Street Calls of the Week
Introduction & Market Context
NEXT Biometrics Group ASA (OB:NEXT) reported a significant revenue decline in its Q2 2025 results presented on August 20, 2025. The biometric authentication solutions provider faced continued challenges in key markets while also implementing revenue restatements that further impacted financial performance. Despite these setbacks, the company highlighted new product launches and breakthrough orders that management believes will drive future growth.
The presentation, delivered by CEO Ulf Ritsvall and CFO Eirik Underthun, revealed the company’s strategy to navigate current market difficulties while positioning for recovery in late 2025 and beyond. This follows a challenging first quarter where the company had already reported declining revenues compared to the previous year.
Quarterly Performance Highlights
NEXT Biometrics reported adjusted revenues of NOK 4.3 million for Q2 2025, a substantial decrease from NOK 18.3 million in Q2 2024. The company’s adjusted gross margin also declined to 39% from 57% in the same period last year. Management attributed these disappointing results to ongoing slowness in the Chinese market and a continued pause in the Indian market.
As shown in the following financial summary from the presentation:
The company’s adjusted EBITDA deteriorated to negative NOK 14.2 million compared to negative NOK 6.7 million in Q2 2024. While adjusted operating expenses improved slightly to NOK 15.9 million from NOK 17.0 million year-over-year, this cost reduction was insufficient to offset the revenue decline.
Detailed Financial Analysis
A significant factor affecting Q2 results was the restatement of historic revenues. The company disclosed irregularities related to sales to selected distributors in China, resulting in a reversal of NOK 1.7 million in Q2 2025 revenues and a restatement of 2024 revenues by NOK 12.6 million.
Additionally, NEXT granted extraordinary discounts of NOK 4.8 million on China-ID products due to changing market conditions and competitor pricing. These adjustments resulted in reported revenues of negative NOK 2.2 million for the quarter.
The following slide explains the revenue restatements in detail:
Management indicated that these one-off issues are expected to be resolved in Q3 2025, potentially setting the stage for improved performance in the second half of the year. However, this represents a significant challenge given that in Q1 2025, the company had projected combined revenue of NOK 60-70 million for Q2 and Q3 2025.
Strategic Initiatives & New Products
Despite financial challenges, NEXT Biometrics achieved several strategic milestones during the quarter. The company successfully launched two new products: the NEXT Granite, a FAP30-sized sensor, and the NEXT Basalt L1 Slim, a FAP20-sized sensor. These products expand the company’s portfolio and target high-end markets such as Government ID and Healthcare.
The following slide details the company’s progress on new products:
Immediately after the quarter closed, NEXT secured a breakthrough order for its FAP30 product valued at NOK 3.2 million, with deliveries expected in Q4 2025. This order confirms market demand for the new product and involves a partner planning two new high-demand devices.
As shown in this slide detailing the breakthrough order:
The company also announced its first major order for Identity & Access Management (IAM) solutions worth NOK 2.5 million, with deliveries starting in Q3 2025. This order comes from what NEXT describes as "a leading global IAM player with 40 million deployed users/licenses" and is expected to generate annual sales of NOK 2.5-5 million, providing recurring revenue potential.
Forward-Looking Statements
Despite current challenges, NEXT Biometrics maintained an optimistic outlook for future growth. Management expects normal quarterly revenues to resume in the second half of 2025 following a ramp-up in India and a restart in China. The company’s long-term growth strategy includes both organic growth from current and new products in existing markets and inorganic growth through potential market consolidation.
The company provided specific revenue projections in its growth outlook:
NEXT expects to achieve full operational momentum by late 2025 or early 2026, with recurring quarterly revenues projected to reach NOK 25-30 million by Q4 2025/Q1 2026. The company also anticipates large tenders and one-time revenue opportunities in the governmental ID sector, potentially worth NOK 10-100 million per project.
In the short term, management is focusing on releasing cash from working capital, completing customer projects, and solving distribution challenges. The company believes its revenue pipeline remains intact, enabling long-term potential from recurring revenues, yearly and irregular revenues, and tenders and one-time revenues.
Given the significant gap between current performance and future projections, investors will likely watch closely for signs of the anticipated market recovery and revenue growth in the coming quarters. The success of the new FAP30 and IAM products will be critical factors in determining whether NEXT can achieve its ambitious revenue targets for late 2025 and beyond.
Full presentation:
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.