Release Date: October 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Pinewood Technologies Group PLC (PDGNF, Financial) achieved double-digit growth in both revenue and gross profit for the first half of FY24.
- The company successfully implemented its system in the EX-Jardine Motor Group, Lithia UK stores, receiving positive customer feedback.
- Pinewood is expanding its market penetration in the UK and has restructured its sales teams to maximize this effort.
- The company is exploring the North American market through a strategic partnership with Lithia Motors, with plans to pilot their system in North America by 2025.
- Pinewood made a strategic investment in the AI company Seez, enhancing its product offerings and preparing for U.S. market expansion.
Negative Points
- Underlying profit before tax decreased from GBP4.6 million to GBP4 million due to increased costs from business investments.
- The company incurred GBP1 million in one-off transaction costs related to the Lithia transaction.
- There was a share of losses from the JV with Lithia amounting to GBP0.3 million.
- The North American market entry is still in the early stages, with ongoing discovery and planning work required.
- The company faces challenges in the broader economic environment, although it does not expect a material impact on trading.
Q & A Highlights
Q: Can you explain the Seez investment and its integration into Pinewood's existing products?
A: William Berman, CEO, explained that Seez is a Dubai-based company specializing in generative AI with a unique tech stack. The integration of Seez technology is expected to enhance both sales and after-sales processes, such as improving customer engagement and facilitating transactions. Pinewood plans to integrate Seez's technology into its systems to offer better customer experiences and operational efficiencies.
Q: Can you provide more details on your conversations with new customers in the UK and internationally?
A: William Berman, CEO, stated that Pinewood is in advanced discussions with several large groups in the UK and Europe. These discussions take time due to the complexity of transitioning from older systems to Pinewood's new tech stack. The company is optimistic about announcing new opportunities in the coming months.
Q: How are early conversations with North American OEMs progressing, and how will Pinewood differentiate itself from incumbent DMS providers?
A: William Berman, CEO, reported positive early-stage conversations with North American OEMs, with no pushback received. Pinewood's system offers a unified platform, unlike the fragmented systems in North America, which often require multiple windows and apps. This efficiency and integration are key differentiators.
Q: What ongoing development work is required for the APAC market, and how significant is this opportunity?
A: Ollie Mann, CFO, mentioned that while some development work is needed, Pinewood is focusing on targeted international expansion, particularly in Japan. The company aims to achieve scale in core countries rather than spreading resources too thinly across multiple markets.
Q: How do you expect U.S. JV losses to develop over the next three years, and what U.S. market share do you aim to capture?
A: William Berman, CEO, noted that while JV losses may increase as Pinewood builds its U.S. presence, the company is optimistic about capturing market share. With Lithia's support, Pinewood aims to penetrate the North American market, which is significantly larger than Europe, offering substantial growth potential.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
