Ekinops’ Q1 revenue dips to $30.3M amidst challenging economic environment
Ekinops continued to weather challenging economic conditions in the first quarter of 2024 as revenue declined to $30.3 million.
The company saw some gains in the Access segment while readying itself to take advantage of emerging 800G optical and SD-WAN networking trends.
"This quarterly revenue level is in line with the third quarter and fourth quarter 2023 trend in an economic environment that remains slow.”
Mixed segment results
Ekinops continued to see mixed financial results across its segments. One bright spot for Ekinops was the Access segment.
After three consecutive quarters of decline, sales of Access Solutions grew in Q1 2024, with activity up 3% over the same period a year ago. Sequentially, Access sales in the first quarter were up 33% versus the same period a year ago.
Ekinops attributed the uptick in the Access segment to a rebound in sales in France (19% in the first quarter of 2024) after a decline of 18% in the domestic market in 2023.
However, the company pointed out, "Access equipment inventory levels with major operator customers are gradually easing but have not yet returned to usual levels.”
Sales were down 13% in EMEA (excluding France), the other main region for the Access business.
Following what it says was a record year in 2023 (27% growth over the entire year), sales of Optical Transport solutions started 2024 in decline (27% over the quarter).
Ekinops said that “this downturn is due to telecom operators' cautious investment and network deployment policies, combined with large inventories of optical transport solutions.”
However, the company is readying itself for the eventual migration to 800G. In March, Ekinops established a foothold in the burgeoning 800G optical market with the debut of its PM_800FR04 pluggable module for the Ekinops360 WDM optical transport system based on its FlexRate™ technology.
Ekinops said, "The launch of the new 800G product and a new OTN (Optical Transport Network) solution should boost business momentum over the coming semesters.”
Regional differences
From a regional perspective, Ekinops also saw varying results.
France was a key growth market. Driven by a rebound in sales of Access solutions, the Group's core business in its domestic market rose 15%.
However, Optical Transport Solutions declined 10% in France, following a hyper-growth of 57% in this business line in FY 2023. In Q1 2024, Ekinops generated 43% of its revenue in France.
While sales rose in France, they declined 24% internationally.
Internationally, Ekinops saw a downturn in business at the start of the year in all regions. International business accounted for 57% of total revenue over the quarter (vs. 68% for FY 2023).
In North America, quarterly sales totaled $7.5 million, up from $7.2 million in the fourth quarter of 2023. Ekinops said this region accounted for 25% of the Group's business activity in the first quarter.
The EMEA region (Europe - excluding France - Middle East & Africa) posted a 21% decline in quarterly sales, with a more pronounced drop in Optical Transport activity, following strong sales growth in 2023, particularly in Germany and Eastern Europe.
Finally, Asia-Pacific accounted for 3% of the Group's total business activity in the first quarter.
Scaling up SD-WAN
Besides ramping up its portfolio to address new 800G optical opportunities, Ekinops has positioned itself to take advantage of the SD-WAN market segment.
One of its critical recent moves was to acquire the "5View" software suite from Infovista, an infrastructure management software editor for mobile and fixed networks.
5View can analyze application performance across networks. It collects real-time data and stores and aggregates it to provide reports for analyzing problems, service level agreements (SLAs), and long-term network capacity management. It also provides the necessary visibility of application traffic in the context of an SD-WAN solution.
The 5View suite will enable Ekinops to extend its software offering (Compose) for service providers and enterprises. 5View will be integrated with Ekinops' SD-WAN solutions. It will also bring value to any operator or business seeking to increase visibility over applications in its network, regardless of their network technology.
Additionally, acquiring the 5View software suite also strengthens Ekinops' R&D team, which now includes four engineers based in France. These engineers will continue to maintain and enhance the solution within the Group's team.
Also, Ekinops and Infovista signed a commercial agreement enabling the latter to continue integrating and selling 5View software as an integral part of its network insurance solutions.
“With this acquisition, Ekinops can step up its strategy with an enhanced SD-WAN offering and increased Software & Services revenues,” Ekinops said. “In the longer term, the technologies used by the 5View suite could be extended to other sectors requiring high-volume data processing.”
Ekinops will complete this acquisition by leveraging available cash.
The company also intimated that 5View is just one purchase it has planned. To facilitate further external growth, the company plans to conduct “one or more transactions that could augment its R&D staff, strengthen its offering, and complete its customer base, with a preference for non-dilutive financing.”
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Sean Buckley
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