Nepa (NEPA) Q3 2024 earnings summary

Executive summary

• Net sales declined 14.4% year-over-year to SEK 60.4 million in Q3 2024, with organic growth at -14.2%.

• Annual Recurring Revenue (ARR) fell 7.6% to SEK 159.3 million, reflecting increased churn and lower new sales.

• Adjusted EBITDA less Capex margin improved to 4.8% (0.0%), the strongest Q3 since 2021, despite a challenging market.

• Loss of a major global tracking contract (SEK 16.5M ARR) will impact revenue from mid-Q1 2025.

• New subscription product, Continuous Marketing Mix Modeling (CMMM), launched; CTO appointed.

Financial highlights

• Subscription revenue decreased 10.2% to SEK 40.2 million; ad hoc revenue from subscribers dropped 30.9%.

• Gross profit was SEK 44.5 million (down 14.3%), with a gross margin of 73.7% (up 0.1 pp).

• Adjusted EBIT was SEK -1.1 million (margin -1.9%); EBIT was SEK -1.1 million (margin -1.9%).

• Net profit was SEK -2.2 million (EPS SEK -0.28), compared to SEK -0.7 million (EPS SEK -0.08) last year.

• Operating cash flow was SEK 5.0 million; net financial position at SEK 29.8 million.

Outlook and guidance

• Market demand remains cautious, but pipeline and new bookings show early positive trends.

• Short-term focus on profitability measures to offset major contract loss; long-term ambition for topline growth and expansion.

• Continued investment in sales, marketing, and product development, including AI-driven tools.