First quarter highlights in figures
• The security segment grew by 9%, compared to the same period last year, to a turnover of SEK 89 m (82).
• Sales in Operating Systems decreased to SEK 20.4 m (83.6). This is explained by a one-off transaction made in the same period last year.
• Adjusted EBITDA of SEK 57.9 m is an improvement compared to the same period last year, which was adjusted for that period's one-off transaction that amounted to SEK 33.7 m.
• Profit after tax amounted to SEK 10.6 m (10.2).
• Earnings per share increased by 10% to SEK 0.52 (0.47).
• Strong cash flow from operating activities of SEK 120.0 m (97.5).

CEO statement

Back to growth in our focus areas
It is gratifying to note that we are starting the year with growth in our security business, which has increased by 9 percent compared to the same period last year. Equally pleasing is the growth in our network business, despite the absence of major deals during the quarter and the overall telecommunications market being in a relatively deep slump. Our growth primarily stems from expanding recurring revenues, and all our growth is organic.
During the quarter, revenues within our security segment amounted to 89 MSEK (82), while revenues within our network segment reached 90 MSEK (82). No significant new contracts were signed; instead, the underlying business is growing. This is highly positive from several perspectives, especially as it enhances stability in our future operations. In the first quarter of last year, we sold the future customer-specific product rights to one of our largest clients in the operating system domain for 54 MSEK. However, this deal concluded future OSE revenues from this client, and the net effect of this transaction, when comparing this year’s first quarter to the same period last year, is 61 MSEK. Therefore, our total revenues for the first quarter this year, amounting to 200 MSEK, compared to 248 MSEK, provide a positive indication of growth in our focus areas and stability. Stability and predictability are crucial parameters for delivering good results even in a sluggish market.

Our business model continues to deliver
Our business model is proven. For many years, we have been able to deliver high profit margins and good cash flows. Efficiency improvements during 2023 have resulted in our cost base for the full year 2024 being approximately SEK 60 million lower than twelve months ago. This is despite cost increases due to inflation and the continued large investments we are making in product development. During the first quarter this year we invested 53 MSEK in research and development which is 26 percent of our net sales. During the quarter we also had a gross margin of over 77 percent and an EBITDA margin of 29 percent, which can be compared to a EBITDA margin of 38 percent in the first quarter last year. The result should be seen in light of the one-off transaction we made in the first quarter of 2023. Now, without this revenue, we are still delivering such a strong result. It should also be noted that this has been done despite the fact that we have capitalized SEK 9 million less during the period than we did in the first quarter of last year. Adjusted for this, earnings for the first quarter of this year are significantly stronger than in the corresponding period in 2023. It is also worth noting that our EPS is growing compared to the same period last year.

Record strong cash flow
During the first quarter we reached 120 MSEK (97) in operating cash flow. This is the strongest cash flow Enea has had since the fourth quarter of 2021.
However, it should be noted that we have both seasonal variations and other fluctuations in our cash flow and that the cash flow for the period is partly an effect of weaker cash flow in the fourth quarter of last year. But our cash flow has actually increased to 328 MSEK (258) in the end of the quarter and our net debt has reduced to 133 MSEK (264). In other words we have been able to create organic growth within our focus areas, invest in new product development, implement operational efficiencies, a buy back program of own shares and at the same time strengthen our financial position. Based on the company's strong financial position, the Board of Directors has decided to continue with the share buyback program, within the framework of the mandate given at the Annual General Meeting in May 2023. New decisions will be made after the Annual General Meeting in May 2024.

Our new world is built upon the mobile infrastructure
Without the mobile infrastructure, our connected world would not work. It would not have been possible to work from home several days a week. It wouldn’t be possible to consult your doctor via mobile phone. You wouldn't be able to sign contracts using your mobile phone, and it wouldn't have been possible to lean back on the sofa and stream your favorite series without limits, to name a few examples. This new world is completely dependent on the huge investments that the telecoms industry has made and is still making in research and development and very concretely in the mobile network, in terms of coverage, capacity, speed and security. Of course, the pace of invest-ment and the power of innovation are also great in other areas that help create these conditions. Security is also of utmost importance. Should more companies and individuals have to go through the costly and painful experience of having their sphere hacked, as several Swedish companies experienced during the first quarter of this year, it will have a clear negative impact on this whole lifestyle. Nevertheless, global investments in mobile infrastructure (radio access networks) decreased by 11 percent last year, according to the leading research firm Dell’Oro, and they predict a further decrease in 2024. This is an asymmetry in society that should be discussed even more.

In February every year, the world's mobile players gather in Barcelona for the Mobile World Congress (MWC), and there is no sign of weakness in the telecom market. There it is boom time for the mobile industry. This year, the number of visitors was almost back to the pre-covid level, with 2,700 exhibitors and over 100,000 visitors, just over half of which come from industries that connect their business to mobile infrastructure in various ways. MWC this year was visited by 180 ministerial delegations from 140 different countries. AI, security and how all this should be regulated are discussed, all while exhibitors show the latest AI technology, how to protect mobile traffic and how 5G and 6G will further increase capacity and accelerate speeds in networks. More operators came to Enea's stand in Barcelona this year than ever before to discuss concrete investment plans for how, with our help, they can improve the security of their mobile networks, increase capacity without having to buy more hardware, and how, with the help of our software, they can strengthen their earning capacity. But if today you cannot very concretely reduce the customers' costs or alternatively help to increase their income, the situation is tough.

Future outlook
It bears repeating that Enea has a strong market position in crucial areas both within and outside the telecoms industry. Our product portfolio is well positioned in a world where mobile traffic and cybersecurity are crucial for technology development. We also have a global organization with very competent employees and, at least as important, many successful customers and competitors, who constantly challenge and develop us. Combined with our proven earning power, this makes us cautiously optimistic about the future. For some time, the macroeconomic climate has had a dampening effect on demand, above all in the telecoms market, and I cannot comment today on how this will develop during the year. But our objective for the coming years remains unchanged. We want to achieve double-digit growth in our focus areas and an EBITDA margin above 35 percent with strong cash flows.

Our growth will continue to be affected by how the willingness to invest develops within our market. For 2024, however, we expect a continued strong cash flow and an EBITDA margin of over 30%.

Anders Lidbeck
Acting President and CEO

Presentation
Enea is pleased to invite investors, analysts, and media to a presentation of the first quarterly report of 2024. The presentation will be conducted in English by Anders Lidbeck, President and Chief Executive Officer, and Ulf Stigberg, Chief Financial Officer, and will be concluded by a questions and answer session. It can be attended through a webcast or teleconference (see details below).

Details 
Date: April 25, 2024 
Time: 8.30 a.m. CEST 

If you wish to participate via webcast please use the link below. Via the webcast you are able to ask written questions. https://ir.financialhearings.com/enea-q1-report-2024 

If you wish to participate via teleconference please register on the link below. After registration you will be provided phone numbers and a conference ID to access the conference. You can ask questions verbally via the teleconference. https://conference.financialhearings.com/teleconference/?id=50048638 

References 
Webpage for Enea financial reports 
https://www.enea.com/investors/financial-reports/ 

Webpage for Enea financial presentations 
https://www.enea.com/investors/presentations/ 

Contacts
Ulf Stigberg, CFO
Phone: +46 8 507 140 00
E-mail: ir@enea.com