Seco (IOT) Q3 2024 earnings summary

Executive summary

• Net sales for the first nine months of 2024 were €139.4M, down 14% year-over-year, mainly due to customer destocking and lower sales volumes across geographies and sectors.

• Clea software business grew 4% year-over-year to €17.0M, now representing 12% of net sales, with a 214 bps increase in contribution.

• Gross margin improved to 52.1% of revenue (+261 bps YoY), supported by a better sales mix and reduced component costs.

• Adjusted EBITDA was €20.4M (14.7% of sales), down 45% year-over-year, with net income dropping 90% to €1.6M and reported net income at -€7.6M due to non-recurring items.

• Strategic partnerships with NXP, Raspberry Pi, and Qualcomm were announced, expanding Clea and edge AI offerings and supporting future growth.

Financial highlights

• Net sales declined to €139.4M from €162.1M in 9M23, mainly due to customer destocking and low demand.

• Clea software revenue increased by 4% year-over-year to €17.0M, now 12% of total sales.

• Gross margin rose to 52.1% (up 261 bps), but gross profit fell due to lower volumes.

• Adjusted EBITDA margin was 14.7% for the nine months, totaling €20.4M.

• Adjusted net financial debt increased to €56.9M as of September 30, 2024.

Outlook and guidance

• Full-year 2024 guidance confirmed: revenues expected to exceed €180M and gross margin above 50%.

• Revenue growth expected to return to positive in H1 2025 as business fundamentals stabilize.

• Organic growth of 15% anticipated in 2025 under normalized market conditions.

• Cost reductions in OPEX are expected to benefit profitability in Q4 and throughout 2025.

• Visibility for 2025 is improving, with order intake and book-to-bill ratios turning positive.