Media Content Kudelski Group Suffers US$20.4 Mil. Loss in 1H 2019

Cheseaux-sur-Lausanne, Switzerland, Aug. 21, 2019 — The Kudelski Group (SIX: KUD.S), a provider of media content protection and value-added service technology, has reported a net loss of US$20.4 million, which included US$13.7 million of restructuring costs, during the first half of 2019.

The Group said it generated US$400.6 million total revenues and other operating income, representing a 6% decrease from the previous first half. The Group reduced its first half operating expenses by US$54.8 million compared to the first half 2018. Operating income before depreciation and amortization (OIBDA) ex-restructuring costs was US$10 million higher at US$29.2 million.

Digital TV revenues reached US$190.5 million, representing a constant currency decline of 12%. It said the legacy digital TV market continues to contract, as a number of established pay TV operators report lower subscriber numbers. In addition, the Group did not book any IP licensing revenues in the first half 2019. Digital TV generated US$53.6 million of OIBDA net of restructuring costs, representing a US$1.6 million improvement from the previous first half.

The Group’s cybersecurity business generated US$72.9 million of gross revenues in the first half 2019, a 3.3% decrease from the first half 2018, as the Group actively shifts its business mix from lower margin technology reselling to higher margin advisory services, managed security services and proprietary technology sales. Margin after cost of material relative to net revenues increased from 37.5% in the first half 2018 to 43.4% in this first half. The Cybersecurity segment generated a US$-10.7 million OIBDA, representing a US$1.5 million improvement from the previous year.

In the first half, IoT generated revenues of US$1.2 million, mainly from the IoT Center of Excellence, and an OIBDA of US$-11.5 million, reflecting the early development stage of this business.

Public Access revenues on a constant currency basis increased by 2.9% in the first half 2019 compared to the prior year period. Revenue development was driven by a strong European business, which grew by 9.6% in local currency, and the American business, which generated 12.2% growth from the previous first half. Public Access OIBDA increased to US$4.7 million, a US$6.6 million improvement from last year’s period.

In line with the rapid evolution of the digital TV market, the Group said it continued the transformation of the Digital TV division with a number of structural changes.

The Group merged its Conditional Access Solutions and User Experience product units into a consolidated DTV Product Unit to deliver a more consistent and complete offer to the market, with a focus on leveraging the power of the Cloud and IP connectivity, while realizing operational synergies.

In June, the Group announced the appointment of Nancy Goldberg as chief marketing officer (CMO), in charge of the sales and marketing of the Kudelski Group’s Digital TV division. She is joining the Group as executive vice president, succeeding Pierre Roy, who will retire after 25 years within the company.

While adapting to the challenges of the transforming video landscape, the Group continues to strengthen its partnership with market-leading operators. In Europe, the Group is deploying its Security Solution Platform across Vodafone, supporting set-top boxes as well as open devices. Vodafone extended this collaboration to include the cloud-based NAGRA Device Authentication Service. In the United States, NAGRA continued to strengthen its relationship with Altice USA (NYSE: ATUS) to include NAGRA Protect, the leading broadcast content protection.