Tecnotree Corporation Financial Report 1[st] Jan – 30[th] Sep 2023 (unaudited)

Tecnotree Corporation Stock Exchange Release 27 October 2023 at 9:00 EEST

Record Order Book backed by repeatable product deliveries enabling stable growth

Third quarter (July-September 2023)

• Net sales increased by 7.4% to EUR 21.4 (19.9) million.
• Operating result increased by 23.0% to EUR 6.2 (5.0) million.
• Net result decreased by 3.3% to EUR 3.2 (3.4) million.
• Cash flow after investments was EUR -7.9 (5.5) million.
• Earnings per share were EUR 0.01 (0.01).
• Order book at the end of the period stood at EUR 78.0 (76.1) million.
• Prospects 2023 retained and further refined.

January-September 2023

• Net sales increased 9.1% to EUR 56.2 (51.5) million.
• Operating result increased 31.4% to EUR 16.0 (12.2) million.
• Net result increased by 5.3% to EUR 8.8 (8.3) million. 
• Cash flow after investments was EUR -9.1 (1.2) million.
• Earnings per share were EUR 0.03 (0.03).

From the CEO’s desk–  

Tecnotree continues a strong growth trajectory despite inflationary cost pressures and slower cash collections.

Financial Performance

• Revenue: Tecnotree continued to demonstrate strong growth in revenue in Q3 with increase of 7.4% to EUR 21.4 (19.9) million. The January-September revenue growth increased by 9.1% to 56.2 (51.5) million. The Middle east, APAC and Africa markets contributed to the maximum revenue for Tecnotree, while the Europe and North America grew in Order Intake, opportunities and order pipeline. License revenue for this quarter increased from EUR 3.2 million to EUR 5.2 million and ARR in MEA & APAC region also increased from EUR 4.6 million to EUR 5.3 million. In 2023, year to date revenue from new customers has exceeded revenue from legacy customers.
• Profitability: Tecnotree had an increased operating result of 23.0% in Q3 to EUR 6.2 (5.0) million. The January-September operating result increased by 31% to EUR 16.0 (12.2) million. This profitability was enhanced by growing ARR to 22% YoY to EUR 24.3 (19.9) million. While the revenue in Q3 grew by 7.4% over previous year, the opex grew by 2% to EUR 15.2 (14.9) million. The January-September opex also grew by a similar 2% to EUR 40.2 (39.3) million. The management of opex has been a key focus by implementing greater levels of productization and automation.
• Net Result: The Net Result for the Q3 decreased by 3.3% to EUR 3.2 (3.4) million. The January-September Net Income increased by 5% to EUR 8.8 (8.3) million. Tecnotree continues to face growing pressures from currency devaluation and hyper inflationary trends. Even though Tecnotree exercised prudent cost management, this was offset by the higher financial expenses and taxes in Q3 amounting to EUR 2.9 million compared to EUR 1.7 million in the same quarter of the previous year. Similarly the financial expenses including taxes for January-September is EUR 7.2 (3.8) million. We believe these financial pressures will continue to exist in the near term. In the long term, as Tecnotree expands its market presence in new regions of North America and Europe and we hope to mitigate these acute financial pressures.
• Cash Flow: The cash inflow for Q3 of 2023 was EUR 11.9 (21.8) million for the same period last year. The January-September cash inflow is EUR 43.4 (47.7) million. The lower cash collection in Q3 is attributed to the retirement of many deliveries, which will result in invoices to be generated in the coming quarter. The Nigerian currency faces significant devaluation pressures causing payment delays. In countries that face extreme financial pressures, Tecnotree continues to negotiate alternative payment terms. The company allotted Compulsorily Convertible Debentures amounting to EUR 43.1 million, out of which EUR 14.1 million has been collected thus far. The cash balance at the end of Q3 was EUR 15.5 (12.3 at the end of 2022) million.
• Cost Optimization: Tecnotree plans to focus on strategic cost reductions in Q4 across its businesses to ensure profitability and optimize cash consumption. This is in line with the guidance provided.
• Order Book: Tecnotree’s Order Book continues to grow at a record high EUR 78.0 (76.1) million fueled by Tecnotree’s growth strategy of further penetrating into Europe & APAC and winning several new customer logos. The Q3 order intake also stood at a record high of EUR 31.0 (16.1) million. The orders grew for the existing digital BSS platform which helps CSPs to transform their businesses and enable faster-time-to-market for 5G monetization. The order intake also included for Fintech, Moments, VAS and Sensa Ai Products.

Tecnotree Q3 Market Highlights

Tecnotree launched MTN D-Stack, under the transformation program MTN Metamorphose powered by Tecnotree. Driven by Tecnotree’s digital suite, the project signifies a major leap towards enhancing MTN’s offerings, enabling them to benefit from wide-ranging automation-driven solutions.

• Tecnotree signed a multi-million Euro, 5-year agreement with Telenor Group, to supply Tecnotree Voice Mail System (VMS) for Norway, Denmark and Sweden operations in the Nordic region.  
• Tecnotree signed a multi-million Euro agreement with Telikom in Papua New Guinea. Under this new agreement, Tecnotree will provide support to Telikom through its BSS-Edge platform, with products like mobile & fixed line business integration.
• Tecnotree signed a multi-million Euro deal with a rising telco services provider from the African region. This collaboration will see Tecnotree deliver advanced digital Business Support Systems (BSS) stack, coupled with Fintech and Value-Added Services (VAS). The new logo is another successful endeavor towards the company’s strong presence in the African region.
• This quarter Briclinks Africa Plc ‘BTEL’ selects Tecnotree BSS, Moments B2B2X Marketplace and Diwa Fintech platform to super charge Go-to-market, and revenue monetization capabilities.
• In addition to this, in Q3 Tecnotree won a Sensa AI/Ml and Digital BSS transformation deal with a Tier-1 CSP in the Middle East.
• Tecnotree achieves the Diamond Badge for TM Forum Open API Conformance, solidifying a leading position with total of 59 certified Open APIs including 9 real world open APIs. The recognition signifies Tecnotree's commitment to creating an open digital ecosystem for customers and matching the increasing expectations of the global communications industry.
• Tecnotree has been ranked 4^th among the top companies in the world for Ai and Autonomous Agents by Markets and Markets Analyst firm in 2023. 
• Tecnotree has also been ranked among the top 2 vendor companies globally for Revenue Monetization Market Share in 2023 by Precision Reports and Digital Journal a renowed Canadian analyst firm for CSPs.
• Tecnotree was recognized by TM Forum as a finalist in its most prestigious TMF Excellence awards for Customer Experience that was delivered to MTN Uganda.
• Tecnotree was honored with two prestigious awards - ‘Best Innovation in Information Technology’ and 'Best Workplace Diversity Award'. The awards acknowledged Tecnotree’s achievements in the fields of innovation and novel technology implementation, as well as its dedication to fostering exceptional digital talents through workplace diversity.

Prospects 2023

Despite significant pressures expected in Q4 of 2023 from cost inflation and margin erosions, the company (y at this stage maintains its original guidance range and further refines as follows:

• Revenue to be higher by 9% -13% (earlier guidance 7% -15%) compared to 2022
• Operating profit (EBIT) to be higher by 15% -20% (earlier guidance 10%-20%) compared to 2022
• Cash recovery is revised to increase by 12%-14% (earlier guidance 12%-18%) compared to 2022
• Cost rationalization by Q4 of 2023 approximately by 5%-7%.

Further information
Padma Ravichander, CEO, tel +97 156 414 1420
Indiresh Vivekananda, , CFO, tel +971 56 410 8357

About Tecnotree
Tecnotree is a 5G-ready digital Business Support System (BSS) player with AI/ML capabilities and multi-cloud extensibility. It has over 40 years of deep domain expertise and it is amongst the first few companies to attain Platinum Badge in the world for Open API standards by TM Forum. It’s agile and open-source Digital BSS Stack comprises of the full range (order-to-cash) of business processes and subscription management for telecommunication players and other digital services providers, creating opportunities beyond connectivity. Tecnotree also provides a Fintech solution and a B2B2X multi-experience digital marketplace to its subscriber base through the Tecnotree Moments platform to empower digitally connected communities across gaming, heath, education, OTT and other vertical ecosystems. Tecnotree is listed on Nasdaq Helsinki (TEM1V). For more information, please visit www.tecnotree.com.