Strong quarter in a turbulent market

Our steady growth trend and progress in 5G synchronization continue, despite market uncertainties.

It was a strong start to the year, despite continuous challenges with component shortages and increased uncertainty in general due to the geopolitical situation. Revenue in Q1 amounted to SEK 109.7 million, of which SEK 11.3 million related to the 5G synchronization (initiated in Q4 2021). Sales in the period increased 40.8% compared to the corresponding quarter in the previous year (in comparable currencies 32.9%), and increased compared to the previous quarter by 1.7%. The growth is driven by strong sales across all regions and by 5G synchronization sales.

Operating earnings totaled SEK 10.7 million, compared to SEK 3.1 million in Q1 2021 and SEK 3.3 million in the previous quarter. Gross margin was positively affected by high proportion of service sales in the quarter. Operating expenses were lower than in the previous quarter which was impacted by non-recurring costs related to the 5G synchronization initiative.

Our recurring revenue streams increased in the quarter, partly from our cloud offering (Nimbra Edge) but also from increased license and support revenue from our core business Nimbra MSR.

Positive response from the market
I received positive feedback on our new products, like Nimbra Edge during my trip to the US and Canada in March, when I had the opportunity to meet with some large media companies and service providers. The market is experiencing a rapid technological transformation across many areas which is driven towards Cloud and IP-based workflows. The work we have invested in
strengthening and supporting our customers in their businesses have made us closer, and our ability to help customers in this transformation give us a strong market position.

Significant interest in our 5G synch solution
5G is based on TDD (Time Division Duplex) which among other things enables increased capacity and the opportunity to develop new functionality. The synchronization is a prerequisite for the TDD networks to function due to the high precision requirement and high demand on low latency.

The advantages with our synch solution are many and have generated a significant amount of interest among our mobile operator target group. For example, there is no need to upgrade the entire network, lower operational costs and it enables a faster roll-out across the network. The uncertain geopolitical situation has also generated a strong awareness of the importance of critical networks like 5G being constructed independently of GPS.

Out of nearly 800 mobile operators in the world, we have identified our target group using parameters such as type of network, number of network equipment suppliers and phase in their 5G roll-out. The customers are primarily located in Europe and APAC (excluding China).

Sanctions against Russia and Belarus
It goes without saying that we will comply with the current sanctions levied against Russia and Belarus. This implies to both direct and indirect sales, deliveries and support to customers, subcontractors and partners in Russia and Belarus. Our exposure to these markets is very limited and we have assessed that the sanctions will not have a significant impact on the business.

Uncertain component availability continues
As expected, the component shortages continued to affect us in the quarter through delivery difficulties and price increases within some component categories. The price adjustments we carried out from February 1, aimed to compensate for these price increases. We now expect further uncertainty during the whole of 2022.

Repurchase program finished The repurchase program of own shares, which commenced in November, has finished. 14 million shares were repurchased for a total amount of SEK 70 million.
It will be proposed at the AGM that a renewed mandate is passed for the repurchase of shares for up to a maximum of 10% of shares issued, and that all repurchased shares should be cancelled.

Clear focus in an uncertain world
We experience significant interest in our new products, we are strengthening our marketing position and we are on target to reach our financial goals. This is reassuring.

I am proud of the commitment and clear direction we have and would like to thank all our employees for their endurance and engagement.

Solna Sweden, April 29, 2022

Crister Fritzson, CEO