REG - Ethernity Networks - Business update

Ethernity NetworksAnnouncement

28/03/2024 07:00

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RNS Number : 5879I  Ethernity Networks Ltd  28 March 2024

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the UK version of the Market
Abuse Regulations (EU) No. 596/2014 ("MAR"). With the publication of this
announcement via a Regulatory Information Service, this inside information is
now considered to be in the public domain.

 

 

28 March 2024

 

ETHERNITY NETWORKS LTD

("Ethernity" or the "Company")

 

Business update

 

Ethernity Networks (AIM: ENET.L, OTCMKTS: ENETF), a leading supplier of
networking processing semiconductor technology ported on field programmable
gate arrays ("FPGA") for virtualised networking appliances, announces a
business update.

 

In the year to date, the Company has had positive engagement with a number of
potential new customers, including two OEM vendors which, following an
extensive evaluation of Ethernity's Universal Edge Platform ("UEP") have
indicated an interest to adopt and launch the product to their customer base
and the Company is in negotiations with these two vendors on potential
contracts that could lead to significant business for Ethernity. In addition,
two further OEM vendors have indicated an interest to contract the Company for
delivery of a UEP based design.

 

Based on the scopes of work being discussed with these potential new
customers, should they lead to contracts, they could contribute between $2.2
million and $3 million to the Company's revenues in 2024. Given the commitment
of each customer to adopt the products, this would likely lead to
significantly higher revenues in 2025 and beyond. Whilst there can be no
guarantee that the discussions summarised above will all lead to contracts at
all or on the terms currently being discussed, the Board considers that this
significant interest in the Company's products demonstrates the potential for
future growth in sales of a complete system offering combining Ethernity's
chip and software stack that is expected to be the main driver of the future
growth of the Company.

 

Ethernity's products are available to OEM vendors either via the sale of
complete systems or through the licencing of the Company's IP. The preferred
business model is defined by the customer, depending on whether it is looking
for a complete product or would like to embed Ethernity's technology within
its own product, resulting in one of the two following revenue models:

 

System sales

In this business model Ethernity sells a complete UEP product. The typical
product sales price ranges from $500 to $1,600, depending on the specific
ordering options. Some variants are equipped with Ethernity's Carrier Ethernet
engine (and optional bonding). Other product variants provide PON/XGS-PON OLT
with optional Carrier Ethernet Switching capabilities, where such engagement
requires a volume commitment from the customer and includes non-recurring
engineering ("NRE") costs to allow Ethernity to support integration of the
complete product within the customer's management platform.

 

Licensing model

In this business model, Ethernity customizes the ENET engine to fit into the
customer's product and preferred FPGA. The customer pays a one time, milestone
based NRE, and enters into a license agreement for the use of Ethernity's code
in its product under one of two licensing options: either the customer buys
the FPGA hardware from Ethernity (which comes with integrated Ethernity code);
or the customer sources the FPGA itself, and pays a royalty to Ethernity for
using the ENET FPGA code (with the size of such royalty depending on the OEM
deal size).

 

Ethernity is offering to its customers a path to significantly reduce their
costs by converting the FPGA into a significantly lower cost and higher
performance eASIC. Customers typically start with an FPGA and when annual
volumes get to 10,000 units, converting to eASIC becomes a viable financial
alternative. By opting for this alternative, the Company estimates that the
OEM company will be able to reduce its product cost by up to 50%, allowing the
vendor to be more competitive and take more market share. At the same time,
the higher production volumes enable Ethernity to enjoy higher gross margins
for the complete product.

 

David Levi, CEO, commented: "Ethernity is seeing promising progress with
current OEM vendor engagements, including several new ones. Such OEMs value
Ethernity's Programmable UEP, based on our semiconductor technology for
Ethernet Access and Passive Optical Network (PON) fibre access technology.
Ethernity's Technology is offered to its OEM customers via various business
models from IP licensing, conversion to eASIC or ASIC, through to delivery of
a complete customised system."

 

For further information, please contact:

 

 Ethernity Networks Ltd                                        Tel: +972 8 915 0392
 David Levi, Chief Executive Officer

 Ayala Deutsch, Chief Financial Officer

 Allenby Capital Limited (Nominated Adviser and Joint Broker)  Tel: +44 (0)20 3328 5656
 James Reeve / Piers Shimwell (Corporate Finance)

 Amrit Nahal (Sales and Corporate Broking)

 CMC Markets UK plc (Joint Broker)                             Tel: +44 (0)20 3003 8632

 Douglas Crippen

 Peterhouse Capital Limited (Joint Broker)                     Tel: +44 (0)20 7562 0930
 Lucy Williams / Duncan Vasey / Eran Zucker

 

About Ethernity (www.ethernitynet.com (http://www.ethernitynet.com) )

Ethernity Networks (AIM: ENET.L, OTCMKTS: ENETF) provides innovative,
comprehensive networking and security solutions on programmable hardware for
accelerating telco/cloud networks. Ethernity's semiconductor logic offers
complete Carrier Ethernet Switch Router data plane processing and control
software with a rich set of networking features, robust security, and a wide
range of virtual function accelerations to optimize telecommunications
networks. Ethernity's complete solutions quickly adapt to customers' changing
needs, improving time-to-market, and facilitating the deployment of 5G, edge
computing, and NFV.

 

 

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