CEO Statement Q2 2018

Strong sales growth in eventful quarter

Sales grew by a solid 25 percent in the second quarter compared to a weak comparative period in 2017. We’re now starting to see the results of the initiatives we’ve implemented over the past year, which is positive. By entering the value chain at an earlier stage, we’re addressing more operators and generating a broader and deeper business dialogue.

The annual NAB trade fair in Las Vegas always makes the second quarter an eventful period for Net Insight. The fair is an important networking event for us and for the sector as a whole. As previously announced, we launched Nimbra 1060 at the fair, the next generation platform for media transport. The product received a very positive reception by customers, partners and industry experts, and it was awarded “Best of Show by TV Technology.”

Nimbra 1060 is generating considerable market interest, and we won our first order for a European sporting league in the quarter. Sales growth in the quarter was mainly derived from more new Nimbra deals for major live sporting events. For example, we won an order for a new IP based media network for a multi-sports event in South East Asia, and for a national media network in Europe for video assistant referee network, so called VAR. We’re extremely competitive when it comes to deals with a high degree of complexity and superior demands on quality, and win a significant proportion of the bids we’re involved in. In order to increase the number of smaller deals we’re involved in, we need to develop a more attractive offering and new revenue models that will make the Nimbra portfolio more accessible. One example is two rental deals during the period, where the customer rents our solution, i.e. without requiring any major capital investments.

In the quarter, we also launched Sye Streaming Service, which means that customers use Sye as a service in a cloud-based solution without the need for proprietary technical infrastructure. The service is mainly aimed at smaller customers and makes it easier to get started with broadcasting live events such as sporting events, news, games and auctions. We already have some customers in Sweden and the US. We’ve partnered with CDNetworks, a world-leading provider of live streaming, whereby Sye streaming solutions will be delivered to customers globally. These partnerships
and collaborations are important to strengthening our OTT position and reach larger customers and a broader market, thus generating revenues.

Sales in the second quarter totaled SEK 120 million. Operating earnings for the quarter improved by SEK 9 million year-on-year, amounting to SEK -13 million. Earnings were charged with non-recurring costs of SEK -7 million. Our continued initiatives relating to Sye affected operating earnings by SEK -13 million. Underlying operating earnings for core products was SEK 4 million.

The global media sector continues to change rapidly. One example of the high level of activity is a trend towards relatively new media operators adding exclusive live content to their offering, such as Amazon, which has acquired exclusive rights to broadcast select Premier League matches in the UK. Our assessment is that the global media technology market will continue to change. With our
customer base and strong product portfolio, we’ll remain very competitive in both IP and traditional broadcasting technology.

Net Insight is also experiencing a high level of activity as we’re moving in to new state-of-the-art offices in Stockholm and the US during the summer. The change will make us more efficient and provide a more accurate representation of our brand.

While we’ve presented a strong quarter revenue wise, improvements still need to be made and challenges remain. Net Insight has a high level of competency and highly skilled employees, a strong customer base and a competitive product portfolio, which makes us well equipped in a world that continues to change.

Stockholm July 20, 2018
Henrik Sund, interim CEO

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