Calnex Solutions Plc · LSE:CLX
Calnex Solutions — FY2023 Earnings Presentation
28 slides from Calnex Solutions's earnings presentation, May 23, 2023
Slide 1: Final Results FY23
Calnex Insight and Innovation 7777) Hh SCT ue. gE Final Results FY23 Tommy Cook, CEO Ashleigh Greenan, CFO
Slide 2: Calnex Solutions
Calnex Solutions We have established a position at the forefront of the Test solutions for the world global test and measurement industry computing industries Our portfolio enables R&D, pre-deployment and in- service testing for network technologies and networked applications Enabling our customers
Slide 3: Supporting the world's telecoms & data centre industry
Supporting the world’s telecoms & data centre industry TELECOM EQUIPMENT VENDORS ‘ otfte ° S$ fod ce ciena Fujitsu ) Yinfinera JUNIPES JMPavenir HUAWEI NEC Ey SAMSUNG ZTE NETWORK OPERATORS Ss : % eutsche ar @ tides COMCAST "OE iis: Jelefonica verizon’ Oo vodafone Calnex May 2023 HYPERSCALE, ENTERPRI
Slide 4: Why we are needed
Why we are needed Design Simulation New product development lifecycle R&D Design Validation and Conformance Testing Critical points in the development cycle, require high capability and high-value test equipment. Fully prove the operation design and conformance with International Standards. Provide
Slide 5: Confident in our prospects
Confident in our prospects Calnex May 2023 Profitable, cash generative, well- managed business with a robust balance sheet A considerably larger business following three years of revenue and profit growth since listing Strong customer and partner relationships across all territories We have a large
Slide 6: Review of the Year
———— Calnex Insight and Innovation Review of the Year
Slide 7: Robust performance delivering considerable growth in revenue and PBT
Robust performance delivering considerable growth in revenue and PBT, with an improved performance in H2 * £274m Revenue +25% * £7.2m Profit before tax +21% + £19.1m (FY22 £15.4m) Closing cash * 0.62p Final dividend Calnex May 2023 Successfully mitigated the well- documented supply chain challenges
Slide 8: Financial review
———— Calnex Insight and Innovation Financial review
Slide 9: Revenue model
Revenue model 2023 24,579 2,870 2022 20,040 2,006 2024 16,509 1469 pr Hardware & Software revenue O Warranty support Revenue (£,000) 53% 47% Average length of relationship of top ten customers is 10 years Top 10 customers orders O Other customer orders Top 10 customers (3yr order average) Calnex May
Slide 10: Geographical & product family overview
Geographical & product family overview Geography ‘«) ROW: Largest region this year driven by strong performance in Europe. North Asia: China remains challenging as still impacted by US restrictions. Strong performance in Taiwan with continued potential in both Taiwan and Japan. Americas: Solid start
Slide 11: Year ending 31 March income statement
Year ending 31 March FY23 FY22 £000 £000 ▪ Revenue 27,449 22,046 Cost of sales (6,977) (5,518) ▪ Gross Profit 20,472 16,528 Other income 751 648 Administrative expenses (excl D&A) (9,928) (7,917) ▪ EBITDA 11,295 9,259 Amortisation of development costs (3,315) (2,908) Underlying EBITDA 7,980 6,351 ▪
Slide 12: Cash flow, year ending 31 March FY23 FY22
Year ending 31 March FY23 FY22 £000 £000 Cashflows from operating activities ▪ EBITDA 11,295 9,259 ▪ Add back non cash items (317) (542) Movements in net working capital (456) (1,574) R&D tax credit cash refunds received 589 207 Net cash from operating activities 11,111 7,350 ▪ Development costs cap
Slide 13: Corporate Giving Scheme
Corporate Giving Scheme — equal to 1% of the profits we generate + Employee-led team considers proposals from employees for donations or support to groups that matter to them. + In FY23 Calnex donated £70,000 to and social events across the globe through our Corporate Giving Scheme. Invest in traini
Slide 14: Strategy and market opportunity
———— Calnex Insight and Innovation Strategy and market opportunity
Slide 15: Global spend on Mobile Network Infrastructure predicted to grow
The global spend on Mobile Network Infrastructure is predicted to grow from US$61.3 billion in 2022 to US$73.5 Billion in 2027, with a CAGR of 3.7%. This spend is split across the three constituent elements of the telecommunications network: Core network, the Transport network and RAN network. Sourc
Slide 16: Continued product innovation to capitalise on growth of 5G
Continued product innovation to capitalise on growth of 5G Expand within the Cloud Computing sector and other Ethernet market niches Target select M&A opportunities to add to product portfolio
Slide 17: Evolving product portfolio
Evolving product portfolio Synchronisation Testing synchronisation Network emulation for testing in the lab performance of networks real-world testing in the lab NETWORK SYNC Prove compliance hoy and interoperability ie q t of 5G O-RAN fronthaul devices Sentry Rack-mount platform solution SNE Ignite
Slide 18: Building on established dominance in 5G
Building on established dominance In 5G Maintaining domin: * On-going progr tracking updates ITU-T and O-RAI Investing to mainta Major project u 800G interface s Paragon-Neo Paragon-Neo is the market leader and defacto standard for proving performance to network equipment to the high accuracy time t
Slide 19: Expansion to grow addressable market
Expansion to grow addressable market ABE SNE Ignite ane SNE-X SNE Attero With the SNE and previously, the Attero, developed significant presence in the Network Emulations market space. Established leadership in Infrastructure testing by emulating real-world network behaviours to verify performance u
Slide 20: Developing the Data Centre opportunity
Developing the Data Centre opportunity Sentinel Initial success in selling Network Tester to verify performance of Time Distribution across a Data Centre. Need for accurate time in Data Centres growing in importance to increase Server performance through efficiency in data transfer plus increase ser
Slide 21: Lab Sync (Paragon-Neo) sales for chip-set evaluation
We have sold Lab Sync (Paragon- We have sold Lab Sync products Neo) products for evaluation of successfully for a number of years. new chip-set by R&D teams. Worked with R&D team to enable them The strong relationship led to the to build both their evaluation and introduction to a group looking for
Slide 22: Current trading and outlook
• Trading in Q1 FY24 has continued as anticipated - confident in delivering results for the year in line with Long-established Proven business market expectations. industry position model provides a • Whilst customer budgets continue to be restricted in with reputation for strong platform for the ne
Slide 23: Appendix
———— Calnex Insight and Innovation Appendix
Slide 24: Acquisition of iTrinegy
Acquisition of iTrinegy The ONLY full-coverage Network Emulation portfolio a? Application- _Application-optimised optimised SW HW Performance-optimised Perform Full performance sw t HW 3 FPGA Performance APPLICATIONS Internet Apps (incl. gaming), Enterprise IT Migration NETWORKS Telco Cloud, MEC, Mi
Slide 25: Shareholder % of Issued Share Capital
% of Issued Shareholder ▪ Share Capital ▪ ▪ ▪ ▪
Slide 26: Board and management
Tommy Cook Ashleigh Greenan Stephen Davidson Helen Kelisky Graeme Bissett Margaret Rice-Jones
Slide 27: Financial structure
Financial structure Revenue Gross profit Admin costs Tax Cash Two revenue streams: + Average of 90% bundled hardware & software recognised on delivery + Average of 10% warranty and software support recognised over life of product Gross margin: approx. 75% net of discounts given to channel partners C
Slide 28: Balance sheet as at March 2023
Mar-23 Mar-22 £000 £000 Non-current assets Intangible assets 10,565 8,424 Goodwill 2,000 - Tangible & right of use assets 937 1,065 Deferred tax asset 272 304 13,774 9,793 Current assets Inventories 2,748 998 Trade and other receivables 3,130 4,997 Cash and cash equivalents 19,098 15,357 24,976 21,3