Enea (ENEA) Q3 2024 earnings summary

Executive summary

• Achieved 3% organic growth in Q3 and 11% organic growth in focus areas YTD, with security up 13% and network up 9% over nine months; security business revenues rose to SEK 96.6 million.

• Secured a record contract for Stratum Network Data Layer with a Tier 1 North American operator, valued at $17.7 million with a potential of $21.3 million over three years.

• EBITDA margin was 33% in Q3, with gross margin improving to 77.7% due to a higher share of license revenues.

• Maintains a world-leading portfolio in telecom application and cybersecurity software, serving over 1 billion subscribers in traffic management and protecting 1.5 billion in cybersecurity.

• After nine months, profit after tax reached SEK 48.4 million, a turnaround from last year’s loss.

Financial highlights

• Q3 revenue was SEK 217 million, nearly flat year-on-year due to currency headwinds.

• Security Solutions license revenues increased 67% year-on-year, while network license revenue declined 15%.

• Q3 adjusted EBITDA was SEK 71.8 million (33% margin), with gross margin at 77.7%.

• Net cash flow for the quarter was -SEK 27 million, compared to +SEK 50 million last year.

• Net debt at SEK 170 million, equity ratio at 66.5%, and net debt to EBITDA at 0.58.

Outlook and guidance

• Reiterates guidance for 2024: EBITDA margin above 30% and strong cash flows.

• Long-term ambition to generate double-digit growth in focus business areas and achieve EBITDA margin above 35%.

• Growth remains sensitive to macroeconomic conditions, especially in telecom.