Release Date: July 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- StrongPoint ASA (STU:PGT, Financial) reported growth in service and recurring revenue, which is crucial for building a sustainable business.
- The company has started recognizing revenue from a significant order picking deal with Sainsbury's, marking a major milestone.
- StrongPoint ASA (STU:PGT) initiated a pilot for its CashGuard Connect solution with Spain's largest grocery retailer, indicating progress in product development.
- The company is expanding its partner network, particularly in the US, to enhance its e-commerce offerings.
- StrongPoint ASA (STU:PGT) has implemented restructuring initiatives to reduce costs, which are expected to take effect in the second half of the year.
Negative Points
- Product sales have declined compared to the same quarter last year, reflecting hesitation from major retailers to make large-scale investments.
- The company faces challenges in penetrating larger markets like the UK and Spain with its Electronic Shelf Labels (ESL) due to direct supplier access expectations.
- StrongPoint ASA (STU:PGT) has not announced new wins for its AutoStore distribution, indicating potential stagnation in this area.
- The depreciation of the Norwegian and Swedish kroner has negatively impacted sales in these regions.
- There is limited visibility on product sales, making it difficult to predict future revenue and gross margin outcomes.
Q & A Highlights
Q: What are the key highlights from this quarter?
A: Jacob Tveraabak, CEO: The quarter saw a decline in product sales due to retailer hesitation in making large investments. However, there was growth in service and recurring revenue, which is crucial for long-term business health. Notably, StrongPoint began recognizing revenue from a significant order-picking deal with Sainsbury's, which is opening doors for further opportunities. Additionally, a pilot for the CashGuard Connect solution with Spain's largest grocery retailer was announced, marking a significant achievement.
Q: What is the progress of the CashGuard Connect pilot and its potential for future orders?
A: Jacob Tveraabak, CEO: The pilot is progressing well, focusing on ensuring stability and addressing customer feedback. CashGuard Connect allows cash payments without employee handling, with cash stored securely. Interest from other clients is present, but the current focus is on refining the solution for large-scale manufacturing.
Q: Can you discuss the partner network and any plans for expansion?
A: Jacob Tveraabak, CEO: StrongPoint aims to deliver in its nine core countries and expand through partners for certain solutions like CashGuard and e-commerce offerings. The company has strong partners in South Africa, France, and Ireland, and is exploring further expansion opportunities. The self-checkout solution is also being considered for partner distribution once proven in core markets.
Q: What is the status of the new order-picking contract with Sainsbury's and other potential pilots?
A: Marius Drefvelin, CFO: The onboarding process with Sainsbury's is underway, with the first stores expected to go live in autumn. Service revenue is already increasing. Jacob Tveraabak, CEO, added that while large-scale pilots will be announced, the Sainsbury's deal is attracting attention and opening new opportunities.
Q: How is StrongPoint addressing the decline in revenue compared to other retailers?
A: Marius Drefvelin, CFO: The decline is attributed to challenging conditions in Norway and Sweden, including currency depreciation. StrongPoint is focusing on cost control, having reduced costs twice recently, and is pushing sales of its solutions in markets with favorable conditions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
