Tecnotree Corporation Financial Report for Q2 and Half Year 2022
Tecnotree Corporation Stock Exchange Release 4 Aug 2022 at 9:00 EET
Healthy Order Book and Revenue Growth
Second quarter (April – June 2022)
- Net sales EUR 18.3 (16.7) million.
- Operating result EUR 5.1 (7.6) million.
- Result for the period EUR 4.0 (5.3) million.
- Cash flow after investments EUR -2.1 (1.8) million.
- Earnings per share EUR 0.01 (0.02).
- Order book at the end of the period EUR 72.8 (55.0) million.
First half (January - June 2022)
- Net sales EUR 31.6 (27.9) million.
- Operating result EUR 7.1 (10.6) million.
- Result for the period EUR 5.0 (7.7) million.
- Cash flow after investments EUR -4.2 (3.5) million.
- Earnings per share EUR 0.02 (0.03).
| Key figures, MEUR | 4-6/2022 | 4-6/2021 | 1-6/2022 | 1-6/2021 | 1-12/2021 |
| Net sales | 18.3 | 16.7 | 31.6 | 27.9 | 64.2 |
| Operating result | 5.1 | 7.6 | 7.1 | 10.6 | 23.7 |
| Result before taxes | 5.9 | 6.2 | 7.4 | 9.1 | 21.4 |
| Result for the period | 4.0 | 5.3 | 5.0 | 7.7 | 18.3 |
| Earnings per share, basic, EUR | 0.01 | 0.02 | 0.02 | 0.03 | 0.06 |
| Order book | 72.8 | 55.0 | 53.5 | ||
| Cash flow after investments | -2.1 | 1.8 | -4.2 | 3.5 | 4.0 |
| Change in cash and cash equivalents | -2.1 | 1.0 | -3.6 | 2.6 | 9.5 |
| Cash and cash equivalents | 13.9 | 10.7 | 17.6 | ||
| Equity ratio % | 81.7 | 49.4 | 85.2 | ||
| Net gearing % | -18.7 | 6.9 | -26.0 | ||
| Personnel at end of period | 778 | 688 | 750 |
Prospects 2022
In the second half of 2022, Tecnotree expects its revenue to be higher compared to the first half of 2022. The full year revenue in 2022 is expected to be 5 to 10% higher compared to 2021 and the full year EBIT in 2022 is expected to be lower compared to 2021. The lower EBIT is on account of the business requirement to fulfil the high order book, investments in new initiatives (Tecnotree Moments, Fintech and SaaS) coupled with headwinds caused by high inflation and adverse currency movement.
CEO Padma Ravichander: Witnessing strong traction but being cost cautious
Tecnotree witnessed surge in demand for its products and solutions through the first half of the year resulting in the highest ever order book position of EUR 72.8 million being 32% higher than in the end of the first half last year. MEA and APAC region witnessed 35% increase in order book followed by Europe and Americas with a 16% increase. We continued to receive large orders from large tier 1 telecom groups for which we need to invest to deliver these orders expeditiously. This will ensure long term recurring revenue from these new customers such as STC, Zain, Ooredoo as our engagements have a long-term aspect embedded like MTN and Claro with whom we have more than a decade long relationship and recurring revenues.
Despite challenging economic and political environment, our revenue grew by 13% in the first half. Further, as a product company, we witnessed 33% growth in our license revenue and 19% growth in our delivery revenue which entails strong trust in the Company and provides credible references to our potential customers. We registered the recurring revenue of 36% of the total revenue in the first half as against 42% last year.
Despite the growth in revenue, we continued to face rising cost and operational challenges led by external factors leading to thinner first half net result margin of 16% compared to 28% last year. Further, one of the reasons for cost increase is also the new deployments in tier 1 clients which requires greater initial investment to understand their current environments and at the same time we are also expected to increase our onsite presence and support to earn their trust and confidence. This also makes our BSS Stack richer and capable of serving multiple markets and customers.
With the uncertainties the world is witnessing, we are adopting a balanced approach of controlling our costs and at the same time focusing on monetizing on all opportunities to increase our order intake and meeting our deployment commitments.
We continue to work with the inherent risks of currency fluctuations, high wage inflation and supply chain pressures and are taking all efforts to mitigate its impact. Additionally, we continue our investments on new initiatives – Tecnotree Moments, Tecnotree DiWa (Digital Wallet) and SaaS and are hoping to see encouraging response in the next few quarters.
Order intake
New orders recorded during the second quarter totaled to EUR 27.1 million compared to EUR 24.4 million last year. Order book in the end of the second quarter was EUR 72.8 million being 35% higher compared to EUR 55.0 million last year.
Revenue
Revenue in the second quarter was EUR 18.3 million showing 9% growth compared to last year. Correspondently, revenue in the first half was EUR 31.6 million and 13% higher than last year. The growth in revenue came from MEA & APAC segment.
Profitability
Tecnotree’s operating result in the second quarter was EUR 5.1 million and declined by EUR 2.4 million compared to EUR 7.6 million last year. Operating result in the first half was EUR 7.1 million and declined by EUR 3.5 million (-33%) compared to EUR 10.6 million last year.
Tecnotree’s result for the period in the second quarter was EUR 4.0 million and declined by EUR 1.4 million compared to EUR 5.3 million last year. Result for the period in the first half was EUR 5.0 million and declined by EUR 2.8 million (-36%) compared to EUR 7.7 million last year.
Financial situation
Cash and cash equivalents at the end of the second quarter were EUR 13.9 million compared to EUR 10.7 million last year. Tecnotree’s financial situation continues strong and it is debt free.
Other business updates
With Tecnotree Moments platform and its Fintech offerings, we hope to synergize new partnerships with communication and Digital Service Providers, eco-system players and internet of things (IOT) providers, to introduce new revenue models and API frameworks to take advantage of the 5G roll-outs world-wide and forge new frontiers to empower digitally connected communities in the sectors of Education, Health, E-commerce, Gaming, Sports and Entertainment.
Further information
Padma Ravichander, CEO, tel +97 156 414 1420
Priyesh Ranjan, CFO, tel +971 50 955 1188
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.