u-blox (UBXN) Investor Update summary

Strategic decision and business focus

• Announced the phase-out of the loss-making cellular business after unsuccessful turnaround efforts and failed sale attempts, following a strategic review.

• The company will now focus on its Locate (GNSS/positioning) business and improving the profitability of its short-range (Wi-Fi/Bluetooth) business, aiming for break-even in short range by the second half of 2025.

• Immediate initiation of the transition, with most cost reduction actions expected in 2025.

• The phase-out involves stopping cellular R&D, serving existing customers with current products, and minimizing related operating expenses.

• Commitment to supporting affected employees, customers, and partners during the transition.

Financial impact and cost management

• Eliminating the cellular business is expected to remove at least CHF 30 million in annual EBIT-level losses, with a one-off cash impact of CHF 25-30 million.

• A Q4 impairment of CHF 31 million for R&D capitalization was reported, with a total Q1 impact of CHF 65 million, about 40-60% of which is non-cash and includes inventory effects.

• Previous CHF 20 million cost savings are partially included in the CHF 30 million cellular loss elimination; further cost base reductions are underway.

• Q4 2024 revenue guidance confirmed at CHF 60-70 million, with adjusted EBIT margin of -25% to -15%.

• Break-even revenue threshold is expected to drop from CHF 70-80 million to CHF 50-60 million per quarter due to cost base adjustments.

Market outlook and strategic rationale

• Positioning (Locate) is seen as a structurally growing and highly differentiated market, with applications in automated driving, robotics, industrial IoT, and asset tracking.

• The margin profile is expected to improve with the exit from cellular, but no new midterm financial targets were disclosed.

• Short range remains part of the portfolio for now, with value maximization as the guiding principle; its future ownership is not ruled out.

• The Locate business can operate independently, but there are synergies with short range in areas like indoor positioning.

• Ongoing commitment to innovation and sustainable growth in the positioning technology market.