Spirent sees solid performance in third quarter
By Josh White
Date: Thursday 15 Nov 2018
(Sharecast News) - Communications technology provider Spirent Communications updated the market on its trading for the third quarter ended 30 September on Thursday, reporting that its performance delivery was "on plan", with further good momentum enjoyed in the quarter.
The FTSE 250 company said it secured a number of key wins in the period, which the board said provided further evidence that its strategy was working.
Order intake for the nine months showed "solid growth" on the same period in 2017.
"We continue to expect a weighting to the second half of the year, with the usual uptick in the last quarter of the year, underpinned by the expected rebound in 400G high-speed Ethernet testing, the timing of key orders for Lifecycle Service Assurance solutions, continued expansion in our security business and a strong performance within positioning," the board said in its statement.
"The board is therefore confident of delivering further strategic progress in the year and expects to at least deliver its expectations for the current financial year."
As Spirent continued to develop its solution-selling capabilities to better address its customers' "larger and more complex" challenges, it had made senior appointments in the quarter, key account executives to further deepen important relationships at its largest customers, and a new leader for our Europe, Middle East and Africa (EMEA) business.
The balance sheet reportedly remained "strong", with good cash conversion in the quarter and year to date.
In the networks and security division, Spirent said it continued to maintain its leadership position in high-speed Ethernet testing.
It explained that, following the release of recent "pent-up demand" resulting from uncertainty in the China-US trading relationship, a multi-million dollar order was received from a large China equipment manufacturer.
Additionally, trading resumed with Chinese mobile equipment manufacturer ZTE following the ending of the trade embargo imposed by the US government.
Key strategic wins in the quarter, with network equipment manufacturers for high-speed Ethernet 400G programme acceleration, were also secured.
As a result, orders in the third quarter showed a "strong" pick up, the board said, with year-to-date growth on 2017.
"We are currently benefiting from particularly strong demand from the US for GPS positioning products for military and other programmes," Spirent's board added.
It said that expansion of its security product sales into government and enterprise continued to deliver to plan, and was attracting more subscription sales, which initially delayed revenue recognition to future years.
In addition, it announced its new 'Data Breach Emulation' solution for holistic and hyper-realistic testing of networks and devices.
Spirent was also approved as an authorised 'Test Lab' for CTIA IoT Cybersecurity Certification, which the board described as a new programme designed to confirm the security of cellular-connected 'internet of things' (IoT) devices.
In its Lifecycle Service Assurance business, Spirent said its 'VisionWorks' solution continued to be well-received by key customers, with a further multi- million dollar win in the period from an unnamed Tier-1 service provider for its VisionWorks Customer Experience Assurance solution, building its assurance capability in the heart of their network.
It also secured a key 5G Landslide deal with an unnamed US service provider, which the board said demonstrated the advanced 5G capabilities of the platform.
Over in its connected devices business, Spirent said it continued to see "relative stability" in the smartphone test market.
Proactive cost management actions taken in 2017 were also delivering an earnings benefit there, with the board saying its strategic focus on developing 5G test capabilities was "on track".
"The business continues to perform well," said chief executive Eric Hutchinson.
"We are pleased growth in order intake is now translating to revenue growth and we are building a solid platform to benefit from growing market opportunities for our VisionWorks, security and high-speed Ethernet (400G) products and solutions.
"The board remains confident that the Group will show progress in 2018, and that we will at least deliver our expectations for the year."
In a separate announcement on Thursday, Eric Hutchinson also notified the board of his desire to retire from the company.
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