Tempest Security (TSEC) Q3 2024 earnings summary

Executive summary

• Net sales decreased by 6% to SEK 118.1m in Q3 2024, but increased by 8.3% to SEK 379.9m for Jan–Sep 2024 year-over-year.

• Q3 results were negatively impacted by losses in Denmark and the US, as well as high start-up costs for new contracts in Sweden.

• The US business is being divested after continued losses, and the Danish business has been restructured for stability.

• Andrew Spry was appointed interim CEO during the quarter.

Financial highlights

• Q3 2024 EBITDA was SEK -4.4m (12.1m), with an EBITDA margin of -3.7% (9.6%).

• Adjusted EBITDA for Q3 was SEK -2.9m (12.6m), margin -2.5% (10.0%).

• Operating income (EBIT) for Q3 was SEK -7.4m (9.0m); adjusted EBIT was SEK -5.9m (9.5m).

• Net income from continuing operations in Q3 was SEK -7.5m (6.4m).

• Cash flow from operations before working capital changes was SEK -5.4m (11.6m) in Q3.

Outlook and guidance

• Management expects a more focused organization and positive results in 2025, with reduced seasonal variations and improved cost structure.

• The divestment of the US business and restructuring in Denmark are expected to remove loss-making operations and support future profitability.