Release Date: July 18, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Net sales grew by 4% in Q2 2024, reaching EUR5.1 million.
- EBITDA improved significantly from EUR0.1 million to EUR0.5 million compared to the previous year.
- Subscription ARR grew by 8.2%, with PrivX subscription sales increasing by 21.2%.
- The company launched SalaX solutions for secure communication and achieved its first customer wins.
- SSH Communications Security Oyj strengthened its partner network, leading to new deals in various sectors, including banking and manufacturing.
Negative Points
- Overall sales growth was relatively modest, and EBIT remained negative at EUR0.5 million.
- Cash flow from operations was negative at EUR0.8 million, reflecting seasonal weakness.
- There were delays in anticipated deals, affecting immediate revenue recognition.
- The company experienced a sequential decline in ARR from Q1 to Q2 2024 due to delayed renewals and a customer loss in the secure collaboration suite.
- Organizational restructuring led to a reduction of seven employees, with the full impact of cost savings expected in future quarters.
Q & A Highlights
Q: Is the performance growth from the new partners you mentioned, or can you talk more about what region and type of customers are driving the PrivX growth?
A: The growth is primarily driven by partners, including a new customer in heavy-duty manufacturing and expansions with MSPs. A significant partner is CANCOM in Central Europe, which has contributed to the pipeline and initial wins.
Q: Is the new certification of NQX and the orders due to a NATO boost, or is it overall demand from defense and infrastructure industries?
A: The expansion is related to a major deal announced earlier, with new versions requiring certification. While NATO membership expansion is related, the demand is primarily from communications and defense sectors.
Q: You reduced the number of employees by 7. Are there more cuts to come?
A: The organizational changes and reductions are complete. While organizations naturally evolve, the structural changes and personnel adjustments are finalized.
Q: Will the salaries still be on your cost on the balance sheet?
A: The impact of the organizational changes will be seen in the third quarter, with the full effect expected in the fourth quarter.
Q: R&D was slightly up in the quarter. Are you increasing R&D going forward?
A: There are no plans for significant R&D increases. Structural changes have been made for efficiencies, but no major R&D resource increases are anticipated.
Q: Can you elaborate on the decline in recurring revenue ARR and subscription revenue ARR during Q2 of 2024?
A: The decline is due to seasonality, delayed renewals in the Zero Trust product line, and a larger customer loss in the secure collaboration suite. These factors contributed to the ARR decline from Q1 to Q2.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
