Cinnober Financial Technology AB has released its year-end financial report for 2017. Cinnober is Sweden-headquartered provider of exchange clearing technology, offering services to global stock exchanges, clearing houses, banks, and brokerages.

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According to the company’s report, net sales recorded an increase for the second consecutive year, reaching SEK 348.6 million ($42.88 million), a 5.33% increase YoY from 2016 levels of SEK 330.9 million ($40.71 million).

The contribution of recurring revenues to overall net sales amounted to 72.7%, or SEK 253.43 million ($31.18 million). Comparatively, in 2016, recurring revenues only amounted to 66.8% of the total net sales.

Net Sales Can’t Overcome Expenses

However, despite improved net sales and recurring revenues, the company recorded an operating loss of SEK 93.4 million ($11.49 million) over the course of the year. The operating loss marks a significant decline, relative to 2016’s operating profit of SEK 9.5 million.

Q4 losses strongly aided the yearly results, as quarterly operating loss came in at SEK 43.6 million ($5.36 million). Cinnober also recorded operating losses during Q3 in the amount of SEK 19 million ($2.34 million).

According to the company’s official report, Q4 earnings “were also affected by non-recurring expenses due to higher activity in preparation for MiFID II. This brought increased development and implementation costs in the form of higher personnel and consultancy expenses.”

As a result of the operating loss, earnings per share (EPS) deteriorated to SEK -4.46 (-$0.55), relative to 2016’s release at a positive EPS of SEK 0.22 ($0.03).

Management Response

Cinnober’s board of directors has recommended that no dividends be paid for FY 2017, in response to the lackluster financials.

Veronica Augustsson, Chief Executive Officer of Cinnober, commented on the company’s financial report: “We see a number of business opportunities and have in recent years made significant investments, based on our core operations, to ensure that we are properly positioned for the market’s future needs.”

She continued: “With a stable core business, strong financial position and a business model with a high percentage of recurring revenue and long-term contracts, we look forward to continuously broadening our market and further strengthening our position in selected areas in both the short and long term.”