Observit (OBSE) Q3 2024 earnings summary

Executive summary

• Achieved record Q3 with 47% revenue growth year-over-year and significant EBITDA improvement of 47% compared to Q3 2023.

• International expansion strong, with notable growth in Finland (23.8%), Denmark (22.1%), Norway (37.8%), and UK (39.6% increase in camera sales) year-over-year.

• Recurring software revenues slightly below expectations due to bus delivery delays, but expected to strengthen in 2025 as new cameras are activated.

• Ongoing investments in sales teams and pilot projects in France, Switzerland, Germany, and the US, with confidence in future deal conversion.

Financial highlights

• Q3 2024 net revenue: 15.0 MSEK (up from 10.2 MSEK in Q3 2023, +47%).

• Q3 EBITDA: 2.5 MSEK (1.7 MSEK in Q3 2023); EBIT: 1.1 MSEK (0.7 MSEK); EBT: 1.0 MSEK (0.7 MSEK).

• Gross margin for Q3: 44.4% (down from 58.7% in Q3 2023) due to higher hardware sales share.

• ARR for Q3: 18.9 MSEK (16.2 MSEK in Q3 2023, +16.6%).

• Net income per share: 0.002 SEK (0.001 SEK in Q3 2023).

Outlook and guidance

• Recurring software revenues expected to increase in 2025 as delivered cameras are activated.

• Management confident that ongoing pilot projects in new markets will lead to future contracts.