Netgem's board of directors released the company’s half-year financial statements on Wednesday highlighted by revenues of US$14.5 million (€13.1 million), a decline of 9.9% from the previous year’s first half, and a net revenue of US$7.42 million (€7.42 million), a decrease of 4.3% from the previous year. The company posted a net loss of US$2.66 million (€2.4 million) for the first half.
The board also announced the launch of the new generation of multi-screen products, the first deployments of new business models on 4K Boxes, and the continued growth of Videofutur, affirming an ambitious US$33.24 million (€30 million) in turnover by 2021.
The company also announced the separation of the functions of Chairman and CEO, and the appointment at the later post of Mathias Hautefort, effective July 1, 2019
"The new range of multi-screen services, associated with high-end equipment, and with new business models must allow the Netgem Group to take advantage of the growth of the very high-broadband market and the emergence of new operators" says Mathias Hautefort, CEO.
The impact of the expected decline in "Box" revenue was buffered by the contribution of the service activities (slower decline in net revenue) and cost reductions, which enabled the Ebitda to remain positive and the operating income close to balance.
In addition, on May 14, 2019, Netgem transferred to Vitis its "multi-screen cloud platform and digital recorder" business. The result of this activity is isolated on a specific line in the accounts for the period and is not significant. For information purposes, without this transaction, Netgem's consolidated net revenue would have been higher by US$0.78 million (€ 0.7 million) over the period.
The commercialization of traditional Boxes has been refocused on a limited number of references, with a sharp reduction in operational costs and long-term contracts. This decision implies a gradual decrease in consolidated net revenue in the short term. New, more upscale equipment adapted to the specific Fiber market will be presented in the coming months.
These new connected pieces of equipment will be marketed as part of new business models combining the sale or rental of equipment with value-added services. This is how Netgem will provide Elisa as from the second half of 2019 with its new generation 4K HDR Box.
New customer offerings have already been launched by Vitis on this platform, allowing users to benefit from new multi-screen services such as Live, replay and recording in the Cloud (nPVR): the triple-play offer "VICTORIA 100% Entertainment" and the offer "VIC 100% Digital," designed for "digital natives," without a TV Box.
Vitis thus becomes a showcase for the new offerings, and other customers of Netgem have shown an interest in this comprehensive content management solution independent of TV Boxes.
The United Kingdom has undertaken a massive plan to catch up on fiber deployment, generating the emergence of many new operators with significant financial resources. The first contracts were signed with such local FIbre operators to provide them with NetgemTV’s global cloud-based management solution for connected home services.
The business plan for Vitis (Videofutur), an entity that is not consolidated in Netgem's accounts, demonstrates the continued robust growth of its business, driven by the deployment of Fiber in France. The Videofutur offer is now available for marketing on more than 1.2 million access points and distributed in about 40 French départements, based on infrastructures operated by Altitude Infrastructure, Axione, Covage, TDF and soon SFR.
