Tecnotree Oyj — Earnings Release 2024

Feb 26, 2025

Tecnotree Corporation Full Year Financial Report 1st Jan - 31st December 2024 (unaudited)

Tecnotree Corporation Full Year Financial Report 1st Jan - 31st December 2024 (unaudited)

Tecnotree Corporation Stock Exchange Release 26 February 2025 at 9:00 EET

Delivering consistent revenue, margin expansion and three consecutive quarters
of positive free cashflow

Full year Results

· Net sales of EUR 71.6 million (78.4) -8.6% Year on Year, in constant
currency +4.0% Year on Year, in line with guidance.
· Operating profit EUR 23.8 million (23.8) flat Year on Year, however
operating profit margin expanded to 33.2% (30.4%). Operating profit in constant
currency EUR 26.0 million, +9.0 % Year on Year in line with guidance.
· Foreign exchange losses reduced to EUR 2.5 million (9.7).
· Net Income for the period EUR 8.3 million (11.2) -25.8% Year on Year due to
one-time items pertaining to EUR 7.3 million.
· Adjusted net income was EUR 15.6 million (11.2) +39.3% Year on Year.
· Gross cash inflow from operating activities EUR 21.3 million (17.4).
· Free cash flow stands at EUR -1.8 million ( -9.7).
· Free cash flow for H2 stands at EUR 2.2 million (-3.9) in line with
guidance.
· Earnings per share were EUR 0.5 (0.04*).

Q4 Results

· Net sales of EUR 17.6 million (22.2) -20.7% Year on Year, In constant
currency,
-16.5% Year on Year.
· Operating profit of EUR 10.9 million (7.9) +38.1% Year on Year.
· Operating margin of 61.7% (35.4%).
· Foreign exchange losses reduced EUR 0.3 million (6.0).
· Net income for the quarter was EUR 0.5 million (2.4) -79% Year on Year.
· Adjusted net income for quarter EUR 4.9 million (2.4) +104% Year on Year.
· Gross cash inflow from operating activities EUR 8.4 million (9.9).
· Positive free cash flow of EUR 0.4 million (-0.6), the third quarter in a
row.
· Earnings per share EUR 0.03 (0.01*).
· Order book at the end of the period EUR 79.6 million (80.2).

* On 19 April 2024, Tecnotree executed a reverse split, i.e. the reduction of
the number of shares where every 20 old shares in the company corresponds to one
new share.

[][]
Key figures, MEUR 10 10 1-12/ 1-12/2023
-12/20 -12/20 2024
24 23
Net sales 17.6 22.2 71.6 78.4
Operating result 10.9 7.9 23.8 23.8
Result before taxes 3.0 2.8 12.8 13.9
Adjusted result for 4.9 2.4 15.6 11.2
the period [1]
One-time items -4.4 0.0 -7.3 0.0
Result for the 0.5 2.4 8.3 11.2
period

Earnings per share, 0.03 0.01 0.5 0.04
basic, EUR [2]

Order book 79.6 80.2 79.6 80.2

Gross cash flow from 8.4 9.9 21.3 17.4
operating activities
Free cash flow 0.4 -0.6 -1.8 -9.7
Change in cash and -0.3 4.8 -4.1 8.6
cash equivalents
Cash and cash 16.8 20.8 16.8 20.8
equivalents

Equity ratio % 66.7 67.5
(Equity/Total
Liabilities)
Debt Equity ratio % 4.5 6.6
(Debt/Equity)

Personnel at end of 758 883
period

1) Adjusted result
for the period =
result before one
-time items.
2) On 19 April 2024,
Tecnotree executed a
reverse split, i.e.
the reduction of the
number of shares
where every 20 old
shares in the
company corresponds
to one new share.

One-time expenses included provision of EUR 7.3 million receivable from sale of
business assets.

Guidance for 2025

· Net sales are expected to grow by low to mid-single digit percentage in
constant currency terms.
· Operating profit margin expected to see margin expansion of at least +200bp
(2%).
· Raising free cash flow guidance to > EUR 4 million for the full year, from
the previous guidance of > EUR 3 million.
· Capex as a percentage of net sales is targeted at 10-12%.
· Receivable days are expected to range between 100-140.
· Dividend pay-out policy targets 10% of free cash flow.
· Foreign exchange exposure to frontier country risk will be reduced to 10-15%
within three years.

Assumptions for 2025

· Industry analysts forecast that the long-term growth of the Business Support
Systems (BSS) industry is forecasted to grow at +2.1% per annum 2022-2027.
However, 2025 is forecast to be negative growth year. Despite this, Tecnotree
still sees top line growth due to anticipated significant market share gains and
the current order backlog.
· The company will continue its focus on increasing license sales, while
evolving its delivery model to an Annual Recurring Revenue (ARR) model and
continue to increase it in 2025. This will ensure that the company will have
more predictable and stable quarter on quarter net sales.
· The cost optimisation programme that commenced in 2024 will continue to
provide margin benefits in 2025 and beyond.

From CEO's Desk:

Tecnotree Demonstrates SISU in a Pivotal Year: Three Consecutive Quarters of
Positive Free Cash Flow & Strong ARR Growth

Resilient Cost Optimisation Amidst Macro Challenges

Tecnotree has successfully navigated foreign exchange volatility and
macroeconomic headwinds, leveraging financial discipline and strategic cost
optimization to drive sustainable profitability saving EUR 6.9 million against
promised EUR 4.5 million previously committed. Our 2024 cost optimisation
program has significantly improved operational efficiency, and its impact is
evident in our results today - and will continue to strengthen our financial
position in 2025. Our cost optimisation initiatives included:

· Retiring non-telecom business and net sales in the United States that was
acquired from Cognitive Scale.
· Reduction of Capex spend due to technology maturity and availability of Out
-of-the-Box features for our customers.
· Early adoption of AI/ML tooling to generating more productivity and reduced
resource dependencies.

Companies Progress to Reduce Frontier Market Exposure

Tecnotree has taken precautionary measures to exit markets which are
characterised with geo-political risks, are regions of conflict or that with
high risks of sanctions. These regions were a part of the acquisition of
Lifetree Convergence Pvt Ltd in 2008 and have continued to cyclically expose the
company to unnecessary risk. The following actions have been taken by the
management in 2024 to mitigate the same:

· Exiting subsidiaries and contracts with regards with such regions.
· In Q4, we incurred one-time provisions of EUR 4.4 million, contributing to a
total of EUR 7.3 million for the year 2024, primarily due to a provision for
receivables related to the sale of business assets. Excluding these one-offs,
the adjusted result for the period shows continued operational strength and
strategic progress.
· The company focused most growth efforts in Tier1 and Dollar denominated
markets. Tecnotree's telecom net sales from the Americas grew by 46% to EUR 14.6
million (10.0)

Landmark Entry into the United States of America

· Tecnotree achieved a breakthrough Tier 1 telco deal in the United States, in
collaboration with a leading Systems Integrator (SI) as previously announced.
This validates:

· Our early investment in TM Forum standards, securing long-term credibility
in global telecom markets.

· The strategic acquisition of 137 AI/ML patents from Cognitive Scale in 2022,
solidifying our position in AI-driven telecom transformation.
· Our ability to secure recurring revenue streams in Dollar denominated
enterprise markets, ensuring sustainable growth for the future.

Positive Free Cash Flow & Strengthened Financial Position

For three consecutive quarters, Tecnotree has delivered positive free cash flow,
a key indicator of our improving financial health. We are now confident in our
ability to raise our 2025 full-year free cash flow guidance to over EUR 4
million. We are actively monitoring this KPI and will provide more clarity as
the year progresses.

ARR Growth & AI-Driven Operational Scale

· Revenue predictability has been significantly enhanced with our transition
to an ARR-driven model.
· ARR increased by 8% Year on Year, fuelled by AI-powered automation and
enhanced customer renewals. Our ARR customer base expanded from just 2 legacy
accounts in 2023 to over 10 recurring customers, spanning the Middle East,
Nordics, and high-growth markets.
· Increased productivity from AI/ML has enabled us to consistently execute 5-7
digital transformations per quarter, reinforcing our ability to scale revenue
with efficiency.

Industry Leadership & Market Recognition

Our continued investment in Emerging Technology such as AI, automation, and
cloud-native platforms has led to industry-wide recognition:

· 2024 Gartner® Magic Quadrant for AI in CSPs - A first-time recognition for
our AI-driven telco transformations.
· Among the Top 2 Global Telecom Revenue Management Providers (Precision
Reports, for the 2nd consecutive year.
· Featured in 4 Gartner® HypeCycles & 2 Gartner® Market Guides for CSP digital
marketplaces, revenue management, and Customer Management solutions.
· Named one of the fastest-growing BSS providers by Omdia in 2024,
highlighting our momentum against legacy competitors.

Nordic Leadership in ESG & Business Performance

In 2024, as a Nordic technology company, we were recognized as a top-performing
company in the Nordic Business Diversity Index (Mid-Cap Segment), reinforcing
our commitment to building inclusive, digitally connected communities while
delivering strong financial outcomes.

The Path Forward: Predictable, Scalable, and Profitable Growth

While the global telecom landscape remains dynamic, Tecnotree's SISU-driven
execution, AI-powered transformation, and disciplined financial management have
positioned us for a stronger, more resilient future. Our recurring revenue
model, continued Tier 1 expansion, and AI-led automation will drive long-term
profitability, ensuring predictable and scalable growth for our investors and
stakeholders.

I would like to thank the Tecnotree Core Management and employees and our loyal
customers who helped us navigate through a difficult year and building the
foundation for a resilient year in 2025.

2024 Summary

Q1 - On-track revenue growth, improved profitability while facing currency
exchange fluctuations

· Negative free cash flow due to challenging market conditions.
Free cash flow was impacted by delayed payments from key customers in Africa and
the Middle East, contributing to liquidity constraints.
· Currency depreciations impacted net sales and profitability.
Net sales increased by 4.7% to EUR 16.3 million (15.5). The depreciation of the
Nigerian Naira reduced the value of local currency revenues when converted to
Euros.
· Similar spending to previous year
Operating expenses EUR 11.8 million (11.9)
· Slow Order Intake.
New orders totalled EUR 10.0 million, showing a decline compared to the previous
quarter's EUR 30.1 million

Q2 - Tecnotree achieves positive free cash flow for the quarter, sustaining
revenue growth

· Signs of free cash flow stabilisation.
Free cash flow improved to positive EUR 0.8 million (-0.8), reflecting better
working capital management.
· Currency fluctuations persisted, impacting financials.
The continued devaluation of currencies led to a 3% decline in net sales when
reported in Euros.
· Strategic cost-cutting measures implemented.
Announced completion of the global business rationalisation and personnel
-related restructuring. Headcount reductions continue and 5% of headcount
reductions have been achieved in the second quarter.
· Expanded partnerships and secured new contracts.
Partnered with leading global SI and hyperscalers as previously announced to
enhance product offerings, market reach and demonstrating SI-ready status.
· Order intake less than previous year.
EUR 13.4 million (20.1) in new orders, helping to maintain a backlog of EUR 72.6
million.

Q3 - The Tecnotree strategy has delivered free cash flow for a second
consecutive quarter

· Net sales Impacted by Currency Fluctuations
Net sales decreased by 11.2% to EUR 19.0 million due to adverse currency
movements.
· Strong Order Intake & Growing Backlog:
Secured EUR 23.8 million in new orders, with the order backlog increasing to EUR
75.1 million.
· Cost Optimization Efforts in Progress:
Operational expenses reduced by 10% to EUR 14.0 million as part of ongoing cost
-saving initiatives.
· Positive Cash Flow Achievement:
Positive free cash flow of EUR 1.7 million, driven by improved working capital
management.
· First Dividend Issued
For the first time since May 2009, Tecnotree was able to pay a dividend EUR 0.01
and plans to continue dividend payments in the future, as given in the new
dividend policy guidance of 10% of free cash flow.

Q4 - Delivering consistent revenue, margin expansion and three consecutive
quarters of positive free cashflow

· Positive cash flow achieved through disciplined cost control.
Focused cost management is evident from reduced employee benefit expenses of EUR
5.4 million (7.3).
· Currency impact moderated but remained a challenge.
Stabilization of the Ghanian CEDI and Nigerian Naira helped offset currency
losses, but risks persisted.
· Strengthened financial position heading into 2025.
Operating profit increased to EUR 10.9 million (7.9), reflecting improved cost
efficiency.
· Continued focus on strategic investments and innovation.
Invested in AI-driven solutions, enhancing product differentiation and
competitive advantage. Greater shift towards the ARR model and expansion into
developed markets from frontier markets.

Webcast for investors and media

Tecnotree webcast of results is Friday, 28 February 2025 at 10.00 a.m.
EET (Helsinki).

Shareholders and potential investors are invited to pre-register a zoom account
and join the online presentation via this
link: https://us06web.zoom.us/j/83055809435

The event will be recorded, and the presentation materials will be made
available on the company's website investors.tecnotree.com.

Annual General Meeting

Tecnotree's Annual General Meeting 2025 is planned to be held on Monday, 7 April
2025. The plan is to offer a Hybrid meeting in Helsinki, Finland, similar to
last year.

Further information
Padma Ravichander, CEO, tel +97 156 414 1420
Indiresh Vivekananda, , CFO, tel +971 56 410 8357

About Tecnotree:

Tecnotree is a global provider of AIML and digital solutions for the management
of services, products, customers and revenue for Communications Service
Providers. Tecnotree helps customers to monetise and transform their business
towards a marketplace of digital services. Together with its customers,
Tecnotree empowers people to self-serve, engage and take control of their own
digital life.

Tecnotree is listed on Nasdaq Helsinki (TEM1V). For more information, please
visit
www.tecnotree.com (https://eur03.safelinks.protection.outlook.com/?url=http%3A%2F
%2Fwww.tecnotree.com%2F&data=05%7C02%7CThomas.Koponen%40tecnotree.com%7C5e80c22d7
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