Release Date: October 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Enea AB (LTS:0RP6, Financial) reported double-digit growth in its core areas, achieving 11% organic growth in focused business areas over the first nine months of 2024.
- The company signed a significant $17.7 million contract for its Stratum product, with a potential value of $21 million over three years, marking one of the largest deals in its history.
- Enea AB (LTS:0RP6) experienced a 67% year-on-year increase in security solutions license revenues, driven by upgrades and expansions.
- The company maintains a strong position in traffic management and cybersecurity, optimizing over 1 billion subscribers daily and processing 3 billion messages a day.
- Enea AB (LTS:0RP6) continues to innovate by integrating AI-based traffic congestion management and expanding its product offerings, contributing to new deals and market opportunities.
Negative Points
- The company reported only 3% organic growth in Q3, indicating a slowdown compared to the nine-month period.
- Total revenues for Q3 decreased slightly to 217 million from 221 million the previous year.
- There were variations in professional service revenues due to project milestones, affecting overall financial stability.
- The company faced a negative financial net impact due to unrealized currency adjustments, affecting profit before tax.
- Cash flow from operations was lower than expected, partly due to currency effects and a buildup of working capital in accounts receivable.
Q & A Highlights
Q: Can you comment on the service potential of the recently announced contract?
A: Anders Lidbeck, Chief Executive Officer: The contract for our UDR product already frames the services business for the next three years. It is a recurrent license business with committed software services volume. The contract is valued at $17 to $18 million, with a potential of $21 million. Additional services will include support and maintenance, which are smaller in scope. This is one of the largest contracts in our recent history.
Q: Could you provide insights into your pipeline, particularly in cybersecurity?
A: Anders Lidbeck, Chief Executive Officer: Our pipeline is impressive, especially in cybersecurity. While the pipeline is large, the focus is on quality and winning more deals than we lose. The telecom industry is not a growth market currently, but the cybersecurity segment is expanding. The challenge lies in the time it takes to close deals, but the number of deals is reassuring.
Q: How has the currency development impacted your financial results?
A: Ulf Stigberg, Chief Financial Officer: Currency fluctuations, particularly a stronger SEK, have negatively impacted our financial results, affecting profit before tax due to unrealized currency adjustments on cash balances. However, over the nine-month period, our financial net is in line with last year.
Q: What are the key growth drivers for Enea AB?
A: Anders Lidbeck, Chief Executive Officer: Key growth drivers include our focus on enhancing existing offerings, expanding into adjacent areas, and evolving with new disruptive technologies like AI. Our cybersecurity and telecom portfolios are leading in their fields, providing significant market opportunities.
Q: Can you elaborate on the financial performance in Q3?
A: Ulf Stigberg, Chief Financial Officer: We reported 3% organic growth in Q3, with strong license revenues in the security solutions area, up 67% year-on-year. The EBITA margin was 33%, slightly lower than last year. Our operational expenses decreased, partly due to lower depreciation and amortization.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
