Net Insight - Turnaround in sight

Q4: 8. 4% organic sales growth, opex -13% y-o-y Broadcasting market beginning to adapt to COVID-19 Divests ScheduALL for USD 6m, a clear positive COVID-19 impact is gradually diminishing Net Insight posted Q4 sales of SEK 107. 5m, which exceeded our expectations (+2% y-o-y, +16% vs ABGSCe). We are now starting to see results from the strategic plan developed by the new management team.

Adjusted for FX, sales increased 8% y-o-y. The broadcasting market is still impacted by COVID-19, but has begun adapting to the new conditions. NETI says that customers have recently started to increase capacity in their network infrastructure, and it has secured several important deals: both with previous customers (e.

g. The Switch), and with new customers (e. g.

Shanghai Media Group). New management team is executing well on its strategic plan With the new foundation for growth, management is now fully focused on phase 2 in the strategic programme; growing the existing business and increasing market share. A new version of Nimbra Edge was released during the quarter.

With an installed base of +16,000 devices, there is room to grow by selling value-enhancing software updates and add-on solutions to existing customers. On the cost side, adj. opex declined 13% y-o-y in Q4, leading to EBIT of SEK -4m.

Here, we note that management’s ambition to make the cost structure more efficient is starting to bear fruit. We expect opex and total R&D to continue declining y-o-y in 2021e, yielding a margin expansion. Continues to focus on its core; divests ScheduALL After the report, the company announced a sale of its resource optimisation business ScheduALL for a total consideration of USD 6m on a debt and cash-free basis.

Looking ahead, we see less risk of big live events being cancelled or postponed, which should support a robust recovery in 2021 for NETI’s remaining business. We forecast 16% organic growth in ’21e, and reiterate our belief that the company will once again reach positi.