Edgeware (¨the Company¨) today announces an expected revenue range for the second quarter 2019. Revenues are expected to be in the range of SEK 28-34 million. While Edgeware does not provide forecasts, it chooses to disclose this information since it considers that this level of revenue differs significantly from the general expectations currently in the market.
The reason for the decreasing revenue level in the second quarter is that Edgeware currently experiences a weakening of the Company´s Content Delivery Network (CDN) product business with Telecommunication Operators in Western Europe. The CDN-business with these customers has represented a large part of the Company’s revenues and although business in other markets still are progressing according to plan, total revenues are negatively affected. Edgeware assesses that this decrease in demand will continue to affect the Company in the near term, at least including second and third quarter of 2019.
Global Investments in CDN networks are still increasing
According to independent industry analysts, investments by Telecommunication and Cable Operators in CDN networks, both for IPTV and OTT, are still expected to increase on a global basis. This development is driven by an increasing number of subscribers and increased traffic due to the use of new video related features such as time-shift. However, this development has been ongoing for many years in North Western Europe where most of the Company’s CDN business currently lies and hence the increase in these markets are more limited. The increase is on the other hand more prominent in emerging markets such as Asia and Latin America, where the Company is developing new CDN-related business.
The Company remains committed to its strategy
Edgeware´s high customer concentration and dependency on CDN-network sales to Telecommunication and Cable Operators in Western Europe has been recognized as challenging and measures are clearly reflected in the defined strategy currently being executed;
- The Company is investing in sales, business and product development activities to support sales of CDN-networks to Telecommunication and Cable Operators in Asia, Latin America, Middle East and Eastern Europe. Major expansion orders have been received from a large customer in Mexico and, during the second quarter, the company secured a strategic CDN-order from a large Chinese Cable Operator.
- Edgeware is investing in product and business development to increase the business towards Broadcasters and Content owners. The company has launched new products during the past year including origin, ad insertion and SaaS over public clouds. Recent customer wins include Com Hem and an undisclosed broadcaster in the Nordics. New innovative products are also scheduled to be launched at the IBC event in September.
- To complement in-house R&D-activities, the Company is pursuing an active M&A-agenda. In January Cavena, the leading supplier of solutions for subtitling, was acquired to further strengthen the offer towards Broadcasters and Content owners.
- The Company will continue to focus on operational efficiency whilst ensuring investments in growth areas. During 2018, operational cost run-rate was reduced with approximately 10%.
A fundamentally strong market position but strategy execution needs to accelerate
Despite the currently weakened market for CDN-networks in western Europe, the Company has a relevant strategy, excellent customers relationships, a strong product portfolio, a motivated team and is active in a market fundamentally characterized by growth due to increasing consumption of streaming video. Despite short term challenges, prerequisites for both growth and profitability are therefore favorable longer term. In addition, Edgeware has a strong financial position and the focus moving forward is to accelerate the implementation of the strategy.
Telephone conference and webcast for media, analysts and institutional investors
The Company has yet not finalized the financial statements for the second quarter and does therefore not provide any forecast for other items in the balance sheet, income statement or cash flow statement. The Company will present the report for the second quarter as planned on July 19 2019.
At 10:00 a.m. on June 4 2019, the company will hold a web-broadcast teleconference, during which CEO Karl Thedéen will comment on the press-release.
Anyone wishing to participate in the teleconference in conjunction with the presentation should call one of the numbers below:
Annika Norin, CFO
Tel: +46708856774, E-mail: firstname.lastname@example.org
This information is inside information that Edgeware AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 18:45 CET on June 3, 2019.