Tecnotree Corporation Interim Report 1 Jan – 31 Mar 2024 (unaudited)

Tecnotree Corporation Stock Exchange Release 26 April 2024 at 9.00 EEST

On-track revenue growth, improved profitability while facing currency exchange fluctuations

First quarter (January – March 2024)

• Net sales increased 4.7% to EUR 16.3 (15.5) million.
• Net sales constant currency increased  35% EUR 21.6 (16.0) million
• Operating result increased 22.3% to EUR 4.4 (3.6) million.
• Foreign exchange losses increased 80.3% to EUR 1.7 (1.0) million.
• Result for the period decreased by 10.4% to EUR 1.6 (1.8) million.
• Gross cash inflow from operating activities EUR 1.0 (4.9) million.
• Earnings per share EUR 0.01 (0.01).
• Order book at the end of the period increased by 10.3% to EUR 74.8 (67.8) million.

Key figures, MEUR	1-3/2024	1-3/2023	1-12/2023
Net sales	16.3	15.5	78.4
Operating result	4.4	3.6	23.8
Result before taxes	2.1	2.7	13.9
Result for the period	1.6	1.8	11.2
Earnings per share, basic, EUR	0.01	0.01	0.04
Order book	74.8	67.8	80.2
Gross cash inflow from operations	1.0	4.9	17.4
Change in cash and cash equivalents	-4.4	-0.9	8.6
Cash and cash equivalents	16.4	10.9	20.8
Equity ratio % (Equity/Total Liabilities)	65.9	74.6	67.5
Debt Equity ratio % (Debt/Equity)	6.1	2.5	6.6
Personnel at end of period	892	884	883

*Unless otherwise stated, all figures presented below are for the financial period 1-3/2024 and the figures for comparison are for the corresponding period in 1-3/2023.

Prospects 2024

Tecnotree expects in 2024:

•   Revenue to be higher by 2%-7% compared to 2023

•   Operating profit (EBIT) to be higher by 7%-15% compared to 2023

The company will continue its focus on increasing licence sales, while evolving its delivery model to an Annual Recurring Revenue model. This will ensure that the company will have more predictable and stable quarter on quarter revenue.  However, revenue will be impacted in the shorter term. Telecom industry growth is poised at 2.1% annually from 2022-2027 and Tecnotree has been growing above the market. Further given the uncertain global economic scenario, the Company expects 2%-7% growth in revenue compared to 2023.

In 2024, the company is expecting higher cost optimisation which will result in higher Operating profit of 7%-15% compared to 2023. 

The outlook is based on the constant currency terms

From the CEO’s desk 

Ontrack revenue growth with higher profitability while foreign exchange losses continue

In Q1 2024,Tecnotree continued to further its embedded AIML offerings in the Middle East with its most recent win for the Sensa Fabric in Jordan.  This reinforces Tecnotree’s position as a trusted partner for leading Telecommunication partners in AIML powered BSS solutions.  As operators focus on de-layering their  business models beyond connectivity, to drive accelerated revenue growth in adjacent verticals, Tecnotree announced its third MVNO win in a new market, with Nuh-Digital in Brazil.  Nuh-Digital is a dynamic network player in the realm of education services and has selected Tecnotree’s comprehensive digital platform to enhance customer experience and accelarate revenue growth.

Revenue

In Q1 2024, Tecnotree continued growth trend and recorded a solid 4.7% increase in revenue totaling to EUR 16.3 million compared to EUR 15.5 million last year. In constant currency terms (exchange rate as at the Dec of previous year) increased by 35% to EUR 21.6 million compared to EUR 15.0 million in the same quarter last year.  High exchange volatility voilataility has impacted the revenue in the current quarter.

In the first quarter of 2024, Tecnotree continued to drive sales of its digital platform globally, completing a number of AIML and digital transformations for key customers, thereby increasing revenue from these deliveries.   

While Tecnotree had new wins in the LATAM region, EMEA and APAC continue to be the growth markets for the digital platform.

Tecnotree earns revenue in multiple global currencies and predominantly in US dollars. In Q1/2024, one third of revenue was in Nigerina nairas resulting in further currency exchange losses.  In terms of mitigating the exchange losses, we continue to work with a number of financial institutions for currency swaps and hedges.

Since February of 2024 the naira has continued to show signs of improvement and this

will hopefully minimize our exchange risks going forward.

Cost

Tecnotree began cost optimization last year and continue to embark on a global initiative targeting significant cost optimization also in 2024. The total operating expenses for Q1/2024 was 73% of the revenue, which is lower than 76% in Q1/2023. This has resulted in higher EBIT for the current quarter.

Profitability

The operating result in the first quarter improved by 22.3% to EUR 4.4 million compared to EUR 3.6 million last year. During the quarter, Tecnotree also initiated a new cost rationalization program, and the company expects full-year operating result to be 7% to 15% higher than in 2023. In the first quarter, net profitability continued to be negatively impacted by exchange differences. However the actions taken  to mitigate the risk continue and have started to show positive signs for the situation to improve.   

Collections

Tecnotree business has a high degree of seasonal variations. A number of digital deliveries were completed in Q1/2024, which have now been invoiced and  are due for collection over the next quarter.  The overall collections for Q1/2024 totaled EUR 9.5 million and in constant currency it would have been EUR 12.0 million. Q1/2024 also witnessed a heavy period of holidays and lesser number of available banking days, adding further slowing collections.

Order Book

Tecnotree’s order book grew in total by 6% year on year to EUR 74.8 million and the growth was supported by LATAM, Middle East, Africa and APAC.

Recognitions

In Q1 2024, Tecnotree announced its Partnership with Bytedance, combining its expertise in technology and content creation with Tecnotree Moments' telecom industry insights and innovative solutions. The partnership seeks to create synergies that accelerate digital transformation and unlock value for telecom operators worldwide. Leveraging advanced AI capabilities and high-speed 5G networks.These solutions will empower telecom enterprises to drive new revenue streams and enhance customer engagement.

In Q1/2024, Tecnotree Moments was selected by  Global Hitss, an American Movil Group Co. to enhance e-health services across Mexico and Latin America. This digital platform will improve healthcare services by transforming various aspects, such as registration, appointment scheduling, accessing records of patient history, subscription management, and billing processes - ensuring seamless operations across the entire value chain. 

Tecnotree Moments in Q1 2024 was also selected as a finalist in the prestigious TMForum 2024 Excellence Awards in the category of network monetization, for enabling B2B2C network monetization in healthcare. The results will be announced in June 2024.