Tecnotree Corporation Full Year Report 1[st] Jan – 31[st] December 2022 (unaudited)

Tecnotree Corporation Stock Exchange Release 24 February 2023 at 9:00 EET

Solid revenue growth supported by strategic investments

Fourth quarter (October – December 2022)

• Net sales increased 11.2% to EUR 20.1 (18.1) million.
• Operating result increased 3.6% to EUR 6.1 (5.9) million.
• Non operating expenses increased 276% to EUR 2.9 (0.8) million.
• Result for the period decreased 37.2% to EUR 3.1 (5.2) million.
• Cash flow after investments EUR -6.0 (3.8) million.
• Earnings per share EUR 0.01 (0.02).
• Order book at the end of the period increased by 28.8% to EUR 68.9 (53.5) million.

Full year (January - December 2022)

• Net sales increased 11.5% to EUR 71.6 (64.2) million.
• Operating result decreased 22.7% to EUR 18.3 (23.7) million.
• Non operating expenses increased 25% to EUR 6.7 (5.4) million.
• Result for the period decreased 36.7% EUR 11.6 (18.3) million.
• Cash flow after investments EUR -4.8 (4.0) million
• Earnings per share EUR 0.04 (0.06).

Prospects 2023

Tecnotree expects in 2023:

•   Revenue to be higher by 7%-15% compared to 2022

•   Operating profit (EBIT) to be higher by 10%-20% compared to 2022

Assumptions behind the prospects
The demand for our products and solutions continues to grow and we expect to receive increasing orders from new and existing Tier 1 operators. The investments in Artificial Intelligence and Machine Learning in the new verticals of Telco, Healthcare and Fintech are strategic to the company and in line with emerging industry trends, which will yield long term benefits.

In 2023, these planned investments are expected to have an adverse impact on Tecnotree’s EBIT in the short term. Such investment is necessary to further cement our position in the AI/ML space.

Tecnotree has seen significant growth in the last couple of years. In order to ensure competitive advantage in its core digital business, Tecnotree will implement cost rationalization in Q2 of 2023 to the tune of 5 - 7%. These cost savings are expected to be realized in Q4 of 2023 and 2024, thus positively benefiting the company's profitability.

Foreign exchange rates are expected to remain at approximately current levels.

From the CEO: Tecnotree continues to enjoy a strong order book position while delivering customer commitments

Tecnotree has witnessed a surge in demand for our digital stack with a robust increase in order book position by 29% to 68.9 million euros compared to end of last year. We have also been recognizing revenue through our global deliveries across Europe, Middle East and Africa, realizing a 11% increase in revenue in 2022 despite persistent geo-political issues.

Tecnotree adds record number of new logos
Tecnotree continues to grow its market position welcoming new customer logos like Solomon Telekom, Emtel Mauritius, Monty Mobile Gambia, Entel Bolivia, Cable & Wireless Communications Panama and Start Canada, that further validates the demand for our digital offerings across markets. Tecnotree was recognized by Gartner for Customer Management and Experience Solutions and for Revenue Monetization & Management in 2022.

Ongoing recognition by key Industry bodies
Tecnotree was also recognized by TM Forum, the telecom industry standards body, as the first digital platform company in the world to be certified for real-world open API implementation, which ensures quick and rapid integrations to accelerate business growth and growth in our partner ecosystems for the 5G and Cloud era. In addition, Tecnotree is a Global ISP partner for Microsoft Azure, with a Global joint Go To Market alignment.

Order Book
Order book at the year end was EUR 68.9 million being 29% higher compared to EUR 53.5 million last year.

Net sales
Net sales in the fourth quarter were EUR 20.1 million showing 11% growth compared to last year. Similarly, the full year net sales were EUR 71.6 million and 11% higher than last year. The growth in net sales came mainly from MEA & APAC segment.

Profitability
Tecnotree’s operating result in the fourth quarter was EUR 6.1 million and increased by EUR 0.2 million (4%) compared to EUR 5.9 million last year. Operating result for the full year was EUR 18.3 million and declined by EUR 5.4 million (-23%) compared to EUR 23.7 million last year.

Tecnotree’s net result in the fourth quarter was EUR 3.2 million and declined by EUR 1.9 (-37%) million compared to EUR 5.2 million last year. Net result for the full year was EUR 11.6 million and declined by EUR 6.7 million (-37%) compared to EUR 18.3 million last year.

Tecnotree faces increase in operating expenses as it continues to invest in human resources in order to meet its delivery demands and to invest in the R&D of its digital platform. The  operating result is further impacted by global inflationary pressures. Tecnotree has made necessary provisions against receivables with abundant caution. Tecnotree continues to be challenged with currency volatility in its Treasury operations. As we continue to work in emerging markets we face repatriation challenges and delayed collections.

Financial situation
In the fourth quarter Tecnotree concluded an asset purchase agreement with Cognitive Scale Inc. for a cash price of USD 0.6 million The transaction included acquiring interest bearing liabilities valued to USD 5.4 million.

Cashflow and Cash Management
For the year 2022 growth in cash collections of 15%, outpaced Revenue Growth at 11%. Cash and cash equivalents at the end of the year were EUR 12.3 million compared to EUR 17.6 million last year. Cash flow in the fourth quarter was impacted by temporary delays in some key customer payments and a strategic investment made in Q4 2023. Our cash recovery expectation for 2023 is expected to grow by 12% to 18%.

Tecnotree is committed to investing in advanced technologies such as 5G, AI/ML, Deep Learning, Automation, Robotics and Cloud across its R&D centers globally. The recent acquisition of Cognitive Scale’s award winning AIML platform, with 108 awarded patents will put Tecnotree in a market leading position with Tecnotree SENSA, the next generation of our digital platform. It will enable Tecnotree products to develop advanced cognitive & intuitive capabilities that will empower customers to make personalized choices.

At the end of 2022, through the acquisition of CS, Tecnotree has expanded its footprint globally and entered the North American market.

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.