Release Date: October 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Net sales grew by 12.5% in comparable currencies, reaching 42 million.
- Developer licenses sales are on budget with healthy demand.
- The QA business, including products like Quess and Cocoa, is experiencing healthy growth.
- The company is strategically positioned in a growing market with increasing demand for software and user interfaces.
- Efforts in new customer acquisition and business development are ongoing, with a focus on QA testing tools.
Negative Points
- Q3 results were weaker than expected, with a notable softness in consulting sales.
- Distribution licenses growth rate is lower than anticipated, affecting overall performance.
- The US market is experiencing more pronounced softness, particularly in consultancy.
- Trade receivables are high due to delayed payments, although no risk is perceived.
- The company lowered its revenue growth guidance from 20-30% to 20-25% for 2024.
Q & A Highlights
Q: Could you clarify the performance of your revenue lines, particularly the distribution license revenue? Was the growth negative or flat? How did the renewal business in developer licenses perform, and what was the contribution of new sales to Q3 growth?
A: The distribution licenses are growing, but at a slower rate than expected. The growth is not negative or flat, but slow. Most of our sales come from existing customers expanding their use, with new sales starting small and growing over time. Our renewals business is strong, with a low churn rate, as most development projects are long-term.
Q: What is the growth difference between the QA software and the ecosystem developer license growth? Do you still expect to make over 30 million in net sales for the testing and quality assurance businesses this year?
A: Yes, we expect to make over 30 million in net sales for the QA business. The QA business is growing nicely, and we are confident it can become a 100 million business in the future. The QA business can be sold to both Qt commercial users and the broader market, which is larger than the Qt ecosystem alone.
Q: Regarding the US market, what challenges are you facing, and do you see any potential impacts from the upcoming US elections?
A: We haven't lost any customers in the US, but there is a general cost-consciousness among US companies. The US elections might lead to tighter US-China relations, which could impact distribution license sales if import duties are raised. However, we are strategically positioned to manage such risks.
Q: Can you elaborate on the challenges in the American business? Does it relate to your organization or customers?
A: The challenges are mainly related to execution speed and consulting demand. We need to improve execution, but there are no fundamental issues with the product or pricing. The US market is large, and we see room for improvement in execution.
Q: You mentioned price hikes for 2025. How are discussions with customers progressing, and do you expect to implement these hikes?
A: Yes, we expect to implement price hikes. The discussions are progressing well, as price increases are generally understood due to rising operational costs and industry-wide price adjustments.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
