- Net sales amounted to SEK 271.0 million (252.3), equivalent to a 7 percent increase. Net sales was flat compared to last year in fixed exchange rates.
- Adjusted EBITDA amounted to SEK 103.9 million (118.7), corresponding to a margin of 38.3 percent (47.1).
- Operating profit was SEK 57.8 million (57.5), corresponding to an operating margin of 21.3 percent (22.8).
- Net profit after tax amounted to SEK 39.2 million (52.5).
- Earnings per share were SEK 1.82 (2.54).
- Earnings per share continued operations were SEK 1.81 (2.44).
The period January – December
- Net sales amounted to SEK 927.7 million (863.2), equivalent to a 7 percent increase. Net sales increased by 1 percent in fixed exchange rates.
- Adjusted EBITDA amounted to SEK 316.3 million (367.0), corresponding to a margin of 34.1 percent (42.5).
- Operating profit was SEK 118.1 million (197.8), corresponding to an operating margin of 12.7 percent (22.9).
- Net profit after tax amounted to SEK 109.0 million (185.5).
- Earnings per share were SEK 10.43 (9.30).
- Earnings per share continued operations were SEK 5.05 (8.61).
Significant Events During and After the End of the Quarter
- On November 11, Enea announced a contract for Carrier Wi-Fi with a North American mobile network operator worth USD 1.6 million. Software licenses corresponding to a value of USD 1.2 million are booked in the fourth quarter of 2022. Remaining revenues are recognized during 2023.
- On December 30, Enea announced an order for signaling security in mobile networks from a European telecom operator. The agreement covers new business with an existing customer and includes software as well as services in multiple countries. Revenues of EUR 1 million are booked in the fourth quarter of 2022. The remaining part is recognized during a three-year period. The total order value is EUR 2.2 million.
- On January 13, Enea announced a frame contract for support and maintenance of operating systems with one of the company´s key costumers. The contract guarantees recurring revenues of approximately SEK 20 million per year.
- On January 31, Enea announced that Ola Burmark will leave the CFO position, after six months’ notice period.
We end the year with a strong quarter and report an increase in revenue and operating profit, compared to the previous periods of the year. The need for cyber security for mobile operators and companies is growing and we are winning new contracts, thanks to world-leading products and expertise.
Net sales in the fourth quarter of 2022 were SEK 271 million, which is an increase of 7 percent compared to the same period last year. The positive trend in recent quarters is a result of growing sales in cyber security, combined with underlying seasonality. Operating profit was SEK 58 million, corresponding to an operating margin of 21 percent. We achieve good profitability, despite the impact of inflation and currency fluctuations, thanks to continuous cost control and restructuring measures at the beginning of the year. The cash flow from current operations was -2.1 MSEK, which is explained by high invoicing late in the quarter and by lower advance invoicing of maintenance agreements compared to the fourth quarter of last year. Earnings per share (EPS) in the quarter amounted to SEK 1.82. This gives SEK 10.43 for the whole year, which includes the contribution from the previous divestment of the service business.
The network solutions product area, which accounts for the majority (87 percent) of sales, grew organically by 12 percent (3 percent currency adjusted). Sales of products for cyber security in mobile systems are growing and we are gaining shares in a market that is in focus due to the uncertain geopolitical situation in the world. The latest example is a deal in Europe, where a telecom operator will use our products and services to strengthen signaling security in several countries. Along with several contracts earlier this year in North America, this solidifies our market position as a leader in mobile network cybersecurity. Our traffic classification products, which are used by major enterprise and mobile security system providers, are also increasing thanks to the same trend.
The market for 5G systems is developing more slowly than expected and we are seeing long sales cycles and caution in customer investment, mainly because customers' optimistic forecasts about sales in new market segments have not materialized yet. The underlying, long-term needs for increased capacity, new services and higher system efficiency remain, and we assess that it is only a matter of time before current mobile systems are gradually replaced by solutions based on the new 5G Core standard. We have market-leading products for data and traffic management for 5G, which have been developed in collaboration with some of the world's largest operators. We are increasing investments in sales and marketing to reach a wider group of customers and partners.
One of the highlights of the quarter was the signing of a Wi-Fi agreement in November with a North American mobile operator. In discussions about the deployment of 4G and 5G systems, Wi-Fi is not always mentioned as a strategic option, probably because many mobile system providers do not have a strong enough Wi-Fi offering. In fact, there is a parallel rapid development in Wi-Fi technology, and the latest standard (Wi-Fi 6) has characteristics that are in many cases comparable to 5G. In addition, Wi-Fi provides access to frequency spectrum that can add valuable extra capacity and coverage, for example in indoor environments. We see an opportunity for continued sales of our offer to operators who see the potential in supplementing 4G/5G with Wi-Fi.
Operating systems are a declining part of our revenue, due to customers developing new systems with open source rather than on specialized platforms. However, there remains a large installed base of our products, which need to be maintained over several years. At the beginning of January 2023, we signed a three-year agreement for operating system support and maintenance with one of our key customers. This gives us recurring and predictable revenue throughout the contract period.
Our ambition is to develop Enea into the leading challenger for specialized software in the cybersecurity and telecom market. We are already established with large customers, and we gain new market shares through innovative solutions for the open, cloud-based systems of the future. We compete with large companies by being focused, faster and more agile, and we can attract the best talent. Our goal in the coming years is to generate double-digit growth in Network Solutions, an EBITDA margin over 35 percent, and strong cash flows. Over time, we also aim to make complementary acquisitions to further strengthen our market position.
We enter 2023 with significant uncertainty about how the geopolitical situation will affect our business. However, our assessment is that we in 2023 will surpass previous year's sales and EBITDA results.
The full Annual Statement is attached to this press release and has been published on the Enea website (see references below).
Enea is pleased to invite investors, analysts, and media to a presentation of the Annual Statement. The presentation will be conducted in English by Jan Häglund, President and Chief Executive Officer, and Ola Burmark, Chief Financial Officer, and will be concluded by a questions and answer session. It can be attended through a webcast or teleconference and the presentation material as well as a recording of the presentation will be published on the Enea website (see details and references below).
- Date: February 2, 2023
- Time: 8.30 a.m. CET
- If you wish to participate via webcast, please use the link below. Via the webcast you are able to ask written questions.
- 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.
- Webpage for Enea financial reports
- Webpage for Enea financial presentations
Phone: +46 8 507 140 00
Enea is a world-leading specialist in software for telecom and cybersecurity. The company’s cloud-native solutions connect, optimize, and secure services for mobile subscribers, enterprises, and the Internet of Things. More than 100 communication service providers and 4.5 billion people rely on Enea technologies every day.
Enea has strengthened its product portfolio and global market position by integrating a number of acquisitions, including Qosmos, Openwave Mobility, Aptilo Networks, and AdaptiveMobile Security.
Enea is headquartered in Stockholm, Sweden, and is listed on Nasdaq Stockholm.
For more information: www.enea.com