Ethernity Networks Ltd Update on strategy, trading and $1.5 million order (8122H)
August 01 2023 - 2:00AM
UK Regulatory
TIDMENET
RNS Number : 8122H
Ethernity Networks Ltd
01 August 2023
1 August 2023
ETHERNITY NETWORKS LTD.
("Ethernity" or the "Company")
Strategy and trading update
and update on $1.5 million order
Ethernity Networks (AIM: ENET.L; OTCQB: ENETF), a leading
supplier of data processing semiconductor technology for networking
appliances, announces an update on its recent $1.5 million purchase
order and the following update on the Company's strategy and
trading.
$1.5m purchase order
The Company is pleased to report that it has completed the
delivery of the Company's data processing system-on-chip ("SoC")
devices to its existing fixed wireless customer pursuant to the
$1.5 million purchase order announced on 29 June 2023. The Company
delivered c. 40% of the order in June 2023 and has received the
payment for this portion, with the balance delivered in July 2023
and due for payment by the end of August 2023.
Strategy update
Ethernity's Passive Optical Network ("PON") controller
technology can be used in different broadband network
configurations and platforms including in fiber-to-the-premises
("FTTP"), fiber-to-the-building ("FTTB") and
fiber-to-the-home/fiber-to-the-room ("FTTH"/"FTTR") (together,
"FTTx"). This provides Ethernity with the opportunity to offer its
PON solutions for a variety of different scenarios.
There is significant global investment in improving fiber
connectivity, particularly in the EU, USA and India. FTTH Council
Europe has estimated that by 2027 approximately 300 million homes
will be connected to fiber. In the USA, $42.5 billion has been
allocated to investment in broadband infrastructure projects
pursuant to the "Broadband Equity, Access, and Deployment (BEAD)
Program". With certain of those territories banning the use of
products manufactured by Chinese system vendors, this has provided
the opportunity for new vendors to enter the market.
Ethernity's go to market strategy is to provide an alternative
source of PON technology for system vendors, by offering the
Company's PON controller both on Field Programmable Gate Arrays ("
FPGAs ") and in a pplication specific integrated circuits (" ASICs
"), whilst combining its PON technology and flow processor switch
technology onto a single ASIC, thereby delivering a complete
Optical Line Terminal (" OLT ") on a chip .
The Company's customized PON solution on FPGAs will be offered
on a licensing model which, the Directors believe, will provide a
more cost-effective solution to prospective customers for certain
PON applications, compared to the existing devices in the market.
ASIC sales are expected to represent a larger portion of the total
addressable market and will be targeted on a revenue sharing model
with ASIC vendors. This new revenue sharing model, which the
Company has already begun to discuss with certain customers, should
improve the Company's gross margin compared to its existing product
sales and would allow Ethernity to target larger scale PON platform
contracts.
Trading update
As set out in the Company's annual report and the results for
the year ended 31 December 2022 (" FY2022 Accounts "), the Company
is taking careful steps towards generating positive cash flow from
its operations during FY2023, which includes a combination of the
modified business model to focus on licensing, as described above,
and a reduction in costs. The delays in existing customer
contracts, combined with the extended sales cycles being
experienced by the Company, as set out in the FY2022 Accounts,
place significant uncertainty over the Company's ability to achieve
the revenues previously targeted for FY2023. Whilst revenue is
therefore expected to be lower than previously anticipated, the
focus on the higher margin licensing contracts is expected to
contribute to an improved gross margin once licensing sales
commence and, combined with the cost savings, an improved
EBITDA.
David Levi, CEO of Ethernity Networks, commented: "With the PON
licensing model that we are implementing, we anticipate that we
will be able to generate positive cash flow from operations and
build a profitable and growing business."
For further information, please contact:
Ethernity Networks Ltd Tel: +972 8 915
0392
David Levi, Chief Executive Officer
Allenby Capital Limited (Nominated Adviser Tel: +44 (0)20
and Joint Broker) 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 OTCQB: 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
PON 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.
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