Kalray (ALKAL) H1 2024 earnings summary

Executive summary

• H1 2024 revenue was €10.9M–€10.93M, down from €15.3M in H1 2023 but stable versus H2 2023, amid longer sales cycles and supply chain delays.

• Strategic pivot to a more service-oriented, collaborative model, including the launch of a new DPU design subsidiary, aims to drive profitability and innovation.

• Immediate cost reduction plan targets a 20% cut in operating expenses by end-2024, aiming for free cash flow break-even by end-2025.

• Cash position at June 30, 2024 was €2.34M–€2.35M, reinforced by a €6M bond issuance in July, with up to €10M available.

• Ended exclusive merger negotiations with Pliops due to market conditions, impacting H1 2024 operations.

Financial highlights

• H1 2024 consolidated revenue: €10.9M–€10.93M, down from €15.3M in H1 2023, but stable versus H2 2023.

• Gross margin on net sales at 55% (vs 62% in H1 2023), impacted by higher hardware component costs.

• Net result: -€11.1M in H1 2024 vs -€3.0M in H1 2023; EBITDA: -€5.34M in H1 2024 vs -€34K in H1 2023.

• Operating cash flow at -€2.1M; free cash flow at -€18.7M, reflecting ongoing R&D investments.

• Headcount increased to 230 in H1 2024 (from 192 in H1 2023), driving higher payroll expenses.

Outlook and guidance

• Revenue growth targeted for H2 2024 compared to H1, supported by a robust pipeline and new contracts.

• Free cash flow targeted to move from -€1.5M/month at end-2024 to break-even by end-2025.

• Financing needs covered until at least March 2025, potentially June 2025 with further bond drawdown and successful debt renegotiations.