STOCKHOLM — Nov. 2, 2018 — today, Zenterio reports third quarter 2018.
July – September 2018
- Deployed license base and recurring revenue
- The VAS (value added services) enabled license base grew by 8 thousand licenses to an accumulated base of 7,3 million.
- Quarterly ARPU (Average Recurring revenue per Unit) grew to SEK 0,64 (0,53 SEK) representing a year-on-year growth by 22%.
- Net sales and other operating income increased by 5,9 % year-on-year to SEK 54,9 million (SEK 51,9 million).
- EBITDA in the third quarter 2018 was SEK -2,4 million (SEK 5,9 million). EBITDA included items affecting comparability of SEK -4,0 million arising from restructuring of the organisation.
- Net result in the third quarter 2018 was SEK –15,9 million (SEK -7,0 million).
- Operating cash flow improved to SEK 18,7 million (SEK 4,9 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. This has expanded and become an important resource of selected competences for scaling up/down needs and cost competitiveness.
Events after the reporting date
- Nothing to report
Comments from Jörgen Nilsson, CEO of Zenterio:
As I write my Q3 report, we are now well into the last quarter of 2018 and I am revisiting many of the themes I laid out in my last report. As you know, early in 2018 we started taking steps to reduce our company’s dependency on non-recurring income. In a competitive environment, we increasingly need to make changes to become a much more nimble company which will result in further adjustments.
Our vision for the company remains to build our future on a strong, product-oriented portfolio with a scalable, recurring business model. Our success is tied to our customer’s success and we know that their end-users are kings and that the home is the ideal aggregation point for consumption of content and services. As I have articulated previously, our strategy is to enable our customers, Pay TV operators, to securely and efficiently offer their end-users the widest possible selection of content and services with a great customer experience. We do this by embracing innovation in our product proposition, supporting industry-standard technologies and shortening cycle times for our customers. Recognising how our industry will evolve is just the beginning, we must also deliver our product to customers in a simplified value-added package, demonstrating increased revenues and reduced operational cost benefits to justify change on the part of our customers to break their dependency on stifling legacy technologies.
At IBC trade fare in Amsterdam in September, we used the show to officially launch our new product portfolio and we had a record of 88 operators, broadcasters and partners visiting that gave us great confidence for our future business outlook. Moreover, as 30% were potentially new customers, our Zenterio Cloud could be more relevant than we thought for 2019 business.
We will continue to build on the insights and learnings from our existing and prospective customer interactions to create value added software solutions. Our goal is to support our customers as their world becomes more data-centric and we believe we already have the foundations for these products in place.
This leads to major changes in how we market, develop and deliver our products and this implies that there must be massive change in our organisation – something that we have taken further steps to execute on in this past quarter. These changes are essential to take Zenterio to the stage where strong products and a scalable business model deliver real shareholder value. As I previously stated, I must admit progress is still too slow for us to demonstrate the desired financial performance and we remain too dependent on historical, contracted customer commitments made several years ago. As these contracts now come to completion, our team has delivered projects which provide relevant proofs for our company’s capability. The challenge now is to deliver growth and profitability through products and not as a consulting and primarily services-led company.
We maintain our belief that the independence of our solutions is attractive to TV operators and our approach of offering our installed base upgrade paths through additional value-added services remain our key objective. We clearly need to help our existing customers migrate upwards and in parallel engage with new customers which is being championed by our recently restructured sales organisation.
With a goal of rightsizing the business, we have therefore decided to take some restructuring charges in the Q3 results which reflect the first steps towards a changed business model. More restructuring charges will unfortunately, but very necessarily, follow in coming quarters.
Net sales and other operating income amounted to SEK 54.9 million, a 5.9% increase compared to Q3 2017 (SEK 51.9 million).
- The EBITDA result was SEK -2.4 million, a decrease from SEK 5.9 million in Q3 2017. This negative result was mainly affected by the initiated restructuring cost SEK 4.0 million.
- Operating expenses increased to SEK 74.2 million (SEK 65,6 million) including the restructuring cost mentioned above.
- Capitalised R&D amounted to SEK 4,2 million (SEK 8,3 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.
We are preparing our organisation for our company’s next phase of becoming a true partner to our customers delivering scalable services and solutions that share in the economics of success. I am actively guiding how our development programs, company structure and organisation now need to change to reach this goal.
Finally, as always, I would like to thank our fantastic employees, our partners and our customers for their continued support. I believe Zenterio with this new direction, now being formalised into programs for meaningful change, will ensure that we will be well positioned for success in the future. This is what the company has worked for and invested into for so many years – an opportunity to build on its customer base and achieve operational and financial success without the boundaries of legacy.
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About Zenterio (www.zenterio.com)
Zenterio enables TV Operators to securely and efficiently manage and deliver entertainment to the home while increasing business insight and value. Zenterio’s portfolio of products and solutions includes a complete TV and OTT entertainment experience client. In addition, Zenterio provides cloud-based solutions for content aggregation, data and analytics, home automation integrations and advanced advertising capabilities with a focus on reducing cost and increasing ARPU. Zenterio also provides professional and consulting services, with global partners, to provide future-proofed lifecycle management for Linux and Android platforms.
For more information, please contact:
Jörgen Nilsson, CEO
Phone: +46 13 36 39 50
Steven Moodie, CFO
Phone: +46 13 36 39 50