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Introduction & Market Context
Sensys Traffic AB (NASDAQ SMALL CAP STOCKHOLM:SGG) presented its Q1 2025 results on April 24, 2025, highlighting strong revenue growth despite currency challenges. The traffic enforcement solutions provider saw its stock surge 7.32% to 44 SEK following the presentation, reflecting investor optimism about the company’s strategic direction and financial performance.
The company’s Q1 results demonstrate continued execution of its long-term strategy focused on building a solid foundation of recurring revenue, which now constitutes 94% of order intake. This strategy has helped Sensys Traffic maintain growth momentum despite global economic uncertainties and currency volatility.
Quarterly Performance Highlights
Sensys Traffic reported total revenue of MSEK 152 for Q1 2025, representing a 22% increase compared to the same period last year. This growth was driven by a 44% increase in system sales (MSEK 59) and an 11% rise in TRaaS (Traffic Enforcement as a Service) revenue (MSEK 93).
As shown in the following revenue breakdown chart, TRaaS now accounts for 61% of the company’s total revenue, underscoring the success of Sensys Traffic’s recurring revenue strategy:
The company’s EBITDA showed remarkable improvement, increasing by 125% to MSEK 9 in Q1 2025. However, operating profit (EBIT) remained negative at MSEK -4, primarily due to currency translation effects that negatively impacted financial items by MSEK 13.
The following chart illustrates the company’s financial performance for the quarter:
Gross margin for Q1 2025 stood at 37%, slightly below the company’s typical 40% level. This was attributed to a higher contribution of system sales from Dutch projects, which were in the initial phase with lower margins. Management expects to recoup these margins during the service and maintenance phases of these contracts, which run for a minimum of six years.
The gross margin trend over time is illustrated in this chart:
Strategic Initiatives
Sensys Traffic’s order intake for Q1 2025 was MSEK 192, compared to MSEK 318 in Q1 2024. While this represents a decrease, the quality of orders improved significantly, with 94% classified as recurring revenue. The company secured three contracts with new cities across three different states in the USA, including its first contract in Colorado, expanding its geographical footprint.
The following chart shows the order intake trend over recent quarters:
A significant strategic milestone was the company’s first recurring revenue order from Saudi Arabia, worth MSEK 27 for one year. This order covers the maintenance of 1,200 in-vehicle systems delivered since 2018 and is part of a three-year framework agreement for service and maintenance. This development reinforces Sensys Traffic’s strategic partnership with Tahakom in Saudi Arabia and opens up further opportunities in the Middle East region.
The US market continues to be a key focus area, representing approximately 40% of Sensys Traffic’s worldwide revenue. Despite US government global tariffs imposed in April, the company reported negligible impact on its US business, which operates primarily through a Managed Services model. However, the weakened US dollar has affected profit before tax this quarter.
Detailed Financial Analysis
Sensys Traffic’s business is divided into two main segments: Managed Services and System Sales. Both segments showed distinct performance patterns in Q1 2025.
The Managed Services segment, primarily representing US operations, saw revenue decrease by 7% to MSEK 46 (compared to MSEK 50 in Q1 2024). EBITDA for this segment was MSEK 5, down from MSEK 8 in the same period last year. This decline was largely attributed to the impact of Iowa legislative changes, which reduced quarterly EBITDA by approximately MSEK 3. Despite these challenges, US Managed Services secured new customer contracts with a Total (EPA:TTEF) Contract Value of MSEK 54, plus MSEK 65 in renewals.
The performance of the Managed Services segment is illustrated in this chart:
The System Sales segment performed exceptionally well, with revenue increasing to MSEK 106 (from MSEK 75 in Q1 2024). EBITDA for this segment improved significantly, reaching MSEK 4 compared to MSEK -4 in the same period last year. This improvement was driven by increased deliveries on Dutch Tender and Australian projects. Notably, 44% of System Sales now comes from recurring revenue, aligning with the company’s strategic focus.
The System Sales segment performance is shown in this chart:
Currency volatility had a significant impact on financial results. The weakening of the US Dollar, Euro, and Australian Dollar against the Swedish Krona resulted in a negative impact of MSEK 6 in Q1 2025, compared to a positive impact of MSEK 3 in Q1 2024 – a delta of MSEK 9. Additionally, the impact on the EURO 30 million bond resulted in a delta of MSEK 4. In total, currency translation effects negatively impacted financial items by MSEK 13 in Q1.
The company’s financial position remains stable, with available cash of MSEK 149 and interest-bearing debt of MSEK 274. Investments in fixed assets amounted to MSEK 13, while working capital was MSEK 32.
Forward-Looking Statements
Sensys Traffic’s management remains optimistic about the company’s future prospects, focusing on executing its 1 billion SEK backlog in home markets, developing its US TRaaS business, and delivering sustainable, profitable growth.
The following chart summarizes the company’s financial outlook:
The company highlighted five key investment propositions: being a leading global player in traffic enforcement, operating in a relevant and growing market, implementing focused strategies for service business growth, sustaining financial and operating performance, and offering products for a safer and sustainable planet.
While the company faces challenges from currency volatility and specific market changes like the Iowa program, its strategic focus on recurring revenue and international expansion positions it well for continued growth. The strong order backlog of more than 1 billion SEK is expected to provide solid revenue well into the future, supporting management’s confidence in achieving their financial targets for 2025.
Full presentation:
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