Gold prices bounce off 3-week lows; demand likely longer term
In its Q1 2025 earnings call, Huddly reported a 37% year-over-year increase in revenue, reaching 45 million NOK. Despite this robust performance, the company’s stock fell by 2.95%, closing at 16.45 NOK, as investors weighed the impact of ongoing cash flow challenges and external market pressures.
Key Takeaways
- Huddly’s revenue increased by 37% year-over-year.
- The company launched the AI-driven Huddly C1 video bar.
- Operational cash flow remained negative but showed improvement.
- Stock price decreased by 2.95% post-earnings announcement.
- Tariff negotiations reduced levels from 100-145% to 30%.
Company Performance
Huddly demonstrated a strong performance in Q1 2025, with a significant increase in revenue driven by a 55% rise in channel sales. The company continues to focus on innovation, launching the Huddly C1 AI-driven video bar, which boasts over 20 times the AI capacity of its existing products. However, ongoing cash flow challenges and market uncertainties, such as trade tensions, remain concerns.
Financial Highlights
- Revenue: 45 million NOK, up 37% YoY
- Gross margin: 53%, improved from 48% last year
- Operational cash flow: Negative, but improved
- Cash balance: 93 million NOK at the end of Q1
- Raised 25 million NOK from an oversubscribed offering
Market Reaction
Following the earnings announcement, Huddly’s stock price decreased by 2.95%, closing at 16.45 NOK. This decline suggests investor concerns over the company’s cash flow position and broader economic factors, despite positive revenue growth and product innovation.
Outlook & Guidance
Huddly aims to achieve cash flow positivity by the end of 2025, with full positivity expected in 2026. The company plans to continue its strategic partnerships and anticipates strong cash generation by 2027. The Huddly C1 product is expected to ship in Q3 2025, potentially contributing to future revenue growth.
Executive Commentary
CEO Rosa Stanson highlighted the company’s technological advancements, stating, "We have over 20 times the AI capacity of our existing portfolio." CFO Abi Banek addressed the economic environment, saying, "We are monitoring the situation continuously and will do mitigative actions when deemed necessary." These statements underscore Huddly’s focus on innovation and vigilance in economic challenges.
Risks and Challenges
- Continued negative operational cash flow poses a risk to financial stability.
- Trade tensions and tariffs could impact cost structures and profitability.
- Achieving cash flow positivity by the end of 2025 remains uncertain.
- Market competition, especially from Asia, could pressure margins.
- Economic uncertainties may affect consumer and business spending.
Q&A
During the Q&A session, analysts focused on revenue growth drivers and the advantages of Huddly’s AI technology. Questions also addressed the potential impact of tariffs and the closure of the strategic review process. These discussions highlighted the company’s innovation strategy and its approach to navigating economic challenges.
Full transcript - Huddly AS (HDLY) Q1 2025:
Rosa Stanson, CEO or Presenter, Huddly: Welcome to Huddly’s q one presentation twenty twenty five. My name is Rosa Stanson, and together with me, I have my CFO, Abi Banek. You just got a sneak peek of our new product launch, the Huddly c one AI driven video bar. We are extremely excited to launch this product and we will come back to that in this presentation. On the Q1 results, we reported revenue of NOK45 million compared to NOK33 million at the same quarter last year.
The main growth in the quarter is driven by the channel business, showing a 55% increase year on year. We also see that the strategic business is increasing, and we expect that to increase significantly through the year. When it comes to the gross margins, we are delivering strong gross margins in the quarter, with 53% compared to 48% at the same time last year. In Q1, we started the rollout of Huddly Crew to Microsoft offices globally, and this will continue into Q2. Similarly, Shore launched the Intellimix bundles, which have the Huddly cameras included in the bundle, and have had their first customer shipment now in May.
When it comes to Huddly C1, we are extremely proud as said to launch our own product with audio and video powered by AI this week. We are globally launching the product at Infocom in June, followed by a roadshow with Lenovo and Microsoft. When it comes to the strategic review, the board has closed the strategic review process and we will come back to that later in the presentation. On the outlook, we are in Q1 delivering according to the business plan, as put forward last quarter. However, we do see that market uncertainty and the volatility with regards to the tariffs may impact the situation.
And back to Microsoft. As said, we are globally now rolling out Huddly Crew and Huddly L1 to Microsoft and we are obviously extremely proud that Microsoft have chosen HUDLY to be the standard for their large and medium room meeting spaces internally. When it comes to the Intelemix bundles, these were launched at IAC in Q1 and got a great reception by the market. And now shipping in early May, the customers can enjoy the Intellimix bundles from small, medium to large meeting rooms, featuring the Hudly IQ, Hudly L1 and Hudly Crew. And to give you a bit of a flavor of who our channel customers are, the government sector is increasingly we are getting increased traction in the government sector, and CQ’s partner is one of those examples.
CQ’s Partner is a government institution in Norway that supplies meeting rooms of 5,000 in the South East Region Of Norway. And why do government institutions choose Huddly? They mention examples such as the low maintenance cost, the long lifetime of the product, the ESG perspective, but also the IT security. As Huddly produces their products in the EU, we have all the standard compliance, such as TAA, on our products. Our product roadmap, as put forward last quarter, we are continuing to deliver on.
As we mentioned then, we were going to bring to life in 2025 an audio and video product. And now the time has come. This week we launched Huddly C1, our most powerful product to date. It has over 20 times the AI capacity of our existing portfolio, bringing high performance AI into every meeting room, not only on the video side, as you would expect from Huddly, but also on the audio side. We have worked together with our partners on an extensive go to market plan for this product.
We started the introduction of the product at IEC in February, with great receptions with customers and partners. And we are continuing now in Q2 a roadshow with Lenovo and Microsoft in cities such as Oslo, Warsaw, Paris, London and Milan, before we do the global announcement and launch in Infocom in June. For the second half of the year, we will continue the roadshow in The US together with Lenovo and Microsoft. We are obviously very proud to have such strong partners, echoing the AI importance into everyday meeting space. And we look forward to going on this roadshow with them.
And on that, I give the word over to Abi.
Abi Banek, CFO, Huddly: Thank you very much, Roussa. In this part, I will go a bit more into details of the outlook and financials. And let me first start off with the outlook. In December, we communicated a new business plan towards 2027 with an ambition to get to cash flow positive towards the end of twenty twenty five. We define three different strategic pillars: number one, increasing strategic revenue and channel revenue number two, monetizing on AI and thereby sustaining our strong gross margins and finally, strict cost control and disciplined investments.
In the last quarterly announcement in February, we reiterated this plan and we maintain our outlook in this quarterly announcement as well as we are according to the business plan. However, we do acknowledge that there is a certain degree of uncertainty in the market with regards to the recent developments in tariffs and different trade conditions. As you are probably aware of, there has been quite a lot of trade tensions between The U. S. And China for the past four to six weeks, and tariff levels have varied between 100% to 145%.
However, in the recent days, that level has been negotiated down to 30%. In Europe, there’s also been announced tariffs and however, it is at a significantly lower level than comparison with Asia. So how does that impact Haltley and us as a company? In order to understand that a bit better and our risk exposure, I’d like to go a bit more into our supply chain setup. In this slide here, you can see an illustration and you can see that most of our components are sourced from China.
These components are then transported to our contract manufacturing site in Poland, where the components are assembled into finished goods. Depending on the customer and the customer type, these products are then shipped to the customer or shipped to our fulfillment center in Norway. Once at the fulfillment center, we sent and ship these products to our distributors globally, both in The U. S, Europe and APAC. And it is important to acknowledge here that it is the distributors who carry the responsibility for both the shipment and for duties.
Hence, they have the risk exposure with regards to increased tariffs. Once they arrived at the distributors, they then distributed to the resellers and finally they distributed to the end customers. So how may that impact Huddly? And let’s start to look at from a company level. As explained in the last slides, there is an impact on the distributors with regards to increased costs.
And as a consequence of that, Hudley has decided to increase the cost to the end customers. It is important to acknowledge here that, at Huddley, we preserve our margins, while at the same time protecting the margins of the distributors, but the end customers are then absorbing most of the costs. We have already seen industry wide price increases, and many of these price increases may have different impact on price sensitivity. However, it is important to note that for many of Huddle’s customers, such as Fortune 1,000 customers, they are large B2B customers and typically tend to have less price sensitivity than many others. It seems like Huddly is in a favorable cost position with regards to manufacturing.
As explained in the previous slides, we have manufacturing in Poland, whereas many of our competitors have manufacturing in China, Malaysia and Vietnam. From a more macroeconomic perspective, we do see a lot more uncertainty out in the market with several market participants deciding to postpone their decisions on investments. This may impact Huddly and it may lead to customers postponing their purchases or other strategic initiatives. Overall, it is still a bit too early to say anything conclusive about how this may affect us on a net basis. However, we are monitoring the situation continuously and will do mitigative actions when deemed necessary.
One thing we do know for certain is that the tariff situation has impacted the strategic review process. And just a recap before I go into the details. The company initiated a strategic review following interest from a global player in autumn twenty twenty three. The aim of the process was to evaluate the company’s long term direction and partnerships. And as communicated last in February, the company expected to conclude the process in Q2 twenty twenty five.
A lot of things have happened since then. Of course, the tariff situation, as briefly explained in the previous slides, This has led to a significant increase in market uncertainty and hence effectively closing the window for M and A opportunities at the moment. We do see that the M and A activity is at an all time fifteen to twenty year long low at the current. As a consequence of that, the Board will therefore end the strategic review process for now, but remains open to revisiting strategic opportunities should conditions change materially. While the transaction is not anticipated in the near term, Huddle has through the process created and strengthened relations with global industrial players, which may benefit us in the future.
The company is executing according to its business plan and its AI based technology and products are recognized as being best in class. And the Board is confident that the significant commercial progress since last year has further strengthened Huddles’ position and potential to create significant shareholder value. That concludes the business review of the quarterly presentation and I will now move into the financials to provide more flavor into the numbers. Let me first start off with the revenue. Revenue in Q1 twenty twenty five ended at million, which is a 37% increase year over year.
This is mainly driven by strong increase in channel sales versus same quarter last year, as well as strategic sales picking up. So first looking into channel. Channel experienced 55% year over year increase. It was a decline if you look at versus Q4 last year. However, it is important to note that there’s a certain degree of seasonality in the channel business.
So if you look at from a year over year perspective, there is a sustained growth in the business in channel. With regards to strategic revenue, which is a very important part of our business plan, we are starting and delivering on value in this regard. As presented earlier in this presentation, we are rolling out products to Microsoft Offices, which is expected to continue in Q2. We have ramped up deliveries to shore in Q1, and we are expecting to increase the deliveries in the coming quarters. In addition, we are actively pursuing new strategic partnerships, which will increase the revenue base with strategics.
Moving on to the gross margin. Gross margin in Q1 was strong and arrived at 53% versus 48% in the same quarter last year. This is reflected by the market appeal for our products with our AI enabled cameras. Q1 showcased a favorable product and customer mix and the quarter also didn’t have any significant scrapping or other gross margin reducing effects, which was the case for a few quarters last year. Now we have discussed revenue and gross margin and let us move into the cost base.
If you look at the P and L statement, the OpEx for Q1 increased. However, that is because mainly due to increase in non cash items according to IFRS. So in this case, this is because of the introduction of a new employee share incentive based program, which increased the P and L recognized in the costs. If you look at on a cash cost basis, we still have strict cost control and we have previously announced the implementation of a cost savings program of 12,000,000 on an annual basis. That is expected to have a full effect from May.
During this presentation, we have showcased the C1 product, a very exciting development for the company. And the investments that we put into this company in terms of R and D capitalization is a very important part of that journey. Capitalized R and D in Q1 was 20,000,000, which is in line with previous quarters. And we still have a strong and very good organization of engineers, sixty one in total, and 45 of them are working with AI, software development and machine learning. So this showcases that Huddley is a software oriented company.
Going forward, it will be important to defend our position with multi camera systems and also to enable the shipment and scale up of the new C1 products in Q3 twenty twenty five. Finally, I’d like to wrap up with a cash flow. End of twenty twenty four cash balance was million and end of Q1 cash balance was NOK93 million. Operational cash flow was a negative million, but that is an enhancement in comparison to previous quarters in last year. If you look at financing, we raised a total gross proceeds of NOK 25,000,000 from a subsequent repair offering, which was oversubscribed.
And that concludes the financial part of the presentation. And I would like to leave the word back to you, Ruzsa.
Rosa Stanson, CEO or Presenter, Huddly: Thank you, Abi. With this, this summarizes the presentation we wanted to bring to you today. So in summary, the three pillars in our business plan we are delivering on: the increased revenue both from channels and strategic partners, in addition to maintaining and protecting our high gross margin, but obviously, as well as I’ll be saying, we are adhering to a very strict cost control and careful investments. And with that, we will welcome you into our Q and A section of the presentation. Hello, and q and a.
Now Jonas joined us. Welcome to Jonas. Thank you for joining us today. So we will go into the questions. So the first question, what is the main reason behind your year on year revenue growth?
So as we explained in the presentation, we report a revenue of 45,000,000 in in q one twenty twenty four. This is a 37% increase year on year, mainly driven by their channel sales revenue, which saw an increase of 55% in year on year. And then the next question, When do you expect to sign a new strategic partner? This is obviously very hard for us to say in public the time wise. However, what we can say is that attracting new strategic partners and new strategic partner revenue is one of our main priorities according to the business plan, and we are actively working with both existing and new strategic partner to see future opportunities.
And we will report back as soon as that is appropriate. Most of your competitors offer AI solutions. What sets Headly apart? Well, what sets us apart is the the technology and the architecture, and what does that mean for for our customers? That means that we have technology as we have our AI is built on the edge means on the actual units themselves.
It reduces significantly both the installation cost, but also the installation time the products are deployed. And now a new question. When will your new product c one start contributing to revenue? Our c one product, we are super excited about our new c one product. It’s a new AI driven video bar, so meaning we are delivering both audio and video in into into the rooms, and we have informed the market that we are planning to start shipping that in q three.
So we revenue recognize when we ship. And then there is a question, how much of the revenue changes year on year and quarter over quarter is down to change in NOKUSD? And, Abid, this I will give to you.
Abi Banek, CFO, Huddly: Yeah. There’s obviously been changes to that, but it’s important to remember that we both have some of our, well, our revenues partly based in mostly based in the US dollar, but also our cost base is also demobilated somewhat in NOK as well. So there has been changes on revenue and over quarter basis. The specific numbers of that, that I can get back to.
Rosa Stanson, CEO or Presenter, Huddly: I think we are gonna enter into our final question. Well, there are many questions coming in. Just giving it a bit of a time. Okay. So there is a question here.
Given the current cash burn, can hardly expect new financing before the end of the year? And I’ll be giving this to you.
Abi Banek, CFO, Huddly: We have during this presentation communicated that we are according to business plan, where we have ambition to get to cash flow positive towards the end of twenty twenty five and have a full year cash flow positivity in the next year before finally getting a strong cash generation in 2027. Apart from that, we are continuously evaluating and monitoring the situation and we’ll take necessary measures if needed.
Rosa Stanson, CEO or Presenter, Huddly: And then we will enter into our final question. Why have you decided to launch a video bar and thereby moving into sound in addition to video. Well, if we start with the market, we see from analyst reports such as Frost and Sullivan that the growth in our market segment is gonna be mainly driven by two categories going forward. The multi camera solutions and all in one endpoints such as video bars. And we now with having c one both deployed as a standalone or as part of our Huddly Crew multi camera solutions, we have we are well positioned to to play in that market.
And then, obviously, we are very excited that we launched the product this week, and we got are getting great reception from partners and and the market. And the reason, we are bringing now AI, our AI and machine learning, which we have been accelerating in on the video side now into the audio side as well. And why are we doing that from a business perspective? Bringing the entire full end solution of the experience in the room gives Huddly as well as more autonomy with regards to dependency on third parties for supplying the solutions into the room. So we we couldn’t be more excited of bringing this product to the world.
It’s been a ideation in Hadley for almost six years, and now it’s finally here. And with that, I would just want to say thank you to all of you for participating in today. If you manage if there has been any lag in the questions coming in, please do not hesitate to reach out to us. You can always reach us @IRatatHudley.com or go through our web page, Hudley.com, for any questions, and we’re gonna follow-up and answer you there. And with that, I say thank you, guys.
Thank you for today, and have a nice day forward. Thank you.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.