | 1,193,031 | 1,192,727 | 1,192,727 |
| Translation reserve | 1,953 | 1,441 | 1,504 |
| Accumulated deficit | -595,682 | -601,912 | -603,892 |
| Total shareholders' equity | 614,056 | 607,006 | 605,089 |
| Non-current liabilities | |||
| Lease liabilities | 16,500 | 18,794 | 20,733 |
| Other liabilities | 53,335 | 62,388 | 61,307 |
| Total non-current liabilities | 69,835 | 81,182 | 82,040 |
| Current liabilities | |||
| Lease liabilities | 11,655 | 11,806 | 11,434 |
| Accounts payable | 23,864 | 22,036 | 35,899 |
| Other liabilities | 130,526 | 113,266 | 110,734 |
| Total current liabilities | 166,045 | 147,108 | 158,067 |
| TOTAL EQUITY AND LIABILITIES | 849,936 | 835,296 | 845,196 |
CHANGES IN CONSOLIDATED EQUITY, IN SUMMARY
| Attributable to parent company's shareholders | |||||||
|---|---|---|---|---|---|---|---|
| SEK thousands | Share capital |
Other paid-in capital |
Translation reserve |
Accumulated deficit |
Total shareholders' equity |
||
| January 1, 2022 | 15,597 | 1,192,727 | 183 | -561,979 | 646,528 | ||
| Repurchase of own shares | - | - | - | -36,662 | -36,662 | ||
| Warrants issued | - | - | - | 1,457 | 1,457 | ||
| Total comprehensive income | - | - | 1,018 | 19,935 | 20,953 | ||
| June 30, 2022 | 15,597 | 1,192,727 | 1,201 | -577,249 | 632,276 | ||
| January 1, 2023 | 14,750 | 1,192,727 | 1,504 | -603,892 | 605,089 | ||
| Exercised warrants | 4 | 304 | - | - | 308 | ||
| Repurchase of own shares | - | - | - | -13,106 | -13,106 | ||
| Total comprehensive income | - | - | 449 | 21,316 | 21,765 | ||
| June 30, 2023 | 14,754 | 1,193,031 | 1,953 | -595,682 | 614,056 |
CONSOLIDATED STATEMENT OF CASH FLOWS
| Apr-Jun | Jan-Jun | Jul 2022- | Jan-Dec | |||
|---|---|---|---|---|---|---|
| SEK thousands | 2023 | 2022 | 2023 | 2022 | Jun 2023 | 2022 |
| Ongoing activities | ||||||
| Profit/loss before tax | 14,292 | 13,903 | 27,732 | 24,461 | 72,153 | 68,882 |
| Income tax paid | -1,922 | -771 | -1,933 | -890 | -2,421 | -1,378 |
| Depreciation, amortization & impairment | 18,653 | 15,214 | 36,267 | 30,095 | 68,329 | 62,157 |
| Other items not affecting liquidity | 2,092 | 2,482 | 2,812 | 3,539 | 4,475 | 5,202 |
| 33,115 | 30,828 | 64,878 | 57,205 | 142,536 | 134,863 | |
| Changes in working capital | ||||||
| Increase-/decrease+ in inventories | -7,951 | -19,400 | -15,835 | -19,028 | -30,637 | -33,830 |
| Increase-/decrease+ in receivables | -11,728 | -28,475 | -16,966 | -10,491 | -17,650 | -11,175 |
| Increase+/decrease- in liabilities | 6,631 | 17,973 | -4,756 | 32,040 | 22,175 | 58,971 |
| Cash flow from operating activities | 20,067 | 926 | 27,321 | 59,726 | 116,424 | 148,829 |
| Investment activities | ||||||
| Capitalized expenditure | -25,385 | -23,161 | -50,063 | -43,722 | -93,914 | -87,573 |
| Investment in intangible assets | - | -302 | - | -302 | -273 | -575 |
| Investment in tangible assets | -184 | -767 | -1,659 | -1,594 | -2,661 | -2,596 |
| Increase-/decrease+ in financial assets, net | - | - | - | - | -152 | -152 |
| Cash flow from investment activities | -25,569 | -24,230 | -51,722 | -45,618 | -97,000 | -90,896 |
| Financing activities | ||||||
| Amortization leasing | -2,532 | -1,947 | -5,045 | -3,882 | -9,366 | -8,203 |
| Exercised warrants | 308 | - | 308 | - | 308 | - |
| Warrant premiums paid | - | 1,457 | - | 1,457 | 104 | 1,561 |
| Repurchase of own shares | -4,642 | - | -13,106 | -36,662 | -74,780 | -98,336 |
| Cash flow from financing activities | -6,866 | -490 | -17,843 | -39,087 | -83,734 | -104,978 |
| Net change in cash and cash equivalents | -12,368 | -23,794 | -42,244 | -24,979 | -64,310 | -47,045 |
| Exchange differences in cash and cash equivalents Cash and cash equivalents at the beginning of the |
168 | 609 | 176 | 591 | 114 | 529 |
| period | 278,479 | 353,660 | 308,347 | 354,863 | 330,475 | 354,863 |
| Cash and cash equivalents at the end of the period | 266,279 | 330,475 | 266,279 | 330,475 | 266,279 | 308,347 |
DISAGGREGATION OF REVENUE
| Apr-Jun Jan-Jun |
Jul 2022- | Jan-Dec | ||||
|---|---|---|---|---|---|---|
| SEK thousands | 2023 | 2022 | 2023 | 2022 | Jun 2023 | 2022 |
| Net sales by product group | ||||||
| Hardware | 50,319 | 52,174 | 104,169 | 97,057 | 233,285 | 226,173 |
| Software licenses | 33,014 | 21,088 | 65,940 | 39,009 | 112,503 | 85,572 |
| Support and Services* | 42,945 | 36,861 | 82,798 | 83,770 | 162,401 | 163,373 |
| Total | 126,279 | 110,123 | 252,908 | 219,836 | 508,190 | 475,118 |
| Net sales by region | ||||||
| EMEA | 69,942 | 74,100 | 132,784 | 135,167 | 262,059 | 264,442 |
| AM | 35,025 | 24,421 | 67,991 | 62,399 | 167,298 | 161,706 |
| APAC | 21,311 | 11,602 | 52,132 | 22,270 | 78,832 | 48,970 |
| Total | 126,279 | 110,123 | 252,908 | 219,836 | 508,190 | 475,118 |
| Timing of revenue recognition | ||||||
| Products and services transferred at a point in time | 80,112 | 71,337 | 164,015 | 132,474 | 333,629 | 302,088 |
| Products and services transferred over time* | 46,166 | 38,786 | 88,892 | 87,362 | 174,560 | 173,030 |
| Total | 126,279 | 110,123 | 252,908 | 219,836 | 508,190 | 475,118 |
*) Of which NRE fee; SEK 7.1 (7.1) million Apr-Jun, SEK 14.1 (14.1) million. Jan-Jun and SEK 28.2 million Jan-Dec 2022.
FINANCIAL ASSETS AND LIABILITIES
| Group's financial instruments by category - Assets | Jun 30, 2023 | 31 Dec 2022 | ||||
|---|---|---|---|---|---|---|
| SEK thousands | Value-tier | Measured at amortized cost |
Measured at fair value through profit or loss |
Value-tier | Measured at amortized cost |
Measured at fair value through profit or loss |
| Assets in Balance Sheet | ||||||
| Derivative instruments | 2 | - | 2 | - | ||
| Accounts receivable and other receivables, excluding non-financial assets |
154,609 | 140,200 | ||||
| Cash and cash equivalents | 266,279 | 308,347 | ||||
| Total | 420,888 | - | 448,547 | - |
Group's financial instruments by category -
| Liabilities | Jun 30, 2023 | 31 Dec 2022 | |||||
|---|---|---|---|---|---|---|---|
| Measured at amortized |
Measured at fair value through profit |
Measured at amortized |
Measured at fair value through profit |
||||
| SEK thousands | Value-tier | cost | or loss | Value-tier | cost | or loss | |
| Liabilities in Balance Sheet | |||||||
| Derivative instruments | 2 | 2,502 | 2 | 787 | |||
| Accounts payable and other liabilities, excluding non financial liabilities |
34,303 | 47,368 | |||||
| Total | 34,303 | 2,502 | 47,368 | 787 |
Carrying value of account receivables, other receivables, cash and cash equivalents, account payables and other liabilities makes a reasonable approximation of fair value.
Financial instruments in tier 2
The fair value of derivative instruments is measured using exchange rates of currency forwards on the reporting date.
PARENT COMPANY INCOME STATEMENT, IN SUMMARY
| Apr-Jun Jan-Jun |
Jul 2022- | Jan-Dec | ||||
|---|---|---|---|---|---|---|
| SEK thousands | 2023 | 2022 | 2023 | 2022 | Jun 2023 | 2022 |
| Net sales | 126,279 | 110,064 | 252,908 | 219,719 | 507,896 | 474,707 |
| Cost of sales | -47,784 | -43,071 | -99,575 | -84,760 | -192,499 | -177,684 |
| Gross earnings | 78,495 | 66,993 | 153,333 | 134,959 | 315,397 | 297,023 |
| Sales and marketing expenses | -39,145 | -31,660 | -75,445 | -63,260 | -143,206 | -131,021 |
| Administration expenses | -16,155 | -13,166 | -31,174 | -26,759 | -57,172 | -52,757 |
| Development expenses | -13,193 | -12,954 | -24,891 | -26,929 | -50,498 | -52,536 |
| Other income expenses | -1,064 | -488 | -2,085 | 244 | -7,767 | -5,438 |
| Operating earnings | 8,937 | 8,725 | 19,738 | 18,255 | 56,754 | 55,271 |
| Net financial items | 4,645 | 456 | 6,362 | 585 | 13,864 | 8,087 |
| Profit/loss before tax | 13,583 | 9,181 | 26,100 | 18,840 | 70,618 | 63,358 |
| Tax | -3,330 | -1,984 | -6,092 | -4,150 | -15,635 | -13,693 |
| Net income | 10,253 | 7,197 | 20,008 | 14,690 | 54,983 | 49,665 |
PARENT COMPANY BALANCE SHEET, IN SUMMARY
| SEK thousands | 30 Jun 2023 | 31 Dec 2022 | 30 Jun 2022 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Capitalized expenditure for development | 220,417 | 198,200 | 179,169 |
| Other intangible assets | 1,360 | 1,673 | 1,750 |
| Equipment | 13,435 | 14,670 | 16,652 |
| Participations in group companies | 3,173 | 3,173 | 3,173 |
| Deferred tax asset | 899 | 2,657 | 12,201 |
| Deposits | 4,628 | 4,628 | 4,628 |
| Total non-current assets | 243,912 | 225,001 | 217,573 |
| Current assets | |||
| Inventories | 98,527 | 84,249 | 70,060 |
| Accounts receivable | 142,127 | 130,180 | 130,444 |
| Receivables from group companies | 346 | 346 | - |
| Other receivables | 35,188 | 30,113 | 28,936 |
| Cash and cash equivalents | 261,372 | 300,860 | 321,236 |
| Total current assets | 537,560 | 545,748 | 550,676 |
| TOTAL ASSETS | 781,472 | 770,749 | 768,249 |
| EQUITY AND LIABILITIES | |||
| Equity | |||
| Restricted equity | 307,296 | 277,979 | 250,827 |
| Non-restricted equity | 262,474 | 284,581 | 338,329 |
| Total equity | 569,770 | 562,560 | 589,156 |
| Non-current liabilities | |||
| Other liabilities | 52,304 | 60,557 | 34,723 |
| Total non-current liabilities | 52,304 | 60,557 | 34,723 |
| Current liabilities | |||
| Accounts payable | 23,658 | 35,617 | 24,963 |
| Liabilities to group companies | 11,129 | 7,504 | 2,153 |
| Other liabilities | 124,611 | 104,511 | 117,254 |
| Total current liabilities | 159,398 | 147,632 | 144,370 |
| TOTAL EQUITY AND LIABILITIES | 781,472 | 770,749 | 768,249 |
ACCOUNTING POLICIES
This Interim Report has been prepared in accordance with IAS 34 Interim Financial Reporting and applicable regulations of the Swedish Annual Accounts Act. The Interim Report of the parent company complies with chapter 9 of the Swedish Annual Accounts Act, Interim Financial Reporting, and RFR 2 Accounting for Legal Entities.
Disclosures in accordance with IAS 34 are presented in the interim financial statements and the associated notes as well as elsewhere in the interim financial report.
There are no new or amended International Financial Reporting Standards (IFRS) in 2023 that have had a material impact on the Company's financial reporting.
The same accounting principles and basis of calculation as those used in the latest Annual Report have been applied to the group and parent company. For a description of these accounting principles, please refer to the Annual Report for 2022.
The preparation of the Interim Report requires management to make judgements, estimates and assumptions that affect the company's earnings and position and information presented generally. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. For a description of these estimates and assumptions, please refer to the Annual Report for 2022.
Figures in brackets in this report refer to comparison with the corresponding period or date in the previous year, if not stated otherwise. Divergences due to rounding may occur in this report.
Tax
The group reported tax of total SEK -3.4 (-2.1) million for the period April–June 2023, corresponds to an effective tax rate of -23.9 (-15.3) percent. The group reported tax of total SEK -6.4 (-15.3) million for the period January–June 2023, corresponds to an effective tax rate of -23.1 (-18.5) percent. The effective tax rate is affected by tax adjustments and the relative effects of foreign tax rates.
The remaining tax loss carryforwards of SEK 12.9 million that the group companies had as of December 31, 2022, has been used during the year.
Contributed equity
The repurchase program, which was decided by the board with the support of a mandate from the 2022 AGM, ran during the period July 2022 to February 2023. Within the program, the parent company repurchased a total of 12,877,000 own B shares on Nasdaq Stockholm for SEK 70.1 million, including transaction costs, of which 1,297,000 more shares for SEK 8.5 million during the period January-February 2023.
The 2023 AGM resolved to authorize the board of directors to resolve to repurchase, on one or several occasions until the next AGM, as many own shares as may be purchased without the company's holding at any time exceeding ten per cent of the total number of shares in the company. Further, the AGM resolved to authorize the board of directors to resolve on one or several occasions until the next annual general meeting, to transfer (sell) own shares.
At the Board meeting in June, the board of Directors of Net Insight AB decided to utilize the repurchase mandate given at the AGM in 2023. The repurchase program commenced on June 7, 2023, and will last until the next AGM and will amount to maximum SEK 50 million.
During June 2023, the parent company repurchased 875,000 of its own B shares on Nasdaq Stockholm for SEK 4.6 million, including transaction costs.
At the end of the period, the parent company had a total of 13,752,000 of its own class B shares, at an average cost of SEK 5.44 per share and with a par value of SEK 0.04 per share. The shares are held as own shares. The parent company has the right to reissue these shares at a later date.
The 2023 AGM resolved that the company's share capital shall be reduced by SEK 511,000 for allocation to unrestricted equity through cancellation of 12,775,000 own B shares held by the company. The matter is pending with the Swedish Companies Registration Office.
Subscription for shares in a long-term incentive program, decided by the 2020 AGM (LTI 2020 series 1), can be done during the period June 19 – September 19, 2023. A total of 2,160,000 warrants have been issued in the program and each warrant entitles the holder to subscribe for one (1) B -share against a predetermined subscription price of SEK 2.80. During June, 110,000 warrants were exercised, which resulted in the number of B shares and votes in Net Insight AB increasing by 110,000 and the share capital increasing by SEK 4,400.
In total, the Company has three additional ongoing warrant programs (LTI 2020 series 2 and LTI 2022 in series 1 and 2) with a total of 2,700,000 warrants. When calculating earnings per share, a dilution effect arises when the average price for the period exceeds the exercise price for the warrants. For more information about the programs and the accounting principles, see Note 7 on page 82 in the 2022 Annual Report.
All shares issued by the parent company were fully paid.
| 30 Jun, 2023 | 31 Dec, 2022 | ||||||
|---|---|---|---|---|---|---|---|
| The division of shares | A-shares | B-shares | Total | A-shares | B-shares | Total | |
| Outstanding shares | 1,000,000 | 354,116,009 | 355,116,009 | 1,000,000 | 356,178,009 | 357,178,009 | |
| Repurchased own shares | - | 13,752,000 | 13,752,000 | - | 11,580,000 | 11,580,000 | |
| Issued shares | 1,000,000 | 367,868,009 | 368,868,009 | 1,000,000 | 367,758,009 | 368,758,009 |
TRANSACTIONS WITH RELATED PARTIES
During the first quarter, the parent company hired a member of the management team's related party company for consulting services. Charged fees during the six-months period amounted to SEK 0.5 (-) million.
AUDITORS' REVIEW
This Report has not been reviewed by the company's auditors.
SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD
No significant events occurred after the end of the reporting period.
THIS IS NET INSIGHT
Business concept and model
Net Insight is defining new ways to deliver media. Net Insight is driving the transformation of video networks with open IP, virtualized and cloud solutions that enable our customers to simply and costeffectively create live experiences.
With the product area Media Networks, Net Insight is opening up new routes for customers to produce and deliver content to viewers anywhere. Revenues are generated through sales of hardware and software solutions and services.
The 5G synchronization product area enables cost-effective, more secure and faster roll-out of 5G networks.
Strategy
Net Insight wants to set the benchmark for media transport and help broadcasters, production companies, service providers and enterprises to transform their media businesses – enabling them to benefit from new software defined, virtual and distributed media workflows, without discarding their existing hardware investments. Net Insight wants to empower customers to work smarter through remote/distributed production and flexible networks.
Net Insight is technology agnostic and has built the market's most open and cloud-ready video centric media delivery platform, allowing customers to deliver content on any network, their way.
The main strategic objective is to accelerate growth, in both existing and closely related market and customer segments. This will be achieved through a combination of leveraging our unique portfolio and our industry expertise, strengthened solutions competitiveness, and improved internal execution.
For more information, please contact
Phone: +46 (0)8-685 04 00 Box 1200, 171 23 Solna, Sweden Email: [email protected] Phone: +46 (0)8 – 685 04 00
Joakim Schedvins, CFO, Net Insight AB (publ) www.netinsight.net Phone: +46 (0)8-685 04 00 Email: [email protected]
Value creators
The solutions are deployed by the world's leading media brands to keep their mission-critical media networks running smoothly. New technology is enabling these players to adopt new, more cost efficient and flexible ways to produce and deliver content. Net Insight can play an important role to support our customers making this gradual transition.
Net Insight benefits from underlying market trends like the general increase in video traffic, live streaming and file-based transfers. Other trends supporting the company's growth prospects include the broader coverage of live events, move towards remote production and increased use of Internet and cloud for media production and transport.
Reporting dates
Interim report January – September November 9, 2023
Crister Fritzson, CEO, Net Insight AB (publ) Net Insight AB (publ), corp.id.no. 556533-4397
This information is information that Net Insight AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, at 7:30 am CEST on July 18, 2023.
CERTIFICATION BY THE BOARD OF DIRECTORS AND CEO
The Board of Directors and the CEO certify that the Interim report for the period January – June 2023 gives a true and fair overview of the Parent Company Net Insight AB (publ) and the Group's operations, their financial position and results of operations, and describes significant risks and uncertainties facing the Parent Company and other companies in the Group.
Solna, July 18, 2023
Gunilla Fransson Chairman
Jan Barchan Board member Cecilia de Leeuw Board member
Karl Thedéen Board member Torbjörn Wingårdh Board member
Crister Fritzson CEO
This interim report has been prepared in Swedish and translated into English. In the event of any discrepancies between the Swedish interim report and the English translation the former shall have precedence.
FINANCIAL INFORMATION
| Apr-Jun | Jan-Jun | Jul 2022- | Jan-Dec | |||
|---|---|---|---|---|---|---|
| SEK millions (if not defined differently) | 2023 | 2022 | 2023 | 2022 | Jun 2023 | 2022 |
| Earnings | ||||||
| Net sales | 126.3 | 110.1 | 252.9 | 219.8 | 508.2 | 475.1 |
| Gross earnings | 78.4 | 67.0 | 153.2 | 135.0 | 315.9 | 297.7 |
| Operating expenses | 67.6 | 57.5 | 129.4 | 115.4 | 248.1 | 234.2 |
| Total development expenditure | 38.2 | 36.0 | 74.2 | 69.9 | 143.2 | 139.0 |
| EBITDA | 28.5 | 24.6 | 58.1 | 50.1 | 130.7 | 122.7 |
| EBITDA-2 | 3.2 | 1.4 | 8.1 | 6.4 | 36.7 | 35.1 |
| Operating earnings | 9.9 | 9.4 | 21.9 | 20.1 | 62.3 | 60.5 |
| Profit before tax | 14.3 | 13.9 | 27.7 | 24.5 | 72.2 | 68.9 |
| Net income | 10.9 | 11.8 | 21.3 | 19.9 | 55.4 | 54.0 |
| Balance sheet and cash flow | ||||||
| Cash and cash equivalents | 266.3 | 330.5 | 266.3 | 330.5 | 266.3 | 308.3 |
| Working capital | 119.5 | 56.8 | 111.2 | 59.1 | 104.9 | 76.5 |
| Total cash flow | -12.4 | -23.8 | -42.2 | -25.0 | -64.3 | -47.0 |
| The share | ||||||
| Dividend per share, SEK | - | - | - | - | - | - |
| Earnings per share, basic, SEK | 0.03 | 0.03 | 0.06 | 0.05 | 0.15 | 0.15 |
| Earnings per share, diluted, SEK | 0.03 | 0.03 | 0.06 | 0.05 | 0.15 | 0.15 |
| Cash flow per share, basic, SEK | -0.03 | -0.06 | -0.12 | -0.07 | -0.18 | -0.13 |
| Cash flow per share, diluted, SEK | -0.03 | -0.06 | -0.12 | -0.07 | -0.18 | -0.13 |
| Equity per share basic , SEK | 1.73 | 1.71 | 1.72 | 1.70 | 1.73 | 1.65 |
| Equity per share diluted, SEK Average number of outstanding shares basic, |
1.71 | 1.70 | 1.70 | 1.69 | 1.71 | 1.63 |
| thousands | 355,662 | 368,758 | 356,002 | 371,737 | 359,501 | 367,083 |
| Average number of outstanding shares diluted, thousands |
||||||
| Number of outstanding shares at the end of the | 359,540 | 371,813 | 360,191 | 374,792 | 363,587 | 370,840 |
| period, basic, thousands | 355,006 | 368,758 | 355,006 | 368,758 | 355,006 | 357,178 |
| Number of outstanding shares at the end of the period, diluted, thousands |
357,951 | 371,813 | 357,951 | 371,813 | 357,951 | 361,988 |
| Share price at end of period, SEK | 4.82 | 3.65 | 4.82 | 3.65 | 4.82 | 6.06 |
| Employees and consultants | ||||||
| Average number of employees and consultants | 189 | 175 | 186 | 171 | 183 | 176 |
| KPI | ||||||
| Net sales YoY, change in % | 14.7% | 17.1% | 15.0% | 27.8% | 18.6% | 24.8% |
| Gross margin | 62.1% | 60.8% | 60.6% | 61.4% | 62.2% | 62.7% |
| Total development expenditure/Net sales | 30.3% | 32.7% | 29.3% | 31.8% | 28.2% | 29.2% |
| Operating margin | 7.8% | 8.5% | 8.7% | 9.1% | 12.3% | 12.7% |
| EBITDA margin | 22.6% | 22.3% | 23.0% | 22.8% | 25.7% | 25.8% |
| EBITDA-2 margin | 2.5% | 1.3% | 3.2% | 2.9% | 7.2% | 7.4% |
| Net margin | 8.6% | 10.7% | 8.4% | 9.1% | 10.9% | 11.4% |
| Return on capital employed | 8.6% | 5.2% | 8.6% | 5.1% | 8.5% | 8.9% |
| Equity/asset ratio | 72.2% | 75.0% | 72.2% | 75.0% | 72.2% | 71.6% |
| Return on equity | 9.1% | 5.1% | 9.0% | 5.1% | 9.1% | 8.7% |
ALTERNATIVE PERFORMANCE MEASURES AND OTHER DEFINITIONS
Non-IFRS financial measures are presented to enhance investors and management possibility to evaluate the ongoing operating results, to aid in forecasting future periods and to facilitate meaningful comparison of result between periods. The APMs in this report may differ from similar-titled measures used by other companies. The section has also been supplemented with some other definitions.
Any key figures in text, diagrams or tables that include periods earlier than 1 April 2021, refer to continued operations, i.e. excluding the effect from divested operations. For more information, see interim reports and annual report for 2022.
Calculation of performance measures not included in IFRS framework, and some other definitions.
| Performance measures | Various types of performance measures and margin measures as a percentage of sales. | ||||
|---|---|---|---|---|---|
| Non-IFRS performance measures |
Description | Reason for use of the measure | |||
| Gross margin | Gross earnings as a percentage of net sales. | The gross margin is of major importance, showing | |||
| Gross margin excl. amortization of capitalized development |
Gross earnings excl. amortization of capitalized development as a percentage of net sales. |
the margin for covering the operating expenses., supplemented by the margin to cover the operating expenses as well as the cost of amortization of capitalized development expenditures. |
|||
| Operating expenses | Sales and marketing expenses, administration expenses and development expenses. |
Shows the company's total operating expenses. Putting them in relation to net sales shows the |
|||
| Operating expenses/net sales | Operating expenses as a percentage of net sales. | company's cost efficiency. | |||
| Operating earnings | Calculated as operating earnings before financial items and tax. |
Operating earnings provides an overall picture of earnings generated in the operating activities. |
|||
| Operating margin | Operating earnings as a percentage of net sales. | The operating margin is a key measure together with sales growth and capital employed for monitoring value creation. |
|||
| Net sales YoY, change in % | The relation between net sales for the period and the corresponding sales for the comparative period in previous year. |
The sales growth is a key measure together with operating margin and capital employed for monitoring value creation. |
|||
| Change in Net sales in comparable currencies |
The relation between the net sales for the period, recalculated using the foreign currency exchange rates from the comparative period, and the corresponding sales for the comparative period in previous year. Only sales from business combinations that has been part of the Group for the whole comparative period are recalculated. |
This measure is of major importance for management in its monitoring of underlying sales growth driven by changes in volume, price and product mix for comparable exchange rates between different periods. |
|||
| Net margin | Net Income as a percentage of net sales. | The net margin shows the remaining share of net sales after all the company's costs have been deducted. |
|||
| Total development (R&D) | Development expenses and capitalized | The measure is a good complement to | |||
| expenditure | expenditures for development. | development expenses, as it shows the company's | |||
| Capitalization rate | Capitalized development expenditures as a percentage of total development expenditures. |
total expenditure in development. The development expenditures effect on income, |
|||
| Total development (R&D) expenditure/net sales |
Total development expenditure as percentage of net sales. |
financial position, and presentation in the statement of cashflow is affected by the periods level of capitalized development expenditures. |
|||
| EBITDA | Operating earnings before depreciation and amortization. |
Complementing EBITDA with EBITDA-2, where capitalized development expenditures are |
|||
| EBITDA-2 | Operating earnings before depreciation and amortization and capitalization of development expenditure. |
reversed, provides a good complement to operating earnings and margin as it, simplified, shows the earnings-generated cash flow in the |
|||
| EBITDA & EBITA-2 margin | EBITDA & EBITDA-2 as a percentage of net sales. | operation and it shows operating earnings without influence of variations in the level of capitalized development expenditures in the company's development projects. |
|||
| Regions | Definition of regions for designation of revenue: • EMEA – Europe, the Middle East and Africa. • Americas (AM) - North and South America. • APAC – Asia and Pacific. |
Definition of regions for designation of revenue. |
| Change in net sales in comparable currencies | Apr-Jun | Jan-Jun | Jan-Dec | |||
|---|---|---|---|---|---|---|
| SEK millions (if not defined differently) | 2023 | 2022 | 2023 | 2022 | 2022 | |
| Net sales | 126.3 | 110.1 | 252.9 | 219.8 | 475.1 | |
| Net currency effect of comparable currencies | -8.0 | -7.7 | -18.6 | -14.0 | -43.7 | |
| Net sales in comparable currencies | 118.3 | 102.4 | 234.3 | 205.8 | 431.5 | |
| Change in net sales in comparable currencies | 7.4% | 8.8% | 6.6% | 19.7% | 13.3% |
| KPI Income Statement | Apr-Jun | Jan-Jun | Jul 2022- | Jan-Dec | ||
|---|---|---|---|---|---|---|
| SEK millions (if not defined differently) | 2023 | 2022 | 2023 | 2022 | Jun 2023 | 2022 |
| Net sales | 126.3 | 110.1 | 252.9 | 219.8 | 508.2 | 475.1 |
| Net sales YoY, change in % Cost of sales ex. amortization of capitalized |
14.7% | 17.1% | 15.0% | 27.8% | 18.6% | 24.8% |
| development | -33.5 | -31.6 | -71.8 | -62.1 | -141.1 | -131.3 |
| Gross earnings ex. amortization of capitalized development |
92.8 | 78.5 | 181.1 | 157.8 | 367.1 | 343.8 |
| Gross margin ex. amortization of capitalized | ||||||
| development | 73.5% | 71.3% | 71.6% | 71.8% | 72.2% | 72.4% |
| Cost of sales amortization of capitalized development |
-14.4 | -11.6 | -27.8 | -22.8 | -51.2 | -46.2 |
| Gross earnings | 78.4 | 67.0 | 153.2 | 135.0 | 315.9 | 297.7 |
| Gross margin | 62.1% | 60.8% | 60.6% | 61.4% | 62.2% | 62.7% |
| Sales and marketing expenses | -38.5 | -31.4 | -74.0 | -62.4 | -141.6 | -130.0 |
| Administration expenses | -16.2 | -13.3 | -31.3 | -26.8 | -57.2 | -52.8 |
| Development expenses | -12.9 | -12.8 | -24.1 | -26.2 | -49.3 | -51.4 |
| Operating expenses | -67.6 | -57.5 | -129.4 | -115.4 | -248.1 | -234.2 |
| Operating expenses/net sales | 53.5% | 52.2% | 51.1% | 52.5% | -48.8% | 49.3% |
| Other operating income and expenses | -1.0 | -0.1 | -2.0 | 0.5 | -5.5 | -3.0 |
| Operating earnings | 9.9 | 9.4 | 21.9 | 20.1 | 62.3 | 60.5 |
| Operating margin | 7.8% | 8.5% | 8.7% | 9.1% | 12.3% | 12.7% |
| Net financial items | 4.4 | 4.5 | 5.9 | 4.4 | 9.8 | 8.4 |
| Profit before tax | 14.3 | 13.9 | 27.7 | 24.5 | 72.2 | 68.9 |
| Tax | -3.4 | -2.1 | -6.4 | -4.5 | -16.8 | -14.9 |
| Net Income | 10.9 | 11.8 | 21.3 | 19.9 | 55.4 | 54.0 |
| Net margin | 8.6% | 10.7% | 8.4% | 9.1% | 10.9% | 11.4% |
| EBITDA margin | Apr-Jun | Jan-Jun | Jul 2022- | Jan-Dec | ||
|---|---|---|---|---|---|---|
| SEK millions (if not defined differently) | 2023 | 2022 | 2023 | 2022 | Jun 2023 | 2022 |
| Net sales | 126.3 | 110.1 | 252.9 | 219.8 | 508.2 | 475.1 |
| Operating earnings | 9.9 | 9.4 | 21.9 | 20.1 | 62.3 | 60.5 |
| Amortization of capitalized development expenditure | 14.4 | 11.6 | 27.8 | 22.8 | 51.2 | 46.2 |
| Other depreciation & amortization | 4.3 | 3.6 | 8.4 | 7.3 | 15.7 | 14.5 |
| Impairment | - | - | - | - | 1.5 | 1.5 |
| EBITDA | 28.5 | 24.6 | 58.1 | 50.1 | 130.7 | 122.7 |
| EBITDA margin | 22.6% | 22.3% | 23.0% | 22.8% | 25.7% | 25.8% |
| Capitalization of development expenditure | -25.4 | -23.2 | -50.1 | -43.7 | -93.9 | -87.6 |
| EBITDA-2 | 3.2 | 1.4 | 8.1 | 6.4 | 36.7 | 35.1 |
| EBITDA-2 margin | 2.5% | 1.3% | 3.2% | 2.9% | 7.2% | 7.4% |
| Development expenditure | Apr-Jun | Jan-Jun | Jul 2022- | Jan-Dec | ||
|---|---|---|---|---|---|---|
| SEK millions (if not defined differently) | 2023 | 2022 | 2023 | 2022 | Jun 2023 | 2022 |
| Development expenses | 12.9 | 12.8 | 24.1 | 26.2 | 49.3 | 51.4 |
| Capitalization of development expenditure | 25.4 | 23.2 | 50.1 | 43.7 | 93.9 | 87.6 |
| Total development expenditure | 38.2 | 36.0 | 74.2 | 69.9 | 143.2 | 139.0 |
| Capitalization rate | 66.4% | 64.4% | 67.5% | 62.6% | 65.6% | 63.0% |
| Net Sales | 126.3 | 110.1 | 252.9 | 219.8 | 508.2 | 475.1 |
| Total development expenditure/net sales | 30.3% | 32.7% | 29.3% | 31.8% | 28.2% | 29.2% |
| CAPITAL AND RETURN MEASURES |
SHOWS HOW CAPITAL IS UTILIZED AND THE COMPANY'S FINANCIAL STRENGTH. RETURN IS A FINANCIAL TERM THAT DESCRIBES HOW MUCH THE VALUE OF AN ASSET CHANGES FROM AN EARLIER POINT IN TIME. |
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|---|---|---|---|---|---|---|---|
| Non-IFRS performance measure |
Description | Reason for use of the measure | |||||
| Working capital | Current assets less cash and cash equivalents, accounts payable and other interest-free current liabilities. The Company has no interest-bearing liabilities, excluding lease liabilities. Changes in working capital in the cash flow statement also includes adjustments for items not affecting liquidity and changes in non-cur- rent operating assets and liabilities. |
This measure shows how much working capital that is tied up in the operations and can be put in relation to sales to under-stand how effectively tied up working capital is used. |
|||||
| Capital employed | The Company capital employed is calculated as an average of total assets, less total liabilities, excluding interest-bearing liabilities. The Company has no interest-bearing liabilities, excluding lease liabilities. |
Return on capital employed is the central ratio for measuring the return on the capital tied up in operations. |
|||||
| Return on capital employed | Operating earnings plus interest income, in relation to average capital employed, rolling four quarters. |
||||||
| Equity/asset ratio | Shareholders' equity divided by the balance sheet total. |
A traditional measure for showing financial risk, expressing the ratio of the assets that is financed by the owners. |
|||||
| Return on equity | Net income as a percentage of average share holders' equity, rolling four quarters (R4Q). |
Return on equity shows the total return on shareholders' capital and reflects the effect of the company's profitability as well as the financial leverage. |
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| Investments | Investments in intangible and tangible assets. | ||||||
| Total cash flow | Change in cash and cash equivalents during the period, excluding exchange differences in cash and cash equivalents. |
Definitions to rows in the cash flow statement. |
| Working capital | Apr-Jun | Jan-Jun | Jul 2022- | Jan-Dec | ||
|---|---|---|---|---|---|---|
| SEK millions | 2023 | 2022 | 2023 | 2022 | Jun 2023 | 2022 |
| Current assets | 536.7 | 545.7 | 541.1 | 548.8 | 544.9 | 548.4 |
| Cash and cash equivalents | -272.4 | -342.1 | -284.4 | -346.3 | -295.6 | -328.4 |
| No interest-bearing short term liabilities | -144.8 | -146.8 | -145.4 | -143.4 | -144.4 | -143.5 |
| Working capital | 119.5 | 56.8 | 111.2 | 59.1 | 104.9 | 76.5 |
| Return on capital employed | Apr-Jun | Jan-Jun | Jul 2022- | Jan-Dec | ||
|---|---|---|---|---|---|---|
| SEK millions (if not defined differently) | 2023 | 2022 | 2023 | 2022 | Jun 2023 | 2022 |
| Capital employed | ||||||
| Total balance | 842.6 | 827.4 | 843.5 | 827.7 | 840.1 | 831.1 |
| No interest-bearing liabilities | -202.7 | -170.8 | -204.5 | -163.2 | -194.7 | -175.5 |
| Capital employed | 639.9 | 656.5 | 639.0 | 664.5 | 645.4 | 655.6 |
| Operating earnings less interest income R4Q | ||||||
| Operating earnings R4Q | 62.3 | 35.1 | 62.3 | 35.1 | 62.3 | 60.5 |
| Interest income R4Q | 7.6 | 1.0 | 7.6 | 1.0 | 7.6 | 2.4 |
| Operating earnings less interest income R4Q | 54.8 | 34.1 | 54.8 | 34.1 | 54.8 | 58.1 |
| Return on capital employed | 8.6% | 5.2% | 8.6% | 5.1% | 8.5% | 8.9% |
| Equity/asset ratio | Apr-Jun | Jan-Jun | Jul 2022- | Jan-Dec | ||
|---|---|---|---|---|---|---|
| SEK millions (if not defined differently) | 2023 | 2022 | 2023 | 2022 | Jun 2023 | 2022 |
| Equity | 614.1 | 632.3 | 614.1 | 632.3 | 614.1 | 605.1 |
| Total equity and liabilities | 849.9 | 842.7 | 849.9 | 842.7 | 849.9 | 845.2 |
| Equity/asset ratio | 72.2% | 75.0% | 72.2% | 75.0% | 72.2% | 71.6% |
| Return on equity | Apr-Jun | Jan-Jun | Jul 2022- | Jan-Dec | ||
|---|---|---|---|---|---|---|
| SEK millions (if not defined differently) | 2023 | 2022 | 2023 | 2022 | Jun 2023 | 2022 |
| Net income - R4Q | 55.4 | 32.9 | 55.4 | 32.9 | 55.4 | 54.0 |
| Average equity - R4Q | 610.5 | 648.1 | 615.5 | 648.1 | 610.5 | 624.2 |
| Return on equity | 9.1% | 5.1% | 9.0% | 5.1% | 9.1% | 8.7% |
| SHAREHOLDERS' INFORMATION Non-IFRS performance |
MEASURES RELATED TO THE SHARE. | |
|---|---|---|
| measure | Description | Reason for use of the measure |
| Average number of outstanding shares |
Total number of shares in the Parent company, less the number of group companies' holdings of shares in the Parent company (own/treasury shares). |
Definitions of IFRS performance measures. Measures showing the return of the business to the owners, per share. |
| Dividend per share | Dividend divided by the average number of outstanding shares during the period. |
|
| Earnings per share (EPS) | Net income divided by the average number of outstanding shares during the period. |
|
| Cash flow per share | Total cash flow, divided by average number of outstanding shares during the period. |
Measures showing the return of the business to the owners, per share. |
| Equity per share | Shareholders' equity divided by number of out standing shares at the end of the period. |
| Employees | Measures related to employees. | ||||
|---|---|---|---|---|---|
| Non-IFRS performance measure |
Description | Reason for use of the measure | |||
| Average number of employees and consultants/co-workers |
The average number of employees and consultants for non-temporary positions (longer than nine months) and who do not replace absent employees, in FTE (Full-time equivalent). |
To supplement the number of employees with consultants gives a better measure of the Company's cost. |
| Apr-Jun | Jan-Jun | Jul 2022- | Jan-Dec | |||
|---|---|---|---|---|---|---|
| Average number of employees and consultants | 2023 | 2022 | 2023 | 2022 | Jun 2023 | 2022 |
| Average number of employees | 145 | 129 | 143 | 128 | 139 | 131 |
| Average number of consultants | 44 | 46 | 43 | 43 | 45 | 45 |
| Total average number of employees and | ||||||
| consultants | 189 | 175 | 186 | 171 | 183 | 176 |
MATERIAL PROFIT AND LOSS ITEMS
The group has identified a number of items which are material due to the significance of their nature and/or amount. These are listed separately here to provide a better understanding of the financial performance of the group:
| Material profit and loss items | Apr-Jun | Jan-Jun | Jan-Dec | ||||
|---|---|---|---|---|---|---|---|
| SEK millions | Note | 2023 | 2022 | 2023 | 2022 | Jun 2023 | 2022 |
| Exchange rate differences | |||||||
| Part of Other operating income & expenses | -1.7 | -0.2 | -3.0 | 0.4 | -5.2 | -1.9 | |
| Part of Net Financial Items | 2.6 | 4.7 | 2.6 | 4.6 | 5.0 | 6.9 | |
| Total Exchange rate differences | 0.9 | 4.5 | -0.4 | 5.0 | -0.3 | 5.1 | |
| Government grants Covid-19 | |||||||
| Reduction of employee expenses | - | - | - | - | - | - | |
| Other operating income | - | 0.1 | - | 0.1 | - | 0.1 | |
| Total | - | 0.1 | - | 0.1 | - | 0.1 | |
| Items affecting comparability | |||||||
| Restructuring Government grants Covid-19, other |
(a) | - | - | - | - | -1.2 | -1.2 |
| operating income Government grants electricity support, |
(b) | - | 0.1 | - | 0.1 | - | 0.1 |
| other operating income | 0.6 | - | 0.6 | - | 0.6 | - | |
| Impairment of intangible assets | (c) | - | - | - | - | -1.5 | -1.5 |
| Total | 0.6 | 0.1 | 0.6 | 0.1 | -2.2 | -2.6 | |
| Operating earnings excluding items affecting comparability |
|||||||
| Operating earnings | 9.9 | 9.4 | 21.9 | 20.1 | 62.3 | 60.5 | |
| Items affecting comparability, as per above | -0.6 | -0.1 | -0.6 | -0.1 | 2.2 | 2.6 | |
| Total | 9.3 | 9.3 | 21.3 | 19.9 | 64.5 | 63.1 | |
| Operating earnings excluding exchange rate differences |
|||||||
| Operating earnings | 9.9 | 9.4 | 21.9 | 20.1 | 62.3 | 60.5 | |
| Exchange rate differences, as per above | 1.7 | 0.2 | 3.0 | -0.4 | 5.2 | 1.9 | |
| Total Operating earnings excluding exchange rate differences & items affecting comparability |
11.6 | 9.5 | 24.9 | 19.7 | 67.6 | 62.4 | |
| Operating earnings | 9.9 | 9.4 | 21.9 | 20.1 | 62.3 | 60.5 | |
| Exchange rate differences, as per above | 1.7 | 0.2 | 3.0 | -0.4 | 5.2 | 1.9 | |
| Items affecting comparability, as per above | -0.6 | -0.1 | -0.6 | -0.1 | 2.2 | 2.6 | |
| Total | 11.0 | 9.4 | 24.3 | 19.6 | 69.7 | 65.0 | |
| Cash Flow excluding repurchase of own shares |
(d) | ||||||
| Net change in cash and cash equivalents | -12.4 | -23.8 | -42.2 | -25.0 | -64.3 | -47.0 | |
| Repurchase of own shares | 4.6 | - | 13.1 | 36.7 | 74.8 | 98.3 | |
| Total | -7.7 | -23.8 | -29.1 | 11.7 | 10.5 | 51.3 |
All items in the table above effects operating earnings, except for (d) that affects cash flow.
(a) Severance pay in due to structural changes.
(b) Covid-19 related government grants for personnel and other resources that still contribute to creating value for the Company.
- (c) During the third quarter of 2022, a restructuring was carried out, among other things to achieve a tighter integration of the Nimbra and Aperi platforms. As a consequence, some development projects were cancelled.
- (d) Presenting the cash flow without effects from the repurchase program of own shares provides a better understanding and comparison of the underlying operations' cash flow.
Net Insight AB (publ), corp.id.no. 556533-4397
Telephone: +46 (0)8 685 04 00, [email protected], www.netinsight.net
The information presented in this document may be subject to change without notice. For further information on product status and availability, please contact [email protected] or visit www.netinsight.net ©Copyright 2023. Net Insight AB (publ), Sweden. All rights reserved. Net Insight and Nimbra are trademarks of Net Insight AB, Sweden. All other registered trademarks are the property of their respective owners.
