Equity Research - 02 December 2019 06:42 CET n · Net Insight 2 December 2019 ABG Sundal Collier 4...

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Net Insight

Reason: Initiating coverage

Company sponsored research

Not rated

Optimising media transportation

Offers technology to optimise media production & delivery

Expect strategic moves and/or cash injection near term

Volatile share trades at ~2x EV/sales with ~5% growth

A technology solutions firm in the challenging media space

Accelerating prices for TV rights, changing viewer behaviour, new

technology and increased demand for resource efficiency all contribute to

the burgeoning uncertainty and cost pressure within the media market.

Thus, broadcasters need to produce more content with fewer resources,

which is exactly what Net Insight offers. Net Insight is a media

technology company that focuses on media networks, resource

optimisation and streaming solutions, including both hardware and

software sales. It strives to be a key partner to its customers and a leader

in the media industry’s transition towards providing an improved media

experience for end-users at lower cost. Its main customer group is

composed of global network service providers and broadcasters.

Business units targeting different parts of the value chain

Nimbra is a product portfolio (media networks) that facilitates dependable

long-distance media transport across all types of underlying

infrastructure. Its software-integrated hardware products allow transport

of live content (audio, video and data). ScheduALL (resource

optimisation) helps media companies to reduce and control operating

costs, increase efficiency and optimise resource utilisation. Sye (to-

consumer live streaming) is a software for low-latency live streaming that

is addressing the increased demand for high quality streaming in several

verticals like sports, betting and quizzes. Live-streamed video traffic is

estimated to grow at a 70% CAGR in the coming years.

Weak recent financial development needs to turn

Net Insight has been a disappointment for shareholders since 2016. We

think that the company is exposed to an attractive market and has

products targeting the right needs, which should drive profitable growth.

We estimate a 5% sales CAGR in the coming years and a return to

positive EBIT in 2020e. Near-term triggers are potential divestment of

ScheduALL and a cash injection to finance further efforts in Sye. See

valuation scenarios (peer group, SOTP and DCF) on page 30.

29/11/2019

Performance

Equity Research - 02 December 2019 06:42 CET

SEKm 2017 2018 2019e 2020e 2021e

Sales 427 452 466 489 513

EBITDA 64 26 71 86 97

EBITDA margin (%) 14.9 5.8 15.1 17.5 18.9

EBIT adj -8 -37 -8 5 14

EBIT adj margin (%) -1.8 -8.1 -1.8 1.0 2.7

Pretax profit 5 -74 -9 5 14

EPS rep 0.01 -0.15 -0.02 0.01 0.03

EPS adj 0.01 -0.05 -0.02 0.01 0.03

Sales growth (%) -15.2 5.8 3.3 4.9 4.9

EPS growth (%) -89.8 -1,716.7 88.4 159.3 177.8

Source: ABG Sundal Collier, Company data

Lead analyst: Daniel Thorsson

Simon Granath

Share price (SEK) 2.7

Information Technology, Sweden

NETIb.ST/NETIB:SS

MCap (SEKm) 1,018

MCap (EURm) 96.7

Net debt (EURm) -2

No. of shares (m) 383

Free float (%) 88.0

Av. daily volume (k) 56.8

Next event Q4 report: 14 Feb

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Net Insight OMX STH PI

1m 3m 12m

Absolute (%) 57.0 61.8 -7.6

OMX STH PI (%) 0.5 11.5 19.0

Source: FactSet

2019e 2020e 2021e

P/E (x) -153.4 258.7 93.1

P/E adj (x) -153.4 258.7 93.1

P/BVPS (x) 2.06 2.06 2.06

EV/EBITDA (x) 14.1 11.9 10.7

EV/EBIT adj (x) -121.8 201.6 74.3

EV/sales (x) 2.13 2.08 2.03

ROE adj (%) -1.3 0.8 2.2

Dividend yield (%) 0 0 0

FCF yield (%) -1.9 -0.7 -0.2

Lease adj. FCF yld (%) -3.0 -1.8 -1.3

Net IB debt/EBITDA -0.3 -0.0 0.2

Lease adj. ND/EBITDA -0.8 -0.3 0.0

Net Insight

2 December 2019 ABG Sundal Collier 2

Geographical breakdown, sales, SEKm


Business area breakdown, sales, SEKm


EPS estimate changes, 2019e, SEK

Source: ABG Sundal Collier, FactSet

EPS estimate changes, 2020e, SEK

Source: ABG Sundal Collier, FactSet

Quarterly sales and adj. EBIT, SEKm


OpportunitiesNet Insight develops solutions to produce, contribute and

distribute media content for service providers and

broadcasters. These are facing a challenging market

requiring more content production at higher quality and

less resources. This is exactly what Net Insight helps out

with, through its media networks, resource optimisation

and to-consumer streaming solutions. The market trends

should be in favour of Net Insight’s role in the value chain

and its product offering.

RisksAs many other technology companies, Net Insight is

operating in an ever changing industry with movements

between old and new technologies. This could result in the

company’s offering going from highly important to almost

obsolete over a short period in time, and also create an

environment with new competitors occuring. Sales stem

from a global basis which also adds risk from a global

investment appetite and FX movements.

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Western Europe Americas Rest of World

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Nimbra ScheduALL Sye

Sales

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ABGSC FactSet Consensus Mean

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Company descriptionNet Insight is a media technology company focusing on

media networks, resource optimisation and streaming

solutions. Net Insight strives to be a key partner to its

customers and a leader in the media industry’s transition

towards an improved media experience for end-users at

lower cost. Its main customer group consists of network

service providers and broadcasters. With 220 employees,

sales stem from a global basis and through three business

units covering media networks, resource optimisation and

to-consumer live streaming.

Net Insight


Table of contents

Summary ...................................................................................................... 4

Technology company in the media production industry ............................. 4

Weak financial history needs to turn ......................................................... 4

Ongoing CEO changes and potentially strategy shift ................................ 6

Valuation considerations ........................................................................... 6

Net Insight at a glance .................................................................................. 7

Market trends and offering ............................................................................ 8

Increased competition for TV viewers ....................................................... 8

Media transportation – Nimbra .................................................................. 9

Growth drivers ........................................................................................ 16

Competitive landscape ............................................................................ 16

Resource optimisation – ScheduALL ...................................................... 18

To-consumer live streaming – Sye .......................................................... 20

Forecasts ................................................................................................... 25

Business model ...................................................................................... 25

Estimates ................................................................................................ 25

Valuation .................................................................................................... 30

Risks .......................................................................................................... 34

Appendix .................................................................................................... 35

Nimbra product portfolio .......................................................................... 35

Management ........................................................................................... 36

Board of Directors ................................................................................... 37

Shareholders .......................................................................................... 38

History .................................................................................................... 38

Glossary ................................................................................................. 39

Net Insight


Summary

Technology company in the media production industry Net Insight is a media technology company focusing on media networks, resource

optimisation and streaming solutions. Accelerating prices for TV rights, changing

viewer behaviour, new technology and increased demand for resource efficiency all

contribute to the growing uncertainty and cost pressure within the media market. We

find an increasing demand for production and content among large global tech

companies, which should drive investments in products for in-production and to-

consumer solutions ‒ exactly what Net Insight offers.

Net Insight has its core foundation in Nimbra, a hardware product enabling remote

production for media companies and a reliable, high-quality data feeding from live

events into the production facility where video and audio expertise can be located

centralised. This enables media companies to produce better content at lower

prices, an never-ending challenge for the industry. In 2015, Net Inisght acquired the

software product ScheduALL for resource management in the media production

industry. It turned out to be an underinvested asset that needs some love from Net

Insight to prove its full potential, or be treated as an asset up for sale. Sye is the

optionality in Net Insight, a high-quality and low latency live-streaming platform from

production companies to end consumers, with clear advantages in sports, live

betting and interactive live games (like quizzes), although we have seen little

traction so far from end markets.

Sales per business area

Source: ABG Sundal Collier, company data

Content spending by major tech companies


Weak financial history needs to turn Financially, Net Insight has been nothing else than a disappointment since 2016 for

shareholders. The negative development in the financial performance can be

summarised as a stable development in Nimbra, a declining trend in ScheduALL

with increased costs and a cash-burning effort into launching Sye that has been

delayed a couple of years. Net Insight is now undergoing potential strategic moves

to focus its business and set out a plan to reach profitability.

Even though we think the company has a solid technological foundation and

attractive end-market exposure, we argue that the history of financial

underperformance needs to be proven wrong before we see shareholder value

moving in the right direction again. Net Insight has announced that it is looking into

divesting ScheduALL and a capital injection for continued investments in Sye. Net

Insight has also appointed a new CEO (Crister Fritzson) from the board, who will

start in March 2020, at the latest. Hence, there are many moving parts that can

change the story near term.

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HBO Netflix Hulu Amazon

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2016 2017 2018 2019

Net Insight


We estimate 0-3% organic growth in Nimbra with retained healthy profitability (EBIT

margin ~15-20%), improved sales growth in ScheduALL once version 6 of its

software starts to replace lost sales for version 5, and a high growth rate in sales for

Sye coming from low levels driven by the Swedish client Primetime, as well as the

non-disclosed Fortune 500 customer from 2020e. This results in a group sales

CAGR of 5% in the coming three years and returning to positive EBIT in 2020e.

Cash position and FCF


Overview of business unit potential


Key estimates


230

201 197

178165

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6149

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Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19

Cash FCF

Business potential Nimbra ScheduALL Sye

Growth Medium Medium High

Margins Medium High High

Competition Medium Medium High

Competitive advantage High quality - Low latency

Hardware/Software Hardware & software Software Software

Share of 2018 sales 83% 16% 0%

Share of 2022e sales 74% 17% 9%

Key estimates (SEKm) 2018 2019e 2020e 2021e 2022e

Sales per segment

Nimbra 375 379 387 394 406

ScheduALL 74 77 82 87 94

Sye 2 11 21 32 47

Group sales 452 466 489 513 547

sales grow th 6% 3% 5% 5% 7%

organic sales grow th 2% -2% 3% 5% 7%

Group gross margin 58% 60% 61% 62% 63%

Group adj. opex -301 -289 -293 -304 -314

Group EBIT -75 -8 5 14 30

non-recurring items -39 0 0 0 0

Group adj. EBIT -37 -8 5 14 30

adj. EBIT margin -8% -2% 1% 3% 6%

Net income -58 -7 4 11 24

FCF -85 -19 -7 -2 8

Net Insight


Ongoing CEO changes and potentially strategy shift We also want to highlight that even though Net Insight appointed Henrik Sund as

CEO as late as in December 2018, he is now leaving his position to Crister Fritzson

(currently in the Board and previous CEO of SJ). Henrik took over the ship from

Fredrik Tumegård who was CEO between 2013 and 2018; hence, we are now

entering a period with the third CEO in less than 1.5 years.

Valuation considerations The Net Insight share price has been volatile in the last five years, which we assess

was due to a beginning of big hopes of an early launch of Sye in combination with a

profitable underlying business. This then turned out to be a later than expected

launch and market uptick at the same time as ScheduALL faced decreasing sales

and suddenly the group was loss-making.

We have conducted three different ways of looking at valuation on Net Insight, and

came up with the following valuation ranges: Group peer group: SEK 1.34-5.18,

SOTP: SEK 1.24-7.91 and a DCF: SEK 1.02-7.77.

Historical overview – sales (SEKm) and adj. EBIT margin (%)


Share price and valuation ranges (SEK/share)


229

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288 295 280 281

379 376

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427452 466

489513

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Sales Adj. EBIT margin

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Nov-14 Nov-15 Nov-16 Nov-17 Nov-18 Nov-19

Net Insight B OMXS30 rebased

CEO change CEO change

Initial hopes on Sye

Decliningdevelopment in

ScheduALL and a slow uptake of Sye

Announced planned capital raise and

strategic movesPeers

SOTP DCF

5.18

1.34

7.91 7.77

1.241.02

Net Insight


Net Insight at a glance

Net Insight is a media technology company focusing on media networks, resource

optimisation and streaming solutions. It strives to be a key partner to its customers

and a leader in the media industry’s transition towards providing an improved media

experience for end-users at lower cost. Its main customer group consists of global

network service providers and broadcasters. With 220 employees, global sales stem

through three business units: Nimbra, ScheduALL and Sye.

Nimbra (Media Networks) enables reliable long-distance media transport across

any type of underlying infrastructure. Nimbra is a portfolio of software integrated

hardware products that allows reliable transport of live content (audio, video, and

data) over long distances. This requires high quality of data feeding and Nimbra

does that. It ultimately increases efficiency and reduces costs for production

companies. In 2018, Nimbra generated revenue of SEK 375m (83% of sales).

ScheduALL (Resource Optimisation) software enables media companies to

reduce and control operating costs, increase efficiency and optimise resource

utilisation. Net Insight acquired ScheduALL in 2015; customers in more than 50

countries us it and it is installed at more than 1,200 broadcast, satellite/transmission

and production facilities worldwide. In 2018, ScheduALL generated revenue of SEK

74m (16% of sales).

Sye (To-consumer Live Streaming) is a software for low-latency live streaming.

Sye is a proprietary technology for Net Insight; it is gaining ground with increased

demand for high quality streaming in several verticals such as sports, betting,

quizzes and others. Sye is in early phase and Net Insight recently signed a contract

with a Fortune 500 company, with estimated rollout late 2019/early 2020. In 2018,

Sye generated revenue of SEK 2m (~0% of sales).

Net Insight has five offices globally and generated 46% of sales in Western Europe,

33% in Americas and 21% Rest of World from more than 500 customers in 2018.

Revenue per product category was 33% hardware ‒ 29% software licenses and

38% support & services.

Sales and sales growth


Adj. EBIT and adj. EBIT margin


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Net Insight


Market trends and offering

Net Insight acts as a niche player in the global media technology market,

which has been under pressure for a long time to deliver better content with

fewer resources. The company provides broadcasting solutions for IP media

transport, resource optimisation and live streaming. This method of media

transportation is increasing its market share as the available WAN bandwidth

for transport is increasing and is now approaching capacity of Serial Digital

Interfaces (SDI), the traditional media transportation method.

Increased competition for TV viewers Accelerating prices for TV rights, changing viewer behaviour, new technology and

increased demand for resource efficiency all contribute to the growing uncertainty

and cost pressure within the media market. As a result of the changing market

conditions, the traditional value chain of content owners, TV companies and

distributors are being changed. Distributors are buying commercial rights and there

is a trend towards content owners offering services directly to consumers. One

example is that relatively new media operators, such as Netflix, Amazon and

Facebook, are adding exclusive content to their service offerings, in terms of own

productions and live content. For example, in 2018 Amazon acquired the rights to

selected Premier League games in the UK and is now starting to compete with

traditional broadcasters.

Intensifying global competition over viewers and rising costs means that TV

companies need to increase revenue from broadcasts and improve operational

efficiency. This also contributes to growing industry consolidation, where TV

companies acquire other operators to create a more competitive offering and

improve profitability. Comcast’s acquisition of 21st Century Fox’s stake in Sky last

year exemplifies this. TV companies are also looking for new opportunities to

increase the efficiency of in-production and to-consumer media transport. To

maintain competitiveness, media companies need to produce more for less. Net

Insight offers solutions to address this trend, namely with 1) in-production media

transportation, 2) recourse optimisation and 3) to-consumer live streaming.

Media rights market outlook

Source: SportsCal, Delta Partners Analysis

12.0 12.5

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Net Insight


Media transportation – Nimbra The market for in-production media transportation has since 2017 increasingly

started to embrace the internet protocol (IP) as its main media delivery technique

over the previously dominant Serial Digital Interfaces (SDI). This transition is fuelled

by technological development in networking hardware increasing the bandwidth as

well as development in software enabling more efficient media transport. In addition,

IP enables new production workflow, often referred to as remote production,

supporting effective personnel and resource management by transporting media

over long distances.

Own content has been increasingly important, and we see, for example, both the

value of Premier League TV broadcasting rights as well as content acquisitions from

global media companies increasing steadily over time.

Olympic Games commercial rights value

Source: ABG Sundal Collier, Independent1

Content acquisition spending


The occurrence is also notable on a global basis, where many of the major sports

leagues in various sports are showing high sports rights inflation metrics (as

demonstrated in the graph below).

1 https://www.independent.co.uk/news/business/analysis-and-features/rio-2016-olympic-games-richest-

ever-usain-bolt-mo-farah-a7171811.html

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Sport rights inflation 2018 vs. 2013

Source: ABG Sundal Collier, company data, SportsCal, press clippings, Delta Partners analysis

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NFL NBA LaLiga MajorLeague

US Open Nascar MLS

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2013 2018

111%

41%

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94% 20%265%

Net Insight


The recently released “Big Broadcast Survey”, assembled by research firm

Devoncroft, states the most important commercial trends in the media technology

sector.2 We see content delivery as the highest priority, which is exactly what Net

Insight offers with its Nimbra product.

The survey questions ~10,000 media technology professionals (for example

technicians at Net Insight, Evertz and Brightcove); however, the chart above shows

the responses of all technology purchasers (not only vendors), which makes these

answers an important indication of how broadcasters will invest in the coming years.

Modernising the broadcasting ecosystem

Historically, the SDI has been the common standard for in-production media

transport, which is the transportation of uncompressed video within production

facilities. This allow broadcasters to connect their equipment, including cameras,

editing and production, together. The benefits of using SDI are clear; it provides a

common uncompressed digital infrastructure with minimal latency and perfect

synchronization. The transport of video in SDI can be seen as an instant stream of

video.3

The Society of Motion and Television Engineers (SMPTE) developed in 2007 the

SMPTE-2022 standards, a framework for a method to send digital video over IP.

These standards are referred to as SDI over IP, as it creates an interface for IP-

devices to handle and send SDI data. When introduced, the standards focused on

video carried in MPEG-2 transport streams and have since been expanded to

support other video formats, audio and data. The standards now support both

compressed and uncompressed video and focuses mainly on professional video

delivery over IP networks in or between production facilities. By embracing these

open standards for IP transport, different broadcasting solution vendors are creating

an environment where niche players can be featured.

2 https://devoncroft.com/2019/08/29/ip-tops-2019-ranking-of-most-important-commercial-trends-in-global-media-technology-sector/

3 https://www.matrox.com/graphics/media/pdf/press/guides/av-over-ip-

fundamentals/en_fundamentals_of_AV_over_IP.pdf

2019 Big Broadcast Survey

Source: Devoncroft, ABG Sundal Collier, company data

IP networking & content delivery

Multi-platform content delivery

4K / UHD

AI /ML

Automated workflows

5G

Cloud Computing / Virtualization

Transistion to multi-channel

File-based /tapeless workflow

Video compression efficiency

HDR

Cyber security

Remote production

VR

Targeted advertising

S-VOD

Centralized operations

Outsourced operationsNimbra addressed areas

Net Insight


With the progression of networking technology (mainly Ethernet), media transfer

over the internet protocol (IP) has emerged. However, this technology is harder to

implement in low-latency environments since media transport over the IP needs the

video-data to be packaged into packets before transfer. This makes the system

more fragile and prone to delays in the network. However, the strength of IP is

apparent. The ability to transfer media over WAN and the public internet enables

cheaper and more intelligent workflow. Modern cameras, production switchers,

audio devices and graphics devices already have IP-based interfaces to support a

fully IP based workflow.4

As the networks’ bandwidth capacity has increased, media transport over IP is

becoming more advantageous. Thereby the presence of IPs in studios and

broadcasting facilities is increasing.

While cloud solutions are widely used for on-demand media production, the live-

broadcasting sector has been slow in its technological development. This is

attributed to its time-critical workflow. The new standards break apart audio, video

and data into separate elementary streams, enabling these to be transported to

different devices in the network.

An obvious advantage of using IP is that media can be transported to people

outside the facility or the Local Area Network (LAN), compared to SDI, which is a

closed network. Anyone connected to the internet can be integrated to the media

workflow via WAN networks. This blurs the line between broadcasters’ central

facilities and other remote locations, and creates the concept “remote media

production”. Smart hardware is required for WAN data transportation. Net Insight

offers this through its Nimbra product portfolio.

Using remote media production is needed to broadcast live events in a cost-efficient

way. The concept focuses on using the at-home production studio to support live

broadcasts from other locations. The connection is enabled through a fast and

reliable VPN connection, a secure WAN and an efficient media transportation

method. By not needing full production capacity on site (only camera and audio

operators), the amount of staff and equipment at the venue is minimized. Remote

production has previously been executed via satellite links (using Satellite News

Gathering Trucks6) or leased landlines. However, these media transportation

4 https://www.thebroadcastbridge.com/content/entry/8678/smpte-st-2110-we-are-family,

https://tech.ebu.ch/news/2016/08/ip-production-infrastructure---is-it-ready-for-take-off 5 https://www.smpte.org/sites/default/files/users/user29811/SMPTE%20UK%20&%20SAM%20-%20ST%202110%20The%20Basics%20FINAL.pdf 6 https://en.wikipedia.org/wiki/Satellite_truck

Move from SDI to IP media transport

Source: SMPTE, ABG Sundal Collier, company data5

SDI

SDI over IP

Virtualisation and cloud-fit functions

2014 2019

Market

progress

Net Insight


methods are associated with high costs and low availability. This is an important

reason why the media currently is embracing IP. We believe that media

transportation via WAN and the public internet is what broadcasters have been

waiting for in order to utilise remote production fully.

The media research firm Devoncroft Partners concluded in a recent analysis that

the number of remote productions will increase going forward and that centralisation

of production hardware is just the beginning. Many broadcasters plan to take remote

production principles much further, believing they can deploy completely

decentralised production workflows where equipment and personnel in multiple

locations work together on a live event.7 This would reduce the need for large capex

investments at the live event, centralising the data into the production facilities

where expertise can be located.

Increased NFV focus

To support the move from SDI to IP media transportation, broadcasting solution

manufacturers have delivered integrated hardware and software solutions, so-called

“black-boxes”, to get the job done. These products often perform well, but since the

software is integrated into the hardware, configurability is limited and so is the

product’s lifetime.

The lack of configurability is the main reason why broadcasters have started to

favour transportation functions based on a virtualised infrastructure. Inspired by

Cloud Solutions Providers (CSPs), the concept of Network Function Virtualisation

(NFV) is being embraced in broadcasting. NFV describes the process of separating

the virtual from the physical part of a solution, separating software from hardware. In

IP media solutions, this means that hardware and software are not fixed, making it

possible to change the software used in the broadcasting workflow, while still using

the same hardware and vice versa.

As the alliances for IP media transport are constantly developing the transportation

methods, it seems logical to run the media transportation function virtually, in order

to easily update and upgrade. By having a virtualised solution, it is possible to run

the software on standardised commercial-off-the-shelf hardware (COTS). With the

7 https://devoncroft.com/2019/06/27/sony-acquires-45-stake-in-nevion-aims-to-take-remote-production-to-

the-next-level/

Satellite news-gathering truck: the old way of doing it

Source: ABG Sundal Collier, company data, Wikipedia

Net Insight


right software, COTS can produce the same functionality as the black-box solutions,

but at a lower price and with shorter implementation times. Short-term triggers for

the virtualised development are the cloud-computing players now entering the

market for cloud-based processing of media functions.

Nimbra is a group of products focusing on delivering media efficiently over long

distances. The solutions all utilise the internet protocol (IP) for its network functions.

The Nimbra product portfolio is mainly hardware-based, but because the

broadcasters are starting to embrace virtualised networking functions, Net Insight

has started to develop software-based solutions to support media delivery on COTS

(commercial-off-the-shelf) hardware as well.

The transition to remote and distributed production provides significant advantages for

customers. The fact that production personnel no longer need to travel to the physical

recording locations increases efficiency and generates large cost savings. Optimised

production resources and equipment also make it possible to produce better and more

content. Ultimately, operators can allocate more resources and focus to generating

high-quality live content, and less to the technical aspects of production.

The technological shift towards remote and distributed production also means that

the network becomes increasingly important in terms of reliability, capacity and

flexibility. Network technology is currently undergoing rapid transformation, with

increased transport over the internet and 5G in the near future, which continuously

increases capacity.

The company has released the Nimbra Edge, which is a cloud-based media pipeline

developed to perform the same media transportation functions via a private or public

cloud. Running on standardised hardware and supporting SRT and RIST (standards

for reliable transport of media signals over unreliable-networks) makes the Nimbra

Edge one solution for the future of broadcasting. Nimbra Edge simplifies the

operation of the media-transporting network, moving capex to opex (pay-per-usage

payment) and from hardware to software, since its cloud-based backend is

dynamically scalable. This results in cost savings for the customers.

In addition to the fully software-based solution, Net Insight has released its next-

generation WAN hardware transport platform, the Nimbra 1060, a high-capacity

terabit router. The solution is made to support third party-software and act as a host

platform for all of the broadcaster’s WAN software. Support for third-party vendors is

enabled through a virtualisation architecture, facilitating flexible deployment of

software functions as containers. Containers isolate software from its environment

and ensure that it works uniformly, despite differences, for instance, between

development and staging.

Nimbra enables remote and centralised production


Nimbra

Location 1

SDI

Nimbra

Location 2

SDI

ProductionProduction

Internet

Internet

Nimbra

Net Insight


Customer case – SVT, the world’s largest remote production

For the February 2019 FIS Alpine World Ski Championships in Sweden, the national

public service television company Sveriges Television (SVT) wanted to utilise

remote production. It decided to order Nimbra hardware from Net Insight. The

championship was hosted in Åre, in the north of Sweden, while SVT’s production

facility was in Stockholm (600km away). Historically, SVT would have driven several

buses with production sites and personnel to Åre, produced the content next to the

live event, and distributed it via satellite or cable to households around Sweden. Net

Insight worked together with the US company Grass Valley (a Belden Brand), which

contributed high-resolution cameras to the live event.

To be able to have its main production remotely, SVT chose to use Net Insight’s

Nimbra products for media delivery over IP. The solution delivered to SVT was

based on the Nimbra 600 and Nimbra 1060 with its Terabit media transportation

capacity. The media was sent between the premises (cameras in Åre) and the

production facility (Stockholm) via Telia’s Ethernet Private Line (EPL), which is a

fibre network that supports low-latency media transport. Remote production is

dependent on the presence of fibre networks.

The Alpine World Ski Championships generated over 600 hours of TV, reaching 700

million viewers over 25 days. This was made possible by remote production, which

used the largest number of cameras and video, audio, and data feeds ever, making

it the world’s largest remote production to date, according to Net Insight. SVT’s main

reason for choosing remote production was based on cost, as it means that less

personnel and equipment were required on site.

After the event in Åre, SVT used its Nimbra products for the Biathlon World

Championship in Östersund (in March 2019). For Net Insight, that did not lead to a

follow-up sale as SVT bought and own the products, but more as a proof of concept

that remote production did work and has its role in improving efficiency and reducing

costs for live event media production.

Net Insight has been a key partner to SVT for a number of years: the first remote

production collaboration was at the London Summer Olympics in 2012. The solution

created for the 2019 FIS Championship showed how efficient live production

workflow could be, however, with a fast ethernet transportation backbone.

Financially, we estimate that Net Insight sold 2-3 Nimbra products for a few million

SEK up-front, coupled with a support and maintenance agreement worth around 5%

of the initial order value in annual support fees. In addition to product sales, Net

Insight also offers services in terms of personnel if needed, invoiced as a typical

service contract based on hours per person. Based on the underlying gross margin

on the Nimbra business of 75-80%, we estimate that the stand-alone EBIT margin is

~50% for this type of customer case (as it requires limited sales and marketing

efforts). If we assume that the SVT case generated SEK 5m for Net Insight, it

corresponded to ~5% of revenue for the Nimbra business unit in Q1’19.

Net Insight


The chart below illustrates that the pricing of ethernet line lease (fibre networks) in

most European countries and the US are about the same, and we believe that

remote production has good possibilities to grow in these countries. The Asian

market seems to have higher prices, which favours other media transportation

methods to support large-scale remote media production.8

8 https://www.wik.org/uploads/media/BT_EthernetLL_Benchmark_final.pdf

Nimbra 1060 enabled remote production for SVT


National leased line charges, monthly price

Source: OECD & Teligen/Strategy Analytics ABG Sundal Collier, company data

Stockholm

(Production f acility )

Östersund

(Live event)

Nimbra 1060 in Åre, Östersund

Nimbra 1060 in Stockholm

600 km

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

USD

Inexpensive ethernet line lease

Net Insight


Sony acquired Nevion in 2019

Sony announced in June that it acquired a 45 % stake in the Norwegian

broadcasting solutions vendor Nevion.9 Nevion is, just like Net Insight, focused on

delivering media transport solutions over IP.

Both Net Insight and Nevion are partly changing their businesses from historical

black-box hardware solutions to NFV solutions supporting open transportation

frameworks. This change has required large investments in R&D, explaining the

lack of profitability in recent years.

We believe the main reason that Sony is investing in Nevion is due to the

company’s focus on IP media delivery as well as its expertise in virtualised media

solutions. Compared with Net Insight, it seems that Nevion has historically had a

more specific focus on virtualisation, although both of the companies now seem to

fully focus on this.

“Through this strategic partnership, we will be able to expand our end-to-

end IP solution offerings that allow customers to produce live content

connecting multiple locations,” (Mikio Kita, senior GM, Media Solution

Business Division, Professional Products & Solutions Group, Sony Imaging

Products & Solutions Inc.)10

Sony’s broadcasting segment has its base in cameras, while also delivering other

on-site broadcasting hardware. The company has clear insight into how its

customers are planning to invest and develop their broadcasting ecosystems. We

believe that Sony, which has been supporting high-level remote production solutions

with its hardware products, acknowledges the demand for these services and will

start to develop a new offering including IP media software, creating an end-to-end

live broadcasting solution. The acquisition makes us believe that the market for Net

Insight’s Nimbra portfolio will continue to be important in broadcasting.

Growth drivers The main underlying growth drivers for the Nimbra business are the volume (hours)

of live content transported over media networks and the quality of this content (e.g.

HD, 4K, 8K). Both these factors are increasing, which means that broadcasters

need higher capacity for media transportation, a field that Net Insight targets with its

Nimbra product portfolio. Net Insight estimates that the traditional Nimbra market

grows 3-5%. Net Insight also targets the Internet-based transporting of media with

its products Nimbra 400 (previous VA), and estimates that this market grows around

15% annually. In addition, the market for transporting media in the cloud is still

small, but has significantly higher growth rates than other market segments.

Competitive landscape Net Insight’s most mature product category is the Nimbra brand. In the area of

remote production, the entry barriers are higher than for the software-based

solutions Sye and ScheduALL. The competitors have been constant for a long

period, but market activity has been high.

Evertz Microsystems

Evertz Microsystems is a global manufacturer of broadcasting equipment and

solutions. Evertz is mainly active in professional IP media transport, but also in IPTV

and other content distribution (including Live OTT). In IP media transport, the

9 https://devoncroft.com/2019/06/27/sony-acquires-45-stake-in-nevion-aims-to-take-remote-production-to-the-next-level/ 10 https://pr.sony.eu/pr-saas-api/press-release?hostApp=psa&locale=ue-us&prName=nevion-ip-solutions-

partnership

Net Insight


company offer solutions for production, post-production and transmission of TV

content. Evertz Microsystems is a member of RIST. The company has products for

IP media transportation, including gateways, encoders and switches. In this

category, it states that some of its products are virtualised.

Nevion

Nevion is a company focused on real-time media broadcasting transport. Its

customers are, just like Net Insight’s Nimbra products, mainly broadcasters and

media service providers. The company focuses on delivering virtualised solutions,

and it is shifting focus from hardware-based solutions to a more NFV/SDN-like

environment. However, Nevion also offers integrated hardware and software boxes

handling compression, ending and transport. In June, Nevion announced that Sony

had acquired part of the company (a deal referred to by Sony as a strategic

partnership), described on the previous page.

LiveU

LiveU is a company that focuses on providing live video streaming, with a patented

audience participation technology. The company offers both hardware and software,

which are designed to enable live streaming from and to different locations and

settings in high quality. The company has historically been a supplier to global

broadcasters and news agencies during high-profile events like the US Presidential

election and the FIFA World Cup.

TVU

TVU is a global live streaming provider with a focus on transforming broadcasters’

SDI-based operations to make them IP-based. With its proprietary IS+ technology,

the company’s solutions are able to deliver low-latency, HD video from and to most

locations globally by using any combination of cellular, satellite, microwave, Wi-Fi

and ethernet IP connections. ESPN, CNN, Sky Sports and NFL are examples of

customers in its more than 2,500 customer base.

Net Insight


Resource optimisation – ScheduALL As explained above for Nimbra, broadcasters and TV companies need to produce

more and better content at a lower price due to the changing market environment.

Today, many broadcasters use a manual approach to schedule upcoming and

ongoing production, which is inefficient and costly. Net Insight addresses this with

its ScheduALL software technology.

Released in 1989, the software solution ScheduALL has been a market-leading

solution in enterprise resource management (ERM) for the media, broadcasting and

transmission industry. In October 2015, Net Insight acquired the software, widening

its offering from IP media delivery. Development has continued since the launch,

and ScheduALL now consists of different modules, creating a highly customisable

product, optimising resource and schedule management for broadcasters.

The foundation of ScheduALL is in scheduling and resource management for

broadcasting. The software connects to and controls external hardware and

software sources, enabling an automated broadcasting workflow. In addition to

handling the scheduling and planning, the system can be customised with other

features. Since the software is developed to support planning, integration of

personnel, contract and labour managers are popular. Additionally, the solution

provides powerful real-time business insight for executives and line managers.

ScheduLINK delivers a transmission management solution, a platform to plan the

different transmission signals that a broadcaster uses. For a broadcaster this

typically includes cable network, satellite bandwidth and mobile communication.

All the software solutions in this product category are developed to support the daily

orchestration of broadcasting and media management.

Customer case – US broadcaster

In 2018, a US broadcasting network selected Net Insight’s ScheduALL solution and

integrated with Nimbra VA11. The background was the broadcaster’s expansion of

coverage, production of live news and international video flows. The combined

ScheduALL and Nimbra solution enabled the customer to organise, optimise and

centralise operations during expansion.

The expansion generated a threefold increase in demand in news production, and

the volume increase meant that each member of staff and every resource needed to

be optimised as far as possible. By introducing ScheduALL as a central hub for

optimising transmission and production planning, operations, price and cost

tracking, as well as analysis and reporting, the broadcaster was able to guarantee

seamless broadcasts to its 25.7m viewers in 22 countries.

11 Net Insight 2018 annual report

ScheduALL modules

Source: Net Insight, ABG Sundal Collier, company data

Net Insight


This client also used the Nimbra VA for live video transport over IP between the

company’s global offices and head office.

Competitive landscape

The shift from hardware-integrated software to fully software-based solutions has

increased the competition faced by ScheduALL.

Skyline Communications

The company offers solutions in network management, mainly for broadcasters and

telecommunications operators. Skyline’s flagship solution is DataMiner, which is

similar to Net Insight’s ScheduALL. DataMiner enables broadcasters to view and

manage their operational chain. The solution is deployed by broadcasters including

Arqiva, Discovery networks and Al Jazeera.

Xytech Systems

Xytech Systems is the developer behind MediaPulse, which is a software solution

providing resource, work order and asset management for broadcasters. Large

broadcasters including CBS, NBC Sports, Paramount and Deluxe use the solution.

Net Insight


To-consumer live streaming – Sye Content owners like sports associations are moving their positions in the value

chain, to capture more of direct live streaming to end consumers. This clear trend

has driven up prices for product rights, and has put pressure on traditional

broadcasters to produce better content at a lower price. The development has been

enabled by the advancement of technological solutions for content owners to

directly stream their content at a low cost with low latency through the public cloud.

Net Insight offers a software technology on a volume business model to enable this,

with low latency and high quality. The offering is called Sye Streaming Solutions.

Solutions for to-consumer media distribution is Net Insight’s newest product

category. In this area, the company has its Sye brand, which is a technology

focused on delivering low-latency streaming to a multi-device ecosystem. To be

able to deliver low-latency streaming globally Sye uses a public cloud, or a Content

Delivery Network (CDN), which acts as a global distributor of the media. The

solution has support for multiple CDNs. However, the end-to-end streaming service

offered by Net Insight specifically uses the Microsoft Azure CDN. Cisco estimates

that live internet video will account for 17% of Internet video traffic by 2022,

meaning it will grow 15-fold from 2017 to 2022.12 With live streaming increasing its

market share of total internet video traffic, streamers will focus on low-latency

streaming, an area where Net Insight’s Sye is market leading, according to the

company.

33% CAGR in internet video data usage…

Source: Cisco

…and live streaming growing 15x or 70% CAGR

Source: Cisco

Trends in live content consumption

Historically, content from TV productions has been distributed to consumers through

satellite discs (DTH), cable TV or IPTV over broadband to watch live events on the

TV. Today, the development is moving into streaming solutions, watching live

events at a laptop, tablet or smartphone. This causes higher latency as the

technology is so far not as good. For example, the Swedish broadcaster Viasat can

show a live event with a few seconds lag on television, but on the streaming solution

Viaplay, the lag can be up to 30-45 seconds. This makes the user experience

worse, and linking a live event, for example, to live sport betting becomes irrelevant.

Sye enables the streaming to have high quality and low latency, reducing the lag to

less than two seconds, according to the company.

12 https://www.cisco.com/c/en/us/solutions/collateral/service-provider/visual-networking-index-vni/white-

paper-c11-741490.html#_Toc532256800

0

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300

2017 2018 2019 2020 2021 2022

Exabyte

s p

er m

onth

Short-From Internet VoD Long-From Internet VoD

Live Internet Video Video Surveilance

36

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17

28

48

+70%

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2017 2018 2019 2020 2021 2022

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s p

er m

onth

Live Internet Video

Net Insight


By utilising IP for media delivery instead of competing technology, the initial costs of

setting up a live streaming service are reduced. This has made it possible for smaller

market players (which do not own any infrastructure) to create their own live streaming

service, cutting out the traditional broadcasters, which essentially only deliver

infrastructure for modern content delivery. Recent examples of this are Formula 1 and

NBA, which have launched their own to-consumer live streaming services.

In the area of low-latency live streaming (e.g. live sports, live quizzes and live

betting), a limited number of suppliers can provide broadcaster-grade quality and

sync via IP. Net Insight’s Sye streaming service was developed to handle these

demanding streaming tasks while keeping a constant lag, giving all consumers the

exact same experience.

The reason for broadcasters to embrace IP-based broadcasting for their end

consumers is clear: advertising. Thanks to the fact that most IP-streaming services

support cookies and live ad-insertion, the possibility to target marketing to specific

customers emerges (programmatic ads). As TV ads are an important source of

revenue for broadcasters, we believe that IP-based broadcasting has considerable

market growth ahead.

Global programmatic ad spend

Source: ABG Sundal Collier, MAGNA

Global advertising spending

Source: ABG Sundal Collier, Statista

Sye’s solution

Sye, a fully featured streaming solution, facilitates the streamer with all parts of the

streaming process, from transcoding to the client. The solution is developed for

users in need of low-latency live streaming. Net Insight says that the solution has

been developed for live sports, live-events, live betting and live-auctions.

The solution is cloud-based, it can be supported by multiple CDNs and it comes with

the Sye client Software Development Kit (“SDK”) which enables integration of

streaming to apps and websites. Sye revenues are recurring and largely depend on

the volume of video content streamed through the platform.

6

10

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20

25

31

37

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+31%

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2013 2014 2015 2016 2017 2018 2019 2020 2021

US

Dbn

+4%

0

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300

400

500

600

700

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

US

Dbn

Trends in live event distribution


Streaming

IPTV (over broadband)

Satellite disc (DTH)

Cable TV

History Future

Net Insight


Sye Streaming Service delivers low-latency to-consumer media streaming, and its

main application is broadcasting of live sports and betting. Historically, satellite

technology has dominated live sports production and distribution, but if the C-band

relocation goes through, broadcasters will need to find alternative technologies, thus

increasing the demand for the Sye service. In February 2019, Net Insight

announced that one Fortune 500 company would be using Sye. We do not know

which one, but it is likely to be a company changing from its current satellite focus to

testing other technologies.

Sye Streaming Service

In addition to delivering over-the-top (OTT) live streaming solutions, Net Insight

offers a fully featured streaming service, Sye Streaming Service.

Complementing the service, additional Sye functions can be added, such as

synchronised metadata, Sye-On-Prem and ad insertion. Synchronised metadata

creates a more dynamic tool to work with the livestream. That means being able to

send metadata to the SDK-Client (real-time data, text and media can be integrated

to the user experience without being rendered into the stream). Sye-On-Prem is an

option to ensure that the low-latency stream is maintained from the source to the

cloud where Sye Streaming Service resides.

Sye solution


Sye Streaming Service


The growing market for live streaming including live streaming is an opportunity for

the Sye streaming service.

We believe that the Fortune 500 company mentioned above, which is about to

release its new live streaming product based on the Sye Solution, is one of the

broadcasters or telecom operators. It seems likely that the customer has historically

used satellite-based solutions but is now trying out competing technology, possibly

due to the C-band relocation.

Net Insight recently announced that the Hong Kong-based professional video

solutions provider Mediatech has implemented Sye on top of its own CDN network.

Mediatech delivered the Sye-based solution to The Hong Kong Jockey Club, Hong

Kong’s largest betting operator with a turnover of HKD 234bn.13 Companies in

sports and betting seem to be the ones which value low-latency the most.

Customer case – Primetime

Sye was used in the Swedish trivia app Primetime (launched in 2018 as a copycat

of the US mobile trivia game HQ Trivia). The solution was used by Trippel Media, a

Swedish app-developer. The app was particularly popular at the end of 2018,

reaching more than 800,000 active users.14

13 https://www.scmp.com/news/hong-kong/society/article/2162085/hong-kong-jockey-club-hits-record-high-hk234-billion-turnover 14 https://www.breakit.se/artikel/18023/primetime-har-fatt-hundratusentals-svenskar-att-spela-nu-lanserar-

de-i-danmark

Net Insight


The main challenge in live quiz or live betting is to guarantee that all participants

receive the same video stream and questions (in this case) simultaneously.

Traditional streaming solutions do not provide a simple solution for this. In this case,

the client also wanted to include a chat functionality in the app to enable dialog

between the host and the audience, to create a sense of community and belonging.

Quizzes such as Primetime are extreme in that hundreds of thousands of users log

into the app simultaneously to participate, and the show has a duration of 10-15

minutes, after which all users log out again. The large number of users places

enormous demand on the stability and scalability of the underlying streaming

service. Sye is based on the public cloud Microsoft Azure, and has been designed

to be dynamically scaled up or down to match demand before, during and after each

competition.

According to Daniel Weilar, the founder of the Primetime app, he was looking for a

streaming service with perfect synchronisation, ultralow latency, and scalability. Sye

was at that point in time the only solution that could guarantee all three.

Demand for live apps like HQ Trivia and Primetime seems to be relatively short in

duration. HQ Trivia used another solution for streaming, which according to Net

Insight had a longer time lag and less quality. There are many solutions for

streaming out in the market, at different levels of quality. Net Insight argues that Sye

is the most advanced and can be used in larger scale.

Primetime live quiz app

Source: Dagens Media

Net Insight


Competitive landscape

Historically, to utilise low-latency, live streaming proprietary hardware solutions were

needed. In live streaming today, most solutions utilise the Content Delivery

Networks (CDNs) created by global server constellations owned by cloud

companies such as:

Akamai (has an own-streaming solution)

Maxcdn

Cloudflare

Amazon CloudFront

Limelight Networks (has an-own streaming solution)

Level 3

Microsoft Azure

These private CDN operators deliver video (content) efficiently over long distances,

minimising the latency time to stream on-demand or live.

Wowza Media Systems

The company mainly provides services for video streaming, including low-latency

livestreaming solutions. The services are built on the CDN delivered by Akamai.

Wowza supports multiple encoding formats and streaming protocols, including the

ones used to achieve low-latency streams.

Haivision

Founded in 2004 in the US, Haivision delivers enterprise video streaming

technologies. The company is the developer of the media transport protocol SRT,

which was made open source in 2017. Haivision competes with Net Insight on in-

production media delivery and to-consumer media delivery, including low-latency

livestreaming solutions. The company’s Makito X Series hardware and software

solutions are similar to Net Insight’s Nimbra boxes. Haivision also has its Video

Cloud, enabling low-latency livestreaming via the Akamai CDN.

Phenix

Phenix Real Time Solutions, a global provider of real-time IP video solutions, is

primarily focused on shortening latency and Time To First Frame (TTFF). It

developed SyncWatch, which enables users to watch real-time and VOD content in

the same frame, independent of device, location or Operating System (OS).

HQ Trivia and Primetime popularity

Source: Google Trends

0

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80

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120

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tre

nd in

dex

HQ Trivia (US) Primetime (Sweden)

Net Insight


Forecasts

Business model Net Insight’s business model varies between its segments. We describe each model

below:

Nimbra – Nimbra generates sales from hardware, software licenses, support and

consulting services. According to the company, the share of revenue from licenses

and support has increased significantly in recent years, although we are under the

impression that this originates from a low base. A typical customer usually starts

with a limited number of Nimbra units (throughout a limited number of locations).

Furthermore, it gradually buys more units in order to cover more

locations/geographies.

ScheduALL – Net Insight’s sales from ScheduALL are a function of software

licenses, in addition to support and consulting services. A customer’s initial step is

usually to buy a limited number of licenses, which Net Insight helps to implement at

the customer premises through its support and consulting services. Given that Net

Insight offers several modules/solutions, the company can thereafter conduct

upselling of products, which involves both adding new functionalities and connecting

more users to the system.

Sye – the lion’s share of Sye sales are based on the volume of video content

streamed through the platform, and are generated on a recurring basis.

Furthermore, Net Insight charges for implementation and support, in addition to

services like ad insertion and synchronised metadata.

Estimates We derive our group sales estimates from each business unit, as the company

started with that split during 2019. Our thoughts are below:

Nimbra – Even though the market is growing at 3-5%, according to the company,

Net Insight has not been able to capture this underlying growth. It has delivered an

estimated organic growth of -3-10% in the first three quarters of 2019, and we

estimate that the most recent years have been around flat growth or slightly

negative. As a result of that, we stick to a conservative view that seeing is believing,

and forecast a 0% FX adjusted growth in Q4’19e and 2020e. From 2021e, we

forecast 2% growth. EBIT wise, Nimbra reached a margin of 10-23% during 2019.

ScheduALL – ScheduALL’s sales have been declining since Net Insight acquired

the company, which we think is a result of the current conversion from version 5 to

version 6 (a cloud-based solution). This is also driving opex higher, meaning that

Overview of business unit potential


Business potential Nimbra ScheduALL Sye

Growth Medium Medium High

Margins Medium High High

Competition Medium Medium High

Competitive advantage High quality - Low latency

Hardware/Software Hardware & software Software Software

Share of 2018 sales 83% 16% 0%

Net Insight


the EBIT contribution has been negative between SEK 5-10m per quarter during

2019. We estimate the opex level to remain relatively high, as R&D and sales &

marketing should continue in the product conversion, while sales may be under

pressure although capturing back a bit of the losing momentum as client contacts

are retained. We estimate a 0% FX adjusted growth in Q4’19e, 5% throughout

2020e and then 7% per year from 2021e. We estimate improved losses in the

coming years, although not reaching profitability in our forecast period, as we argue

that sales growth need to ramp up to +20% to reach that. This is nothing we have

seen in the last years; hence, it is yet to be seen.

Sye – As sales have been SEK 9m YTD 2019 (+435% growth y-o-y), it is still at a

low level. We estimate continued high y-o-y growth in Q4’19e and reaching SEK

21m in sales in 2020e (+88% FX adjusted vs 2019e). Beyond that, we forecast an

annual growth rate of 50% in 2021e-2022e. The high growth is driven by recent

orders and activities from Primetime, the Hong Kong Jockey Club, and the as-yet-

undisclosed Fortune 500 company. As revenues will be a result of volumes, users

and data in the streaming platform, it is very difficult to do a sophisticated approach

in terms of both amount and timing. The revenue model will be recurring, but also

consist of many moving parts such as a downward trend in revenue per volume as

volumes increases. We also want to emphasise that any new orders that may be

presented during 2020 will most likely take 1-2 years before showing any significant

revenues, as the lead times and ramp up process is relatively long. We estimate

that the underlying volume based revenues will come with a ~95% gross margin, but

the streaming service will have a COGS to CDNs for using the networks. In that

revenue stream, we estimate a 60% gross margin (40% COGS). As a result, we

think that a reasonable gross margin for Sye is around 75%, even though this may

fluctuate significantly depending on individual contracts.

Sales composition

Today, the lion’s share of sales stems from Nimbra, accounting for 82% of Q3’2019

sales. The other product groups, which comprises ScheduALL and Sye, accounted

for 17% and 1%, respectively, for the corresponding period. In our forecasts, we

have pencilled in 0-3% organic growth for Nimbra for 2019e-2022e, 5-7% for

ScheduALL and 50-90% for Sye.

Key estimates


Key estimates (SEKm) 2018 2019e 2020e 2021e 2022e

Sales per segment

Nimbra 375 379 387 394 406

ScheduALL 74 77 82 87 94

Sye 2 11 21 32 47

Group sales 452 466 489 513 547

sales grow th 6% 3% 5% 5% 7%

organic sales grow th 2% -2% 3% 5% 7%

Group gross margin 58% 60% 61% 62% 63%

Group adj. opex -301 -289 -293 -304 -314

Group EBIT -75 -8 5 14 30

non-recurring items -39 0 0 0 0

Group adj. EBIT -37 -8 5 14 30

adj. EBIT margin -8% -2% 1% 3% 6%

Net income -58 -7 4 11 24

FCF -85 -19 -7 -2 8

Net Insight


Sales split and Sye’s share of sales


Sales growth and share of sales


Mixed historical performance, with large yearly fluctuations

Looking back some years, Net Insight has reported solid growth, with a 9% sales CAGR

between 2007 and 2016. As a reflection of its business model, where larger orders have

large impact and occur without any clear seasonality, the yearly fluctuations have been

high. Even so, for the same period, the adjusted EBIT margin has generally been held

up at high levels, with an average EBIT margin of 10% for 2007-2016. In 2017,

however, operations started to take a negative turn, with a –15% sales decline

compared with 2016, and the adjusted EBIT margin fell from 10% to -2%.

375 379 387 394 406

74 77 82 87 94 2 11

21 32

47

0%

2%

4%

6%

9%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

-

100

200

300

400

500

600

2018 2019e 2020e 2021e 2022e

Nimbra ScheduALL Sye Sye share of sales

Sales CAGR % of 22e

Business unit 18-'22e sales

Nimbra 2% 74%

ScheduALL 6% 17%

Sye 118% 9%

Announced orders 2018-2019


Date Title Product Sales channel Size/value (SEKm) Delivery

Sep-19 MEDIATECH’S CDN IMPLEMENTS NET INSIGHT'S SYE FOR THE

HONG KONG JOCKEY CLUB

Sye Mediatechs dynamic Q2/Q3'19-onwards

Sep-19 RTVE väljer Net Insight för nytt nationellt IP-medianät Nimbra MoMe 7 studios Q3'19

Sep-19 Mobilelinks wins new contract and expands Nordic IP media

network with Net Insight

NImbra Mobilelinks n.a. Q2/Q3'19

Jul-19 NEP Connect has selected Net Insight’s media transport solutions

for a new live sports contribution network in the UK.

Nimbra 72 stadiums Q2'19

Jul-19 Input Media selects Net Insight for remote production of FIFA

Women’s World Cup France 2019

Nimbra 27 Games Q2'19

Jul-19 Net Insight selected by Swisscom Broadcast for core media network

expansion

Nimbra n.a. Q2'19

May-19 NEP Switzerland deploys Net Insight’s Nimbra media transport

solution

Nimbra n.a. Q2'19

Apr-19 Net Insight enables seamless video production for LinkedIn Corp Nimbra n.a. Q1'19

Apr-19 Net Insight selected by Aldea Solutions for Pan American Games

Lima 2019

Nimbra 17 arenas Q1'19

Feb-19 Net Insight enables largest Remote IP Production ever, produced by

SVT

Nimbra 150 camera operators Q1'19

Feb-19 Net Insight signs key Sye agreement for live streaming Sye dynamic Q1'19-onwards

Dec-18 Movistar+ implements Net Insight’s Remote production solution for

Spanish Basketball League

Nimbra MoMe n.a. Q3/Q4'18

Nov-18 Net Insight AB: Net Insight wins significant order for nationwide

media over internet distribution in Eurasia

Nimbra Local partner >1 EURm Q4'18

Aug-18 Net Insight selected for next-generation media network connecting

stadiums for Austria Football Bundesliga

Nimbra 12 Stadiums Q3'18

Jun-18 Net Insight AB: Net Insight wins significant order from European

partner for Video Assistant Referee network

Nimbra >1 EURm Q3'18

Apr-18 Net Insight wins order for multi-sport event in Asia Nimbra PT Transtel Universal n.a. Q2/Q3'18

Apr-18 Trippel Media chooses Net Insight's Sye Streaming Service,

powered by Microsoft Azure, to handle live streaming for their

interactive trivia and live event app platform Primetime.

Sye n.a. Q2'18

Feb-18 NBC OLYMPICS SELECTS NET INSIGHT AS TRANSMISSION

SCHEDULING MANAGEMENT SOLUTIONS PROVIDER FOR ITS

PRODUCTION OF 2018 OLYMPIC WINTER GAMES IN

PYEONGCHANG

ScheduALL n.a. Q1'18

Jan-18 Gearhouse Broadcast partners with Net Insight to enable Remote

Production in Australia

Nimbra >80 feeds Q1'18

Net Insight


Costs composition (SEKm)


Costs composition of sales (%)


-350

-300

-250

-200

-150

-100

-50

02013 2014 2015 2016 2017 2018 2019e 2020e 2021e 2022e

Selling and marketing costs Product development costs Admin costs

37.3%

28.5%32.6%

27.2%33.9%

40.1%

31.3% 30.5% 30.2% 29.2%

13.7%

10.8%

11.7%14.9%

14.6%

14.4%

16.5% 17.2% 17.3% 17.0%

8.2%

7.8%

10.8%10.8%

11.6%

12.2%

13.0% 12.3% 11.8% 11.3%

0%

10%

20%

30%

40%

50%

60%

70%

2013 2014 2015 2016 2017 2018 2019e 2020e 2021e 2022e

Selling and marketing costs Product development costs Admin costs

Historical overview – sales (SEKm) and adj. EBIT margin (%)


Gross margin to stabilise and increase going forward


229

274

233

288 295 280 281

379 376

504

427452 466

489513

547

14% 14% 15% 15% 15%

1%-3%

14%

5%10%

-2%

-8%

-2%1% 3%

6%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

0

100

200

300

400

500

600

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e 2022e

Sales Adj. EBIT margin

9% CAGR

5% CAGR

60%

56%

61%60%

63%

58% 58%60%

61%62%

63%

74%73%

75% 75% 75%

72%71%

72%73%

74% 75%

50%

55%

60%

65%

70%

75%

80%

2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e 2022e

Gross margin Adj. Gross Margins (ex. amortisations on capitalised R&D)

Net Insight


Annual breakdown of forecasts


Interim breakdown of forecasts


Annual overview (SEKm) 2014 2015 2016 2017 2018 2019e 2020e 2021e 2022e

Revenue 379 376 504 427 452 466 489 513 547

Other income 0 0 0 0 0 0 0 0 0

Opex -178 -207 -266 -255 -337 -287 -293 -304 -314

EBITDA 108 76 113 64 26 70 87 97 116

Depreciation & amortisation -54 -57 -63 -71 -101 -79 -82 -83 -86

Operating result (EBIT) 54 19 49 -8 -75 -8 5 14 30

Non-recurring items (NRI) 0 0 0 0 -39 0 0 0 0

Adj. EBIT 54 19 49 -8 -37 -8 5 14 30

Net f inancial items 2 -13 -5 13 1 -1 0 0 0

Pretax profit 55 7 44 5 -74 -9 5 14 30

Taxes -14 -5 -9 -2 16 2 -1 -3 -7

Net income 42 2 35 4 -58 -7 4 11 24

Metrics 2014 2015 2016 2017 2018 2019e 2020e 2021e 2022e

EBITDA margin 28% 20% 22% 15% 6% 15% 18% 19% 21%

EBIT margin 14% 5% 10% -2% -17% -2% 1% 3% 6%

Adj. EBIT margin 14% 5% 10% -2% -8% -2% 1% 3% 6%

Net profit margin 11% 1% 7% 1% -13% -1% 1% 2% 4%

Tax rate 25% 71% 20% 33% 21% 25% 22% 22% 22%

Reported grow th y-o-y 35% -1% 34% -15% 6% 3% 5% 5% 7%

EBIT grow th y-o-y -654% -64% 157% -115% 901% -89% -162% 178% 116%

Adj. EBIT grow th y-o-y -654% -64% 157% -115% 387% -78% -162% 178% 116%

Sales breakdown 2014 2015 2016 2017 2018 2019e 2020e 2021e 2022e

Nimbra 375 379 387 394 406

ScheduALL 74 77 82 87 94

Sye 2 11 21 32 47

Group sales 452 466 489 513 547

Sales growth by segment 2014 2015 2016 2017 2018 2019e 2020e 2021e 2022e

Nimbra 1% 2% 2% 3%

ScheduALL 3% 7% 7% 7%

Sye 428% 90% 50% 50%

Group sales 3% 5% 5% 7%

Sales breakdown % 2014 2015 2016 2017 2018 2019e 2020e 2021e 2022e

Nimbra 83% 81% 79% 77% 74%

ScheduALL 16% 16% 17% 17% 17%

Sye 0% 2% 4% 6% 9%

Group sales 100% 100% 100% 100% 100%

Quarterly overview Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19e

Revenue 110 120 115 106 111 129 112 114

Other income 0 0 0 0 0 0 0 0

Opex -63 -84 -75 -115 -77 -73 -66 -71

EBITDA 19 2 11 -5 8 23 23 17

Depreciation & amortisation -17 -15 -15 -55 -20 -19 -20 -20

Operating result (EBIT) 2 -13 -4 -60 -12 3 3 -3

Non-recurring items (NRI) 0 0 0 -39 0 0 0 0

Adj. EBIT 2 -13 -4 -22 -12 3 3 -3

Net f inancial items 2 1 -1 0 1 -1 -1 0

Pretax profit 4 -12 -5 -61 -11 3 2 -3

Taxes -1 3 1 13 2 0 0 1

Net income 3 -9 -4 -48 -9 2 2 -2

Metrics Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19e

EBITDA margin 17% 2% 9% -5% 7% 18% 20% 15%

EBIT margin 2% -11% -4% -57% -11% 3% 3% -2%

Adj. EBIT margin 2% -11% -4% -20% -11% 3% 3% -2%

Net profit margin 3% -8% -3% -45% -8% 2% 2% -2%

Tax rate -25% -23% -20% -21% -20% -15% -8% -22%

Reported grow th y-o-y 0% 25% 10% -8% 1% 7% -2% 7%

EBIT grow th y-o-y -64% -40% -164% -8595% -587% -126% -172% -96%

-64% -40% -164% -3167% -587% -126% -172% -88%

Sales breakdown Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19e

Nimbra 92 105 95 83 94 107 90 88

ScheduALL 18 14 19 23 15 18 20 24

Sye 0 1 1 0 3 3 3 2

Group sales 110 120 115 106 111 129 112 114

Sales growth by segment Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19e

Nimbra 2% 2% -5% 6%

ScheduALL -19% 26% 3% 6%

Sye na 410% 182% 406%

Group sales 1% 7% -2% 7%

Sales breakdown % Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19e

Nimbra 84% 88% 83% 78% 84% 83% 80% 77%

ScheduALL 16% 12% 17% 22% 13% 14% 18% 21%

Sye 0% 1% 1% 0% 2% 3% 2% 2%

Group sales 100% 100% 100% 100% 100% 100% 100% 100%

Net Insight


Valuation

Net Insight’s share price has been volatile over the last five years. Hopes were

initially high for an early launch of Sye, and the underlying business was profitable.

The launch took longer than expected, however, and a slower market uptick at the

same time as ScheduALL was struggling contributed to the group making a loss.

Growth has been low (and even negative recently), which has put even more

pressure on the share.

In 2019, Net Insight announced that it is looking into strategic options for

ScheduALL. Moreover, it wants to raise capital for continued Sye investments. This

has put pressure on the share, but also provided relief (the price recently doubled).

We have also seen a few of the company’s largest shareholders decreasing their

holdings in recent quarters, most likely putting more pressure on the share.

We have valued Net Insight using three different valuation methods, and arrived at

the following valuation ranges:

Peer group: SEK 1.34-5.18

SOTP: SEK 1.24-7.91

DCF: SEK 1.02-7.77

Share price and valuation ranges


0

1

2

3

4

5

6

7

8

9

10

Nov-14 Nov-15 Nov-16 Nov-17 Nov-18 Nov-19

Net Insight B OMXS30 rebased

CEO change CEO change

Initial hopes on Sye

Decliningdevelopment in

ScheduALL and a slow uptake of Sye

Announced planned capital raise and

strategic movesPeers

SOTP DCF

5.18

1.34

7.91 7.77

1.241.02

Net Insight


Peer group

We currently classify Net Insight as a “loss-making technology company”. By

looking at comparable listed peers, we find a median EV/Sales range of 1-4x. On

our estimates, Net Insight (as a group) trades at ’19e-’21e EV/Sales of 2.1-2.3x,

based on ~5% annual group growth. Applying 1-4x ’20e EV/Sales on Net Insight on

a group level yields corresponding share prices of SEK 1.34-5.18.

3-year sales CAGR and EV/Sales (2020e)

Source: FactSet consensus

Narrowed view at growth between 0-10%

Source: FactSet consensus

-20%

0%

20%

40%

60%

80%

0.0x 2.0x 4.0x 6.0x 8.0x 10.0x 12.0x 14.0x

3-y

ear S

ale

s C

AG

R

EV/Sales (2020)

We expect Net Insight to grow º~5% in the coming years

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

0.0x 2.0x 4.0x 6.0x 8.0x 10.0x 12.0x 14.0x

3-y

ear S

ale

s C

AG

R

EV/Sales (2020)

EV/Sales around 1-4x for companies growing 3-9% CAGR

Peer group

Source: ABG Sundal Collier, FactSet consensus, ABGSC for Net Insight estimates

Valuation scenario on group level EV/Sales (2020e)


Nordic Tech

Mcap

(SEKm) Share price

YTD (total

return)

5-year

return

Net debt (+) /

net cash (-)

YE'18

EV/Sales

(2019)

EV/Sales

(2020)

EV/Sales

(2021)

EV/EBIT

(2019)

EV/EBIT

(2020)

EV/EBIT

(2021)

P/E

(2019)

Div.

yield

(2019)

3-year

Sales

CAGR

3-year EBIT

CAGR

Loss-making peers

Edgeware 175 6 -52% na -168 0.2x 0.2x 0.2x -1.4x -6.8x 3.2x -10.9x 0.0% -1% -206%

PowerCell 7,770 150 326% na -49 111.5x 58.1x 19.2x 15.8x -140.1x 215.3x -123.1x 0.0% 84% -182%

Napatech 374 4 103% -27% 37 1.5x 1.3x 1.1x -14.0x 63.1x 16.8x -13.8x 0.0% na na

GomSpace 643 12 21% na -233 3.6x 3.3x 2.1x -5.9x -12.8x 110.1x -6.6x 0.0% 20% -135%

Smart Eye 1,504 100 46% na -84 23.6x 12.8x 5.4x -14.2x -18.1x 44.1x -16.1x 0.0% 69% -181%

Bioservo 233 16 88% na -26 5.4x 3.5x 1.4x -6.6x -8.2x 18.7x na na na na

Veoneer 16,858 153 -32% na -30 0.6x 0.5x 0.4x -2.2x -2.9x -4.6x -3.1x 0.0% 5% 7%

Acconeer 382 19.9 16% na -9 47.3x 15.8x 5.7x -4.2x -4.1x -5.6x -5.7x 0.0% 268% 13%

Tobii 3,692 37 38% na -192 2.6x 2.2x 1.8x -30.2x -206.6x 29.4x -28.4x 0.0% 19% -188%

Average 21.8x 10.8x 4.1x -7.0x -37.4x 47.5x -25.9x 0.0% 66% -125%

Median 3.6x 3.3x 1.8x -5.9x -8.2x 18.7x -12.3x 0.0% 20% -181%

Mature peers

HMS Networks 6,901 147 21% 314% 319 4.7x 4.5x 4.0x 27.5x 23.6x 19.9x 35.9x 1.3% 10% 14%

RTX 2,216 174 9% 248% -183 2.3x 2.0x 1.8x 15.7x 13.9x 12.3x 32.0x 0.8% 15% 12%

Allgon 616 11 115% -24% 236 1.5x 1.3x 1.2x 12.1x 10.3x 8.6x 19.0x 0.0% 30% 72%

JLT Mobile Computers 183 6 69% 262% -44 1.0x 1.0x 0.9x 10.6x 9.3x 8.7x 16.8x 4.7% 7% 9%

Mips 4,316 171 59% na -243 16.3x 10.3x 8.2x 40.4x 23.1x 18.0x 51.9x 1.7% 39% 47%

Tomra 39,803 255 33% 464% 1,128 4.4x 4.2x 3.9x 35.5x 32.7x 30.0x 46.0x 1.1% 6% 6%

Mycronic 16,117 165 42% 765% -827 3.8x 3.8x 3.5x 14.5x 17.4x 15.3x 19.7x 1.9% 5% -1%

Invisio 4,233 96 70% 599% -62 9.5x 7.3x 6.1x 45.8x 29.8x 22.3x 59.3x 1.0% 25% 44%

Fingerprint Cards 4,673 15 47% 106% -541 2.8x 2.4x 2.1x 282.7x 61.6x 31.2x 414.7x 0.0% 9% -161%

Nordic Semiconductor 10,286 54 88% 41% -899 3.5x 2.7x 2.1x 117.1x 33.5x 17.8x 176.9x 0.0% 22% 62%

Pricer 1,835 17 84% 187% -171 1.7x 1.5x 1.3x 17.0x 15.5x 13.5x 17.4x 4.2% 3% 13%

Troax 6,720 112 34% na 469 3.6x 3.4x 3.2x 17.5x 16.3x 15.2x 24.5x 2.0% 6% 7%

Ovzon 2,116 63 51% na -40 6.9x 4.1x 2.8x 43.5x 27.3x 11.8x 37.5x 0.0% 42% 152%

Average 4.8x 3.7x 3.2x 52.3x 24.2x 17.3x 73.2x 1.4% 17% 21%

Median 3.6x 3.4x 2.8x 27.5x 23.1x 15.3x 35.9x 1.1% 10% 13%

Net Insight (ABGSCe) 1,014 3 -3% -10% -93 2.1x 2.0x 1.9x -120.3x 194.8x 70.1x -150.0x 0.0% 4% -157%

Valuation scenario (group level)

Sales (2020e) 489

Sales grow th (2020e) 5%

EV/Sales (2020) 1x 2x 3x 4x

EV 489 979 1,468 1,957

Net debt ex. leasing (2020e) -24

Mcap 514 1,003 1,492 1,982

Number of shares 383

Value per share 1.34 2.62 3.90 5.18

Net Insight


SOTP

Net Insight has three different business units. Nimbra is a stable and profitable

business, we believe. ScheduALL has been declining (and is currently loss-making),

with sales growth yet to be seen. Net Insight is investing in Sye, which it hopes will

achieve high sales growth in the coming years.

Because the investor base in Net Insight is predominantly Nordic/Swedish, we

argue that Nordic alternative investments with similar characteristic are the most

comparable assets, even though the operational and market overlap is close to

zero. Comparing the three different business areas with different categories of the

peer group, we reach these conclusions:

Nimbra: Medium growth, good profitability, mature business, similar sales and

earnings growth as HMS Networks (4.5x 2020 EV/Sales), JLT Mobile Computers

(1.0x 2020 EV/Sales), Tomra (4.2x 2020 EV/Sales), Pricer (1.5x 2020 EV/Sales)

and Troax (3.4x 2020 EV/Sales). The low to high-end value of these multiples would

imply SEK 387m-1,739m.

ScheduALL: Currently low growth, non-profitable business with investment needs,

similar to Edgeware (0.2x 2020 EV/Sales) and Veoneer (0.5x 2020 EV/Sales). The

low to high-end value of these multiples would imply SEK 16m-41m.

Sye: Low absolute sales, high expected growth, non-profitable, similar to PowerCell

(58.1x 2020 EV/Sales), Smart Eye (12.8x 2020 EV/Sales), Acconeer (15.8x 2020

EV/Sales) and Tobii (2.2x 2020 EV/Sales). The low to high-end value of these

multiples would imply SEK 46m-1,224m.

Adding the low and high-end range of the different units results in a share price

range of SEK 1.24-7.91.

The share has historically been trading between 1-3x NTM EV/sales

Source: FactSet

SOTP scenario on EV/Sales (2020) per business area


0x

1x

2x

3x

4x

EV/Sales f12m (x) Avg.

No estimates

SOTP 2020 sales growth

Nimbra 387 2% 1 4.5 387 1,739

ScheduALL 82 7% 0.2 0.5 16 41

Sye 21 90% 2.2 58.1 46 1,224

SOTP 449 3,004

Net debt ex. leasing (2020e) -24

Mcap 473 3,029

Number of shares 383

Value per share 1.24 7.91

2020 EV/Sales EV

Net Insight


DCF

We have also conducted a DCF analysis, in which we assess the individual

characteristics of Net Insight’s business model. In all scenarios, we have used a

three-stage model, which comprises the periods ’19e-’22e, ’22e-’30e, and ’30e and

beyond (terminal value). We have applied a 10% WACC (of which 11% cost of

equity and 2% cost of debt).

Each scenario has different inputs on sales growth, profit margins, and FCF

margins. We end up with three different scenarios yielding implied share prices of

SEK 1.02-7.77.

Sales per scenario


FCF and FCF margin per scenario


0

500

1,000

1,500

2,000

2,500

2019e 2020e 2021e 2022e 2023e 2024e 2025e 2026e 2027e 2028e 2029e 2030e

Scenario 1 Scenario 2 Scenario 3

-3%

2%

7%

12%

17%

22%

27%

-100

0

100

200

300

400

500

2019e2020e2021e2022e2023e2024e2025e2026e2027e2028e2029e2030e

FCF Scenario 1 FCF Scenario 2 FCF Scenario 3

FCF margin Scenario 1 FCF margin Scenario 2 FCF margin Scenario 3

DCF scenarios


DCF overview


DCF Scenario 1 DCF Scenario 2 DCF Scenario 3

PV (FCF) stage 1 -54 PV (FCF) stage 1 -19 PV (FCF) stage 1 77

PV (FCF) stage 2 110 PV (FCF) stage 2 265 PV (FCF) stage 2 690

PV (TV) 254 PV (TV) 621 PV (TV) 1,889

EV 310 EV 867 EV 2,656

(-) Net debt ex. leasing 46 (-) Net debt ex. leasing 46 (-) Net debt ex. leasing 46

Other adjustments 0 Other adjustments 0 Other adjustments 0

Equity value 356 Equity value 913 Equity value 2,702

No. of shares (m) 382.8 No. of shares (m) 382.8 No. of shares (m) 382.8

Value per share 1.02 Value per share 2.63 Value per share 7.77

Weighted Cost of Capital - WACC Scenario 1 Scenario 2 Scenario 3

Risk free yield 2% CAGR / avg. '19e-'22e CAGR / avg. '19e-'22e CAGR / avg. '19e-'22e

Market risk premium 5% Sales CAGR 1.0% Sales CAGR 5.5% Sales CAGR 12.0%

Equity beta 100% EBIT CAGR -100.0% EBIT CAGR -254.7% EBIT CAGR 114.2%

Extra risk factor 4% EBIT margin -1.0% EBIT margin 1.9% EBIT margin 8.0%

Company specif ic risk premium 9%

Cost of equity (Re) 11% CAGR / avg. '22e-'30e CAGR / avg. '22e-'30e CAGR / avg. '22e-'30e

Sales 2.0% Sales 5.8% Sales 16.9%

EBITA tax rate 22% EBIT na EBIT 27.4% EBIT 24.9%

Cost of debt after tax (Rd) 2% EBIT margin 1.1% EBIT margin 8.2% EBIT margin 15.0%

Capital w eights and WACC DCF value per share 1.02 DCF value per share 2.63 DCF value per share 7.77

Equity 87%

Debt 13%

Implied net debt/equity 15%

WACC 10%

Net Insight


Risks

Technology and competition risk

Net Insight is operating in a demanding technology market, which is traditionally

slow-moving but also dependent on new technology. It is therefore facing both

competition from legacy technology and emerging technology, which could appear

in a short time period. Net Insight is building its products as proprietary solutions,

and there is a risk that the market prefers standardised solutions instead.

Liquidity risk

Net Insight is currently loss-making and has a small cash position, so it is

dependent on the capital markets either in divesting assets or raising further capital

if the operations do not turn around into profitable territory again.

Execution risk

Net Insight is a technology company with good quality products, but it has not been

successful at launching the solutions to the market and gaining sales traction. This

is a risk that may persist. Although the company has set out an agenda to drive the

organisation towards commercial thinking, this is a risk.

Net Insight


Appendix

Nimbra product portfolio For in-production media transport over IP, Net Insight has its Nimbra brand, which

contributes ~80% of Net Insight’s revenue. Looking at the revenues in this segment,

hardware makes up for ~50%. Its virtualised products (including the Nimbra 400,

Nimbra 1060 and Nimbra 600) are the main drivers of sales growth, according to the

company.

The Nimbra 1060 is Net Insight’s new flagship media transport platform, designed

with a virtualisation architecture supporting multiple networking functions.

The Nimbra 600 can be configured as a media access solution or as an edge-

processing unit to support the Nimbra 1060. We believe the latter is its main sales

driver.

The Nimbra 400 is made to fit most broadcasting needs, including usage in space-

constrained remote sites and flight kits. It supports RIST and SRT, meaning it can

efficiently transport media over the public internet.

Nimbra platforms

Source: Net Insight

Net Insight


Management

Holdings in Net Insight: None.

Holdings in Net Insight: 50,000 class B shares and 150,000 synthetic options

Holdings in Net Insight: 37,000 class B shares and 150,000 synthetic options.

Holdings in Net Insight: 17,000 class B shares.

Christer Fritzon – Incoming CEO (H1 20’)

Pelle Bourn – Chief Financial Officer

Education and Professional Experience:

- M.Sc. In Business Administration,

Lund University.

- Previous CFO roles at Aditro, Kemetyl Group and Ortivus Group among others.

Ken Graham– Interim VP Resource Optimization


- Bachelor of Applied Science in

Computer Science, University of South Alabama.

Filippa Hasselström – VP Streaming Solutions


- M.Sc. in Physics, KTH Royal Institute

of Technology.

Marcus Sandberg – VP MARCOM


- M.Sc. In Finance and Accounting,

Stockholm School of Economics.

- Currently member of the Board in Belatchew Arkitekter AB.

Ulrik Rohne – VP Media Networks


- M.Sc. In Electrical Engineering, KTH

Royal Institute of Technology.

Katarina Dufvenmark – Head of People


- M.Sc. In International Business,

Marketing and Management.

- Previously Head of HR Operations

Sweden at If P&C Insurance.

Holdings in Net Insight: 60,000 class B shares and 150,000 synthetic options.


Holdings in Net Insight: 138,434 synthetic options


- Graduate in Marketing Economics,

Nordic School of Marketing.

- Excecutive Management Program, INSEAD.

- Former CEO and President of Teracom Group, Boxer, Executive VP

Global Marketing & Sales of AllgonSystems. Several senior positions in

Motorola.

Anders Harrysson– Interim CEO


- M.Sc. In Engingeering Physics,

Linköping Institute of Technology.

- Former CEO of Birdstep Technology ASA and has experience from IBM and Sun Microsystems.


Net Insight


Board of Directors

Gunilla Fransson– Chairman of the Board


- M.Sc. in Chemical Engineering.

- Licentiate of Technology in Nuclear

Chemistry, KTH Royal Institute of Technology.

- Other Missions: Board member of Trelleborg AB, Nederman AB, Eltel

AB, Enea AB and some unlisted companies, including Chairman in

Novare Peritos AB.

Jan Barchan – Member of the Board


- B.Sc of Business Administration.

- Other Missions: CEO of Briban

Incest AB, Chairman in AudiodevAB, Västraby Gård and VästrabyGård Energi AB. Member of the

Board of Directors in Assistera AB, Studsvik AB, Trianon AB and

Trialbee AB.

Mathias Berg– Member of the Board


- M.Sc. In Business Administration,

Stockholm School of Economics.

- Other Missions: COO of Bonnier Broadcasting Sweden, TV4 and C More.

Charlotta Falvin – Member of the Board


- M.Sc. In Business Administration and

Economics, Lund University.

- Other Missions: Member of the Board in Bure Equity, InvisioCommunications and CLX

Communications. Chairman of IdeonScience Park, Lunds Tekniska

Högskola and Handelsbankens Södraregionstyrelse.

Christer Fritzon – Member of the Board


- Graduate in Marketing Economics,

Nordic School of Marketing.

- Excecutive Management Program, INSEAD.

- Other missions: CEO and President of SJ AB. Board member of

Systembolaget.

Anders Harrysson– Member of the Board


- M.Sc. In Engingeering Physics,

Linköping Institute of Technology.

- Other Missions: Board member of Precise Biometrics AB and Chairman of Aditro Group AB, Ewalie AB and

Qmatic AB.

Holdings in Net Insight: 48,052,491 class B shares through BribanInvest AB.

Previous Missions: Member of Saab AB’s Group management and held senior positions in the Ericsson group.


Previous Missions: Previous experience from TDC, MTG and multiple positions within the TV4 Group.


Previous Missions: Board member of Doro AB, Axis Communications. Chairman of Barista Fair Trade Coffee.


Previous Missions: Former CEO and President of Teracom Group, Boxer, Executive VP Global Marketing & Sales of Allgon Systems. Several senior positions in Motorola.


Previous Missions: CEO of Birdstep Technology ASA. Previously worked at IBM and Sun Microsystems.


Stina Barchan– Member of the Board


- PhD, University College London

- Other missions: Board member of

Briban Invest, Deputy Board member of Trailbee and member of the nomination committee in Studsvik


Net Insight


Shareholders

History

Shareholders

Source: ABG Sundal Collier, company data, Holdings 26 November 2019

Overview of historical events

Source: ABG Sundal Collier, company data (AGM 2017)

# Owner NETI A NETI B Value (MSEK) Capital Votes Country Verified

1 Jan Barchan 0 48,052,491 126.4 12.3% 12.0% Sw eden 31/10/2019

2 Lannebo Fonder 0 25,191,322 66.3 6.5% 6.3% Sw eden 30/09/2019

3 Alecta Pensionsförsäkring 0 24,000,000 63.1 6.2% 6.0% Sw eden 31/10/2019

4 Avanza Pension 0 20,047,955 52.7 5.1% 5.0% Sw eden 04/11/2019

5 Nordnet Pensionsförsäkring 0 11,867,760 31.2 3.0% 3.0% Sw eden 31/10/2019

6 Net Insight AB 0 7,175,000 18.9 1.8% 1.8% Sw eden 31/10/2019

7 Handelsbanken Fonder 0 7,000,000 18.4 1.8% 1.8% Sw eden 31/10/2019

8 Lars Bergkvist 0 6,582,000 17.3 1.7% 1.6% Sw eden 31/10/2019

9 Hanna Barsum 0 4,264,730 11.2 1.1% 1.1% Sw eden 31/10/2019

10 Nordea Liv & Pension 0 4,200,907 11.0 1.1% 1.1% Sw eden 31/10/2019

11 Edgar Sesemann 0 3,788,500 10.0 1.0% 0.9% Latvia 31/10/2019

12 Bajram Nuhi 0 2,874,000 7.6 0.7% 0.7% Sw eden 31/10/2019

13 Otto Nordhus 0 2,604,978 6.9 0.7% 0.7% Sw eden 31/10/2019

14 Dimensional Fund Advisors 0 2,134,627 5.6 0.5% 0.5% USA 30/09/2019

15 Abboud Malkoun 0 2,115,126 5.6 0.5% 0.5% Sw eden 31/10/2019

16 Dan Hemström 0 2,071,800 5.4 0.5% 0.5% Sw eden 31/10/2019

17 Lars Gauffin 600,000 1,469,930 5.4 0.5% 1.9% Sw eden 31/10/2019

18 XACT Fonder 0 2,065,784 5.4 0.5% 0.5% Sw eden 31/10/2019

19 SEB Fonder 0 1,971,263 5.2 0.5% 0.5% Sw eden 31/10/2019

20 Andra AP-fonden 0 1,932,738 5.1 0.5% 0.5% Sw eden 31/10/2019

1997

Net Insight is founded by Christer Bohm,

Lars Gauffin and Per Lindgren

2004

EBU selects Net Insight

2006

First DTT customer in Telenor/Norkring

2008

Olympic Games in Beijing

2012

Launch of media over internet solution

2016

Launch of Sye

2015

Launch of Live OTT

Acquisition of

ScheduALL

Net Insight


Glossary

Access Network: The part of the public network closest to end-users. Consists of

copper lines in the telephone network and coaxial cable for cable TV. Fiber and

wireless solutions are also becoming more widespread.

Bandwidth: Measure of how much information can be transmitted. Measured in bits

per second, bps.

Broadcast: Transmission from a single sender to all possible recipients in a

network.

Catch up TV: To watch a recent TV program after it has been broadcast.

CDN: (Content Delivery Networks), an overlay network of customer content,

distributed geographically to enable rapid, reliable retrieval from any end-user

location.

Content: TV content that is distributed in the network.

Contribution: Communication for production and processing of material before it is

transmitted to the end-user.

Core: Larger transport networks between cities and backbone networks.

DTT: (Digital Terrestrial Television), name of digital terrestrial TV to regular TV sets

equipped with set-top boxes. Also called DVB-T.

ERM: (Enterprise Resource Management), software that lets an enterprise manage

its network resources efficiently.

Ethernet: The most common technology for communication in local area networks,

LANs. Transmission speeds of 10/100 mbps,1 Gbps and 10 Gbps.

Gigabit Ethernet: Development of the Ethernet primarily used in large LANs and

backbone networks. Can process transmission speeds of up to 1,000 mbps.

HD/HDTV: (High definition/TV), high resolution/TV.

UHD/TV: (Ultra High Definition/TV), ultra High resolution TV. Available digital video

formats are 4K and 8K.

Headend: A master facility for receiving television signals for processing and

distribution over a cable television system.

Linear TV: Linear TV is a real-time television service that broadcasts scheduled

programs, conventionally over the air or through satellite/cable, not streamed to a

specific user.

IP: (Internet Protocol), protocol used for data transmission over the internet. All

internet traffic is transmitted in IP packets.

IPTV: Television that is broadcast over IP (broadband).

MPLS: (Multi Protocol Label Switching), protocol for the efficient management of

connections over a package-switched network.

MSR: (Media Switch Router), MSR is a platform specially designed to handle media

services.

Net Insight


Node: A unit that is connected to a network, either as a sender/ receiver, or to

connect different networks.

NPS: (Net Promotor Score), is both a measure and a survey method that provides a

value on how loyal a company's customers or employees are.

Orchestration: Automated coordination of virtual resources, functions and people.

OTT: (Over-The-Top), internet-based distribution of TV.

Post Production: Post production of TV shows or films, for example.

Protocol: An agreed set of rules for how different network equipment should

communicate.

QOS: (Quality of Service), name for the quality of service (that can be provided by a

network). Video and speech require higher QoS. QoS is achieved in a network

either by separating traffic so that interference cannot occur or by prioritization

where the highest-priority traffic is sent first.

Real Time: Immediate transmission of material without delay.

Remote Production: Also called centralised production or at-home production.

Camera feeds are transported via media networks and the studio production is

made remotely.

Router/Switch: A unit to guide and forward data packets, over the internet, for

example.

Routing: Guiding and forwarding data packets through a computer network.

SDN: (Software Defined Networking), networking technology that makes media

networks more agile and flexible to support for example automated, customer

provisioned networks and the increased use of virtualization and data centre

technologies within the media industry.

SLA: (Service Level Agreement), is a part of a service contract where the level of

service is formally defined.

Streaming/Streamed Media: Playing sound and video files on a computer or

mobile phone simultaneous with transmission over a LAN or WAN, such as the

internet. Used for playing stored files from websites and for live events over the

internet.

Uplink Station/Teleport: Station where media content in a terrestrial network is

transferred to a satellite network for further distribution.

VOD: (Video on Demand), to select and watch video content anytime when needed.

Net Insight



Income Statement (SEKm) Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019e

Sales 110 120 115 106 111 129 112 114

COGS -45 -49 -44 -52 -46 -53 -43 -46

Gross profit 66 71 71 54 65 76 69 68

Other operating items -47 -69 -61 -60 -57 -53 -47 -51

EBITDA 19 2 11 -5 8 23 23 17

Depreciation and amortisation -17 -15 -15 -55 -20 -19 -20 -20

EBITA 2 -13 -4 -60 -12 3 3 -3

EO items 0 0 0 -39 0 0 0 0

Impairment and PPA amortisation 0 0 0 0 0 0 0 0

EBIT 2 -13 -4 -60 -12 3 3 -3

Net financial items 2 1 -1 -0 1 -1 -1 0

Pretax profit 4 -12 -5 -61 -11 3 2 -3

Tax -1 3 1 13 2 -0 -0 1

Net profit 3 -9 -4 -48 -9 2 2 -2

Minority interest 0 0 0 0 0 0 0 0

Net profit discontinued 0 0 0 0 0 0 0 0

Net profit to shareholders 3 -9 -4 -48 -9 2 2 -2

EPS 0.01 -0.02 -0.01 -0.13 -0.02 0.01 0.00 -0.01

EPS Adj 0.01 -0.02 -0.01 -0.13 -0.02 0.01 0.00 -0.01

Total extraordinary items after tax 0 0 0 -39 0 0 0 0

Tax rate (%) 25.5 23.2 19.7 21.0 20.1 14.7 8.2 22.0

Gross margin (%) 59.6 59.2 61.9 51.2 58.3 59.1 61.7 60.0

EBITDA margin (%) 17.2 1.8 9.2 -5.1 7.1 17.5 20.3 15.3

EBITA margin (%) 2.2 -10.8 -3.7 -56.7 -10.7 2.6 2.7 -2.3

EBIT margin (%) 2.2 -10.8 -3.7 -56.7 -10.7 2.6 2.7 -2.3

Pretax margin (%) 3.6 -10.2 -4.2 -57.0 -9.6 2.0 1.7 -2.3

Net margin (%) 2.7 -7.8 -3.3 -45.0 -7.7 1.7 1.6 -1.8

Growth rates Y/Y Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019e

Sales growth (%) 0.1 25.0 9.9 -8.4 0.8 7.5 -2.4 7.2

EBITDA growth (%) -14.7 370.4 -55.4 -chg -58.4 924.9 115.4 +chg

EBIT growth (%) -64.0 +chg -chg -chg -chg +chg +chg +chg

Net profit growth (%) -73.6 +chg -chg -chg -chg +chg +chg +chg

EPS growth (%) -73.6 +chg -chg -chg -chg +chg +chg +chg

Adj earnings numbers Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019e

EBITDA Adj 19 2 11 33 8 23 23 17

EBITDA Adj margin (%) 17.2 1.8 9.2 31.2 7.1 17.5 20.3 15.3

EBITA Adj 2 -13 -4 -22 -12 3 3 -3

EBITA Adj margin (%) 2.2 -10.8 -3.7 -20.5 -10.7 2.6 2.7 -2.3

EBIT Adj 2 -13 -4 -22 -12 3 3 -3

EBIT Adj margin (%) 2.2 -10.8 -3.7 -20.5 -10.7 2.6 2.7 -2.3

Pretax profit Adj 4 -12 -5 -22 -11 3 2 -3

Net profit Adj 3 -9 -4 -9 -9 2 2 -2

Net profit to shareholders Adj 3 -9 -4 -9 -9 2 2 -2

Net Adj margin (%) 2.7 -7.8 -3.3 -8.8 -7.7 1.7 1.6 -1.8

Net Insight



Income Statement (SEKm) 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e

Sales 280 281 379 376 504 427 452 466 489 513

COGS -113 -124 -147 -150 -188 -179 -189 -188 -191 -195

Gross profit 167 156 232 226 316 248 262 279 298 318

Other operating items -123 -117 -124 -150 -203 -184 -236 -208 -213 -221

EBITDA 44 39 108 76 113 64 26 71 86 97

Depreciation and amortisation -42 -49 -54 -57 -63 -71 -101 -79 -81 -83

Of which leasing depreciation 0 0 0 0 0 0 0 -11 -11 -11

EBITA 3 -10 54 19 49 -8 -75 -8 5 14

EO items 0 0 0 0 0 0 -39 0 0 0

Impairment and PPA amortisation 0 0 0 0 0 0 0 0 0 0

EBIT 3 -10 54 19 49 -8 -75 -8 5 14

Net financial items 2 2 2 -13 -5 13 1 -1 0 0

Pretax profit 5 -8 55 7 44 5 -74 -9 5 14

Tax 7 -2 -14 -5 -9 -2 16 2 -1 -3

Net profit 12 -9 42 2 35 4 -58 -7 4 11

Minority interest 0 0 0 0 0 0 0 0 0 0

Net profit discontinued 0 0 0 0 0 0 0 0 0 0

Net profit to shareholders 12 -9 42 2 35 4 -58 -7 4 11

EPS 0.03 -0.02 0.11 0.00 0.09 0.01 -0.15 -0.02 0.01 0.03

EPS Adj 0.03 -0.02 0.11 0.00 0.09 0.01 -0.05 -0.02 0.01 0.03

Total extraordinary items after tax 0 0 0 0 0 0 -39 0 0 0

Leasing payments 0 0 0 0 0 0 0 -11 -11 -11

Tax rate (%) 133.2 21.2 24.7 71.2 20.0 33.3 21.0 24.9 22.0 22.0

Gross margin (%) 59.7 55.7 61.2 60.2 62.7 58.0 58.1 59.8 61.0 62.0

EBITDA margin (%) 15.9 13.9 28.5 20.2 22.4 14.9 5.8 15.1 17.5 18.9

EBITA margin (%) 1.0 -3.4 14.1 5.1 9.8 -1.8 -16.6 -1.8 1.0 2.7

EBIT margin (%) 1.0 -3.4 14.1 5.1 9.8 -1.8 -16.6 -1.8 1.0 2.7

Pretax margin (%) 1.8 -2.7 14.5 1.8 8.7 1.3 -16.3 -1.9 1.0 2.7

Net margin (%) 4.2 -3.3 10.9 0.5 7.0 0.8 -12.9 -1.4 0.8 2.1

Growth rates Y/Y 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e

Sales growth (%) -4.8 0.2 35.0 -0.9 34.0 -15.2 5.8 3.3 4.9 4.9

EBITDA growth (%) -62.4 -12.2 176.4 -29.6 48.3 -43.5 -58.7 168.6 21.5 13.0

EBIT growth (%) -93.6 -455.1 654.3 -64.2 157.3 -115.2 -901.3 89.1 161.8 177.8

Net profit growth (%) -76.2 -177.7 549.2 -95.4 1,752.6 -89.8 -1,716.7 88.6 159.3 177.8

EPS growth (%) -76.2 -177.7 549.2 -95.4 1,752.5 -89.8 -1,716.7 88.4 159.3 177.8

Profitability 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e

ROE (%) 4.7 -1.9 8.1 0.4 6.4 0.6 -11.2 -1.3 0.8 2.2

ROE Adj (%) 4.7 -1.9 8.1 0.4 6.4 0.6 -3.8 -1.3 0.8 2.2

ROCE (%) 1.1 -1.9 10.3 3.5 8.4 -1.3 -13.8 -1.5 0.9 2.4

ROCE Adj(%) 1.1 -1.9 10.3 3.5 8.4 -1.3 -6.7 -1.5 0.9 2.4

ROIC (%) 4.4 -4.2 16.5 1.9 10.8 -1.3 -15.4 -1.4 0.8 2.2

ROIC Adj (%) 4.4 -4.2 16.5 1.9 10.8 -1.3 -7.5 -1.4 0.8 2.2

Adj earnings numbers 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e

EBITDA Adj 44 39 108 76 113 64 65 71 86 97

EBITDA Adj margin (%) 15.9 13.9 28.5 20.2 22.4 14.9 14.4 15.1 17.5 18.9

EBITDA lease Adj 44 39 108 76 113 64 65 60 75 86

EBITDA lease Adj margin (%) 15.9 13.9 28.5 20.2 22.4 14.9 14.4 12.8 15.3 16.7

EBITA Adj 3 -10 54 19 49 -8 -37 -8 5 14

EBITA Adj margin (%) 1.0 -3.4 14.1 5.1 9.8 -1.8 -8.1 -1.8 1.0 2.7

EBIT Adj 3 -10 54 19 49 -8 -37 -8 5 14

EBIT Adj margin (%) 1.0 -3.4 14.1 5.1 9.8 -1.8 -8.1 -1.8 1.0 2.7

Pretax profit Adj 5 -8 55 7 44 5 -35 -9 5 14

Net profit Adj 12 -9 42 2 35 4 -20 -7 4 11

Net profit to shareholders Adj 12 -9 42 2 35 4 -20 -7 4 11

Net Adj margin (%) 4.2 -3.3 10.9 0.5 7.0 0.8 -4.3 -1.4 0.8 2.1

Net Insight



Cash Flow Statement (SEKm) 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e

EBITDA 44 39 108 76 113 64 26 71 86 97

Net financial items 2 2 2 -13 -5 13 1 -1 0 0

Paid tax 0 0 -0 -0 -1 -0 -0 2 -1 -3

Non-cash items 110 -4 2 1 19 -21 -7 0 0 0

Cash flow before change in WC 157 37 111 64 126 56 21 72 85 94

Change in WC -97 30 22 -3 -14 16 2 -9 -3 -3

Operating cash flow 60 66 133 61 112 71 23 63 82 91

CAPEX tangible fixed assets -2 -1 -1 -2 -2 -3 -32 -2 -5 -5

CAPEX intangible fixed assets -68 -48 -41 -55 -80 -95 -76 -80 -84 -89

Acquisitions and disposals 0 0 0 -98 0 0 0 0 0 0

Free cash flow -10 18 91 -94 30 -26 -85 -19 -7 -2

Dividend paid 0 0 0 0 0 0 0 0 0 0

Share issues and buybacks 0 0 0 -8 -10 -11 -1 0 0 0

Lease liability amortisation 0 0 0 0 0 0 0 -11 -11 -11

Other non cash items 183 5 -0 -21 -17 19 8 -53 -4 -11

Decrease in net IB debt 182 15 89 -123 4 -16 -81 -84 -22 -24

Balance Sheet (SEKm) 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e

Goodwill 4 4 4 59 64 58 63 63 63 63

Other intangible assets 186 185 174 234 255 271 248 270 294 321

Tangible fixed assets 5 4 3 4 3 5 34 26 22 17

Right-of-use asset 0 0 0 0 0 0 0 60 60 60

Total other fixed assets 39 37 24 24 16 19 35 35 35 35

Fixed assets 234 231 206 321 338 353 381 455 475 496

Inventories 50 43 44 56 47 44 46 44 46 49

Receivables 97 81 79 100 130 123 130 135 142 149

Other current assets 0 0 0 0 0 0 0 0 0 0

Cash and liquid assets 186 204 294 194 215 178 93 68 46 22

Total assets 567 559 624 670 730 697 650 703 709 716

Shareholders equity 503 494 537 532 565 546 494 494 494 494

Minority 0 0 0 0 0 0 0 0 0 0

Total equity 503 494 537 532 565 546 494 494 494 494

Long-term debt 4 3 3 23 43 20 18 18 18 18

Pension debt 0 0 0 0 0 0 0 0 0 0

Convertible debt 0 0 0 0 0 0 0 0 0 0

Leasing liability 0 0 0 0 0 0 0 59 59 59

Total other long-term liabilities 0 0 0 0 0 0 0 0 0 0

Short-term debt 0 3 4 6 4 6 4 4 4 4

Accounts payable 20 15 15 21 15 73 88 79 83 87

Other current liabilities 40 44 65 88 103 52 46 49 51 54

Total liabilities and equity 567 559 624 670 730 697 650 703 709 716

Net IB debt -221 -235 -311 -188 -184 -171 -106 -23 -1 24

Net IB debt excl. pension debt -221 -235 -311 -188 -184 -171 -106 -23 -1 24

Net IB debt excl. leasing -182 -198 -287 -164 -168 -152 -71 -46 -24 0

Capital invested 292 261 227 346 384 381 390 474 495 520

Working capital 97 67 46 48 62 47 45 54 56 59

EV breakdown 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e

Market cap. diluted (m) na na 1,209 3,236 3,470 1,844 1,043 1,018 1,018 1,018

Net IB debt Adj -221 -235 -311 -188 -184 -171 -106 -23 -1 24

Market value of minority 0 0 0 0 0 0 0 0 0 0

Reversal of shares and participations 0 0 0 0 0 0 0 0 0 0

Reversal of conv. debt assumed equity 0 0 0 0 0 0 0 0 0 0

EV na na 898 3,048 3,286 1,673 937 995 1,017 1,042

Capital efficiency 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e

Total assets turnover (%) 98.8 49.9 64.1 58.1 71.9 59.8 67.0 68.9 69.3 72.0

Working capital/sales (%) 17.3 29.3 14.9 12.5 11.0 12.7 10.1 10.5 11.2 11.2

Financial risk and debt service 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e

Net debt/equity -0.44 -0.48 -0.58 -0.35 -0.33 -0.31 -0.22 -0.05 -0.00 0.05

Net debt/market cap na na -0.27 -0.15 -0.07 -0.07 -0.07 -0.02 -0.00 0.02

Equity ratio (%) 88.8 88.4 86.1 79.3 77.4 78.3 76.0 70.2 69.6 69.0

Net IB debt adj./equity -0.44 -0.48 -0.58 -0.35 -0.33 -0.31 -0.22 -0.05 -0.00 0.05

Current ratio 5.54 5.29 5.00 3.02 3.22 2.61 1.95 1.75 1.59 1.42

EBITDA/net interest -18.75 -19.08 -71.97 6.03 20.87 -4.94 -18.79 106.53 high high

Net IB debt/EBITDA -4.97 -6.02 -2.88 -2.47 -1.63 -2.68 -4.04 -0.32 -0.01 0.24

Net IB debt/EBITDA lease Adj -4.10 -5.06 -2.66 -2.16 -1.49 -2.38 -1.09 -0.78 -0.33 0.00

Interest cover -1.15 4.72 -35.73 1.52 9.15 0.58 53.64 -12.32 nm nm

Net Insight



Valuation and Ratios (SEKm) 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e

Shares outstanding adj. 390 390 390 390 390 390 390 383 383 383

Fully diluted shares Adj 390 390 390 390 390 390 390 383 383 383

EPS 0.03 -0.02 0.11 0.00 0.09 0.01 -0.15 -0.02 0.01 0.03

Dividend per share Adj 0 0 0 0 0 0 0 0 0 0

EPS Adj 0.03 -0.02 0.11 0.00 0.09 0.01 -0.05 -0.02 0.01 0.03

BVPS 1.29 1.27 1.38 1.36 1.45 1.40 1.27 1.29 1.29 1.29

BVPS Adj 0.81 0.78 0.92 0.68 0.70 0.61 0.50 0.46 0.39 0.32

Net IB debt / share -0.5 -0.5 -0.7 -0.4 -0.4 -0.4 -0.2 0.0 0.1 0.2

Share price na na 3.10 8.30 8.90 4.73 2.68 2.66 2.66 2.66

Market cap. (m) na na 1,209 3,236 3,470 1,844 1,043 1,018 1,018 1,018

Valuation 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e

P/E na na 29.1 1,703.3 98.6 512.3 -17.9 -153.4 258.7 93.1

EV/sales na na 2.37 8.11 6.53 3.92 2.07 2.13 2.08 2.03

EV/EBITDA na na 8.3 40.1 29.2 26.3 35.6 14.1 11.9 10.7

EV/EBITA na na 16.8 158.8 66.5 -223.1 -12.5 -121.8 201.6 74.3

EV/EBIT na na 16.8 158.8 66.5 -223.1 -12.5 -121.8 201.6 74.3

Dividend yield (%) na na 0 0 0 0 0 0 0 0

FCF yield (%) na na 7.5 -2.9 0.9 -1.4 -8.1 -1.9 -0.7 -0.2

Lease adj. FCF yield (%) na na 7.5 -2.9 0.9 -1.4 -8.1 -3.0 -1.8 -1.3

P/BVPS na na 2.25 6.09 6.14 3.38 2.11 2.06 2.06 2.06

P/BVPS Adj na na 3.36 12.28 12.74 7.81 5.31 5.84 6.77 8.22

P/E Adj na na 29.1 1,703.3 98.6 512.3 -53.2 -153.4 258.7 93.1

EV/EBITDA Adj na na 8.3 40.1 29.2 26.3 14.4 14.1 11.9 10.7

EV/EBITA Adj na na 16.8 158.8 66.5 -223.1 -25.7 -121.8 201.6 74.3

EV/EBIT Adj na na 16.8 158.8 66.5 -223.1 -25.7 -121.8 201.6 74.3

EV/cap. employed na na 1.6 5.4 5.4 2.9 1.8 1.7 1.8 1.8

Investment ratios 2012 2013 2014 2015 2016 2017 2018 2019e 2020e 2021e

Capex/sales 25.0 17.3 11.1 15.2 16.3 22.9 23.8 17.7 18.2 18.2

Capex/depreciation 167.8 99.8 77.7 100.9 129.4 137.0 105.9 121.7 127.6 130.2

Capex tangibles/tangible fixed assets 41.1 22.5 36.4 48.7 68.3 62.7 94.3 7.6 23.2 30.2

Capex intangibles/definite intangibles 37.2 25.9 23.7 26.6 34.9 37.6 32.4 31.4 30.0 28.9

Depreciation on intangibles/definite intangibles22.1 25.6 30.6 26.4 26.4 24.1 25.0 22.8 21.4 20.2

Depreciation on tangibles/tangibles 25.8 34.7 43.3 44.8 90.4 226.5 128.1 35.6 45.2 59.9

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