Kudelski FY revenues decline
February 27, 2020
The Kudelski Group, a digital security specialist, has announced its 2019 annual results. Total revenues and other operating income decreased from $919.7 million to $827.3 million. This evolution was mainly driven by the Digital TV segment, which posted a $61.3 million decline, reflecting the trend seen in emerging markets.
In the Public Access segment, European sales increased by 8.8 per cent in constant currency, while in the Americas, sales decreased 16.5 per cent compared to the previous year. Cybersecurity revenues shifted from lower margin technology reselling to higher margin advisory services, managed security services and proprietary technology sales.
IoT generated marginal revenues as the segment’s primary focus continues to be the development of a secure IoT platform solution for the market.
Overall, the Group reduced 2019 operating expenses by $81.7 million, including $56.8 million of cost savings achieved with the ongoing restructuring program, net of the cost of additional investments in the Group’s key growth areas. Group EBITDA, excluding restructuring costs, was $81.4 million, a $5.5 million increase over the previous year.
For 2020, the Group expects the revenue erosion in the Digital TV segment to taper off, as the subscriber churn at established pay TV operators is slowing down and the Group will continue to benefit from multiyear contracts with large pay-TV customers. The Group is also successfully introducing new solutions that are expected to drive further revenue opportunities with its clients. Following the reduction of operating expenses in the past two years, the Group expects the Digital TV cost base to remain substantially stable in 2020.
With Cybersecurity, the Group will continue to drive the development of higher value product lines and expects continued growth of margin after cost of material. Cybersecurity is expected to continue adding new clients, expanding geographical coverage and increasing profitability by leveraging strategic offerings and high-value products and services. For 2020, the Cybersecurity segment top line is expected to revert to growth, resulting in a lower operational loss compared to 2019.
Following three years of substantial investments, a secure IoT platform is now available for commercial deployment. In 2020, the Group targets a level of revenue contribution from the IoT business that is at least double the level achieved in 2019. At the same time, operating expenses will remain in the same range as in prior years.
In the Public Access segment, SKIDATA is implementing rationalization measures that are expected to result in a material reduction of operating expenses. These measures are expected to restore an EBITDA margin level in line with prior years.
For 2020, the Group expects EBITDA to be between $70 and 90 million and positive net income.