Tecnotree Corporation Interim Report 1 Jan – 31 Mar 2023 (unaudited)
Tecnotree Corporation Stock Exchange Release 18 April 2023 at 9.00 EET
STRONG GROWTH IN REVENUE AND PROFITABILITY
First quarter (1st Jan – 31st Mar 2023)
- Net sales increased 17.0% to EUR 15.5 (13.3) million.
- Operating result increased 80.5% to EUR 3.6 (2.0) million.
- Net result increased by 79.2% to EUR 1.8 (1.0) million.
- Order book at the end of the period stood at EUR 67.8 (64.0) million.
- Cash flow after investments was EUR -0.4 (-2.1) million.
- Earnings per share were EUR 0.01 (0.00)
| Key figures, MEUR | 1-3/2023 | 1-3/2022 | 1-12/2022 |
| Net sales | 15.5 | 13.3 | 71.6 |
| Operating result | 3.6 | 2.0 | 18.3 |
| Result before taxes | 2.7 | 1.6 | 17.2 |
| Result for the period | 1.8 | 1.0 | 11.6 |
| Earnings per share, basic, EUR | 0.01 | 0.00 | 0.04 |
| Order book | 67.8 | 64.0 | 68.9 |
| Cash flow after investments | -0.4 | -2.1 | -4.8 |
| Change in cash and cash equivalents | -0.9 | -2.1 | -5.3 |
| Cash and cash equivalents | 10.9 | 15.6 | 12.3 |
| Equity ratio % | 74.6 | 81.6 | 77.1 |
| Net gearing % | -8.1 | -22.7 | -9.3 |
| Personnel at end of period | 884 | 756 | 857 |
From the CEO –Record Q1 performance
Revenue
Tecnotree witnessed a strong Q1 performance with 17% growth in Net sales to Euro 15.5 million (13.3), making this the highest Q1 revenue performance in the last four years.
Substantial additional revenue growth came from the Americas Region. This growth was fuelled by higher R&D investments made in Tecnotree Sensa AI/ML engineering platform and multi-cloud technologies.
Tecnotree increased R&D investments to Euro 3.4 million (1.8) in Q1 2023. Tecnotree launched Sensa AI/ML engineering platform and integrated it across the digital portfolio for Telecom, Fintech and Digital Commerce, in order to address increasing customer demand in these segments.
Tecnotree added two new Tier-1 logos from North America, one in the United States of America and Telus in Canada. Further Claro Peru, an existing customer expanded its digital portfolio to include Sensa AI for Customer 360 Experience Management validating the R&D investments. Many erstwhile clients of Cognitive Scale have expressed confidence in Tecnotree’s capabilities and are in the process of entering into new contracts for our Sensa AI platform.
Collections
Tecnotree operates across the world. While the company is winning new customers in North America and Middle East, still majority of the business comes from Africa. The customers in Africa are large and stable global Tier 1 Telecom companies or Government entities. Tecnotree faces challenges in collecting the money from these countries, due to foreign exchange constraints within the country. Similar challenges are faced in a few Latin American countries. The business model of Telecom companies has long gestation period commencing from Scope Study to Go Live and payment schedules are skewed towards closure to the Go Live. All these factors have historically resulted in higher receivables for Tecnotree. This is not peculiar to Tecnotree and a market norm in the region Tecnotree operates Tecnotree is currently engaged in diversifying market presence, which should result in further improvement of cash collection.
Tecnotree has been rigorously pursuing the Account Receivables. During the Q1 2023 Tecnotree was able to collect Euro 15 million which was 39% more than collections in Q1 2022 (10.8) and 35% more than collections in Q4 2022(11.2) and this was the largest receivable collections for the Q1 over the last 4 years.
While the amount of AR is high, 78% of total receivables are less than 9 months outstanding (which is the normal credit period in most countries Tecnotree operates). Adequate provisions have been made to secure the remaining 22%. Tecnotree continues to expect higher cash collections in 2023 over 2022 by 12%-18%
Profitability
The operating result in the first quarter was EUR 3.6 million compared to EUR 2.0 million of Q1 last year. While we cautiously increase our investments in R&D, Tecnotree continues to implement strong cost saving measures. Tecnotree’s net result in the first quarter was EUR 1.8 million compared to EUR 1.0 million Q1 last year. As stated in the last Annual Report, Tecnotree will initiate cost rationalization in Q2 of 2023 to the tune of 5%-7%. These cost savings are expected to be realized in Q4 of 2023 and 2024, thus positively benefiting the company's profitability.
Order Book
Tecnotree’s Order book grew by 6% year on year to Euro 67.8 million across Latam and North America, Middle East and Africa and APAC and included License and Managed Services Sales.
Recognitions
Tecnotree has been recognized by Gartner’s Market Guide again in Q1 of 2023 for Customer Experience and Management for Telecom Operators and has been consistently recognized for the same since 2020.
Additionally, Tecnotree has been recognized by Gartner’s Market Guide for Revenue Monetization and Management for Telecom Operators consistently since 2020.
Tecnotree continues to be among the leading vendors in TM Forum Open APIs certification standards with a 44 APIs certified by the industry standards body, the highest in the Internet Service community.
Further Tecnotree Moments has been awarded the best telecom monetization platform by the Government of Dubai at the FTNFT awards in Q1 of 2023.
