Interim Report, July – September 2015

Continued growth in revenues and profit

Enea increased its operating profit and operating margin in the third quarter.
Revenue growth was also good, while earnings per share were also higher than the
corresponding quarter of the previous year.

  · Net sales in the third quarter amounted to SEK 117.7 (105.0) million, an
increase of 12 percent. Sales for the first nine months of the year increased to
SEK 355.3 (310.0) million.
  · Operating profit for the third quarter increased to SEK 27.9 (23.9) million,
corresponding to an operating margin of 23.7 (22.8) percent. Operating profit
for the first nine months of the year increased to SEK 77.7 (64.6) million,
equating to an operating margin of 21.9 (20.8) percent.
  · Earnings per share rose to SEK 1.29 (1.16) for the third quarter and SEK
3.77 (3.13) for the first nine months of the year.
  · Cash flow from operating activities was SEK 17.5 (17.9) million for the
quarter and SEK 85.8 (77.7) million for the first nine months of the year. Cash
and cash equivalents and financial investments amounted to SEK 193.4 (184.7)
million at the end of the quarter.

July to September 2015
(third quarter previous year in brackets)

  · Net sales, SEK 117.7 (105.0) million
  · Revenue growth, 12 (8)%
  · Revenue growth, currency adjusted, 6 (6)%
  · Operating profit, SEK 27.9 (23.9) million
  · Operating margin, 23.7 (22.8)%
  · Net profit before tax, SEK 27.7 (24.3) million
  · Net profit after tax, SEK 20.6 (18.8) million
  · Earnings per share, SEK 1.29 (1.16)
  · Cash flow (from operating activities), SEK 17.5 (17.9) million
  · Cash and cash equivalents and financial investments, SEK 193.4 (184.7)
million

Anders Lidbeck, President and CEO comments:

“The first half-year 2015 progressed well for us, and the third quarter
maintained the same tempo. Operating profit for the third quarter was up by 17
percent on the corresponding period of the previous year. In the third quarter
of 2015, like the first and second quarters, we also set operating profit
records for these periods, not only in year-on-year terms, but for the whole of
Enea’s history. The third quarter was the tenth consecutive quarter of year-on
-year profit growth, and the sixteenth consecutive quarter of margin expansion.

Sales also made satisfactory progress in the quarter, with 12 percent growth on
the corresponding period of the previous year. This is our fourth consecutive
quarter of double-digit revenue growth. However, the currency-adjusted growth
was 6 percent in year-on-year terms. Primarily, the difference is due to us
having one-third of our revenues in US dollars, and the dollar being 26 percent
stronger against the Swedish krona than in the corresponding period of the
previous year. The Swedish krona has also depreciated against the euro compared
to the same period of the previous year, which also affects us to some extent.
However, our currency exposure on the profit line is fairly modest, because our
revenues and expenses are well allocated between different currencies within the
framework of our global business. This is corroborated by our operating profit
growth of 17 percent, and earnings per share increase of 11 percent in the third
quarter, in year-on-year terms. Our profit gains are due to revenue growth
coupled with continuous work on identifying and implementing productivity
improvements right across our business. At the end of the quarter, we altered
our sales organization in Germany. We also expanded the capacity of our Nordic
sales organization. All the expenses for these changes were charged to third
-quarter profits.

Once again, we exceeded 20 percent growth in year-on-year terms in our global
service business, as well as sequential growth on the previous quarter. This is
the sixth consecutive quarter of double-digit growth and the fifth consecutive
quarter of growth exceeding 20 percent on the corresponding quarter of the
previous year. Product-related service sales are continuing to grow, even if
growth was somewhat more restrained in the third quarter. The high demand for
expert services associated with our products is a consequence of a growing
number of solutions being based either on open source, or a combination of open
source and proprietary software. Additionally, our customers are continuously
seeking more cost-efficient ways to execute their projects.  In overall terms,
our service business is continuing to outgrow our software business, which is
the main reason for our third-quarter gross margin (67.8 percent) being lower
than the corresponding quarter of the previous year (72.4 percent). We also have
a good net margin in our service business. Expert know-how, not confined to our
own products, but also the capacity to deliver integrated projects effectively
and with high quality, is, and will remain, a key component in a world where
open source is getting more important. Accordingly, we’ll keep developing our
global service business, and in the third quarter, we opened our second start-up
in Romania, in the University town of Iasi, to ensure our access to competence.

Our software business grew by 5 percent in the third quarter, in year-on-year
terms. Revenues from key accounts decreased somewhat on the previous year. These
revenues remain heavily dependent on royalty revenues, which were stable in year
-on-year terms. In our software business, our realignment to generating a
growing share of revenues outside our major accounts continues. In the third
quarter, we achieved growth of over 20 percent for the fifth consecutive quarter
in what we designate as Worldwide Software Sales. After the third quarter,
rolling 12-month growth in this segment was as high as 41 percent, which means
that software sales and the associated product-related services within Worldwide
Software Sales, are Enea’s highest-growth segment. We are delighted about this,
and it is important for the company that we continue to advance our market
positioning quarter by quarter by winning new contracts and new business
customers. In the third quarter, we signed an agreement with a Russian
corporation, which has selected our proprietary operating system Enea OSE to
install in a spacecraft as part of an ongoing European space program. To be
selected as part of such a demanding and high-profile project offers yet more
recognition of Enea OSE’s quality and characteristics.

Our second major realignment, which is about creating a product portfolio with
more offerings based on open source, and to secure ourselves more deeply in
relevant multinational open source collaborations, is also continuing at an
undiminished pace. Several interesting developments occurred in the past
quarter, which have various links to our commitment to the Linux Foundation,
where we were already a silver member. At the end of the summer, Enea was
present as a sponsor and exhibitor at LinuxCon North America. To be a visible
component of the growing Linux community in this manner is critical to our brand
and general recognition of Enea. Another noteworthy event was that alongside our
partners in the ARM ecosystem1, and within the Linux Foundation’s “OPNFV”
project2, we have now set a new course focusing on ARM as a platform. Because
much of our commitment associated with what we call “COSNOS”3 is based on ARM as
a platform, naturally the advance of this ecosystem is really important to us.
We also saw growing interest for training in LINUX in the previous quarter—even
if this is a segment where we already had an established collaboration with the
LINUX Foundation. Just as in previous quarters, we are continuing to invest
right across our offering—a product portfolio that now extends from proprietary
software, as well as new, emerging components based on open solutions and open
source. Our investment in product development increased by 7 percent year on
year.

We are continuing our endeavor to build a bigger and even stronger company that
delivers greater value for customers, employees and shareholders. The trends and
changes that we are seeing on the market, not least associated with open
solutions, do increase the risks for us. We are addressing this by being part of
these changes, and executing the realignment and focuses reviewed above. We will
also be accelerating our business development work to secure in-depth strategic
alliances. With strong finances, good cash flows and far stronger market
positioning in emerging technology segments, we are prepared for these changes,
and view the future with confidence.

Our objective for the full year 2015 remains to achieve revenue growth, and we
expect earnings per share to improve compared to 2014.”

1) ARM is both the name of a processor architecture, and the company behind this
architecture. Around these there is an ecosystem of different companies that
build hardware or software with the aim of systems based on ARM architecture.
2) Open Platform for NFV (abbreviated ”OPNFV”) is a project initiated by the
Linux Foundation with the objective to develop a platform for NFV solutions,
based on open source.
3) ”COSNOS” (”Carrier-grade open source network operating system”) is a concept
that Enea announced in May this year, which aims to develop a software platform
for next-generation virtualized network functions. COSNOS builds on the work
that Enea do around OPNFV with the aim of ARM-based systems.

Press and analyst meeting
Press and financial analysts are invited to a press and analyst meeting where
Anders Lidbeck, President and CEO, will present and comment on the report.
Time: Wednesday October 21 at 08:30 am CET.
Link: http://financialhearings.nu/151021/enea/
Phone number: SE: +46856642661, UK: +442034281402

The full report is published at www.enea.com/investors

This information is such that Enea AB (publ) is to publish in accordance with
the Swedish Securities Markets Act and/or the Financial Instruments Trading Act.
The information was submitted for publication on October 21, 2015 at 7.20 CET.

For more information visit www.enea.com/investors or contact:
Anders Lidbeck, President & CEO
E-mail: anders.lidbeck@enea.com

Sofie Dåversjö, Investor Relations
Phone: +46 70 971 40 05
E-mail: sofie.daversjo@enea.com

About Enea

Enea is a global supplier of network software platforms and world class
services, with a vision of helping customers develop amazing functions in a
connected society. We are committed to working together with customers and
leading hardware vendors as a key contributor in the open source community,
developing and hardening optimal software solutions. Every day, more than three
billion people around the globe rely on our technologies in a wide range of
applications in multiple verticals – from Telecom and Automotive, to Medical and
Avionics. We have offices in Europe, North America and Asia, and are listed on
NASDAQ OMX Nordic Exchange Stockholm AB. Discover more at www.enea.com and start
a conversation at info@enea.com.

Enea®, Enea OSE®, Netbricks®, Polyhedra® and Zealcore® are registered trademarks
of Enea AB and its subsidiaries. Enea OSE®ck, Enea OSE® Epsilon, Enea® Element,
Enea® Optima, Enea® Optima Log Analyzer, Enea® Black Box Recorder, Enea® LINX,
Enea® Accelerator, Polyhedra® Lite, Enea® dSPEED Platform, Enea® System Manager
and Embedded for Leaders(TM) are unregistered trademarks of Enea AB or its
subsidiaries. Any other company, product or service names mentioned above are
the registered or unregistered trademarks of their respective owner. © Enea AB
2015.