Xaar (XAR) H1 2024 earnings summary

Executive summary

• Revenue declined 17% year-over-year to £28.6m, mainly due to ongoing weakness in the ceramics market and order delays, but new market segments grew 26% and a strong OEM pipeline supports future growth.

• Operational efficiency improved through proactive cost management, reducing operating expenses by 24% while retaining key capabilities.

• Net cash increased to £6.8m, reflecting disciplined cash management and strong cash generation.

• 15 OEM product launches expected in 2024, with major projects in wax, 3D printing, and battery coating sectors.

• Diversified product range now accesses four of five target sectors, with a 26% printhead revenue CAGR since 2019 (excluding ceramics).

Financial highlights

• Group revenue for H1 2024 was £28.6m, down from £34.5m in H1 2023, mainly due to ceramics market weakness.

• Gross margin declined to 35% from 40% year-over-year, impacted by higher input and energy costs and lower overhead absorption.

• Adjusted EBITDA fell 71% to £1.0m, and adjusted loss before tax was £0.7m, compared to a profit of £1.8m last year.

• Operating expenses reduced by 24% year-over-year to £10.6m.

• Net cash at period end was £6.8m, up from £6.2m in H1 2023.

Outlook and guidance

• Full-year expectations remain unchanged, with a strong pipeline of OEM projects and further launches expected in H2 2024.

• Revenue from new printhead business continues to grow, offsetting legacy market declines.

• Legacy ceramics business expected to plateau in 2026, with recovery not expected until 2027.

• Gross margins expected to improve as sales volumes recover and energy costs stabilize.

• Inventory levels maintained to support anticipated growth.