REG - Ethernity Networks - Full Year Trading Update

Ethernity NetworksAnnouncement

05/12/2023 07:15

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RNS Number : 6414V  Ethernity Networks Ltd  05 December 2023

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.

 

05 December 2023

 

ETHERNITY NETWORKS LTD.

("Ethernity" or the "Company")

 

Full year trading update

 

Ethernity Networks (AIM: ENET.L; OTCMKTS: ENETF), a leading supplier of data
processing and fibre access semiconductor technology for networking
appliances, is pleased to provide an update on the Company's anticipated
trading for the year ending 31 December 2023 ("FY 2023").

 

Subject to completion of the FY2023 audit, the Company anticipates that its
headline results for 2023 will be:

 

·    revenue of between US$3.6m and US$3.8m (2022: US$2.97m);

·    underlying gross profit of between US$2.4m and US$2.6m (2022:
US$1.59m) representing an underlying gross margin of 67%-68% (2022: 54%);

·    EBITDA loss of not more than US$3.8m (2022: EBITDA loss of US$6.4m);
and

·    a reduction in monthly operating expenses from US$660k in June 2023
to US$300k in December 2023.

 

The Company's current cash balance is c. US$954k. This includes the proceeds
of the NIS 1,000,000 short term loan from David Levi, CEO of Ethernity,
details of which were announced on 26 October 2023. Under the ongoing
temporary suspension of proceedings ("TSP") process, details of which were
announced on 12 October 2023 (the "TSP Announcement"), the Company will be
required to agree a settlement with its creditors from the commencement of the
TSP. The Board anticipates that the current cash balances, together with the
anticipated cash receipts due ahead of the year end (details of which were
announced on 29 November 2023), will enable the Company to exit the TSP
process. Notwithstanding this, the Company is considering options to raise
additional funding to strengthen its balance sheet, which the Directors
believe would improve the Company's ability to secure significant contracts
with potential new customers.

 

Outlook

 

Subject to successfully exiting the TSP, the Company's strategic focus for
2024 will be on enhancing sales of its Universal Edge Platform ("UEP") fibre
access offering, including the low power remote OLT and optical interworking
units, as well as its 5G Open RAN data plane offload solutions. These
solutions are based on Ethernity's networking semiconductor technology that
enables it to provide a differentiated and innovative offering to its
customers. The Board considers that these growing markets offer significant
growth potential for Ethernity.

 

The Company's UEP employs the ENET Flow Processor firmware with best-in-class
Carrier Ethernet Switch technology that, to date, has been deployed in more
than 950,000 different systems. The global market for Carrier Ethernet Access
devices was estimated to be valued at US$17.2 billion in 2022 1  (#_ftn1) and
several OEMs are currently evaluating the Company's UEP. The UEP is available
to potential customers either through licensing of the Company's IP or via
sales of complete systems, including software applications up to an eASIC
offering. While the majority of the ongoing discussions with OEMs for
Ethernity's UEP are in the field of support for wireless link bonding, certain
potential opportunities are targeting general purpose Carrier Ethernet Switch
appliances, which include other unique monitoring and AI differentiated
networking functions. Ethernity is able to provide a differentiated and
cost-effective offering to its clients due to the Company's proprietary IP and
technology.

 

An updated version of the Ethernity's corporate presentation, providing
further background to the Company's target markets and solutions in these
markets, will shortly be available on the Company's website,
www.ethernitynet.com/investors (http://www.ethernitynet.com/investors) .

 

David Levi, CEO of Ethernity Networks, commented: "While we have had an
extremely challenging year, particularly over the last three months, the team
has been working tirelessly to release the UEP products with the required
functionalities for our targeted customers. Together with our Fibre Access
offering, which is targeting the US$50bn PON Market, and our 5G Open RAN data
plane offload solutions, we are hopeful that 2024 will be a transformative
year for Ethernity and, with our careful cost control on the reduced operating
cost base, our goal is to generate positive cashflow."

 

For further information, please contact:

 

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

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

 Amrit Nahal / Stefano Aquilino (Sales and Corporate Broking)

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

 

About Ethernity (www.ethernitynet.com)

 

Ethernity Networks (AIM: ENET.L OTCMKTS: ENETF) provides innovative,
comprehensive networking and security solutions on programmable hardware that
increase telco/cloud network infrastructure capacity. Ethernity's
semiconductor logic offers data processing functionality for different
networking applications, innovative patented wireless access technology, and
fibre access media controllers, all equipped with control software with a rich
set of networking features. Ethernity's solutions quickly adapt to customers'
changing needs, improving time-to-market, and facilitating the deployment of
5G over wireless and fibre infrastructure.

 1  (#_ftnref1)
 https://www.researchandmarkets.com/reports/3301144/carrier-ethernet-access-devices-global

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