Sweden, 2013-09-05 10:00 CEST (GLOBE NEWSWIRE) --
Continued growth in Q2
ZetaDisplay reported sales of SEK 14.1m in Q2, representing growth of 6% compared to the same period last year. Our forecasts were for sales of SEK 18m in Q2. The main reason for the discrepancy was fewer installations of hardware. The lower proportion of hardware installations also meant that the gross margin improved to 53 %, compared to 47 % in Q1 (positive mix effect of increased recurring revenue).
Expansion in Europe is depressing earnings
Q2 EBITDA was SEK -2.0m, which was weaker than our forecast of SEK 0.5m. We believe this is primarily due to higher costs related to the expansion in Europe and the relatively low level of new installations of hardware. Our view is that the cost level in the company will remain at this level for the remainder of the year. However, we expect positive operating profit before depreciation and amortisation in H2 2013, driven by continued growth of installations, software and services.
Licence revenue continues to grow
The highly important and profitable licensing revenues grew in Q2, by 54% over the previous year.
Exciting contracts in place after the quarter’s end
ZetaDisplay has received a number of exciting contracts after the end of the second quarter. During the autumn ZetaDisplay will deliver its media platform to Norwegian home furnishing chain Hansen & Dysvik. The expansion in Europe has not led to only higher costs, and is already resulting in new installations. ZetaDisplay will deliver its media platform for a large retail chain’s expansion of cosmetics stores in France. The first installation will be made at the chain's flagship store in central Paris.
Slightly lower forecasts – profit in 2014E
We are lowering our EPS estimates for 2013E-15E, given a slightly higher cost base from ZetaDisplay’s expansion in Europe. With a steadily growing installed base and a continued strong flow of inquiries from both existing and new customers, we expect a profit in 2014 for ZetaDisplay. However, uncertainty is substantial and there are thus likely to be deviations from the forecasts, given the quarterly and annual fluctuations in margins and revenues. With our 2014E forecasts, ZetaDisplay is trading at P/E 10.3x, which we find attractive. We envisage good growth potential for both the underlying market and ZetaDisplay for 2015 and onwards.
The whole analysis is attached to this press release and can also be downloaded at http://www.penser.se/epaccess/zetadisplay
For more information please contact:
ZetaDisplay AB (publ)
CEO Leif Liljebrunn
Telephone: +46 70 845 80 52
ZetaDisplay is a leading supplier of Digital Signage to major chains in the retailing and service sectors of the European market.
The head office is in Sweden and there are sales offices located in Denmark, Norway, Finland, Estonia and the Netherlands. Since April 2011 the company’s shares have been traded on NASDAQ OMX First North Premier, using the ZETA abbreviation. The Certified Adviser is Erik Penser Bankaktiebolag and the liquidity guarantor is Pareto Öhman. More information can be found at http://www.zetadisplay.com
About Digital Signage and multi-channel communication
ZetaDisplay defines Digital Signage as a system for advertising, profiling and retail store communication, which forwards audio, images and film related to retail stores and information in the public environment. A Swedish name for Digital Signage translates as digital retailing communications. Solutions based on digital displays form a large part of the market, but development is proceeding towards the utilisation of more digital channels to communicate customer offers and other information. This is a matter of solutions that are integrated into social media and web sites, and apps for smart mobile phones and tablets which create interaction with customers. Development is also progressing towards integrating solutions with retailers’ cash desks for automatic price updating and the automatic switching of offers on the digital displays.