Asetek (ASTK) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue was $12.2 million, down from $20.5 million in Q3 2023, reflecting lower liquid cooling demand and planned SimSports growth, supported by a new Xbox partnership and expanded distribution.

• Liquid Cooling segment remains profitable but faces rapid market changes, decreased demand for premium products, and lower cash flow.

• SimSports business is scaling up as planned, with new partnerships and product launches positioning for console market entry.

• A rights issue of at least $15 million is planned to strengthen the financial position and fund SimSports investments.

Financial highlights

• Q3 2024 revenue was $12.2 million, down 40% year-over-year; year-to-date revenue was $37.1 million, down from $59.7 million in 2023.

• Gross margin for Q3 2024 was 36%, impacted by a one-off supply chain quality issue; adjusted margin would have been 41%.

• Net income for Q3 2024 was a loss of $22.2 million, mainly due to $18 million in non-cash write-downs and $0.8 million U.S. tax charge.

• Adjusted EBITDA for Q3 2024 was ($0.5) million, compared to $4.8 million in Q3 2023.

• Cash position at end Q3 2024 was $3.4 million, with significant investments in SimSports and new HQ since the 2023 rights issue.

Outlook and guidance

• 2024 revenue guidance maintained at $52–$55 million, with adjusted EBITDA margin expected at 1–4%.

• SimSports revenue expected to grow 40–60% vs. 2023; Liquid Cooling revenue expected to decline 35–40% vs. 2023.

• Medium-term ambitions: $50 million+ revenue for both SimSports and Liquid Cooling, with 25%+ EBITDA margin for Liquid Cooling and positive single-digit margin for SimSports.

• Liquid Cooling growth expected to resume from 2026, pending market rebound and new design wins.

• Financing need of around $20 million anticipated for medium-term ambitions.