- Net sales in the period was MSEK 138 (95) and Net sales for the quarter were MSEK 55 (27).
- The Gross margin for the period was 46% (67%) and Gross margin for the quarter was 37% (65%) 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. Gross profit for the period was MSEK 64 (64) and Gross profit for the quarter was MSEK 20 (17).
- Earnings before depreciation and amortization (EBITDA) for the period was MSEK -59 (-45) and EBITDA for the quarter was MSEK -25 (-26).
- The Result after tax for the period was MSEK -68 (-56) and the Result after tax for the quarter was MSEK -30 (-26).
- Earnings per share before and after dilution for the period was SEK -0.08 (-0.13) and for the quarter SEK -0.03 (-0.06).
- Cash flow during the period was MSEK 3 (-5) and Cash flow for the quarter was MSEK 0 (-11). Cash flow from operating activities before changes in working capital during the period was MSEK -58 (-49) and for the quarter MSEK -23 (-23). Cash flow from financing activities during the period was MSEK 92 (45) and for the quarter MSEK 64 (7).
Comments from the CEO
MULTI SURFACE PRECISION PEN INPUT
Revenues in the second quarter were 55 MSEK compared to 27 MSEK in Q3 2015. Gross margin was 37% compared to 65% in Q3 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. We expect the gross margin to normalize around 50% in the coming quarters. Operating expenses in the quarter were 48 MSEK compared to 35 MSEK in the same quarter last year. As previously announced the higher operating expenses in 2015 are related to product development with HP,Ink., research and testing of new micro dot thin film solutions for large displays and the development of Anoto LiveTM Services. The combined result of these efforts is a broader portfolio of products that we are now preparing to ship in the coming quarters and a back-end infrastructure for the support of partners and resellers.
We are about to realize the vision of a universal platform to enable precision pen input on paper, displays and walls, -from small sticky notes to 24 foot size walls as well as small to ultra-large displays. The advantages of having a single pen technology that works on multiple surfaces are many. The ability to combine paper, displays and walls opens for totally new user experiences, more flexibility and creative freedom, as well as better control of content and data. For manufacturers it means lower overall manufacturing costs and synergies between devices but most importantly better pen performance.
We expanded the management team in Q3 with the hiring of senior managers within product management, marketing and sales and to get a stronger presence in Los Angeles and the San Francisco Bay area. Key priorities in the quarter was to work on the overall positioning of a broader product portfolio that now includes products and applications for digital signatures and document data capture, solutions for professional collaboration, brainstorming and project management, precision pen input on small and large displays, as well as hybrid solutions for the combination of digital pens, paper and mobile devices.
During the quarter we initiated contact with new potential OEM customers and signed up new distributors and resellers in the US, Germany and France. We tested out a range of new large displays and planned for segmentation of the portfolio into application areas; professional collaboration solutions, architects, design and creatives.
We finalized the development of Anoto LiveTM Pen 2 Professional and prepared for mass production of 30,000 pens for the delivery to a large financial services company in Japan in Q4.
Our increased working capital need was financed through a 40 MSEK private placement of shares in the third quarter and we also closed 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.
OUTLOOK
After a long period of negotiations in parallel with product and business development we finally signed a Technology Licensing Agreement with HP, Inc. on November 5th. We are very excited about this new partnership and believe HP is the ideal partner to help realize our vision about a universal digital writing platform that embraces user cases across all industries. The agreement contains certain exclusivity rights for HP within product segments for Workstations, a product segment where HP has a dominant market share. The exclusivity is subject to certain conditions including a minimum purchase of products from Anoto over a 4 year period. It is difficult to estimate the future revenue deriving from the agreement, but we expect the agreement to have a significant positive impact on Anoto`s business in the coming years.
On November 5th Anoto signed a share purchase agreement to acquire Livescribe Inc., Anoto partner since 2007, with it’s headquarter in the San Francisco Bay area. The purchase price shall be paid in cash and is based upon an enterprise value of 15 MUSD equal to estimated sales for 2015. On closing, which is expected to take place on November 30, Livescribe will be debt free. The acquisition is another step in consolidating the Anoto ecosystem and to realize synergies in hardware and software development, supply chain and operations, as well as to give Anoto access to additional market channels for online sales and retail distribution. We are working on a new range of products to be launched in Livescribe sales channels in 2016. Livescribe employs 45 full time employees and contractors, and offers the leading personal mobile companion and application to integrate handwriting into mobile devices. Livescribe allows customers to continue using pen and paper to take both structured and unstructured notes yet instantly make them useful with their favorite applications as they digitize in real-time.
Based upon a strong order back log with our partners in Korea and China and large publishing companies within education, as well as the enterprise order in Japan and the planned delivery of 29,000 pens to a large financial services company in Japan we expect continued strong revenue growth in Q4. We expect the strong growth to continue in 2016 with the expected commercial launch of products with HP, the commercial launch of large displays, the addition of new distributors and resellers for We-Inspire, partnering with The Foundry as well as the acquisition of Livescribe. We expect gross margin to normalize around 50%.
Stein Revelsby
CEO, Anoto Group
Anoto Group AB may be required to disclose the information provided herein pursuant to the Securities Markets Act. The information was submitted for publication at 07.20 on November 6, 2015.
A webcast of the Q3 report will be available from 9.00am on November 6, and a Q&A session via audiocast will be held at 11.00am the same day.
For more information, see www.anoto.com/investors.
Calendar 2015
Q4 report February 2016
For more information
Please contact:
Stein Revelsby, CEO
Phone: +46 (0)733 45 12 05
Email: stein.revelsby@anoto.com
Anoto Group AB (publ.), Corp. Id. No. 556532-3929
Mobilvägen 10,
SE-223 62 Lund
Phone: +46 46 540 12 00
www.anoto.com
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. healthcare, banking and finance, transportation and logistics and education. The Anoto Group has around 100 employees and is headquartered in Lund (Sweden). The company also has offices in Norrköping (Sweden), Basingstoke and Wetherby (UK), Boston (US), Los Angeles (US) and Tokyo (Japan). The Anoto share is traded on the Small Cap list of NASDAQ OMX Stockholm under the ticker ANOT.
For more information, please visit: www.anoto.com.
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