KERLINK (EPA:ALKLK) - Q3 2018 revenue

Transparency directive : regulatory news

30/10/2018 18:44

Q3 2018 revenue
Q3 revenue declines, in line with forecasts
Improvement expected in Q4

PRESS RELEASE

Thorigné-Fouillard, France - 30 October 2018 - 6:00 p.m.- Kerlink (ALKLK -
FR0013156007), a specialist and global leader in solutions dedicated to the
Internet of Things (IoT), published its third-quarter 2018 revenue today.

As previously announced, revenues are still bearing the brunt of the lull in
the Group's robust momentum (CAGR of 62% from 2013 to 2017). As previously
stated, this dip in momentum stems primarily from time lags on contracts with
Tier 1 public operators.

In light of its confidence with regard to medium-term trends across the IoT
market as a whole, the Group is nevertheless maintaining its target for
revenues to reach EUR70m by 2020.

Revenue by business         At 30        At 30
In thousands euros     Sept. 2018   Sept. 2017    Change   Q3 2018   Q3 2017

Public operators            4,218        8,222    -48.7%       831     2,902

Private operators           7,090        6,577     +7.8%     2,150     1,865

Reference Design              243          101     x 2.4        50        45

Total                      11,551       14,900    -22.5%     3,031     4,812

Consolidated revenue under IFRS - unaudited figures

Placed on hold by public operators, as growth continues in private operator
segment Kerlink chalked up revenue of EUR4.2m in the public operators' segment,
versus EUR8.2m at end September 2017.

In addition to the persistent wait-and-see stance being taken by certain public
network operators, the decline comes against a demanding comparison base.
Indeed, Kerlink recorded sharp growth in revenues in Q3 2017, when it conducted
a major contract for a Tier 1 French operator and rolled out the Tata
Communications contract in India.

Meanwhile, the Group consolidated its positions in the private operators'
segment, with revenue of EUR7.1m, up 7.8% year-on-year (note that Kerlink
posted growth of +5% at end June 2018).

Despite this anticipated decline in Q3 2018, the Group is standing by its 2018
target, with second-half revenue expected to increase relative to the
first-half period.

As announced, and despite the temporary dip in revenue, the rising number of
projects now at the discussion stage, some of which being very large in scale,
cements the Group's confidence in its ability to restore momentum and achieve
its target by 2020.

Growth in value-added application services for connected objects

Revenue by Business Unit
In thousands euros                At 30 Sept. 2018   At 30 Sept.2017   Change

Kerlink Infrastructure Solutions        8,170            12,144        -32.7%
Kerlink Advanced Services               3,381             2,757         22.6%
Total                                  11,551            14,900        -22.5%

Consolidated revenue under IFRS - unaudited figures

Kerlink Advanced Services Business Unit, which markets value-added application
services for connected objects, reported growth in sales during the period. As
at 30 September 2018, revenue from the BU was up 22.6% at EUR3.4m and accounted
for nearly 30% of total Group sales.

Revenue trends at Kerlink Infrastructure Solutions Business Unit, which markets
turnkey solutions for IoT networks, reflect the slowdown in deployments of
infrastructure for public operators.

Services account for rising share of product mix

Sales of the Group's services continue to gain traction, as anticipated and in
line with its business model. At end September 2018, revenue from services
totalled EUR2.2m, up 31% on the year-earlier period. These now account for some
19.1% of total Group revenue, compared with 11.3% at end September 2017.
Sales of Kerlink's Reference Design solution came to EUR0.2m at end September
2018.

Kerlink reiterated its expectation for gross margin to top 40% over the full
year, thanks notably to the ramp in services revenues.

International activity: growth rate maintained excluding comparison base effect
on Asia region

Revenue by geographic area  At 30     At 30
In thousands euros           Sept.     Sept.
                             2018      2017   Change  Q3 2018  Q3 2017   Change

NCSA (Americas)               299       311    -3.9%      116     133    -12.8%
APAC (Asia-Pacific)         2,429     4,613   -47.3%      840   2,234    -62.4%
EMEA, excl. France          1,992     1,927     3.3%      548     519      5.6%
FRANCE                      6 831     8,049   -15,1%    1,527   1,926    -20.7%
Total                      11,551    14,900   -22.5%    3,031   4,812    -37.0%

Consolidated revenue under IFRS - unaudited figures

Revenue from international activities came to EUR4.7m, accounting for 41% of
total revenue, compared with 46% for the year-earlier period.

The decline in revenues in the Asia-Pacific zone stemmed from an unfavourable
comparison base effect, the Tata Communications contract having been rolled out
on a massive scale during the same period of 2017.
With respect to this high-potential region, the Group reiterated it had
recently opened a Japanese subsidiary to support the roll-out of LoRa(r)
networks, step up the pace of Group growth in Japan, and underpin its
international ambitions for Asia.

Erratum regarding geographic breakdown of H1 2018 revenue

The Group wishes to inform the market of an error in the geographic breakdown
of its H1 2018 revenue. The error appeared in a press release issued on 31 July
2018 and was unfortunately repeated in that of 25 July 2018 and in a financial
report for the period, which was made available to the public on 3 October
2018. The error concerns the breakdown of revenue generated in H1 2018 by
Kerlink Infrastructure Solutions Business Unit: some of the revenue generated
in France in Q2 (EUR1.8m) was mistakenly attributed to the EMEA zone excluding
France. This error has no impact on the total revenue or on reported first-half
earnings, nor does it affect Q1 2018 revenue and the related geographic
breakdown issued on 24 April 2018.

After correction, the updated breakdown of revenue by geographic regions and
variations relative to H1 2017 are as follows:

Revenue by geographic area
In thousands of euros     Initially Reported              Corrected
                      H1 2018   H1 2017  Change    H1 2018   H12017  Change

NCSA (Americas)           183       178      3%        183      178      3%
APAC (Asia-Pacific)     1,589     2,379    -33%      1,589    2,379    -33%
EMEA, excl. France      3,264     1,408   +132%      1,444    1,408      3%
FRANCE                  3,484     6,123    -43%      5,304    6,123    -13%
Total                   8,520    10,088    -16%      8,520   10,088    -16%

Consolidated revenue under IFRS - unaudited figures

About Kerlink Group

Kerlink Group is a global leading provider of end-to-end network solutions for
the Internet of Things (IoT), serving telecom operators, businesses and public
authorities worldwide. Its growing suite of turnkey IoT services includes
network planning, design and operational management that maximizes performance
of its market-leading, carrier-grade infrastructure offering. The Group, widely
recognized for its IoT expertise, also continually introduces innovative
value-added services, such as network- based geolocation, remote end-device
management and low-power IoT reference design, which allows its customers to
quickly bring to market IoT-ready devices and to imagine innovative business
models to monetize their deployments.

In just over 10 years, more than 100,000 Kerlink installations have been
deployed in more than 69 countries. In 2017 Kerlink supplied more than 330
customers, including major telecom operators such as Tata Communications, and
service providers such as GrDF and Suez. The company's solutions are enabling
IoT networks worldwide with major deployments in Europe, South Asia, South
America and Oceania. Kerlink, a co-founder and board member of the LoRa
Alliance(TM), has invested more than EUR10 million in research in the past
three years. In 2017, Kerlink Group generated revenues of nearly EUR25 million,
more than 50 percent internationally. Since 2013, it has posted average annual
growth of more than 62 percent. It has been listed on Euronext Growth Paris
since May 2016 and was added to the EnterNext PEA-PME 150, an index of 150
fast-growing French SMEs, in 2017. It joined the Tech 40 index in April 2018,
which recognizes the top-performing tech SMEs on Euronext's markets in
Amsterdam, Brussels, Lisbon and Paris.

For more information, go to www.kerlink.fr and follow us on Twitter
@kerlink_news

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2018 full-year revenue: 05 February 2019, after trading
www.kerlink.fr

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