Release Date: April 29, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Net Insight AB (FRA:NSGB, Financial) experienced strong growth in the Americas region, with a 46% year-on-year increase.
- The company has a very strong gross margin, which has increased by 1% over the last 12 months.
- Net Insight AB (FRA:NSGB) has added 21 major new customers over the past three years, significantly increasing revenue from new accounts.
- There is a growing demand for time synchronization solutions, driven by geopolitical uncertainties and the need for secure 5G networks.
- The company is well-positioned in the cloud segment, with a strong product portfolio that includes both cloud and hardware solutions.
Negative Points
- Net sales decreased by 19.6% due to geopolitical uncertainties and hesitant markets in EMEA and APEC regions.
- The company reported an operating loss of 9.1 million for the quarter, primarily due to lower revenue.
- There is a temporary top-line pressure and short-term market hesitation affecting business deals.
- The gross margin decreased in the quarter due to a higher proportion of hardware sales compared to software.
- Net Insight AB (FRA:NSGB) has initiated a cost-saving program in response to the current market conditions and geopolitical uncertainties.
Q & A Highlights
Q: Cecilia, you talked briefly about the US tariffs and how it affects Net Insight. Can you say a bit more about this and also perhaps elaborate on how you are affected by the US dollar movement we've seen?
A: Our products are currently exempt from US tariffs, so there are no direct consequences at the moment. However, if this changes, it could impact a small portion of our revenue, about 12%. Regarding currency, most of our revenue is in euros or US dollars, so a strengthened krona affects our revenue. We hedge to even out these effects over time.
Q: What can you say about the cost savings program that you are going to implement? How do you reason when signing such a program and what's the magnitude and when will it have impact?
A: We started being cautious with costs in Q1, maintaining operating expenses at last year's level. We are now taking a broader approach to cost savings, and more details about the program and its expected impact will be provided in our Q2 report.
Q: Can you elaborate, Chris, on the market dynamics that you're seeing in media at the moment? Do customers have overcapacity which makes them afford delaying investments, or what dynamics are you seeing at this moment?
A: The market dynamics remain focused on transitioning to IP and cloud solutions, which offer cost savings and flexibility. The uncertainty affects the timing of orders, but demand remains strong. Live sports continue to drive the media industry, and we see resilience in revenue streams, even during economic downturns.
Q: You mentioned a fairly good number of new customers over the recent years. How does this intake of 21 new media customers compare to historical levels?
A: The intake of new customers is extremely high compared to historical levels. In 2022, we had one new customer, and last year we added more than 10. This aligns with our strategy to move into IP, attracting new customers, especially in the US market, which is very IP-based.
Q: Moving over to time synchronization, there has been strong optimism around time synchronization, yet the order book is declining and sales are now lower than the previous quarter. What's the reason behind this?
A: The sales cycle for time synchronization is extensive, starting with lab testing and moving to network tests and negotiations. Many new customers are currently testing our products, and while this takes time, we see traction and expect increased sales in the second half of the year. Long-term, time synchronization will be crucial for growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
