12th Jun 2019 11:27
(Alliance News) - Ethernity Networks Ltd on Wednesday said it swung to a loss in 2018 due to a declining margin and "market delays" as well as higher expenses.
Shares in networking and security company Ethernity were up 9.8% at 28.00 pence in late morning trade.
Ethernity's pretax loss in 2018 was USD2.5 million, reversing a small USD159,471 profit the year before.
Revenue declined 27% to USD1.1 million from USD1.5 million on "market delays and customer positioning". Ethernity said "adoption of the new networking virtualization market" in which the company operates was delayed by around a year. Ethernity said the results reflect the delay but align with expectations.
While its gross margin percentage narrowed to 72% from 86%, Ethernity said margins remained above the 50% level used in its own forecasting.
Research and development expenses more than doubled to USD473,489 from USD215,778, and general and administrative expenses likewise more than doubled, reaching USD1.3 million versus USD554,645 in 2017. Impairment losses of financial assets rose to USD132,799 from USD37,258.
Ethernity said 2019 will be challenging but it is confident of progress and long-term value building.
"I am now significantly more positive of achieving our planned growth objectives in existing and new market places as I see the growth in interest in the company's offerings and the opening of materially significant discussions that will lead to the company making considered headway in 2019 and allow for multiple times growth in 2020 as the solutions pass testing phases by the operators and reach mass deployment," said Ethernity Chief Executive David Levi.
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