CEO Statement Q1 2021

Growth on a continued cautious market

Accelerated product development results in new deals

Net Insight posted continued growth in the first quarter 2021 and revenue up by 2.6% despite negative exchange rate effects. Adjusted for exchange rate effects, year-on-year growth was 11.6%.  The divestment of ScheduALL, which was announced in the quarter, is an important step towards focusing the operations and achieving profitable growth. It is also encouraging that our sharper focus and accelerated R&D investments are yielding results and that we won important deals in the quarter.

Financial targets

Following last year’s strategic operational focus and initiatives aimed at the core operations Media Networks, we are now ready to communicate external financial targets of an average annual organic growth of at least 10% and an average annual EBIT margin (operating margin) of at least 10% until 2025.

Market position and Covid-19

The pandemic is not over yet and the market is continuing to adjust to the new reality. The transition towards remote production continues, as well as demand for live events with higher transmission quality from traditional TV broadcasters and various streaming services.  Although market activity is increasing, the market remains hesitant and a high proportion of business in the quarter is related to minor upgrades and network extensions.  Due to the increased market activity, we ended all short-term staff furloughs on April 1.

There is currently a global shortage of electronic components due to the Covid-19 pandemic. To what degree this will affect us, and whether it could disrupt production and delivery remains uncertain, but we are working to secure component deliveries.

The first quarter is normally characterized by preparations ahead of major trade shows. All Net Insight’s operations are now carried out digitally and more than a year has passed since we last met in person with our customers, partners and colleagues. Although personal meetings are invaluable, the digital transition shows that we have the capacity to adjust and realign operations, which will be critical for continuing to build a successful change organization.

Media Networks 

Over the past year, we have invested in Media Networks and accelerated product development. Our product investments are now focused on IP media, based on the ST 2110 standard, and IP video functionality, that supports our customers’ transition to IP and cloud-based production and distribution.

In the quarter, we were pleased to announce the implementation of our 100GE IP media solution for delivery of an uncompressed IP playout to Red Bee Media, for reliable, flexible and future-proof services for their customers. The solution includes Media Pro App, our new software offering IP video functionality in our Nimbra products, such as ST 2110 adaptation and IP video security. We also signed a deal in the quarter with NEP Connect relating to remote production for cricket for a UK broadcaster, where our solution supports the transition to IP and virtualized workflows. Swisscom Broadcast also chose us for a media network that covers all arenas for the top two soccer leagues in Switzerland.

During this period when sporting events are taking place without audiences on-site, TV broadcasts have become even more important which has led to extensive changes that have accelerated the shift to remote production. For example, we signed a deal with Swiss broadcaster SRF, who had planned to have 80 persons on-site during the Alpine World Champion-ships in Cortina, but were forced to change their plans due to the Covid-19 pandemic. They chose our cloud-based Nimbra Edge solution for remote production as a replacement, which ensured quality transmission from Cortina and to quickly scale-up production.

Time synchronization

We recently completed a study as part of an innovation project alongside Vinnova and KTH Royal Institute of Technology relating to time synchronization for real-time critical networks. The study showed that our time synchronization technology could be attractive to mobile operators and that it satisfies the technical requirements for cost-efficient inclusion in existing synchronization solutions in 5G networks and other critical networks. This also demonstrates our leading-edge technology and highly skilled developers. We are now developing the solution further and have started discussions with customers and partners, and initiated the first customer tests.

Resource Optimization

In line with our strategy of focusing operations and optimize resources in Media Networks, we took an important step in February when we signed an agreement to sell ScheduALL to Xytech Systems, thereby divesting the Resource Optimization business area. We will continue to develop various partnerships looking ahead, and have established a close collaboration with Xytech relating to continued joint solutions.

The work associated with developing and improving customer relationships, together with our tech development initiatives, are now starting to pay off in the form of deals, while we are also gearing up for innovation and development on further markets.

I am very satisfied that we have now externally communicated our financial targets for the first time and look forward to continuing to work alongside all my colleagues to reach these goals on our future growth journey.

Crister Fritzson, CEO

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