Ethernity Networks Ltd – ENET – Final Results

Ethernity Networks Ltd – ENET – Final Results

Ethernity (AIM: ENET), a leading supplier of functional acceleration ethernet adapter cards on FPGA (field programmable gate array) for virtualised networking appliances, today announces its results for the year ended 31 December 2019.

Financial Highlights

–      Revenues increased by 19.6% to $1.34m (2018: $1.12m)

–      Gross margins increased by 41.6% to $1.15m (2018: $0.81m)

–      Operating costs before amortisation of intangible assets, depreciation charges, changes in recognition of R&D costs and other non-operational charges decreased by 14.1% to $2.79m (2018: $3.25m)

–      EBITDA Loss (adjusted for R&D capitalisation) improved by 35.3% to a loss of $1.52m (2018: loss of $2.35m)

–      $2.7m net cash and short term cash deposits as at 31 December 2019.  As at 16 June 2020 the Company had retained cash reserves of $0.54m (unaudited)

–      Cessation of capitalisation of R&D expenditure from 1 July 2020

Operational 2019 and Post-period highlights

Operational Highlights

–      First delivery of the ACE-NIC prototypes in early 2019

–      Concluded the delivery associated with a licensing contract, signed in Q4 2018, with a U.S Tier 1 telecommunications OEM, that has subsequently resulted in a follow up contract at the end of April 2020

–      ACE-NIC100 selected by FiberHome Telecommunication Technologies for vBNG (virtual broadband network gateway) offload; now refocused for 5G User Plane Functionality (UPF) to be delivered for testing by Chinese operators during Q4 2020

–      Increased drive from Chinese markets, focused on building a 5G mobile network based on NFV (network function virtualisation), opening further ACE-NIC100 engagement opportunities

Post-period highlight Highlights

–      Agreement in February 2020 with TietoEVRY to create a joint offering of open source concept based on VPP (vector packet processor) for 5G UPF to accelerate 5G packet processing at the network edge

–      Ethernity named in Gartner’s February 2020 Report “Market Trends: Function Accelerator Cards Disrupting Traditional Ethernet Adapter Market” as a “Vendor to Watch” for solutions within Functional Acceleration Cards

–      Design win in March 2020 with Chinese OEM working on integrating their UPF control software to operate on top of Ethernity’s ACE-NIC for UPF data plane offload

–      ACE-NIC100 cards shipped to a large Chinese operator in April 2020 following an order received for implementation of 5G UPF

–      Engaged in March 2020 with Tier 1 networking OEM vendor on the UEP-20, this engagement is on hold due to COVID-19.

–      June 2020 – order from South Asian service provider planning to deliver their own UPF control and offload, with Ethernity’s ACE-NIC, the UPF data plane

–      Following conclusion in 2019 of the delivery associated with a licensing contract, signed in Q4 2018, with a U.S Tier 1 aviation/military supplier, a new project was originally planned to commence  in Q2 2020. Due to  the  impact of COVID-19 the customer  has estimated a delay in the programme development, for which we remain under consideration, to be between six to twelve months from now

–      Direct relationship in place with three major telecom service providers in China – China Mobile, China Telecom and China Unicom – each either planning to use an FPGA SmartNIC offering for 5G UPF for integrating their own open UPF software to be offloaded by the ACE-NIC

–      Staff safeguarding and cash conservation measures implemented in light of COVID-19

–      Continued focus on delivering complete solutions for functional acceleration of virtualised platforms and programmable networking appliances, transitioning from a technology Intellectual Property licensing company to a complete solution offerings company

David Levi, Chief Executive, said “I am encouraged by the fact that, finally, the telecom cloud and NFV market combined with the data usage requirements of 5G has been realised and, despite the uncertainty resulting from the COVID-19 pandemic, is now positioning towards mass deployment, allowing the Company to fulfil its goal. I am hopeful that the growing momentum around our 5G UPF acceleration solution will lead to the achievement of large scale growth in the coming years.”

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