u-blox (UBXN) Q3 2024 TU earnings summary

Executive summary

• Q3 2024 revenue reached CHF 77.6 million, up 19% sequentially but down 25% year-over-year, with business performance slowing in Q4 compared to Q3, interrupting earlier improvement.

• EBIT (adjusted) declined to CHF -7.0 million from CHF 2.4 million in Q3 2023; EBIT margin (adjusted) fell to -9.1%.

• The slowdown is primarily attributed to deteriorating conditions in the automotive sector, consistent with broader semiconductor industry trends.

• Locate business outpaced Connect in growth; Automotive outperformed Industrial, with APAC and EMEA driving regional gains.

• Management remains confident in long-term prospects, citing strong structural demand, design wins, and partnerships.

Financial highlights

• Revenue at constant exchange rates decreased by 23% year-over-year.

• Reported EBIT dropped to CHF -11.1 million, with EBIT margin at -14.4%, impacted by lower capitalization of development costs.

• Adjusted EBIT margin decreased from -2.3% to -9.1% year-over-year.

Outlook and guidance

• Q4 2024 revenue expected between CHF 60-70 million; adjusted EBIT margin forecasted at -25% to -15%.

• Early indicators suggest a return to growth in 2025, with double-digit growth expected in the Locate business.

• Near-term visibility remains limited, especially regarding the timing of recovery in the automotive market.

• Market conditions anticipated to remain challenging in the near term, with recovery expected in 2025.

• Cost savings from reduction measures will begin to show in Q4, with full effect expected in the first half of 2025.