Index falls as earnings results weigh; pound above $1.33, Bodycote soars
Introduction & Market Context
Otovo AS (OTOVO) presented its second quarter 2025 results on July 11, showing signs of recovery after a challenging first quarter. The solar and battery marketplace reported sequential growth in key metrics, though year-over-year comparisons remain negative as the company continues its restructuring efforts in a stabilizing European residential solar market.
The presentation comes after a difficult Q1 where Otovo missed revenue forecasts significantly, leading to a 10.9% stock price drop. The company’s shares have since stabilized, closing at 1.80 NOK on July 10, 2025, representing a 0.56% increase on the day and trading well above its 52-week low of 0.77 NOK.
Quarterly Performance Highlights
Otovo reported Q2 2025 revenue of 152 million NOK, representing a 22% increase from Q1’s 125 million NOK, though still down 26% compared to Q2 2024. The company saw growth in both order intake value (+15%) and customer numbers (+9%) compared to the previous quarter.
As shown in the following chart of quarterly revenue and order intake progression:
Installation numbers also showed strong sequential growth, increasing 29% from Q1 2025, while gross profit improved to 36 million NOK (+18% quarter-over-quarter). Gross margin remained relatively stable at 23.9%, slightly down from 24.6% in Q1.
The company’s backlog grew 13% to 221 million NOK by the end of Q2, continuing an upward trend that began in Q1 and suggesting potential for continued revenue growth in coming quarters.
Strategic Initiatives
Otovo has implemented a standardized sales process across all markets, with a particular focus on a hybrid sales approach that the company claims converts customers at four times the rate of online and phone sales alone. The new methodology aims to reduce cost per sale while boosting conversion rates.
The company’s sales process is illustrated in this flowchart:
Data from Q2 shows the effectiveness of different sales channels, with hybrid sales significantly outperforming other methods:
Battery demand has emerged as a key growth driver for Otovo, with battery order intake increasing to 10.6 MWh in Q2 2025 from 7.9 MWh in Q1. Average battery sizes are also growing, reaching 8.9 kWh in Q2 compared to 8.5 kWh in Q1, indicating customers are seeking larger energy storage solutions.
The following chart illustrates the growing trend in battery demand:
Otovo is also developing a services business targeting the growing number of aging and "orphaned" solar systems across Europe, which the company estimates represents a 1 billion EUR market opportunity. This initiative aims to create recurring revenue streams while leveraging Otovo’s existing service infrastructure.
Financial Analysis
Otovo’s business is divided into two segments: direct-to-consumer (B2C) and leasing portfolio owner (B2B2C). The B2B2C segment, which includes subscription contracts, delivers higher gross margins and represented 24% of Q2 revenue.
The company’s segment breakdown is shown here:
Detailed financial analysis reveals the profitability advantage of the B2B2C segment:
Cost reduction efforts have shown significant results, with personnel expenses down 39% compared to the previous year. The company highlighted its ability to grow revenue and sales without incurring significant additional costs, demonstrating the scalability of its business model.
Cash position improved to 131 million NOK at the end of Q2, a substantial increase from the 75 million NOK reported at the end of Q1. This improvement follows the company’s portfolio transaction with Swiss Life (SIX:SLHN) Asset Managers, which freed up equity and profits from leasing portfolios in Europe.
The positive cash flow development is illustrated in this chart:
Forward-Looking Statements
Otovo’s management expressed optimism about the company’s trajectory, emphasizing three business priorities for 2025: growing order intake, expanding ticket sizes and value per customer, and maintaining operational leverage.
The European residential solar market is showing signs of stabilization, with Otovo reporting growth in Portugal, Poland, and Italy, while maintaining resilience in Sweden, Norway, and the DACH region (Germany, Austria, Switzerland). The company projects continued market growth, with residential solar PV capacity expected to grow at a CAGR of 12% from 2024-2029, while residential battery capacity is forecast to grow at 23% CAGR over the same period.
CEO Andreas Thorsheim, who was quoted in the Q1 earnings call saying "Otovo is returning to growth, selling higher margin projects to more and more customers," appears to have delivered on that promise in Q2, though the company still faces challenges in returning to year-over-year growth.
While Otovo’s Q2 results show sequential improvement, investors should note that the company continues to operate below previous year levels and faces ongoing challenges in a competitive European energy market. The significant revenue miss in Q1 2025 (125 million NOK vs 912 million NOK forecast) raises questions about forecasting accuracy and market expectations that weren’t directly addressed in the Q2 presentation.
Full presentation:
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