Earnings call transcript: Huddlestock Fintech Q2 2025 sees stock drop 10%

Huddlestock Fintech reported its Q2 2025 earnings on August 29, revealing a nuanced financial picture. The company’s revenue experienced a 21.6% year-over-year decline due to recent divestments, while maintaining a stable cash position. Despite these efforts, Huddlestock’s stock price fell by 10.26% to 0.70 NOK during the trading session. This reaction highlights investor concerns over the company’s current performance and future outlook. According to InvestingPro data, the company’s market capitalization stands at $20.42 million, with analysts expecting both sales and net income growth in the current year.

Key Takeaways

• Huddlestock maintained a stable cash position despite divestments.
• Stock price dropped by over 10% following the earnings release.
• The company is focusing on expanding its European market presence.
• Strategic partnerships and management changes are underway.

Company Performance

Huddlestock Fintech’s Q2 performance was marked by strategic shifts and financial adjustments. The company started the quarter with approximately 10 million NOK in cash, maintaining this level by the quarter’s end. The firm faces some financial challenges, with InvestingPro analysis showing a current ratio of 0.47, indicating short-term obligations exceed liquid assets. Despite this, the firm is actively expanding its footprint in the European market, particularly in Germany, where it aims to become a leading player in the financial services sector. For deeper insights into Huddlestock’s financial health and growth potential, investors can access comprehensive analysis through InvestingPro’s detailed research reports.

Financial Highlights

• Cash Position: Approximately 10 million NOK, stable from the quarter’s start.
• Revenue: Slight decrease due to divestments.
• Cash Burn: Normalized at around 6 million NOK.
• Warrant Conversions: Generated approximately 11 million NOK.

Market Reaction

Huddlestock’s stock experienced a significant decline of 10.26% following the earnings announcement. Despite this recent drop, InvestingPro’s Fair Value analysis suggests the stock is currently undervalued. The company has shown strong momentum with a 70.68% year-to-date return, though recent price action places the stock closer to its 52-week low of 0.42 NOK. The broader market reaction suggests cautious sentiment, reflecting uncertainties about Huddlestock’s strategic direction and financial health, particularly given its gross profit margin of 15.33%.

Outlook & Guidance

Looking ahead, Huddlestock is committed to turning its European investment service platform cash-positive by 2026. The company plans to leverage its Nordic technological expertise and pan-European licenses to capture a larger share of the underserved European market. Additionally, Huddlestock aims to distribute 20% of Dund shares to shareholders by Q4, signaling confidence in its strategic initiatives.

Executive Commentary

• "We are a totally different company now than we was before." - Evan, Moderator
• "We want to play in the Champions League." - Simon Lange, Gigabroker CEO
• "Our ambition is to turn the European investment as a service platform... cash positive during 2026." - Leif Arnell, CEO

Risks and Challenges

• Market Saturation: The competitive landscape in Europe poses significant challenges.
• Revenue Decline: Continued impact from divestments could affect future earnings.
• Investor Sentiment: The recent stock price drop indicates potential investor concerns.
• Economic Conditions: Broader macroeconomic pressures could impact growth plans.

Q&A

During the earnings call, analysts sought clarification on the valuation of Dund shares, which was based on a closing price of 9.9 SEK on August 25. However, no additional detailed Q&A was provided in the transcript.

Full transcript - Huddlestock Fintech As (HUDL) Q2 2025:

Evan, Moderator/Chairman, Huddl Stock: Welcome to the q two presentation. I just want to to say some words before I I leave the the word to Leif Arnold. Yesterday, we sent out news that we have a a new board member, Frank Bjorda. So I would like to welcome him. And today, we are also so lucky that we have Simon Lang, yeah, from Giga Broker that are going to say some words on on what we are doing in Germany.

So as you can see from the from the numbers that we presented today, it’s a lot of different in terms of what we presented the the last half year in 2024. And that also shows that Huddl stock is in a huge transformation. We are a totally different company now than we was before. And I think the things that we have been doing the last year is is really good for all the shareholders. So with that, Leifanal, welcome, and the word is yours.

Leif Arnell, CEO, Huddl Stock: Thank you, Leven, and welcome everyone to this half year or second second quarter presentation. I’m looking been looking very much forward to this presentation, to be honest, because I’m I’m a little bit proud of what we’ve delivered so far this year. So let me start. And as Evan said, it’s it’s also a pleasure to have Simon Lange with us, and he will have the floor in in some minutes. But let’s just just start.

And as I said, what a year we we have had behind us so far. We have delivered and and executed on a lot of, in my eyes, bold decisions and strategically important decisions for Huddl stock. And and my my understanding of the situation is that we are very well positioned now for for the way going forward. We have a asset light business model and and service value proposition for for the pan European market. We have secured the first European customer with Gigabroker that was signed up in March.

And we have divested our Nordic investment as a service platform, which was unprofitable, meaning that going forward, we have a reduced cash burn. And in return, we have received shares, which gives us a source of funding for our expansion into the Continental Europe. Also, on the top management side, we have strengthened ourself with appointment of Sabine DeMaki that will start October 1. And she is a very experienced person, original originally from from Germany. And and together with me, we will be the basis of of the the new management team that are going to deliver on the plans going forward.

And as Raven mentioned, we have also strengthened the the board by yesterday with including Frank Burel as a new board member. So for me, working close with the board, I’m I’m very happy with that decision as well. I’ve talked about the the new and updated vision strategy, a growth strategy that was decided before Christmas last year. And and we see already that it has started to to to make sense. Perhaps not in the figures for q two.

I’ll come back to that. But when we look at the utilization going forward, it it definitely is a right path we are on. And on top of that, when it comes to Visigon, we have also the strength in the management team with, yeah, hiring Jens Vester from August 1. So all in all, this has been a very important important half year, and I’m I’m proud of what we have delivered so far. And I think we are very well positioned now.

How to talk in numbers? And it’s it’s easy to to see that we are a different company now than we were just a few months ago. We’re still listed on Euronext growth in in Oslo based on our share price 20 fifth of August with a market cap of a little bit more than 200,000,000 Norwegian kroner. We have two clear distinct business areas. It’s the consulting area within the treasury system, and and we were executing on on the strategy.

And we have the technology and and license investment area with with a focus on Continental Europe and with the basis of of Munich. As a consequence of the divestment, we have been able to get access to cash and Dund shares that could be transferred to cash. And if you exclude the Dund shares that we’re going to distribute to to the Huddl stock shareholders, we still have more than one more than 50,000,000 Norwegian krone accessible that we can use for for expansion going forward. We have offices in all the Scandinavian countries and office in Munich, which is the center of our European expansion. What we are doing now is to apply, the Nordic mindset, the Nordic DNA, into a large underserved market in Continental Europe.

Together with the if we what we do is to combine our licenses or our pan European licenses for delivering these services with partners, we’re able to deliver services and and and and value to to a big market in in Europe. The first customer we signed up was Gigabroker, and we’ll come back to to see more longer about that. But with this approach, we are able to deliver services to the market within a very short time, and also important for me, with a very limited demand for investments in our service. And, my experience so far, being working with the Germans and being in Germany for several times is that, in my eyes, Pan Europe and and Germany are are some years behind the Scandinavian countries when it comes to digitalization and optimization. And I’m sure that our our background and our where we come from is a a perfect start and a perfect place to be to to offer this underserved European market with our services.

We are now in a position where we are going to ramp up and prepare for for the future. It’s important for us to have a good cost control, meaning that our organization needs to be lean. It has been that for many years. It will still be that for the years to come. And that is important for us to make sure that we are not having more costs than necessary before that we see that we have a a customer base that is is also meeting the the cost base we are building on.

We are extremely happy with signing up the the agreement with the Gigabroker, which we did the the first half year. And we are working now, of course, in parallel with new customers. So we have the ambition of signing up an LOI with the second customer this year And to make sure that we have enough pressure and and energy spent on customers and sales, we increased the team in in Munich from two to three from August, where the third employee is fully focusing on on the customer and sales and marketing side. And our ambition is to turn the European investment as a service platform coming from from from Munich Munich and Germany being cash positive during 2026. And with that said, I would like to give the word to the guest speaker and my my very good contact, Simon Langen.

So, Simon, the floor is yours.

Simon Lange, Co-CEO, ABL/Gigabroker: So hello. Good morning, everyone. I’m Simon Lange, the co CEO of ABL and CEO of Geekaproker. I’m proud to introduce myself in this meeting in the q and a session of Huddl stock. Yes.

ABL was founded 1997 from my father, Ubelange, here in Weinstadt near Stuttgart. It’s big reach with car manufacturers and technology and big companies here like Porsche, Mercedes, and Bosch. And we have the mindset here to grow the things big in in Germany down here in in the Southern part of Germany. Yes. Some words to ABL.

ABL was startup 1997, like I have mentioned, founded by my father, and was extremely successful in selling mutual funds in Germany. And the approach is to to to sell this product really cheap without transaction costs and without deductibles on buying these mutual funds. So it it it is a really price sensitive market here for for these products. And if you don’t want to be consulted by a bank, it’s good to buy these funds by your own, and you will save very much money. That was the secret of our business model here in Germany.

So ABL is now a leading financial broker in the discount segment for mutual funds. So we have currently about 65,065, yes, customers with €2,600,000,000 asset under management. And so how was the cooperation going with Huddl stock? What was the intention? We have many phone calls every week of our client base, about 500 to 1,000 in a week, and many clients asked why couldn’t could I not buy crypto or tokenized shares or or or stocks so cheap with ABL?

I would like to to buy these products with you, not with any other bank or or competitor. And then we thought there’s a big chance to grow our business business even much, much bigger. And so we found together with with Huddl stock to set up a large new program offering here in Germany. We have ambitious growth here to to manage. We would like to be the top three neo program in Germany within three years.

That’s our goal. So we want to play in the Champions League. That’s our real goal. And in in regard to the pricing, as I have mentioned, the customers here in Germany are really price sensitive, and all these settings are in place. I think we have a really attractive pricing in a really attractive offering in sense of pricing.

And, also, in in in the way how the apps and the web login will be offered, it’s the best technical solution, in my opinion, you can get. And so that’s why we have chosen Huddl stock. We have a first class ecosystem with really outstanding partners in the background for the liability umbrella and also the connection to the stock exchanges. I like to mention, at this point, we have already initial take also a stake in Halifax shares because I think, as I have mentioned, we really like to play in Champions League for for brokerage in Germany. And if our plan is is is true and it will be true in my opinion, then there’s a huge chance in Huddl stock shares now for for future true growth in the near future.

And even with the DAN shares in place and the cash, I think there’s also a good position to finance this expansion to Germany and Europe. That’s why we have already took some Huddl stock shares. Our ABL holding bought them. Yes. That’s from my side.

I will hand over to Lai again.

Leif Arnell, CEO, Huddl Stock: Thank you very much, Simon, for for sharing. And I know that this is, interesting for the investors as well because, Gigabroker is and and, our relationship with with you is something we have been talking about for months. So having your your face and your your voice is very nice. So thank you very much for for contributing, Simon. Okay.

Going from the the investment as a service area with a focus on on the Continental Europe, we also have another leg of our business, and that’s our consultancy business. I’m very happy to see that our consultancy business and revenues coming from Visigon still deliver a profit in line with market standards, and that is that is basis. But what is more interesting, I think, and I’m very happy to see, is that the updated and new strategy and the work we’ve been doing during this half first half year are starting to to pay off. Well, revenues for the second quarter was a little bit lower than last year, affected by consultants working in one project, then one was stopped, and then another started again. So that’s how life is.

But if we look forward and if we looked at our predictions for the rest of the year, we have already contractually signed up a utilization of approximately 80% for the rest of the year, and we expect the utilization to be above 95% excluding August. Meaning that, going forward, we expect a strong second half of of twenty five, and that is a big and important result of the the new strategy that we are working on. In addition to the new strategy and to do whatever we can to to strengthen the growth going forward, we are happy to to announce that Jens Buster was hired as part of the management team from August 1. Jens has experience for from this industry and from growing businesses within this treasury and and Calypso area. So see, he has already started, and it’s it’s good to see.

And expectations expectations are high to also to Jens when it comes to his deliveries together with the both the management team and the rest of the organization when it comes to the the growth going forward. And objective is, of course, to to make this business grow substantially. Then since it’s a quarterly or a half year presentation, we need to go through the figures. And as Euven mentioned, and that is actually one of my main points, it’s very difficult or it, in some way, would not probably make sense to compare the first quarter to the second quarter, first half this year with first half year last year. And the reason for that is is easy to understand.

During this half year, we we made an agreement with Dund where they were to acquire three companies of ours. Two of them were divested and out of our books from April 24, while the last one, Huddl stock investor services, was in the books for the full half year. So so to compare those two half years is not yeah. Easy or doesn’t make much sense. But, anyway, just quickly go through it.

Revenues, a little bit down, naturally, because of the divestment. Personal costs from first half last year to this year going down, of course, because of divestment, and we didn’t have all the employees for the full half year. Other operating revenues, a little bit up, very much affected by the by the the transaction and divestments that always comes with some cost one offs that we we see also in this year compared to last year. And then we have some net financials that has gone in the negative way. And and the main explanation for that is some losses related to the sales of the shares of the investment and also some non realized value changes in the AI because we need to to to book the value of the share price at a certain day, and this was booked on the last day in in June.

So if you look at then, what I think is more important is to focus on in which position we are when this half year is finished, and we are now looking forward. During the half year, we have started with approximately 10,000,000 in cash, and that is also where we ended in this half year. We have had, during the period, some operational costs, mainly connected to the Nordic investment as a service business area that is now divested. On the investment side, we definitely did some investments in the Nordic EIS business, but at the same time, we received cash from subsidiaries that was divested and sold out. We have had some inflow of cash from from conversion of warrants of approximately 11,000,000 Norwegian kroner.

And what then is interesting when you go out to the quarter or the half year is that we see that we have a market value of the Dundshares excluding the value of the shares that we’re going to distribute, of approximately 41,000,000 Norwegian kroner. So going out of this half year or out of this second second quarter, we find ourselves in a very good position when it comes to funding for our strategy going forward. We’re trying also, as we did in last quarter, to do a compensation with the last quarter and where we try to take out extraordinary costs associated with the transaction and also with the companies that has been divested or is to be divested as Huddl stock investor services is an example of. The revenues for the second quarter then is actually the revenues coming from Visigon. And I explained that revenues for that quarter was a little bit below last year with its explanations because of projects starting and stopping and and some of the consultants being between that was affecting the revenues.

And personnel costs, of course, lower and the same with other operational expenses. So going forward, including the interest expenses for this quarter, we have had a normalized cash burn of around 6,000,000. And going forward, it’s important for me to emphasize that the transaction we’ve done was not finished by the June. It has been, as you all know, also going into Q3 during July and August. And and so so so the cost and and the cash burn will be affected also in in the last half year or twenty five.

The progress of of the divestment has gone through its followed its its plan. It started with an announcement in in the April where we announced the sale of the Nordic investment as a service platform. We received the last shares, the tranche number two, August 25, which was also announced in the in the market. And what will happen now going forward is to do the distribution of 20% of these received shares to Huddl stock investors. And distribution will happen no later than the start of Q4 this year, and we will send out information in due notice about the details on that.

But that is the the plan. And when we are finished with that, then I feel that we have wrapped together everything and finalized and very important part of our history and and made self access to a source of funding for our European expansion that we are all looking very much forward to to see. So to close it all up, looking forward, I’m looking very much forward to to have Sabine on board together with me with her experience both when it comes to language and and where it come from. She’s grown up in in Germany and many years of experience from The Nordics. We are to distribute 20% of the Dund shares to existing Huddl stock shareholders.

I I think that will be very good. We have a business now with a reduced cost and cash burn, and we are ready to do the expansion into the Continental Europe starting with the Gigabroctor launch and working hard on the the sales and and the commercial side together with the next extended German organization with a new employee with a full focus on customer and sales. And our ambitions for the Continental Europe is to turn the European US business positive during ’26. And as I also have mentioned, we are starting to deliver on the the growth strategy on Visigon, Not very visible in q two, but our utilization going forward, it looks very nice. And with this new colleague of ours in the management group, I’m sure that we are going to see some results also from that area in the time going forward.

So margins and profitability when it comes to Visigon, I have the expectations of that it will be a good journey ahead of us. Thank you.

Evan, Moderator/Chairman, Huddl Stock: Okay, Lefano. Very nice presentation. We have one question regarding is the value of TON shares calculated based on execution price SEK 14 or share price in in the end of the quarter, 9.9. So

Leif Arnell, CEO, Huddl Stock: 9.9. The the value of the shares in this presentation is based on

Evan, Moderator/Chairman, Huddl Stock: The closing.

Leif Arnell, CEO, Huddl Stock: Yeah. I think it was I think so. It was August 25. It is not based on the 14.

Evan, Moderator/Chairman, Huddl Stock: So so some of the finance loss is actually because of the share prices have been going down. The receiving price was 14, and then we used the closing last last day of of the quarter as a as a closing debt. So, hopefully, next quarter, hopefully, the the down shares will go up again, and then we can have a have a finance a a good finance number. Is it is it any any other questions? So please, please, just, write it in the chat or in the q and a section, and we will, try to to answer.

If not, please also contact me or or or the company, and and we will try to to answer the questions that you all have.

Leif Arnell, CEO, Huddl Stock: Okay. If if nothing more, also from my side, just to to conclude, I started with it, and it’s important for me to emphasize. I’m very, very pleased where with the the the place we are now. And I’m so pleased with with the what we have been doing this this last half year. And also from my perspective, representing the administration, I I must say that the cooperation with the board and what we are able to do together has been demonstrated this this first half year.

It makes me very optimistic for for for the time going forward.

Closing Speaker, Huddl Stock: Good. Thank you. Okay. With that, we close the q two presentation. Thank you.

Thank you very much. Bye. Bye. Bye.

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