Cherry (C3RY) Q3 2024 TU earnings summary

Executive summary

• Q3 2024 results were significantly below expectations, with a revenue shortfall of EUR 13 million and negative adjusted EBITDA margin, leading to a EUR 6 million cash burn in the quarter.

• Weakness was most pronounced in the Gaming and Office Peripherals segment, driven by poor German market conditions, internal management issues, and order delays in Components.

• Management is implementing restructuring, leadership changes, sales team reorganization, and a hiring freeze to address challenges.

Financial highlights

• Group sales for the first nine months of 2024 were EUR 84 million, with Q3 sales at EUR 22.6 million, down 17% year-over-year.

• Adjusted EBITDA for Q3 was -EUR 3.1 million, with a nine-month adjusted EBITDA of -EUR 0.7 million and margin of -0.8%.

• Gaming & Office Peripherals posted a negative Q3 earnings contribution of EUR -1.5 million.

• Digital Health & Solutions segment generated over EUR 2 million in Q3 earnings, improving from a loss in Q3 2023.

• Cash burn in Q3 totaled EUR 6 million.

Outlook and guidance

• Full-year 2024 group revenue now expected at EUR 120 million, with adjusted EBITDA margin around 3%, revised down from previous guidance.

• Q4 2024 implied sales of EUR 35.9 million and adjusted EBITDA margin of 11%, assuming full cost savings.

• Management expects restructuring benefits to materialize in 2025, with a focus on internationalization and margin stabilization.