KERLINK H1 2023 results
A decline in activity that impacts the Group's results
Measures to lower breakeven level and speed up commercial transformation in Q4
PRESS RELEASE
Thorigné-Fouillard, France - 28 September 2023, 6 p.m.
Kerlink(AKLK FR0013156007), a network and IoT solutions provider, published its H1 2023 consolidated figures.
As a reminder, H1 2023 sales fell by 34% to €6.6m compared with €10m the previous year. This change was mainly due to an unfavourable base effect: business momentum in H1 2022 was strongly linked to sales of infrastructure and services equipment intended for the deployment of the Helium network, which represented €3.8m at end-June. H1 revenue from the core IoT business was up 6%, after the restatement of sales related to the Helium project in 2022.
The fall in sales during H1 naturally weighed on the Group's results, despite strict control of operating expenses, which were down 13% over the period. EBITDA came out at -€1.6m at 30 June 2023 vs. -€0.8m one year earlier.
William Gouesbet - Co-founder, Chairman and Chief Executive Officer of Kerlink: "During the first half of the year, we rolled out two strands of our action plan with the aim of restoring sustainable growth at Kerlink. The first involved adapting our cost structure, with a reduction in payroll costs, the effects of which will be seen in the second half of the year, and more specifically during the fourth quarter. The second involved speeding up the conversion of growth in demand by simplifying our commercial offers. This is a fundamental aspect of our development which involves offering solutions that are simple, easy and fast to implement, while more closely involving our technology partners and the main LoRaWAN® Network Server (LNS) suppliers of the ecosystem."
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Consolidated half-year financial statements
On 26 September 2023, the Board of Directors approved the consolidated financial statements as at 30 June 2023.
In thousands of euros | H1 2023 | H1 2022 |
Revenue | 6,623 | 10,051 |
Cost of sales | -3,970 | -5,345 |
Gross margin | 2,653 | 4,706 |
Gross margin rate | 40.1% | 46.8% |
Operating expenses | -4,025 | -4,645 |
o/w external expenses | -538 | -746 |
o/w personnel expenses | -3,487 | -3,879 |
Provisions for doubtful receivables | -211 | -818 |
EBITDA | -1,583 | -757 |
Depreciation and amortisation | -777 | -730 |
Operating income (expense) | - 2,361 | - 1,487 |
Net financial income | -259 | -45 |
Income tax | -5 | -7 |
Group share of net income | -2,624 | -1,540 |
IFRS - A limited audit by the Statutory Auditor is under way
Sales of network infrastructure equipment accounted for 69% of sales of IoT solutions in H1 2023. They stood at €4.6m, down 39% compared to H1 2022. On a like-for-like basis, equipment sales in the core IoT business remained stable at €4.5m. Revenue from services fell 17% to €2.0m. On a like-for-like basis, these sales increased by 21% in the half year, representing more than 30% of the total activity for the period.
A breakdown by business segment shows an increase in the Smart City & Quality of Life segment. Sales in the Smart Agriculture & Environment segment also continued to rise.
Decline in margin linked to product mix and the end of Helium sales
The gross margin was 40.1% in H1 2023 vs. 46.8% in H1 2022. In order to stimulate demand and reduce its inventory level, the Group occasionally granted price reductions on certain items of equipment. The decline in sales of equipment and services related to the deployment of the Helium network mechanically impacts the overall product mix and therefore the margin rate.
Operating expenses came to €4m at 30 June 2023 compared with €4.6m the previous year. This decrease is due to strict measures to control external expenses and the first savings generated from the reduction in payroll costs.
As a precaution, the Group decided to set aside €211k in its financial statements for the first half of the year to cover non-recovery risk on a few customers in economic difficulties.
EBITDA came to -€1.6m compared with -€0.8m the previous year.
Consolidated net income came to -€2.6m compared with -€1.5m at 30 June 2022.
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Careful management of inventory and cash flow
At 30 June 2023, Group shareholders' equity stood at €9.9m versus €12.6m at 31 December 2022.
Inventories amounted to €13.5m at 30 June 2023 compared with €14.2m at 31 December 2022.
Inventory levels remain high because during the first half of the year the Group was obliged to meet commitments on remaining purchases of electronic and manufacturing components from its subcontractors. These commitments, entered into at the height of the semiconductor crisis, were initially intended for the Helium network. The Group points out that this inventory is not specific and can be used for the customers of its core IoT business.
The correlation between actual revenue and lower inventory levels is thus expected to be more direct in the second half of the year.
The slight fall in inventory levels over the period, in tandem with the reduction in trade receivables, led to a positive variation in the working capital requirement.
Cash flow decreased from €5.7m to €3.8m, taking into account the Group net loss.
Financial debt at the period end (excluding lease liabilities under IFRS16) was €12.6m (of which €1.2m factored) versus €9.2m (of which €1.3m factored) at 31 December 2022.
In this context, on top of the measures taken to lower the Group's breakeven level, the management team has initiated discussions with the Group's banking partners with a view to achieving the necessary renegotiation of its debt by obtaining a capital franchise and extending the maturity of loans.
At this point, management does not consider a capital increase or the use of dilutive instruments.
In thousands of euros
30 June 2023
31 December 2022
Net assets and other non-current assets | 5,925 | 6,342 | ||||||
Current assets | 20,102 | 22,199 | ||||||
Of which inventory | 13,511 | 14,203 | ||||||
Cash and cash equivalents | 3,763 | 5,746 | ||||||
Total assets | 29,790 | 34,287 | ||||||
Shareholders' equity | 9,910 | 12,586 | ||||||
Long- and medium-term financial liabilities | 9,191 | 10,602 | ||||||
Other non-current liabilities | 462 | 441 | ||||||
Current financial liabilities | 4,425 | 4,369 | ||||||
Other current liabilities | 5,802 | 6,288 | ||||||
Total liabilities | 29,790 | 34,287 | ||||||
IFRS - A limited audit by the Statutory Auditor is under way |
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Strong measures to speed up commercial transformation in the fourth quarter
TECHNOLOGICAL DEVELOPMENTS NOW OFFERED IN TANDEM WITH THE LORAWAN NETWORK SERVER (LNS) OFFERS OF THE MAIN PLAYERS IN THE ECOSYSTEM
To speed up the adoption of its solutions by the main players in the LoRaWAN® ecosystem, the Group now offers compatibility of its gateways with the offers of the main LNS suppliers on the market, strengthening the value of its connectivity offering.
Partners can now opt for Kerlink's new Plug & Play functionality. The Zero-TouchPprovisioning (ZTP) package, which allows fast and simple network deployments, has been very well received by the market.
NEW SIMPLER OFFERS TO ENABLE FASTER IOT NETWORK ROLLOUT
During the period, the Group built new commercial offers to differentiate itself from the competition and simplify its global connectivity offer. To this end, it drew on the same attributes that helped to cement its reputation: the efficiency of its customer service and the historically very low rate of return in its after-salesservice.
Yannick Delibie, Co-founder and Chief Technical Officer of the Group: "We have built an offer that everyone understands. This means fewer constraints and technical questions in order to speed up customer engagement, simplify internal order, contract and invoicing management processes, and facilitate access to support for customers. The renewal of our commercial offers should also help to boost the appeal of the services and strengthen recurring revenues."
The new Access, Maintain and Operate solutions were launched in early September. The first commercial transformations based on these offers are under way.
STRONG PROMOTION OF THIS NEW VALUE ADDED FOR CUSTOMERS AT THE MAIN INTERNATIONAL TRADE FAIRS
After being a partner of The Things Conference organised by The Things Industries in Amsterdam last week, the Group will present these new offers at the LoRaWANLive event organised by the LoRa Alliance® in Tokyo on 11 and 12 October 2023 as well as at the GITEX fair in Dubai from 16 to 20 October 2023.
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About Kerlink®
Kerlink Group is a leading global provider of end-to-end connectivity solutions for designing, deploying, and operating public & private low power/wide area (LPWA) Internet of Things (IoT) networks. Its comprehensive product portfolio includes industrial-grade network equipment, best-of-breed network core, operations and management software, value-added applications and expert professional services, backed by strong R&D capabilities. More than 200,000 Kerlink installations have been rolled out with over 350 clients in 70 countries, in all the key verticals. Kerlink is a co-founder and board member of the LoRa Alliance® and the uCIFI Alliance™. It is listed on Euronext Growth Paris under the symbol ALKLK.
For more information, visit www.kerlink.com
Kerlink®, Wirnet® and Wanesy® are registered trademarks of Kerlink SA and its affiliates worldwide and must not be used without permission. All rights reserved.
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Kerlink Contact Presse Financière : | Kerlink Contact Presse et Analystes Marchés : |
Actifin | Mahoney Lyle |
Isabelle Dray | Sarah-Lyle Dampoux |
+33 (0) 1 56 88 11 29 | +33 (0) 6 74 93 23 47 |
idray@actifin.fr | sldampoux@mahoneylyle.com |
Kerlink Contact Investisseurs : | |
Actifin | |
Benjamin Lehari | |
+33 (0)1 56 88 11 25 | |
blehari@actifin.fr |
Upcoming event
2023 Q3 Revenue
October 17, 2023 after market closes
www.kerlink.com
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Kerlink SA published this content on 28 September 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 September 2023 16:27:59 UTC.
