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Calnex ends tougher year in line with market forecasts

Wed 03 April 2024 14:03 | A A A

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(Sharecast News) - Telecommunications and cloud computing test and measurement specialist Calnex Solutions said in an update on Wednesday that for the 2024 financial year, it anticipated results in line with market expectations, with revenues reaching £16.3m and margins maintained.

The AIM-traded company said it had adjusted its cost base, focusing research and development spend to capitalise on available opportunities while controlling other costs.

Despite ongoing challenges in the telecoms sector, customer engagement levels remained high, instilling confidence that improvements in the telecoms market outlook would lead to project recommencements and resumed customer spending.

Calnex said it was well-positioned to fulfil orders related to those projects once activity levels increased.

Its management said it was encouraged by the positive engagement with customers on the company's new product programmes.

Continued order growth from the defence and cloud computing sectors was expected to facilitate Calnex's return to growth in the 2025 financial year and beyond.

The engineering programmes had been directed toward opportunities showing near-term resilience and potential within the established telecoms market, and in the emerging markets of cloud computing and defence.

In the telecoms market, focus was on 800 gigabits-per-second synchronisation testing, where there was growing customer demand.

A major new release in the second half of 2025 was anticipated to support leading-edge 800 gigabits-per-second interface testing.

Despite ongoing challenges in the telecoms market, the transition to 5G and further development of O-RAN were expected to drive long-term transformation and demand for Calnex's lab synchronisation products.

Calnex said its products targeting the cloud computing and data centre markets, such as SNE-X, SNE Ignite, and NE-ONE, were receiving encouraging interest and initial orders.

Over the medium term, the cloud computing market represented a significant opportunity for Calnex, driven by investment to support growth in artificial intelligence (AI), virtual reality, and increasing data centre demand.

The company said it was exploring new opportunities in network time monitoring, data centre efficiency, and effectiveness.

Additionally, good order levels for its application assurance offering, NE-ONE, in the defence, government, and satellite markets were expected to continue in the 2025 financial year.

To maximise those opportunities, Calnex said it was optimising its market approach for its suite of cloud-focused offerings, bringing together its cloud infrastructure and application teams to develop a consistent additional revenue stream.

"In the face of a challenging telecoms market we have successfully adjusted the focus of our engineering programmes towards the markets showing the most resilience and opportunity, with positive customer conversations taking place across each of our new product programmes," said founder and chief executive officer Tommy Cook.

"The cloud computing market in particular represents an increasingly exciting opportunity and with the long-term growth drivers in the telecoms market remaining intact, we are well placed to return to growth in the 2025 financial year and beyond."

Calnex said it would announce audited results for the year ended 31 March on 21 May.

At 1100 BST, shares in Calnex Solutions were down 2.56% at 57p.

Reporting by Josh White for Sharecast.com.

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