Interim report January - June 2009

January - June 2009

- Net sales amounted to SEK 123.1 million (137.9).
- Software license and support revenue amounted to SEK 32.2 million (32.0).
- Improved gross margin at 77.2% (70.2).
- Net income before tax amounted to SEK 21.1 million (22.0).
- Total cash flow amounted to SEK -13.5 million (-9.3).
- Earnings per share amounted to SEK 0.04 (0.06).

Second quarter 2009

- Net sales amounted to SEK 62.6 million (73.2).
- Software license and support revenue amounted to SEK 15.3 million (18.4).
- Improved gross margin at 78.7% (71.3).
- Net income before tax amounted to SEK 11.1 million (15.8).
- Total cash flow amounted to SEK -34.5 million (13.2).
- Earnings per share amounted to SEK 0.02 (0.04).

Over the six-month period we report earnings and profitability that are in line with our plans despite the global market downturn, which has affected our sales mainly in North America and Asia Pacific. Sales declined compared to the same period last year but improved margins and operating expenses according to plan generated healthy earnings and a continued strong financial position.

The underlying market demand for high quality media transport solutions is strong. We also see that many larger network rollout projects are being planned in our segments of the market around the world but the decision processes are currently somewhat slower causing delays.

During the second quarter we have continued to win new customers and our existing customers continue to expand and upgrade the installed base. The EMEA region has developed strongly during the quarter partially offsetting the weak quarter in APAC and North America. Our strong relationship with existing customers is a fundamental driver and enabled us to win a new customer in Denmark in close cooperation with BSD, one of our longstanding customers. We also established an important footprint in southern Europe when a large broadband and multimedia services provider selected Net Insight. As this new customer is planning further expansion we also see further business opportunities.

The Nimbra platform has proven to be the best solution for demanding contribution networks for live coverage in many countries around the world and this was once again confirmed when our solution was selected for live sport transmissions of a European football league.

We have continued to increase our investment in sales and customer support functions as part of our strategy to expand into new geographical markets. In the Middle East another step was taken when Net Insight was awarded an order for a significant TV production and contribution network in the region.

Our sales in APAC have decreased compared to the same period last year. Despite uncertain market conditions, we have won new customers during the period and we see increasing opportunities for our products in Asia. According to plan, our network of business partners and resellers has been extended and we are now pursuing opportunities in most major markets in the region.

In North America we have a strong position among broadcasters and media network operators and our customers continue to upgrade and invest in their Nimbra networks. During the second quarter, another tier one telecom operator bought Net Insight equipment. This order validates the need for flexible, quality-protecting transport solutions among service providers in the U.S. and our continued traction in this market. Our potential in North America remains significant but the second quarter was weak.

Our Time Transfer function (for GPS-independent synchronization of Single Frequency Networks) is an important market differentiator. We also introduced new capabilities in the Nimbra platform during the quarter, that are now in operation in customer networks. One new product is the IP Trunk, which makes it possible for a network owner to use Nimbra nodes to transport signals over a combination of optical links and IP/Ethernet links. Normally the IP/Ethernet links and the optical links are handled by different products and the Nimbra solution has a unique advantage in being able to use both kind of links at the same time.

Net Insight is well positioned for the future with a solid customer base, strong offering and healthy financial position.


The full report can be downloaded here: Interim report Q2 2009 (pdf)

Stockholm, 28 August 2009

Fredrik Trägårdh
Chief Executive Officer

For more information, please contact:
Fredrik Trägårdh, CEO Net Insight AB
Tel.: +46 (0) 8-685 04 00, email: fredrik.tragardh@netinsight.net
Net Insight AB
Box 42093
126 14 Stockholm
Tel +46 (0) 8 685 04 00
www.netinsight.net
Corporate Reg. No. 556533-4397