Sweden, 2013-11-25 10:23 CET (GLOBE NEWSWIRE) --
Sales in line with expectations
ZetaDisplay reported sales of SEK 12 (10) million in Q3, representing sales growth of 20% compared to the same period last year. We anticipated sales of SEK 13 million in Q3. The sales increase was primarily driven by a stronger demand scenario from the French and Norwegian markets. The gross margin increased during the quarter and amounted to 60%, compared with 53% in Q2 (positive mix effect of increased recurring revenue). Operating profit amounted to SEK -1.9 (-1.8) million, which was slightly below our estimate of SEK -1.4 million. The company states that its international expansion was the primary reason for the slightly higher cost base. Profit after tax amounted to SEK -2.1 (-2.2) million.
International expansion begins to bear fruit
During the quarter, four companies signed agreements for ZetaDisplay’s media platform, including Norwegian home furnishing chain Hansen & Dysvik, which has 45 stores in its network, and a cosmetics company in France. Furthermore, the company announced that two more companies (Netonnet and Mercedes-Benz) signed contracts after the period for the Digital Signage media platform. This indicates that the international expansion is beginning to bear fruit. We calculate that the company requires annual sales of approximately SEK 65-70 million to meet its costs. Our view is that the cost level of the company will rise slightly in the final quarter of the year. However, we expect a positive operating profit before depreciation and amortisation for Q4 2013, driven by continued growth of installations, software and services.
We expect profit in 2014E
We are lowering our estimates for 2013E EPS, given a slightly higher cost base from ZetaDisplay’s expansion in Europe than we had previously anticipated. However, we maintain our forecast for 2014E. With a steadily growing installed base and continued strong flow of inquiries from both existing and new customers, we expect profit in 2014 for ZetaDisplay. Uncertainty, and thus probable deviations from the forecasts, is large given the quarterly and annual fluctuation in margins and revenues. On our 2014E forecasts ZetaDisplay is traded at P/E 10x, which we find attractive. For 2015 and onwards, 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 http://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.
