Edgeware: Interim report January-March 2017

First quarter of 2017: (January–March)

  • Net sales of SEK 68.7 million (63.6), up 8.1 percent.
  • Gross profit of SEK 52.4 million (46.1), corresponding to a gross margin of 76.2 percent (72.6).
  • Operating profit (EBIT) of SEK 13.0 million (10.6), corresponding to an operating margin of 18.9 percent (16.7).
  • Adjusted operating profit (adjusted EBIT) of SEK 13.0 million (12.1), corresponding to an operating margin of 18.9 percent (19.1).
  • Profit for the period of SEK 10.3 million (8.3).
  • Cash flow from operating activities of SEK 4.7 million (neg: 2.0).
  • Earnings per share for the period of SEK 0.3 (0.3) before and after dilution.

Significant events in the first quarter and after the reporting period

  • The annual general meeting (AGM) was held on 12 April 2017.
  • The AGM adopted the income statement and balance sheet of the Parent Company and the consolidated income statement and balance sheet for the 2016 financial year. Profit was carried forward and no dividend will be paid.

Comments by the CEO

2017 has begun well for Edgeware. Our commitment to growth is continuing with international customer successes, a stronger organisation and an extended product range.

The first quarter 2017 tracked the expected seasonal pattern and was good with improvements in many respects compared to the fine first quarter of 2016. Edgeware reported higher sales and improved gross margins. Our operating profit were strong and the EBIT margin matched that of the year-earlier period. However, it should be noted that the recruitments that have been effected have yet to be fully charged to profit. During the quarter we also released our completely software-based streaming solution to the first customers.

Our customer concentration was reduced. When we have more customers, we are less dependent on the purchases of individual customers. Demand for capacity expansion is high because existing customers are noting increased demand for services. In response, we are largely able to scale up their capacity by selling them additional licensed capacity. This has a positive effect on the gross margin since it is not necessary to deliver any physical systems to the customer.

Building a stronger presence internationally

During the first quarter, Edgeware strengthened both the company and the customer appeal of our suite of offerings. During the quarter, eight new employees were recruited, including a number of senior key individuals, to contribute to increasing sales and improved customer service.

The new issue implemented in connection with the IPO was partly designed to facilitate faster expansion by adding more people to the sales force. We have also established a completely new position with responsibility for global partner sales. Our new employees are located in our three regions and also in new geographic markets, such as the UK and Chile.

Keen interest in building proprietary TV-CDN

The market trend we actively are contributing to and previously predicted, that content providers are investing in building their own distribution networks – known as TV-CDN – is becoming increasingly visible in our sales. The customer category that is investing in proprietary TV-CDN now accounts for more than 10 percent of our sales and is showing the most powerful growth. This was particularly apparent in Asia-Pacific during the first quarter.

Interest in building proprietary TV-CDN, as an alternative to leasing the service, was also a central theme at the NAB Show in Las Vegas on 24-27 April. At this show, which is the most important trade fair for customers in North and Latin America, Edgeware had its largest presence to date in the form of stands, customer events and seminars. The show generated valuable contacts among existing and potential customers.

Focus on continued growth and international expansion

With an increasingly complete and differentiated product range, we offer attractive products that are in demand globally among telco and cable operators, as well as content providers. The aim of all of this is to deliver amazing TV experience and services to the discerning consumers of today, not least in the mobile area.

Joachim Roos
CEO, Edgeware

About Edgeware

Edgeware offers leading operators and content providers the tools to deliver modern TV services on a huge scale and at a low cost. Edgeware’s unique technology gives control and insight back to the content provider with an outstanding viewing experience. In recent years, Edgeware has experienced rapid growth, reaching sales of SEK 252 million in 2016. Edgeware is headquartered in Stockholm, Sweden, with a subsidiary in the US and offices Hong Kong and Mexico. Edgeware also has sales and technical sales support staff throughout Europe, Asia and Americas. For more information, visit www. Corporate. edgeware.tv.

This information is inside information that Edgewar 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 7.30 CET on May 4, 2017.