The solid growth seen in the first six months continued into the third quarter. We continue to report strong earnings, despite an increasingly uncertain market. The growth is driven by strong sales in region Americas, including larger orders to two of our customers of which one includes delivery of equipment for the 2022 Football World Cup in Qatar. Due to the large proportion of USD in the sales for the quarter, both revenue and earnings benefited from a significant positive exchange rate effect compared with the same period year-on-year. Revenue and earnings from the new product area 5G synchronization also contributed to the strong sales and earnings.
Sales for the period totaled SEK 130.3 (100.8) million, which is 29.2% higher than the same period year-on-year (in comparable currencies 12.3%). The gross margin increased to 65.3% (60.1). The higher gross margin is largely attributable to positive exchange rate effects and a favorable customer and product mix during the quarter, while the price increase we implemented earlier in the year compensated for increased component costs. Operating earnings totaled SEK 27.3 million, compared with SEK 11.8 million in Q3 2021.
Sales growth for the rolling four quarters was 26.0%, which exceeds our long-term target of an average annual sales growth of at least 10% for the period 2021–2025. Operating margin for the rolling four quarters was 11.0%, which is in line with our long-term target of at least 10%.
Due to the uncertainties in the world, there is a tendency for greater caution and slower sales cycles. We are still seeing significant impact on the supply chain and a risk of cost increases. During the quarter we continued to secure the supply of components in order to safeguard customer deliveries in the long term. This improves our delivery reliability and will also increase our inventory over the coming quarters.
Interest in our cloudbased Nimbra Edge solution remains strong, with rising recurring revenues through new customers and increased usage by existing customers. During the quarter we signed an agreement worth almost SEK 8 million with a leading American service provider.
First 5G products delivered to Three Sweden
Our major investment in time synchronization continues. We have delivered Three Sweden’s initial order for our existing Nimbra Time Node for synchronization in their 5G network. After the end of the quarter, we received a pilot order from one of Canada’s leading mobile operators. Turkish mobile operator Türk Telekom, whom we signed an agreement with in 2021, has put its 5G network into operation based on our GPS-independent synch product – an important milestone on our growth journey.
Our new product for 5G synchronization is under development and is expected to be launched at the end of 2023. The rate of investment remains high in development, while we are building resources in sales and marketing.
Customer delivery of advanced ST 2110 functions
To offer an efficient transition to IP, we have developed a suite of advanced ST 2110 functions that enhance our Nimbra 1000 platform. This is the most significant upgrade to date. In August the first customer delivery was made to Nordic service provider Mobile Links, providing clear proof of the solution’s competitiveness.
Strengthened position in our growth areas
Looking back over an unusually strong quarter, I am proud of our achievements which include several important deals and launches. At the same time, we are cautious in our expectations for the near future, given the situation in the world at large. We continue to make advances in IP, Cloud and 5G synchronization and to strengthen our position in the market. I want to thank our employees for their constant commitment and contribution to our customers’ success.
Solna Sweden, November 8, 2022
Crister Fritzson, CEO
