Asetek (ASTK) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue declined to $12.7 million, down 48% year-over-year, mainly due to lower liquid cooling shipments; gross margin held steady at 45% and adjusted EBITDA was $0.2 million.

• SimSports business is growing as planned, with full-year revenue expected between $10–11 million, representing 40–60% growth.

• Cost reduction initiatives targeting $3 million in annual savings are underway, primarily through headcount reductions and U.S. downsizing, with full effect from Q1 2025.

• Guidance for 2024 maintained, with group revenue expected between $52–55 million and adjusted EBITDA margin of 1–4%.

• Strategic partnerships and new product launches announced, including AI-optimized cold plates and Gen8 liquid cooling technology.

Financial highlights

• Q2 2024 operating loss was $1.2 million, compared to a $4 million profit in Q2 2023; net loss for Q2 was $2.3 million, impacted by a $2 million non-cash deferred tax adjustment.

• H1 2024 revenue was $24.9 million, down from $39.3 million in H1 2023.

• Cash position at end of June 2024 was $6.8 million, down from $9.1 million at year-end 2023.

• Net cash provided by operating activities was $0.6 million in H1 2024.

• Working capital was negative $11.2 million at June 30, 2024.

Outlook and guidance

• 2024 group revenue expected at $52–$55 million, a 28–32% decrease versus 2023; adjusted EBITDA margin guidance is 1–4%.

• Liquid cooling segment revenue expected to decrease 35–40% in 2024, with growth resuming in 2026.

• SimSports full-year revenue guidance unchanged, with growth trend expected to continue beyond 2025.

• Cost reductions to take full effect from Q1 2025.