Sweden, 2013-05-29 14:00 CEST (GLOBE NEWSWIRE) --
Strong growth in Q1
ZetaDisplay reported Q1 sales of SEK 18.2m, corresponding to growth of 50% over Q1 2012 and outperforming our expectations of 17.0m. The sustained high level of hardware installations is the main driver of the sharp rise in sales. From the short-term perspective, hardware installations have negative impact on gross margin but they also grow the installed base, which has positive impact on revenues and gross margin over the long term.
Continued strong growth in license revenue
The favourable trend for license revenue also continued during the quarter and delivered growth of 54% compared to Q1 2012.
Earnings weaker than expected
The company posted negative EBITDA in Q1 of -0.8m, underperforming our forecast of 1.2m, driven primarily by somewhat higher costs, lower than expected license revenue and relatively low margins on new installations. During the next quarter we anticipate continued growth in installations, software and services, which should enable ZetaDisplay to report positive earnings before depreciation and amortisation in Q2 and Q3.
Expansion outside the Nordics and new contracts in place
ZetaDisplay opened sales offices in the Netherlands and Estonia during the quarter in a bid to increase sales among new and existing new customers in these and neighbouring countries. In our assessment, this will entail a minor increase in costs but the increase will be offset by additional revenue. New contracts were also finalised with TUIfly Nordic and Lantmännen in Q1 for the installation of ZetaDisplay’s media platform and digital systems. The trend continued after the end of the quarter, when a new contract was signed with Asko in Finland.
Minor forecast adjustments and expected profit this year
We are raising our sales forecasts for 2013E-15E by 7-8% in response to the Q1 report and based on a strong inflow of new contracts. With a steadily growing installed base and a strong, sustained flow of inquiries from new and existing customers, we expect ZetaDisplay to turn a profit in 2013. However, uncertainty is high and deviations from the forecasts are likely in light of quarterly and annual fluctuation in margins and revenue. In our 2014E forecasts, ZetaDisplay is traded at a P/E of 9.7x, which we find attractive. For 2015 and forward, we see good growth potential for both the underlying market and ZetaDisplay.
The whole analysis is attached to this press release and can also be downloaded at www.penser.se/epaccess/zetadisplay
For more information please contact:
ZetaDisplay AB (publ)
CEO Leif Liljebrunn
Telephone: +46 70 845 80 52
E-mail: leif.liljebrunn@zetadisplay.com
About ZetaDisplay
ZetaDisplay is a leading supplier of Digital Signage to major chains in the retailing and service sectors of the European market.The head office is in Sweden and there are sales offices located in Denmark, Norway, Finland, Estonia and the Netherlands. Since April 2011 the company’s shares have been traded on NASDAQ OMX First North Premier, using the ZETA abbreviation. The Certified Adviser is Erik Penser Bankaktiebolag and the liquidity guarantor is Pareto Öhman. More information can be found at http://www.zetadisplay.com
About Digital Signage and multi-channel communication
ZetaDisplay defines Digital Signage as a system for advertising, profiling and retail store communication, which forwards audio, images and film related to retail stores and information in the public environment. A Swedish name for Digital Signage translates as digital retailing communications. Solutions based on digital displays form a large part of the market, but development is proceeding towards the utilisation of more digital channels to communicate customer offers and other information. This is a matter of solutions that are integrated into social media and web sites, and apps for smart mobile phones and tablets which create interaction with customers. Development is also progressing towards integrating solutions with retailers’ cash desks for automatic price updating and the automatic switching of offers on the digital displays.
