StrongPoint (STRO) Q2 2024 earnings summary

Executive summary

• Focused on delivering retail technology solutions to grocery retailers across nine European markets, enhancing both in-store and online experiences to drive efficiency and savings.

• Emphasizes end-to-end service, including installation, support, and recurring service revenue, with an average of 4.7 solutions sold per top customer.

• Continued customer success with new pilots and expansions in Spain, the US, and Cyprus, strengthening presence in core markets.

• Q2 2024 revenue declined 12% year-over-year to 297 MNOK, with product sales down across all business units due to continued market hesitation and weak customer spending.

• Service and recurring revenue increased, and gross margin improved to 45% from 40% in Q2 2023, driven by product mix and higher service revenue.

Financial highlights

• Q2 2024 revenue: 297 MNOK, down from 381 MNOK in Q2 2023.

• Q2 EBITDA: -9.1 MNOK, including 10 MNOK in non-recurring restructuring costs; adjusted EBITDA was 0.9 MNOK.

• Gross margin improved to 45% in Q2 2024 (from 40%).

• Earnings per share for Q2 was -0.47 NOK; rolling 12-month EPS was -0.65 NOK.

• Net interest-bearing debt increased to 105.1 MNOK as of June 30, 2024, up from 77 MNOK in Q1.

Outlook and guidance

• Long-term ambition remains to achieve an EBITDA margin above 10%.

• Market uncertainty and cautious customer spending expected to persist in the short term, but customer interest in solutions remains strong.

• Cost base adjustments to materialize in H2 2024; cautious optimism for improved H2 performance.

• Continued focus on cost reductions and working capital improvements to cushion revenue declines.

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