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NET INSIGHT Interim report January - June 2011


WEBWIRE

Net Insight AB [publ] Corporate Reg. No 556533-4397

Second Quarter 2011

· Net Sales of SEK 72.2 million (71.5) corresponding to a growth of 1.0% compared with the same period previous year. The growth rate in comparable currencies amounts to 12%.

· Operating earnings of SEK 8.3 million (11.9), corresponding to an operating margin of 11.5% (16.6).

· Earnings per share of SEK 0.02 (0.02).

· Total cash flow of SEK -25.8 million (3.3) due to temporary changes in working capital.

January - June 2011

· Net sales of SEK 138.9 million (132.0) corresponding to a growth of 5.2% compared with the same period previous year. The growth rate in comparable currencies amounts to 11%.

· Operating earnings of SEK 11.2 million (18.1), corresponding to an operating margin of 8.1% (13.7).

·Earnings per share of SEK 0.04 (0.19).

·Total cash flow of SEK -45.3 million (56.4).

MODEST GROWTH BUT CONTINUED GEOGRAPHICAL EXPANSION

Revenues reported in the second quarter of 2011 were SEK 72.2 million and slightly above the same period in the previous year. We are pleased to have won some very significant contracts in the quarter but as a company we remain dependent on certain key projects to materialize in order to achieve significant revenue growth.

The reported gross margin for the second quarter is 61.3 % compared with 66.4 % for the same period in the previous year. The cash flow during the second quarter was negative by SEK 25.8 million mainly due to changes in working capital and higher inventory levels to hedge certain long lead time components for production. The negative cash flow is not a result of any change in bad debts. The revenue growth the second quarter amounted to 1.0 % compared with the same period previous year. In fixed currencies the revenue growth amounted
to 12 %.

The second quarter showed a steady repeat business with existing customers and two significant contracts from two new customers, one in the US and one new important cable-TV customer in Germany. The Americas and APAC have improved slightly and EMEA was lower than expected. We continue our strategic direction to expand geographically. Net Insight entered several new countries during the quarter and opened up new markets through our partners in countries such as Turkey, Greece, Egypt, Peru and Colombia.

Our partner network increased with eight new partners to a total of 48 partners. Our indirect sales reached 33 % of total revenues for the quarter and for the first six months indirect sales reached 48 %. We have now established a strong partner network in all target markets and going forward our focus is to leverage these partnerships to achieve accelerated growth.

The operating earnings for the second quarter and the first half of 2011 was SEK 8.3 million and SEK 11.2 million respectively, compared with SEK 11.9 million and SEK 18.1 million for the same period in the previous year. In summary, revenues were higher the second quarter and for the first half of 2011, but we were not able to compensate for the foreign exchange effects on the bottom line.

Net Insight AB discloses the information provided herein pursuant to the Securities Market Act and/
or the Financial Instruments Trading Act. The information was submitted for publication on July 20, 2011 at 08.30 am CET.

About Net Insight

Net Insight delivers the world’s most efficient and scalable transport solution for Broadcast and IP Media, Digital Terrestrial TV, Mobile TV and IPTV/CATV networks.

Net Insight products truly deliver 100 percent Quality of Service with three times improvement in utilization of bandwidth for a converged transport infrastructure. Net Insights Nimbra(TM) platform is the industry solution for video, voice and data, reducing operational costs by 50 percent and enhancing competitiveness in delivery of existing and new media services.

More than 130 world class customers run mission critical video services over Net Insight products in over 50 countries. Net Insight is quoted on the NASDAQ OMX, Stockholm.

For more information, visit www.netinsight.net



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