Kudelski Group Annual Financial Report
25 February 2021 - 5:00PM
UK Regulatory
Dow Jones received a payment from Newsbox to publish this press
release.
Annual Financial Report
ANNUAL RESULTS 2020
HIGHLIGHTS:
· USD 741.5 million of total revenues and other operating income, USD 64.3
million of EBITDA and USD 122.5 million of operating free cash flow
· Successfully adapted structure and operations to effectively accommodate
impact of COVID-19
· Strong resilience of Digital TV produced a USD 5.9 million increase of EBITDA
to USD 96.9 million
· Positive momentum in cybersecurity increased gross margins by 22.6%, driven
by 57.4% growth in European revenues
· IoT portfolio expansion includes launch of RecovR, an advanced asset tracking
solution for car dealerships
· Better than expected resilience of Public Access business, with USD 8.5
million EBITDA improvement to USD 16.5 million in spite of COVID-related
volatility
· Strong synergies between business units enabling end-to-end digital security
offering spanning content protection, IoT and cybersecurity
· Outlook for 2021: revenue growth and EBITDA between USD 65 and 80 million
· Proposing a cash distribution (dividend) of CHF 0.10 per bearer share
KEY FIGURES 2020
+---------------------------------+---------------+---------------+
|(In million USD) | 2020 | 2019 |
+---------------------------------+---------------+---------------+
|Revenues and Other Operating | 741.5 | 827.3 |
|Income | | |
+---------------------------------+---------------+---------------+
|EBITDA | 64.3 | 40.6 |
+---------------------------------+---------------+---------------+
|Operating free cash flow | 122.5 | 19.5 |
+---------------------------------+---------------+---------------+
Cheseaux-sur-Lausanne, Switzerland, and Phoenix (AZ), USA ??" February 25, 2021 ??"
The Kudelski Group (SIX: KUD.S), the world leader in digital security, announced
today its 2020 annual results.
In 2020, total revenues and other operating income decreased to USD 741.5
million from USD 827.3 million in 2019. After a weak first half, Group sales
strongly recovered in the second half producing a marginal decline of USD 5.3
million from the second half 2019, with cybersecurity and IoT revenues improving
and Digital TV materially stable. Compared to the first half 2020, second half
2020 total Group revenues increased by USD 101.3 million, driven by higher sales
in all segments.
The Group generated EBITDA of USD 64.3 million, a 58.5% or USD 23.7 million
improvement from the previous year. This improvement reflects a strong second
half where the Group generated USD 59.4 million, a USD 34.3 million improvement
compared to the second half 2019. Overall, the Group generated an operating
income of USD 16.1 million, compared to a loss of USD 15.3 million in 2019.
The Group generated USD 122.5 million of operating free cash flow, an
improvement of USD 103.0 million from 2019. Working capital improvements drove
2020 cash generation, contributing USD 92.4 million.
SUCCESSFULLY ADAPTED TO COVID-19 REALITY
With the onset of the pandemic, the Group implemented a set of measures aimed at
temporarily reducing its cost base to mitigate the business impact of COVID-19.
While the first half was materially impacted by strains related to the pandemic,
including reduced levels of demand in the Public Access and Digital TV segments
of the business, the Group swiftly adapted its structure and operations to
integrate learnings from the first COVID-19 wave and ensure full business
continuity in spite of extended lockdowns. In addition, the Group adjusted its
marketing and sales approach to increasingly leverage digital channels to
accommodate the changing needs of customers.
As a result, the second half showed more resilience than anticipated across the
Group's four business segments.
DIGITAL TV: STRENGTHENED RELATIONS WITH OPERATORS AND SUCCESSFUL SOLUTION
PORTFOLIO
Digital TV delivered a strong 2020, with USD 345.4 million in net revenues and
USD 96.9 million of EBITDA, a USD 5.9 million increase from 2019. Following a
slow first half, second half segment revenues were in line with the second half
2019 and increased by USD 36.0 million from the first half 2020. In relative
terms, EBITDA margin increased from 23.8% in 2019 to 28.1% in 2020.
Despite the macro-economic conditions created by the pandemic, the Group's
partnerships with the largest pay-TV operators worldwide continued to expand.
+-+----------------------------------------------------------------------------+
|-| Altice USA and NAGRA have continued to extend their partnership on|
| | antipiracy, leveraging NAGRA's antipiracy expertise based on Open-Source|
| | Intelligence (OSINT), field investigation and IoT forensic analysis. In|
| | addition, Altice USA has successfully deployed NAGRA PROTECT, the leading|
| | one-way broadcast content protection to secure and enable a new generation|
| | of HD-DTA (Digital Television Adapter). This converter box has complemented|
| | the already deployed Altice One platform to provide a consistent user|
| | experience among the different consumer devices in the home.|
| | |
| | |
| | |
| | |
+-+----------------------------------------------------------------------------+
|-| At Claro Colombia, NAGRA successfully launched a cardless-based system with|
| | the NAGRA PROTECT as an extension of the original NAGRA Conditional Access|
| | System. Originally planned for HFC networks, the solution is also available|
| | for IPTV usage and will provide secure and improved service for mass|
| | deployment on low-cost set-top boxes.|
| | |
| | |
| | |
| | |
+-+----------------------------------------------------------------------------+
|-| As part of the long-term agreement between NAGRA and Vodafone Group, the|
| | deployment of Vodafone TV has continued to grow during 2020, especially in|
| | Eastern Europe. This evolution reinforces NAGRA's strategy of offering a|
| |central Security Services Platform providing security services for both open|
| | devices and Vodafone TV set-top boxes with an increasingly larger service|
| | footprint.|
| | |
| | |
| | |
| | |
+-+----------------------------------------------------------------------------+
|-| NAGRA Insight is gathering momentum with several operators and gaining|
| | market distinction for innovation. Altice USA extended the reach of NAGRA|
| |Insight to include newly deployed devices such as AppleTV 4K. Claro Colombia|
| | successfully deployed Insight to measure the audience and to provide|
| | extended analytics to support Claro's business. NAGRA developed a new|
| | Insight module collecting and analyzing audience data from non-connected|
| | satellite set-top boxes for Canal+. Industry recognitions for NAGRA Insight|
| | in 2020 include the "Best Data & Analytics Innovation" Award at the CSI|
| |Awards as well as the "AI and Machine Learning Innovation of the Year" Award|
| | at the VideoTech Innovation Awards.|
+-+----------------------------------------------------------------------------+
CYBERSECURITY: SUSTAINED FOCUS ON DRIVING VALUE
In 2020, the Group's cybersecurity business posted USD 139.9 million of gross
revenues, a 2.0% increase from 2019. 2020 net revenues were USD 85.3 million,
and gross profits increased by 22.6% to USD 48.4 million. The European region
posted strong growth, increasing net revenues to USD 26.7 million, a 57.4%
year-on-year improvement. The EBITDA loss was reduced by USD 4.6 million to USD
17.5 million.
Given changing requirements of the pandemic, many organizations are accelerating
digital transformation. Kudelski Security's cloud-first cybersecurity portfolio
strengthens the digital transformation initiatives of global enterprises using
private and public cloud services. In support of these cloud activities,
Kudelski Security launched strategic partnerships with the leading providers of
public cloud services: Microsoft, Google, and Amazon. Mid-year, the company
launched dedicated Microsoft Security services, enabling clients to effectively
consume and configure Microsoft security capabilities and adding integrated
security monitoring to their Microsoft 365 and Azure environments.
Kudelski Security's Managed Security Services (MSS) delivered an exceptional
performance throughout the year, with a high double-digit growth rate driven by
strong activity in Europe and a notable expansion into the operational
technology (OT) and industrial control system (ICS) space. Kudelski Security's
Managed Security Services were further validated by a new round of recognition
from leading industry analyst firms, such as being listed as Market Leader by
the Forrester Wave report and nominated in the Gartner Market Guide for Managed
Security Services and Gartner Market Guide for Managed Detection & Response
Services 2020.
Kudelski Security continued to deliver innovation in 2020, launching a dedicated
focus on quantum security, including expanded research and advisory services
that enable security leaders and product and system developers to align their
long-term approach to risk and data protection to the era of quantum computing.
INTERNET OF THINGS (IOT): EXPANDED SERVICE OFFERING AND KEY PARTNERSHIPS
Full year revenues for the Group's IoT business increased by USD 0.9 million to
USD 3.7 million. Second half revenues more than doubled compared to the first
half, still mainly driven by the IoT Services business.
The Kudelski Group's IoT Security Center of Excellence (CoE) continues to draw
new customers who wish to leverage Kudelski's extensive expertise in hardware
and software security as well as security architecture and design. It has now
added both IoT security workshops and full end-to-end solution design services
to its portfolio. In recognition of the CoE's capabilities, it was chosen by
both Amazon as a certified Alexa Built-In Security Lab, and AT&T as an IoT
Security Lab for companies connecting their devices to AT&T's network.
2020 also saw a key milestone in Kudelski IoT when it announced the availability
of the PICO SE-800, a security chip that is part of Kudelski's IoT keySTREAM.
This provides IoT devices manufacturers with a turnkey IoT security solution
enabling them to securely manage, control and update their IoT devices. Silicon
manufacturer STMicroelectronics and SIM card specialist IDEMIA also announced
the integration of Kudelski IoT keystream into their product lines, enabling
more robust IoT security for their customers. Kudelski IoT also announced that
it had contracted to deliver a passive keyless entry solution to
California-based Canoo, an electronic vehicle manufacturer.
In February 2021, Kudelski IoT launched RecovR, a new two-in-one solution for
car dealerships that places a small, battery-powered locator device in new cars
in order to help dealers locate and manage their vehicle inventory more
efficiently. Once the car is sold, RecovR is offered to the new owners as a
vehicle theft recovery solution, generating revenue for both the dealer and
Kudelski IoT and giving consumers a powerful vehicle theft recovery tool.
PUBLIC ACCESS: ADDRESSING MARKET VOLATILITY
COVID-19 significantly affected 2020 Public Access results, with revenues
decreasing by 13.0% year-on-year to USD 295.1 million. In the second half
business partially recovered, posting a marginal 4.5% decline compared to the
second half 2019 in spite of the pandemic. Public Access reduced 2020 operating
expenses by USD 28.9 million compared to the previous year. In addition to
temporary COVID-related actions, structural headcount reduction measures enabled
these cost savings. Overall, Public Access generated an EBITDA of USD 16.5
million, representing a USD 8.5 million improvement compared to the prior year.
In 2020, reacting to new customer requirements due to the pandemic, SKIDATA
launched dedicated touchless solutions in each of its business segments: parking
facilities, ski destinations and event venues. The solutions enable operators to
continue running their operations smoothly and safely.
SKIDATA has also developed environment-friendly solutions that contribute to
reduce the use of plastic or paper tickets, enabling users to enter, pay and
leave a parking facility with a smartphone ticket, go directly to a ski lift
with a digital ski pass or attend a sports event with an electronic ticket. In
2020, it also launched a new access card made of FSC-certified wood ??" a prime
example of replacing plastic materials with renewable primary products.
STRONG SYNERGIES BETWEEN BUSINESS UNITS FOR BROADER SOLUTION REACH
In 2020, following successful efforts undertaken in the previous years to
increase business efficiencies, the Group's entities increased their focus on
leveraging synergies, enabling the building of strong internal bridges and
shared technology resources, innovation, and business/solution ideation to
encourage broader solution development and collaboration. Today, the Group's
end-to-end digital security ecosystem spans content protection, IoT and
cybersecurity.
OUTLOOK FOR 2021
In the Digital TV segment, the Group expects the positive momentum of the second
half 2020 to continue into 2021, with stable year-on-year revenues. In the
Cybersecurity segment, the Group expects growing 2021 revenues. As the
Cybersecurity business continues to drive the development of higher margin
product lines, gross profits should continue to grow at a double-digit rate. The
Group expects 2021 IoT revenues to at least double compared to 2020, driven by
the recent launch of RecovR and continued promotion of IoT Services and the
keySTREAM platform. The Public Access business will continue to face
uncertainties related to the COVID-19 impact on airports, shopping centers,
stadiums and ski resorts, for at least the first half of the year. Segment plans
for 2021 take these uncertainties into account. In 2021, the Group will continue
to streamline SKIDATA's operations, seeking a tighter integration with other
Group segments and corporate functions and among the SKIDATA local and central
entities.
Overall, the Group expects year-on-year revenue growth and an EBITDA between USD
65 and 80 million in 2021.
PROPOSING A CASH DISTRIBUTION (DIVIDEND) OF CHF 0.10
Taking into account the Group's 2020 results and profitability outlook, the
Board of Directors is proposing a CHF 0.10 cash distribution per bearer share
for approval at the 2021 Annual Shareholders' Meeting. It is proposed that CHF
0.05 of this cash distribution be treated as a return of capital.
Note to the editors:
The 2020 Financial Statements and MD&A are available in PDF format under:
www.nagra.com >> Investors >> Publications
About the Kudelski Group
The Kudelski Group (SIX: KUD.S) is a world leader in digital security and a
provider of end-to-end convergent media solutions to the digital entertainment
industry, including services and applications requiring access control and
rights management to secure the revenue in digital television, internet, mobile
and interactive business efficiency applications. The Group also offers
cybersecurity solutions and services focused on helping companies assess risks
and vulnerabilities and protect their data and systems. It also supplies
integrated solutions to manage access control of people and vehicles to sites
and events. The Kudelski Group is headquartered in Cheseaux-sur-Lausanne,
Switzerland and Phoenix (AZ), USA. For more information, please visit
www.nagra.com
Contacts
Cédric Alber
Kudelski Group
Director ??" Corporate Communications & Media relations
+41 21 732 01 81
+1 415 962 5005
cedric.alber@nagra.com
Santino Rumasuglia
Kudelski Group
Vice President ??" Head of Investor Relations
+1 480 430 9952
santino.rumasuglia@nagra.com
Press Release English (PDF)
Communiqué de presse Français (PDF)
Financial Report 2020 (PDF)
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+---------------------------++--------------++---------------------------------+
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