Enea

Third quarter highlights in figures

• Revenues from the network business decreased by 5 percent compared with the same period last year and amounted to SEK 100.8 million (106.6).

• Revenues from the security business increased by 13 percent compared with the same period last year and amounted to SEK 96.6 million (85.9).
• Revenue from operating systems decreased by 18 percent to SEK 19.0 million (23.2).
• Adjusted EBITDA amounted to SEK 71.8 million (72.5), corresponding to an EBITDA margin of 33.2 percent (33.6).
• Profit after tax amounted to SEK 3.7 million (20.5).
• Earnings per share amounted to SEK 0.18 (0.96).
• Cash flow from operating activities amounted to SEK 18.6 million (108.3).

Period highlights in figures (Jan-Sep)

• Revenues from the network business increased by 9 percent compared with the same period last year and amounted to SEK 309.2 million (283.1).
• Income from the security business increased by12 percent compared with the same period last year and amounted to SEK 285.9 million (255.1).
• Revenue from operating systems decreased by 57 percent to SEK 57.6 million (133.0). The decrease is explained by the one-off transaction worth SEK 54 million that was made in the first quarter of last year.
• Adjusted EBITDA amounted to SEK 212.8 million (215.7), corresponding to an EBITDA margin of 32.6 percent (32.1).
• Profit after tax amounted to SEK 48.4 million (-563.5).
• Earnings per share amounted to SEK 2.34 (-26.13).
• Cash flow from operating activities amounted to SEK 175.7 million (282.9).

CEO Statement

We Continue to Deliver
16% organic growth in our security business, 3% organic growth for the entire company, and an EBITDA margin of 33% for the third quarter are good figures for us. In other words, we continue to deliver in a market that is challenging in many ways. During the third quarter we also had to manage relatively large changes in exchange rates where the Swedish krona has strengthened against both the US dollar and the euro. This has affected our reported figures in Swedish kronor and our sales in the third quarter, converted to Swedish kronor, are in line with the same period last year. As a consequence of the exchange rate changes, we have also had to revalue certain balance sheet items, which burdens the period’s financial net by -26.3 MSEK, which in turn affects the period’s EPS. This means that after nine months, we also report a financial net in line with 2023 with an EPS of 2.34 SEK, which is far better than the first nine months of the previous year, which were burdened by a lot of write-downs.

Product Synergies and New Growth Opportunities
The third quarter has been a positive period for our Traffic Management product, where we have been entrusted to deliver our solution to three new customers. In addition to video optimization, these new customer installations also include DPI functionality. This is also interesting from a growth perspective, as it shows that we are now actually expanding from a strong position in video traffic optimization to a new market for DPI traffic intelligence and fraud management.

During the quarter, we successfully delivered our first combined solution for traffic management and policy manager to one of our larger customers. We are also happy to have been able to build on our product synergies by combining Traffic Management with the Stratum Network Data Layer, and with this solution secured a new business deal in Canada. This combination allows our customer to improve the end-user experience of mobile video and meet the increasing demand for high-quality streaming. These examples demonstrate the portfolio synergies that we are now beginning to extract from the acquisitions we have made over the past eight years. They do not only validate our acquisition strategy but also highlight our commitment to continuously developing products that make networks and communications safer and more efficient.

Cybersecurity is Crucial for Our Connected Life
Voice fraud and fake calls pose a serious threat to both consumers and businesses, making it an increasingly significant problem. We have therefore expanded our signaling firewall product with robust voice protection for end-users. Through close collaboration with telecom operators, we have integrated valuable insights into our solution, which is designed to protect users, especially when roaming. During the third quarter, we won our first deal with this new voice firewall functionality. Our signaling firewall has also been nominated for the cybersecurity award at the World Communications Awards, and our experts in the field were invited to contribute to a whitepaper on voice security, which the leading operator STC published in connection with their event “Global Cybersecurity Forum”. We are proud to actively participate in the global discussion on how to better combat cyber threats to our connected life.

A Rapidly Evolving Market
In parallel to the cyber threats, our market is characterized by major technological changes and a growing demand for faster and more integrated connectivity. During the year, 5G has continued to expand. Satellite technology is being integrated with terrestrial networks to increase 5G coverage even in remote areas. At the same time, AI and automation are beginning to play a central role in streamlining network operations and improving customer experiences through self-healing networks and advanced chatbots. Operators are also embracing the growing cloud-based infrastructure. The development enables faster scaling of services, which is becoming increasingly important as IoT and new 5G use cases grow. To be on top of these trends, operators must be agile and adaptable while strategically investing in new technology to remain competitive in a rapidly changing market. The same applies to us. To remain competitive and to earn the trust to deliver our products, we need to be agile, adaptable, and continue to invest heavily in our products and our staff.

During the period, we reinvested 24% of our revenues in research and development. We have maintained this investment rate during the first nine months of the year, and plan to continue so going forward.

Future Outlook
In the fourth quarter of this year, we will invite you to a capital markets day on December 4th in Stockholm. Here we will discuss our strategy, our products, our market, and how we intend to continue working to develop both customer and shareholder value.

We have a unique market position in exciting areas both within and outside the telecom industry. Our product portfolio is well-positioned in a world where mobile traffic and cybersecurity are crucial for technological development. We have a global organization with very competent and dedicated employees and, equally important, many successful customers and even competitors who constantly challenge and develop us. Combined with our proven earning capacity, this makes us cautiously optimistic about the future. For some time, the macroeconomic climate has had a dampening effect on demand, especially in the telecom market, and I cannot comment today on how this will develop in the coming period. But our goal for the coming years remains unchanged. We aim to achieve double-digit growth in our focus areas and an EBITDA margin above 35 percent with strong cash flows.

Our growth will continue to be affected by how investment willingness develops in our market. For the full year 2024, however, we expect strong cash flow and an EBITDA margin above 30%.

Anders Lidbeck
Acting President and CEO

The full Interim Report is attached to this press release and has been published on the Enea website (see references below).

Presentation
Enea invites investors, analysts, and media to a presentation of the third quarterly report of 2024. The presentation will be conducted in English by Anders Lidbeck, President and Chief Executive Officer, and Ulf Stigberg, Chief Financial Officer, and will be concluded by a Q&A session. It can be attended through a webcast or teleconference.

Details 
Date: October 25, 2024 
Time: 8.30 a.m. CEST 
If you wish to participate via webcast please use the link below. Via the webcast you are able to ask written questions.
https://ir.financialhearings.com/enea-q3-report-2024
If you wish to participate via teleconference please register on the link below. After registration you will be provided phone numbers and a conference ID to access the conference. You can ask questions verbally via the teleconference. 
https://conference.financialhearings.com/teleconference/?id=50048640

References 
Webpage for Enea financial reports 
https://www.enea.com/investors/financial-reports/ 
Webpage for Enea financial presentations 
https://www.enea.com/investors/presentations/ 

Contacts 
Ulf Stigberg, CFO
Phone: +46 8 507 140 00
E-mail: ir@enea.com