Enea Ab · OMXSTO:ENEA
Enea Ab — Investor Day (2019)
69 slides from Enea Ab's investor day presentation, 2019
Slide 1: Capital Markets Day 2019
ENEA Capital Markets Day 2019
Slide 2: Agenda
Agenda 1:00 PM Business and Strategy Update Video Traffic Management Embedded DPI for Cybersecurity 2:30 PM Coffee Break 2:50 PM 5G Core Networks Integration of Acquisitions Financial Update Concluding Remarks Question and Answer Session 4:15 PM Snacks and Mingle
Slide 3: Introduction
Introduction Jan Häglund President and Chief Executive Officer
Slide 4: Enea is a world-leading supplier of innovative software components
Enea is a world-leading supplier of innovative software components for telecommunications and cybersecurity
Slide 5: Proven Track Record
Proven Track Record Real-time operating …real-time …e-mail received over the Internet in Sweden in operating system for mobile radio #1 system for radio networks 1983. base stations. …HTML for mobile devices in 1998. First …optimization of encrypted video in 2016. #1 Embedded Deep Packet Inspection
Slide 6: Solid Financial Performance
Solid Financial Performance Jul-Sep 2019 Jan-Sep 2019 OPERATING OPERATING HEAD REVENUE REVENUE MARGIN* MARGIN* QUARTER KISTA, SWEDEN 250.2 25.4 751.2 26.8 MSEK MSEK PERCENT PERCENT EARNINGS PER R&D OPEX EARNINGS PER R&D OPEX LISTED SHARE INVESTMENT SHARE INVESTMENT NASDAQ STOCKHOLM (MID CAP) 2.37 16
Slide 7: Sales per Region
Sales per Region 50% Europe, Middle East and Africa 37% 13% Americas Asia * Based on financial report for third quarter 2019 7
Slide 8: Global Presence
Global Presence Bristol Stockholm (HQ) Munich Berlin Vienna Belfast Osijek Tokyo Redwood City Shanghai Phoenix Pune Boston Paris Bucharest Iasi Craiova - Sites with R&D - Sales offices 658 employees (Sept 2019) 8
Slide 9: Strong Customer Base
Strong Customer Base Global Services Network Solutions 15% Operating System Solutions 23% 62% * Based on financial report for third quarter 2019 9
Slide 10: Billions of People Use our Software Every Day
Billions of People Use our Software Every Day Policy and Access Control Real-Time Operating System Access and quality-of-service 3 control, based on subscriber 2 Phone connects to profile. radio base station. Cloud Data Management Subscriber data 4 continuously stored and updated - video session sta
Slide 11: Macro Trends Create Growth Opportunities
Macro Trends Create Growth Opportunities 2005 2010 2015 2020 2025 Virtualized HW/SW HW/SW Micro Virtualization and Cloud Integration Separation Network Services Functions 5G Core (SA) 5G 5G Evolution 4G (LTE) 5G NR (NSA) Data Mining Endpoint Network Behavior Cybersecurity Security Security Analytics
Slide 12: Leading Positions in Select Segments
Leading Positions in Select Segments Connected Devices Network Edge Access Network Core Network Internet and Cloud #1 #1 Real-Time Video Traffic Operating System Management for Radio Networks Tier 1 Cloud Data Management New Tier 1 Edge Virtualization Policy and Platforms Access Control #1 Embedded
Slide 13: Successful Complementary Acquisitions
Successful Complementary Acquisitions Annual turnover: Software businesses with customer EUR ~12 million (2019)* Business Unit No. of employees: ~90 base and revenues Complementary product portfolio, research and development, and Annual turnover: USD ~27 million (2017)* innovation capabilities N
Slide 14: Revenue Model – Main Revenue Types
Revenue Model – Main Revenue Types Revenue type Right Recognition Recurring Perpetual w cap Time of delivery No/Semi New licenses for more capacity Perpetual Time of delivery No/Semi Some licenses1) are per unit sold from ”end-customer” License Term-based Over the period Yes Normally 3-5 years Usage
Slide 15: Well Positioned for Profitable Growth
Well Positioned for Profitable Growth Brand Leading independent provider of software components for 5G core networks and cybersecurity. Market position Best-of-breed in targeted market segments. Trusted for critical software and infrastructure, known for innovative solutions. Business models Softwar
Slide 16: Executive Management Team
Executive Management Team Jan Häglund Erik Larsson Jean-Philippe Lion President and Head of Marketing and Head of Business Unit Chief Executive Officer Communication Deep Packet Inspection Adrian Leufvén John Giere Björn Westberg Head of Business Unit Head of Business Unit Chief Financial Officer Op
Slide 17: Video Traffic Management
Video Traffic Management John Giere Head of Business Unit Openwave Mobility
Slide 18: Leading Positions in Select Segments
Leading Positions in Select Segments Connected Devices Network Edge Access Network Core Network Internet and Cloud #1 #1 Real-Time Video Traffic Operating System Management for Radio Networks Tier 1 Cloud Data Management New Tier 1 Edge Virtualization Policy and Platforms Access Control #1 Embedded
Slide 19: Market: Adoption of Mobile Video Continues to Grow
Market: Adoption of Mobile Video Continues to Grow Mobile Video Penetration (2018-2024) 100% 90% 80% 70% By 2024 there will be 60% 4.6 billion smartphone 50% users across the world 40% 30% Source: Global Mobile Video Update, Strategy Analytics, August 2019 20% 10% 0% WE NA APAC CEE CALA MEA Global 1
Slide 20: Market: 2019 The Year of Video Streaming Services
Market: 2019 The Year of Video Streaming Services Mobile video streaming services are driving ever greater video traffic consumption on 4G networks 20
Slide 21: Market: 4G Traffic Continues to Increase
Market: 4G Traffic Continues to Increase “5G will not overtake 4G till 2026 thus extending 4G’s return on investment. This is where the money is for the next few years.” Source: ABI Research CY2018 Network Technology & Market Tracker Data (Published Feb 2019) 21
Slide 22: 5G: Cloud Mobile Video Gaming
5G: Cloud Mobile Video Gaming Analysis Mason forecast 1.3B mobile active cloud gaming users by 2025 Mobile operators are aiming to leverage 5G Cloud market inflection to monetize mobile gaming services 22
Slide 23: 5G: Cloud Mobile Video Gaming
5G: Cloud Mobile Video Gaming Analysis Mason forecast 1.3B mobile active cloud November 19th gaming users by 2025 Mobile operators are aiming to leverage 5G Cloud market inflection to monetize mobile gaming services 23
Slide 24: Cloud Market Leader
Cloud Market Leader Traffic Management and Cloud Data Management Examples of active engagements across the globe 24
Slide 25: Product Portfolio
Product Portfolio TRAFFIC MANAGEMENT STRATUM: CLOUD DATA MANAGEMENT Manage and Monetize Mobile Video Traffic Shared Cloud Network Data Layer Platform • Managing the competing challenges of • Securely store and utilize ANY subscriber data delivering a superior mobile subscriber QoE across virtualized
Slide 26: Traffic Management Portfolio
Traffic Management Portfolio Learning-Based IP Machine Learning Congestion Traffic Acceleration RAN Detection & Relief Network • Improve Network Congestion • Reduce Congested Cells Acceleration Quality Ranking Management by >15% Congestion & QoE-Driven Classification & QoS-Driven Optimization Encryp
Slide 27: Traffic Management: Delivering Customer Value
Traffic Management: Delivering Customer Value TELUS Introduces Traffic Acceleration TELUS remains ahead of competition TELUS ranks #4 -- 13% off to BELL Jumps to #1 position to date using Traffic Acceleration 2016 2017 >2018 1 1 1 4 2 2 Fastest Network: A Customer Competitive Priority 27
Slide 28: Stratum: Compelling Customer Value Proposition
Stratum: Compelling Customer Value Proposition Fixed Broadband 5G Mobility IOT Multi-vendor Application Management Layer (Any Data to Any Application) Scales Data Distribution Layer (Any Application to Any Data) Agile Data Base Layer Best in category TCO & Subscriber Details | Billing Detail
Slide 29: Customer Growth Strategy
Customer Growth Strategy Products Sold TCP Opt+ MO + Tier 1 EMEA SP Engagement Status Proxy Svc STM IPTF SD-RCM Stratum Egypt Deployment T Germany Deployment Ireland Deployment Italy Deployment T New Zealand Deployment Romania Deployment South Africa Deployment T Spa
Slide 30: Revenue Model
Typically part of an initial agreement Revenue Model Typically part of renewal/extension Model (year by year) Revenue type Right Recognition 1 2 3 4 5 6 7 8 9 Recognition in tandem with Perpetual %-complete installation project License New licenses for more capacity Support&maintenance Maint&support
Slide 31: Competitive Landscape
Competitive Landscape Competitive landscape is broad and often divides between specialist vs. generalist 31
Slide 32: 5G: Investing in Strategic Sales Partnerships
5G: Investing in Strategic Sales Partnerships 5G All IP Acceleration Embedded TCP Embedded RAN Burst 5G Services Acceleration Acceleration Management Q4 Q1 Q2 Q4 2019 2020 2020 2020 5G system suppliers lead the engagement Enea leads side by side positioning and selling Best-in-Breed Cloud softwa
Slide 33: Mobile Video Management Key Takeaways
Mobile Video Management Key takeaways Ambition: Enea will maintain and grow our leadership position in the Traffic Management and Cloud Data Management Domains. Market: Video drives 4G network traffic and data management use cases which will grow exponentially with new 5G services. Products: P
Slide 34: Embedded DPI for Cybersecurity
Embedded DPI for Cybersecurity Jean Philippe Lion Head of Business Unit Deep Packet Inspection
Slide 35: Leading Positions in Select Segments
Leading Positions in Select Segments Connected Devices Network Edge Access Network Core Network Internet and Cloud #1 #1 Real-Time Video Traffic Operating System Management for Radio Networks Tier 1 Cloud Data Management New Tier 1 Edge Virtualization Policy and Platforms Access Control #1 Embedded
Slide 36: Enterprise Cybersecurity: Traffic Visibility is Key
Enterprise Cybersecurity: Traffic Visibility is Key Firewalls and signature-based anti-virus are not enough to stop attacks Security Operations Centers focus on discovering and containing breaches Latest solutions use a combination of: Machine learning / artificial intelligence User and tr
Slide 37: National Cyber Defense: a Strategic Priority
National Cyber Defense: a Strategic Priority Geopolitical tension lead to more cyberattacks Attack targets: corporate espionage, elections, critical infrastructure and personal information Source: Carbon Black Relevance for Enea DPI: Qosmos technology provides detailed traffic information that h
Slide 38: Enea DPI Market: Cybersecurity Vendors
Enea DPI Market: Cybersecurity Vendors Growing number of threats and vendors New cybersecurity use cases emerge continuously Fragmented market with specialized vendor categories Several vendor categories are relevant for Enea embedded DPI Enea’s position: # 1 Embedded DPI 38
Slide 39: Competitive Overview of the DPI Engine Market
Competitive Overview of the DPI Engine Market Competitor Market Focus Rhode & Schwarz ipoque Cybersecurity, Telecom Sandvine NAVL Cybersecurity, Telecom In-house DPI Control over technology Note: open source (nDPI) is not a competitor 39
Slide 40: Go-to-Market Model
Go-to-Market Model Telecom Operators, Enterprises, Government Agencies 30+ references Network Solution Security Solution Security Systems Vendors Vendors Integrators DDDPI Enea 40
Slide 41: Product Portfolio and Value Proposition
Product Portfolio and Value Proposition Product Unique Selling Points ixEngine SDK: Classification and metadata extraction Large number of Qosmos C libraries protocols classified ixEngine ixEngine Extension Modules: CSM, Deep File (3,200+) and Metadata Inspection, GTP Lib, Rule Engine extracted (5
Slide 42: Use Case Example: Qosmos ixEngine for Malware Prevention
Use Case Example: Qosmos ixEngine for Malware Prevention and Data Loss Prevention Malware Cybersecurity Attacks Solution Organization Qosmos ixEngine provides traffic Data visibility Exfiltration 42
Slide 43: Use Case Example: Qosmos Probe for Cyber Threat Hunting
Use Case Example: Qosmos Probe Provides Traffic Intelligence for Cyber Threat Hunting Security Operations Center Feed for 1 Machine Learning Database 2 Forensics Qosmos Probe Benefits for Security Operation Centers: 1. Improved threat hunting, based on detailed, real-time traffic information 2. Re
Slide 44: Revenue Model
Typically part of an initial agreement Revenue Model Typically part of renewal/extension Model (year by year) Revenue type Right Recognition 1 2 3 4 5 6 7 8 9 Perpetual Quarterly Production License reports (Volume based) Time of delivery License (Dev Lic & Prod Lic) Yearly flat fee Perpetual Over th
Slide 45: Embedded DPI for Cybersecurity Key Takeaways
Embedded DPI for Cybersecurity Key takeaways Cybersecurity is a growing market Traffic classification is key in most cybersecurity solutions Enea is the leading vendor of embedded deep packet inspection Our ambition: expand addressable market and maintain #1 market position 45
Slide 46: Agenda
Agenda 1:00 PM Business and Strategy Update Video Traffic Management Embedded DPI for Cybersecurity 2:30 PM Coffee Break 2:50 PM 5G Core Networks Integration of Acquisitions Financial Update Concluding Remarks Question and Answer Session 4:15 PM Snacks and Mingle
Slide 47: 5G Core Networks
5G Core Networks Roland Steiner Head of Business Unit Policy and Access Control
Slide 48: Leading Positions in Select Segments
Leading Positions in Select Segments Connected Devices Network Edge Access Network Core Network Internet and Cloud #1 #1 Real-Time Video Traffic Operating System Management for Radio Networks Tier 1 Cloud Data Management New Tier 1 Edge Virtualization Policy and Platforms Access Control #1 Embedded
Slide 49: 5G Requires a New Core Network
5G Requires a New Core Network With 5G speed and latency will be improved Latency is important for interactivity (remote surgery, gaming, …) But 5G also will converge fixed, wireless and mobile networks in the Cloud Lower latency, other access technologies and Cloud support, 5G Core is requi
Slide 50: Core Network Market by Vendor and Generation
Core Network Market by Vendor and Generation Annual sales in 2018 hit a record high of USD 2.7 billion Huawei and Ericsson are dominating the market Other players are Nokia, Cisco, ZTE, Mavenir, and Affirmed - 5G - 4G Majority of installed based is still on 4G Core - 3G But almost all new
Slide 51: Data Management in 5G Core Networks
Data Management in 5G Core Networks Core Network 4G Core Network 5G Core Network Profile Access Policy Access Policy Profile Dynamic Static Data Data Applications using subscriber information Increased relevance of Data Management Enea only offered selected applications Enea has a complete o
Slide 52: Go-to-Market Model
Go-to-Market Model Mainly indirect business via Core Network vendors Telecom Operators Most 5G tenders require an entire Core Network Complementing partner portfolio with Enea applications Engaged with established players and challengers Partner Best-of-breed for selected accounts via Enea sal
Slide 53: Data Management Competition
Data Management Competition Nokia is the market leader Profile Company Followed by Ericsson and Huawei System Vendor • Nokia • Ericsson • Huawei Most core vendors do not have an offering • ZTE Targets for Enea to partner • Samsung Competition by specialists Core Network • Cisco Specialist
Slide 54: Unique Selling Proposition
Unique Selling Proposition Best in class software Easy to do business professional base Future-proof Linear and In service SERVICES Presence in LICENCE Integrated Configuration cloud-native cost-efficient with (oneTier off) 1 Europe and (perpetual) with partner for simple architecture scalability op
Slide 55: Revenue Model
Typically part of an initial agreement Revenue Model Typically part of renewal/extension Model (year by year) Revenue type Right Recognition 1 2 3 4 5 6 7 8 9 Not renewed, but potentially Perpetual At time of delivery extended (capacity, new release) License Support&maintenance Maint&support Over th
Slide 56: 5G Core Networks Key Takeaways
5G Core Networks Key Takeaways 5G Core market will start to take off 2020 Drivers are Cloud, low latency and access independence Complementing portfolio of domain vendors Direct and indirect sales through partners Become #1 independent Data Management vendor
Slide 57: Enea is a world-leading supplier of innovative software components
Enea is a world-leading supplier of innovative software components for telecommunications and cybersecurity
Slide 58: Financial Update
Financial Update Björn Westberg Chief Financial Officer
Slide 59: Significant Growth in Network Solutions
Significant Growth in Network Solutions Network Solutions +38% in Q3 Revenue per Product group (MSEK) 1) ● PAC business major contributor 250 62% ● 6 percent organic growth in other products 1) Policy and Access Control 200 62% 150 54% 30% 100 Operating System Solutions -7% in Q3 ● sales decline
Slide 60: Strong Sales Growth and High EBIT Margin
Strong Sales Growth and High EBIT Margin Revenue MSEK MSEK 75 29% 300 70 28% 250 65 27% 200 60 26% 150 55 25% 100 50 24% 50 45 23% EBIT margin EBIT 0 40 22% 3/18 4/18 1/19 2/19 3/19 3/18 4/18 1/19 2/19 3/19 Highest revenue in a third quarter Highest Operating profit (EBIT) in a third quarter • Netwo
Slide 61: Stable Cash Flows
Stable Cash Flows MSEK Operating cash flow of 70 MSEK in Q3 100 80 • Significant part recurring revenue 60 40 • Including a Working capital change of -9 MSEK (Net working capital was 107 MSEK 30 Sep 2019) 20 0 Operating CF EBIT 3/18 4/18 1/19 2/19 3/19 Stable operating cash flow on a 12-month basi
Slide 62: Solid Financial Position
Solid Financial Position ND/EBITDA Equity ratio EPS SEK 3.00 60% 3.00 2.50 50% 2.50 2.00 40% 2.00 1.50 30% 1.50 1.00 20% 1.00 0.50 0.50 10% 0.00 0.00 0% 3/18 4/18 1/19 2/19 3/19 3/18 4/18 1/19 2/19 3/19 Net debt to EBITDA down to 0.67 from 2.62 Q3 2018 Q1-Q3 EPS of SEK 7.21 vs 4.61 Q1-Q3 2018 Equity
Slide 63: Stable Financials – Facilitating Growth
Stable Financials – Facilitating Growth (MSEK) 30 Sep 19 Interest bearing debt 574.7 Remaining purchase price 47.9 Cash 395.7 Net debt 226.9 Net debt to EBITDA of 0.67 (19-Q3) EBITDA 338.6 Significant interest reduction • Bond loan had 5.25% Positive EPS effect from 2020 Completed in October: • Bond
Slide 64: Financial Outlook 2019
Financial Outlook 2019 Our objective for the full year 2019 is to achieve revenue growth over 2018 and an operating margin exceeding 20 percent. 64
Slide 65: Concluding Remarks
Concluding Remarks Jan Häglund President and Chief Executive Officer
Slide 66: Positioned for Profitable Growth
Positioned for Profitable Growth Select markets in telecommunication (4G and 5G) and cybersecurity, working with leading Market Position customers and gaining top positions in key niche segments. Pure play software company with high gross margin and significant recurring revenues, Business Model une
Slide 67: Question and Answer Session
Question and Answer Session 67
Slide 68: Agenda
Agenda 1:00 PM Business and Strategy Update Video Traffic Management Embedded DPI for Cybersecurity 2:30 PM Coffee Break 2:50 PM 5G Core Networks Integration of Acquisitions Financial Update Concluding Remarks Question and Answer Session 4:15 PM Snacks and Mingle
Slide 69: Thank you!
Thank you! www.enea.com 69