Zenterio Reports Second Quarter 2018

Posted On: 22nd August 2018

STOCKHOLM — Aug. 22, 2018 — Zenterio, a leading television and multiscreen solutions provider, reports today their second quarter of 2018.

April – June 2018

  • Deployed license base
    • The VAS (value added services) enabled license base grew by 57 thousand licenses to an accumulated base of 7,3 million.
    • Quarterly ARPU (Average Recurring revenue per Unit) grew to SEK 0,70 (0,38 SEK) representing a year-on-year growth by 84%.
  • Net sales and other operating income decreased by 8,5 % year-on-year to SEK 66,2 million (SEK 72,4 million).
  • EBITDA in the second quarter 2018 was SEK 0,2 million (SEK 11,5 million).
  • Net result in the second quarter 2018 was SEK –12,3 million (SEK -0,3 million).
  • Operating cash flow improved to SEK -1,4 million (SEK -8,4 million). Zenterio has the target to balance costs with incoming revenues from operators and is now starting to demonstrate that this is becoming achievable. We continue to invest in the key partnership with a Serbian company that we started at the end of 2016. That has expanded and become an important resources of selected competences for scaling needs and cost competitiveness.

 

Events after the reporting date

  • Nothing to report

 

Comments from Jörgen Nilsson, CEO of Zenterio:

In this report for the second quarter of 2018, I believe that we have demonstrated continuity with our overall vision for the company. For our customers, the end-user is the king and the home is the ideal aggregation point for consumption of content and services. Our strategy is to enable our customers, pay TV operators globally, to offer these end-users the widest variety of products and services (service offerings such as video on demand, games, information) and to create new revenues streams through the monetization of data, particular through advertising. With a solid installed customer base, we believe we can scale and grow our business faster if we deliver simplified, value-added solutions to drive revenues for these operators.

At the same time, as CEO I am frustrated that we are still not able to demonstrate stronger financial performance through the conversion of our installed customer base to the generation of recurring, scalable revenues. We now have started out on an ambitious journey to invest into, create and to market a broader and more innovative product portfolio. We maintain our belief that the independence of our solutions is attractive to TV operators who are still too dependent on customized, monolithic solutions from a small number of vendors which limits their ability to quickly and easily innovate and add new features. Equally, we believe we can help them compete better around these features and functionality to differentiate them from aggressive new market entrants coming from the online world.

Our approach of offering our installed base upgrade paths through additional value-added services remains our key objective. However, it is greatly frustrating that delays in development of products and services and in closing new deals has negatively impacted our financial performance. We clearly need new customers, channel partners and a new consultative model of selling and therefore I have now undertaken a complete restructuring of our sales organization. While this sees the introduction of new leadership and talent with relevant Tier 1 experience and deep industry relationships, I believe it will take the remainder of the calendar year before we see the financial benefits from this restructuring flow through.

In the second quarter 2017 we had extraordinary, one-off license and test system transactions with two of our main customer groups which greatly impacted Q2 2017 to a profit level which should be kept in mind when comparing quarter-on-quarter results 2018 with the previous year.  Net sales and other operating income amounted to SEK 66.2 million, 8.5% lower compared to Q2 2017 (SEK 72,4 million). However, Net Sales in the second quarter included a 38% year-on-year growth in sale of consulting services and recurring maintenance support.

  • The EBITDA result was SEK 0,2 million, decreasing from SEK 11,5 million in Q2 2017.
  • Operating expenses improved to SEK 80,4 million (SEK 80,8 million).
  • Capitalised R&D amounted to SEK 5,1 million (SEK 8,9 million) and the decrease is mainly explained by the generic development in our contract with a German Tier one operator which has now moved into a new phase.

As Zenterio solutions are already widely deployed today by global top tier customers, we are confident we need no additional proof points to validate the continuing relevance of our client software.

If we look back of other key initiatives in the quarter, I want to highlight our continued focus on adding additional capabilities to our next-generation advertising and smart analytical SaaS solutions. These capabilities are already widely recognized and admired and we are now moving to lead them into a new revenue footing by tackling real customer use cases around revenue generation and cost optimisation. In this respect, services and domain knowledge are equally as important as technology. Furthermore, we are becoming an integrated part of our existing customer’s forward roadmaps, in particular as they look to move to create new revenue streams which they view as consistent with our vision and the shape of our portfolio.

We are now planning for a very visible presence at the IBC show in Amsterdam which is the most relevant show for our industry in EMEA. We will use this show to officially soft launch our new product portfolio together with a reference architecture and initiate discussions to start our first new Zenterio Cloud deployments with other revenue driving services in early 2019. We will now package our SW in a greatly simplified way and add value-added services in a scalable and incremental way from day one of implementation. We expect this to be very exciting as a upgrade path for our existing customers as well as for new customers who are striving for a stronger, independent technology base for the future that allows them to stay competitive against other pure OTT providers and other direct-to-home offerings.

We have also continued our partnership dialog with a small number of very large industry leaders to find common business benefits and to scale our business presence through their customer and market positions. Zenterio is in a very good position to become the catalyst as TV and Internet verticals, as we know them, morph into a new industry with contemporary and user-friendly business models.

Finally, I would like to thank our employees, our partners and moreover our customers for their fantastic support in the first half of 2018. With our vision, our new product launches and a relentless focus on business models based on scalable participation in our customer’s revenues, I believe Zenterio is in good shape for the future. This is what the company has worked on for so many years to invest in and build its customer base to achieve.

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About Zenterio (www.zenterio.com)
Zenterio provides an independent OS for interactive TV aimed at creating an industry standard. Zenterio also offers an intuitive multiscreen UI, a powerful Data Analytics solution, Consulting Services and additional Value Added Services to TV operators. Zenterio partners with global system integrators, set-top box suppliers, CA/DRM providers, chip-set manufacturers and services providers. Zenterio has offices in Linköping, London, Dublin, Prag and Atlanta and is owned by private investors and private equity firm Scope. The Chairman of the Board is former Nokia CEO Mr. Olli-Pekka Kallasvuo and the CEO is former Ericsson executive Mr. Jorgen Nilsson. For more information please visit www.zenterio.com.

For more information, please contact: 

Jörgen Nilsson, CEO
Phone: +46 13 36 39 50

Steven Moodie, CFO
Phone: +46 13 36 39 50

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