Desenio Group (DSNO) Q3 2024 earnings summary

Executive summary

• Net sales declined 15.6% year-over-year to SEK 192.6 million, with profitability improving due to a higher gross margin and adjusted EBITA margin, despite weak purchasing power outside the Nordics.

• Adjusted EBITA margin increased to 12.1% from 11.0% last year, supported by a favorable product mix and stable fulfillment costs.

• Operating cash flow was positive at SEK 2.3 million, despite lower sales and early inventory build-up for Q4.

• Ongoing discussions with bondholders regarding refinancing as the senior secured bond matures in December 2024, with material uncertainty regarding going concern.

• Appointment of Joar/Johan Roslund as new CFO effective January 2025, with a transition period until March 2025.

Financial highlights

• Net sales: SEK 192.6 million, down 15.6% year-over-year; gross margin improved to 85.2% from 83.3%.

• Adjusted EBITA was SEK 23.4 million (12.1% margin), compared to SEK 25.1 million (11.0%) last year.

• Operating profit (EBIT) increased to SEK 21.8 million from SEK 16.1 million year-over-year.

• Net interest payments on outstanding bonds totaled SEK 24.8 million in the quarter; cash and cash equivalents at SEK 71.3 million.

• Average order value increased by 5% year-over-year.

Outlook and guidance

• 2024 net sales expected at the lower end of the -5% to -10% year-end growth range.

• Adjusted EBITA margin for 2024 expected at 11%-13%.

• 2025 guidance: net sales growth of 0%-5% and adjusted EBITA margin of 11%-14%.

• New long-term targets: organic annual net sales growth >5% and adjusted EBITA margin >15% over time.