Ethernity Networks Ltd (LON:ENET) has landed a previously flagged substantial contract to supply its ENET switch and traffic manager firmware.
The customer is a North American tier 1 telecommunications original equipment manufacturer (OEM) that has integrated Ethernity’s firmware into its existing fibre-to-the-home optical networking platform for advanced broadband services with 4K video.
READ: Ethernity Networks continues transition towards virtual networking and security provider
In its interim results, Ethernity had indicated that it was most of the way down the road to porting its ENET software on to the OEM’s platform.
The contract represents nearly US$500,000 in short-term revenue for Ethernity and, is expected to generate an estimated US$2mln in future royalty streams over the next 30 to 36 months, with additional royalty streams extending thereafter.
To put that into context, Ethernity’s revenues in the first half of the current financial year totalled US$441,247.
Announced our new #FPGA #Gfast system on a chip flow processor today and we’re showing it at @BBWorldForum, the perfect setting for a system aimed at the broadband market. https://t.co/sQizluGqXk pic.twitter.com/EhcngeV8v6
— Ethernity Networks (@EthernityN) October 23, 2018
The parties have already engaged in discussions to apply Ethernity's ENET firmware and software to the customer's broadband switch and router platforms, which, if successfully concluded, would add significantly to the ongoing royalty stream.
“We believe this will be the first of many similar agreements with customers in the future," said Ethernity's chief executive officer, David Levi.
"This supply contract confirms that our extensive networking functionality offers tremendous value to the market, and is an example of how we can build strong partnerships with industry leaders," he added.
Rob O'Hara, Ethernity's vice president of International Sales, said Ethernity’s proven ability to customise its solution to fit existing customer hardware results in a much shorter time-to-market for the OEM.
"The decline in the development and availability of network processors on ASICs for this market makes porting Ethernity's firmware onto FPGA extremely attractive to tier 1 vendors, who can now purchase FPGAs for the price of ASICs," said O’Hara.
(ASICs are application-specific integrated circuits and FPGA stands for field-programmable gate array – essentially semiconductor devices where the electrical functionality can be configured during or sometimes even after the circuit board assembly process).
Shares in Ethernity shot up 20% to 24p in early deals.
Will Day 2 at @BBWorldForum be as great as Day 1? We think so, and our team is ready for more engaging discussions with attendees about our newest #FPGA and #SmartNIC solutions. pic.twitter.com/W6AYx8CfQN
— Ethernity Networks (@EthernityN) October 24, 2018