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Bittium Oyj reported its fourth quarter 2024 earnings, showcasing a solid year-on-year revenue growth of 29.2% with net sales reaching €33,200,000. Despite this growth, the company slightly missed its revenue forecast of €33,220,000. The stock showed a modest pre-market decline of 0.3%, reflecting cautious investor sentiment. According to InvestingPro analysis, the company maintains a healthy financial position with a current ratio of 2.53, indicating strong liquidity. The stock has delivered an impressive 53.52% return over the past year, though it currently trades at a relatively high P/E ratio of 520.
Key Takeaways
- Bittium achieved a 13.2% year-on-year increase in net sales for 2024.
- Operating profit for Q4 was robust at €6,000,000, representing 18% of net sales.
- The company introduced innovative products, including a Quantum (NASDAQ:QMCO) Safe Mobile VPN.
- Minor revenue miss in Q4 compared to the forecast.
- Stock price saw a slight pre-market dip of 0.3%.
Company Performance
Bittium demonstrated strong performance in 2024, with net sales totaling €85,200,000, marking a 13.2% increase from the previous year. The fourth quarter alone saw net sales of €33,200,000, a significant 29.2% increase year-on-year. This growth was driven by strategic investments in research and development, amounting to €13,500,000, or 15.9% of net sales.
Financial Highlights
- Revenue for 2024: €85,200,000 (13.2% YoY growth)
- Q4 2024 Revenue: €33,200,000 (29.2% YoY growth)
- Operating Profit: €8,600,000 (10.1% of net sales)
- Q4 Operating Profit: €6,000,000 (18% of net sales)
Market Reaction
The stock price of Bittium experienced a slight decline of 0.3% in pre-market trading. This minor movement suggests a cautious but not overly negative reaction from the market. The stock remains within its 52-week range, with no significant deviations from broader market trends. Based on InvestingPro's Fair Value analysis, the stock appears slightly overvalued at current levels. InvestingPro subscribers have access to 10 additional key insights about Bittium, including detailed valuation metrics and growth projections.
Outlook & Guidance
Looking ahead, Bittium forecasts net sales between €95 million and €105 million for 2025, with operating results expected to range from €10 million to €13 million. The company plans to focus on strengthening sales, ensuring delivery capability, and maintaining core competencies in embedded technology. InvestingPro data shows the company operates with a moderate debt level and analysts expect net income growth this year. Get access to the comprehensive Pro Research Report for deeper insights into Bittium's growth trajectory and financial health metrics.
Executive Commentary
CEO Johan Westermark stated, "We are on track towards profitable growth," highlighting the company's commitment to leveraging its world-class solutions. He also noted the impact of geopolitical uncertainty on defense spending, which could benefit Bittium's offerings in secure technology.
Risks and Challenges
- Potential geopolitical risks could impact market stability.
- Stricter regulatory approvals in the medical market may pose challenges.
- The engineering services market remains competitive, with challenges in 5G and IoT sectors.
Q&A
During the earnings call, analysts inquired about the company's segment reporting and growth expectations across business units. Bittium confirmed that they anticipate growth in all segments and highlighted a continued strong relationship with Boston Scientific (NYSE:BSX). The company also noted that Q4 and the second half of the year are traditionally stronger periods.
Full transcript - Bittium Oyj (BITTI) Q4 2024:
Carolina Malmi, Press Conference Host/Moderator, Bitium Corporation: Good morning, everyone. My name is Carolina Malmi, and I'm happy to be able to welcome you all to this press conference on Bitium Corporation's Financier Statement 2024. I'm here today with our CEO, Johan Westermark, and he will walk you through our topics today. At the end of the presentation, we have reserved some time for Q and A, and you should find a box to type your questions on the bottom of the screen. But without further ado, I will let Johan to start.
Johan Westermark, CEO, Bitium Corporation: Thank you, Carolina, and good morning to everybody. Let's first start with a few statements. Some of these statements made in this material relating to future circumstances, By the nature of forward looking statements involve risk and uncertainty, and Bitium Corporation disclaims all obligations to update such forward looking statements. And then let's start with the summary of 2024. First, we can see that net sales grew, operating results and cash flow improved significantly.
Net sales for the full year 2024 were 85,200,000.0, which was 13.2% year on year growth. Net sales in Q4 'twenty four were 33,200,000.0, increase of 29.2% year on year. Operating profit in 2024 was 8.6%, representing 10.1% of net sales. Operating profit for Q4 was 6,000,000, representing 18% of net sales. And cash flow improved significantly in 2024, and I will get back to that later in the presentation.
And then on our journey from an R and D house towards a profitable growth company is proceeding as planned. And we're looking to the different business segments, Defense and Security. We had a good strong growth last year in this Defense and Security business segment. Medical (TASE:PMCN) business segment was still affected by extended schedules in regulatory approval process. But at the same time, we have done our homework.
We have strengthened the regulatory organization to meet these new requirements better. And today, we are in much better shape than we were a year ago. Engineering Services business, affected by the challenging market situation. R and D investments decreased year on year, and order book grew significantly, was EUR 45,100,000.0, increase of 63.4% year on year. And we have the growth strategy in place, which we are now implementing.
And let's take the next slide and have a look at the growth strategy. And the four basic pillars in our growth strategy are: strengthening sales and commercialization to enable growth Ensure the delivery capability to enable scalability. Three, focusing R and D investments on further increasing the competitiveness of our offerings and services. Four, continue to strengthen our core competence, secure embedded technology, and this is where we want to continue to be the best in the world. And then financial review.
And first, let's have a look at the group annual financial development. And last year, we were able to change the few previous years we have been declining in the top line. We saw growth, which was 13.2% year on year, ending up in 85.2%. And operating results improved significantly, being €8,600,000 and being 10.1% of net sales. And then let's have a look at the quarterly development.
Q4 last year was strong for us. We had a growth of almost 30% year on year and also the operating result grew significantly, being EUR 6,000,000 and being 18% of net sales. R and D investments decreased, being €13,500,000 equaling to 15.9% of net sales, 5,600,000.0 was capitalized. Depreciations for R and D investments were 5,600,000. And total R and D costs and depreciations in the P and L was €13,500,000 And our focus in R and D was according to the strategy, improving our competitiveness and mainly focus on tactical communication systems and radios and medical technology products and software.
Cash flow, which improved significantly compared to last year. Net profit plusminus adjusted accrual basis items, EUR 18,900,000.0, change in net working capital 7,100,000.0, interests and taxes minus 1,500,000.0, net cash from operating activities 24.4%. Net cash from investing activities, minus 6.7%. Net cash from financing activities, minus 4.3%. Net change in cash and cash equivalents, €13,400,000 Then asset and liabilities.
Assets, non recurring assets, EUR82.8 million, which included property plant and equipment for 2017, capitalized development costs 50.5 and other assets 15.3. Current assets 82.4 which included inventories, euros 24,800,000.0 trade and other receivables, euros 35,800,000.0 cash and liquid assets, euros 21,000,000. Equity and liabilities. Equity, million. Liabilities, million, which included trade and other receivables, million.
Interest bearing debt, million. Other liabilities, 5,800,000.0, and we had net gearing of minus 0.7, which is on a really good level. And equity ratio, 69.9%. Next (LON:NXT), we will go through the development of business segments and we will start with the Defense and Security business segments. The whole year, there was a really good development with the Defense and Security.
Growth was 42.3% year on year. And if we look at the quarterly development last quarter, Q4 last year was strong for us, which was 47.3% higher than year on year. Several product deliveries were made in the last quarter. This business, the geopolitical uncertainty is something that has led the states to increase to monetize the defense forces, which is good for our business. Partnership agreement with Finnish Defence Forces was signed last year.
Finnish Defence Forces started the serial procurement of bitumen tough SDR radios. Internationalization strategy is proceeding as planned. Demand for our ultra secure phone, Bitium Tough Mobile increased. And then our software solution, BITIUM SAFEMO Mobile VPN is now Quantum Safe. And then let's move to the next business segment, Medical business segment.
Here we see the top line. It was a decrease compared to last year, 12.6%. And quarterly results, quarterly turnover, we can see that there was a growth in Q4, which was positive signal, and that was 2.3% year on year. And what was impacting our Medical business segment was the stricter requirements in regulatory approvals and this is something that is really going forward and this approval requirements are tightening significantly and has been tightening, but we have done our homework. We have strengthened our Regulatory Affairs organization, and we are today, as I mentioned earlier, in a much better situation to get this done as fast as possible.
Cooperation with Boston Scientific Cardiac Diagnostics continued well. Respira sales, we are clearly focused at getting out on the European market first. And then, we have a new version of EMG device developed. And this is based on an other device that we have modified to meet for this EMG requirements. Engineering Service business segment.
Here we see the tough market. We had a decline 15.6% year on year. Last quarter was a bit better. It was still lower than last year, but we saw a little bit more positive sign in the last quarter last year. So net sales decreased.
However, operating result remained positive, and I think that is a really good work from the business segment. Customers are cautious to start new development projects due to the challenging market situation, and we expect this challenging market situation to continue the first half of this year. Part of the engineers in this Engineering Services were allocated to Defense and Security business segment to support strong growth in the Defense business segments. Despite the current challenging market situation, we see that five gs implementation IoT solutions is there and it will grow. So the underlying market should be there.
We want new customers in telecom and industrial markets. Then the outlook for 2025. We are on track towards profitable growth. We have the growth strategy in place and the implementation is in full speed. We have a strong customer base, satisfied customers, and these work as a strong reference supporting our growth.
We have world class solutions, and we will focus on further improving their competitiveness. We have committed high skilled people and we will continue to strengthen the organization to make sure we are the best in the world in secure embedded technology. And then we have the megatrends supporting the growth. In Defense, the geopolitical uncertainty, which I mentioned earlier. In Medical business, the aging population, remote diagnostics opportunities.
So, this is what we see as an underlying trends that support our business. And then we have the five gs and IoT development supporting the Engineering Services. So we are on track towards profitable growth. And our financial outlook for 2025 is net sales between 95,000,000 and €105,000,000 and operating results between €10,000,000 and €13,000,000 And more information about can be read on the company's Internet pages. And the investor calendar will come out with annual report 15.
We will have Q1 results coming out twenty nine April AMG, '7 May Q2, August '8 Q3, October '20 '4 And now it's a time for questions and answers. Karolina?
Carolina Malmi, Press Conference Host/Moderator, Bitium Corporation: Thank you, Johan. There are a few questions, and the first one is about the segment based reporting structure. Has that have any effect on the internal decision making or how you allocate the resources?
Johan Westermark, CEO, Bitium Corporation: The answer is yes. And let me specify a bit. First of all, the segment structure that we have in place, the whole idea is to have more independent business segments. Understanding customer needs, being able to provide the best possible service towards these customer needs. And this is independency, and we will have as much as possible resources in the business segments, the three business segments that we have, and we will have a really lean group organization, which is what we did the change in 'twenty three.
And this is how we are structured. And keeping in mind that still we have the core competence, this secure embedded technology, wireless knowledges is the same with all. And we can see that we had the possibility to share resources like I mentioned in the presentation, Engineering Services. When there's a tough market situation, we have a good demand in Defense. We can support the business segments can support each other.
Carolina Malmi, Press Conference Host/Moderator, Bitium Corporation: Yes. Thank you. How now you talked about the new strategy and implementation of it. How does the company plan to adapt to potential market changes or any kind of challenges there?
Johan Westermark, CEO, Bitium Corporation: I think this is something that it's a really good question because as we see, there can be some disruption. Some changes can happen fast. And what we have done, we have strengthened our business development organizations. We have hired Eric Angert to be heading our business. And this is also to follow clearly support the business segments in understanding the market, changes in technologies.
If there's something we need to we are on have the best possible information to always guide our R and D, our risk investments, where we are going to changes in the market or customer needs.
Carolina Malmi, Press Conference Host/Moderator, Bitium Corporation: Yes. How does the Ukraine hoped for future peace may affect Ptyom?
Johan Westermark, CEO, Bitium Corporation: Well, first, of course, we all hope that there is peace in Ukraine. That's for sure. Otherwise, if we see the defense sector, the investments that we see has been taking place now for a few years, that will our estimate is this will continue for several years forward. So building up countries' defenses, Europe globally is something that it will not change with this, hopefully, piece in Ukraine. So my answer is that we don't see any significant changes impacts on our business.
Carolina Malmi, Press Conference Host/Moderator, Bitium Corporation: Yes. Thank you. So how do you see the development in different business segments in the future?
Johan Westermark, CEO, Bitium Corporation: Defense, let's start with the defense security. I think there there's a good market out there. We have really good tactile radio solutions to architecture and we have really good references, being one, Finnish Defense Forces, which is a really strong references globally. So I'm really positive towards the development on this for the Defense business and Security business. Medical business, we have some regulatory issues, but as I said, today we are in much better situation than we were a year ago.
Things are proceeding. And I'm positive towards the medical business. And the underlying business, our products and services and the megatrends supporting it is there. Engineering services, markets situation is challenging. And maybe back to the previous questions, if there is a piece in Ukraine, hopefully the economy is going to pick up and that will for sure have a good impact on our Engineering Service business.
So the answer is that we expect growth in all business segments.
Carolina Malmi, Press Conference Host/Moderator, Bitium Corporation: Okay. Thank you. So the next one, what are the most important assumptions that you have made regarding your 2025 guidance?
Johan Westermark, CEO, Bitium Corporation: Well, the assumptions is that we have done it goes a little backwards. When we started two years ago, we went through control of the business, how to get better control. Then we worked really on the profitability, having that in place. And last autumn, they did the growth strategy and really went through how do we build up the growth for the coming three years and even further. And this is the so there is thorough work behind our guidance for this year.
So this is the summary from our growth strategy and how we see things will develop.
Carolina Malmi, Press Conference Host/Moderator, Bitium Corporation: Thank you. And how do you see the cooperation with Boston Scientific? Do you assume that it continues like in the past?
Johan Westermark, CEO, Bitium Corporation: We have no reason to believe. I have myself been strongly involved with Boston Scientific and the cooperation is on really good level. There is no reason to believe that anything will change.
Carolina Malmi, Press Conference Host/Moderator, Bitium Corporation: Thank you. So and what are the significant regulatory approvals that you are currently applying for? And when do you expect to receive them?
Johan Westermark, CEO, Bitium Corporation: Well, there are some regulatory approvals that we are pushing forward, and we will not we have learned so far that we will not give the exact date on something because it's the requirements might change, but I'm convinced we will get there. Hopefully, we will get this year there and we are up and running, but we are in well position. We have an organization to kind of answer, push the process forward. And again, once we're in there, other suppliers have the same road to do as we have done.
Carolina Malmi, Press Conference Host/Moderator, Bitium Corporation: Thank you. Then a question to could you comment on the tough SDR delivery volumes in Q4 as well as your expectations for the year 2025, do you expect significant deliveries to other international customers?
Johan Westermark, CEO, Bitium Corporation: Say that now as I mentioned Finnish Defence Forces have moved into serial purchases of SDR radios. We have good development, as I said, with international customers. And the amounts of SDR radios, we had a press release. I think that is what I can tell at the moment. So we are going forward as planned and it looks good.
Carolina Malmi, Press Conference Host/Moderator, Bitium Corporation: There's also a question about by any chance if you could comment on the seasonality of the product deliveries in 2024, similar than in 2025, so similar than in 2024? Or will it be more equally balanced?
Johan Westermark, CEO, Bitium Corporation: Or I would say that we will most likely, we look at the history. Q4 has always been strong. Second half has always been strong for us. First half a little bit slower. I'm not going into much detail, but saying that hopefully we can get a little bit more even these volumes, but the history shows how it has been and most likely we can see that the similar trend also in the future.
Carolina Malmi, Press Conference Host/Moderator, Bitium Corporation: Okay. Thank you. And finally, there are quite many questions regarding you leaving the company. So thank you, Johan, for these two years. And if you could provide any additional comments or background regarding the CEO that you're stepping down or background regarding the CEO that you're stepping down on this position?
Johan Westermark, CEO, Bitium Corporation: I think, first of all, it has been a great journey. The people in the company, I'm still amazed of the know how in the company. So really big thanks to the whole company, the people working in the company, the management team. I think the company is really well set for the future growth. And I will not comment more on my decision.
Carolina Malmi, Press Conference Host/Moderator, Bitium Corporation: Okay. But thank you, and thank you, everyone, for participating. So these were all my questions here online. And thank you, Johan, very much also.
Johan Westermark, CEO, Bitium Corporation: Thank you.
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