NETI B: Next-Gen Platform Upgrades Will Drive Media Workflow Adoption

Key Takeaways

• Accelerated adoption of IP and cloud-based solutions, alongside growth in software and service revenues, is expanding the company's addressable market and boosting margins.
  
• Strategic R&D, innovation, and targeted cost reductions are improving competitiveness, profitability, and diversification across media and telecom infrastructure markets.
  
• Revenue growth is threatened by uncertain demand, heavy customer concentration, risky large deals, delayed 5G adoption, and rising expenses amid global economic and currency pressures.

Catalysts

Provides media network solutions worldwide.

• Adoption of Net Insight's high-capacity, IP-based, and cloud-enabled media transport solutions is accelerating, driven by broadcasters' and enterprises' need to support growing live and on-demand streaming content and the shift from satellite to IP delivery-expected to structurally grow the company's addressable market and boost top-line revenue.
  
• Increasing demand for precise time synchronization in 5G networks, as operators and regulators seek GPS/GNSS-independent solutions, positions Net Insight to expand into new telecom and critical infrastructure markets-potentially driving significant incremental revenues and improving business diversification.
  
• Expansion of recurring software and service revenue streams (SaaS, managed services, licensing) is gaining traction with large media deals and new time synchronization contracts, supporting higher gross margins and increased earnings visibility over time.
  
• Strategic investments in R&D, product innovation (e.g., 400-gig platform, cloud-based offerings, AI integration), and deepening ecosystem partnerships are expected to strengthen Net Insight's competitive position and enable premium pricing, positively impacting long-term revenue growth and operating leverage.
  
• Announced cost reduction initiatives set to fully take effect by Q1 2026 are likely to reduce OpEx and enhance net margins, improving overall profitability as projected volume growth in both media and time sync segments begins to materialize.

Net Insight Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Net Insight's revenue will grow by 15.1% annually over the next 3 years.
• Analysts assume that profit margins will increase from 0.3% today to 21.7% in 3 years time.
• Analysts expect earnings to reach SEK 180.6 million (and earnings per share of SEK 0.33) by about August 2028, up from SEK 1.8 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 15.3x on those 2028 earnings, down from 751.3x today. This future PE is lower than the current PE for the GB Communications industry at 47.8x.
• Analysts expect the number of shares outstanding to decline by 1.99% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 5.95%, as per the Simply Wall St company report.

Net Insight Future Earnings Per Share Growth

Risks

• Persistent market uncertainty, delayed customer orders, and longer decision-making cycles-especially in the key media and 5G/time synchronization segments-could suppress near-term and long-term revenue growth, creating volatility in quarterly earnings and impeding steady top-line expansion.
  
• Heavy reliance on large, one-off deals (e.g., a largest media deal ever driving the quarter) introduces lumpiness and risk to revenue and margin consistency, and exposes the company to setbacks if such deals do not recur or are lost to competitors-impacting both revenue and net margins.
  
• Significant investments in R&D and time synchronization ahead of proven commercial uptake have led to a temporary increase in OpEx and negative cash flow, with management acknowledging that revenue contributions from these bets (e.g., 5G sync rollouts) have been delayed, raising the risk of not achieving needed scale or ROI in the timeline project-this could pressure net profits and cash reserves.
  
• Elevated customer concentration risk exists in Net Insight's high-capacity/venue solutions, as growth is currently concentrated in a small set of U.S. venues and a few key telecom rollouts (e.g., Türk Telekom); if these customers slow their investments, in-source, or switch vendors, Net Insight's recurring support/licensing revenue base and gross margins could be materially affected.
  
• Continued FX headwinds, geopolitical uncertainty, and global macroeconomic softness (particularly in EMEA and APAC earlier in the year) may further compress gross margins, destabilize regional revenue growth, and force ongoing cost-saving measures that could dampen investment and innovation, thereby limiting the company's long-term earnings potential.

Valuation

• The analysts have a consensus price target of SEK7.25 for Net Insight based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of SEK9.0, and the most bearish reporting a price target of just SEK5.5.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be SEK833.7 million, earnings will come to SEK180.6 million, and it would be trading on a PE ratio of 15.3x, assuming you use a discount rate of 6.0%.
• Given the current share price of SEK3.88, the analyst price target of SEK7.25 is 46.4% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.