Ekinops continued to see a tale of two perspectives in the fourth quarter as its gains in optical and software came as economic headwinds affected its access equipment segment.
The company reported that fourth-quarter revenue was $32.7 million, down from $34.3 in the same period a year ago, representing a 4% quarterly decline. On a sequential basis, fourth-quarter sales were up 9% compared with Q3 2023, which Ekinops said was the year's lowest point.
At the end of 2023, Ekinops continued to suffer from what it said was a “deteriorated market environment, marked by the macroeconomic slowdown and a drop in demand, penalizing sales of Access equipment.”
However, Ekinops saw a revenue uptick in the optical business due to various commercial successes and new customer wins, posting strong growth (27% over the year) “underpinned by operators' bandwidth requirements.”
Access solution challenges
Access solutions sales fell by 15% over the year, including 25% in the year's second half alone.
The company said the business was penalized by three main factors: a slowdown in demand and increased caution among clients in implementing their investments, a high level of equipment inventories among major operators and more complex and costly access to financing sources for operators.
“Changes in the economic climate during 2023, affecting company investment policies and health, penalized our Access business in the second half of the year,” said Didier Brédy, Chairman and CEO of Ekinops.
Optical and software stood strong
Amidst the challenges Ekinops faced in its Access segment, the optical transport segment again showed strong results.
Driven by the success of WDM solutions and new customer wins, mainly in Eastern Europe, Optical Transport solutions rose 27% in the fiscal year 2023.
The company noted that in Optical Transport, which exceeded its annual sales target, 2023 was marked by several commercial successes in the US and Europe. This included a multi-year contract with German operator Deutsche Glasfaser to modernize and unify their optical transport network infrastructure using the Ekinops360 platform at the end of the year.
“We significantly outperformed the Optical Transport market in Europe and the United States,” Brédy said. “After the low point of Q3, we aim to generate a higher level of revenue in H1 2024 than that of H2 2023.”
He added that fiscal year “2024 revenue should be driven by a rebound in Access equipment sales as the economy recovers, and by the launch of a major new optical transport product over the summer.”
EMEA, North America rises
From a regional perspective, international sales increased by 8%, with double-digit growth in EMEA and North America. The share of business generated internationally totaled 68% in FY 2023 (vs. 64% in 2022).
In North America, full-year revenue amounted to 31.7m€, up +6% Y-o-Y. The region represented 25% of the Group's revenue in FY 2023 (vs. 23% a year earlier and 18% in 2021).
The EMEA region recorded revenue of 53.4€m in 2023, a robust increase of +23% versus the previous year. This sharp growth was primarily driven by the surge in sales of Optical Transport solutions in the region, especially in Germany and Eastern Europe. Ekinops generated 41% of its revenue in EMEA in 2023 (vs. 34% in 2022).
Asia-Pacific, which now accounts for only 2% of Group revenue generated with just a few customers, was down 63% over the year.
In its domestic market, sales were down 11% compared with 2022. Sales of Access equipment, the Group's core business in France, fell by 18% over the year, mainly due to the economic slowdown and high inventory levels at its largest service provider customers. Ekinops generated 32% of its sales volume in France in 2023 (vs. 36% in 2022).
Ekinops noted that “momentum was still strong in Optical Transport with a leap of 57% in sales over the year.”
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Sean Buckley
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