Yubico (YUBICO) Q3 2025 earnings summary

Executive summary

• Net sales declined 7.2% year-over-year to SEK 547.5 million, mainly due to delayed large deals and negative currency effects; sales were flat excluding FX impact.

• Subscription sales grew 21.8% to SEK 86.7 million, now 15.8% of net sales, reflecting a shift toward recurring revenue.

• Order bookings fell 17.3% year-over-year, with softness concentrated in large deals, especially from the U.S. public sector.

• Investments in innovation, new geographies, and retail channels, including a new hub in Singapore and Best Buy partnership, support long-term growth.

• Small and mid-sized orders showed growth and high customer loyalty, with annual repurchase rates among largest customers exceeding 100%.

Financial highlights

• Gross profit for Q3 was SEK 430.2 million, down 10% year-over-year, with gross margin at 78.6% (down from 81%).

• EBIT margin decreased to 14.5% from 18.8% last year, mainly due to higher personnel and LTIP program costs.

• Cash and cash equivalents at period end were SEK 874.7 million; net cash was SEK 835.7 million.

• Inventory increased to 33.1% of last 12 months' sales, driven by final shipments of secure elements.

• Subscription sales accounted for 15.8% of net sales, up from 12.1% last year.

Outlook and guidance

• Management remains optimistic about long-term growth, citing strong pipeline for large orders and continued momentum in small and mid-sized deals.

• Transition to a 50/50 mix between perpetual and subscription sales is expected to take several years, with sector-specific strategies.

• Ongoing investments in next-generation firmware, passkey development, and quantum-resilient authentication are expected to drive future growth.

• Q4 is typically a strong quarter, but large order timing remains unpredictable, especially in the U.S. public sector.

• Long-term growth in phishing-resistant authentication is expected, driven by rising cyber threats, regulations, and digital transformation.