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Net sales in the period amounted to MSEK 83 (68) and Net sales for the quarter were MSEK 40 (31).
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The Gross margin for the period was 53% (68%) and Gross margin for the quarter was 46% (63%). Gross profit for the period was MSEK 43 (47) and Gross profit for the quarter was MSEK 18 (20).
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Earnings before depreciations and amortizations (EBITDA) for the period was MSEK -35 (-25) and EBITDA for the quarter was MSEK -23 (-17).
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The Result after tax for the period was MSEK -35 (-31) and the Result after tax for the quarter was MSEK -29 (-18).
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Earnings per share before and after dilution for the period was SEK -0.05 (-0.07) and for the quarter SEK -0.04 (-0.04).
- Cash flow during the period was MSEK 3 (6) and Cash flow for the quarter was MSEK -27 (6). Cash flow from operating activities before changes in working capital during the period was MSEK -32 (-27) and for the quarter MSEK -28 (-18). Cash flow from financing activities during the period was MSEK 56 (39) and for the quarter MSEK 16 (13).
Comments from the CEO
STRONGER ORDER BACK LOG, NEW PRODUCTS AND AWARD WINNING SOLUTIONS
Revenues in the second quarter were MSEK 40 compared to MSEK 31 in Q2 2014. Gross margin was 46% compared to 63% in Q2 2014. The lower gross margin was due to a combination of lower software sales in the quarter in Enterprise Solutions and larger sales of hardware to our partners in Korea within education. Operating expenses in the quarter were MSEK 42 compared to MSEK 37 in the same quarter last year. As previously announced the significantly higher operating expenses in the last two quarters are primarily related to product development with HP, large displays, research and testing of new thin film solutions for displays and continued development of Live Services to be able to service larger ISV’s and partners with hardware configuration, microdot pattern management and maintenance.
Sales within Enterprise Solutions were disappointing MSEK 18 in the second quarter, compared to MSEK 31 in the first quarter when we closed the sales to Wales Ambulance Trust in the UK. The variance in revenues from quarter to quarter reflects the lack of capacity in sales and delivery and our need to strengthen the partner network. We are therefore taking measures to strengthen our sales capacity. The large deals that we have won within Enterprise Solutions in the UK, Germany, Turkey and Japan lately shows clearly the value that we offer to customers and the need for solutions to close the digital transformation gap that exists, and to be able to realize the full potential within financial services, healthcare and field services we work on better alignment with the IT industry in general and a more focused partner strategy.
The overall order back log increased substantially during the quarter and we received orders from Pen Generations and Solid Education for the delivery of 90,000 pens to Kyowon, the largest provider of educational content in Korea. 38,000 pens were delivered in Q2.
We received an order for 60,000 pens via Pen Generations and 4,000 Live Pen 2 from TStudy China and 4,000 pens were delivered in Q2. Furthermore we signed an extension to the exclusive distribution agreement with TStudy China subject to the purchase of a minimum of 2 million pens over the next 5 years exclusivity period.
In India we received an order for 10,000 pens and LivePDF software from InformDS Technologies (P) Ltd. for the automation of physician practices. 500 units were delivered in the second quarter and full delivery is expected by the end of 2016.
Together with partner Optika Display, a subsidiary of Stratacache in the US, we announced the Collaborate 65UHD, a 65-inch large format, 4K LCD collaboration device. The product won the award for Best Personal Workspace for Creatives at InfoComm in Orlando, US among 950 exhibitors and 40,000 professionals from 100 countries. At the same trade show Anoto subsidiary We-Inspire, Inc. won the award for Best Visual Collaboration Solution for Creatives. The positive market feedback and interest from potential partners confirms the large business opportunity – initially within creative industries that need precision pen input, but also the opportunity to provide intuitive, real-time seamless communication between teams, collaboration and creative experiences in general.
OUTLOOK
The negotiations with HP are going in parallel with product development. The closing of a final deal is subject to many considerations and legal issues related to intellectual property, ownership and rights. Anoto’s primary strategy is based on enabling functionality and delivery of components and products to several OEM customers. Therefore we are focusing on balancing the need for our partners to get a competitive advantage and to create a win-win situation while preserving our position as the future industry standard for digital writing.
Based upon the stronger order back log and deals won after the end of the second quarter we expect significant growth in the second half of the year, especially in Q4. Together with our consortium partners we won the public tender for a digital pen solution to a large financial services company in Japan. The contract is the largest Enterprise Solutions contract for Anoto to date with the deployment of 29,000 Live Pen 2 Pro and digital pen software and yet another example of industry acceptance of digital writing in the enterprise. Anoto’s part of the contract is of 37 MSEK and is planned to be delivered in Q4 of this year.
Our increased working capital need was financed through a MSEK 15 private placement of shares in the second quarter and another MSEK 40 private placement in July. Extra capital has been tied up in components, manufacturing tools, test equipment and ongoing outstanding non-refundable engineering work that is needed for new products and ramp up of manufacturing for the second half an onwards. In July we also announced the acquisition of XMS Penvision, an innovative Swedish software company specializing in digital writing solutions. The acquisition of XMS Penvision gives us a larger portion of the value chain, flexibility in pricing and a product suitable for sale through larger resellers, as well as a highly competent team that complements our own in-house software development.
Because of the launch of new products and new partnerships with larger OEM customers and ISV’s we are in the process of expanding our management team in the US to increase our overall capacity within product management, market channel development, marketing and sales.
Stein Revelsby
CEO, Anoto Group
The information in this press release is published pursuant to the Swedish Financial Instruments Trading Act. The information was submitted for publication 8.30 on 14th August, 2015.
A webcast of the Q2 report will be available from 02.00 on August 14, and a Q&A session via audio cast will be held at 11.00 the same day.
For more information, see www.anoto.com/investors.
Calendar 2015
Q3 report 6th of November
Q4 report February 2016
For further information, please contact:
Stein Revelsby, CEO
Tel. +46 (0)733 45 12 05
Anoto Group AB (publ.)
Traktorvägen 11
SE-226 60 Lund
Tel.: +46 46 540 12 00
About Anoto Group:
Anoto Group AB is a global leader in digital writing solutions, which enables fast and reliable transmission of handwriting into a digital format. Anoto operates worldwide through a global partner network that delivers user-friendly digital writing solutions for efficient capture, transmission, distribution and storage of data. Anoto is currently in use across multiple business segments, e.g. consumer, healthcare, banking and finance, transportation and logistics and education. The Anoto Group has over 100 employees and is headquartered in Lund
(Sweden).The company also has offices in Basingstoke and Wetherby (UK), Los Angeles and Boston (US) and Tokyo (Japan). The Anoto share is traded on the Small Cap list of Nasdaq Stockholm under the ticker ANOT.
For more information, please visit: www.anoto.com.
Follow Anoto on Twitter at: @Anoto
