Cherry (C3RY) Q2 2024 earnings summary

Executive summary

• H1 2024 saw stabilization and operational improvements, with a focus on margin over volume, cost control, and revitalization supported by secured financing and healthy inventory levels.

• Revenue for H1 2024 was €61.6 million, a 0.4% increase year-over-year, driven by strong growth in Digital Health & Solutions, while other segments declined.

• Project North restructuring is ahead of plan, delivering €5.5 million in annual savings from workforce reductions and improved supply chain resilience.

• The company continued its transformation into an integrated hardware, software, and cloud services provider, with significant restructuring and cost-cutting measures.

• Management changes include the early departure of the CFO and permanent appointment of Volker Christ as EVP, Global Finance and IT.

Financial highlights

• H1 2024 sales reached €61.6 million, slightly above H1 2023, with Q2 revenue at €31.3 million, up 3.2% sequentially.

• Adjusted EBITDA margin in Q2 was 5.1%, up 2.3 percentage points year-over-year; H1 adjusted EBITDA at €4.0 million (5.2% margin), but full H1 margin fell to 4.0% due to higher costs.

• Gross profit increased to €20.9 million, with gross margin rising to 34.0% from 30.2% year-over-year.

• Digital Health & Solutions revenue doubled to €16.2 million in H1 2024, with Q2 revenue at €8.2 million and adjusted EBITDA margin rising to 38.9%.

• Net loss widened to €-6.6 million from €-5.0 million year-over-year, mainly due to higher refinancing costs and restructuring expenses.

Outlook and guidance

• Q3 2024 sales expected at €35 million, with adjusted EBITDA margin of 5%-6%.

• Full-year 2024 guidance maintained: sales of €140–150 million and adjusted EBITDA margin of 7%-8%.

• Medium-term target is an adjusted EBITDA margin above 20%.

• Growth initiatives include new OEM supply agreements, expanded Asian partnerships, and a brand relaunch.

• Digital Health segment expected to benefit from further regulatory rollouts and recurring software revenue.