Release Date: August 20, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Gross margin increased by 4 percentage points year-over-year, reaching an all-time high of 28%.
- Battery attachment rates are strong, with 42% of systems installed in Q2 including batteries.
- New partnerships with ADAC and Volkswagen Group's Elli are expected to reduce customer acquisition costs and drive sales.
- Operating expenses reduced by 16% year-over-year and 8% quarter-over-quarter.
- Positive policy outlook in key markets like the UK, France, Italy, Portugal, and Poland.
Negative Points
- Total operating income decreased year-over-year due to lower installation activity.
- Sales remain flat, which is a concern for the company.
- Ticket size is lower than previous quarters due to decreasing costs of equipment and installations.
- Challenging market conditions in Northern Europe and Spain with limited policy support.
- Cash reserves decreased from NOK434 million to NOK334 million due to negative operational cash flow.
Q & A Highlights
Q: Did you say that you will break even at current sales levels, so 1,622 per quarter?
A: No, I didn't say that. But I said that we would implement efficiency measures to bring costs into alignment with activity levels. The exact details of that will be fleshed out with our employee representatives and the Board of Directors and then, of course, presented to the markets and the shareholders.
Q: What is this new sales method that you mentioned you tried in Italy?
A: When we started Otovo, we were pioneering online sales and online pricing. We've had a lot of success with that, but it's now the industry standard. We want to push that forward by combining our online tools, physical sales consultants, and our network of installers to improve the likelihood that interested customers become buying customers. We've had good initial success with this in Italy and are now implementing it in other markets.
Q: How is the heat pump launch going? What percentage of your revenue is from heat pumps this quarter?
A: Heat pumps are for sale in the Italian market, where they represent 13% of sales this quarter. This is a good start, and we plan to roll this out across more countries later on.
Q: Why didn't you just cut more in the previous round? Why not cut to break even?
A: In December and January of last year, we decided to reduce costs based on our performance over the last few quarters. We optimized for sales levels at 3,000 to 3,000-plus back then. Now, after three consecutive quarters with flat sales, we see that it's both needed and possible to address the cost anew.
Q: If the portfolio sale does not succeed, how long will your cash reserves take you before you need a new raise?
A: We announced at the Q1 presentation that we have initiated the sales process of the continental subscription portfolio. While the process is ongoing, it's difficult to be more precise. However, in all realistic scenarios, there is preserved latent cash reserves in that portfolio. We stay on top of this situation by combining the cash that we have on the balance sheet, the latent cash in that portfolio, with the cost cuts.
Q: Can you give some more color on the changes in battery attachment leasing share? Are the changes driven by country mix?
A: The appetite for batteries is increasing uniformly across Europe. The battery attachment rate is not driven by country mix; it's strong across all countries. Leasing shares are up but are weighted down by country mix. Italy, a non-leasing country, affects the leasing share when it performs well.
Q: Are you rolling out heat pumps and EV chargers to all markets? How has it progressed so far?
A: Italy is leading the charge with heat pumps, followed by Poland. We will take it step by step based on progress and learnings. On the EV charger side, we have sold EV chargers in all markets, and the increasing EV sales across Europe make it more interesting for people to get EV chargers through us.
Q: When will batteries be economically feasible for customers in Norway? Are subsidies needed?
A: We are about to cross that line. Batteries costing NOK100,000 with 10,000 cycles and 10 kilowatt hours bring the cost to about NOK1 per kilowatt hour, which starts to look feasible. However, the Norwegian government needs to subsidize solar and batteries more to stimulate the market.
Q: Would it be wiser to enter a closer cooperation with businesses like Tibber or Enode?
A: Consumers increasingly expect smart systems that optimize energy use. We address this by partnering with companies like Tibber and equivalents across Europe. Smartness is definitely a growing trend, and we cooperate closely with several companies to provide this.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
