Release Date: August 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Clavister Holding AB (FRA:89P, Financial) reported its 11th consecutive quarter of net sales growth, with a 17% increase in Q2.
- The company achieved a positive operational cash flow of SEK4.3 million, a significant improvement from the previous year's negative cash flow.
- Order intake for Q2 showed a 13% growth, marking the first time the company exceeded SEK50 million without large defense contracts.
- The company maintained a strong cash position, supported by a cash injection since Q1.
- Clavister's base business, including next-generation firewall and identity access management, continues to provide stable growth and recurring revenue.
Negative Points
- The 17% sales growth fell short of the company's 20% target, partly due to currency headwinds and delayed large deals.
- Gross margins were slightly below the target at 79%, impacted by a higher volume of hardware sales.
- The adjusted EBITDA margin was 12%, below the company's ambition, primarily due to sales not meeting expectations.
- Currency effects negatively impacted revenue growth, with significant fluctuations compared to the previous year.
- The telecom market remains uncertain, with ongoing macroeconomic challenges affecting investment in 5G and cybersecurity.
Q & A Highlights
Q: You're talking about acceleration in your next-generation firewall business, but why aren't we seeing this in the numbers?
A: John Vestberg, CEO: The growth we're seeing now comes from our base business. While growth can be more, it's part of our daily operation to optimize our go-to-market and sales efforts. The foundation is there.
Q: You shipped a lot of hardware during the quarter, but your ARR only increased by SEK1.4 million sequentially. Could you explain the dynamics?
A: David Nordstroem, CFO: When we ship hardware, it doesn't count as ARR. ARR is the annualized value of the software on that hardware. There's a lead time from shipping hardware to the activation of the software license by the end customer.
Q: What kind of mix between hardware and software do you expect for the second half? Should gross margins be above 80% again in H2?
A: David Nordstroem, CFO: We don't guide specific numbers, but growth typically means more hardware, impacting gross profit initially. Over time, software sales will drive margins higher.
Q: Could you expand on the recent SEK5 million defense order, which was only software?
A: John Vestberg, CEO: The recent order was software-only because the customer already had their own hardware. Our defense offering doesn't always require hardware, and selling software is beneficial from a margin perspective.
Q: Can you give an update on the CV90 pipeline with BAE?
A: John Vestberg, CEO: BAE's recent CV90 wins have resulted in orders for Clavister. However, there's a lead time between BAE winning an order and it translating to a Clavister order, which can be up to a year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
