Tecnotree (TEM1V) Q3 2024 earnings summary

Executive summary

• Q3 2024 was challenging due to muted order intake in Q1 and significant currency headwinds, but cost-cutting and a focus on free cash flow led to improved financial performance in Q2 and Q3.

• Revenue grew 11% year-over-year in constant currency for the first nine months of 2024, with EBIT up 28% in constant currency terms.

• Strategic focus is on mature and higher-margin markets (Europe, America), increasing revenue share and reducing exposure to volatile currencies.

• Partnerships with SI partners like HCLTech and new product innovations, including GenAI social commerce agent, are expected to drive further growth.

• Order backlog remained strong at EUR 75.1 million, with a 77% increase in orders received from Q2 to Q3 2024.

Financial highlights

• Q3 2024 net sales were EUR 19.0 million, down 11.2% year-over-year; constant currency sales were EUR 20.2 million.

• EBIT in Q3 2024 was EUR 5.0 million (EUR 6.5 million in constant currency), up 43% from Q2 but down from EUR 6.2 million in Q3 2023.

• Free cash flow improved to EUR 1.7 million in Q3 2024, marking the second consecutive positive quarter.

• CapEx to sales ratio was 11% in Q3 2024, trending toward 10-12% guidance for 2025.

• DSO days improved from 170 in Q2 to 153 in Q3.

Outlook and guidance

• 2024 guidance: 2%-7% revenue growth and 7%-15% EBIT growth in constant currency.

• Free cash flow guidance for H2 2024 is EUR 2-5 million; annual free cash flow for 2025 projected to exceed EUR 3 million.

• CapEx to sales expected to be 10%-12% by 2025; receivable days targeted at 100-140.

• Dividend policy introduced: 10% of free cash flow to be paid as dividends from 2025.

• FX exposure to be reduced from 35% to 10%-15% over three years.