Birkeroed,, 2012-03-13 11:38 CET (GLOBE NEWSWIRE) -- Announcement No. 1-2012
13 March 2012
To: NASDAQ OMX Copenhagen A/S
(This announcement should be read in conjunction with the enclosed 2011 Annual Report for Netop Solutions. The Annual Report is also available from Netop Solutions’ web site, www.netop.com.)
Netop Solutions A/S releasing Annual Report 2011
Summary: In 2011, we invested heavily in those of our core areas where we aim to generate revenue growth going forward. Revenue amounted to DKK 88.3 million in 2011, a 4.1% decline from 2010 driven mainly by a smaller-than-expected order inflow in Secure Remote Control from the US market in combination with a lower USD/DKK exchange rate relative to 2010. Despite the lower revenue, our stable cost base enabled Netop Solutions to achieve an EBITDA profit of DKK 2.5 million and a cash inflow from operations of DKK 5.0 million. Our investment activities in 2011 were mainly concentrated on the Live Chat business area. During the year, we invested approximately DKK 13 million in a number of initiatives intended to position Netop Live Guide as a key product in the rapidly growing live chat market. By itself and in combination with our other business areas, this product holds a large earnings potential for Netop Solutions.
CEO Kurt Bager said: After our decent growth performance in 2010, we were positive on our prospects for 2011, but the year turned out to be more challenging than we had expected, especially in the USA, and we had to settle for a slight drop in revenue. Our stable cost base and our general cost restraint enabled us to achieve an EBITDA profit and to increase our cash resources, both important objectives for the year, without impacting on our high level of investment. Our two main business areas, Secure Remote Control, and Classroom Management, are both profitable, and in 2011 we launched a number of initiatives intended to boost top-line growth in both areas. We generate earnings from these two business areas that enable us to make substantial investments in our most recent business area, Live Chat, which is a rapidly growing market that we believes offers a large earnings potential longer term. Our goal is to position Netop Live Guide among the top 5 products on this market. To do that we must invest heavily in increasing awareness of our product while also ensuring that we have technology leadership in those of our fields that hold the greatest potential, mainly in security, but also in audio and video chat. Netop Solutions is a leader in all three areas In 2011, our investments in the Live Chat area impacted our EBITDA by DKK 10 million, but we agree fully with our Board that we must put our money to work in areas where we can help to restore the high earnings level we have previously enjoyed. That's why we intend to continue to step up investments as we achieve top-line growth.
Highlights of the 2011 financial year
- For Netop Solutions, 2011 was a year of consolidation and of investing in those of our core areas where we aim to generate revenue growth going forward, and throughout the year, we maintained a high level of activity and investment. The company has a stable cost base and no interest-bearing debt. When reviewing the strategy for the future, the Board of Directors and the Management Board resolved to step up investments, especially in the Secure Remote Control and Live Chat segments in order to create a basis for future growth.
- Netop Solutions' targets for 2012 was to grow revenue, record an EBITDA profit and generate positive cash flows from operations. However, the year proved to be more challenging than expected, especially in the US market.
- Consolidated revenue for the year was DKK 88.3 million against DKK 92.1 million in 2010. The revenue developments were mainly due to a drop in Secure Remote Control revenue resulting from deteriorated market conditions, mainly in the USA, and the lower USD-DKK exchange rate.
- EBITDA was DKK 2.5 million compared to DKK 8.2 million in 2010, which included non-recurring income of DKK 4.7 million from the sale of Mobile/Embedded. Accordingly, EBITDA for 2011 was in line with our guidance.
- Cash flows from operating activities amounted to DKK 5.0 million in 2011, compared with DKK 5.6 million in 2010.
- Netop Solutions incurred a loss for the year after tax of DKK 11.3 million against a profit of DKK 0.9 milllion in 2010.
- Revenue from Secure Remote Control products, our largest business area, amounted to DKK 48.4 million in 2011, a decline of 8.5% from DKK 53.0 million in 2010. Adjusted for exchange rate effects, the drop in revenue was 6.4%. The revenue decline was especially rooted in the US market, where sales were down 18% in local currency. The drop was mainly due to deteriorated market conditions in combination with the lower USD/DKK exchange rate and a number of organisational challenges in the USA. The EMEA region reported a 3% revenue improvement. We maintain the view that the strategy of focusing on the Enterprise segment is the right way to go, and we believe that there is still an unmet potential in the Enterprise market where Netop Solutions’ products have gained a strong position.
- Classroom management products sold and marketed during the year were Netop School, Netop Vision and Netop MyVision. Revenue from classroom management products amounted to DKK 34.1 million in 2011, a decline of 6.8% from DKK 36.6 million in 2010. Adjusted for exchange rate effects, the drop was 3.0%. Revenue from the USA was up by 3% in local currency relative to 2010, while EMEA revenue fell by 7% because of the negative economic developments in southern Europe.
- Revenue from the Live Chat business area were DKK 3.4 million in 2011 against DKK 2.6 million in 2010, an increase of 31%. Netop Live Guide has mainly been sold in the Danish market, where it has been well received, and in 2011 we began to promote this product in the US and UK markets as well. We invested heavily in this business area in 2011 and will stay on this track in 2012 in order to capture the huge potential of the live chat market. Management expects the Live Chat business area to account for a gradually increasing part of our consolidated revenue, and our goal is to position Netop Solutions as a top 5 provider of live chat solutions.
Q4 2011 financial highlights
- Revenue in Q4 2011 was DKK 24.6 million, against DKK 25.9 million in Q4 2010.
- The Q4 EBITDA was DKK 1.9 million, against DKK 2.5 million in Q4 2010.
- Cash flows from operating activities amounted to DKK 2.7 million against DKK 4.8 million in the same period of last year.
Outlook for 2012
Netop Solutions launched a number of investment initiatives in 2011, aiming to accelerate the individual business areas.
In Secure Remote Control, we will remain focused on sales to the Enterprise market, as our products here are well positioned to solve the special needs of Enterprise customers in relation to complexity and security. Launches planned for 2012 include a number of new versions providing iOS and Android platform support as well as an updated user interface. Some reluctance is still expected in the US market, but based on the initiatives launched and the resources added in sales and marketing, Netop Solutions expects 7–12 % revenue growth in the Secure Remote Control segment relative to 2011.
In classroom management, the launch of the Vision Pro product is expected to lift demand, especially in the USA. Market developments in the EMEA region are expected to be flat, due to the continued restraint on public sector budgets. Overall, we expect 7–12% revenue growth in Classroom Management in 2012 relative to 2011.
Netop Solutions invested heavily in the Live Chat product in 2011, and in 2012 a main priority will be to achieve a substantial expansion of the customer base through substantial investments in sales-promoting activities and marketing campaigns. This is a high-growth market, and Netop Solutions' product is attracting customer attention. We expect strong revenue growth in this business area and project that we will double our revenue from the Live Chat business area in 2012.
Based on the initiatives launched, Netop Solutions expects overall revenue of DKK 95–105 million in 2012. Based on the approved investment plans, which also aim to generate additional growth in 2013, we forecast EBITDA in the DKK 0–5 million range in 2012. Additional investments, especially in the Live chat segment, will be made as the company generates top-line growth. Our revenue guidance for 2012 is based on a USD/DKK exchange rate of DKK 5.30. A USD/DKK exchange rate of 5.40 is expected to lift revenue by about DKK 0.9 million, and EBITDA would be about DKK 0.3 million higher.
Netop Solutions A/S
Netop develops and sells software solutions enabling swift, stable and secure transfer of video, screen images, sound and data between two or more computers. The company has three core business areas: Secure Remote Control, Classroom Management and Live Chat. Netop Remote Control is the most scalable and secure solution available on the remote control market today and more than half of the Fortune 100 companies apply this unique solution. Companies all over the world use Netop Remote Control to cut their support costs and comply with tough security requirements. Netop Solution’s market-leading classroom management solutions for digital classroom management help students and teachers in 75 countries achieve results through virtual teaching. Greater efficiency and higher grades are but some of the results. Netop Live Guide, Netop's live chat solution, is a unique chat solution that enables businesses to offer better customer service, enhance their efficiency and sales and convert online visitors into customers. Netop has about 130 employees and subsidiaries in the USA, the UK, Romania, China and Switzerland. The company sells its solutions to public and private sector customers in more than 80 countries. Netop Solutions A/S is listed on NASDAQ OMX Copenhagen. Netop generated revenue of DKK 88.3 million in 2011. For more information, go to www.netop.com.
Translation In the event of any inconsistency between this document and the Danish language version, the Danish language version shall be the governing version.
Kurt Bager (CEO)
Tel: +45 45 90 25 25
E-mail:kgb@netop.com
