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Introduction & Market Context
Techstep ASA (OB:TECH), a European mobile and circular technology company, presented its Q2 2025 financial results on August 20, 2025, highlighting improved profitability despite a revenue decline. The company’s strategic shift toward recurring revenue streams and cost optimization efforts are yielding results, with adjusted EBITA growing 64% year-over-year despite a 7% drop in total revenue.
The company’s stock closed at NOK 13.40 on August 19, 2025, within its 52-week range of NOK 10.10 to NOK 14.95, according to available market data. Following its Q1 2025 results, which showed a less severe 3% revenue decline, the stock had dropped 5.26%, reflecting investor concerns about top-line performance.
Quarterly Performance Highlights
Techstep reported total revenue of NOK 247.23 million for Q2 2025, down 7% from NOK 266.31 million in Q2 2024. Despite this decline, the company achieved notable improvements in profitability metrics, with net gross profit increasing 5% to NOK 87.98 million and adjusted EBITA rising 64% to NOK 4.30 million.
The company’s revenue mix continues to shift toward higher-margin software and services. Own Software (ETR:SOWGn) revenue grew 13% year-over-year to NOK 31.06 million, while Mobile Devices & other revenue declined 12% to NOK 163.03 million. Advisory & Services revenue remained stable at NOK 53.14 million.
As shown in the following quarterly highlights:
Net gross profit margin improved significantly to 36%, up 4 percentage points from Q2 2024, reflecting the company’s successful transition toward higher-margin offerings. The company also reported positive cash flow from operations of NOK 54 million, an improvement of NOK 24 million year-over-year.
A detailed breakdown of the financial performance reveals the continued strength in software revenue growth:
Strategic Initiatives
Techstep continues to strengthen its market position through strategic partnerships and new client agreements. In June, the company signed a strategic partnership with Telia (ST:TELIA) Norge and is planning to roll out services with Ireland and UK-based partner Fonua in Q4 2025.
A significant commercial win was the new exclusive agreement with Oslo Municipality, with a potential value of NOK 500 million over a four-year period. This agreement covers mobile devices, software, and services for all agencies within Oslo Kommune, as well as several other entities, supporting the municipality’s sustainability ambitions.
In Spain, Techstep achieved a major milestone with its Essentials Mobile Device Management (MDM) software being certified by CCN, making it the only certified MDM solution for government use in the country. The total addressable market is estimated at between 800,000 and 1,000,000 devices.
The company’s end-to-end service offering covers the complete device lifecycle, from procurement to recycling:
Regional Performance
Techstep’s performance varied across its regional markets. Norway experienced a 14% year-over-year revenue decline and a 3% decrease in net gross profit. In contrast, Sweden/Denmark saw 8% revenue growth and 4% net gross profit growth, while Poland delivered the strongest performance with 20% revenue growth and 36% net gross profit growth.
The company continues to expand its foothold in the Swedish public sector through newly awarded agreements with Borås municipality and Norrkõping municipality. It also secured new agreements with LKAB and Securitas AB in Sweden.
In Norway, Techstep renewed agreements with Equinor and Sykehusinnkjøp, and the agreement with Sykehuspartner HF became fully operational from Q2 2025.
Transforming to Recurring Revenue
A key element of Techstep’s strategy is the transformation to recurring revenue streams. The company reported recurring revenue annualized of NOK 324 million in Q2 2025, up 4% year-over-year, driven by 6% growth in Own Software.
The following chart illustrates this transformation:
While the company saw a 2% decline in recurring revenue since the previous quarter due to churn, management expects its refocused commercial strategy with emphasis on partner agreements to drive and accelerate growth in recurring revenues going forward.
The company’s profitability has shown consistent improvement, with last twelve months (LTM) adjusted EBITA reaching NOK 42 million in Q2 2025, representing 52% growth year-over-year:
Forward-Looking Statements
Techstep provided optimistic guidance for 2025, expecting recurring revenue annualized growth of 15-25% year-over-year, net gross profit growth of 12-18%, and an adjusted EBITA conversion target of 13-18%. This represents a significant acceleration from 2024 actuals, which showed 6% recurring revenue growth, -2% net gross profit growth, and an 11% EBITA conversion rate.
The company’s strategy for scaling and increasing value to accelerate recurring revenue is illustrated below:
Management emphasized that strategic partner agreements are positioned for scalability, with the Sykehuspartner HF contract now live and in production. The company also noted strong momentum for its Essentials MDM solution across Europe.
Balance Sheet and Cash Position
Techstep maintained a solid financial position with total assets of NOK 1.14 billion as of Q2 2025, slightly down from NOK 1.15 billion in Q2 2024. The equity ratio stood at 48%, while total borrowings were reduced by NOK 25 million year-over-year to NOK 142 million.
The company reported a net cash position of NOK 22 million, with cash and cash equivalents at the end of the period totaling NOK 21.6 million, up from NOK 15.4 million in Q2 2024. Net interest-bearing debt (NIBD) decreased by NOK 31 million from Q2 2024 to NOK 120 million.
Operating cash flow after investments in Device-as-a-Service improved by NOK 24 million year-over-year, reflecting enhanced operational efficiency and working capital management.
Conclusion
Techstep’s Q2 2025 results demonstrate the company’s successful execution of its strategic shift toward higher-margin recurring revenue streams despite top-line challenges. With improved profitability, strong cash flow generation, and strategic partnerships positioning the company for future growth, management appears confident in achieving accelerated growth in the coming quarters.
The company’s expansion in key European markets, particularly with its certified MDM solution in Spain and new agreements in the Nordic public sector, provides a foundation for the ambitious growth targets outlined in its 2025 guidance. Investors will likely focus on whether Techstep can maintain its profitability momentum while reversing the revenue decline trend in upcoming quarters.
Full presentation:
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