Net Insight AB (publ)

Good morning everyone and welcome to the presentation of NetInsight's third quarter for 2026. We have the usual setup. It is myself, Andreas Jorgelsson, covering NetInsight on behalf of DNB Carnegie. But more importantly we have management from the company, Andreas Eriksson and Cecilia Hojgard Hook. and unfortunately it's the last time you're here Cecilia so this is a special occasion but we do it in the same way as we usually do we have the presentation and then we open up for a Q&A so with that I leave the floor to you Andreas.

Thank you Andreas and good morning everyone and so let's get into it so we'll run through the agenda as per usual we'll cover first the Q3 overview we'll then go into a bit more detail in the business review looking at the The two different businesses. Cecilia will cover the financials and then we'll wrap up a summary and then we'll open up for Q&A. So let's get into it. If you look at the Q3 overall, you know, we could see that we had a relatively weak financial performance if you look at the quarter. But what was pleasing to see was the sequential improvement when you compare to the previous quarter. and we could see that we had continued commercial progress in the business. Net sales amounted to 104 million SEK, so that was down 29% if you compare year on year, but up 14% when you look at Q2 26. If you look at the EBIT level, if you exclude restructuring, one-off cost amounted to negative 3 million SEK. If you look at the media side, we can see that the broader portfolio is now really starting to create momentum, creating more additional customer opportunities, both with existing customers as well with new. But, you know, it's early days on the product launches and the new products we are bringing out. So, of course, revenue contribution from those remains relatively limited at this point in time. On the time synchronization side, it's very kind of pleasing to see that we have now two new commercial customers that are established in two new areas, and I'll talk a bit more about that later. And then, finally, the focus going forward is really execution, customer conversion, clearly on the sync side, but as well on the media side, making sure that we build this more broader and repeatable business. If I then look at the plan we set for the year when you think about the three strategic priorities we have talked about before, starting with enhancement of the media portfolio. As you know, in April early this year, we launched the new Nimbra 520. This quarter in September, we have now launched the Nimbra 1020G, which is a new offering we're bringing out in the Nimbra, so the flagship product we have, which is a compression-only product. If you look at the sales efficiency, as you know, we have a big focus on the North American market, which we feel is sort of undeserved for us, and we continue to see expansion of customer engagement in that market, which is good to see. and we've also highlighted that we were able to kind of break into this global media and technology customers and we now see additional opportunities coming from those new segments and really the wider portfolio reach we're getting that now through the broader portfolio which is again been part of the plan. If you look at the time synchronization side, as I mentioned, two new commercial customers in new segments outside 5G. We have one national telecom opportunity that advanced to pilot installation in the quarter, and we also launched the TimeNode access, which is a new product. So again, the three priorities remains, and we are executing on this plan. If I then zoom in a bit on the two businesses, starting with the media area, Again, the revenue in the media area was at 92 million compared to 79 million in quarter two, 26, but below the corresponding quarter last year. The additional adoption of the 520, which we launched again in April, it's really now sort of started to demonstrate that we are able to expand. We are getting into new customers. Being able to broaden the customer relationship we had, and one good example of this is DMC. DMC is a Nordic, Northern European customer, which we started working with in 2024, more on the 1000 Series side, more on the flagship product. and now when we had the 520 we're able to expand that relationship with them with the 520 and what it means is means that we can cover more use cases more type of services with the same customer in that case that we have not been able to do before so we can see that it's working. Again, winning new customers. This has been a really beachhead product where we're able to break into half a dozen of customers now that using the 520, which has been really critical because as we communicated before, we really need to kind of broaden our customer base and get into new customers. So we can see that the 520 has been a really important tool in achieving that. If you look at the 1020G, I think this is a really kind of a critical step we're taking now because if you look at historically, we come from an area of transport. If you think about Netisite providing transport and compression as the core offerings. Traditionally, the products have always been transport and then we've added compression to that and that's how a lot of the competitors and customers see us. What the 1020G means is we are getting into the compression with the compression-only dedicated product into that area, which means we'll start to go head-on with the compression vendors. And that means that we are broadening the commercial reach. We can actually get into other new market areas which we have not been active in before. So that's sort of the first step. In getting into that area, which is really pleasing to see. And 520 and 1020G will actually kind of work together in achieving that. So we're starting to have a good strong portfolio to break into new areas. If you look at the internet and cloud area, this is when customers want to use internet and cloud as a carrier. On top of that, we build with our technology a stable and robust media transport solution. This is an area in our business that is growing a lot. A lot of customers want to move to internet and cloud because they want to have much more content from the large events and from leagues and other things. So that they can not just bring out the core video feeds on a robust managed solution, but actually use internet and cloud to bring out even more content. And we can see that there's a lot of interest in that area. Focus in the media side really remains on converting now the portfolio investment we are making into new customers and make sure it becomes repeatable revenue growth. If I just quickly touch on this, we talked about before that, you know, one big part of the plan has been to increase our target market. And if you look at where we are today with the current core, we have said that with getting into sort of the dark blue extension, we're actually going to double the TAM, which I think is step one. And that's what we're now executing on. If I then sort of position the 10... 1020G is under the smaller Nimbra 1000 version. That fits in under that product. That actually now strengthen our ability to, in the manage area, be active in the pure compression area, which we haven't been able to be in the same way before. If you look at the 520, that's a really kind of interesting product because it fits into actually the three areas. So on one hand, you can use it if you want to run a managed solution, so over a fiber solution, but you can also use it, which we see a lot of interest now, on an internet-based delivery model, and you use it for that. And as I mentioned before, and as you can see from the CAGR, that area is growing. Up to double digits. So that's actually an area we want to be much more active in and we can see activities in the market in that area. And then you look at the new compression area which is actually getting into the second kind of compression family which we haven't been very active in previously. The 520 is starting to chew us into that area as well. So this is kind of a core product for us, as you can see, because it's the ability, therefore, to be active in many more use cases and many more opportunities for the customer is then there. And that's why we see that the 520 has been the strategic breaking point for us to new customers. So that sort of explains that probably in a bit more detail. If I then move on to the SYNC side, if you look at the revenue side, revenue amounted to 12 million, broadly in line with prior year. I think what was exciting to see on the SYNC side is that we have first of all now two new commercial customers that we secured outside the five years. I think for me that is a testament to the focus around conversion, you know, really focusing on driving conversion of the customers that we have in the pipeline and being able to bring them all the way into a commercial customer. I think the other point to make here is that the two deals we've got, one deal is in the defense area and the other one is in an AI data center environment. It's also very interesting and pleasing to see that we're able to show that we have a right to play in those areas. And I think that's, you know, we all know that, you know, defense and AI data centers are sort of growing and there's a lot of investment going into that. But also then, of course, we now see that we have a right to play in those areas. And it's early days, of course, so the initial order values are sort of limited, and it's early days for us to learn a bit more about those industries and how we can be more active and so forth. So I think, but you know, it's promising when you think about it that way. If you look at the telecom side, then we have now moved one national telecom opportunity to pilot installation, which is again showing the progress we're making by focusing this year on conversion of the pipeline we have on the time sync side. We also launched in the quarter a new time synchronization product we call Syntai Time Node Access. I'll cover that on the next slide so you can understand a bit more the business drivers behind that and what that opens up. But in short, it sort of increases our addressable market. It makes it possible for us to be active on the sync side all the way out in the access of the network. I think for us, when we think about the SYNC, we remain very positive in the long-term outlook. So that remains for us. The short-term revenue contribution is expected to build gradually as we have communicated previously. So that still remains our view. If I then zoom in a bit on the Time Not Accessed, this is a new product that we launched. As you can see, sort of two drivers. Driver number one is that it broadens the Syntag portfolio for us. So far, we've been able to, with the synchronization product we've had, be able to be active in the core and the regional side predominantly. We have not been able to be having sort of a An economical solution and a cost efficient way to go out all the way to Axis if the customer want to go there. Now we have that. So now we're able to have a complete portfolio that covers both core, regional and Axis which open up for more opportunities for us and will be kind of strengthening our overall offering. The second one is that there is operators out there which the connection out to the base stations, they're using least and third party access networks, so they don't use their own fiber solutions. So in those situations, then we're not able, traditionally they have not been able to Thank you very much. and network-based synchronizations. This is the business drivers behind this and I think this is a very important step in having a much more broad and strong portfolio on the Sync side. If we then look at the pipeline on the sink, there's been some good progress throughout the quarters. We have one new POC started. We have another two moved to field trial. We have one, as I mentioned, moved into pilot installation. And then in the rollout phase, the two I mentioned, the one defense and the one AI Data Center deals, so those all in rollout. And the third one in the rollout phase is this media customer that we communicated earlier and that we have still being in the rollout phase. So that's the summary and the situation where we are now on the time sync side in terms of deals. All that handover to Cecilia.

Yeah, okay. So, turning to financial performance, and as Andrea said, net sales for the third quarter amounted to 103.9 million, representing a decline of 29% versus the same period last year. At the same time, revenue improved 14% sequentially from the 91.3 million we had in the second quarter. The year-on-year decline is mainly related to media, but sequentially media revenue increased from approximately 79 million in Q2 to 92 million. but remained significantly below the reported level one year ago. Looking at time synchronization, the revenue amounted to 11.8 million and that is broadly in line with the quarter last year. Continuing with gross margin, and gross margin improved to 72.5% compared to the 66.3% in the corresponding quarter last year. The improvement is mainly driven by our revenue mix, and in Q3 we have a higher portion of software revenue. After two quarters that we have had a relative larger portion of hardware revenue. And it's important to recognize that this mix can vary between quarters. Some customer projects begin with hardware deliverances and then they complement with software, while others have the mix directly. So this affects the reporting gross margin from one quarter to another. Continuing with operating expenses and excluding our restructuring cost of 2.1 million, they amounted to 57.8 million and broadly unchanged year on year. EBITDA excluding the restructuring cost of 2.1 million amounted to 19 million, corresponding to a margin of 18%. The improved gross margin and stable cost base supported earnings during the quarter. However, the revenue level remains the main constraint on our profitability. And continuing to operating earnings, we can see the same relationship as we had in EBITDA reflected. And reported operating earnings, excluding the 2.1 million of restructuring cost, amounted to minus 3 million compared to the positive of 22 million in the third quarter last year. As shown in the left-hand chart, operating earnings have varied considerably between quarters, and this reflects our volatility in revenue that we have had the last quarters. On the right hand, the chart illustrates the corresponding development on our rolling 12-month basis. So last, our cash flow and liquidity. Cash flow from operating activities amounted to minus 10.1 million compared with the positive of 21.7 million in the corresponding quarter last year. The weaker operating cash flow primarily affects the lower earnings in the quarter. Investment activities amounted 19.2 million, primarily capitalized development expenditures. And after investing and financing activities, total cash flow for the quarter amounted to minus 31.3 million. Cash at the end of the period was 48.7 million. And in addition to that, we have 128.5 million in unutilized credit facility, bringing total available liquidity to 177.2 million. So that was it.