StrongPoint (STRO) Q2 2024 (Q&A) earnings summary

Executive summary

• Q2 2024 revenue declined 12% year-over-year to 297 MNOK, with product sales down, but service and recurring revenues grew, supported by major new contracts such as Sainsbury's and pilots in Spain and Cyprus.

• EBITDA for Q2 was -9.1 MNOK, including 10 MNOK in non-recurring restructuring costs; adjusted EBITDA was slightly positive.

• Major customer wins included the Sainsbury's order picking contract, CashGuard Connect pilot in Spain, expanded grocery locker sales in the US, and a 37 MNOK ESL order in Cyprus.

• Cost reduction measures totaling 20 MNOK p.a. were implemented, with further savings expected in H2 2024.

• Management remains cautiously optimistic for H2 2024, despite ongoing market uncertainty.

Financial highlights

• Q2 2024 revenue: 297 MNOK (down 12% YoY); H1 2024 revenue: 656 MNOK (down 9% YoY).

• Q2 2024 EBITDA: -9.1 MNOK (vs. 2.1 MNOK Q2 2023); adjusted EBITDA: 0.9 MNOK.

• Gross margin improved to 45% in Q2 2024 (from 40% Q2 2023), driven by product mix and higher service revenue.

• EPS for Q2 2024 was -0.47 NOK per share, with rolling 12-month EPS at -0.65 NOK.

• Net interest-bearing debt increased to 105.1 MNOK at Q2 2024, up from 48 MNOK in Q2 2023.

Outlook and guidance

• No formal guidance for Q3; product sales visibility remains limited, but recurring service revenue is expected to continue increasing.

• Cost base adjustments to materialize in H2 2024; management expects improved performance in the second half.

• Long-term ambition remains healthy revenue growth and EBITDA margin above 10%.

• Ongoing focus on expanding end-to-end solutions for grocery retailers in nine core markets, with continued investment in technology and customer success.