Release Date: July 16, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Enea AB (LTS:0RP6, Financial) reported a stable EBITDA margin of 33% for the quarter, within their guidance range of 30% to 35%.
- The company added 7 new customers in the quarter, including significant additions in the deep packet inspection and firewall businesses.
- Enea AB (LTS:0RP6) extended a contract with a leading US-based SD-WAN vendor, valued at $2.5 million over 2026-2027.
- The company is seeing strong growth in its traffic management business, driven by increased network intelligence demands.
- Enea AB (LTS:0RP6) is actively working on strategic partnerships, such as the cooperation with Akamai, to enhance their cybersecurity offerings.
Negative Points
- Currency headwinds negatively impacted net sales by SEK11 million, affecting overall financial performance.
- The security business experienced a 7% decline in currency-adjusted sales for the quarter.
- Earnings per share were heavily impacted by financial net items and currency fluctuations, ending at SEK 0.43 per share.
- Operating cash flow was significantly lower at SEK 5 million compared to SEK 37 million in the same quarter last year.
- There is a noted shift from perpetual license models to source license models, which may pressure short-term revenues.
Q & A Highlights
Q: How have recent customer discussions evolved, particularly given the macroeconomic turmoil?
A: Teemu Salmi, CEO, noted that customer discussions vary by region. In the Middle East and Africa, there is eagerness to invest, driven by regulatory and monetization opportunities. In Europe, geopolitical concerns are prompting discussions about relying on American partners for critical infrastructure. There's also a shift from perpetual to source license models, affecting short-term revenues but potentially benefiting long-term recurring revenue.
Q: Can you provide more details on the transition to source license models and its impact on growth?
A: Teemu Salmi explained that while the shift to source models is a trend, it's too early to quantify its impact. The transition is occurring in certain regions and product segments, but it's not yet a major shift for Enea. The company is monitoring this trend closely.
Q: Do you foresee the need for increased investments to achieve organic growth targets?
A: Teemu Salmi acknowledged that investments are necessary for acceleration. The company is currently undergoing a strategy update to identify opportunities and areas for growth, which may require investments. The strategy process is expected to conclude by Q3 or Q4.
Q: What are the opportunities for Enea in the defense and national security sectors?
A: Teemu Salmi highlighted that the defense and national security sectors are strategic areas of interest for Enea. The company's solutions, such as traffic management and deep packet inspection (DPI), are relevant for these sectors, and Enea is already engaging in discussions and activities in this area.
Q: Can you elaborate on the partnership with Akamai and its potential impact?
A: Ulf Stigberg, CFO, described the Akamai partnership as a referral partnership that enhances Enea's offerings by integrating Akamai's Fingerbank with Enea's solutions. This partnership aims to provide broader and deeper network traffic visibility, strengthening Enea's competitive position. The company sees potential for more such partnerships to build a stronger ecosystem.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
