NETGEM (EPA:ALNTG) - NETGEM // Q3 2017 activity and perspective // +24% growth of active subscribers base

Transparency directive : regulatory news

13/10/2017 07:00

Q3 2017 activity and perspective
+24% growth of active subscribers base

Paris-La Défense, October 13, 2017

Revenue, gross margin, activity and outlook

Consolidated      Q3 2017   Q3 2016     Change   9 months  9 months    Change
                                                    2017     2016
Revenue
(EUR million)        12.4      19.7   -37%  -7.3    45.3     58.8   -23%  -13.5
Gross profit
(EUR million)         5.1       6.9   -26%  -1.8    17.8     21.5   -17%   -3.7
Active subscribers
base ('000)         1 930     1 560   +24%  +370

For the quarter ended September 30, 2017, Netgem announces a consolidated
revenue of EUR12.4 million and a gross profit of EUR5.1 million, bringing the
consolidated revenue and gross profit for the first 9 months of 2017 to
respectively EUR45.3 million and EUR17.8 million (unaudited).
Revenue and Gross profit in Europe and Asia were mostly comparable to 2016,
with most of the decline attributable to the consequence of the licensing
agreement with ZTE and Totalplay in Mexico, which transformed hardware sales
into software licenses.

The active subscribers base went up 24% compared to September 30, 2016 to reach
1.9 million daily users at the end of September 2017. This performance
indicator, released today, is part of the analytical data gathered in real-time
by our Diamond platform which connects all deployed TV devices and content
applications. It is the key indicator of the development of our customer's TV
offerings, and a forward indicator of future monetisation opportunities through
new services.

Vitis, a 58% subsidiary of Netgem and B2C service provider of entertainment
services in  France, continues to grow its subscribers base as its latest
fiber-to-the-home offer "La Fibre Videofutur" is now accessible to more than
400,000 homes in France rural areas. Homes passed are expected to double in
2018. Vitis is not consolidated in the the figures reported for 2017. Had Vitis
not been consolidated in 2016, the comparable turnover and gross profit for the
first 9 months of 2016 would have been respectively EUR 55.3 million and EUR
20.5 million(1).

For Full Year 2017, activity in Europe and Asia is expected to grow slightly as
compared to 2016 and the Group active subscribers base to pass the 2 million
threshold. The software licensing transition in Mexico will not impact the full
year 2017 operating income, expected to be in line with 2016.

As of September 30, 2017, the Group's cash position amounted to EUR35.9
million, as the transition to software licensing in Mexico continues to improve
working capital requirements. Netgem has also secured a EUR15 million (undrawn)
short term asset-based credit line with one of its banks.

Significant transactions and events

Over the summer :

- Finland's leading operator and long term customer Elisa chose Netgem's
  Diamond virtual TV platform to launch Binge, an OTT service, to extend its
  reach in neighbouring Estonia;

- Hifi Audio brands Tangent of Denmark and Elipson of France have partnered
  with Netgem to take the SoundBox solutions to market.

Netgem also announces that it now owns 100% of the share capital of Voxtok.
Since Netgem earlier minority investment, Voxtok's audio software platform has
been fully integrated with Diamond, leading to the successful presentation at
IBC of the SoundBox solution.

After synergies, VoxTok software licensing business will contribute positively
to 2018 results, and accelerate the Diamond licensing strategy. Joel Reboul,
CEO and founder of Voxtok, is in charge of developing the Netgem Licensing
business.

The EUR25 million share buyback offer initiated by the Company is in progress
and the tender period will end on October 27, 2017. The opportunity in the TV
market is moving from IPTV to OTT, and Netgem is successfully migrating its
offering from hardware to TV-as-a-Service. The new balance sheet of the Company
is geared to offer investors a better return on equity on the new business
opportunity. Over the last 8 years, and including this operation, the Company
will have returned more than EUR100 million of cash to its shareholders.

(1) Such pro forma financial information addresses a hypothetical situation
and, therefore, does not represent the company's actual financial position or
results.

The 2018 indicative calendar for financial communication will be released in
November.

About Netgem

Netgem is the publisher of Diamond, a software platform for next generation
entertainment and connected home services, and a solutions providers to the
telecoms industry. Diamond is available under license for service operators,
content providers and device manufacturers looking to benefit from the OTT
digital transformation of the TV, video and audio industries, or as part of
end-to-end solutions to the telecoms industry.

Netgem extensive experience and technological assets in software, user
experience and security, combined with its global partnerships in content and
device manufacturing make it a unique one-stop outsourcing partner for telecom
service providers seeking to increase revenue and build loyalty on an existing
consumer base. Through its customers, Netgem solutions address several million
households in more than 20 countries.

Netgem is long term driven by innovation, simplicity, privacy, affordability
and operational excellence.

Netgem is listed on Euronext Paris Compartment C
(ISIN: FR0004154060, Reuters: ETGM.PA, Bloomberg: NTG:FP)
www.netgem.com

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NETGEM (EPA:ALNTG) - NETGEM // Q3 2017 activity and perspective // +24% growth of active subscribers base

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