Anders Lidbeck, President & CEO October 26, 2016

represents 20% of total Q3 revenues compared to 15% two years ago (Q314) Revenues from Key Accounts decreased compared to the same quarter last year b...

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Anders Lidbeck, President & CEO October 26, 2016

Agenda  Enea Intro  Enea Financials Q316  Technology & Corporate Development  Outlook

A Catalyst for the Connected Society

REVENUE

OPERATING MARGIN

MSEK

PERCENT

HEAD QUARTER KISTA, SWEDEN

481.5

NO. OF EMPLOYEES

R&D OPEX INVESTMENT

403

19

22.9

LISTED NASDAQ STOCKHOLM

PERCENT Numbers for 2015

Our Vision Our software and expertise help you develop amazing functions in a connected society

More than 3 billion people rely on Enea software every day, to connect a call or use their mobile phone to get online.

Our Business  Software Products for embedded applications focused on communication solutions  Operating Systems  Network Operating Systems for NFV  On Device Management  VNF Management  Network Management  Services Orchestration  Proprietary and Open Source

 Maintenance, Support, and Product Services  Related to our own product portfolio  For Open Source based solutions  For integrated solutions incl. 3rd party  Stand-alone System and Software Services  Architecture, design, development, test  In-house and or on-site projects  Bridged Services

Leading Customers

Record Q3 EBIT & Operating Margin Q316

Q315

EBIT (MSEK)

29.6

27.9

Operating margin (%)

24.5

23.7

Earnings per share (SEK)

1.42

1.29

FY15 EBIT (MSEK)

110.0

Operating margin (%)

22.9

Earnings per share (SEK)

5.49

• 14th consecutive quarter of y-o-y EBIT growth • 20th consecutive quarter of y-o-y Operating margin expansion

Record Q3 Revenues Q316 Revenue (MSEK)

Q315

120.7

117.7

Revenue growth (%)

3

12

Revenue growth (%) (currency adjusted)

1

6

FY15 Revenue (MSEK)

481.5

Revenue growth (%)

12

Revenue growth (%) (currency adjusted)

5

• 9th consecutive quarter of y-o-y revenue growth

Revenue Split per Region  Asia Sales increased significantly compared with the same period last year. Growth in Asia can be attributed to a number of small deals and one larger deal in with a global information and communications technology company.  Americas Sales increased compared to the same quarter last year. The increase in America can be linked to a number of new service contracts and extension of an existing agreement.  Europe In Europe, sales decreased this quarter compared with the same quarter last year due to lower revenues from key accounts. Other Software and Services sales were flat over the same period last year.



High double-digit growth numbers in Asia



Significant win in Asia with a LTE-base station project

Strong Continued Growth in Worldwide Sales  World-wide software sales continues to grow and now represents 20% of total Q3 revenues compared to 15% two years ago (Q314)  Revenues from Key Accounts decreased compared to the same quarter last year both in absolute numbers and in percent – representing 47% of Q3 revenues  Global Services revenues increased compared to the same period last year, showing a record quarter

• • •

WW Software Sales: Highest quarterly revenues on record Global Services: Highest quarterly revenues on record Middleware: 8% y-o-y growth

Good Quarter in Global Services  3% y-o-y revenue growth in the quarter with growth both in the US and in Europe  The Bridge Services deal in the US, closed in

Q216 continued to be important



Rolling 12 Months revenue growth: +5%



Highest Global Services revenue on record

Strong Financial Position  Q316 cash flow from operations 20.7 (17.5) MSEK  Q316 cash flow before change in working capital 29.0 (30.6) MSEK

 Cash, cash equivalents and financial investments at the end of the quarter were 215.8 (193.4) MSEK with no debt and unused credits of 15 MSEK  The equity ratio was 76.0% (77.5%)

Technology & Corporate Development

Open Source Will Impact Us Taking the role of a truly independent software vendor  Leveraging both multi-vendor hardware and software  Engaging with both end users and hardware vendors (both ARM and Intel) NFV infrastructure fully aligned with the open source community  Extending the OPNFV project to cover ARM hardware  Taking a lead role around security within the OPNFV project Innovation that augments the open source based infrastructure

 VNF management and network management  Carrier grade solutions for high-availability and real-time

NETCONF + YANG

Acquisition of Qosmos Enea has signed an agreement to acquire Qosmos – a leading supplier of Network Intelligence software based on Deep Packet Inspection (DPI)  Subject to approvals from French authorities

 Expected completion before end of 2016  Total consideration approximately 53 MEUR  Financed through cash and bank loan  Qosmos will provide significant extension to Enea’s product portfolio

“I am proud to announce this highly complementary acquisition, which provides a significant and attractive extension of our portfolio. The combination of our companies will benefit the joint customer base, open up new market segments, and accelerate Enea’s growth going forward while maintaining a healthy profit margin.” Anders Lidbeck President and CEO, Enea ”I am very happy to join forces with Enea, a larger and well-established organization with a strong reputation in our adjacent markets.”

Thibaut Bechetoille CEO, Qosmos

Qosmos

Paris Santa Clara

Tokyo

Singapore

 Headquartered in Paris, with major offices in the US and APAC  Privately held, founded 2000, 90 employees, revenue 14.2 MEUR (2016 est.)  Customer types: vendors in the telecom, networking and security industries  100+ telecom networks worldwide use products powered by Qosmos

What is DPI?  DPI stands for Deep Packet Inspection  Technology that scans network traffic in real time  Enables users to make automated decisions about what to do with the traffic  Makes it possible to find, identify, classify, reroute or block packets with specific data  Enables users to allocate available resources to streamline traffic flow

Use Cases Include  Traffic Shaping  Cyber Security  Value Added Services

 Managing Video Content  Network and Subscriber Analytics  Managing M2M Connections  Regulatory Compliance

Network Intelligence to Optimize, Monetize and Protect Optimize

Monetize

Protect

Policy Control, QoS, …

Analytics, vCPE, …

NG Firewall, SIEM, …

Visibility on thousands of application protocols

Extraction of 4,300+ Metadata Caller, called party, jitter, packet loss, latency, call duration, setup time, codec, throughput,

mobile ID (IMSI, IMEI), phone number, user login, IP address, MAC address, date & time of login / logoff, subject of email / chat / Webmail, sender, receiver, attached documents, response time, data transfer sessions (type, content, time), visited Website, page content, time spent on visit, basket share, referent, etc.

In the Old World… Old Monolithic Architecture

DPI OEM component from Qosmos

OS Solutions and Middleware from Enea

Vertically integrated solution – custom hardware for custom applications

 Enea is a leading vendor of embedded operating systems and middleware solutions and services  Qosmos is a leading vendor of embedded DPI solutions for classification and data extraction  The end product is typically an integrated solution provided by a telecom/network equipment provider  Enea and Qosmos have no direct engagement with the end user (service provider or operator)

In the New SDN/NFV World…  Enea provides NFV infrastructure, management and orchestration solutions, as well as specific VNF components and expert services  Qosmos provides application aware network intelligence for analytics, micro-segmentation, and intelligent, dynamic, service chaining  The customer can still be an equipment vendor, but we can also address the end user (service provider or operator) directly

New Component-Based Architecture Classifier

VNF Mgmt Firewall

DPI HA

vSwitch

NFVI

VIM

Future networks are built using components linked by standardized interfaces

Enea and Qosmos in 2015 Joint demo at the ARM Partner Meeting 2015

A multi-vendor NFV solution, implementing quality-ofservice and firewall functionality for a video streaming application

Enea and Qosmos and Partners in 2016

Together We become Bigger and Stronger Market

Business

Portfolio

Culture



TEMs and NEPs are main customers today, similar dialogues with customers in the SDN/NFV domain



Well established in the ARM & Intel ecosystem



Together stronger coverage in community projects and industry consortiums



Similar go-to-market models



Concrete cases combining operating systems and DPI & integration of device/network-management and DPI



Developing dialogue with operators/CSPs – componentization trend in our favor



Highly complementary portfolios & complementing technology areas



Crucial technology for next generation networks



Complementing fundamental building blocks in an emerging growth market



Midsize SW companies with global footprint with focus on business & investing in R&D



Similar internal organizations and ways of working



Good cooperation already

Price & Financing Financing  Of the total 52.7 MEUR purchase price, approximately 16.3 MEUR is related to net cash and cash equivalents, leaving 36.4 MEUR as the enterprise value  The acquisition will be financed by cash-on-hand and a 165 MSEK bank loan. The parties have agreed that 10.0 MEUR will be paid 24 months after closing  EPS accretive already 2017

MEUR

MSEK

Cash at hand

25.7

249.2

Bank loan

17.0

165.0

Deferred payment

10.0

97.0

Total purchase consideration

52.7

511.2

(1 EUR = 9.70 SEK)

Net Cash Balance Indicative post-deal net cash balance, MSEK

Enea

Q

Adj.

E+Q

216

157

-276

97

Bank loan

0

27

138

165

Net cash

216

130

-414

-68

Cash

The combination of reduced return on cash and the interest rate on the bank loan will amount to less the 5 MSEK per year

Long Term Ambition Our Vision is that our software and expertise will help you develop amazing functions in a connected society. Our Mission is to provide the network software platform and expert services our customers need to enable today’s and tomorrow’s connected society. Our Ambition over a period of three years commencing 2016 is to continue to develop a global software company with higher revenues, sustainable high profitability and good cash flows. The company will focus on organic growth, but both strategic and complementary acquisitions will be evaluated continuously.

Growth will vary between years and quarters, depending on the timing of individual deals and the progress of royalty streams, which depend on customers’ sales volumes. Operating margin will vary over the quarters of this period, corresponding to growth. Enea’s objective is to maintain an operating margin of over 20 percent over this period.

Market Outlook Outlook 2016 Our objective for the full year 2016 to achieve revenue growth and our assessment that earnings per share will improve compared with 2015, is unchanged.

Thank You! For additional information on Enea, please contact: Anders Lidbeck , President & CEO [email protected]

Håkan Rippe, CFO [email protected] Julia Steffensen, Executive Assistant [email protected] Phone: +46 8 507 140 00