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Net Insight
Quarterly Report • Nov 9, 2023
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Quarterly Report
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INTERIM REPORT JANUARY – SEPTEMBER 2023
July – September 2023
- Net sales amounted to SEK 144.0 (130.3) million, an increase of 10.5% year-on-year. In comparable currencies net sales increased by 5.9%.
- Operating earnings amounted to SEK 19.6 (27.3) million, corresponding to an operating margin of 13.6% (20.9%). Excluding foreign exchange rate differences of SEK -1.9 (0.5) million, operating earnings were SEK 21.5 (26.8) million.
- Net income for the period was SEK 16.2 (24.2) million.
- Earnings per share diluted was SEK 0.05 (0.07).
- Total cash was SEK -3.6 (-36.0) million. Excluding the cash impact from share-related transactions, the cash flow was SEK 18.5 (2.1) million.
January – September 2023
- Net sales amounted to SEK 396.9 (350.1) million, an increase of 13.4% year-on-year. In comparable currencies net sales increased by 7.2%.
- Operating earnings amounted to SEK 41.5 (47.3) million, corresponding to an operating margin of 10.4% (13.5%). Excluding foreign exchange rate differences of SEK -4.9 (0.9) million, operating earnings were SEK 46.4 (46.5) million.
- Net income for the period was SEK 37.5 (44.1) million.
- Earnings per share diluted was SEK 0.10 (0.12).
- Total cash was SEK -45.9 (-61.0) million. Excluding the cash impact from share-related transactions, the cash flow was SEK -10.6 (13.8) million.
Q3 in brief
- Twelfth consecutive quarter of growth
- Strong operating earnings despite big investments
- First customer installation of the new time synchronization product Zyntai
- Order book for time synchronization continued to increase
| Jul-Sep | Jan-Sep | Oct 2022- | Jan-Dec | ||||||
|---|---|---|---|---|---|---|---|---|---|
| SEK millions | 2023 | 2022 | Change | 2023 | 2022 | Change | Sep 2023 | 2022 | Change |
| Net sales | 144.0 | 130.3 | 10.5% | 396.9 | 350.1 | 13.4% | 521.9 | 475.1 | 9.8% |
| Operating earnings | 19.6 | 27.3 | -28.2% | 41.5 | 47.3 | -12.4% | 54.7 | 60.5 | -9.7% |
| Operating margin | 13.6% | 20.9% | 10.4% | 13.5% | 10.5% | 12.7% | |||
| Net income | 16.2 | 24.2 | -33.2% | 37.5 | 44.1 | -15.1% | 47.4 | 54.0 | -12.3% |
| EBITDA | 38.2 | 43.8 | -12.8% | 96.3 | 93.9 | 2.5% | 125.0 | 122.7 | 1.9% |
| EBITDA margin | 26.5% | 33.6% | 24.3% | 26.8% | 24.0% | 25.8% | |||
| EBITDAC | 19.3 | 24.6 | -21.4% | 27.4 | 31.0 | -11.6% | 31.5 | 35.1 | -10.2% |
| EBITDAC margin | 13.4% | 18.9% | 6.9% | 8.9% | 6.0% | 7.4% | |||
| Net Income | 16.2 | 24.2 | -33.2% | 37.5 | 44.1 | -15.1% | 47.4 | 54.0 | -12.3% |
| Net margin | 11.2% | 18.6% | 9.4% | 12.6% | 9.1% | 11.4% | |||
| Total cash flow | -3.6 | -36.0 | -45.9 | -61.0 | -31.9 | -47.0 |
For definitions and calculation of KPI's, see pages 16-20. The performance measure EBITDA-2 has changed its conceptual name to EBITDAC, the definition is unchanged.
Net Insight AB (publ) corp.id.no. 556533–4397
FINANCIAL HIGHLIGHTS
CEO´s Statement
Continued profitable growth driven by strong development in the media business
The strong earnings and growth in the quarter was attributed to the ongoing strong development in the media business, despite macroeconomic uncertainty. As expected, the revenue from time synchronization was slightly lower year-on-year, however the order book has increased during the quarter from SEK 160 million to over SEK 180 million.
In the Americas region, where we have observed some caution in the market at the beginning of the year, we saw increased activity and higher sales volume in the third quarter. The IP-related investments we have made in recent years have expanded our customer offering and strengthened our existing product portfolio, contributing to the continued growth trend.
In the third quarter, sales amounted to SEK 144.0 million, representing a 10.5% increase year-on-year (5.9% in comparable currencies). Operating earnings for the quarter were SEK 19.6 million, compared to SEK 27.3 million in Q3 2022 (the highest operating earnings in the company's history) and SEK 9.9 million in Q2 2023. The gross margin for the quarter was 59.7% (compared to 65.3%).
However, the gross margin was only slightly lower than the average margin for the period January-September. The lower gross margin in the quarter, year-on-year, was due to a very favorable customer and product mix in the comparative period of the previous year, plus costs of SEK -2.5 million related to previously secured access to components, where the need has now been estimated to be lower.
Continued investment in R&D and build-up of our organization in time synchronization, which, along with inflation-driven cost increases and costs associated with the implementation of a new ERP system, resulted in higher costs in the quarter compared to the same period last year. However, sequentially, our operating expenses decreased.
Strategic progress with expanded IP functionalities
A concrete example of the result of our investment in technology development is the recently launched IP functionalities on Nimbra 1000 and Nimbra 600. This has made our
products more versatile and attractive to both existing and new customers.
At the annual TV and media industry trade show, we received a gratifying recognition when Trust Boundary, one of several updates for our IP products, was awarded the IBC Best of Show award. During the quarter, we also carried out several partner collaborations. For example, our
"Growth trend within the media business, contributing to a strong quarter."
partner Console Connect introduced a cloud-based solution based on Nimbra Edge. In collaboration with our partner MediaKind, we also integrated our
cloud solution Nimbra Edge into their platform, streamlining the distribution processes for global sports events.
Successful implementation of the new time synchronization product Zyntai
In the quarter, we made important progress regarding our time synchronization solution for 5G and critical networks. The installation of our new product Zyntai n Three Sweden's mobile network has started ahead of schedule. The new product offers higher capacity, improved algorithms, greater scalability, and support for complex network scenarios. We are currently conducting several Proof-of-Concept projects in various stages and engaging in further discussions with potential customers to initiate similar projects.
I am proud that our media business continues to perform well in a turbulent market. In addition, I see that our time synchronization solution can be an important advantage in a telecom market affected by macroeconomic uncertainty, as it implies lower costs for the telecom operators.
Crister Fritzson, CEO
Solna, Sweden, November 9, 2023
REVENUES
Net sales in the third quarter of 2023 were SEK 144.0 (130.3) million, an increase of 10.5%. In comparable currencies, sales increased by 5.9%.
Despite continued macroeconomic uncertainty, which affects customers' investment decisions and, among other things, means longer sales cycles, the media business continued to develop strongly in the quarter. The growth in the media business in the third quarter amounted to 12.1% year-on-year, 7.1% in comparable currencies. In the Americas region, where since the end of 2022 we have seen a certain caution among customers, we saw increased sales in the third quarter. In the EMEA region, we have noted very strong sales in the quarter with a number of larger deals driving the sales increase. The investments of recent years that resulted in launches of new functionality, increased capacity and continued development of the existing platform have increased our competitiveness and contributed to increased sales volume. The ongoing technological development and increased quality requirements create continued investment needs for our customers, which drives the underlying growth. Revenues from time synchronization for 5G amounted to SEK 8.7 million in the quarter, compared to SEK 9.6 million the previous year. The previous year's third quarter included higher revenues linked to delivery of the existing product. Pending the launch of the new product (Zyntai) at the end of the year, revenue from the existing product is decreasing. As mentioned earlier, however, we can state that the order backlog is growing ahead of the official launch at the end of the year.
Net sales for the six-month period of 2023 amounted to SEK 369.9 (350.1) million, an increase of 13.4%. In comparable currencies, sales increased by 7.2%.
Growth within the media business during the period January – September amounted to 16.7% year-on-year, 10.1% in comparable currencies. Revenue from 5G time synchronization during the first nine months of the year amounted to SEK 26.1 million, compared to SEK 32.3 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
July-September
Gross profit for the third quarter was SEK 86.0 (85.1) million, an increase by 1.1%. The increase is driven by the increased revenue. Gross profit included amortization of capitalized development expenditure of SEK -14.4 (-11.5) million. Gross margin excluding and including amortization of capitalized development expenditure was 69.7% (74.1%) and 59.7% (65.3%) respectively. The lower margin compared to the previous year is partly due to a very favorable customer and product mix in the comparison period, partly since we in the period had costs of SEK -2.5 million related to previously secured access to components where the need is now estimated to be lower. However, the gross margin in the quarter is only marginally lower than the average gross margin for the period January-September.
Operating expenses in the third quarter of SEK -64.7 (-57.1) million, an increase of 13.2% year-on-year. The increase is driven by strengthening of the organization (primarily in time synchronization for 5G). 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. Last year's operating expenses included costs for restructuring of SEK -1.2 million. Operating costs in the quarter are also affected by costs related to the implementation of a new ERP system as of October 1. Operating costs in the previous year included costs in connection with restructuring of -1.2 MSEK.
Sales and marketing expenses were SEK -37.8 (-32.3) million, and administration expenses to SEK -14.5 (-12.5) million. Development expenses were SEK -12.3 (-12.3) million and the total development expenditures, i.e., before capitalization, were SEK -31.2 (-31.5) 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 of SEK -1.4 (-) million.
Financial targets 2023-2027:
* an organic average annual growth of at least 15% * an operating margin (EBIT%) that within the period will reach 20%
Other operating income and expenses were SEK -1.8 (-0.7) million, of which foreign exchange rate differences of SEK -1.9 (0.5) million. Last year included impairment of development projects, as a result of a tighter integration of the Nimbra and Aperi platforms, of SEK -1.5 million
Strong operating earnings despite big investments, although lower than last year's record result. Operating earnings amounted to SEK 19.6 (27.3) million, corresponding to an operating margin of 13.6% (20.9%). Excluding foreign exchange rate differences of SEK -1.9 (0.5) million and items affecting comparability of SEK 0.6 (-2.7), operating earnings were SEK 21.5 (29.5) million. See also table Material profit and loss items on page 20.
EBITDA and EBITDAC (including reversal of capitalization of development expenditures, concept name changed from EBITDA-2) amounted to SEK 38.2 (43.8) million and SEK 19.3 (24.6) million, respectively, which corresponded to an EBITDA margin of 26.5% (33.6%) and an EBITDAC margin of 13.4% (18.9).
In the third quarter, net financial items amounted to SEK 1.1 (4.4) million, of which foreign exchange rate differences of SEK -0.9 (3.6) million and net interest income of SEK 2.0 (0.7) million. The increased net interest income is due to increased interest income due to higher market interest rates.
Profit before tax was SEK 20.7 (31.6) million, and net income was SEK 16.2 (24.2) million, corresponding to a net margin of 11.2% (18.6%).
January-September
Gross profit for the first nine-month period was SEK 239.2 (220.1) million, an increase by 8.7%. The increase is due to the increased revenue and a favorable revenue mix, where a gradual increase of software-related revenue with a higher margin partially compensates for increased costs for components etc. Gross profit included amortization of capitalized development expenditure of SEK -42.2 (-34.3) million. Gross margin excluding and including amortization of capitalized development expenditure was 70.9% (72.7%) and 60.3% (62.9%) respectively. During the first nine months, the increase in license and support revenue has not fully compensated for lower event-base services revenue compared to the previous year.
Operating expenses in the first nine-month period were SEK -194.0 (-172.5) million, an increase of 12.5% year-on-year. The increase includes cost increases driven by e.g. inflation, a strengthening of the organization, increased marketing-related costs, implementation of a new ERP system and the weakening of the Swedish Krona against the USD. Last year's operating expenses included costs for restructuring of SEK -1.2 million.
Sales and marketing expenses were SEK -111.8 (-94.8) million, and administration expenses to SEK -45.8 (-39.3) million. Development expenses were SEK -36.4 (-38.5) million and the total development expenditure, i.e., before capitalization, were SEK -105.3 (-101.4) 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 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 -3.7 (-0.3) million, of which foreign exchange rate differences of SEK -4.9 (0,9) million. During the year, the parent company received a government electricity subsidy of SEK 0.6 million (-). Last year included impairment of development projects of SEK -1.5 million
Operating earnings amounted to SEK 41.5 (47.3) million, corresponding to an operating margin of 10.4% (13.5%). Excluding foreign exchange rate differences of SEK -4.9 (0.9) million and items affecting comparability of SEK 0.0 (-2.6), operating earnings were SEK 45.8 (49.1) million. See also table Material profit and loss items on page 20.
EBITDA and EBITDAC (including reversal of capitalization of development expenditures, concept name changed from EBITDA-2) amounted to SEK 96.3 (93.9) million and SEK 27.4 (31.0) million, respectively, which corresponded to an EBITDA margin of 24.3% (26.8%) and an EBITDAC margin of 6.9% (8.9).
In the first nine-months period, net financial items amounted to SEK 6.9 (8.8) million, of which foreign exchange rate differences of SEK 1.7 (8.2) million and net interest income of SEK 5.2 (0.5) million. The increased net interest income is due to increased interest income due to higher market interest rates.
Profit before tax was SEK 48.4 (56.1) million, and net income was SEK 37.5 (44.1) million, corresponding to a net margin of 9.4% (12.6%).
| Jul-Sep | Jan-Sep | Oct 2022- | Jan-Dec | |||
|---|---|---|---|---|---|---|
| Key Ratios | 2023 | 2022 | 2023 | 2022 | Sep 2023 | 2022 |
| Net sales, SEK millions | 144.0 | 130.3 | 396.9 | 350.1 | 521.9 | 475.1 |
| Net sales YoY, change in % | 10.5% | 29.2% | 13.4% | 28.3% | 14.0% | 24.8% |
| Gross earnings | 86.0 | 85.1 | 239.2 | 220.1 | 316.8 | 297.7 |
| Gross margin | 59.7% | 65.3% | 60.3% | 62.9% | 60.7% | 62.7% |
| Operating earnings | 19.6 | 27.3 | 41.5 | 47.3 | 54.7 | 60.5 |
| Operating margin | 13.6% | 20.9% | 10.4% | 13.5% | 10.5% | 12.7% |
| EBITDA | 38.2 | 43.8 | 96.3 | 93.9 | 125.0 | 122.7 |
| EBITDA margin | 26.5% | 33.6% | 24.3% | 26.8% | 24.0% | 25.8% |
| EBITDAC | 19.3 | 24.6 | 27.4 | 31.0 | 31.5 | 35.1 |
| EBITDAC margin | 13.4% | 18.9% | 6.9% | 8.9% | 6.0% | 7.4% |
INVESTMENTS
The investments in the third quarter were SEK 19.2 (19.7) million, of which SEK 18.8 (19.2) million related to capitalization of expenditure for development. The investments in the first nine-month period were SEK 71.0 (65.3) million, of which SEK 68.9 (62.9) 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 third quarter totaled SEK -18.6 (-16.5) million, of which SEK -14.4 (-11.5) million related to amortization of capitalized expenditure for development. Depreciation and amortization in the first nine-month period totaled SEK -54.9 (-46.6) million, of which SEK -42.2 (-34.3) million related to amortization of capitalized expenditure for development. Launches of new products have increased the amortization. The previous year also included an impairment of development projects during the third quarter, as a consequence of closer integration of the Nimbra and Aperi platforms, of -1.5 MSEK.
Net value of capitalized expenditure for development was SEK 224.9 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 third quarter amounted to SEK 34.8 (23.9) million and for the first nine-month period to SEK 62.1 (83.6) 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 (nonrecurring 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 third quarter amounted to SEK -3.6 (-36.0) million and for the first nine-month period to SEK -45.9 (-61.0) million. The increased investments in development projects during the first nine months, compared to the previous year, are offset by a reduced repurchase of own shares and exercised warrants. Excluding the cash impact from sharerelated transactions (repurchase of own shares and exercised warrants, see page 20), cash flow for the third quarter was SEK 18.5 (2.1) million and for the first nine-months period to SEK -10.6 (13.8) million. More information about the buyback program and warrants can be found on page 12.
Cash and cash equivalents were SEK 262.7 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 utilized during the year. For more information, see the section Tax on page 12.
Equity was SEK 613.8 million at end of the period, against SEK 605.1 million as of 31 December 2022. The equity/assets ratio was 73.1%, 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 third quarter and for the nine-month period was 194 (177) and 190 (173), respectively, of which 160 (144) and 157 (142), 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 144.0 (130.2) million in the third quarter, and net income was SEK 15.1 (24.7) million. In the third quarter, intra-group sales totaled SEK 0.0 (0.0) million, and intra-group purchases SEK -21.7 (-17.4) million.
Net sales for the parent company were SEK 396.9 (349.9) million in the first nine months, and net income was SEK 35.1 (39.4) million. Previous years' net financials included a capital loss of -4.3 MSEK when consolidating of the number of legal entities. In the first nine-months period, intra-group sales totaled SEK 0.0 (0.0) million, and intra-group purchases SEK -62.6 (-50.3) 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
| Jul-Sep Jan-Sep |
Oct 2022- | Jan-Dec | ||||
|---|---|---|---|---|---|---|
| SEK thousands | 2023 | 2022 | 2023 | 2022 | Sep 2023 | 2022 |
| Net sales | 143,986 | 130,265 | 396,894 | 350,101 | 521,911 | 475,118 |
| Cost of sales | -57,966 | -45,143 | -157,658 | -130,013 | -205,099 | -177,454 |
| Gross earnings | 86,021 | 85,122 | 239,237 | 220,088 | 316,813 | 297,664 |
| Sales and marketing expenses | -37,795 | -32,343 | -111,795 | -94,764 | -147,052 | -130,021 |
| Administration expenses | -14,546 | -12,504 | -45,812 | -39,308 | -59,257 | -52,753 |
| Development expenses | -12,346 | -12,293 | -36,433 | -38,457 | -49,355 | -51,379 |
| Other operating income and expenses | -1,753 | -725 | -3,737 | -251 | -6,495 | -3,009 |
| Operating earnings | 19,581 | 27,257 | 41,459 | 47,308 | 54,653 | 60,502 |
| Net financial items | 1,084 | 4,372 | 6,938 | 8,782 | 6,536 | 8,380 |
| Profit before tax | 20,665 | 31,629 | 48,397 | 56,090 | 61,189 | 68,882 |
| Tax | -4,487 | -7,419 | -10,902 | -11,945 | -13,823 | -14,866 |
| Net Income Net income for the period attributable to the |
16,179 | 24,210 | 37,495 | 44,145 | 47,366 | 54,016 |
| shareholders of the parent company | 16,179 | 24,210 | 37,495 | 44,145 | 47,366 | 54,016 |
| Earnings per share, based on net income attributable to the parent company's shareholders |
Jul-Sep | Jan-Sep | Oct 2022- | Jan-Dec | ||
|---|---|---|---|---|---|---|
| during the period | 2023 | 2022 | 2023 | 2022 | Sep 2023 | 2022 |
| Earnings per share | ||||||
| -Basic, SEK | 0.05 | 0.07 | 0.11 | 0.12 | 0.13 | 0.15 |
| -Diluted, SEK | 0.05 | 0.07 | 0.10 | 0.12 | 0.13 | 0.15 |
| Average number of outstanding shares in thousands | ||||||
| -Basic | 352,826 | 365,605 | 354,831 | 369,582 | 356,034 | 367,083 |
| -Diluted | 354,746 | 369,538 | 359,318 | 373,076 | 359,688 | 370,840 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| Jul-Sep | Jan-Sep | Oct 2022- | Jan-Dec | |||
|---|---|---|---|---|---|---|
| SEK thousands | 2023 | 2022 | 2023 | 2022 | Sep 2023 | 2022 |
| Net income | 16,179 | 24,210 | 37,495 | 44,145 | 47,366 | 54,016 |
| Other comprehensive income | ||||||
| Translation differences | -27 | 688 | 422 | 1,706 | 37 | 1,321 |
| Total other comprehensive income, after tax | -27 | 688 | 422 | 1,706 | 37 | 1,321 |
| Total other comprehensive income for the period | 16,152 | 24,898 | 37,917 | 45,851 | 47,403 | 55,337 |
| Total comprehensive income for the period attributable to the shareholders of the parent company |
16,152 | 24,898 | 37,917 | 45,851 | 47,403 | 55,337 |
CONSOLIDATED BALANCE SHEET, IN SUMMARY
| SEK thousands | 30 Sep 2023 | 30 Jun 2023 | 31 Dec 2022 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Capitalized expenditure for development | 224,853 | 220,417 | 198,200 |
| Goodwill | 38,751 | 38,751 | 38,751 |
| Other intangible assets | 1,208 | 1,360 | 1,673 |
| Right-of-use assets | 25,869 | 28,339 | 32,129 |
| Equipment | 13,446 | 14,608 | 16,095 |
| Deferred tax asset | 2,717 | 2,576 | 3,719 |
| Deposits | 5,137 | 4,911 | 4,902 |
| Total non-current assets | 311,981 | 310,962 | 295,469 |
| Current assets | |||
| Inventories | 95,369 | 98,527 | 84,249 |
| Accounts receivable | 140,377 | 141,327 | 129,415 |
| Other receivables | 28,817 | 32,841 | 27,716 |
| Cash and cash equivalents | 262,669 | 266,279 | 308,347 |
| Total current assets | 527,232 | 538,974 | 549,727 |
| TOTAL ASSETS | 839,213 | 849,936 | 845,196 |
| EQUITY AND LIABILITIES | |||
| Equity attributable to parent company's shareholders | |||
| Share capital | 14,326 | 14,754 | 14,750 |
| Other paid-in capital | 1,198,689 | 1,193,031 | 1,192,727 |
| Translation reserve | 1,926 | 1,953 | 1,504 |
| Accumulated deficit | -601,121 | -595,682 | -603,892 |
| Total shareholders' equity | 613,820 | 614,056 | 605,089 |
| Non-current liabilities | |||
| Lease liabilities | 14,011 | 16,500 | 20,733 |
| Other liabilities | 59,136 | 53,335 | 61,307 |
| Total non-current liabilities | 73,147 | 69,835 | 82,040 |
| Current liabilities | |||
| Lease liabilities | 11,584 | 11,655 | 11,434 |
| Accounts payable | 38,355 | 23,864 | 35,899 |
| Other liabilities | 102,307 | 130,526 | 110,734 |
| Total current liabilities | 152,246 | 166,045 | 158,067 |
| TOTAL EQUITY AND LIABILITIES | 839,213 | 849,936 | 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 | ||
| September 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 | ||
| Transfer of quota value upon cancellation of repurchased shares | -511 | - | - | 511 | - | ||
| Exercised warrants | 87 | 5,962 | - | - | 6,049 | ||
| Repurchase of own shares | - | - | - | -35,235 | -35,235 | ||
| Total comprehensive income | - | - | 422 | 37,495 | 37,917 | ||
| September 30, 2023 | 14,326 | 1,198,689 | 1,926 | -601,121 | 613,820 |
CONSOLIDATED STATEMENT OF CASH FLOWS
| Jul-Sep | Jan-Sep | Oct 2022- | Jan-Dec | |||
|---|---|---|---|---|---|---|
| SEK thousands | 2023 | 2022 | 2023 | 2022 | Sep 2023 | 2022 |
| Ongoing activities | ||||||
| Profit/loss before tax | 20,665 | 31,629 | 48,397 | 56,090 | 61,189 | 68,882 |
| Income tax paid | -2,937 | -208 | -4,870 | -1,098 | -5,150 | -1,378 |
| Depreciation, amortization & impairment | 18,588 | 16,535 | 54,855 | 46,630 | 70,382 | 62,157 |
| Other items not affecting liquidity | 3,744 | -38 | 6,556 | 3,501 | 8,257 | 5,202 |
| 40,060 | 47,918 | 104,938 | 105,123 | 134,678 | 134,863 | |
| Changes in working capital | ||||||
| Increase-/decrease+ in inventories | -201 | -5,772 | -16,036 | -24,800 | -25,066 | -33,830 |
| Increase-/decrease+ in receivables | 4,386 | -18,267 | -12,580 | -28,758 | 5,003 | -11,175 |
| Increase+/decrease- in liabilities | -9,468 | 40 | -14,224 | 32,080 | 12,667 | 58,971 |
| Cash flow from operating activities | 34,777 | 23,919 | 62,098 | 83,645 | 127,282 | 148,829 |
| Investment activities | ||||||
| Capitalized expenditure | -18,832 | -19,215 | -68,895 | -62,937 | -93,531 | -87,573 |
| Investment in intangible assets | - | - | - | -302 | -273 | -575 |
| Investment in tangible assets | -413 | -504 | -2,072 | -2,098 | -2,570 | -2,596 |
| Increase-/decrease+ in financial assets, net | -227 | -101 | -227 | -101 | -278 | -152 |
| Cash flow from investment activities | -19,472 | -19,820 | -71,194 | -65,438 | -96,652 | -90,896 |
| Financing activities | ||||||
| Amortization leasing | -2,556 | -1,958 | -7,601 | -5,840 | -9,964 | -8,203 |
| Exercised warrants | 5,741 | - | 6,049 | - | 6,049 | - |
| Warrant premiums paid | - | - | - | 1,457 | 104 | 1,561 |
| Repurchase of own shares | -22,129 | -38,162 | -35,235 | -74,824 | -58,747 | -98,336 |
| Cash flow from financing activities | -18,944 | -40,120 | -36,787 | -79,207 | -62,558 | -104,978 |
| Net change in cash and cash equivalents | -3,639 | -36,021 | -45,883 | -61,000 | -31,928 | -47,045 |
| Exchange differences in cash and cash equivalents | 29 | 49 | 205 | 640 | 94 | 529 |
| Cash and cash equivalents at the beginning of the | ||||||
| period | 266,279 | 330,475 | 308,347 | 354,863 | 294,503 | 354,863 |
| Cash and cash equivalents at the end of the period | 262,669 | 294,503 | 262,669 | 294,503 | 262,669 | 308,347 |
DISAGGREGATION OF REVENUE
| Jul-Sep Jan-Sep |
Oct 2022- | Jan-Dec | ||||
|---|---|---|---|---|---|---|
| SEK thousands | 2023 | 2022 | 2023 | 2022 | Sep 2023 | 2022 |
| Net sales by product group | ||||||
| Hardware | 69,734 | 66,058 | 173,903 | 163,115 | 236,961 | 226,173 |
| Software licenses | 32,174 | 24,408 | 98,114 | 63,417 | 120,269 | 85,572 |
| Support and Services* | 42,078 | 39,799 | 124,876 | 123,569 | 164,680 | 163,373 |
| Total | 143,986 | 130,265 | 396,894 | 350,101 | 521,911 | 475,118 |
| Net sales by region | ||||||
| EMEA | 84,975 | 55,289 | 217,759 | 190,456 | 291,745 | 264,442 |
| AM | 41,093 | 60,727 | 109,084 | 123,126 | 147,664 | 161,706 |
| APAC | 17,918 | 14,249 | 70,050 | 36,519 | 82,501 | 48,970 |
| Total | 143,986 | 130,265 | 396,894 | 350,101 | 521,911 | 475,118 |
| Timing of revenue recognition | ||||||
| Products and services transferred at a point in time | 98,559 | 87,970 | 262,574 | 220,444 | 344,218 | 302,088 |
| Products and services transferred over time* | 45,428 | 42,295 | 134,320 | 129,657 | 177,693 | 173,030 |
| Total | 143,986 | 130,265 | 396,894 | 350,101 | 521,911 | 475,118 |
*) Of which NRE fee; SEK 7.1 (7.1) million Jul-Sep, SEK 21.2 (21.2) million. Jan-Sep and SEK 28.2 million Jan-Dec 2022.
FINANCIAL ASSETS AND LIABILITIES
| Group's financial instruments by category - Assets | Sep 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 |
152,073 | 140,200 | ||||
| Cash and cash equivalents | 262,669 | 308,347 | ||||
| Total | 414,742 | - | 448,547 | - |
Group's financial instruments by category -
| Liabilities | Sep 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 | 1,535 | 2 | 787 | |||
| Accounts payable and other liabilities, excluding non | |||||||
| financial liabilities | 43,135 | 47,368 | |||||
| Total | 43,135 | 1,535 | 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
| Jul-Sep | Jan-Sep | Oct 2022- | Jan-Dec | |||
|---|---|---|---|---|---|---|
| SEK thousands | 2023 | 2022 | 2023 | 2022 | Sep 2023 | 2022 |
| Net sales | 143,986 | 130,207 | 396,894 | 349,926 | 521,675 | 474,707 |
| Cost of sales | -57,863 | -44,919 | -157,438 | -129,679 | -205,443 | -177,684 |
| Gross earnings | 86,123 | 85,288 | 239,456 | 220,247 | 316,232 | 297,023 |
| Sales and marketing expenses | -38,932 | -31,585 | -114,377 | -94,845 | -150,553 | -131,021 |
| Administration expenses | -14,461 | -12,431 | -45,635 | -39,190 | -59,202 | -52,757 |
| Development expenses | -12,666 | -11,637 | -37,557 | -38,566 | -51,527 | -52,536 |
| Other income expenses | -2,221 | -1,941 | -4,306 | -1,697 | -8,047 | -5,438 |
| Operating earnings | 17,843 | 27,694 | 37,581 | 45,949 | 46,903 | 55,271 |
| Net financial items | 1,316 | 4,607 | 7,678 | 5,192 | 10,573 | 8,087 |
| Profit/loss before tax | 19,158 | 32,301 | 45,258 | 51,141 | 57,475 | 63,358 |
| Tax | -4,088 | -7,612 | -10,180 | -11,762 | -12,111 | -13,693 |
| Net income | 15,071 | 24,689 | 35,079 | 39,379 | 45,365 | 49,665 |
PARENT COMPANY BALANCE SHEET, IN SUMMARY
| SEK thousands | 30 Sep 2023 | 31 Dec 2022 | 30 Sep 2022 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Capitalized expenditure for development | 224,853 | 198,200 | 185,455 |
| Other intangible assets | 1,208 | 1,673 | 1,561 |
| Equipment | 12,395 | 14,670 | 15,793 |
| Participations in group companies | 3,173 | 3,173 | 3,173 |
| Deferred tax asset | 1,030 | 2,657 | 4,588 |
| Deposits | 4,855 | 4,628 | 4,628 |
| Total non-current assets | 247,514 | 225,001 | 215,198 |
| Current assets | |||
| Inventories | 95,369 | 84,249 | 75,746 |
| Accounts receivable | 141,152 | 130,180 | 151,896 |
| Receivables from group companies | 346 | 346 | - |
| Other receivables | 30,980 | 30,113 | 26,455 |
| Cash and cash equivalents | 257,654 | 300,860 | 286,972 |
| Total current assets | 525,501 | 545,748 | 541,069 |
| TOTAL ASSETS | 773,015 | 770,749 | 756,267 |
| EQUITY AND LIABILITIES | |||
| Equity | |||
| Restricted equity | 314,511 | 277,979 | 261,649 |
| Non-restricted equity | 253,941 | 284,581 | 314,034 |
| Total equity | 568,452 | 562,560 | 575,683 |
| Non-current liabilities | |||
| Other liabilities | 57,964 | 60,557 | 38,544 |
| Total non-current liabilities | 57,964 | 60,557 | 38,544 |
| Current liabilities | |||
| Accounts payable | 38,206 | 35,617 | 22,501 |
| Liabilities to group companies | 13,012 | 7,504 | 8,515 |
| Other liabilities | 95,381 | 104,511 | 111,024 |
| Total current liabilities | 146,599 | 147,632 | 142,040 |
| TOTAL EQUITY AND LIABILITIES | 773,015 | 770,749 | 756,267 |
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 affects 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 -4.5 (-7.4) million for the period July–September 2023, corresponds to an effective tax rate of -21.7 (-23.5) percent. The group reported tax of total SEK -10.9 (-11.9) million for the period January–September 2023, corresponds to an effective tax rate of -22.5 (-21.3) 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 utilized 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-September 2023, the parent company repurchased 6,035,000 of its own B shares on Nasdaq Stockholm for SEK 26.8 million, including transaction costs.
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 cancellation was completed on August 11.
At the end of the period, the parent company had a total of 6,137,000 of its own class B shares, at an average cost of SEK 4.47 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.
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- September, 2,160,000 warrants were exercised, which resulted in the number of B shares and votes in Net Insight AB increasing by 2,160,000 and the share capital increasing by SEK 86,400.
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 Sep, 2023 | 31 Dec, 2022 | |||||
|---|---|---|---|---|---|---|
| The division of shares | A-shares | B-shares | Total | A-shares | B-shares | Total |
| Outstanding shares | 1,000,000 | 351,006,009 | 352,006,009 | 1,000,000 | 356,178,009 | 357,178,009 |
| Repurchased own shares | - | 6,137,000 | 6,137,000 | - | 11,580,000 | 11,580,000 |
| Issued shares | 1,000,000 | 357,143,009 | 358,143,009 | 1,000,000 | 367,758,009 | 368,758,009 |
TRANSACTIONS WITH RELATED PARTIES
During the first nine-months period, the parent company hired a member of the management team's related party company for consulting services. Charged fees during the period amounted to SEK 0.8 (-) million.
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.
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
Year-end report 2023 February 16, 2024 Interim report January – March April 23, 2024 Annual General Meeting May 7, 2024 Interim report January – June July 18, 2024 Interim report January – September November 7, 2024
Solna, Sweden, November 9, 2023
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.
For more information, please contact
| Crister Fritzson, CEO, Net Insight AB (publ) Phone: +46 (0)8-685 04 00 Email: [email protected] |
Net Insight AB (publ), corp.id.no. 556533-4397 Box 1200, 171 23 Solna, Sweden Phone: +46 (0)8 – 685 04 00 |
|---|---|
| Joakim Schedvins, CFO, Net Insight AB (publ) Phone: +46 (0)8-685 04 00 |
www.netinsight.net |
| Email: [email protected] |
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 CET on November 9, 2023.
REVIEW REPORT
Introduction
We have reviewed the condensed interim financial information (interim report) of Net Insight AB (publ.) as of 30 September 2023 and the ninemonth period then ended. The Board of Directors and the Managing Director are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review Engagements ISRE 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and other generally accepted auditing practices and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, for the Group in accordance with IAS 34 and the Annual Accounts Act, and for the Parent Company in accordance with the Annual Accounts Act.
Stockholm 9 November, 2023 KPMG AB
Henrik Lind Authorized Public Accountant
Translation from the Swedish original
FINANCIAL INFORMATION
| Jul-Sep | Jan-Sep | Oct 2022- | Jan-Dec | |||
|---|---|---|---|---|---|---|
| SEK millions (if not defined differently) | 2023 | 2022 | 2023 | 2022 | Sep 2023 | 2022 |
| Earnings | ||||||
| Net sales | 144.0 | 130.3 | 396.9 | 350.1 | 521.9 | 475.1 |
| Gross earnings | 86.0 | 85.1 | 239.2 | 220.1 | 316.8 | 297.7 |
| Operating expenses | 64.7 | 57.1 | 194.0 | 172.5 | 255.7 | 234.2 |
| Total development expenditure | 31.2 | 31.5 | 105.3 | 101.4 | 142.9 | 139.0 |
| EBITDA | 38.2 | 43.8 | 96.3 | 93.9 | 125.0 | 122.7 |
| EBITDAC | 19.3 | 24.6 | 27.4 | 31.0 | 31.5 | 35.1 |
| Operating earnings | 19.6 | 27.3 | 41.5 | 47.3 | 54.7 | 60.5 |
| Profit before tax | 20.7 | 31.6 | 48.4 | 56.1 | 61.2 | 68.9 |
| Net income | 16.2 | 24.2 | 37.5 | 44.1 | 47.4 | 54.0 |
| Balance sheet and cash flow | ||||||
| Cash and cash equivalents | 262.7 | 294.5 | 262.7 | 294.5 | 262.7 | 308.3 |
| Working capital | 121.9 | 96.2 | 114.4 | 72.0 | 113.7 | 76.5 |
| Total cash flow | -3.6 | -36.0 | -45.9 | -61.0 | -31.9 | -47.0 |
| The share | ||||||
| Dividend per share, SEK | - | - | - | - | - | - |
| Earnings per share, basic, SEK | 0.05 | 0.07 | 0.11 | 0.12 | 0.13 | 0.15 |
| Earnings per share, diluted, SEK | 0.05 | 0.07 | 0.10 | 0.12 | 0.13 | 0.15 |
| Cash flow per share, basic, SEK | -0.01 | -0.10 | -0.13 | -0.17 | -0.09 | -0.13 |
| Cash flow per share, diluted, SEK | -0.01 | -0.10 | -0.13 | -0.16 | -0.09 | -0.13 |
| Equity per share basic , SEK | 1.74 | 1.69 | 1.73 | 1.67 | 1.74 | 1.65 |
| Equity per share diluted, SEK Average number of outstanding shares basic, |
1.73 | 1.68 | 1.71 | 1.66 | 1.73 | 1.63 |
| thousands Average number of outstanding shares diluted, |
352,826 | 365,605 | 354,831 | 369,582 | 356,034 | 367,083 |
| thousands Number of outstanding shares at the end of the |
354,746 | 369,538 | 359,318 | 373,076 | 359,688 | 370,840 |
| period, basic, thousands Number of outstanding shares at the end of the |
349,846 | 361,048 | 349,846 | 361,048 | 349,846 | 357,178 |
| period, diluted, thousands | 350,741 | 365,858 | 350,741 | 365,858 | 350,741 | 361,988 |
| Share price at end of period, SEK | 4.16 | 5.51 | 4.16 | 5.51 | 4.16 | 6.06 |
| Employees and consultants | ||||||
| Average number of employees and consultants | 194 | 177 | 190 | 173 | 189 | 176 |
| KPI | ||||||
| Net sales YoY, change in % | 10.5% | 29.2% | 13.4% | 28.3% | 14.0% | 24.8% |
| Gross margin | 59.7% | 65.3% | 60.3% | 62.9% | 60.7% | 62.7% |
| Total development expenditure/Net sales | 21.7% | 24.2% | 26.5% | 29.0% | 27.4% | 29.2% |
| Operating margin | 13.6% | 20.9% | 10.4% | 13.5% | 10.5% | 12.7% |
| EBITDA margin | 26.5% | 33.6% | 24.3% | 26.8% | 24.0% | 25.8% |
| EBITDAC margin | 13.4% | 18.9% | 6.9% | 8.9% | 6.0% | 7.4% |
| Net margin | 11.2% | 18.6% | 9.4% | 12.6% | 9.1% | 11.4% |
| Return on capital employed | 6.6% | 7.5% | 6.6% | 7.4% | 6.6% | 8.9% |
| Equity/asset ratio | 73.1% | 74.8% | 73.1% | 74.8% | 73.1% | 71.6% |
| Return on equity | 7.7% | 7.4% | 7.7% | 7.4% | 7.7% | 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 (EBIT) | Calculated as operating earnings before financial items and tax. |
Operating earnings provides an overall picture of earnings generated in the operating activities. |
|||
| Operating margin (EBIT%) | 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) expenditure |
Development expenses and capitalized expenditures for development. |
The measure is a good complement to 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 EBITDAC, where capitalized development expenditures are |
|||
| EBITDAC | Operating earnings before depreciation and amortization and capitalization of development expenditure. The performance measure EBITDA-2 has changed its conceptual name to EBITDAC, the definition is unchanged. |
reversed, provides a good complement to operating earnings and margin as it, simplified, shows the earnings-generated cash flow in the operation and it shows operating earnings without influence of variations in the level of capitalized development expenditures in the company's |
|||
| EBITDA & EBITAC margin | EBITDA & EBITDAC as a percentage of net sales. | 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 | Jul-Sep | Jan-Sep | Jan-Dec | ||
|---|---|---|---|---|---|
| SEK millions (if not defined differently) | 2023 | 2022 | 2023 | 2022 | 2022 |
| Net sales | 144.0 | 130.3 | 396.9 | 350.1 | 475.1 |
| Net currency effect of comparable currencies | -6.0 | -17.1 | -21.5 | -31.1 | -43.7 |
| Net sales in comparable currencies | 137.9 | 113.1 | 375.4 | 319.0 | 431.5 |
| Change in net sales in comparable currencies | 5.9% | 12.3% | 7.2% | 16.9% | 13.3% |
| KPI Income Statement | Jul-Sep | Jan-Sep | Oct 2022- | Jan-Dec | ||
|---|---|---|---|---|---|---|
| SEK millions (if not defined differently) | 2023 | 2022 | 2023 | 2022 | Sep 2023 | 2022 |
| Net sales | 144.0 | 130.3 | 396.9 | 350.1 | 521.9 | 475.1 |
| Net sales YoY, change in % Cost of sales ex. amortization of capitalized |
10.5% | 29.2% | 13.4% | 28.3% | 14.0% | 24.8% |
| development | -43.6 | -33.7 | -115.4 | -95.7 | -151.0 | -131.3 |
| Gross earnings ex. amortization of capitalized development |
100.4 | 96.6 | 281.5 | 254.4 | 370.9 | 343.8 |
| Gross margin ex. amortization of capitalized development p |
69.7% | 74.1% | 70.9% | 72.7% | 71.1% | 72.4% |
| development | -14.4 | -11.5 | -42.2 | -34.3 | -54.1 | -46.2 |
| Gross earnings | 86.0 | 85.1 | 239.2 | 220.1 | 316.8 | 297.7 |
| Gross margin | 59.7% | 65.3% | 60.3% | 62.9% | 60.7% | 62.7% |
| Sales and marketing expenses | -37.8 | -32.3 | -111.8 | -94.8 | -147.1 | -130.0 |
| Administration expenses | -14.5 | -12.5 | -45.8 | -39.3 | -59.3 | -52.8 |
| Development expenses | -12.3 | -12.3 | -36.4 | -38.5 | -49.4 | -51.4 |
| Operating expenses | -64.7 | -57.1 | -194.0 | -172.5 | -255.7 | -234.2 |
| Operating expenses/net sales | 44.9% | 43.9% | 48.9% | 49.3% | -49.0% | 49.3% |
| Other operating income and expenses | -1.8 | -0.7 | -3.7 | -0.3 | -6.5 | -3.0 |
| Operating earnings | 19.6 | 27.3 | 41.5 | 47.3 | 54.7 | 60.5 |
| Operating margin | 13.6% | 20.9% | 10.4% | 13.5% | 10.5% | 12.7% |
| Net financial items | 1.1 | 4.4 | 6.9 | 8.8 | 6.5 | 8.4 |
| Profit before tax | 20.7 | 31.6 | 48.4 | 56.1 | 61.2 | 68.9 |
| Tax | -4.5 | -7.4 | -10.9 | -11.9 | -13.8 | -14.9 |
| Net Income | 16.2 | 24.2 | 37.5 | 44.1 | 47.4 | 54.0 |
| Net margin | 11.2% | 18.6% | 9.4% | 12.6% | 9.1% | 11.4% |
| EBITDA margin | Jul-Sep | Jan-Sep | Oct 2022- | Jan-Dec | ||
|---|---|---|---|---|---|---|
| SEK millions (if not defined differently) | 2023 | 2022 | 2023 | 2022 | Sep 2023 | 2022 |
| Net sales | 144.0 | 130.3 | 396.9 | 350.1 | 521.9 | 475.1 |
| Operating earnings | 19.6 | 27.3 | 41.5 | 47.3 | 54.7 | 60.5 |
| Amortization of capitalized development expenditure | 14.4 | 11.5 | 42.2 | 34.3 | 54.1 | 46.2 |
| Other depreciation & amortization | 4.2 | 3.6 | 12.6 | 10.9 | 16.2 | 14.5 |
| Impairment | - | 1.5 | - | 1.5 | - | 1.5 |
| EBITDA | 38.2 | 43.8 | 96.3 | 93.9 | 125.0 | 122.7 |
| EBITDA margin | 26.5% | 33.6% | 24.3% | 26.8% | 24.0% | 25.8% |
| Capitalization of development expenditure | -18.8 | -19.2 | -68.9 | -62.9 | -93.5 | -87.6 |
| EBITDAC | 19.3 | 24.6 | 27.4 | 31.0 | 31.5 | 35.1 |
| EBITDAC margin | 13.4% | 18.9% | 6.9% | 8.9% | 6.0% | 7.4% |
| Development expenditure | Jul-Sep | Jan-Sep | Oct 2022- | Jan-Dec | ||
|---|---|---|---|---|---|---|
| SEK millions (if not defined differently) | 2023 | 2022 | 2023 | 2022 | Sep 2023 | 2022 |
| Development expenses | 12.3 | 12.3 | 36.4 | 38.5 | 49.4 | 51.4 |
| Capitalization of development expenditure | 18.8 | 19.2 | 68.9 | 62.9 | 93.5 | 87.6 |
| Total development expenditure | 31.2 | 31.5 | 105.3 | 101.4 | 142.9 | 139.0 |
| Capitalization rate | 60.4% | 61.0% | 65.4% | 62.1% | 65.5% | 63.0% |
| Net Sales | 144.0 | 130.3 | 396.9 | 350.1 | 521.9 | 475.1 |
| Total development expenditure/net sales | 21.7% | 24.2% | 26.5% | 29.0% | 27.4% | 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. | |||||||
| 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-current 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 understand how effectively tied up working capital is used. |
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| 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. |
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| 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. |
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| 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 | Jul-Sep | Jan-Sep | Oct 2022- | Jan-Dec | ||
|---|---|---|---|---|---|---|
| SEK millions | 2023 | 2022 | 2023 | 2022 | Sep 2023 | 2022 |
| Current assets | 533.9 | 551.5 | 537.6 | 548.1 | 539.3 | 548.4 |
| Cash and cash equivalents | -264.5 | -312.5 | -278.9 | -333.4 | -282.1 | -328.4 |
| No interest-bearing short term liabilities | -147.5 | -142.8 | -144.2 | -142.7 | -143.5 | -143.5 |
| Working capital | 121.9 | 96.2 | 114.4 | 72.0 | 113.7 | 76.5 |
| Return on capital employed | Jul-Sep | Jan-Sep | Oct 2022- | Jan-Dec | ||
|---|---|---|---|---|---|---|
| SEK millions (if not defined differently) | 2023 | 2022 | 2023 | 2022 | Sep 2023 | 2022 |
| Capital employed | ||||||
| Total balance | 844.6 | 835.0 | 842.4 | 827.6 | 839.4 | 831.1 |
| No interest-bearing liabilities | -203.8 | -180.0 | -203.9 | -167.4 | -198.6 | -175.5 |
| Capital employed | 640.8 | 655.0 | 638.5 | 660.2 | 640.8 | 655.6 |
| Operating earnings less interest income R4Q | ||||||
| Operating earnings R4Q | 54.7 | 50.6 | 54.7 | 50.6 | 54.7 | 60.5 |
| Interest income R4Q | 12.6 | 1.6 | 12.6 | 1.6 | 12.6 | 2.4 |
| Operating earnings less interest income R4Q | 42.1 | 48.9 | 42.1 | 48.9 | 42.1 | 58.1 |
| Return on capital employed | 6.6% | 7.5% | 6.6% | 7.4% | 6.6% | 8.9% |
| Equity/asset ratio | Jul-Sep | Jan-Sep | Oct 2022- | Jan-Dec | ||
|---|---|---|---|---|---|---|
| SEK millions (if not defined differently) | 2023 | 2022 | 2023 | 2022 | Sep 2023 | 2022 |
| Equity | 613.8 | 619.0 | 613.8 | 619.0 | 613.8 | 605.1 |
| Total equity and liabilities | 839.2 | 827.3 | 839.2 | 827.3 | 839.2 | 845.2 |
| Equity/asset ratio | 73.1% | 74.8% | 73.1% | 74.8% | 73.1% | 71.6% |
| Return on equity | Jul-Sep | Jan-Sep | Oct 2022- | Jan-Dec | ||
|---|---|---|---|---|---|---|
| SEK millions (if not defined differently) | 2023 | 2022 | 2023 | 2022 | Sep 2023 | 2022 |
| Net income - R4Q | 47.4 | 47.0 | 47.4 | 47.0 | 47.4 | 54.0 |
| Average equity - R4Q | 613.9 | 638.6 | 611.8 | 638.6 | 613.9 | 624.2 |
| Return on equity | 7.7% | 7.4% | 7.7% | 7.4% | 7.7% | 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. |
| Jul-Sep | Jan-Sep | Oct 2022- | Jan-Dec | |||
|---|---|---|---|---|---|---|
| Average number of employees and consultants | 2023 | 2022 | 2023 | 2022 | Sep 2023 | 2022 |
| Average number of employees | 148 | 131 | 144 | 129 | 143 | 131 |
| Average number of consultants g p y |
46 | 46 | 46 | 44 | 46 | 45 |
| consultants | 194 | 177 | 190 | 173 | 189 | 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 | Jul-Sep | Jan-Sep | Oct 2022- | Jan-Dec | |||
|---|---|---|---|---|---|---|---|
| SEK millions | Note | 2023 | 2022 | 2023 | 2022 | Sep 2023 | 2022 |
| Exchange rate differences | |||||||
| Part of Other operating income & expenses | -1.9 | 0.5 | -4.9 | 0.9 | -7.6 | -1.9 | |
| Part of Net Financial Items | -0.9 | 3.6 | 1.7 | 8.2 | 0.4 | 6.9 | |
| Total Exchange rate differences | -2.8 | 4.1 | -3.2 | 9.1 | -7.2 | 5.1 | |
| Government grants Covid-19 | |||||||
| Reduction of employee expenses | - | - | - | - | - | - | |
| Other operating income | - | - | - | 0.1 | - | 0.1 | |
| Total | - | - | - | 0.1 | - | 0.1 | |
| Items affecting comparability | |||||||
| Restructuring Government grants Covid-19, other |
(a) | - | -1.2 | - | -1.2 | - | -1.2 |
| operating income g y pp , |
(b) | - | - | - | 0.1 | - | 0.1 |
| other operating income | - | - | 0.6 | - | 0.6 | - | |
| Impairment of intangible assets | (c) | - | -1.5 | - | -1.5 | - | -1.5 |
| Total | - | -2.7 | 0.6 | -2.6 | 0.6 | -2.6 | |
| Operating earnings excluding items affecting comparability |
|||||||
| Operating earnings | 19.6 | 27.3 | 41.5 | 47.3 | 54.7 | 60.5 | |
| Items affecting comparability, as per above | - | 2.7 | -0.6 | 2.6 | -0.6 | 2.6 | |
| Total | 19.6 | 30.0 | 40.9 | 49.9 | 54.1 | 63.1 | |
| Operating earnings excluding exchange rate differences |
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| Operating earnings | 19.6 | 27.3 | 41.5 | 47.3 | 54.7 | 60.5 | |
| Exchange rate differences, as per above | 1.9 | -0.5 | 4.9 | -0.9 | 7.6 | 1.9 | |
| Total | 21.5 | 26.8 | 46.4 | 46.5 | 62.3 | 62.4 | |
| Operating earnings excluding exchange rate differences & items affecting comparability |
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| Operating earnings | 19.6 | 27.3 | 41.5 | 47.3 | 54.7 | 60.5 | |
| Exchange rate differences, as per above | 1.9 | -0.5 | 4.9 | -0.9 | 7.6 | 1.9 | |
| Items affecting comparability, as per above | - | 2.7 | -0.6 | 2.6 | -0.6 | 2.6 | |
| Total | 21.5 | 29.5 | 45.8 | 49.1 | 61.7 | 65.0 | |
| Cash flow excluding share-base transactions |
(d) | ||||||
| Net change in cash and cash equivalents | -3.6 | -36.0 | -45.9 | -61.0 | -31.9 | -47.0 | |
| Repurchase of own shares | 22.1 | 38.2 | 35.2 | 74.8 | 58.7 | 98.3 | |
| Exercised warrants | -5.7 | - | -6.0 | - | -6.0 | - | |
| Total | 18.5 | 2.1 | -10.6 | 13.8 | 26.8 | 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 and exercised warrants 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.
