Good morning, everyone. This is Per Lindberg. I'm the Chief Executive Officer of Ranplan. I welcome everyone to our results presentation, covering, spanning the first six months of 2024. With me today, I have our chairwoman, Joyce Wu. A few words, Joyce?
I'm the Chief Operating Officer of Ranplan, and I'm also the. Can you hear me?
Yes, yes.
Hello, good morning.
I can hear you. Good morning, Joyce.
Yeah, good morning. I'm Joyce Wu, and I'm the Chief Operating Officer with Ranplan Wireless Network Design, and also the chairman of the Ranplan Group AB.
Yes, Joyce, together with her husband, Professor Yi Shang, is a co-founder of Ranplan. W ith me, importantly, I have George Wells, our CFO, whom I would like you to meet. George?
Yes, good morning. I've been with Ranplan for getting on for six years now. And, I'm helping to present the report today.
Yes, and he knows the numbers inside out. T he agenda for today, I'm pleased to see three external participants. We will take you through some of the main points, the trends, and the swing factors, if you wish, to use financial language. You can always ask questions in the end here, either in Swedish or in English. Obviously, we will speak English since this is the language that everyone here can now fully understand. I think the presentation, it's in itself, it takes some 20 minutes, and it will take 10 minutes Q&A. That would be my principal assumption here. L et's get started.
Hi, Per. Before we start, do you want to, record this session or not?
I don't think we should record
Okay.
Yes, I don't think we should. Yes, you see the slide? The first slide is, yes, the
You stopped sharing, actually.
Oh, I stopped sharing.
Anyway, don't worry. This is something that we do very, very often within Ranplan. I mean, to do Teams meetings, and I hope it works at your end.
Yeah
Dear investors. Yes, dear investors all. T his, the first slide is simply just putting this into the perspective. We are here now presenting the interim results, the annual report in Swedish, for the first six months of 2024. We are listed on Nasdaq First North, and we have been there now, more or less precisely six years, actually since the end of June 2018. W e're pretty familiar with this process and what it entails. As far as the financial summary goes, there are discernible improvements across the board here. Most importantly, as you will see, as we dig deeper in terms of total revenues, the revenues up pretty formidable SEK 3.3 million here, compared with the first half of 2023.
Even more extraordinarily is the operating income, or the operating loss is now vastly, vastly reduced, almost by two-thirds, as you see here. We incurred a loss in the first half of 2023 to the tune of SEK 14-15 million, and in the first half of this year, without any major orders, actually, that we recognize. So this is well diversified. We yet contain the loss to SEK 5.5 million. I mportantly, something that I wish to emphasize, and I must stress over and over again, we expense everything. We expense all consumption of resources as these consumptions are taking place, i.e., we do not capitalize any R&D. That, to us, is an expense. We do not capitalize PC, laptops either. We treat that as an expense. E ven more unusual.
Worldwide and also in the Swedish market, we treat all costs as ongoing costs. I n this, we also have some restructuring charges, but we treat them as part of operations. T hese numbers are clean, probably the cleanest you can find when you scrutinize hundreds, thousands of other folks' reports. Cash flow , earnings per share is just a corollary of net income, et cetera, net income, so I don't spend much time on that. Cash flow from operations, this does include movements of working capital, a very, very mild, a negative SEK 3.6 million. This does take into account a positive contribution from especially receivables, since we did get a fairly big contribution from the UK government before the end of the first half.
Cash then, the balance sheet and our financial stamina. Cash at the end of June was a positive SEK 2.4 million. Clearly, cash must be positive, so it's a positive SEK 2.4 million, and at that time, we still had access to more than SEK 30 million from the credit line that I have extended. T hat's a summary sheet. I will then continue with 3 more before I hand over to George. N ow we come to the graphics, and we wish to portray this in terms of the half years in isolation, as well as the 12-month rolling average. The dotted line here, you should read on the right-hand scale. The green bars, you should read on the left-hand scale. T he trend, seasonally adjusted, is reflected by the gray dots. Needless to say, we do not have any major seasonal variations.
We are not like Husqvarna in Sweden, for instance, or Elekta, I mean, to name two examples of companies that have very, very prominent swings between an H1 or H2, et cetera, or Q1 or Q2. We do not see much of that. Clearly, the months of July and August tend to be less active than, for instance, September and October, et cetera. E qually we tend to have other holiday season impacts during Easter and Christmas and all things. A s you see, a positive trend as we see the net sales evolving. Can I ask everyone to switch or turn to mute so we are not interrupted here at all?
If you don't speak, please, please go to mute. OpEx, operating expenditures, research and development, sales and marketing, general and admin. We are trending down. We don't believe that there will be much difference in the second half, by the way. We are probably going to stay where we were in the first half of this year. There could be some ups and downs, depending on when we hire more people and so on. We are now generally in a rebuilding phase, and we are looking for people to add in certain areas. But if you go back to, for instance, three years ago, we are now running the company considerably more efficiently than was the case a couple of years ago, without any discernible impact, negative impact on the outcome.
Then finally, from me, before George takes the podium, and perhaps the most important for you as investors, I would think, operating income. And here there is a stark swing upwards, I mean, towards something better, especially then in the last six months. But as many of you hopefully already have spotted, that started in earnest, already in the second half of last year. W e are not far off now from breakeven, as one may be allowed to assume, but clearly we want more. W e operate a company with gross margins in the vicinity of 100% when it comes to software sales. So, everyone remotely familiar with the software industry understands what that may entail.
I now hand over to George, and I can move the slides then, George. George, explain to us then what happened in H1 in terms of net sales and research projects.
Yes. If I just explain very briefly, there are actually three lines here. The last one is other operating income, which I'll speak less about, but that's cash from the UK government for doing research, and that's also the money that arrives in H1 of each year and is flat as our cash flow in H1. L ooking at the two lines which have been pulled out here, we have net sales. That's our commercial sales. There is some seasonality in this, so this tends to be higher in the second half of the year than the first half of the year. I t is helpful to compare by halves.
Then there's research projects, which are ongoing projects over different periods, often four years, but sometimes a shorter period of one or two years. Looking first at the net sales, commercial sales line, obviously we've fallen from H1 2024, which is down from H2 2023, but the comparison I would make is compared to the first half of last year, 2023, where we're slightly up. But you see this line, you see this line bobbing, bobbing up and down, and as Per says, it's not caused by any one large, overwhelming customer. But broadly, going steady on the net sales. On the research projects, these are a number of projects, perhaps 10-12 at any one time. We've added...
As you see, we've gone up sharply in research projects from 2022 and then rising in 2023 and up again in H1 2024. These are a number of projects which are over longer periods of time. I n contrast to the net sales, they're easier to forecast in the future. T his number of SEK 4.7 million, subject to individual projects and subject to currency fluctuations and so on, that we expect to be sustained certainly in the second half of this year. But the improvement in our revenue, comparing H1 2024 to H1 2023, is really down to this perhaps SEK 3 million improvement in research projects.
Thank you. Thank you, George. M oving on, I don't think there is so much to add here, is there, George? Gross profit, perhaps, gross profit, that's up.
Yes, up a bit, reflecting the research projects.
Thank you.
Here we see our operating costs broken down into three categories: research and development, sales and marketing, and then general and admin, which covers a variety of sins. A gain, the general trend, sorry, in research and development, is downwards. Most of the savings have kicked in in H1 2023, and then slightly lower in this half. A s Peter says, we don't necessarily expect this trend to continue, anything to fall. It depends on new hires, new projects, new commercial sales, whether we add to that, add expenses to that line. Sales and marketing has also dropped. I would point out that sales and marketing has dropped without affecting commercial sales. I t's really using new sales avenues.
I mean, Peter has been involved, but other members of the team have been involved. W e have cut some sales, specifically some sales staff. M arketing is, marketing is still going strong. Now, marketing tends to be a bit cheaper than sales. General and admin line, that generally fluctuates a bit, so although that's down, I would hesitate to give an indication as to what's going to happen there. O verall, you see, between this half, H1 2022 and H1 2023, we've cut about SEK 7 million of costs.
Yes.
May I have the next one?
If we turn to cash flow.
Here we have cash flow. C ash, first of all, the cash operating cash flow before working capital, so that means that there's no adjustments before working capital, because that's the same as operating income. T hen after working capital, this depends on, debtors paying us and how we pay our creditors. Generally in H1 , our operating cash flow is slightly better than in H2 and that's because of the timing, or mainly because of the timing of our tax credit from the UK government, which comes in H1 . That's a one-off annual payment. H ere we have, operating income before and after R&D.
Here we point out, I mean, this is the point that Per made earlier, that we don't capitalize R&D, so in many companies you'd this R&D investment would not be hitting the income statement immediately. And so if you strip out our R&D investments and expenses, then we have a healthy operating income before positive operating income profit before the R&D expense. On the balance sheet, perhaps not so much to say. Equity has dropped slightly as the result of the losses in the period. H ere we have the shareholder structure. Now Peter has taken on more of the shares of the company and is now sitting, as you see, with 81% of the ownership.
The rest of the ownership spread among UK and Denmark and Sweden, mostly. T hen other, a lot of other is long-time employees of the company. Right, so here we have it again in more detail. I suppose here we haven't seen what we haven't looked at yet is the financial line financial items, financial income and expenses. T hat is income not actually paid in cash, but income accrued payable on the loan that we have from, again, from Peter. T hat goes up and down in H1 2024, it's slightly down on the previous half. That's because Per got some shares, and so that reduced the loan. T hen it's up again.
Sorry, I'm not comparing quite the right things, but anyway, it goes up and down, depending on the size of the loan. H ere, the cash flow statement. I'm struggling to see on my small screen. That's better. Here, not much to say, except to point out the seasonality between H1 and H2, and overall for the year, it's pretty strange, depending on the operating result. H ere we have receivables down, receivables down in H1 as we received the previously had the money owed from the UK government sitting in receivables. Cash and banks slightly up for the same reason, although cash and bank also depends on when we take, when we take loans.
We try to keep it to a minimum, and to repay some of the loan when possible, which has been possible recently. And then we have at the bottom line here, equity attributable to owners down because of the loss in the period.
Okay, very good. Thank you, George. We can revert to the financials during the Q&A. Thank you, George. That's, that's great. Let me then shed some light on operations then. We clearly devote utmost attention to strengthen, further strengthen, I should say, our competitive position. W e are certain, read my lips, we are reassured that that is happening. We take great pride in our latest software version, known as 7.0, which we, without much doubt, would categorize as one of the most significant releases ever in this company's history. Can you turn to mute? Y ou're disturbing us once in a while here. Can you turn to mute? Can you turn to mute?
Anyway, I shouldn't go into the details here, but you see six facets of this hexagon there, where we exemplify the advancements that come with this release. It may be too technical for many of you, but suffice it to say, these advancements are very, very pivotal, important to our customers. We have vastly enhanced the user interface. It's actually a misspelling here, interface, which I now correct. This is something that makes our customers much more productive in using our software when they can visualize this and navigate this more elegantly. H ere you see actually how the visualization is portrayed on a small computer screen.
We are also now first in the world in supporting the latest incarnation of Wi-Fi. We put more and more attention on Wi-Fi as Wi-Fi becomes much more advanced. More advanced Wi-Fi means, entails that Wi-Fi customers, enterprise customers, perhaps one day also domestic customers, they will need a professional grade software that we represent. Dynamic Spectrum Sharing is something many of you may have come across, since Ericsson and Nokia are two Nordic champions of cellular. This is very important for operators migrating step by step from 4G LTE to 5G. W ith Ranplan, you can actually do this gradually, and you can actually define your network cell by cell in this respect.
You can allocate, for instance, 20% of the spectral resources to 4G in January next year, in a certain area of Istanbul, say, and then when more of your subscriber base have 5G-capable handsets, then you increase the 5G proportion of the total, and so on. We're also the champions, literally, of open file formats. Our major competitor takes the polar opposite view, by the way. T his is something that we are certain will win plaudits and praise from our customers. An example of the granularity, the level of detail that we offer, this is a major hotel. You can see the dots there. These dots are small cells. The cables is really telling the engineers how to install the network, et cetera.
The color, nuances here, they indicate the performance of the network in terms of signal strength. It can be in terms of coverage, it can be in terms of throughput, et cetera. Speed, capacity. I think I stop here, and 27 minutes into today's presentation, a little bit longer than I anticipated, but not much. We open up for Q&A. Please, anyone, you can ask either in your native tongue, Swedish or. I also understand German, by the way, but the or English . Joyce understands Chinese, so if you want to ask a question in Mandarin, we have an excellent translator here.
Sorry, Per, did you, did you open up for questions now?
Yes. Yes, I did. Yes. Hello, Carl.
Hi, Per. Hello, how are you?
I'm good, thank you. How are you?
Thank you for taking the time and giving us a rundown of the report and also the new version. I actually had a question. I know you. I read the... When you released the 7.0 version, it looks amazing, and I understand that you have high hopes for it, and we do as well . If you want to, maybe can you elaborate a little bit on, like, if you have what your current customers are saying, what you see going forward? Is this sold as a one package, or can you buy additional components as you go?
Have you changed the pricing, the product, how you sell it now when you go out or. I just wanted to get a feel for this version and what you are already hearing or seeing that your customers are appreciating, so to speak?
Yes, I mean, 2 weeks into its commercial journey, the trends are very positive. We already have 10+ customers that want to upgrade from their earlier version.
Yeah.
Everything, everything is running without any hiccups, and we have lots of interest also now from prospective new customers that want to have a demo, i.e., to learn from us what we, what problems we can solve, and how the tool is handling things that no one else has. No one else has.
Yeah.
With this looks very, very promising. Now, we also understand that many people, not least in North America and, and Europe, are in the midst of the summer vacation, so we will start-
Yeah
The big marketing machinery come September, October, with webinars and other aspects.
I don't know if I remember correctly, but previously, I believe that you didn't sell any, or you don't give away any software for free, right? You don't say you have six months free, and to test and then,
Well, we have test licenses, or we call them demo licenses, they are free for a limited period of time. A ll depending on you, you can compare that with Ericsson and Nokia's field trials, et cetera. S ometimes they run field trials in China over 2 years, and then they hope to get business. We, we don't have that time horizon generally. A s a rule if a customer has interest in a Ranplan piece of software, then we issue them, we provide them with a trial license.
Yeah.
We help them learn how to navigate and use the tool, and as a rule, if they then want to continue after two weeks, then we go into a commercial discussion with them.
Yeah. G reat. M aybe on a higher level, like, we all know the market's been pretty tough. Telecom, investment's been low, et cetera. How, in terms of Ranplan's software, where are the decision-makers to buy your software? W here do you find them, so to speak, if you understand what I mean? Is it starting to go up in your customers' companies or where? Who are you talking to, so to speak?
No, yeah, no, no. You see, generally, clearly it differs in various parts of the world-
Yeah
Between small companies, small customers, and large customers. G enerally, the first point of contact is an expert engineer of a would-be customer, someone that is responsible for in-building planning, in building design. Sometimes the outdoor folks are also involved here. H ow do I perfect a network? How do I plan the network? How do I optimize the network? I t can increasingly now be also for a factory, a warehouse, a vessel, a luxury yacht. T he first person or individuals that we have to sway are the engineers.
Yeah.
Let's say that the engineers are then convinced, "Mamma mia, with Ranplan, I can be much better than I've ever been," et cetera. Then he is trying, he or she is trying to convince his or her management.
Yeah. Yeah.
That is the second aspect that we have to deal with. Generally, I would say generally then, it's easy for us to sway the engineer that this is the best tool you can find on planet Earth, and this will, allow you to be successful in private wireless. That's pretty easy. What tends to take much longer, and perhaps be the greatest difficulty for the engineer here, would be customers, really, to get a budget allocated to him and get the manager approval inside the company. T he larger the organization, the more complicated the second aspect is going to be, and the longer it tends to take before a decision is finally made.
Yeah, yeah. I understand you're still, like, fully convinced that your software is needed if the world is going to deploy 5G, 6G in the way they're saying they're going to do
For advanced use cases, I mean, if you contrast, for instance, let's say you contrast a hotel or where you are or an office, Carnegie or Redeye's offices where you have been, et cetera. If you start with offices there, you already have Wi-Fi. T here you have to ask yourself , "If I want to deploy 5G here? D o I really need to redesign things, or can I just do ad hoc? I try it out," very much like you deploy Wi-Fi.
Yeah.
Does it really matter? Here, I would say in this case, it's our tool is not indispensable. It's not indispensable. You can probably do this ad hoc. You can say pen and pencil style. Yeah, almost like, where should I, where should I put the lamp in the ceiling? I n order to have a good visual, vision across the whole floor, et cetera. Contrast this now with a smart factory, let's say a Tesla factory now with the drones and robots that are moving up and down in a factory, and it has to be flawless. T hese robots, they cannot be disconnected.
They have to work every millisecond, more or less. Every fault there could, or error there could be pretty disastrous. You have drones that are moving up and down, et cetera, transporting transports, transporting conveyors, and so on. In these cases, which are far, far more difficult, and this is really the premium market, these are price-insensitive customers because the value gains there are pretty, pretty stunning. In these cases, then they need, they need our caliber of, professional-grade software. Yes, definitely.
A question on the BIM support for BIM. How do you see that expanding or changing your customer base or-
This is a good question, since there is a listed company with that name also in Sweden that is promoting building information modeling. It is a way to standardize the way we actually digitalize or computerize replicas of physical objects and also buildings, as well as furniture, as well as telecom equipment, by the way, cables and radio base stations and all that. This is something that we find very, very interesting for us, not least since our main competitor, owned by a major telecom equipment maker, by the way, and glass manufacturer, they are not particularly enthused about this because they want to stick to proprietary file formats in order to lock their customers in. We represent the precise opposite, and this is opening up new avenues for us.
We have lots of customers, for instance, that are using Autodesk for mechanical engineering, CAD files, et cetera. They would like to reuse their so-called Revit files, et cetera. Since six months ago, we then provided import. We can now import Autodesk's files into Ranplan open file. Now, with this release, first in the world,
Per, I think I lost you there.
He has frozen.
Yeah.
Could I take this opportunity, Carl, to answer your part of your first question.
Did we lose Pete r?
I think he's frozen. He'll probably... He'll come back in a moment, I expect.
Oh, okay.
B ut in your first question, you were asking about customers buying components of our software, so how, how do we sell it?
Yeah, like, yeah, you split it up in different. Yeah, you understand what I mean, like modules or... Yeah.
In modules, yes. Now, the way we do it is when they buy the software, they get the most up-to-date version of the software. T hen everything is released in a package all at once. T o get the latest update, they need to be on AMS, on maintenance, which means they need to have paid maintenance since they. I mean, they get a year's free maintenance, and then they need to continue to pay maintenance as time goes on. Every year, they need to pay again.
Yeah.
About 20% of the original fee. T his then entitles them to several things, one of which is new versions of the software as they come out. Another is our support, the support over the phone and by computer. T hen the third important thing is updates to the device database. W hen new bits of equipment are produced, they're modeled for use in our software. Y ou need to have the latest Nokia equipment if you want to see what the latest in Nokia, how it performs. You need the up-to-date modeling. Now, they might be able to do it themselves. It would be work that needs good people to do it, but we do this on a continual rolling basis.
Yeah.
These are three things that I'm telling people that, three reasons I'm telling them that they need to continue to pay AMS.
Yeah, yeah. I understand.
If there's a period where they don't pay AMS, well, then they'll have to pay something generally 50% of what it would've been, to catch up again.
Oh, okay, okay.
Mm.
I understand. All right, all right. Now it's only us, but I've been following you for a couple of years actually now, and it's been a tough years, the previous years. I really think that you have an amazing software package, and I think that you're close to breakeven now, and you have a very interesting story to tell. I'm looking forward to continue to follow you . I think that my questions around the product and the like who your customers are and with this BIM support, it looks like you... It might be, the activity might be higher going forward.
That, that's what I'm like anticipating. As just Per said, you have started the rebuild phase with a new version, a slimmed organization, and then to grow from here. I really look forward to continue to follow you. I'm glad that you got this 7.0 version out, and I wish you all the best on that.
Thank you.
I don't think I had any other questions from my side. I think it's only me on the call actually right now. T here's some other, but I don't know who that is.
Yes, apologies. I got disconnected somehow there. I hope we have satisfied your, your curiosity, Carl, and, thanks for attending.
Yeah, of course.
If there's anything left to answer. Yeah.
No, but I got all questions from you and George, as well, talked a little bit about the product and how it's paid, et cetera.
Very good.
Okay. Thank you so much, and have a good weekend.
Thank you.
Thank you.
Thank you. Thank you very much!