Cherry (C3RY) Q2 2024 earnings summary

Executive summary

• H1 2024 revenue reached €61.6 million, a slight year-over-year increase, driven by strong Digital Health & Solutions growth, while other segments declined.

• Digital Health & Solutions revenue doubled year-over-year to €16.2 million, with over 75% market share in German eHealth terminals.

• Restructuring and cost control measures, including headcount reduction and production relocation to China, are ahead of plan, with €5.5 million in annual savings expected.

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

• Transformation into an integrated hardware, software, and cloud services provider continued, with a new brand identity launched.

Financial highlights

• Q2 2024 revenue was €31.3 million, up 3.2% sequentially from Q1 2024, but down year-over-year.

• Adjusted EBITDA margin in Q2 2024 improved to 5.1%, up 2.3 percentage points year-over-year; H1 adjusted EBITDA at €4.0 million (5.2% margin).

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

• Cash and cash equivalents fell to €15.6 million, mainly due to €20 million in loan repayments.

• Equity ratio stands at 56% as of H1 2024, reflecting a healthy capital structure.

Outlook and guidance

• Q3 2024 revenue is forecast at around €35 million, with an adjusted EBITDA margin of 5–6%.

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

• Medium-term goal is to return to an adjusted EBITDA margin above 20%.

• Q4 expected to benefit from seasonal demand and improved margin structure in Gaming and Office Peripherals.

• Macro challenges include weak German consumer sentiment, lower Euro Area and UK PMIs, and shipping disruptions.