Ekinops FY 2024 results: EBITDA margin of 15.3% and strong generation of operating cash flow
PR Newswire
PARIS, March 5, 2025
"Bridge" strategic plan: accelerating Ekinops' leadership in the fastest-growing market segments
PARIS, March 5, 2025 /PRNewswire/ -- EKINOPS (Euronext Paris: EKI) (FR0011466069 - EKI), a leading supplier of telecommunications solutions for telecom operators and enterprises, reports its FY 2024 financial statements (for the period ended 31 December 2024), as approved by the Board of Directors on March 4, 2025. The statutory auditors have finished auditing the consolidated financial statements and the certification report will be issued shortly.
Change
(2024
mEUR -- IFRS 2023 2024 vs. 2023)
------------------------------------------ -------- -------- --------------
Revenue 129.1 117.7 -9 %
------------------------------------------ -------- -------- --------------
Gross margin 67.3 64.5 -4 %
As a % 52.1 % 54.8 %
------------------------------------------ -------- -------- --------------
Operating expenses 62.3 58.1 -7 %
EBITDA(1) 18.6 18.0 -3 %
As a % 14.4 % 15.3 %
------------------------------------------ -------- -------- --------------
Current operating income $(EBIT)$ 5.1 6.5 +28 %
Other operating income and expenses (1.4) (11.4)
Operating income 3.6 (5.0)
------------------------------------------ -------- -------- --------------
Consolidated net income (expense) 3.6 (7.0)
------------------------------------------ -------- -------- --------------
(1) EBITDA (Earnings before interest, taxes, depreciation, and amortization)
corresponds to current operating income restated for (i) amortization,
depreciation and provisions and (ii) income and expenses linked to share-based
payments (see appendices).
FY 2024 revenue: 117.7 mEUR
In FY 2024, Ekinops' consolidated revenue stood at 117.7 mEUR, down -9% from the previous year (identical at constant exchange rates). FY 2024 was characterized by dynamic growth of +11% in Access solutions, driven by the significant rebound in business in France and a number of European countries with operators gradually rebuilding their equipment inventories.
Penalized by significant base effect and operators' reluctance to commit to their investment plans in a deteriorated market environment, the Optical Transport business line posted a decline of -30%Y-o-Y. However, it is worth noting that the end of the year was marked by a slightly more buoyant activity, with a +20% increase in H2 versus H1 2024.
Software & Services accounted for 18% of Group revenue, compared with 17% a year earlier, with an increasing share generated by SD-WAN solutions.
Geographically, sales in France were up +18% while international business declined by -21%. International sales accounted for 59% of total business in 2024 (vs. 68% in 2023), of which 20% in North America, 37% in EMEA (Europe, Middle East and Africa) and 2% in Asia-Pacific.
FY 2024 gross margin of 54.8%
For FY 2024, gross margin stood at 64.5 mEUR, versus 67.3 mEUR a year earlier.
Gross margin thus amounted to 54.8% in 2024, compared to 52.1% in 2023, reflecting the favorable change in the business mix (growth in Access and increasing share of Software & Services in Group's revenue), and a tight control over manufacturing costs for Ekinops' solutions.
FY 2024 EBITDA margin of 15.3%
EBITDA([1]) stood at 18.0 mEUR in 2024, versus 18.6 mEUR a year earlier.
Operating expenses declined by -7% over the year, thanks to carefully managed costs, a decrease in non-cash expenses relating to the extinction of intangible assets, as well as the restructuring of R&D teams (-10% in R&D costs, -6% in general costs and -3% in marketing and sales costs). At year-end, Ekinops had 520 employees, versus 551 a year earlier. As a result, the EBITDA margin increased to 15.3% in 2024, compared to 14.4% in the previous year.
EBIT margin at 5.5%
After accounting for net depreciation, amortization and provisions (10.8 mEUR, including 2.0 mEUR of amortization relating to post purchase price allocation technologies) and non-cash expenses relating to share-based payments (0.7 mEUR), current operating income came to 6.5 mEUR in FY 2024, representing a strong increase of +28% Y-o-Y.
Current operating margin therefore stood at 5.5% of revenue at end-2024, an increase versus the previous year (3.9%).
Other operating expenses totaled 11.4 mEUR, including 10.4 mEUR linked to the closure of Ekinops Brasil([2]) , versus 1.4 mEUR a year earlier. At the end of FY 2024, operating income came to -5.0 mEUR, versus 3.6 mEUR a year earlier.
After taking into account financial expenses of -1.3 mEUR, mainly comprising interest expense on financial borrowings and foreign exchange results on currency hedging, and a tax expense of -0.7 mEUR, net loss amounted to -7.0 mEUR, vs. net income of 3.6 mEUR in 2023.
Strong generation of operating cash flow at +20.8 mEUR and doubling of free cash flow in 2024
Despite the economic challenges impacting its business, Ekinops once again showed its operational efficiency in 2024, through its growing ability to generate cash in its business activity.
Operating cash flow amounted to 20.8 mEUR in 2024, vs. 13.5 mEUR the previous financial year. Change in working capital requirements was positive at +7.6 mEUR (vs. -3.3 mEUR in 2023), driven by the effective management of account receivables and inventories.
Cash flow from investments (fixed assets and R&D capitalization) amounted to a 10.0 mEUR (vs. 8.2 mEUR a year earlier), with 2.8 mEUR in equipment investments, 7.0 mEUR for capitalized R&D, and the acquisition of the 5View software suite. As a result, free cash flow([3]) doubled in 2024 to 10.9 mEUR vs. 5.5 mEUR in 2023.
Cash flow from financing activities (-11.6 mEUR) reflected the Group's significant deleveraging in 2024, with -6.4 mEUR in net repayments of bank loans (including the French research tax credit $(CIR)$ pre-financing). As of 31 December 2024, change in cash position was -0.8 mEUR (vs. +7.8 mEUR in 2023).
Improved net cash position of 29.5 mEUR at end-2024, with accelerated financial deleveraging
ASSETS -- EURm 12/31 12/31 LIABILITIES -- EURm 12/31 12/31
IFRS 2023 2024 IFRS 2023 2024
------------------------ ----- ----- --------------------- ----- -----
Non-current assets 78.8 82.0 Shareholders' equity 119.4 112.1
--------------------- ----- -----
o/w goodwill 28.5 28.4 Financial borrowings 21.4 16.9
o/w intangible assets 17.1 13.4 o/w bank loans 18.6 15.0
o/w right-of-use assets 6.7 11.6 o/w factoring 2.8 1.9
------------------------ ----- ----- --------------------- ----- -----
French research tax
Current assets 66.6 57.0 credit pre-financing 5.1 2.3
--------------------- ----- -----
o/w inventories 25.9 22.8 Trade payables 18.2 17.8
--------------------- ----- -----
o/w trade receivables 30.0 23.7 Lease liabilities 7.0 12.2
------------------------ ----- ----- --------------------- ----- -----
Cash 47.2 46.4 Other liabilities 21.5 24.1
------------------------ ----- ----- --------------------- ----- -----
TOTAL 192.6 185.4 TOTAL 192.6 185.4
------------------------ ----- ----- --------------------- ----- -----
In 2024, Ekinops signed the lease for its new headquarters in Lannion (Brittany) as well as renewed its Belgian subsidiary's commercial lease. This increased the Group's right-of-use assets and lease liabilities of +4.9 mEUR and +5.2 mEUR respectively. Cash and cash equivalents amounted to 46.4 mEUR at end-December 2024 (vs. 47.2 mEUR one year earlier), with a reduction in financial borrowings([4]) to 16.9 mEUR (vs. 21.4 mEUR the year prior), due to the Group's financial deleveraging. The Group's net cash([5]) position improved by the end of 2024, at 29.5 mEUR (vs. 25.8 mEUR in 2023), for shareholders' equity of 112.1 mEUR.
Strengthened sustainability initiatives in 2024 with the implementation of a carbon trajectory by 2030
In 2024, Ekinops stepped up its commitment to sustainability, with work on Corporate Social Responsibility $(CSR.AU)$ heavily linked to regulatory developments and the introduction of the CSRD (Corporate Sustainability Reporting Directive).
The Group conducted a double materiality assessment (financial and impact) in an effort to comply with the new CSRD requirements. Through this analysis, the Group identified a list of material IROs (Impacts, Risks and Opportunities), factoring in the increased expectations of internal and external stakeholders: energy consumption of Ekinops' products, greenhouse gas $(GHG)$ emissions, quality of life at work and diversity within the workforce.
Regarding GHG emissions, the 2024 assessment reported a reduction of nearly -15%, following the -44% decrease observed the previous year. Ekinops expects its sites within the European Union to transition to 100% renewable electricity by 2026, while targeting a -33% reduction in its CO(2) eq (equivalent) emissions by 2030 (vs. the 2023 baseline year), and a -53% reduction by 2050, aligning with the Paris Agreement targets and respecting the methodology defined by the SBTi (Science Based Targets Initiative).
Moreover, Ekinops updated its CSR assessment process for its 60 main suppliers who account for more than 95% of its purchases, evaluating their activities based on a range of criteria (Environment, Social and Human Rights, Business Ethics, Responsible Purchasing) and overseeing their alignment with a minimum level of CSR performance.
Lastly, the Group inaugurated in 2024 its new headquarters in Lannion (Brittany), which is not only a modern flagship for innovation but also designed to be environmentally friendly, with more energy-efficient buildings.
Bridge: a strategic plan to accelerate Ekinops' leader position in the fastest-growing market segments
Ekinops unveils today its new strategic plan -- Bridge -- which was kick-started at the end of 2024:
-- The purpose of Bridge is to consolidate Ekinops' leadership in
fast-growing market segments for its two product lines, Access and
Optical Transport.
-- The goal of Bridge is also to position Ekinops as a supplier of
integrated telecommunications solutions, including equipment, software
and related services which qualifies the Group for the most strategic
projects led by telecom operators and enterprises.
-- Thanks to Bridge, Ekinops intends to be recognized as one of the players
offering end-to-end solutions to the global telecoms market.
Through Bridge, Ekinops aims to quickly return to double-digit growth, generating more than 30% of its annual revenue from Software & Services by 2028, including over 50% as ARR (Annual Recurring Revenue).
This brisker pace of growth over the next years will combine organic development as well as acquisitions, boosted by Ekinops' robust financial position. The Group's innovative R&D capabilities, its firm foothold in its key markets and the trust established among its customers are cornerstones of this ambition.
In profitability terms, the Group seeks to achieve an EBITDA margin close to 20%.
Bridge also includes a CSR component, enabling Ekinops to forge a long-term commitment towards its social and environmental impacts.
For more details on the new Bridge strategic plan, refer to the dedicated press release on Ekinops' website.
Outlook
With Bridge, Ekinops prioritizes growth while betting on a market recovery, anticipated by all in 2025, and by focusing on the products the market will need in 2026 and 2027. As such, Ekinops is targeting a gradual return to revenue growth, particularly in North America, in a still complex and demanding market context.
By developing new high value-added solutions, Ekinops will operate at the heart of booming market segments. The combined evolutions in Access and Optical Transport portfolios will therefore enable the Group to considerably increase its addressable market size by 2026.
FY 2025 will be the first of implementation for the Bridge strategic plan. Ekinops bolstered its leadership team and announces the appointment of Harald Bock as Chief Product Officer as of February 1(st) , 2025. Harald Bock draws on his extensive experience driving innovation, product development and strategy in the telecommunications industry with companies such as Infinera, Coriant, Nokia Siemens Networks, and Ericsson. Under his leadership, the new DCI and cybersecurity products will be released end-2025, early-2026, and will contribute to boosting sales from 2026 onwards.
The clients for the new products developed through Bridge, and the decision-makers within these clients, will be the same as those currently purchasing Ekinops' existing products and services. Significant commercial synergies will emerge from these new products for operators, through upselling to their customers. Operators will thus be able to position themselves in the adjacent, fast-growing segments of DCI and cybersecurity.
As part of Bridge, the R&D department resources have been aligned to match the new strategic initiatives. R&D investments for the development of new DCI and SASE solutions, as outlined in the Bridge framework, have been launched without significantly increasing overall R&D expenditure.
Financial calendar is available on Ekinops website.
Appendices -- Alternative performance indicators- EBITDA
The Group has opted to communicate this metric in view of (i) its significance for the analysis of financial performance, and (ii) the vesting terms applicable to the Group's employee bonus share and stock option plans. As such, the Group defines EBITDA as current operating income restated for (i) amortization, depreciation, provisions and write-offs, and (ii) expenses and income related to share-based payments.
The Group defines adjusted EBIT as current operating income restated for amortization of intangible assets identified post purchase price allocation, i.e. developed technologies and customer relation.
EURm - IFRS 2023 2024 -------------------------------------------------------------- ---- ---- Current operating income 5.1 6.5 -------------------------------------------------------------- ---- ---- Depreciation, amortization and provisions 6.8 8.8 Amortization of developed technologies and customer relations 5.3 2.0 Share-based payments 1.4 0.7 -------------------------------------------------------------- ---- ---- EBITDA 18.6 18.0 -------------------------------------------------------------- ---- ----
EKINOPS Contact
Didier Brédy, Chairman and CEO
contact@ekinops.com
Investors
Mathieu Omnes, Investor relation
Tel.: +33 (0)1 53 67 36 92
momnes@actus.fr
Press
Amaury Dugast, Press relation
Tel.: +33 (0)1 53 67 36 74
adugast@actus.fr
(1) EBITDA (Earnings before interest, taxes, depreciation and amortization) corresponds to current operating income restated for (i) amortization, depreciation and provisions, and (ii) income and expenses relating to share-based payments.
(2) See press release of November 12, 2024 on the closure of Ekinops Brasil
(3) Free cash flow = cash flow from operating activities -- acquisitions of operating cash flow tangible and intangible assets (CAPEX)
(4) Excluding bank debt relating to French research tax credit (CIR) pre-financing and IFRS 16 lease liabilities
(5) Net cash = cash and cash equivalents -- borrowings (excluding bank debt relating to French research tax credit (CIR) pre-financing and IFRS 16 lease liabilities)
Photo - https://mma.prnewswire.com/media/2634759/Ekinops_2024.jpg
Logo - https://mma.prnewswire.com/media/814911/5200893/Ekinops_Logo.jpg
View original content to download multimedia:https://www.prnewswire.com/news-releases/ekinops-fy-2024-results-ebitda-margin-of-15-3-and-strong-generation-of-operating-cash-flow-302393636.html
SOURCE Ekinops
(END) Dow Jones Newswires
March 05, 2025 14:29 ET (19:29 GMT)
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.