Ethernity revenues improve, losses widen slightly

The AIM-traded firm said its gross margin percentage declined to 63.42% from 88.2%, however, due to increased revenues from product sales with lower margins as opposed to the near-100% margins from licensing and royalties revenues.

Research and development, general and administrative, and marketing expenses rose 6.8% year-on-year for the six months ended 30 June, which the company put down to a return to “normal operations” from Covid-19 cutbacks.

Its EBITDA loss remained “consistent” with the comparative period, widening by 2.1% to $2.47m, while its operating loss was increased 1%.

Cash resources were “further bolstered” in the half-year following an additional investment of £1.8m ($2.5m) from the share subscription agreement and £1.0m ($1.46m), including support from directors, from the exercise of the 30p warrants originally issued as part of the placing in July last year.

“The first half results were in-line with our expectations, with a positive mix of product, royalties and licensing revenues,” said chief executive officer David Levi.

“It appears that most of our engaged customers are now returning to more normalised levels of business operations and are finalising their development of new products and architecture.

“This is expected to lead to demand for our programmable products, and the deal flow forecasts for engagements this year remain intact.”

Levi said the company was “hopeful” that those would continue to be concluded during the second half.

“We are pleased to be continuing the evolution of the company, with our strategy to focus on product and system revenue business versus short term licensing deals that are not in line with our system solutions.

“We do, however, foresee that delays in roll-out and deployment in India due to the Covid-19 situation along with the component shortage situation in general required for our UEPs and ACE-NIC product will defer planned third and fourth quarter revenues into the latter portions of the first and second quarters of 2022.”

“The product contracts already signed, the product orders received, and the good progress with our Indian original equipment manufacturer (OEM), will all fuel our revenue growth to position us not just as a technology company, but as a validated system product supplier with differentiated offerings, resulting in growing revenue streams that will allow us to be considered for larger scale deployments,” Levi added.

At 1136 BST, shares in Ethernity Networks were down 5.27% at 40.26p.