Cheseaux-sur-Lausanne, Switzerland and Phoenix (AZ), USA - August 22nd, 2024 - The Kudelski Group (SIX: KUD.S), the world leader in digital security, announced today its results for the first half of 2024.
The first half of 2024 marks a significant shift in the Groups activities with the expected sale of SKIDATA. This transaction fundamentally changes the scope of the Groups operations, with SKIDATA now presented as discontinued operations in the financial statements. The sale, based on an enterprise value of EUR 340 million, is expected to generate net cash of over EUR 300 million after settling SKIDATA loans of around EUR 30 million and accounting for transaction costs and other adjustments.
The proceeds of this transaction will be used by the Group to repay its outstanding CHF 145.9 million bond and all remaining bank debt, resulting in a net cash position close to USD 100 million. The transaction remains subject to regulatory approval and customary closing conditions, and while the closing is anticipated prior to the bonds maturity date, the Group has secured a CHF 150 million credit line from Farallon as a contingency measure.
Following this divestiture, the Group will consist of three business segments - Digital Television, Cybersecurity and Internet of Things. During the first half of 2024, the Digital Television segment faced headwinds, experiencing a decline in revenue and margins after cost of material, which resulted in diminished profitability. In Cybersecurity, top line growth remained modest as the focus shifted towards improving its gross margin to minimize segment losses and approach the break-even point. Meanwhile, the Internet of Things segment maintained strong momentum with solid growth, albeit with increased EBITDA losses due to accelerated investments.
In the first half of 2024, the Groups net revenues remained relatively stable, showing a slight increase of 0.4% to USD 192.0 million. Other operating income increased by USD 2.5 million to reach USD 6.1 million.
DIGITAL TELEVISION: INCREASING OUR MARKET REACH WHILE FOCUSING ON CUSTOMER ENGAGEMENT
Digital Television revenues declined by 7.4% to USD 109.8 million in the first half of 2024. Digital Television margins after cost of material decreased from 94.1% to 89.5%, reflecting a revenue mix that included more CAMs and hardware than in the previous first half. Operating expenses in the Digital Television segment were USD 2.4 million lower compared to last year, mainly due to headcount reductions driven by lower business volumes. This segment's operating expenses include USD 4.5 million of restructuring costs. Digital Television generated USD 3.8 million of EBITDA (USD 8.3 million net of restructuring costs), compared to USD 14.7 million in the first half of 2023.
In an environment characterized by piracy concerns, cybersecurity risks and rapidly advancing AI solutions, Nagravision focused efforts on the promotion of solutions such as Active Streaming Protection, which addresses security vulnerabilities in OTT streaming, NAGRA Scout, which safeguards consumers from cyber threats to smart homes, and OpenTV Platform, which creates consumer value through a user-centric optimized streaming experience. NAGRA Insight Negotiation Agent, Nagravision's autonomous customer care agent powered by controlled generative AI and digital twin technology, is also drawing interest from major telecommunications operators who are looking to reduce churn and optimize revenue.
In a challenging market, the Digital Television division has demonstrated its continuing capability to extend existing partnerships and won new contracts with operators and institutions worldwide during first half of the year:
Nagra Sport and the European Broadcasting Union (EBU) partnered to launch Eurovision Sport, a new worldwide direct-to-consumer sports streaming service providing free-to-air access to major sporting events;
India's GTPL Hathway Limited launched linear television content on connected TVs through TVKey Cloud, a joint solution developed by Nagravision and Samsung;
Nagravision and content distributor Eluvio extended their collaboration with the industry-first integration of forensic watermarking for live streaming of sports and live events;
In Poland, Deutsche Telekom Polska selected Nagravision for its OTT ASP/multi-DRM service;
Switzerland's leading telecom operator Swisscom chose Nagravision's anti-piracy services for its Pay-TV offerings;
In India, sports broadcaster and aggregator Fancode implemented Nagravision's multi-DRM and watermarking solutions for its service; and
Entel, the largest telecommunications company operating in Chile and Peru, has selected Nagravision's OpenTV Platform for its OTT service.
CYBERSECURITY: ACCELERATING TRANSFORMATION AND GROWTH WITH DIFFERENTIATED SERVICES AND STRONG PERFORMANCE
The Group's Cybersecurity segment continues its path towards scalability and profitable growth. In the first half 2024, net revenues remained stable at USD 58.6 million compared to the first half of 2023. The managed security business maintained its impressive growth trajectory, with revenues increasing by USD 4.1 million to reach USD 28.5 million in the first half of the year. Segment margins after cost of material persistently improved over the last year, rising from 66.4% to 71.7%. In absolute terms, margins after cost of material increased by 7.9% to reach USD 42.0 million. The business reduced its operating loss before depreciation and amortization by 59.3% to USD 2.7 million from USD 6.7 million in the first half 2023.
A major highlight of the first half of 2024 was the successful market launch of Kudelski Security's new service, MDR ONE Resolute, in December 2023. The service has already been adopted by over 50 clients, demonstrating strong market demand and reinforcing Kudel
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Cheseaux-sur-Lausanne, Switzerland and Phoenix (AZ), USA - August 22nd, 2024 - The Kudelski Group (SIX: KUD.S), the world leader in digital security, announced today its results for the first half of 2024. 
