Arco Vara (ARC1T) Q3 2024 earnings summary

Executive summary

• Q3 2024 saw stabilization and gradual recovery in the Estonian real estate market, with increased transaction volumes and a 128% sequential revenue increase from Q2 2024.

• Focus was on Kodulahe developments, with 80 of 113 Rannakalda units sold and Soodi 6 pre-sales underway; Botanica Lozen in Bulgaria reached 75% completion.

• Construction of a padel venue was completed ahead of schedule, enhancing rental property profitability.

• The market outlook remains cautious, with gradual recovery expected and tax increases potentially impacting housing availability.

• Key challenge for late 2024 is selling completed apartments at Kodulahe and Kuldlehe (market value €14m) and remaining Botanica Lozen houses (€9m).

Financial highlights

• Q3 2024 revenue was €2.15m, up from €145k in Q3 2023; 9M 2024 revenue was €4.09m, 6.3x higher year-over-year.

• Q3 2024 EBIT was €154k (Q3 2023: -€221k); net loss was €156k (Q3 2023: -€290k).

• 9M 2024 EBIT was -€157k (9M 2023: -€654k); net loss was -€844k (9M 2023: -€928k).

• Cash and cash equivalents at period end were €1.16m (9M 2023: €916k).

• Equity at period end was €19.52m, up from €16.48m a year earlier.

Outlook and guidance

• 2024 revenue forecast is €8.4m with a projected net loss of €1.2m; 2025 revenue expected at €21.1m with net profit of €0.7m.

• Construction of Soodi 6 (Kodulahe) to start end of 2024; Lammi 6 planning ongoing, with construction in two years.

• Botanica Lozen first phase to complete by end of 2024; Arcojärve construction to begin in H2 2025.