Interim Report January - June 2022

April 1st – Jun 30th 2022

• Net sales amounted to EUR 6 763 thousand (6 246), an 8.3 percent increase
• EBITDA of EUR 301 thousand (383) and EBITDA margin of 4.4 % (6.1)
• EBIT of EUR 194 thousand (286) and EBIT margin of 2.9% (4.6)
• Net earnings after tax of positive EUR 106 thousand (19)

Jan 1st – Jun 30th 2022

• Net sales amounted to EUR 12 899 thousand (11 937), an 8.1 percent increase
• EBITDA of EUR 365 thousand (432) and EBITDA margin of 2.8 percent (3.6)
• EBIT of EUR 157 thousand (238) and EBIT margin of 1.2 percent (2)
• Net earnings after tax of negative EUR 170 thousand (-320)

April - June key developments

• Fast growth to an all-time high quarterly Group Revenue of EUR 6.8m
• Significant Net Earnings of close to EUR 110k
• Gross Margin increased to almost 25%
• Fast growth in Germany to over EUR 800k Revenue with 43% GM and 22% EBITDA
• Germany, Belgium, the Netherlands, Haiti and Pakistan all beat their budgets
• New investments and positive business development in the USA
• NPTG received an order from B-meters for 15.000 water meters
• The Smart floor drain was launched at Nordbygg with great feedback from stakeholders
• High fuel and material cost in several countries due to the war in Ukraine
• First contract closed for car charging stations in Sweden and partner agreement with a European charging station supplier signed
• Talkpool launched its new revolutionary Radon sensor
• Talkpool and PAiC joined forces to launch PAiChain and its PAiC Token
• Initial slow IoT sales in Sweden due to projects delays

CEO COMMENTS

Despite the ongoing global turmoil that is causing inflation and hampering investments, Talkpool made its best quarter ever in Q2 2022. Group Revenue reached an all-time high of EUR 6.8m and the Net Earnings of EUR 106k are the best since Talkpool’s IPO in 2016. This breakthrough is the result of a focused and determined turnaround work that started in 2019 and steadily improved financial performance since then. Now when the operational costs are optimized in most existing markets, the next step will be to focus even more on deleveraging and cutting financial costs.

One of the main contributors to the growth and the net result in Q2 was Talkpool’s German business unit, which grew to EUR 800k Revenue with over 43% Gross Margin and more than 22% EBITDA. The stable growth and performance in the other European and the American markets did also grant a successful quarter and a solid base for future growth and further profit improvements.

A good portion of resilience and hard work took us through two years of global pandemic with limited negative business impact. The global effects of the war in Ukraine are now creating new challenges. Soaring energy prices and inflation are increasing the operational costs for Talkpool, but it is also creating business opportunities for energy saving solutions for real estate owners, telecom operators and tower companies.

Although ongoing customer negotiations and planned projects were unexpectedly delayed during the first months of the year, the high sales activity and the demand for energy-saving solutions clearly showed in our books during the second quarter.

Network Services

Covid-19 had a limited negative impact on the telecom industry and in a longer run it has only increased the demand for bandwidth and internet services.

The ongoing global crisis mainly caused by the war in Ukraine is not necessarily advantageous for the telecom and IT industry, but so far, the negative impact on our telecom network business and the demand for our expertise services has been close to zero.

Inflated fuel and power prices have increased the operational costs, but in most countries, we have been able to compensate this with cost reductions and price adaptations.

Talkpool’s engagement in the US market continued to grow during the second quarter. The Ericsson USA 5G roll out services project in Puerto Rico remained our main project on the market, but the preparation for two new projects on the US mainland progressed well.

According to the market outlook the demand for communication networks expertise and services will just continue to grow and the big 5G and fibre network deployment projects in the USA have barely started. Hence Talkpool will continue to invest and grow in this expansive region to make it one of its key markets.

Talkpool has been well established on the German Telecom Network Services Market for many years, but the positive development of the company during the second quarter is unprecedented. The growth to a quarterly revenue of over EUR 800k makes it the fastest growing and the fourth biggest company in the group extrapolating the all-time high revenue in June. The German market demand for optical fiber planning and deployment services is bound to continue for many years to fulfill the political commitments and Talkpool is determined to continue growing to one of the major broadband Network Expert companies in the market.

IoT

In June the sales of IoT solutions and products in the Swedish market started picking up again after some slow first 4-5 month of the year when real estate companies and other customers were holding back on their investments, waiting for the turmoil in the world finance and politics to stabilize. Thanks to the resilience of our sales staff and the soaring energy prices, customer negotiations continued to progress, and we saw the orders booked increase already at the beginning of Q2. Having said that, the financial situation for real estate companies is challenging and the market forecast is uncertain, which will affect investments in the industry.

In Q2 the first contracts for car charging stations in Sweden were closed. Charging stations will be added to our smart buildings offering and the stations will be integrated in the IMD and local power management solutions offered by Nordic Proptech. To secure HW quality and supply a strategic partner agreement was signed with a major European charging station supplier in June.

In April B METERS placed an order for 15.000 of Talkpool’s IoT communication devices, compatible with their water meters. The order shows that demand for the product, first launched in 2018, keeps increasing, and the rollout of the product is reaching large scale.

The partnership fits well in the ‘Talkpool-inside’ concept and the sale of 15.000 LoRaWAN modules is a sign of the success of the strategy. The smart water meters with Talkpool inside will be sold by B METERS to its end-customers, in various markets all over Europe.

The primary market driving use cases are submetering in real estate and smart metering by utility companies. Using smart meters for these applications allows for strengthened control of water management systems, including the detection of leakages and the invoicing of consumption, based on real-time insights in actual consumption.

A couple of years ago, insurance company Folksam initiated a collaboration between Purus, Anticimex and Talkpool, to explore the opportunities to use new technology to reduce water damage costs. Folksam has run a pilot installation for one year with actual customers. Although the sample size was small, the smart floor drain was able to show a decrease of water damage related costs by 60%, through the enablement of partial repairs of the bathroom.

In April the floor drain was launched at the big construction fair Nordbygg in Stockholm. The product and the concept were met with an overwhelming interest from insurance companies, property owners, installers and industry associations, which indicates a great market potential.

The energy optimization solution developed together with AI partner Myrspoven is well proven and already installed to control over 1 million square meters of indoor building space.  In Q4 last year Talkpool delivered the first international solution together with Myrspoven to a combined retail and office building in Prague. In Q2 Talkpool and Myrspoven initiated a joint effort to boost the sale of energy saving HVAC optimisation solution outside of the Nordic countries starting in Germany.

Talkpool also continued its focused efforts to sell the “air4schools” solution in Germany and Switzerland. The end-to-end solution is optimizing the air quality in classrooms while minimizing the energy cost for heating and ventilation. The solution has successfully tested at several schools in Germany and Switzerland and further deployments are planned. While initially focusing on schools, the technology can also improve air quality in offices, conference rooms, public buildings, and private homes.

Radon gas is another severe problem in buildings in many areas of the world, being the second most frequent cause of lung cancer. Good ventilation is crucial to prevent this. In June Talkpool launched its revolutionary Radon sensor. The device measures radon gas levels extremely fast and reports the data directly, online, which enables Smart Building Solutions, supports Green Building Certifications and allows for unique control of ventilation systems based on real-time Radon data.

As a result of this, ventilation systems can be activated when radon levels increase, thereby ensuring a safe environment for the building users. On the other hand, when the building is not in use, like for example a school building at night, ventilation systems can be turned off to save energy, to be activated again in time before the day starts. This can thereby tackle key safety-, sustainability- and financial targets of real estate owners and facility managers.

Talkpool and PAiC have recently joined forces to launch PAiChain and its PAiC Token. This joint venture will deliver a unique combination of Telecommunications, IoT and m-Commerce products, that include blockchain technology in relevant use cases for these industries.

Through PAiChain, the companies are actively engaged in collaboration to identify innovative opportunities for blockchain technology to enhance security, transparency and database efficiency of key projects to the benefit of their current and continuously expanding customer base.

PAiChain is looking to add transactional value to all customers and partners in the PAiChain ecosystem – these values are expressed through the PAiC Token.

3rd Quarter 2022

During the third quarter Talkpool continued to evolve its incubator strategy. The successful acquisition and consolidation of Nordic Proptech in the Talkpool Group has created value which was proven in the new share emission in Nordic Proptech recently at a valuation several times higher than the acquisition price.

This and other valuable assets of Talkpool AG are not relevantly reflected in its share price as the current market cap of the group is only around SEK 50m. In its portfolio of holdings in IoT and com tech companies, Talkpool AG currently has assets worth several times this market cap. To unfold the hidden values and leverage on its strength as an incubator, Talkpool AG will increasingly focus on M&A and investments in innovative tech companies. 

The IoT solutions development centre Capricorn in Chur did also progress well during the quarter as several solution test projects in live environments were launched. The products are developed in Switzerland and the IP will belong to Talkpool.

For more information, please contact:

Erik Strömstedt, CEO Talkpool
Tel: +41 81 250 2020
erik.stromstedt@talkpool.com 

Talkpool provides IoT solutions and telecommunication network services globally. Through its cutting-edge technical expertise, long experience and agile business model, Talkpool offers global telecom vendors and operators high-quality services on short notice no matter the location. Talkpool offers end-to-end IoT solutions for smart buildings and cities with focus on environmental control, energy saving and damage prevention. Erik Penser Bank, +46 8 463 80 00, www.penser.se, is Talkpool's Certified Advisor. For more information www.talkpool.com

This information is inside information that Talkpool AG (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 08.30 CET on August 25, 2022

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