Calnex Solutions Plc · LSE:CLX
Calnex Solutions — H1 FY2023 Earnings Presentation
26 slides from Calnex Solutions's earnings presentation, Nov 22, 2022
Slide 1: Interim Results HY23
Interim Results HY23 Tommy Cook, CEO Ashleigh Greenan, CFO
Slide 2: Test solutions for the world’s telecoms and cloud computing industries
Our portfolio enables R&D, pre-deployment and in-service testing Test solutions for the world’s telecoms and for network technologies and networked applications, enabling our cloud computing industries customers to validate the performance of the critical infrastructure associated with telecoms and
Slide 3: Focused on high value niches of the testing market
R&D Design Validation and Maintenance Testing post Focused on high value niches Conformance Testing deployment of the testing market ▪ Critical points in the development cycle, ▪ Deep insight is required to identify and require high capability and high-value test rectify complex maintenance issues e
Slide 4: Telecom equipment vendors, hyperscale, enterprise, network operators, component manufacturers
TELECOM EQUIPMENT VENDORS HYPERSCALE, ENTERPRISE NETWORK OPERATORS COMPONENT MANUFACTURERS Calnex November 2022 4
Slide 5: Review of the Period
———D Calnex Insight and Innovation Review of the Period
Slide 6: Robust first half for Calnex
£12.7m Revenue Robust first half for Calnex +38% Considerable growth in revenue and profit before tax. £3.1m Growth across our product lines. Profit before tax £14.4m Successful navigation of macroeconomic challenges Closing cash to date. +34% 0.31p Protected profit margins while investing in the bu
Slide 7: Navigation of macroeconomic challenges
Navigation of Delivered on growth Continuing Data Conformance to macroeconomic strategy through Centre opportunities O-RAN standards challenges M&A and new standards Successful mitigation of The recently acquired Interest from hyperscale New customer groups well-documented, global iTrinegy Limited e
Slide 8: Financial Results
———D Calnex Insight and Innovation Financial Results
Slide 9: Geography and Product line
Geography Product line ROW: Robust growth in Rest of the World driven by a Lab Sync: Solid performance driven by up-take in the latest strong performance in Europe. releases of very high speed interface support, (e.g. PAM4, 400G) North Asia: Healthy growth, concerns remain about when the market will
Slide 10: Revenue growth of 38%
Year ending 31 March H1 FY23 H1 FY22 ▪ Revenue growth of 38%; approx. a third of the growth £000 £000 Revenue 12,728 9,251 came from positive currency movements. Cost of sales (3,111) (2,205) Gross Profit 9,617 7,046 ▪ Gross margin 76% in line with prior year. Price increases Other income 150 93 suc
Slide 11: Cash generated in the period before acquisition of iTrinegy
Year ending 31 March H1 FY23 H1 FY22 ▪ £1.3m of cash generated in Period before acquisition of £000 £000 Cashflows from operating activities iTrinegy (H1 FY22: £1.0m). EBITDA 5,076 3,877 Add back non cash items 49 (4) ▪ Closing cash of £14.4m (H1 FY22: £13.6m), including fixed Movements in net worki
Slide 12: Strategy
— Calnex Insight and Innovation Strategy LTT’, WwW’
Slide 13: The telecoms industry is a highly competitive environment
The telecoms industry is Requiring innovative a highly competitive products, technologies During the first half of this year, the worldwide aggregate environment. and services to support telecom equipment market grew by just 3%, as growth slowed investment in new digital infrastructure. from the 7%
Slide 14: Synchronisation testing and network emulation product lines
Synchronisation Testing synchronisation Network emulation for real-world testing testing in the lab performance of networks in the lab LAB SYNC NETWORK SYNC CLOUD & IT Telecom Telecom Data Centre Infrastructure Applications Paragon-neo Attero-100G Sentinel Sentry Paragon-X SNE NE-ONE • Sustained pos
Slide 15: Sentry
Sentry New version of our Network Synchronisation product – leveraging the Sentinel technology. Form, fit and function optimised for the data centre environment. Significant ROI for customers – massive efficiency gains and cost savings. Launching in H2. Calnex November 2022 15
Slide 16: Initial focus on North America
Position in the markets confirmed. Initial focus on North America where we see greatest opportunity. We have signed new relationships with US partner to harmonise with our distributor strategy. Positive initial discussions with Spirent to go into targeted customers. Business development team hired.
Slide 17: Tier-1 Equipment Manufacturer and Software developer
Tier-1 Equipment Manufacturer Software developer We have sold Lab Sync products Company developing software-only based successfully for a number of years. solutions required a Network Emulation solution for evaluation of their product. The strong relationship led to the After they bought a solution
Slide 18: Three-pillared growth strategy
Three-pillared growth strategy to capitalise on the structural market Expand within growth drivers the Cloud Computing sector Continued and other Ethernet Target select product market niches M&A innovation to opportunities to capitalise on add to product growth of 5G portfolio Continued careful cost
Slide 19: Confident in outlook for FY23
▪ Confident in outlook for FY23. ▪ Strong order book as we enter H2. Established Proven business industry position model provides a ▪ No sign of slow down in telecoms investment of target with reputation strong platform segment. for winning for sustainable ▪ Our long-established global presence mean
Slide 20: Appendix
— Calnex Insight and Innovation Appendix LTT’, WwW’
Slide 21: Major Shareholders
▪ Share Price 154.5p (at 21.11. 2022) Major Shareholders ▪ Market AIM % of Issued Share Shareholder Capital ▪ Ticker CLX Thomas (Tommy) Cook (CEO) 19.9% ▪ Market Cap. £135.22m BGF Investment Management Limited 11.85% ▪ Ord. shares in issue 87.5m Scottish Enterprise 9.0% Close Brothers Asset Manageme
Slide 22: Board and management
Tommy Cook Ashleigh Greenan Stephen Davidson Ann Budge Graeme Bissett Margaret Rice-Jones CEO CFO Non-Exec Non-Exec Non-Exec Non-Exec Chairman Director Director Director Tommy is the founder and Ashleigh qualified as a Stephen joined the Board of Ann has been a non- Graeme is an experienced Margaret
Slide 23: Balance sheet
Nov-22 Nov-21 Mar-22 £000 £000 £000 Non-current assets Intangible assets 10,181 7,982 8,424 Goodwill 1,646 - - Tangible & right of use assets 957 699 1,065 Deferred tax asset 304 730 304 13,088 9,411 9,793 Current assets Inventories 1,532 1,189 998 Trade and other receivables 6,035 2,414 4,997 Cash
Slide 24: Financial model assumptions
• Two revenue streams: Revenue • Average of 90% bundled hardware & software recognised on delivery • Average of 0% warranty and software support recognised over life of product Gross Gross margin: approx. 76% net of discounts given to channel partners Cost of sales: approx. 85% is cost of billing fr
Slide 25: Average length of relationship of top ten customers
Hardware & Software revenue Warranty support Average length of relationship of top ten customers is 10 years Calnex November 2022 25
Slide 26: Objective is to make a meaningful impact
Charity committee formed to identify opportunities in the local area. Objective is to Launched initiative to Social Responsibility fund - become an ISO14001 make a equal to 1% of the profits certified business by 2023. meaningful we generate. impact Invest in training to Committed to maintaining enh