2023 HALF YEAR RESULTS

24/08/2023

Ad hoc announcement pursuant to Art. 53 LR

Highlights:

Total Group revenues and OOI increased to USD 339.9 million, from USD 333.4 million in the first half 2022

3 of the Group's 4 business segments reported double-digit revenue growth

Weak first half for Digital Television, with global revenues of USD 118.6 million representing a decline of 17.9% compared with prior year period

Public Access returned to solid growth, with 14.5% revenue growth year-on-year

Cybersecurity maintained its strong momentum, with 15% net revenue growth and further gross margin and profitability improvements

For the fourth year, IoT nearly doubled its revenues, reaching USD 14.1 million, due to the continued momentum of its RecovR asset tracking solution

Confirmation of the original 2023 full year EBITDA guidance in the range of USD 40 million to USD 60 million with year-on-year revenue growth

KEY FIGURES HALF YEAR 2023

(in million USD) 1H2023 1H2022

Revenues & Other Operating Income 339.9 333.4

EBITDA -3.5 0.5

Cheseaux-sur-Lausanne, Switzerland and Phoenix (AZ), USA - August 24th, 2023 - The Kudelski Group (SIX: KUD.S), the world leader in digital security, announced today its results for the first half of 2023.

Total revenues and other operating income were USD 339.9 million compared to USD 333.4 million in the first half of 2022. At USD 335.3 million, the Group's net revenues increased by 2.1% compared to the same period in 2022. In the first half of 2023, the Group generated an operating loss of USD 3.5 million before depreciation and amortization, compared to operating income USD 0.5 million in the previous first half.

In a challenging media and entertainment environment, Digital Television revenues reached USD 118.6 million, representing a decline of 17.9% compared with the prior year period. The segment's operating expenses were USD 4.8 million lower than in the prior first half, as it benefited from continued operational efficiency improvements. Digital Television's operating income before depreciation and amortization declined by USD 11.5 million to USD 14.7 million.

The Group's cybersecurity business delivered a solid first half, reporting gross revenues of USD 96.4 million, a 21.2% increase from the first half 2022. Net revenues were at USD 58.6 million, representing a 15.0% growth. The business also reduced its operating loss before depreciation and amortization to USD 6.7 million from USD 9.8 million in the first half 2022.

The strong momentum of the Group's IoT segment drove impressive revenue growth of 96.3% compared to the previous year. In the first half 2023, IoT generated USD 14.1 million of revenues, compared to USD 7.2 million in the first half 2022 and reduced its operating loss before depreciation and amortization by USD 0.5 million to USD 9.0 million.

Public Access returned to sustainable growth, as the post-pandemic recovery of its business continues, with revenues growing by 14.5% to USD 144.0 million, as compared to the first half 2022. Overall, Public Access generated EBITDA of USD 4.1 million, compared to USD 0.5 million in the first half 2022.

DIGITAL TELEVISION: HELPING CUSTOMERS NAVIGATE THE MARKET CHANGES AND OPPORTUNITIES

Digital Television revenues declined by 17.9%, primarily due to the negative evolution of hardware investments by network operators in EMEA and Asia. Segment revenues from hardware sales, including smart cards, decreased to USD 11.4 million in the first half 2023. This trend is the consequence of the continued transition to Internet-based technologies and a reduction of discretionary spending by operators in the challenging business environment. Conversely, revenues from software, maintenance and royalties showed greater resilience, with a more limited decrease of 7% compared to the previous first half.

In a fast-moving environment, the Digital Television unit has been able to gain market share in Internet-based video services by winning new contracts, particularly in Europe for new sports services. However, the sales cycles and revenue ramp-up for these contracts are relatively long, as the business models are based on service fees and/or revenue shares. In addition, the recent decision by major streaming platforms to increase subscription prices and to more aggressively fight against password sharing heightens the risk of content piracy to their evolving business model and that creates new opportunities for the Group's proven anti-piracy technologies.

Among the highlights of the first half of the year, Digital Television expanded partnerships and won new contracts with large operators worldwide:

German operator Tele Columbus selected Nagravision as its solution provider and prime integrator to launch its new hybrid cable and multiscreen solution, Pyur TV. The cloud-based OpenTV Video and Security Services Platform, delivers an end-to-end, state-of-the art service across TV and streaming devices. With its embedded AI capabilities, this solution will enable Tele Columbus to increase subscriber engagement and loyalty.

- BEIN Sports, a leading sports broadcaster, extended its strategic partnership with Nagravision in its fight against content piracy in the Middle East and North Africa.

- ZEE5, India's largest home-grown video streaming platform with more than 100 million monthly active users, selected Nagravision's Active Streaming Protection to protect its content and optimize business decisions. In addition to being selected for its scalable multi-DRM session management, the Nagravision solution is the only industry solution to provide the added benefit of security monitoring and analytics capabilities.

- Telefonica Spain and Telefonica Global chose Nagravision to provide anti-piracy, anti-fraud intelligence services and 3rd party OTT key provisioning.

- Nagravision is the largest conditiona

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2023 HALF YEAR RESULTS

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