Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Clavister Holding AB (FRA:89P, Financial) achieved a positive operating profit (EBIT) for the first time, marking a significant milestone.
- The company reported 12 consecutive quarters of year-over-year sales growth, with a 16% increase in non-FX adjusted net sales and 21% when adjusted for FX.
- Order intake for the quarter grew by 31%, resulting in an accumulated order backlog of 234 million SEK, providing a strong base for future sales.
- Clavister's gross profit increased by 17%, indicating improved gross margins despite a strong increase in hardware sales.
- The company successfully concluded a warrant package with a 98% participation rate, raising approximately 50 million SEK before transaction costs to pay down EIB debt.
Negative Points
- The company's ARR growth of 10% is trailing behind net sales growth due to time lags from shipments to contract starts.
- Despite aspirations, Clavister did not achieve the 20% net sales growth target in Q3, indicating room for improvement.
- The 5G business has been slow, with the first new 5G security win in a while, suggesting challenges in this sector.
- The ongoing legal situation with 45 ID is impacting OpEx significantly, contributing to increased operational expenses.
- Clavister's growth target of 20% CAGR for 2023-2025 requires acceleration to around 30% in 2025, posing a challenge to meet this ambitious goal.
Q & A Highlights
Q: Can you talk a little about your new packaging of the product? What has the reception been?
A: John Vestberg, CEO: Our technology platform is powerful but complex, so we've created market-adapted solution packages to make it more accessible. The reception has been positive, with a significant deal already secured in Q3. This approach clarifies our product's value, making it easier to sell and buy.
Q: You have previously mentioned that you want to grow the base business and ARR by 20%. What's your view on this?
A: John Vestberg, CEO: Our ARR growth is tied to net sales growth, currently at 70% of our business. While we aim for 20% net sales growth, ARR will naturally follow, albeit with a lag. We are optimistic about meeting our targets based on current trends and pipeline.
Q: Can you talk about how your pipeline of defense business has developed during these years?
A: John Vestberg, CEO: We've focused on the tactical defense market, securing design wins with major players like BAE Systems and General Dynamics. Our strategy involves expanding within existing contracts and exploring new opportunities, with a strong pipeline in place.
Q: Any chance that you get a foot into the US defense ecosystem in the future via a partner?
A: John Vestberg, CEO: Yes, through partners like BAE Systems, which operates in the US. We've been invited to their supplier fairs, indicating interest. While we won't establish a direct presence, partnerships could facilitate entry into the US defense market.
Q: What kind of growth in OPEX should we expect for 2025?
A: David Nordstroem, CFO: We expect some OPEX growth in 2025, driven by growth opportunities. However, it will be tightly linked to revenue growth, ensuring profitability and cash flow improvements. Legal costs have impacted OPEX this year, but we aim for controlled growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
