Ethernity Networks Ltd – Interim Results

Ethernity Networks Ltd – Interim Results

Ethernity Networks Ltd (AIM: ENET.L), announces its interim results for the six months ended 30 June 2019.

Ethernity Networks provides innovative networking and security solutions on programmable hardware for accelerating telecom and cloud networks. Ported onto any Field Programmable Gate Array (FPGA), Ethernity offers complete data plane processing with a rich set of networking features, robust security, to allow improved performances of  a wide range of virtual functions to optimise  networks. The ACE-NIC SmartNICs, ENET Flow Processors, and turnkey network appliances offer best-in-class fully programmable platforms for the telecoms, cloud service provider and enterprise markets. Ethernity offers complete solutions that enables customers to stop burning CPU cores and to quickly adapt to changing conditions, improving time-to-market and facilitating the deployment of edge computing, 5G User Plane Functionality (UPF) and Network Function Virtualization (NFV).

Financial summary:

·    Revenues increased 2.2 times to $971,709 (H1 2018: $441,247)

·    Gross profit increased 2.8 times to $843,002 (H1 2018: $299,647)

·    EBITDA loss reduced by 56% to $485,451 (H1 2018: $1,111,989)

·    Operating loss reduced by 23% to $981,774 (H1 2018: $1,276,489)

·    Cash and cash deposits balances at 30 June 2019 of $5.9m (31 December 2018 $8.6m) (30 June 2018: $11.9m).

 

 EBITDA

Unaudited

Audited

30 June 2019

30 June 2018

31 December 2018

US$

US$

US$

Revenues

971,709

441,247

1,123,707

Operating Profit (Loss)

(981,774)

(1,276,489)

(2,785,731)

Add: Depreciation

128,945

42,283

100,918

Add: Amortisation

367,378

122,217

322,724

EBITDA

(485,451)

(1,111,989)

(2,362,089)

 

Operational highlights:

·    Downward trends of 2017 and 2018 reversed with revenue increasing, reflecting increased revenues from contracts signed.

·    Operating costs, excluding amortisation and depreciation reduced by 5%.

·    ACENIC-100 selected by FiberHome to be promoted to FiberHome’s core Chinese telecom operator clients serving tens of millions of households, including China Unicom, China Telecom, and others.

·    Successfully completed delivery of the Company`s ACENIC-100 to a major Korean OEM.

·    Advanced discussions to supply Ethernity’s current Universal Edge Platform (UEP) and next generation 400Gbps UEP devices and solutions to potential Ethernet Access Market, Mobile Backhaul, and Fiber To The Home (FTTH) customers.

·    Continued positive reception to the Company’s product offerings with Tier1 OEM’s.

 

Further to the annual results for 2018 and information published in the Company`s Annual Report in June of this year, the operational highlights to date in 2019 are as follows:

·   Revenue growth in the first half of 2019 was bolstered mainly from the two contracts signed in the latter part of 2018 along with increased recurring revenues derived from previous ENET flow processor engagement, and a licensing deal.

·   In January 2018 we announced that an ASIC licensing contract with an existing customer for 5G fixed wireless Customer Premise Equipment (CPE) that uses Ethernity’s FPGA on their 5G fixed wireless base node had been put on hold as  the customer had decided to accept a proposal from the Company to use our ENET FPGA SoC for serving business customers with ultra-speed wireless connections. Following successful trials of the customer’s 5G base station node with the Company’s ENET4200 FPGA SoC embedded, the customer intends to complete a rollout of wireless CPE devices targeted for business customers based on its in house Radio ASIC design and Ethernity’s ENET3825 CPE FPGA SoC. Deployment of the 5G wireless CPE is planned for H2 2020. Subject to the overall success of the customer’s business and the number of units deployed, it is anticipated that this will result in significant annual revenues, commencing 2021 onwards.

·   During the three months since the announcement of the 2018 annual results, the Company has had ongoing positive dialogue regarding the Company’s 5G offering for its User Plane Functionality (UPF) acceleration proposal based on the ACENIC-100 with Tier1 Service providers and operators. 5G mobile networks are expected to start deployment during 2020 and are based on virtualized environments. With the increase throughput of the 5G mobile network, acceleration of the User Data Plane at the edge of the network has become a core requirement compared to existing 4G mobile networks. This is expected to result in a significantly higher than anticipated demand for the FPGA Smart NIC product for this specific market.

·   The Company anticipates concluding agreements over the next six months with Tier1 OEM customers in the Cable Modem Termination System (CMTS), Fiber To The Home (FTTH) Broadband deployment and Ethernet Access Devices (EAD) markets, as previously stated, with rollout and production plans now anticipated for 2020, with mass deployment beginning towards the end of 2020

 

David Levi, Chief Executive Officer of Ethernity Networks, commented:

 

“The first half results and growth are in-line with our expectations with the focus being on the Company moving from an IP/technology provider to a solutions provider for virtual networking and security appliances. The licensing contracts signed with Tier1 OEM’s represents part of the change we anticipated and is expected to develop into stable recurrent revenue from royalties. The goal of the Company’s development activities is to build stable recurrent revenues from technology licensing and supply of our ACENIC-100 and UEP products.

 

“We have continued with the successful advancement of our UEP hardware platform that will host our field proven flow processor for general edge access deployment with a complete programmable platform. Furthermore, development of the ‘Router on a NIC’ offering, ACE-NIC FPGA, Smart NIC, and the progress achieved in accepting virtualization especially in the 5G mobile market should, we believe, fuel major revenue streams for the Company going forward.”

 

“We remain confident that Ethernity will meet its long-term objectives and is well positioned to become one of the key solutions providers in its marketplace.”

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