Otovo (OTOVO) Q3 2024 earnings summary

Executive summary

• Signed a term sheet for the sale of Continental European leasing/subscription assets, expected to close in Q1 2025, releasing €15m cash and providing a one-time gain.

• Major cost reduction program underway, reducing headcount by about 45% and targeting NOK 200-225m in annual savings, with centralization in Madrid.

• Customer acquisition is shifting to partnerships and more disciplined marketing, aiming for higher sales volumes and ticket size.

• Q3 saw lower installations and revenue due to reorganization and market weakness, with revenue down 42% year-over-year to NOK 139m.

• Gross margin improved to 28% (APM), with battery attachment rate exceeding 50%.

Significant events and developments

• Portfolio sale includes assets from eight European countries, with Otovo retaining an initial 12% SPV ownership, decreasing over time.

• Buyer receives 55.9 million warrants at NOK 1.15 strike price, potentially adding NOK 65m to the balance sheet.

• Forward flow agreement allows sale of new subscription projects at a 1.47x build cost multiple, with 95% paid in cash.

• Pipeline cleanup in Q3 resulted in 274 project cancellations due to low completion likelihood.

• Sale of Norwegian and Swedish subscription portfolios in Q4 2023 impacted the balance sheet.

Financial highlights

• Q3 installations totaled 1,458 projects, down 45% year-over-year.

• Revenue for Q3 was NOK 139m, with gross profit at NOK 29.8m and gross margin at 21.4% (statutory), 28% (APM).

• Battery attachment rate reached 55%, supporting higher ticket sizes.

• Subscription share was 30% for the quarter, with over 900 batteries, EV chargers, and heat pumps sold.

• EBITDA for Q3 was NOK -114m, with an operating loss of NOK -130.8m.