CEO Statement Q2 2020

Positive results given the market conditions

Important major deals on several markets

There was extensive uncertainty relating to Covid-19 at the beginning of the second quarter. Gradually improving market conditions, several major deals and active cost-cutting measures generated positive earnings in the quarter. We continued to strengthen the Nimbra portfolio, and the acquisition of Aperi has generated positive effects. Revenues were SEK 105 million. Operating earnings amounted to SEK 1 million and were negatively affected by exchange rate effects.

Market situation and Covid-19
The extensive uncertainty at the beginning of April has gradually decreased as countries are starting to ease restrictions and many sporting leagues restarted towards the end of the quarter. Major events such as the Olympics and the UEFA European Football Championships have been postponed which had a negative impact on revenues in the quarter, although most related deals have been postponed rather than cancelled. In the longer term, major leagues have a continued need for expanding their media networks to meet growing capacity requirements, and we secured new deals for sporting leagues in Europe and North America in the quarter. The reduced live event activity is expected to continue to have a negative impact on our customers in the service provider segment.

Travel restrictions continued to have a negative impact on approaching new customers and testing/ installation of physical products. We have implemen-ted cost-cutting measures, including short-term redundancies in Sweden. To step up the pace of our Nimbra development, most of the development team reverted to full time towards the end of the quarter. Our main scenario remains a gradual and slow recovery from Q3 onwards.

Media Networks
In the quarter, we secured several deals for customers looking to expand their media network capacity using modern and flexible solutions. A major sporting league in North America signed an order worth USD 2.5 million relating to products, consultancy services and a 5-year support contract. The order relates to a new 100G IP media network and is designed to meet the highest quality and security standards required for broadcasting today’s most exclusive live sporting events. The network is extremely flexible and offers support for tomorrow’s remote and distributed production environments.

On our Swedish domestic market, the service provider Mobilelinks during the first six months chose Net Insight’s solutions for the expansion of network capacity and connectivity to 50 PoPs (Points of Presence) at arenas and broadcasters throughout the Nordic countries. Both the North American contract and the Mobilelinks deal are based on our high capacity platform Nimbra 1060.

Alongside our partner METCO (Middle East Telecommunications Company), we won a deal worth over USD 1 million for a national media network for contribution and distribution. The order includes products, consulting services and a 3-year support contract.

We continued to invest in the development of our Nimbra portfolio and launched several important solutions in the quarter, including cloud-based solution Nimbra Edge, as well as new functionality for other Nimbra products. For the Aperi products, development continued according to plan, and we secured deliveries to important existing customers such as Telstra, Arqiva and Orange. The positive customer response confirms that Aperi’s open, IP-based and virtualized product portfolio complements and strengthens our media transport offering. Going forward, the plan is to broaden sales of Aperi to include more customers.

Resource Optimization
At the beginning of July, we launched ScheduALL Evolution, a new cloud-based SaaS and associated analytics components. Customer activity was high in the quarter, with numerous demonstrations of the new solution. In general, ScheduALL was also negatively affected by Covid-19, mainly regarding new customer sales.

Foundation for future growth
The first step on the journey towards building the new and growing Net Insight is to ensure internal efficiency and clear priorities. As part of this work, we established a new structure and strengthened the management team in the quarter. We’ve completed recruitment for the new position Chief Commercial Officer, as well as a new CFO. We have also started to identify and prioritize strategic growth initiatives and internal areas of improvement.

To conclude, we are posting a relatively strong quarter given the external conditions

Crister Fritzson, CEO

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