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Huddly AS reported a significant revenue increase in Q4 2024, doubling from the previous quarter and rising 15% year-over-year. The company’s strategic partnerships and product innovations are positioned to drive future growth. Despite a decrease in EBITDA, Huddly’s strong revenue and gross margin performance reflect its robust market position. According to InvestingPro analysis, the company, currently valued at $40.04 million, appears undervalued based on its Fair Value assessment.
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Key Takeaways
- Q4 revenue doubled from Q3 and increased 15% from Q4 2023.
- Gross margin reached 59%, the highest since Q2 2020.
- Strategic partnerships with Microsoft (NASDAQ:MSFT) and Shure enhance product offerings.
- Cash burn remains at NOK 15 million per quarter, with plans to reduce it.
- Workforce reduced from 116 to 109 employees as part of cost-saving measures.
Company Performance
Huddly AS demonstrated strong performance in Q4 2024, with revenue reaching NOK 51 million, marking a 100% increase from the previous quarter and a 15% rise from the same period in 2023. This growth is attributed to increased adoption of its multi-camera meeting room systems, especially the newly launched Huddly Crew, which is certified by Microsoft for large and extra-large rooms.
Financial Highlights
- Revenue: NOK 51 million, up 100% from Q3 and 15% from Q4 2023.
- Gross Margin: 59%, marking the highest level since Q2 2020.
- EBITDA: NOK 7 million, down from NOK 25 million in Q4 2023.
- Cash Burn: NOK 15 million per quarter, with a plan to decrease.
Outlook & Guidance
Huddly aims to double its revenue in 2025 and again in 2026, with a target of reaching NOK 650-700 million by 2027. The company expects to achieve a gross margin of around 50% and become cash flow positive by the end of 2025. Strategic plans include the launch of a new product with audio and video capabilities in 2025 and further expansion through satellite devices and the C1 product by 2026-2027.
Executive Commentary
"Huddly Crew is easy to install. It comes straight out of the box," said Sam Albert from Microsoft, highlighting the product’s user-friendly nature. CFO Abi Panek stated, "We plan to double revenue in 2025 before another doubling in 2026," emphasizing the company’s ambitious growth targets.
Risks and Challenges
- Ongoing cash burn of NOK 15 million per quarter, though expected to decrease.
- Decreased EBITDA could indicate potential profitability challenges.
- Workforce reduction might impact operational efficiency and morale.
- Potential US trade barriers could affect international operations.
- The return-to-office trend may impact the demand for video meeting technology.
Q&A
During the earnings call, analysts inquired about Huddly’s strategic partnerships, confirming ongoing collaborations with Crestron and Google (NASDAQ:GOOGL). Concerns about potential US trade barriers were also addressed, with management monitoring the situation closely. Despite a shift back to office environments, the demand for hybrid work solutions remains strong.
Full transcript - Huddly AS (HDLY) Q4 2024:
Rosa Stenson, Presenter/Executive, Hudley: Presentation from Hudley. My name is Rosa Stenson and together with me, I have my CFO, Abi Panek. In Q4, we started to deliver on our business case, and we are seeing change in trends with reported revenue of NOK51 million and gross margin of 59%. In Q4, we announced that we entered into a new strategic partnership. And in January, we informed you that, that partner is sure.
Hudley Crew has also been chosen as Microsoft’s large room meeting room standard, and Hudley Crew has also been certified for Microsoft Teams for the five camera setup. In December, we successfully concluded a private placement and are planning for a subsequent repair offering now in March. We are keeping the business case outlook as presented in December 2024. So what is HeliCrew? HeliCrew is a new category of multi camera systems that is easy to deploy and easy to set up and gives everyone the opportunity to have a live video production into all of their meeting rooms.
And we are pleased to see that the growth in Huddl Crew is increasing. As you see by these numbers, from Q3 and Q4, we have seen a significant adoption in Hudley Crue, not only in number of units sold but also in number of units per order and per customer. These numbers give us belief and faith in that Hudley Crue is here to say and has definitely proven that Hudley Crue is for SKAY. One of the cases we would like to present to you today is our case with BDO. BDO is a large Hudley customer and has from before a lot of our IQ and L1 cameras.
They’ve also chosen Hudley Crew for their large meeting rooms. And as I say, they have chosen Huddl due to the flexibility and the ease of installation or the plug and play, as I mentioned. And as Bogdan himself describes it, it’s an absolutely outstanding experience. And if you would like to know more about the BDO UK success story with Hudley, you can see more in our web page. In q four, we were also very pleased to inform you that Microsoft themselves have chosen Hudley to be their vendor for their large meeting room rollouts.
They have chosen Hudley Crew as they believe that mostly camera is here to stay. And why have they chosen Hudley Crew? What Sam Albert has highlighted is that Hudley Crew is easy to install. It comes straight out of the box, and it kinda checks all the flat boxes as he says. Microsoft has also certified our five camera kit.
And what does that mean? That means that Hetley Crue is not now only certified for medium and large rooms, but also for the large and extra large rooms, which increases the total addressable market for Helikru even further. And as Ilya Bockstein says, Microsoft, again, they believe that every space will have multi cameras. So we believe that Hellicru is very well positioned for that to come. And as I mentioned, Schore is our new strategic partner.
And as many of you might not know who Schore are, but most of you are familiar with The Beatles or Taylor Swift. And if you have been in Taylor Swift’s era concerts, the audio we’ve heard is delivered by Shure. Shure is one of the world’s leading audio vendors, and we couldn’t be more prouder than to show the world and to start to ship the bundles we have with them, the Intellimix bundles that go from the small, medium and large rooms with our Hudley IQ, Hudley L1 and Hudley Crew in the mix. And why is that strategic partnership also important for Hudley? It gives us a way larger reach for our go to market and our marketing and brand awareness.
And as you can see from the photos on this slide, Schorr is significantly promoting the Intellimix bundles, which includes the Hudley products. And to our roadmap, As we presented in the business case in December 2024 has been the year of establishing the multi camera category and starting to see the adoption of public crew. Going forward into 2025, we are going to be launching a product with audio and video. And further into ’26 ’20 ’7, we are coming out with the satellite devices and a bit more to the c one product. Hudley is obviously gonna be delivering that product with exceptional video as you would expect from Hudley.
But in addition, we are gonna be delivering an exceptional AI audio as well. And we were so lucky to be able to introduce the product to 250 customers and partners at IAC with great feedback. And why is it important for Hudley to have a all in one solution? It gives us a better addressable market in the small and medium room spaces, but also gives us a complete solutions that we can deploy in your bring your own device form or if you would like to match it up with a compute for your MTR environment. And we are planning to launch the product at Infocom this year, starting to ship it in the second half of the year.
And then with that, I will give the word over to Abi.
Abi Panek, CFO, Hudley: Thank you very much, Rosa. So we have previously announced a strategic review in the company, and that was announced back in the 11/09/2023. And back then, that was following the interest from a global industrial player and was aimed at evaluating the company’s long term direction and partnerships. The company has prolonged the strategic review process since it was not possible to reach a conclusion before the private placement in Q4 ’twenty four. But currently, the company is in active and formal discussions with several global industrial players.
The Board of Directors expects to conclude a strategic review in Q2 this year, but there is no certainty as to whether or when any transaction initiative or event will materialize. I’d like to now summarize a bit on what we’ve been talking so far in this presentation. We maintain the outlook that we provided in December 2024, and we keep our three main strategic priorities. Number one, grow strategic partner and channel revenue. As we have presented in this presentation, we have just recently announced Schur as a new strategic partner and working towards adding new partners.
We are also leveraging the existing and future product portfolio to attract new strategic partners. And in addition to that, we have also a very strong alignment with Microsoft in terms of product vision alignment. Second, maintaining healthy gross margin by monetizing on AI enabled products. We will continue to deliver innovation and differentiation as exemplified by Hartley Crue and the Seaboard VideoBar, which we’re planning to launch in second half of this year. And finally, disciplined investments and cost control.
In December, we announced a cost saving program of NOK 12,000,000 on an annual basis, and we have just recently implemented this plan. And we expect to keep the cost base at a stable level going forward, while at the same time delivering on our product roadmap and increasing revenue. And this translates into the graphs on the right hand side, which is which are our growth ambitions. We plan to double revenue in 2025 before another doubling in 2026 before getting to a level of around NOK $650,000,000 to NOK 700,000,000. We also expect the gross margin to be at the level of around 50%.
With a relatively stable cost base, we expect to be cash flow positive towards the end of this year, have a full year ’26 with cash flow positive before starting to have a strong cash generation from 2027. We are maintaining this plan as provided in the investor presentation in December. That concludes the business review of this quarterly presentation, and I will now go into the financial details and provide further flavor into the numbers. Starting with revenue. We arrived at NOK51 million in Q4, and that is a doubling compared to Q3 twenty twenty four and a 15% increase compared to the same quarter 2023.
This was mainly a contributor by increased sales in channels and in particular by the increased adoption of Huddl Crew with the correspondingly higher shares of large scale orders. Strategic revenue in Q4 was relatively low and stayed at the same level as in Q3 twenty twenty four. However, this is expected to pick up significantly into 2025 as we will see increasing revenues from Schur, and we are actively pursuing new strategic partners into the mix in 2025. Gross margin was 59% and that is a very strong gross margin and we have to go all the way back to Q2 twenty twenty to see a similar level of profitability. This is mainly driven by the Hudley crew, which provides a unique and differentiated experience to our customers, which shows the ability to monetize on AI and software innovation.
It’s also important to note that we had a very high share of channel sales in Q4, and that is also driving up the total and blended gross margin in Q4. Finally, I’d like to note that in Q4, we didn’t have any significant gross margin reducing effects such as scrapping or any other items, which we had in Q3. And hence, in Q4, the 59% gross margin really reflects the operational realities of the company. Looking at the summarized P and L statement. We do see improved operational efficiency.
I’ve already talked about the revenues. Let me focus a bit more about the cost level. The cost basis on a cash cost basis reduced by 5% in 2024 compared to 2023 full year. And we expect to see increased cost savings in 2025 as we are implementing the cost savings program. I’ll get back to you into details of that in the next few slides.
Looking at the EBITDA level. EBITDA in Q4 twenty twenty four was NOK7 million, and that is a reduction from the NOK25 million in Q4 twenty twenty three. We have a very exciting product roadmap, and we are continuing to deliver on that. And that is enabled by the great organization that we have with strong and highly competent engineers working with AI, software and hardware. So the investments that we put into this company in terms of R and D and capitalized R and D, that goes into product development, and we will see tangible proofs of that with the C1 launch in second half of this year and by adding new software features into our product portfolio.
So this will lead to a continued defended position that we have out in the market and the capitalized R and D is expected to be around at the similar level going forward. Getting back to the cost base. We announced in December a cost savings program of NOK 12,000,000 on an annual basis, and that is mainly attributed to a reduction in FTEs. End of twenty twenty four, we had 116 employees in the company. And end of twenty twenty five, we plan to have 109 FT feet feet feet feet feet feet feet feet feet feet Es in the company.
So we have implemented the savings and we expect this to primarily take effect from May 2025. With this restructuring, we haven’t only done a cost savings, but we also reallocated the resources from relatively lower profitable regions to more profitable regions. So it’s also a matter of rationalization and improving the organization as a whole. This program will not affect or limit the product roadmap going forward, and we will continue to deliver on the product roadmap as explained by Rosa earlier in this presentation. Finally, going over to the cash flow statement.
Q4 cash wise was challenging for Huddl. However, we had a very strong and successful equity raise where we raised NOK130 million in a private placement. The private placement received strong confirmation and strong support from existing and new shareholders, and we are currently planning of raising additional NOK 35,000,000 in a subsequent repair offering. With this capital raise, we have funded the company towards cash flow positive and we are maintaining our ambitions and our plans as communicated during this presentation and in December. And that concludes the quarterly presentation.
And we will now go over to a Q and A session where we welcome questions from the audience.
Rosa Stenson, Presenter/Executive, Hudley: Thank you for that, Avi (JO:AVIJ). And together with us in the Q and A session, we also have with us our new chair of the board, Johan Hayven Ericsson (BS:ERICAs). Welcome, Ian. Thank you. So I think we just dive right into it.
We have already received one question during the presentation. You see that you say that q four was a turning point for Hudley. Could you be more specific? And I think there are three main factors driving why we are saying that. So the first two are we are starting to deliver on our business plan as presented, first and foremost with the increase of the strategic revenue and signing offshore.
We also see that the multi camera as a category in general is growing and we see that adoption of Hudley Crue is demonstrating that Hudley Crue is right positioned. And thirdly, we had a successful private placement securing funding towards cash
Abi Panek, CFO, Hudley: flow breakeven.
Rosa Stenson, Presenter/Executive, Hudley: And then there is a second question. The last two quarters, there have been practically no sales to Crestron and Google. Do you still consider them as a strategic partner? Yes, we do still consider them as strategic partners. So even though the sales to Crestron and Google are lower than they were at their historical high, they are still very valued and a good collaboration partner for Hudley.
And then comes a question on what is the quarterly cash burn, and I will hand that question over to you, Abi, to answer.
Abi Panek, CFO, Hudley: Thank you very much. 15,000,000 per quarter. However, that number will narrow down and decrease towards zero as we plan and maintain our business outlook towards cash flow positive towards end of twenty twenty five.
Rosa Stenson, Presenter/Executive, Hudley: And then there is a follow-up question. So you still view them as important strategic partners, when can we expect to see new strategic sales to Google and Crestron? Obviously, I can’t comment on that directly on any direct relationships we have. However, we know that we have previously reported on the supply chain and we expect as the market starts to stabilize and increase that inventory levels with those partners will gradually adjust. Then there’s a question about how will American trade barriers affect sales.
I think equally as everyone else, both in our industry, but in generally in Europe and U. S. As well, are quite excited to awaiting to see what actually will will come through. However, on Hadley’s side, we do have our main production and our entire production in The EU, and we do follow continuously together with our contract manufacturer manufacturer the situation and have some mitigation planned in case for various scenarios. So it’s too early to to say how exactly, but we are continuously monitoring the situation.
And with that I think we take the final question. The final question is why do you think hybrid work and video in meeting rooms will be popular when many large companies force their employees back to the office? We see that meeting room equipment is not only used between people at the home office and in the office. We see that people are equally as much using the equipment to talk within in large companies, between either companies or between within their companies. So both the market, the oil market research and the market as we see it is not going to be heavily impacted.
It, however, might be a positive trend because then it’s going to be driving the multi camera category even further with more larger meeting rooms in place. And with that, I think we end the Q and A. And if if there are any additional questions, please let us know and we will come back to you in personally and answer to those. Thank you.
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