Qt Group Q3 2025 slides: Sales decline amid market challenges, IAR acquisition completed

Qt Group Oyj (HEL:QTCOM) presented its third-quarter 2025 results on October 30, revealing a 3.4% year-over-year decline in net sales amid challenging market conditions. The Finnish software company’s stock fell 5.53% following the announcement, as investors responded to weakening financial performance despite management’s optimistic long-term outlook.

Introduction & Market Context

Qt Group reported quarterly net sales of €40.7 million, representing a 3.4% decrease from the previous year, or a 0.2% decline at comparable currencies. The company cited a challenging market environment, weak global economic conditions, and ongoing trade tensions as key factors impacting performance.

"Noticeable cautiousness in customers’ purchasing behavior" was highlighted in the presentation, with average deal sizes coming in smaller than expected. Despite these headwinds, the company maintained that its distribution license revenue remained at the previous year’s level.

As shown in the following chart of quarterly net sales, Qt Group has experienced fluctuating performance throughout 2024 and 2025:

Quarterly Performance Highlights

The third quarter showed significant pressure on profitability metrics. Qt Group’s EBITA (earnings before interest, taxes, and amortization) fell to €4.3 million, representing a 58.5% year-over-year decline. The EBITA margin contracted to 10.5%, compared to 24.5% in the same period last year.

Operating result (EBIT) fell even more dramatically, down 72.6% to €2.3 million, with net profit coming in at €1.4 million, or 3.5% of sales. The company reported quarterly earnings per share of €0.06.

The detailed income statement reveals the extent of the financial challenges faced by Qt Group in Q3 2025:

Despite the earnings pressure, Qt Group maintained a strong balance sheet position. The company reported an operative cash flow of €32.4 million and ended the quarter with a cash balance of €93.9 million. Trade receivables stood at €39.5 million, with a reduction of €3.9 million in contract assets.

Strategic Initiatives: IAR Acquisition

A significant highlight of the quarter was the completion of Qt Group’s acquisition of IAR Systems Group, a strategic move to enhance the company’s product portfolio for the microcontroller (MCU) market, which is expected to grow at approximately 10% annually.

The acquisition is expected to provide Qt Group with a more comprehensive product offering and increased growth opportunities, as IAR’s key product, the Embedded Workbench compiler, is typically selected at the beginning of product development projects.

As illustrated in the presentation slide below, the acquisition strengthens Qt Group’s position in safety-critical systems and supports the company’s transition to a SaaS subscription licensing model:

According to the presentation, the IAR acquisition is expected to contribute approximately €8-10 million to Qt Group’s full-year net sales for 2025. However, one-off transaction costs related to the acquisition are anticipated to have a negative impact of approximately €6-7 million on the company’s full-year EBITA.

Detailed Financial Analysis

Personnel expenses increased by 10% year-over-year to €25.1 million in Q3, reflecting the company’s continued investment in its workforce. Qt Group reported a total headcount of 922 employees as of September 30, 2025, representing a year-over-year increase of 64 employees or 7.5%.

Other operating expenses also rose significantly, up 28.8% to €9.2 million, contributing to the pressure on margins. The company specifically noted that IAR acquisition-related costs amounted to €1.7 million during the quarter.

Exchange rate fluctuations had a negative impact of €1.4 million on net sales for the quarter, highlighting the challenges of operating in a global market with currency volatility.

Forward-Looking Statements

Despite the current challenges, Qt Group maintained an optimistic outlook for long-term growth, citing the increasing number of displays and devices as a significant growth driver for its development tools. The company also highlighted the growing use of AI in software development as a factor that increases the need for quality assurance tools and test automation.

As shown in the following guidance slide, Qt Group provided a cautiously optimistic outlook for the remainder of 2025:

The company estimates that its net sales for 2025 will increase by 3-10% year-on-year at comparable exchange rates, with an operating profit margin (EBITA %) of 20-30%. This guidance includes the estimated impact of the IAR Systems Group acquisition.

However, Qt Group acknowledged that challenges in the market environment cause uncertainty in the short term. The general economic uncertainty may reduce demand for the products of Qt’s customers, and the weakening global economic situation could affect customer solvency.

The stock market response to the earnings release was decidedly negative, with Qt Group shares falling 5.53% to €38 following the announcement. The stock has traded between €34.74 and €92.10 over the past 52 weeks, indicating significant volatility.

While Qt Group faces immediate challenges, the strategic acquisition of IAR Systems and the company’s focus on long-term growth drivers suggest management is positioning the business for future opportunities despite the current market headwinds.

Full presentation:

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