Net Insight Interim Report January – September 2018

Stable quarter and success for Nimbra 1060

We continued to expand with sales growth of 10 percent despite fewer major orders compared to a strong comparative quarter in 2017. We continue to win many deals for live sporting events and completed several transactions with recently launched Nimbra 1060, while our internet-based Nimbra VA service also had a strong quarter.

The ongoing technology shift continues to alter the global media industry in combination with changing consumer behavior. The challenges include global competition, new operators, consolidation and increasing demand for efficient utilization of resources.

The ongoing sector transformation was one of the main themes at IBC in September, one of the world’s largest media trade fairs which is always a period of intense activity for Net Insight. Clear trends emerging at IBC include IP migration, cloud-based solutions and live production of the future using automated and smart solutions, all of which are a close fit with our offering. The changing market means that our customers experience increased uncertainty and cost pressure, which generates new opportunities for our quality-assured and resourceefficient solutions. Examples of our solutions include the reliable Nimbra transport solution for remote production, internet distribution through Nimbra VA and the next generation platform with terabyte capacity via Nimbra 1060.

It’s pleasing to observe the strength of our product portfolio. Examples in the quarter include the sale of some 10 units of our latest flagship Nimbra 1060, while Nimbra VA is also growing strongly with doubled sales in the quarter. A major deal with a US broadcaster that includes both Nimbra VA, ScheduALL and consulting services is another example. We perceive positive growth potential in Resource Optimization (ScheduALL), although we haven’t fully capitalized on ScheduALL or solutions combining Nimbra and ScheduALL. This led us to strengthen the management of Resource Optimization in the quarter.

In the field of OTT, there’s considerable interest in the Sye Streaming Service, our cloud-based offering that removes customer needs of own infrastructure. Since its launch in April, our first customer Trippel Media has attracted a sharp increase in interest in its live quiz app Primetime, which is based on Sye, and draws a daily average of 50,000 players. This highlights the attraction of engaging and interactive content. Trippel Media has now started to license its platform to other national markets. As a result of the progress made by the Sye Streaming Service, Net Insight retained its status as a Global ISV with Microsoft Azure. This is extremely pleasing, especially considering that Net Insight is the smallest company of 16 Global ISVs in media and telecom.

The commercialization of Sye to the mass market through partnerships with major operators has taken longer than anticipated.At the same time, we’re convinced that there’s a substantial market for solutions like Sye that enable live online streaming with low latency. This became particularly clear during the FIFA World Cup, when online viewing broke all records at the same time as viewers and broadcasters experienced significant problems with latency and the spoiler effect.

Although turnover is stable, profitability is impacted by our continued sales initiatives, Sye and reduced capitalization of development expenditures in connection with the launch of solutions such as Nimbra 1060. We’re active on a market dealing with complex solutions, and the accumulation of new customers and projects require sustained effort that is time and resource intensive.

Being even closer to our customers is a key growth factor, and after the end of the quarter we implemented a reorganization aimed at better understanding our customers’ needs and making us more responsive to changing customer behaviors.

With regard to Net Insight’s growth and profitability, although our expectations exceed the current position, we remain confident that the changes we’re implementing will create the right conditions for improved growth and profitability looking ahead.

Solna, Sweden, October 26, 2018
Henrik Sund, Interim CEO

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