Earnings call transcript: Net Insight Q4 2024 sees sales decline, EBITDA rises

Net Insight reported its financial results for Q4 2024, highlighting a 17.8% decline in net sales compared to the same period last year. Despite the drop in quarterly sales, the company experienced an increase in EBITDA, reaching SEK 260 million with a margin improvement. The full year 2024 showed a positive trend with an 8.7% increase in net sales driven by strong growth in the Americas. Net Insight’s stock performance remained stable, with no significant changes noted in recent trading.

Key Takeaways

• Q4 net sales declined by 17.8% year-over-year.
• Full year 2024 net sales grew by 8.7%, led by the Americas.
• EBITDA improved to SEK 260 million, with a margin increase.
• The company is focusing on innovation with new product launches.

Company Performance

Net Insight’s overall performance in Q4 2024 was mixed. While the company faced a notable decline in quarterly net sales, its full-year results were bolstered by a robust performance in the Americas, which saw a 40% growth. The company continues to strengthen its position in the media technology sector, leveraging its investments in IP and cloud services.

Financial Highlights

• Revenue: Declined 17.8% in Q4; full year 2024 up 8.7%
• EBITDA: Increased to SEK 260 million with a 26.5% margin
• Operating margin: Stable at 13% for the full year
• Net cash: SEK 233 million at year-end

Outlook & Guidance

Net Insight aims for a 15% average annual net sales growth and a 20% operating margin by 2027. The company expects significant growth in its time synchronization product, Syntyc, particularly in the second half of 2025. Additionally, Net Insight is exploring bolt-on acquisitions and will continue to focus on expanding its presence in the Americas market.

Executive Commentary

CEO Christoph Rietsholm expressed confidence in reaching the company’s targets, stating, "We are still iterating that we see that we will reach the target that we have set." He also emphasized the payoff from long-term investments in IP and cloud services, noting, "Our long-term investment in IP and cloud is paying off."

Risks and Challenges

• Market saturation: Potential limits to growth in mature markets.
• Economic conditions: Global economic uncertainties could impact investment.
• Competition: Intense competition in media technology and cloud services.
• Supply chain: Disruptions could affect product availability and costs.

Net Insight’s strategic focus on innovation and market expansion, combined with its financial stability, positions it well for future growth despite current challenges. The company’s ongoing investments in technology and market presence are expected to drive its performance in the coming years.

Full transcript - Scorpio Bulkers Inc (NYSE:NETI) Q4 2024:

Christoph Rietsholm, CEO, Net Insight: Good morning, and welcome to NetInsights Q4 results. Together with me today, I have Cecilia, our CFO and I have also Linda, our Investor Relations responsible for Investor Relations. And my name is Christoph Rietsholm. I’m the CEO of Net Insight. So let’s look into the agenda for today.

We will go through the highlights and the business overview, and we will cover media and time synchronization. Cecilia will cover the financials, and then we will end up with an outlook going forward. We will also have questions in the end. So if you have any questions, you know that you can send them in and we will have a Q and A in after the presentation today. So let’s move into the first slide and look into the overview.

We have a successful year behind us with a number of new important customer wins within media and a strong growth in our focus market America. And we have a high conversion rate from POCs to commercial order in the sync business. We have a stable quarter in Q4 in the light of our tough comparison number from last year and the seasonal volatility in media coming from unpredictable budget orders. So Q4, normally, we see budgets orders coming in as last year, 2023, but this year, we have less budget order coming. This may be coming from that our existing large customer have significant investment in previous quarter twenty twenty four.

We saw a strong increase in sales in all the Syntyche in Q4, reaching up to over 14,000,000. And the full year net sales growth is over 13% last year. And we have excluded MRE support from Turk Telekom (IS:TTKOM) on the R and D investment that we have done on the Syntai. One of our main focus in media is to gain new customer and we are very glad to see that we have three additional very strong large customer within media. And we received an order on Syntag from a leading operator in Europe.

And we signed our first time as a service deal in South Africa. We see a continued growth from growing interest in the Syntag for large operator. This is the change the last six to nine months that we see larger operator getting interest into Syntai in all regions. And we have started new POC with large operating Q4, and it continues in even in Q1. So that is a really strong and good trend that we see in higher interest in general, but definitely for large operator.

We will we expect that the contribution to our growth in 2025 will come definitely from SIMTech. And it’s a little bit difficult to predict exactly which quarter the increase in sales become with Syntheyes. It’s depending on when the POC will move forward to commercial orders. But we estimate an acceleration during the year and mainly in the second half of this year, we will see an increase in sales of the same type product. Moving on and coming into the business overview and just start with the sales and the margins then.

Our strategic focus resulted in solid growth in 2024. As I just mentioned, it’s over 13% excluding the NRE. The growth is coming from upselling existing customer. We know that we have a very good solution for the existing customer as these as we go from our DTM technology or IP as a seamless move from the different technologies. But we also see a strong customer acquisition during the year.

If we look at the CAGR and look between 21% to 24%, the CAGR is over 16% or close to 70%, stays strong. And you know, the financial target that we have in growth is to be in an average over 15% per year. We have a stable and good operating margin despite significant investing in the synchronization product, but also in the media product, we have like accelerated investment in boosters product segment. But we’re also increasing investment in front end to secure a long term growth of our business. So the operating improvement, earning improvement in 2024 is coming, of course, from increased revenue and a growing software and license sales also strengthening the EBIT.

I’m comfortable with our financial targets. Of an average annual net sales growth of 15% and reaching an operating margin of 20% in the end of the 2027. Moving over to looking into the sales in the regions. Again, as you can see, a fantastic year for EMEA with strong sales. And EMEA have had for the last two, three years a very strong stable sales.

But our focus had been clear and we have a clear target that we need to grow the American market. We have invested in IP based product and that’s been specifically for The U. S. Market that are very IP based focused. And this has paid off.

You can see that the American market during 2024 was growing with over 40%. So very strong growth in America last year. And we see a continuous positive outlook for America in 2025. Little bit more specific on the media. As you know, our focus is on live event and then the sports segment.

And that is definitely a growing segment. And we see also new players entering into that segment. Large players are investing in content and also on top of that investing in the media product that we are supplying. So that is the driver in the market and that’s our focus area. We will continue to focus on sports during 2025 to be even more focused on the larger leagues in all regions to really gain the growth in that segment that’s growing very fast.

I’m glad to see that our long term investment in IP and cloud is paying off, and we see that we have strengthened our position in the market dramatically the last two to three years in the light of the investment that we have done in those two segment. Now we can see that we have a mature IP product, even though that we continue to increase functionality in the IP. We see that the cloud is slowly but surely increasing in sales. And we are increasing in unmanaged to support the cloud product. So the gross loss here is coming from existing customer that are investing in the IP based product and also in the cloud.

But we are also so happy to see that we are entering in with new customers. As I mentioned in Q4, we have three major customer coming in. One is the major US media company and one launching the ads order in Europe. It’s very encouraging to see that we are moving in the edge segment that is a long term investment and we see going forward that edge cloud will be more important going forward. And our long term investment in Middle East that we have increased our SAIS resources in Middle East like two years ago, really paid off with a large order in Q4 from an operator from the telecom sector.

Moving over to Zinc or the product Sink Time. As I said, we see a continuous increase in Sink Time. Several leading telecom operator have initiated proof of concept, while previous ones are gradually transitioning to commercial orders. So we have a high ratio of operator that moving from POCs to commercial orders. It is important for us to sign up large telecom operator that can lead the way and take down barriers for other telecom operator to use Syntai.

And that’s the reason why this we are so glad to see that one large operator in Europe have signed up. We also signed up our first time as a service provider in South Africa. Just a little bit explanation on the time as a service. It’s not any competition to five gs or other larger segment. Time as a service is focused on smaller market or customer segment like data centers or even radio stations or fintech

Christoph Rietsholm, CEO, Net Insight: that have smaller installation you you you you Please unmute this computer. Thank you. You you you you you you you you you you you you you you you you you you you you you you you you you you you you you you you k. We we understand that we had, okay, we had understand that we had had a problem with the with the with the transmission. So I will go back to the Syntai presentation and then Cecile will come back with the financials.

So coming back to the Syntai, we see a continuous increase in interest in Syntai. And we see several leading telecom operator initiating proof of concept in Q4, while previous ones are gradually transitioning to commercial orders. So that is a trend that we have seen, and and it’s continuous. It’s glad and it’s coming from all all three regions. So it’s very important for us to sign up large operator that we have discussed, that the large operator can give you comfort in the market and lead the way and take down barriers for other telecom operator to use same time.

And we see that that’s a trend that’s coming when we have signed a large European operator. So that’s very, very encouraging, and that will also give a clear message into the telecom market that our product is very, very competitive. And we also signed up our first time as a service customer or provider in in South Africa. Just a little bit, yes, explanation of what time as a service is. It’s actually it will not compete with, like, the telecom market or other larger market like Power Grid.

The time as a service is more focused on smaller installation. It’s come can come from, like, a data centers or a number, two, three, four data center that need to have a time synchronization as this is super interesting solution for them to to take time as a service. It can be like radio stations that have a number of different station in in a country, and they need to have time synchronization between them and it’s very easy for them to just take a service or in the fintech industries. It’s a number of industries that are really interesting in time. Time will be like a crucial components in many many different industries and we see this is a great solution to easy, very cost efficient, get time as a smaller company or a smaller installation.

And we see interest for a number of regions and countries that are looking in to have this service. So we’re glad to see that South Africa is was the the first country doing just that service. The service integrator or partners is a crucial part of the telecom market. And this is a crucial part for us also in our go to market strategy. The integrator is the companies that actually help in the large operator for installation in the network, and they are key components for us in our go to market strategy.

So we are glad to see that we have signed up more than 10 partners in all three regions in different countries, like we have in Turkey and other countries. So that’s an important part of our go to market strategy. So we have been focused on that the last twelve to eighteen months and we now have strong local regional partners. We’re also looking into large global integrator that can be interesting for us going forward to use. We see that the investment appetite in the Google (NASDAQ:GOOGL) global telomere market is slowly coming back.

And it’s driven by increased demand of functionality or demand for new functionality in the five gs network. And it’s mainly coming from industries and other companies that would like to use the five gs functionality that are in the network. And that will drive SIMT ICE sales. If if you have, like, an an installation like that, you would like to have a robust service. And one social part is, of course, that have non GP well, GPS independent.

So that is a driver for us, and we see that’s coming in more and more. Okay. Hopefully, you have heard this now. And if you have any questions, you can take them later on after Cecilia’s presentation. So I’ll hand over to Cecilia and a little bit we need to move the computer to Cecilia then.

Cecilia, CFO, Net Insight: Sorry if for the mistakes in the transmission but now we go into the financials. And as previously noted, the fourth quarter tends to be more volatile than other quarters and this year we saw a softened sales dynamics with fewer orders related to customers’ remaining budget capacity than ’23, while timing of incoming orders also was less favorable. As a result, our net sales declined with 17.8% compared to the same period last year. If we look at full year 2024, our net sales increased with 8.7% mainly driven by our focus region Americas. If we look at our product group and product mix, we see that over time we have a stable mix, though it can be somewhat volatile from quarter to quarter.

But over time we will see a slow shift to a growing share of recurring revenue coming from license fee from cloud related media products and time synchronization. The gross earnings decreased on the back of weaker net sales in the quarter. Our gross margin before amortization in the quarter was 74.7% which is above our three year average and that is due to a temporarily higher share of support and service revenue in the quarter. Gross margin including amortization was 61% and that is below last year and explained by a combination of the lower net sales and higher amortization of capitalized development. Looking at full year 2024, our gross margin before amortization was 71.9% and that is slightly above our three year average.

And over a long period of time, we expect this trend to continue due to the shift in product mix. But this shift, we do not expect it to come rapid or significant in near time. Looking at EBITDA, we have a positive profitability trajectory with EBITDA margin improving along our net sales growth for recent years. Looking at full year 2024, EBITDA increased from SEK143 million and a 25.2% margin to SEK260 million and a 26.5% margin, a sign of the scalability of our business. Looking at the right hand side, we see our long term value creation in development.

During the year we have invested 24% of our revenue in R and D and a large portion of our development expenditures are being capitalized, a sign of long term value creation in the company. During the year, we have gained efficiency by relocating development from The U. S. And India to Sweden. Our operating earnings amounted to SEK 5,200,000.0 with a year on year decrease related to the lower net sales in the quarter.

As we have a higher gross margin, any fluctuations in revenue will have a large impact on our operating earnings. Operating margin decreased to 3.9% alongside weaker sales and continued investments in a strengthened organization both in media, cloud, IP expertise as well as time synchronization. Looking at full year 2024, we have a stable margin of 13%. Now to our cash flow. And our cash flow for the quarter was before excluding related the share related transaction was SEK4.1 million.

Cash flow over operating activities was SEK35.6 million and this was with a positive reduction of working capital. Cash flow from investment activities was minus SEK28.7 million and a result of our capitalized R and D expenditures. Cash flow from finance activities amounted to SEK14.8 million, primarily attributable to SEK12 million in repairs of shares. Our net cash position at year end was £233 and that means that we have a solid financial flexibility to seize emerging opportunities and fund further growth, including potential acquisitions. Looking ahead at capital tied up in inventory of programmable circuits, FBAs, this will increase over the coming years.

And cash flow wise, we expect the majority of the cash flow to related impact in the second half of twenty twenty five. So that was Point Financials and now moving back to Christo.

Christoph Rietsholm, CEO, Net Insight: Okay. Yes. To sum up, I would like just to point out our key strategy, the growth strategy that we have. I mean, we have been very focused on investing in expanding the market, and we have been expanding the market through IP and the managed network that we’re saying. That’s at the end of the, like, the main investment that we have done.

We are still in the growth path of that. We see still that Americas will be the focus market. We’re having strong growth last year and we continue like a strong continuous expansion in U. S. So that is really great to see that we also can attract new As I mentioned, we have attracted three in a quarter.

And if we look at on the full year, it’s all 15 new customer within the media sector, and majority of them have been moving through the IP product that you have. If you look at the unmanaged, which is mainly the cloud, but also related hardware product, and unmanaged is more using the Internet, the open Internet to transport. So it’s a different type of products. We see going forward that the unmanaged will be more and more important in market even though that is fairly small today. And if we also gradually move together with managed and managed, we gradually growth together.

And it’s a great thing for us because we have a huge installed base of managed product like the 600 and the ten sixty, and that can also be used for cloud services going forward. And that also it’s cloud is definitely recurring revenue that you can see further on that is one hour of focus oriented Railing increased recurring revenue. Broadening market footprint is definitely the time synchronization product that we have that we launched in second first half last year through our new Syntar product. And the great thing with us is that we’re using the existing technology that we have used since 02/2008, and we’re moving to new market segments. And as I’ve been saying, that’s really a very, very big, very big opportunity for us to really grow going forward.

Recurring revenue, that’s something that we have been focused on and we have a large portion of recurring revenue as of right now, but we would like to continue growing that. And it’s coming from, like, the cloud product that I mentioned, licensing, but also the time synchronization. The time synchronization product have, like, a larger portion of license than in the media product. So we see definitely those three elements is the driver for increasing the recovery revenue. But we see also that we would like to expand in adjacent markets or technologies.

And it’s like the complement or an addition to our organic growth that we’re also looking into to acquisition. That is still ahead of us. We haven’t really focused on that, but it’s something that we will look into in the future. And scaling the our business. I mean, we have been talking about that a lot previously, but we have a global footprint.

We have, like, relation with large telecom operator. We have relation with large media operators, and we have, like, a high gross margin. So increasing the top line will really drive the EBIT level as well. So we see that we can scale our business with high potential. Okay.

Yes, let’s sum up this presentation before we move into the questions. I mean, we have a successful 2024 behind us. Net sales growth was over 13% and and driven by Americas growth of 40% and very stable sales in Europe. So we are very happy with that growth last year. Operating marketing is stable, around 13%.

And with a continuous high pace of investment in the sync product and in the media product, and we are building out the front end Mainly in the sync part of the business, we are building out the

Cecilia, CFO, Net Insight: front end.

Christoph Rietsholm, CEO, Net Insight: With our investment the last two to three years, we are definitely staying in our media position. We have a strong position now. We are continue selling our DTM technology, but we also have a strong position within the IP market. And the good thing is for existing and new customer, it is seamless that you can move between the technology. Depending on what type of service that you would like to have, you can use the most efficient way of producing your your content.

Continued continuous growing interest in Synty and definitely from large operating in all three regions. And we see that we will have a strong, growth in Singtai this year, mainly in the second half of the year. So we have a very long term growth perspective, albeit somewhat cautious market in EMEA and APAC in Q1. We see some cautious signals in EMEA and APAC, while America showed good development. So that was like a sum up of the presentation.

So I suggest that we move over to q and a and thanks for listening. So we move over Linda to q and a.

Linda, Investor Relations, Net Insight: Thank you. Yes. We have a lot of questions on the call here. And let’s start with with the media business. The media orders you highlighted in the report taken in q four, is the revenue also recognized in q four?

Christoph Rietsholm, CEO, Net Insight: Yeah. All three orders, so new customer that we received in Q4, the first initial order from all three is recognized in Q4. We see all three customers that’s that’s a strategic customer because they are large, so we will anticipate that we will have forward going forward all three customers. And the large order edge is recurring revenue, so that will, like, move on gradually and increase over the years. But also the large customer in US, large broadcaster, one of the largest, we expect that they will be a good customer for us going forward.

And then I’m also glad to see that we have been breaking into Middle East with an order from one of the largest operator in the region.

Linda, Investor Relations, Net Insight: You mentioned timing of incoming orders was also less favorable. Will this reverse in Q1 twenty twenty five? What can you say about the demand in Q1 and generally about the visibility into 2025 in media?

Christoph Rietsholm, CEO, Net Insight: Now that we see a little bit cautious in the market in Europe and in APAC, and and we are, of course, looking into that, like, really crucial or very to to be able to understand. We see, at the moment, we see, like, an absurd caution attitude in the market. We think it’s a little bit inflated in all the global uncertainty that we see. But we see that the orders are in the market, the the big projects are in the market. But we see a little bit cautious in APAC and in Europe in Q1.

But we see, if we’re looking into to, like, the full first half of the year, we see, like, a strong pipeline in Q2. So we don’t think this is like a change in the market. We see it just a little bit cautious in the market right now on investment. America is, like, a good trend and then we continue to deliver strong. But America APAC and Europe, we see some cautious in q one.

Linda, Investor Relations, Net Insight: Any insights into the reason why customers decided to save more of the budgets in ’24?

Christoph Rietsholm, CEO, Net Insight: I mean, we know that some of our customer or existing customer invested heavily during the year. So probably they have less room for doing budget orders in q four. But if you go back, we have seen that q four are very volatile because of the budget. It’s more budget orders. It’s less build out or it’s less new sport events that get started or moving from one service provider to another service provider.

That’s not the quarter. It’s more like in q three that that will happen. So last year, we were happy that we received in the end of q four twenty twenty three, we received two very large orders, and we didn’t see that coming in this year. But if you look at the underlying in the business, we have a, like, a stable Q4. And the reason why we have a lower sales in Q4 compared with Q4 twenty twenty three is the budget orders.

So we don’t see any change in the market in Q4, but we see, like, a little bit hesitant in the market tracking Q1 for APAC and Europe.

Linda, Investor Relations, Net Insight: What can you say about the reception of the newly launched media products from customers?

Christoph Rietsholm, CEO, Net Insight: As I say, I mean, the the the good sign is that we signed up 15 new customer last year and three in q four. I think that’s the best sign saying that we have very competitive product. We have actually been taking deals from our competitor. We had outperformed them in those 15 deals. And the incumbent supplier, we have been able to have a stronger offering and they have been choosing us.

So, I think that’s the absolutely strongest signal and make really comfort for me to see that we have a strong position, that we have so many new customer. But we anticipate that it will continue this year. So focus still is to gain new customer. So long term growth will come from new customer in the media and that our existing customer, like Tata and the rest of them, that they also grow the business and then we will grow our business. So it’s important for us to be with the right customer that have growth.

And and and last year, as we saw, that our existing customer were very, very successful.

Linda, Investor Relations, Net Insight: What can you say in general about in general about the gross margin in the different product product groups, hardware, software support? And given given what you see in terms of revenue mix today, hardware, software support, do you see a continuous stable gross margin in ’25?

Christoph Rietsholm, CEO, Net Insight: Should

Cecilia, CFO, Net Insight: Sorry for us needing to change the computers. Regarding the product mix, we see quite stable gross margin over time. As I said in the presentation, we will see it slowly positive trend, but that will be really slowly. If we look at the year, we have had some quarters with a higher gross margin than we should have had in a normal business and that was Q2. We had a higher margin related to the software order.

We took 30,000,000 with a high margin and then also a higher margin on gross margin before amortization in Q4 related to the higher share of service and support revenue. But otherwise, it’s quite stable but a slow trend and positive.

Linda, Investor Relations, Net Insight: And back to you, Christer again. You’ve previously announced the upcoming launch of the 400 gig IP platform at the turn of the year. What impact will this have on the current installed hardware base? Will software updates be available to enable this increased capacity?

Christoph Rietsholm, CEO, Net Insight: Yeah. The the when we moved from our ten sixty to 200 gig, 1.2 terabytes. That was like a software. It’s the same rack as we had had previously. We see the same way that with the 400, which will be like a software or a card that you will use within existing rack, which will means that it will be a very easy and seamless move over to upgrade existing ten sixty to 400 gig.

So that’s that’s the way that we have been doing previously, like the 600 product. That’s our volume and the highest volume, the highest revenue coming from. That launched 02/2008. And it’s more or less the same rack still, but we have new functions. It’s fully IP today, and it’s take down cost for our customer to move over to new technology or to new features.

And it’s, of course, very sticky for us. Our product is very sticky because it’s a lower barrier to move over to new functions or new technology. So that’s we will continue doing that. And we see that the 400 gig, it’s increasing interest in the 400 gig in our main with our main customer. They will like to see 400 gig because they need only capacity, because it’s we’re going now to full HD, new new more and and and and high capacity needed to really serve the new features.

And and, like, full HD has definitely taken a lot of capacity, and we see now that’s coming in as a feature. All of us probably have a full HD TV in our living room, but still it’s very few that actually are transmitting full HD.

Linda, Investor Relations, Net Insight: If we move over to time synchronization, why doesn’t the Synty order from a leading European operator show in the order book?

Christoph Rietsholm, CEO, Net Insight: The order is coming from one of our integrator that I explained in my presentation called Siacom in Turkey. And they have seen that order coming, so they actually had already placed that order in in earlier than q four, but the the order with the large operator resigned in q four.

Linda, Investor Relations, Net Insight: Any insight into the potential size of the ongoing Syntypox once they materialize into orders, ballpark, not an actual figure?

Christoph Rietsholm, CEO, Net Insight: I mean, it’s hard really to estimate, like, the volume on various operator. I mean, we I mean, we have, announced, like, two numbers that I can just give you, like, three in Sweden when we signed the deal in end of twenty twenty three, the deframe agreement was 30,000,000. Compared with Turk Telekom that we signed an order for 25,000,000 in total and an order value, yes, below 200,000,000. So that’s the range. I mean, three in Sweden are the smallest operator in Sweden and a small operator if you look, like, in Europe.

Turk Telekom is like a mid to mid high, or mid sized large operator. And and then you can see, like, the difference between them. And hopefully, you can estimate all the operating between them.

Linda, Investor Relations, Net Insight: Alright. Thank you. And if we remain on the synchronization area a bit longer, How how are you progressing within power grid with Syntai?

Christoph Rietsholm, CEO, Net Insight: Yes. I mean, we have announced that we have a PUC with one of the one of the power grid companies in Europe, and that continues continue. So we are still in in progress of working together with that operator. So it is continuing. So we see still an an an an an opportunity in the power grid sector, even though that this is slowly moving, they are just moving all from analog to digital.

And it started in in Europe, a little bit more ahead in in Asia and haven’t started in US yet. So it’s it’s it’s it’s will come, and we are in the first phase. But as you understand that the public company that we have the relation with, they are extremely interesting, and and we are jointly investing in testing and making sure that we have a product that fit a power grid network. So I think that’s a good signal.

Linda, Investor Relations, Net Insight: How is the Syntai demand from Swedish operators now considering the GPS independent regulation?

Christoph Rietsholm, CEO, Net Insight: As you know, we have signed two of the four operator in Sweden, Telecom (BCBA:TECO2m) and three. And we have announced that. And we haven’t announced anything more from the other two, even though that we have a relation with them and they know our product. So we will see going forward if they are moving in and using our product. But so far, we have signed two or four.

Linda, Investor Relations, Net Insight: In the report, you mentioned that you expect the growth contribution from time synchronization to increase in ’25 and primarily in the latter part of the year. Could you provide some more clarity on the factors driving this expectation?

Christoph Rietsholm, CEO, Net Insight: Yeah. I mean, it is it has been a quite lengthy process of, like, starting with, like, the first lab test, in in a POC, and then they have a POC in the in in the active network. So it’s been like a lengthy process of moving from PUC to commercial the first commercial order. But we see a high conversion rate on the existing PUCs that we have. We anticipate that the POCs in time will go down.

And hopefully, over time, when we have more customer, like leading customer that I just mentioned in the presentation, that if more operator are using our product, hopefully, we will be able to move at least from the network POCs, maybe a lab test just making sure that the product is working together with the the existing supply that operator have so we can shorten that time from PUC to orders. But when they had done the first commercial orders, it need to be into the network planning and still operate telecom operator, they are still very focused on the budget years. They need to have a budget to really to roll out our product. So it’s a little bit, as I think I mentioned, it’s a little bit hard to really estimate exactly when the PUC will move over to commercial order and exactly when we see the growth coming from the operator that are moving in with our product. But as I mentioned, we see that it will accelerate in the second half of this year, and it’s based on the existing POCs that we have ongoing.

So that’s the, like, measurement that we have and try to estimate when they are ready to rule out or rule in new our product into our network.

Linda, Investor Relations, Net Insight: And if we leave time synchronization and talk about m and a shortly or in, or quickly. Are you looking into bolt on acquisitions or more in general terms, what are you looking at in terms of M and A?

Christoph Rietsholm, CEO, Net Insight: We are not fully ready with the strategy exactly which segment or market segment or product segment or customer segment or where we are really moving. But we see that we have a possibility of broadening our product portfolio, and we are focusing on product that addressing our customer, existing customer, mainly in the media. So so we are just in the first phase of looking into that. But we see that we can probably find a a decent or product that’s very close to our product portfolio that can attract this attract attract the same customer and even the the same, people that we are working with today, which will be easier for us to move in a new product. And we see that we can use our global footprint and the relation with Plus500 (LON:PLUSP) large customer globally, and we can be a good, like, push for products that need to be distributed, like, in a global market that might have, like, in a region a strong position or in country strong position, and we can be the that can really broaden the distribution.

So that’s what we are looking into. We are not looking into, like, trying to integrate with large costing with existing product. We are more looking into, like, have synergies in the front end rather than in the back end. So that will take away, like, large and long investment in integrating them into our existing products.

Linda, Investor Relations, Net Insight: Can you give some color on on why why the board of directors are proposing that no dividend for the financial year 2024 would be given?

Christoph Rietsholm, CEO, Net Insight: Good time. Good time. And then looking into and then we have just announced that we are doing, like, a large buy of FPGA because of we see that the the the time of that product is shortened and we would like to secure that you have FPGAs for the next coming years. So that will take a little bit out of the cash flow, the the the free cash flow that we have. So so, the the decision from the board was to not have any dividends this year.

And that that probably will come up on the annual general meeting. That will be the time for the board to present that.

Linda, Investor Relations, Net Insight: Do you expect the potential US tariffs to affect your business or or otherwise, the Trump administration in general, to affect your business?

Christoph Rietsholm, CEO, Net Insight: It’s it’s extremely hard to to see what will happen. So I don’t think I have any insight in that. I think everyone need to try to see what happened in the market. So, I mean, that one thing that we see is is the number of Canadian competitor that we have. So so that can definitely affect the Canadians.

We don’t know what will happen with Europe. So so I don’t know, actually.

Linda, Investor Relations, Net Insight: And last question. The share is down heavily today. What can you say about the long term value in the company and the investment case?

Christoph Rietsholm, CEO, Net Insight: We haven’t changed our view on a long term perspective. We have iterated that we will reach the 50% gross annual and that we are on our way of reaching the 20% EBIT margin. So you shouldn’t see that the little bit slower sales in Q4 that it changed the prospect of growing the business. And, I mean, it’s normal to have some quarters, it’s a little bit slower because we cannot anticipate exactly when the large order or order coming in Q1 or in Q2. So it can be a little bit volatile between the quarter.

But we are still iterating that we see that we will reach the target that we have set, the financial target for 2025, and the long term for 2027. So that’s we are very confident that we will reach the targets that we have been communicated. And I don’t know how many quarters in raw that we have been growing. And it’s, of course, a pity that we missed the Q4, the first, I don’t know, ’sixteen or ’seventeen quarter in raw that we are growing. But we don’t see any change in the market.

I think that’s the important. We see a little bit more cautious in Europe and APAC, but that will not affect, hopefully, affect our long term growth. And we see that our growth markets, America, that we’re really focusing on, it’s doing well and a good prospect of growing in 2025. And remember, they were growing 40% last year. And still, if you look at the total market, U.

S. Market is much larger than Europe, but still Europe in our books have a higher sale than US. Then you can understand the potential that we have in US. Okay. That was the last one.

Okay. Thank you for listening in. I think that we have one more slide. Yes. Remember the calendar?

And then your report will be published the twenty second. Q ’1 report will be in April 29. And annual general meeting is May 14 in Solna at ten. And Q2 will report in mid July. So thank you for listening and have a great day.

Thank you.

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