Clavister (CLAV) Q2 2024 earnings summary

Executive summary

• Achieved 11th consecutive quarter of net sales growth, with Q2 net sales at 45 million SEK, up 17% year-over-year, though below the 20% target due to delayed large deals and currency headwinds; adjusted for currency effects, growth was 23%.

• Growth was driven by recurring base business, ongoing defense contracts, and increased business from public authorities and private companies, with several large deals slipping into H2.

• Signed memorandum of understanding with Thales Group to expand defense sector reach, starting in Sweden.

• Operational cash flow improved from -8.4 million SEK to +4.3 million SEK year-over-year, maintaining a strong cash position and reduced cash burn.

• Growth in Next-Generation Firewalling and IAM segments, with a notable contract renewal from a major European authority.

Financial highlights

• Net sales for Q2 2024 reached 45 million SEK, up 17% year-over-year; adjusted for currency, growth was 23%.

• Order intake grew 13% to over 50 million SEK, with order book balance at quarter-end of 232.7 million SEK, mainly from defense and telecom contracts.

• Annual recurring revenue (ARR) increased 11% year-over-year to 125 million SEK.

• Gross margin was 79%, slightly below the 80% target, impacted by a higher share of hardware sales.

• Adjusted EBITDA margin was 12%, below the 20% ambition, mainly due to sales mix and not cost overruns.

Outlook and guidance

• Full-year net sales growth is expected to remain above 20%, with positive trends in base and defense business and a target of at least 20% CAGR from 2023 to 2025.

• Gross margin target of 80% remains, though hardware sales may cause short-term fluctuations.

• Operating costs for 2024 estimated to remain in line with 2023 despite inflation.

• Ambition to achieve an EBITDA margin of at least 20% and positive operational cash flow for 2024.