Ranplan Group AB – Interim Report Jan - Jun 2024

2024-08-16 08:00 CET

The period in summary

First half of 2024 (first half of 2023)

• Total income amounted to SEK 14.0 million (11.2 million)¹
• Net sales amounted to SEK 6.6 million (6.2 million)
• Total revenues amounted to SEK 11.4 million (8.1 million)
• Operating income amounted to SEK -5.5 million (-14.5 million)
• Net income amounted to SEK -6.6 million (-15.8 million)
• Earnings per share amounted to SEK -0.14 (-0.51)
• Cash flow from operations amounted to -SEK 3.6 million (-10.7 million)
• Cash at the end of the period amounted to SEK 2.4 million (11.6 million)
• At the end of June 2024, SEK 30.2 million of the credit line was unutilised².

Notes:

1 Total income comprises the sum of net sales (related to commercial products and services), other income (associated with research projects) and other operating income (derived from R&D tax credits). Total revenues comprise the sum of net sales and other income.

2 Cash deposited on an interest-bearing account is treated as debt repaid (until it may be released for utilisation).

Significant events in the first half of 2024 and year-to-date

• On 15th January 2024, Ranplan announced that Per Lindberg has, via a wholly owned company, made public a cash offer to shareholders in Ranplan Group AB, see link in Swedish below: Per Lindberg lämnar, via helägt bolag, ett kontant budpliktsbud till aktieägarna i Ranplan Group AB - Goldcup 34506 AB (cision.com)
• On 19th February 2024, Per Lindberg, via a wholly owned company, made public the Offer Document regarding the mandatory bid for Ranplan Group AB: Per Lindberg BidCo AB makes public the Offer Document regarding the mandatory bid for Ranplan Group AB (ranplanwireless.com)
• On 4th March 2024, the Board of Directors of Ranplan Group AB published a statement regarding Per Lindberg BidCo’s Public Cash Offer: Statement by the Board of Directors of Ranplan Group AB regarding Per Lindberg BidCo AB’s Public Cash Offer (ranplanwireless.com)
• On 20th March 2024, Per Lindberg Bid Co AB published the outcome of the concluded mandatory bid for Ranplan Group AB: Per Lindberg BidCo AB makes public the outcome of the concluded mandatory bid for Ranplan Group AB (ranplanwireless.com)
• On 3rd May 2024, the Annual General Meeting for 2023 was held in Stockholm, Sweden. Annual general meeting held in Ranplan Group AB (publ) (ranplanwireless.com)
• On 30^th July 2024, Ranplan officially launched a major software upgrade: The Power of Open File Formats, Exchange of Data, and Advanced 3D Visualization: Introducing Ranplan 7.0 (ranplanwireless.com)

Words from the CEO

Given the external environment in which it operates, the Company performed quite well in the first half of 2024. Total revenues, comprising commercial products and services as well as research projects, rose by 40% year-on-year. Gross profits advanced by 25% with the gross margin hovering in the vicinity of 100% – mirroring the pure software licensing business model in the absence of any material resale from 3rd parties. The loss from operations amounted to SEK 5.5 million – the lowest level ever recorded for any six-months period – representing less than half of R&D investments– none of which capitalised as an asset. Cash flow post a net release of working capital was contained at -SEK 3.6 million, a most noticeable improvement on the first and second half of 2023. The pipeline of prospects also continued to expand.

Net sales expanded by 7%, following receipt of a number of key purchase orders from new prospects as well as existing customer accounts. No single deal had any material influence on the overall outcome. Encouragingly, breadth of interest in our software tools is clearly discernible in most parts of the world, although, as witnessed by most sector peers, the telecom industry is still restrained by heightened risk aversion on the back of the sharp increase in interest rates and the cost of capital since the end of 2021. Recent feedback from customers instils a sense of comfort and conviction that we possess a very competitive product portfolio which sooner or later should engender superior growth vis-à-vis our peers.

Other income, generating 150% higher revenues than a year ago, constitutes a major contributor to the improvements of the financial results. These future-orientated activities aimed at establishing new business opportunities provide us not only with income but also insights and inspirations in close alliance with leading partners and sponsors. They serve as an implied assurance for our commercial customers that we will continue to stay at the absolute frontier of industry developments. We are currently running eight research projects of which several are critical to enabling some of the most central ingredients of 6G, such as reconfigurable intelligent surfaces (RIS), Terahertz cellular and air-to-ground communication. 

The extraordinary number of research projects notwithstanding, substantial efficiency gains are in clear evidence. In the first six months of the year, operating expenses contracted by slightly more than a quarter with the research and development (R&D) and sales and marketing (S&M) components thereof shrinking by close to one third. Even so, the output from our combined efforts is at least as high as ever before. A sharper focus on the most tangible of opportunities, a stricter prioritisation and a more disciplined commercial approach underpin the changes that we will seek to extend into the coming periods and years. A prime case in point is the streamlining of our software trials which are now highly automated via our web portal, allowing us to handle many more prospective customers without much human involvement.

After the end of the first half. Ranplan Wireless introduced the latest incarnation of its award-winning software tools, Ranplan 7.0 – one of the most comprehensive and important upgrades in the Company’s close to 20-year long history. With this release of this version, we take further steps in differentiating and distancing us from competition across a multiplicity of domains: (1) an entirely modernised user interface will enhance the user experience; (2) an enriched 3D viewer will allow for real-time refinements; (3) export of IFC files will ease the exchange and reuse of data; (4) support for Dynamic Spectrum Sharing (DSS) will smooth migrations from LTE/4G to 5G (and 5G Advanced);  (5) support for WiFi -7 will pave the way for lower latency and higher reliability, and (6) extended MIMO functionality will unleash novel capabilities.

Though not growing as briskly as anticipated during its formative years, private wireless (also known as CBRS in the USA, Local 5G in Japan, or Dedicated Networks which also includes Public Safety) remains at the kernel of our strategic direction. This is the space where the qualities of our software tools are most appreciated, where the revenue prospects are the greatest, where performance criteria (including latency, reliability and occasionally redundancy) are the most exacting, and where the use cases, for the smart city, factory, warehouse etc. are the most advanced. This is also where entirely new (so called greenfield) networks will be built, alleviating the obstacles that many a supplier may face in displacing or replacing a long-standing incumbent with legacy systems in place. 

Following completion of the mandatory Public Bid for all outstanding shares, the Company has obtained greater flexibility in attracting external capital to fund its operations (should it be needed). It is worth noting, after all, that three set-off issues, through which all then-outstanding debt was converted into new equity, have been carried out between October 2020 and December 2023 – thereby bolstering the balance sheet most significantly. Whilst the credit line (capped at SEK 50 million) expires on 28 February 2025 – it may not necessitate consumption of liquidity. Also, whilst the level of net debt rose by around SEK 4.8 million in the first six months to around SEK 17.4 million, it still leaves over SEK 30 million of the credit line (capped at SEK 50 million) to be drawn, if it will at all be needed.

For all the gloom and doom descending on the telecom industry, resulting in near record-low valuation multiples for the sector at large (a polar opposite to the heydays of the TMT boom a quarter of a century ago), we take solace in empirical evidence that periods of extended frugality (as witnessed of late) almost invariably foster elements of pent-up demand, triggering a rebound on the back of a catch-up investment cycle. We envisage revived spending appetite in preparations for deployment in the mid-band of the 5G spectrum (3.5 – 6.0 GHz), 5G Advanced and, towards the end of the decade, 6G – unleashing entirely new applications which we are well placed to help realise. We are also devoting more attention to Wi-Fi, which through version 7 and beyond is bound to become more ‘cellular-like’ in its capability and complexity – triggering real interest in software products of the calibre we provide.  

Our modus operandi will be increasingly guided by creativity, productivity and selectivity. Considering the sheer diversity and variety of proposals and requests they encounter as a matter of course technology companies must continually decide what to do (and how to do it) and what not to do (and how to avoid it). Against this backdrop, we will concentrate our resources on areas where we possess distinctive, sustainable competitive advantages while exploring and nurturing strategic collaborations and partnerships elsewhere. We will always seek to meet our customers’ genuine, intrinsic needs and act as a formidable protagonist of open file formats to ease integration and interoperability with third-party software components. The release of our latest and most significant software version is as fine an illustration of the value these strategic imperatives afford. It is also a great tribute to the efficiency, proficiency and tenacity our staff display in commendably collaborative and cross-functional efforts.

Per Lindberg, CEO        

The complete report is attached to this press release and is available at www.ranplanwireless.com

This disclosure contains information that Ranplan Wireless is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication, through the agency of the contact person, on 16-08-2024 08:00 CET.