Open Insight #8
(Click here to read the Swedish version)
Welcome to Open Insight, our blog for investors. This is where you can find out more about our offering and market position, our progress, challenges and growth. Our blog has now been published for a year and we are delighted that so many are interested in our journey.
Most of you probably know that Duplantis won a historic gold medal at the Tokyo Olympics, and we are proud that Net Insight played a part in this by contributing to the solution that enabled the live broadcasts. I am also proud that our cloud-based Nimbra Edge solution won the prestigious CSI Awards in the category Best Network Delivery Technology. These are more evidence that our market-leading equipment is reliable and delivers in demanding environments.
In this issue, we will look more closely at the new standard for video compression we have invested in, and that we are now able to offer the industry’s broadest product portfolio. This increases our competitiveness and will generate more business. During the year, UK media services provider Red Bee and Italian broadcaster RAS chose to upgrade their networks using Nimbra products.
We will also tell you more about the positive results we achieved in the first half of 2021, when customer investment appetite increased, and about the important Aperi order that will largely be delivered during the third quarter 2021.
The market continues to show considerable interest in our time synchronization solution for 5G and other critical networks. We are continuing to develop the solution and have carried out further customer tests with positive results.
Strategic initiatives ensure continued growth
In the first half of 2021, customer investment appetite increased although the market remains affected by Covid-19. After a cautious start to the year, sales and operating earnings increased compared to the corresponding quarter in 2020. Q2 was the third consecutive quarter of year-on-year growth.
Positive cash flow
An important part of our work relates to generating positive cash flow, and we have continued to focus on reducing Net Working Capital (NWC), for example by decreasing the average number of days that our accounts receivable are outstanding. This has paid off, and in Q2 Group cashflow totaled SEK 16.7 million (-10.3).
Increased net sales
Net sales for the first half year amounted to SEK 172.0 million, an increase of 4.7% compared to the corresponding period of the previous year. Adjusted for exchange rate effects the increase was 12.4%. We won a key order with Aperi, an important transaction in Q2. This was the largest order to date since the acquisition of the product portfolio Aperi and is more evidence of the competitiveness of our broad IP product portfolio.
Investments in IP products create attractive roadmap
Our investments in IP-based products are now starting to pay off. In previous newsletters, we have told you about our accelerated product development, which has already generated a solution for the new video compression standard JPEG-XS adapted for high quality and low latency. In Q4 2021, we will be launching the first JPEG-XS distribution solution for some of the world’s largest sporting events.
Additional functionality for ST 2110 technology—enabling more flexible management of video, audio and other media flows in remote and live production—will be launched in 2022.
The acquisition of Aperi is part of our strategy of offering open, automated and standardized IP solutions for all types of networks. After the acquisition, we have focused on integrating Aperi in our offering.
We won the first order after the Aperi acquisition as early as July 2021. The order, which is worth some SEK 9 M, was placed by a leading North American network operator on behalf of its media services network, and will largely be delivered in the third quarter 2021.
The order is clear evidence of the competitiveness of our IP product portfolio. Alongside our attractive roadmap, this provides a strong market position looking ahead. Our initiatives allow us to address a broader market and to reach customers that already have or want to invest in IP infrastructure.
Interest in our time synch solution remains strong
After the summer, we carried out further customer tests of our synchronization solution in mobile networks and continued to develop and optimize the solution for mobile 5G networks in close collaboration with our customers.
The solution provides unique advantages as it can distribute time synchronization over existing IP networks independently of GPS without needing to upgrade all the nodes in the network. It also works over leased network capacity and via microwave link. As well as increasing reliability, the solution also generates cost savings on operators’ total 5G investments.
In Open Insight #5 we told you about the Vinnova report, which was very well received by many operators and which worked as an important eye opener, and generated many new customer and partner dialogues. There is significant interest in the solution, and we have been invited to present it in more detail at the world’s largest synchronization conference International Timing and Sync Forum (ITSF) in Brighton in November.
One customer that decided to use our GPS-free synch solution in a TV network early on, was public service broadcaster Rundfunkanstalt Südtirol (RAS), based in the South Tyrol region in northern Italy. The company has been a customer since 2007 and recently chose to upgrade the network management system Nimbra Vision for increased functionality.
From contribution to distribution—the positive trend continues
We make the distinction between contribution, distributing individual events such as a soccer match from the arena to the TV company, and primary distribution relating to the TV companies’ distribution of the match to cable TV operators such as ComHem and Boxer or content owners in other countries.
Most of primary distribution and contribution currently takes place via satellite and other traffic through dedicated media networks. In the foreseeable future, we expect current media transport via satellite to start shifting to the cloud, a positive trend that is set to continue.
Thanks to the cost advantages and scalability of the cloud, we expect that an increased proportion of the satellite market will transfer to the cloud over the coming years, implying significant growth potential for Net Insight through Nimbra Edge.
Given the expertise we have accumulated in the cloud over recent years, and the products we are now launching, we have the potential to win a share of the satellite market. We continue to invest in our cloud platform Edge and focus on allocating resources to existing and new customers in satellite distribution.
Net Insight at the 2021 summer Olympics in Tokyo
Net Insight’s solutions once again played an important role in live broadcasts from the Olympic Games, this time at the Summer Olympics in Tokyo in July and August 2021. We provided first class international connectivity between Tokyo and several broadcasting locations, as well as on-site support both before and during the Games.
Mats Sjögren, Customer Success Engineer at Net Insight, has extensive experience of the Olympics and has worked alongside our customer for three summer and two winter Olympics since 2012.
“I had the privilege of watching Armand Duplantis win a gold medal in pole jump in Tokyo,” Mats explains. “It was an amazing experience.”
Many of our customers, including RTVE, the Spanish state-owned radio and TV company, used our solutions to broadcast the Olympics nationally. Read the full article here.
Production in Tokyo set a new record, with 30% more content produced compared to Rio 2016. The aim was to disseminate the content to as many devices, platforms and channels as possible. We are already focusing on supporting the Beijing Olympics in 2022.
Open Insight turns one!
Thank you for your time. With this issue, Open Insight celebrates its first anniversary as a CEO blog. At this time last year, we published the first edition which was very well received. Since then, our readership has grown steadily and continues to increase every month.
We want to give investors, analysts, students, researchers, journalists or members of the public a transparent picture of what we do. We provide continuous updates on our business and roadmap. You can also read about our reflections on the market, industry trends and thoughts about the future.
What would you like to learn more about? Any particular subjects you would like us to raise in the next issue? Email us at info@netinsight.net
Crister Fritzson, CEO, Net Insight
