Fourth Quarter Highlights in Figures
- Revenues from the network business increased by 11 percent compared with the same period last year and amounted to SEK 120.5 million (108.1).
- Income from the security business increased by 2 percent compared with the same period last year and amounted to SEK 106.5 million (104.9).
- Revenue from operating systems decreased by 14 percent to SEK 24.6 million (28.5).
- Adjusted EBITDA amounted to SEK 92.7 million (92.1), corresponding to an EBITDA margin of 36.8 percent (38.2).
- Profit after tax amounted to SEK 94.7 million (12.7).
- Earnings per share amounted to SEK 4.70 (0.60).
- Cash flow from operating activities amounted to SEK 103.5 million (-24.0).
Period Janaury - December Highlights in Figures
- Revenues from the network business increased by 10 percent compared with the same period last year and amounted to SEK 429.7 million (391.3).
- Revenues from the security business increased by 9 percent compared with the same period last year and amounted to SEK 392.4 million (359.9).
- Revenue from operating systems decreased by 49 percent to SEK 82.2 million (161.5). The decrease is partly explained by the one-off transaction worth SEK 54 million that was made in the first quarter of last year.
- Adjusted EBITDA amounted to SEK 305.5 million (307.8), corresponding to an EBITDA margin of 33.8 percent (33.7).
- Profit after tax amounted to SEK 143.1 million (-550.7).
- Earnings per share amounted to SEK 6.96 (-25.80).
- Cash flow from operating activities amounted to SEK 279.2 million (258.9).
CEO's Statement
Enea delivers
In 2024, we delivered 10 percent organic growth in our security business and 10 percent growth in our network business. Our EBITDA margin landed at 34 percent, our operating cash flow during the year was SEK 279 million and our earnings per share were SEK 6.96. With these figures, we delivered on all goals set for 2024. Not only these figures, but also the number of deals won, external quality certifications and employee surveys mean that we can be pleased with the growing level of trust from the market, our customers, employees and shareholders. 2024 was a good year for Enea.
In the fourth quarter, the numbers were even stronger in some areas. The group grew with 4 percent over the same period last year, with an EBITDA margin of 37 percent and earnings per share of SEK 4.70 per share. Our business model, with a high gross margin and operational costs that are not directly linked to sales, scales very well with growth. We have seen this many times.
Strong cash flows and innovation
Enea generates strong operating cash flows. During the fourth quarter, operating cash flow was as much as SEK 104 million. Over the past 24 months, we have thus delivered over half a billion in operating cash flow and reduced our net debt by SEK 204 million. In 2024, we bought back shares for a total of SEK 73.8 million at an average price of SEK 73.21. All of this has of course benefited our shareholders up until today but will also continue to do so going forward. Our reduced net debt and restructuring of loans will reduce our interest for 2025 by approximately SEK 10 million for 2025 compared to 2024, and today the company has 20,036,755 outstanding shares compared to 21,045,124 a year ago. This alone will increase our earnings per share all else being equal.
During the year, we reinvested 23 percent of revenues in research and development. It is a big number and an incredibly important part of our business. To be a leader in our technology areas, and to continue to be so in the years to come, innovation is crucial. It is equally important to keep track of these investments and to have a firm grip on capitalization and depreciation, and here we are now back in balance.
Our customers navigate a complex landscape characterized by rapid technological advancements, changing consumer demands, and significant capital expenditures. Global data consumption is increasing exponentially, mainly driven by video traffic, but the increase in internet access revenue remains modest. The transition to 5G and other new technologies requires significant investments in infrastructure. The rapid development of AI presents both opportunities and challenges for telecom operators. It has already started to implement AI solutions in areas such as customer service and network optimization, and this shift also sharpens questions around data management and security.
Telecom operators need to balance their investments with the relatively slow revenue growth, and this is a challenge we have great respect for. To earn our customers' trust to deliver our products, we therefore need to be agile, adaptable and continue to invest heavily in our products and in our people. We simply need to be the best in our fields.
AI is increasingly important for Enea
During the fourth quarter, we launched Traffic Management version 8.6. There, we introduced key enhancements, including DPI capabilities for monetization and revenue assurance. The release also features a new AI-based classification and remote activation/deactivation to ensure legitimate use of licensed software and reduce the risk of product misuse.
Spoofing, simply put, means that someone takes advantage of another person's or company's identity to defraud someone and gain access to sensitive information. It comes in different disguises such as phishing (over email), vishing (through voice), smishing (through text messages) and even in the form of deepfake (through images, videos and voice). In all its forms, it poses a serious and tangible threat to both consumers and businesses. Online fraud is the fastest growing and already the largest crime area in the United States in terms of number of reports, according to a report from the FBI published in early 2024. One reason for the accelerating development is AI, which also creates opportunities to make spoofing increasingly sophisticated. In the fourth quarter, we launched our Messaging Firewall in version 10.1. In this, we implement our value-pack-based commercial model, new AI-powered real-time URL analysis (RUA) capabilities - to block malicious links in messages - and Restricted Image Detection (RID) for regulatory compliance and message category classification to optimize delivery costs.
On the marketing side, we launched a CLI Spoofing Buyer's Guide and carried out a large number of additional marketing activities during the quarter. Among the highlights, I would like to mention in particular a webinar on Threat Detection and a collaboration with Omdia to produce a report on traffic management tools. Our award from Kaleido as a leading provider in Signal Security and a well-trending article (in The Fast Mode) on generative AI. These four initiatives all stamped an important mark on the quarter.
We are continuously working on internal improvements and during the fourth quarter we have introduced two AI-driven methods to increase our efficiency. An AI-generated podcast process to increase competence about the value and technology behind our latest product versions. We have also introduced an in-house created AI chatbot (Enhanced Learning & Look-up Assistant), aimed at our global sales organization. It creates the conditions for quickly and easily interacting with the enormous amount of product documentation. The tools were introduced to our sales organization now in January 2025.
Prospects
We have a global market position and a unique product portfolio in growing areas both within and outside the telecom industry. We have a global organization with very competent and committed employees and, just as importantly, many successful customers and competitors, who constantly challenge and develop us. The synergies we are now starting to see from the acquisitions we have made over the past eight years not only validate our acquisition strategy but also highlight our ability to successfully and long-term integrate acquisitions. Combined with our proven earning capacity, this makes us optimistic about the future. A future where we hope to continue to complement our organic growth with strategic acquisitions.
Our ambition is double-digit growth in our focus areas, an EBITDA margin exceeding 35 percent and strong cash flows. As our focus areas become an increasingly larger part of the whole, we are also getting closer to this goal for the entire company. The macroeconomic climate has had a dampening effect on demand for some time, but there are emerging signs that we are approaching the end of this slowdown of the telecoms market.
Our guidance for 2025 is continued growth in our focus areas, an EBITDA margin in the range of 30-35 percent and a strong cash flow.
Anders Lidbeck
Acting President and CEO
The full Annual Statement is attached to this press release and has been published on the Enea website (see references below).
Presentation
Enea invite investors, analysts, and media to a presentation of the annual statement and the fourth quarterly report of 2024. The presentation will be conducted in English by Anders Lidbeck, President and Chief Executive Officer, and Ulf Stigberg, Chief Financial Officer, and will be concluded by a Q&A session. It can be attended through a webcast or teleconference (see details below).
Details
Date: January 30, 2025
Time: 8.30 a.m. CEST
If you wish to participate via webcast please use the link below. Via the webcast you are able to ask written questions.
https://enea.events.inderes.com/q4-report-2024
If you wish to participate via teleconference please register on the link below. After registration you will be provided phone numbers and a conference ID to access the conference. You can ask questions verbally via the teleconference.
https://conference.inderes.com/teleconference/?id=5003084
References
Webpage for Enea financial reports
https://www.enea.com/investors/financial-reports/
Webpage for Enea financial presentations
https://www.enea.com/investors/presentations/
Contact Information
Ulf Stigberg, CFO
Phone: +46 8 507 140 00
ir@enea.com
About Enea
We are a world-leading specialist in advanced telecom and cybersecurity software with a vision to make the world's communications safer and more efficient. Our solutions connect, optimize and protect communications between companies, people, devices and things worldwide. We are present in over 80 markets and billions of people rely on our technology every day when they connect to mobile networks or use the Internet. Enea is headquartered in Stockholm, Sweden and is listed on NASDAQ Stockholm. Visit us at enea.com
Enea is required to make the information in this press release public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, at 7:20 a.m. on January 30, 2025.
