Release Date: July 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Invisio AB (FRA:ICQ, Financial) achieved record sales and strong growth in Q2 2024, with revenues reaching SEK553 million, more than double the previous year.
- The company launched several new products, strengthening its market-leading position.
- Gross margin for Invisio-related business was strong at 63.2%, indicating positive impact from newer products.
- Operating expenses remained largely stable, excluding certain one-offs, demonstrating effective cost management.
- The company has a substantial inventory, allowing for rapid deliveries and flexibility in responding to market demands.
Negative Points
- Order intake was somewhat lower than the same quarter last year due to usual fluctuations and timing of orders.
- The company experienced a cyber incident in the UK, which incurred costs, although it did not affect business operations.
- Cash flow was widely negative in Q2 2024 due to prepayments for radio suppliers and dividend payouts.
- There was a significant drop in revenue from markets outside Europe, attributed to usual fluctuations.
- The EBIT margin, while above target, was impacted by the lower gross margin of radio deliveries, which was less than 10%.
Q & A Highlights
Q: Can you comment on the competitive landscape and whether competitors are improving their delivery times?
A: No, I don't think so. The competitive landscape remains largely unchanged. Being the market leader with a broad product portfolio and substantial inventory gives us a significant advantage. (Lars Hoejgaard Hansen, CEO)
Q: Why is the rest of the world down year-over-year in Q2 and the first half of the year?
A: This is due to usual fluctuations and timing of orders. The activity level remains high globally, and we expect good business outside of Europe, including North America. (Lars Hoejgaard Hansen, CEO)
Q: Is the underlying gross margin of 63% sustainable?
A: Yes, it is sustainable. As we phase out lower-margin legacy products and customers transition to newer products, the gross margin will improve. However, it will still fluctuate between quarters. (Lars Hoejgaard Hansen, CEO)
Q: What measures have you taken to prevent future cyber-attacks?
A: We are well-prepared and have been working on IT security for years. The recent incident was isolated to our UK company and did not affect the Invisio group. We continue to stay vigilant and prepared for new threats. (Lars Hoejgaard Hansen, CEO)
Q: Can you clarify the financial impact of the new software solutions for the Intercom system?
A: The new app will be part of the complete system package sold to customers. The wireless Intercom, being hardware, will be sold as a usual product. (Lars Hoejgaard Hansen, CEO)
Q: What is the pricing strategy for the new X7 headset?
A: The X7 is slightly more expensive than the existing X5 due to its advanced features and better hearing protection. It will contribute to increased revenue and improved gross margin. (Lars Hoejgaard Hansen, CEO)
Q: Are there any large tenders or specific orders expected to impact order intake in the second half of the year?
A: We are involved in several ongoing projects, but the timing of order intake is uncertain. The market activity is high, and we expect positive trends with increased defense budgets starting to flow from late 2024 into 2025. (Lars Hoejgaard Hansen, CEO)
Q: What components does Invisio source from China, and can you shift to other countries if needed?
A: We are not dependent on Chinese suppliers. Most of our manufacturing is in Europe and the US, and we can source standard components from other regions if necessary. (Lars Hoejgaard Hansen, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
