Video transport technology provider Net Insight reported its Q1 2016 results. Revenue was SEK 110.0 million, up 25.3% versus Q1 2015. On a constant currency basis revenue for the quarter increased 24.1%.
The vast majority of the year-over-year growth was attributable to the acquisition of ScheduALL in September 2015. Organic growth in Q1 2016 amounted to 3.5% versus the year earlier period.
Net income for the quarter was SEK 14.0 million or (0.04 earnings per share), an increase of 250% over the net income of SEK 4.0 million (0.01 earnings per share) from Q1 2015.
Gross margins for Q1 2016 were 61.7%, a slight increase above the 60.1% from the previous year’s quarter. Operating margins were 7.1%, which is approximately the same as Q1 2015.
Revenue by Geography
- Sales from Western Europe were SEK 47.8 million, an increase of 26.6% versus Q1 2015. The region contributed 43% of total revenue for the quarter. In Q1 2015, Western Europe also represented 43% of overall sales
- The Americas contributed SEK 35.2 million or 32% of Net Insight’s revenue in the quarter (versus 41% in the Q1 2015). This was a slight decrease in performance of 1% versus the revenues from Americas in the year earlier period. When excluding the revenue contribution from ScheduALL, revenues in the Americas decreased 31% (SEK -10.8 million) in the quarter. Management attributed the organic decline to a large order recognized during Q1 2015 within the US.
- Rest of World sales were SEK 26.9 million, an increase of 88% versus the year earlier period. As a percentage of total sales, Rest of World contributed 25% in the quarter versus 16% during Q1 2015
Revenue by Product Type
- Sales attributed to Net Insight’s hardware products were SEK 44.7 million in the quarter, a decrease of 17.5% versus the previous year. As a percentage of total sales, hardware products were 41% of the quarter’s sales versus 62% during Q1 2015.
- Software licenses accounted for SEK 30.0 million of revenue in the quarter, a substantial increase of 94% over the year earlier period. Software contributed 27% of overall revenue during the quarter versus 18% in Q1 2015.
- Support and services sales were SEK 35.5 million during the quarter, an increase of 110% versus the year earlier quarter. Support and services were 32% of overall revenue in the quarter, an increase from the 19% contribution in Q1 2015.
Net Insight’s sales by product type have been transitioning towards software and services and away from hardware for the past several quarters. This was further accelerated with the acquisition of ScheduALL. The trend is highlighted by the below chart from Net Insight’s earnings release.
Revenue by Customer Vertical
- Sales in the Broadcast & Media (BMN) customer vertical were SEK 89.1 million, an 25% increase over the prior year’s quarter. BMN was responsible for 81% of Net Insight’s revenue in the quarter, less on a percentage basis than the 86% in Q1 2015.
- Sales in the Digital Terristrial TV (DTT) vertical were SEK 18.7 million, an increase of 64% over Q1 2015. On a percentage basis, DTT represented 17% of overall revenue in Q1 2016, compared to 13% in Q1 2015.
- The CATV/IPTV vertical was 2% of total sales in Q1 2016. It was 1% of total sales during Q1 2015.
Net Insight ended the first quarter with 204 employees a substantial increase over the 138 employees from a year earlier. The acquisition of ScheduALL is the primary cause for the increase.
Cash and cash equivalents was SEK 170 million at the end of the quarter, up slightly from the SEK 164 million balance as of December 31, 2015.
Commenting on the results for the quarter, Net Insight CEO Fredrik Tumegård stated, “Sales increased by 25 per cent in the quarter with a stable operating margin of 7 per cent. The quarter has been characterized by continuous market penetration of our solution for true Live OTT, integration of last year’s acquisition of ScheduALL and both activities are progressing according to plan.”
Press Release: Net Insight releases Interim Report for January – March 2016
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