Pace interim results for the 6 months ended 30 June 2013

Tuesday, July 30th, 2013
Pace plc logo

Pace plc: Interim Results for the 6 months ended 30 June 2013

SALTAIRE, UK — Pace plc (LSE: PIC), a leading global developer of technologies and products for Pay TV and broadband service providers, today announces its results for the 6 months ended 30 June 2013.

Pace has had a strong first half, when compared with H1 2012, with revenue growth of $311.9m (31.0%) to $1,318.4m, and profit growth of $35.1m (57.0%) to adjusted EBITA of $96.7m delivering $92.0m of free cash flow, a 95.1% adjusted EBITA to cash conversion ratio.

Pay TV hardware leadership

Pace was reconfirmed as the market leader in Pay TV hardware; global number 1 in Media Servers[1], STBs[2] and Telco Gateways[3].

  • STB and Media Server revenues were up 51.8% in H1 2013 driven largely by the continuing high demand for Media Servers from both Comcast and DIRECTV. Pace has now shipped over 2 million Genie™ Advanced Whole-Home HD DVRs for DIRECTV since launch in June 2012 and the next generation HR44 Genie™ Media Server and C41 mini Genie™ client devices are now in production.
  • Pace has been selected by GCI, a cable operator in North America, to provide Media Servers running TiVo software and have a strong pipeline for this offering building on the strategic partnership with TiVo announced H1 2012.
  • The move to Media Servers is gaining speed beyond North America; Liberty Global, a leading international cable operator, has selected Pace to provide Media Server products to a number of their operations in Europe, and Get TV in Norway, has launched a whole home solution supported by a Pace Media Server, the first Media Server deployment for Pace outside North America.
  • Pace has been selected by Telefonica as the major supplier of High Definition Zapper and PVR devices for their IPTV operations in Latin America as part of their rollout of the Telefonica Global Service Platform. Initial deployments will take place in Brazil and Chile later in 2013.
  • Building on our strong multi-year customer relationships, Pace achieved next generation hardware wins at a number of longstanding tier one customers.
  • GVT, one of the leading telcos in Brazil, has selected Pace to provide VDSL (“very-high-bit-rate digital subscriber line”) Gateways with Pace Helium Gateway software, Pace’s first Gateway product win in the key growth market of Brazil.

Widen Out in Software, Services and Integrated Solutions

The win rate and pipeline of new business remains strong across all areas of our software and services offerings and we have made good progress in the delivery of the landmark customer projects won in 2012 and H1 2013.

  • The Pace Elements software platform continues to gain significant traction as part of an advanced integrated solution with a number of wins in the period, including Telefonica Group Cable Operator – Vivo TV Brazil, who selected Pace to provide an integrated PVR solution consisting of Pace Elements software and Pace hardware.
  • The Latens business continues to make good headway, and the software based CAS and Digital Rights Management (DRM) products are now deployed on over 3m devices across the world, representing over 65% growth over the last 18 months. This is due to both increasing digital subscriber numbers at our current customers and a number of significant wins in key growth markets in the period. Latens’ innovative technology is leading the move to software-based conditional access technology, highlighted by an industry first deployment of an integrated product combining CAS and DRM for both Broadcast and Over-the-Top (OTT) services, earlier in the period.
  • As the connected home becomes more complex and operators provide more services, the need to be able to effectively manage and support the customer becomes greater. This is driving increasing demand for the Pace ECO Service Management platform and we have been selected by Telmex, the largest telco in Mexico, to provide our next generation platform and have achieved wins with a number of tier one operators in North America.

In the period, Pace’s three largest customers; AT&T, Comcast and DIRECTV accounted for 59% of the Group revenue (H1 2012: 44%). In H2 2013, we expect the proportion of revenue from these three leading customers will reduce as Media Server supply is dual-sourced.

STB & Media Server mix (by volume)

                     H1 2012  H1 2013
                     -------  -------
North America
 Media Server             4%     27%
 Client                   0%     45%
 HD including HDPVR      33%     23%
 DTA                     63%      5%

Latin America
 HDPVR                   17%     11%
 HD                      42%     48%
 SD including SDPVR      41%     41%

 Media Server             0%      1%
 HDPVR                   34%     32%
 HD                      64%     66%
 SD including SDPVR       2%      1%

 HDPVR                   50%     48%
 HD                      40%     24%
 SD including SDPVR      10%     28%

1. By volume (2012) – IHS Multimedia Home Gateways: The future of the digital home.
2. By volume (2012) – IHS Set-Top Box Market Monitor report for H1 2013.
3. By value (2012) – Infonetics-4Q12-BB-CPE-Subs-Mkt-Fcst.