Release Date: October 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Dynavox Group AB (TDVXF, Financial) reported an 18% year-on-year revenue growth for Q3 2024, adjusted for currency effects.
- The company continues to see strong growth in the North American market, which remains its largest and most influential market.
- Operating profits increased by more than 25% in the quarter, despite the revenue impact from product launches.
- The acquisition of Link Assistive in Australia and New Zealand is expected to enhance market presence and growth potential.
- Earnings per share increased by 30% from SEK0.33 to SEK0.43, indicating improved profitability.
Negative Points
- Revenue was negatively impacted in the short term by a successful product launch, delaying some sales into the next quarter.
- The company experienced increased Opex levels due to investments in future growth, impacting short-term profitability.
- Increased freight costs had a negative impact on the gross margin, despite overall improvement.
- The European market did not see as high growth as expected, partly due to the product launch delays.
- Cash flow after continuous investment was only slightly positive at SEK7 million, impacted by increased inventory levels.
Q & A Highlights
Q: Could you elaborate on the impact of the recent product launches on the top line?
A: The product launches follow a typical pattern for us. Since 90% of our revenues come from prescribed aids, the funding process can be lengthy. When we launch a new product, customers in the process of obtaining current devices may switch to the new product, adding days or weeks to the process. This pushed some orders outside of Q3, but we estimate the underlying FX-adjusted growth would have been about 20% instead of 18%. We expect to catch up on most sales in Q4. - Fredrik Ruben, CEO
Q: Why was growth in Europe not as high this quarter?
A: Growth in Europe was also impacted by the product launch. Our reseller partners and staff were informed about the new products, causing some delays. The new products are targeted towards the autism sector, which is our fastest-growing segment, and are expected to perform well in Europe. - Fredrik Ruben, CEO
Q: Do you expect the organic Opex growth to continue at the same rate?
A: We aim for Opex to grow at a slower pace than revenue. Our spending focus remains on sales, customer-facing roles, and backend systems to support a growing company. - Fredrik Ruben, CEO
Q: Can you provide more details on the acquisition of Link Assistive in Australia and New Zealand?
A: The acquisition brings us closer to customers in these markets, facilitating better support for people with disabilities. Link Assistive's turnover in 2023 was over AUD8 million, and we paid AUD8 million upfront with a potential earn-out of up to AUD5 million. This move is expected to enable faster organic growth in these regions. - Fredrik Ruben, CEO
Q: How did the recent product launches affect inventory levels and cash flow?
A: The product launches increased inventory levels, which negatively impacted cash flow. This pattern is typical with major launches. Cash flow after continuous investment was positive SEK7 million, and cash at hand ended at SEK121 million. - Linda Tybring, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
