Net Insight AB (publ)

Good morning, everyone, and welcome to the Q2 presentation from NetInsight. My name is Andreas Ohlsson. I am, as usual, responsible for the NetInsight coverage here at D&B Carnegie. And with me today, also as usual, I have the NetInsight CEO, Andreas Eriksson, and CFO, Cecilia Högård-Hök. We will start with a presentation of the quarter and then open up for Q&A. And you are most welcome to send in questions via the website. I know some of you have already sent in a lot of questions, so thank you for that. But first, I leave the word to Andreas.

Thank you very much, Andreas. Good morning, everyone. Yeah, let's get into the Q22026 report. So we'll go through an overview. We'll then deep dive a bit into business review, looking at the media as well as the sync side. We'll then go, Cecilia will then cover the financials, and then we'll wrap up in a summary, and then, as Andreas mentioned, open up for Q&A. So if we start with the overview, so this quarter two, net sales amounted to 91 million SEK for the group compared to 143 SEK for previous years. And the shortfall for the data between Q2 last year and this year is really driven by the absence of larger media orders in the quarter. And we thought we'll unpack this a bit because I think this is a question that many might have. You know, what's driving this difference? And I think if you, you know, if I zoom out a bit looking at the NetInsight business and the revenue customer base, we have a very large installed base, you know, many customers around the world, which gives us a really strong foundation. For the most part, these customers have chosen us, the technology from NetInsight, and we continue to support them when they build out the network, extend the network, refresh the network, and so forth. That's sort of the one thing that's important to know, the breadth of the customer base. The other thing to note then is that our revenue base is significantly impacted by large projects, which means, and this is driven by predominantly a few of our largest customers, which also they come in with large media orders to us at the back of large projects. This project will be driven by different things. There could be some major uplift in their infrastructure, and that could be related to capacity uplift and so forth, and major refresh. It could be driven by if they win a large deal, could be at the back of a media right, that they need to do some major uplift of their infrastructure. It could also be driven by new services that they launch, different drivers that drive large significant media orders. The situation then is that these large media orders, because of the sort of swing effect they have, depending when they occur, That means that there could be a significant difference between quarter to quarter when you do the comparison. And if you look at Q2 this year compared to Q2 last year, so Q2 this year, as we stated here, we didn't have any of these larger media orders in the quarter. whereas in last year we did. So that sort of explains the majority of the difference here when you compare quarter to quarter. I think what's important to state, though, when you think about these large media orders is that they haven't disappeared in a way. We still expect large media orders as part of our business. That's been part of the business for the last few years. But again, the timing of them and so forth is the challenge in a way when you look at a quarter-to-quarter comparison. If I then move on to the EBIT side, again amounted to minus 26 million. As many of you know, we have a very, there's a lot of leverage in the business, so that means obviously a very high gross margin, which means if we have a lower revenue base, that flows down very much in a very big impact on the bottom line. So that's just, and obviously works the other way around as revenue growth. If you look at the quarter, we really feel that we have some really good progress in terms of strategic priority. We have set both for the media side as well as for the sync side. On the media side, we have launched a Nimbra 520, which I'll talk a bit more about where that fits in. That's been progressing well. We got the first customer orders for that during the quarter, and we continue to have some good progress on the time synchronization sales funnel, as I'll explain more in detail. The available liquidity amounted to 165 million SEC at the end of the period. And again, as I mentioned, the focused action we've taken to strengthen commercial execution, drive a broadening of a customer base, and then improve this conversion, in particular on the sync side, is what we are focused on at the moment and will continue to do so. If I then summarize what we talked about before, again, the focus actions that we're taking is driven around three areas. And the one is to enhance the media portfolio. As I mentioned here, we have launched a 520 where we're starting to get the first customer orders. We've also brought on a new version of the JPEG access. The JPEG access is one of these major compression technologies that we have in our product. We now have made a major uplift of that, which means now we're now kind of the market leader in that specific area. And we've also there seen some first customers coming on board on that technology. If you look at the middle one, increased sales efficiency, here the focus is very much on the North American market, where we think we have a really good opportunity. We think it's underserved for us. We think we have underlying potential there. We want to get into new customer segments outside our traditional customer segments. And then, of course, as we now build a good market interest for our products at the back of launches and then at the back of future launches, we want to make sure that we get customers on those over time. as we stated his second customer for 400 gig solution. 400 gig at this moment is relatively niche. It's for the really our largest customers. They'll change over time because the capacity requirement will be increasing throughout our entire customer base. But at the moment, it's relatively sort of few that sort of see the big demand for the 400 gig. But getting a second customer is very positive for us. The second thing is, again, growing into new customer segments. As we said, we now have two of the global media and tech segments as our customers, which is really pleasing to see how we can continue to grow with them. If you look at the last part and on the time synchronization side, again, as we said before, you know, really this year is about driving conversion, you know, of the opportunities we have in the pipeline, make sure they progress, you know, trials, pilot, and then moving on to customer role. That's really the core there where we see, again, as I'll deep dive a bit later, we see good progress. So that just gives you a snapshot of the improvement areas that we are driving and the progress we're making in each of them. If I then go in a bit more detail, we'll start with the media side. Again, as I mentioned, the media revenue was low this quarter, as I explained, in the absence of large orders through the quarter. However, you know, the work we're doing and expanding the portfolio is really working. You know, we've launched the 400 gig. We have launched the 520. We're getting customers on those, which is really pleasing. And we also, for the 520, have a number of customers that at the moment are testing the technology and the product. And we have gotten a very positive response from that product from the market. So that's positive for us. And then, as I mentioned, the JPEG Exodus, other compression technology, we made the major uplift this year. It's been used now for a major international sporting event throughout this summer. So that's really exciting for us that the latest tech is being used already now into some of these very high-end sporting events around the world. So to summarize, I guess, the expanded portfolio, it's really, you know, three areas, you know, the high capacity, obviously one area, the internet, the cloud-connected area. So this is, again, where the 520 fits in. And then the distributed production environment, you know, again, remote production. And when you don't do production at the venue, but actually from home base or from a central place, again, the solutions that we are developing is continue to, you know, support those core trends in the market. So, again, we feel that the product launch is in the focus is to convert them now into more and more customers and repeatable revenue, but then also, of course, to make sure that we are expanding our customer base. So if I just sort of zoom out a bit and think about our growth strategy, as we talked about before, the portfolio growth plan is really around, of course, strengthening where we are, but going deeper into the areas where we are already present, plus then grow outside into new markets. If you look at the lower left, what we call managed fiber, That's sort of the current core market. So what we're doing there is to make sure, of course, we want to grow the installed base of the customers we have and want to sell more to them. So that's sort of, I guess, you know, obvious. But then also we want to work with them to be able to serve use cases that we do not cover today. So there are certain situations where, you know, we might not be able to be kind of present in a strong way and not be competitive for certain use cases. So that's part of the portfolio expansion. For example, we're towards the end of the year we'll be launching a smaller version of the 1000 series which will fit into certain use case again where we are not so competitive today. So again going deeper and increasing a market share in that area. Again, same there. We want to grow into the new customers within the segments we already serve. One. Two, we want to go outside the current customer segments that we serve today. Again, as I mentioned, one being this global media and tech customer segments. That's sort of the strategy there. IF YOU GO RIGHT THEN INTERNET AND CLOUD SO THIS IS AGAIN WHEN YOU USE INTERNET OR CLOUD AS THE UNDERLYING CARRIER AND ON TOP OF THAT YOU BUILD LIVE MEDIA SERVICES FOR TRANSPORTING LIVE SPORT SO THAT'S REALLY A FAST GROWING SEGMENT SO WE WANT TO WE'RE GOING TO GET IT WE'VE BEEN WE'RE ACTIVE THERE BUT WE HAVEN'T BEEN SO COMPETITIVE you know what we see now with the 520 launch and the traction we're getting is actually now we can in a much more meaningful and powerful way be active and win business into that fast-growing area so that's really you know exciting for us you know we want to then make sure we continue to do that so we can scale that business up you know in addition to the managed fiber area we have. So that just gives you a bit of a snapshot on how the strategy, what we're doing, fits into the time growth and also the traction we are having in the market and what we're trying to achieve as a business. If I then jump on to time synchronization, time synchronization revenue increased to 12 million compared to 4 million in the previous or quarter last year, Q2 2025, 4 million. Turk Telecom rolled out, that continued well. We now have over 1,000 nodes installed, so this is really exciting because obviously that gives us a really... strength and reference value in the solutions. Other operators look to our technology. It's important to have a really strong reference case, not just that a certain customer is using it, but they're using it at scale, which is quite a different thing, which is really where we are strong. And the third point here, partner ecosystem. We now have 23 Sync partners, which are really partners for, you know, channel, you know, resell partners. They also will help us with integration and rollouts as a customer want to do that. So we get the muscles to be able to deliver at scale as well over time. One of them is the WWT partnerships, which we have, and that's quite an exciting one. Predominant WWT is really about accessing customers in the U.S. market, but also elsewhere, but in the U.S. and Americas is where they are particularly strong. And as some of you might know, they also brought some of our technology into the future labs where they test and trial new products. new technology solutions for the future, which is also sort of a part of that. But predominantly, WWT is really about the resell and the channel to market for us. On the commercial trials, you know, we've been doing outside the 5G market. It's been exciting to see that we have had some commercial trials also on the media side, and we're getting some on the defense through partners. a bit sort of, I guess, you know, we want some media customers, you know, as we highlighted last year, or last quarter, sorry, but then also getting into the fences in another area, which we see a bit more interest. On the standardization side, there's been some good progress there, where the technical work in the ITU standardization body for the E-PTS Standard Supplement, technical work has been completed and agreed in that forum, which is a good step. And then now what will happen is that you now need to document this technical work and document down what has been agreed. and then you approve formally the documented endorsement. So that's sort of the next step. So we expect that the ITU approval will be at the next plenary meeting in February. So there'll be work then to do this final editorial updates and document the agreement and then that will be formally endorsed then. So again, just to summarize, I think, on the time synchronization side, positive long-term outlook remains. Again, as we said, short-term revenue contribution is expected to build gradually as we progress more customers throughout the sales funnel. And doubling down a bit on the sales funnel, here you can see the movement since we reported last time. So another two proof of concepts, another two customers in field trial phase, and another two in the pilot installation phase. And the one sitting in rollout is the media customer that we talked about in last quarterly report that is currently being rolled out. So with that, I'll hand over to Cecile to take us through the financials.

Yes, thank you. So, starting with net sales, and net sales for the second quarter was weak, as Andrea said, and amounted to 91 million compared to the 143 million in the second quarter last year. Decline was driven by media, and media revenue amounted to 79 million, and it did not include any larger order, whilst the comparison period included one of NetInsight's largest orders in history. Revenue from time synchronization increased to 12 million compared to the 4 million in the same quarter last year. So now to profitability and starting with gross margin. Our gross margin for the second quarter remained high at 68.6 and this reflecting our scalability in our business model. Our operating expenses declined with 4% year on year. And then our high gross margin and our relatively fixed cost base, with the shortfall with revenue, this has a significant impact on our earnings. And the earnings for this quarter, we had an EBITDA on a minus 3.8 million. So now to operating earnings, and operating earnings for the second quarter was minus 26% compared to breakeven if we exclude the one-offs last year. And the low result is driven by the low revenue in the media. It's important for us to have these activities that we are now doing so that we can turn this revenue and increase it in the future. Cash flow. Our operating cash flow for the quarter was 3 million compared to minus 35 million last year. And the difference is mainly movements in working capital. If we deduct the investment activities of 22 million, our total cash flow for the quarter amounted to minus 19 million. At the end of the quarter, we have a cash of 80 million and an available liquidity of 165 if we include our unutilized credit facility. After the year period, we have in July signed a 130 million revolving credit facility, and we have incorporated the previous credit facility in that one. And we have done this to strengthen our financial flexibility and to support our ability to continue executing on our growth initiatives. So, Andreas.