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Otovo AS (market cap: $51.7 million) reported its first-quarter 2025 earnings, revealing a revenue miss against forecasts and a notable stock price decline. The company’s revenue reached 125 million NOK, falling short of the projected 912 million NOK. This shortfall, along with a negative cash flow from operations, contributed to a 10.9% drop in Otovo’s stock price during pre-market trading. According to InvestingPro analysis, the company’s overall financial health score stands at "FAIR," though data indicates it may face challenges making interest payments on debt.
Key Takeaways
- Otovo’s Q1 2025 revenue missed forecasts significantly.
- Stock price dropped 10.9% in pre-market trading.
- Gross profit margin improved to 25%.
- Order intake increased to 150 million NOK, showing positive demand trends.
- Organizational restructuring led to reduced payroll expenses.
Company Performance
Otovo’s performance in Q1 2025 showed mixed results. While the company experienced a decline in revenue, it managed to increase its order intake and improve its gross profit margin. The sequential drop in revenue by 13% was offset partially by a 36% rise in solar PV order intake, indicating growing consumer interest in renewable energy solutions.
Financial Highlights
- Revenue: 125 million NOK (down 13% sequentially)
- Order intake: 150 million NOK (up from 118 million in Q4 2024)
- Gross profit margin: increased from 23% to 25%
- Net sales: 1,410 customers (up from 1,050 in Q4)
- Cash position: reduced from 183 million NOK to 75 million NOK
- Negative cash flow from operations: 78 million NOK
Earnings vs. Forecast
Otovo’s actual revenue of 125 million NOK fell significantly short of the forecasted 912 million NOK. This substantial miss highlights potential challenges in market conditions or operational execution.
Market Reaction
Following the earnings release, Otovo’s stock price fell by 10.9% in pre-market trading. This decline reflects investor concerns over the revenue miss and cash flow issues. Despite today’s drop, InvestingPro data shows the stock has delivered strong returns recently, with a 60.61% gain over the past six months and currently trading 238% above its 52-week low of $0.07.
Outlook & Guidance
Looking ahead, Otovo is focused on sustainable sales growth and improving customer acquisition. The company aims to expand its higher-margin leasing segment and increase installations of battery and solar PV systems. Despite current challenges, management remains optimistic about future prospects. InvestingPro analysts forecast 26% revenue growth for FY2025, though they don’t expect profitability this year. Get detailed insights and Fair Value analysis with an InvestingPro subscription, including access to the comprehensive Pro Research Report available for Otovo and 1,400+ other stocks.
Executive Commentary
CEO Andreas Torsheim stated, "Otovo is returning to growth, selling higher margin projects to more and more customers." CFO Petter highlighted operational efficiency, noting, "We are doing more sales with fewer people."
Risks and Challenges
- Continued revenue shortfalls could impact financial stability.
- Cash flow issues may limit operational flexibility.
- European energy market volatility presents ongoing challenges.
- Organizational restructuring may impact employee morale and productivity.
- Potential market saturation in key regions could hinder growth.
Q&A
During the earnings call, analysts inquired about Otovo’s ability to sustain sales growth and the impact of recent European blackouts on demand. Executives expressed confidence in their lean organizational structure and potential expansion of partnerships with Swiss Life into new geographies like Italy.
Full transcript - Otovo AS (OTOVO) Q1 2025:
Andreas Torsheim, Founder and CEO, Otovo: Ladies and gentlemen, good morning, and welcome to this presentation of Ottobo’s results for the first quarter of twenty twenty five. My name is Andreas Torsheim. I’m founder and CEO of Ottobo. I’ll be joined in today’s presentation by our CFO, my friend and colleague, Petter. I’ll be giving you a business update before Petter gives a financial update.
We’ll give a summary and outlook before opening up for our q and a session. Do not hesitate to submit your questions as we talk or towards the end of the presentation. Today’s quarter is something we’ve been looking forward to presenting. It represents a return to growth for Atovo, a new and reset company that we’re proud of and that we’re eager to develop going forward. It’s a quarter with a strong growth in the order intake, both in terms of new customers and the the value of those customers.
We see our backlog grow once again, and we see the profitability for for project as strong as ever. In terms of our cash position, the reset of the company, the portfolio sale frees up cash and receivable that represents more than 200,000,000 kroner at the beginning of the quarter, a buffer that we find comfortable as we go into the remaining three quarters of twenty twenty five. Our cost structure is reset during the fourth quarter. We did an organizational reset centered around Madrid with a smaller, more robust team there. We present quarterly results where both marketing spend and personnel expenses are down, showing a resilient TOVO with a new reset cost structure going forward.
On top of that, we experience consumers that are eager to use the technological advancements that we see in solar and in storage in an environment where the profitability of both products is improving for the European consumer, giving us confidence in the outlook for the rest of the year. So this is a quarter in which Otovo returns to growth with improved cash structure, with a new cost structure set on the path towards profitability as these markets develop. Okay. Now let’s dive into the business update. In the fourth quarter of twenty twenty four, we entirely reset our cost structure.
In the first quarter, we entered into a seminal agreement with Swiss Life asset managers for the sale of our continental leasing portfolio that had a twofold effect. It both freed up cash latent in our leasing companies, but it also entirely changed the operational cash structure of the company in which we move from investing every time we create a new leasing system to harvesting money from our joint venture as we develop new leasing assets. From this quarter onwards, Otovo is focused on growing a number of customers, the value of those customers, adding more batteries. It’s a story of a return to growth, and we’re eager to share that with you. And the way Otovo works now is a much simpler company.
We have two segments, customers who buy directly from us or customers who enter a leasing contract. We have a quite simple product range consisting mostly of solar installations, battery installations, but also with added products such as heat pumps, EV chargers, backup solutions, or home energy management systems adding value for the consumer. We’re putting these two segments and multiple products into play in 10 European markets from Norway in the North to Spain in the South. The two business segments that we have, the direct to consumer household customer or the b two b two c leasing portfolio owner have a bit different characteristics. The business to consumer segment is one in which cons the consumer house owner pays in full at time of delivery.
It represents three quarters of our business with a margin of 23%. The leasing portfolio owner is Swiss Life asset managers, both for our Scandinavian assets and our European assets. In this segment, we make sure that the consumer enters a leasing contract for twenty years for their solar PV or ten years for their batteries, and that represents about a quarter of our business in terms of installations in q one, but with a much stronger profitability, 24% in Scandinavia, 30 2 Percent in Continent Europe. And, obviously, as sound businessmen, we’ll be shifting our business towards these segments as they’re more profitable, more unique for us. And you can already see that in the order intake where the leasing share is up compared to the installation numbers that typically lag by a bit.
This first quarter of twenty twenty five represents a return to growth for Etobo. The order intake came in at above hundred and 50,000,000 kroner, a marked increase from the fourth quarter of twenty twenty four where it was hundred and 18,000,000. Revenue materializes as we install projects previously sold and backlogged. Revenues came in at hundred and 25,000,000, down 13% sequentially. The backlog grew 27% to a hundred and 95,000,000 kroner from the end of the previous quarter.
They combined the effect of added pro profitability of leasing contracts in the new setup and a growth in new sales. Gross profit holding roughly stable despite the drop in revenue. Why? Because we expanded our gross profit percentage from 23% to 25% in the quarter, a continuation of a trend we’ve been on for quite some time and that we’re proud and confident to be able to work on in the future. In terms of numbers of customers, the net sales came in at 1,410, a strong rebound in the winter quarter from from 1,050 in q four.
Installations typically materialize roughly ninety days after sales, and you can see that these this means that installation numbers roughly lag the net sales numbers by a quarter. In terms of value, the order intake, the new sales value was up 30% sequentially, strong showing for us. Revenue came in at hundred and 25,000,000 as we installed previously sold installations in the quarter. Now moving our sights towards the the future and what the customer is buying as they enter a contract with Atobo. Now households in Europe have multiple problems relating to energy.
One is rising energy cost. Another is periods of extreme prices. A third is rising grid connectivity fees. A fourth is blackout. We’ve experienced those in the past week or so.
And then there’s the opportunity of new markets opening up for frequency and and capacity in which consumers can participate and generate more value from the assets that they have in their home. Now what do customers need to take full benefit in from new technology facing these challenges and opportunities? Well, they need solar PV in order to make energy. They need batteries for pretty much everything else. And if they add EV chargers, heat pumps, home energy management, they can increase their resilience, their savings, and the value of their home.
So that, of course, underpins the major trends that we as a company are surfing. We’ve seen an increase in demand for batteries over time, but that spiked last week as customers in Portugal, Spain, and parts of France experienced a substantial blackout. Now we do not know yet for how long that demand will be sustained, but it is a reminder that households face new challenges in in a in a new era and that adding storage and backup capability to existing systems or as a component in new systems sold is going to be important. It’s another argument in the story that’s been developing around batteries because batteries are potentially even more impressive than wind power and solar power have been in the last two decades in its ability to get more inexpensive month by month, quarter by quarter, a development that we see continuing into 2025. What that means is that storage becomes more competitive with the energy grid, making it, in general, more profitable to put a battery into your garage or your home.
And that, of course, gets expressed in our sales numbers in which our order intake in batteries is increasing. This quarter, we sold almost eight megawatt hours of of batteries, And and that’s a a new record for us, and it’s a number that we expect to be able to increase going forward, obviously. The story for PV is also much the same. The cost of solar PV installations on the Atovo platform is down 9% in q one compared to the same or rather to q four of last year. Comparing further back, of course, those numbers are are stronger, and you can see that the benefit of cheaper equipment, more disciplined and efficient installers, and the compression on the installer margins after the energy crisis are contributing to equipment and installation getting cheaper for consumers.
And that means that even weighing energy prices across European market, we’re able to move more areas of Europe into the area where this is highly profitable for consumers as shown in the map on the left on this slide, in which blue indicates good profitability and orange poor profitability for the consumer. And and this is a trend that’s very marked in the beginning of the year. What that means is that solar PV is once again increasing in profitability for the consumer. That is usually a good indicator in this business. Our order intake is up to almost nine megawatt peak, an increase in 36% in the last quarter compared to the previous one.
So on that positive note, I leave the floor to Petter for our financial update.
Petter, CFO, Otovo: Thank you, Andreas. I will then take you through our first quarter financial results. The portfolio transaction simplifies our financial reporting. We have lost control of the eight SPVs that was sold to Swiss Life asset managers, and as such, they are deconsolidated from our balance sheet. We will, from in this quarter and in subsequent quarters, record the revenues and the profits of those sales as they previously were eliminated in our consolidated financial reporting.
As a result, we will then have two segments. Our b to c segment, which we previously named marketplace. This is sales to homeowners across Europe. Then we also have the b to b to c segment, which is sale of systems to Swiss Life asset managers who have entered into new subscription contracts with homeowners across Europe. Turning over to the P and L, we see that revenue is down sequentially and also year over year as a result of lower installation activity in the first quarter.
Looking at profitability, you clearly see the effect of the portfolio sale. There now one quarter of the revenues in the first quarter was from the b to b to c segment, and the remaining was to the b to c segments. The profitability in the b to b to c segment is 10 percentage points higher, which helps increase the gross margin as reported in the first quarter. Looking on order intake, we came into the quarter with a backlog of $153,000,000 That backlog had a value uplift of $12,000,000 as a result of the portfolio transaction, bringing it to 165,000,000 Out of that backlog, we installed NOK 125,000,000 of revenue in the quarter, and we had NOK 154,000,000 of order intake, meaning we exited the quarter with 195,000,000 in backlog, which is up 27,000,000 quarter over quarter. The cost cuts that we announced and effected 2024 is also clearly visible in the financial results.
Payroll is down 29,000,000 year over year to 42,000,000 in the quarter. Marketing costs is down 39,000,000 sorry, is down from 39,000,000 to 23,000,000, which is a reduction of 39%. And other OpEx increased 4,000,000 year over year, but this is including roughly 10,000,000 of project related costs that we took in the first quarter. If you remove that, the underlying trend is a decrease of 25% year over year. Going further down in the p and l, you will see that we have adverse currency effects of 24,000,000 in the quarter.
This comes from financing of the group’s subsidiaries in euro, which has an adverse impact given that the Norwegian parent company reports in Norwegian kroner. When the NOK strengthens, we will see a adverse effect. And when the NOK weakens, we will see a positive effect. This has no cash effect and has no impact on these subsidiaries financials or solidity as they operate in euros. Then going over to the balance sheet, you see that the balance sheet is reduced significantly due to the portfolio transaction.
Now in the quarter, we have our 11% ownership stake in the Europe is worth roughly 70,000,000 and is reported in total assets. And we also have a total of 140,000,000 NOK of receivables towards that entity, which is a result of the portfolio transaction. Going forward, we will continue to invoice EBI Europe for subscription projects, but the additional value creation in excess of CapEx will be invoiced quarterly, and you will just see a receivable on a quarterly basis going forward. Then going over to the cash position, we started the quarter with 183,000,000 of cash in the group. We had a negative cash flow from operations of 78,000,000.
This is inclusive of roughly 20,000,000 in payments to employees related to severance and bonuses paid for 2024 and a NOK 17,000,000 negative trade payables development in the quarter. Investments in subscription assets and interest paid on the bank facility with DNB was a total of negative 33,000,000. We had a positive impact of the first installment on the portfolio sale of roughly 10,000,000. Other effect other effects such as sale of assets, capitalized R and D, and FX of negative 7 million dollars bringing us to an exit balance of $75,000,000 at the end of the quarter. But with the additional receivable available from Syslife, we had in excess of 200,000,000 in cash at the start of this quarter.
I will then leave the word to Andreas to take you through the summary and outlook.
Andreas Torsheim, Founder and CEO, Otovo: Okay. So what to retain from this morning’s session? Otovo is returning to growth, selling higher margin projects to more and more customers who add more and more equipment. Our cash position is comfortable, and our cost structure is much improved after the portfolio sale and our efficiency measures of the fourth quarter. The European consumer is seeing more and more benefits and profitability from solar panels and batteries and is returning to the market after a couple of years of tough adjustment.
For Otovo, the combination of higher margins, a growing number of customers, and a lean cost structure are what is going to add up to a profitable Otovo. And with that, let me open up for, your questions. Alright. So a little bit of housekeeping here. We’re ready to go.
Can you sustain these sales numbers, or sales improvement numbers? The short answer is, yes. The longer answer is that we see improvements in all important leading indicators of sales. The cost per lead in marketing, what we pay to attract the customer to, the web page is, at an all time low in q, one. Or not at all time low, but, but a a very good number, the strongest we’ve seen since the energy crisis.
We, we do see a improvement in the number of offers sent out to customers, and the conversion of those offers is also, good. This was a quarter where our, we ran the company with half the staff compared to q four And being able to grow the order intake by 30% with with such smaller staff is is a it’s a very strong showing. So, yes, our focus is on growing these sales numbers, and I will be very disappointed in myself if we’re not able to sustain the progress here. What else do we have? Have you seen any effects of the blackouts in Spain on demand?
Yes. We have. In during last week, Google searches for keywords related to to our products roughly doubled in Portugal and Spain. That compares to a peak of tripling from previous levels during the energy crisis. So it’s a it’s meaningful impact on the interest for storage and backup and and solar.
And it’s a bit early to say what this translates to. There’s a risk that it could be noise with lots of people looking for solar panels that they can charge this mobile phone with, like the small smaller kit, and that will divert attention from our sales staff and and divert activity. That’s kind of the worst case scenario. The the best case scenario is that this is a serious awakening, only for Spanish and Portuguese consumers, but all across Europe in that solar and battery is part of your emergency kit. We know that resilience has gotten a lot more attention in in Europe in recent years, and this could be another push in that direction.
We are putting on extra staff to handle the increase in in interest that has come in over the last week in Portugal and and Spain in particular, but also interestingly in Germany, increase in in interest there. So it’s a bit early to say. But, yes, we’ve seen an effect, and we need to see if these are people just browsing the store or who who are serious about, about buying. The buying cycle is roughly three weeks from interest to to decision. So by by mid May, we should know more about where this is is headed.
You have taken deep cuts to the organization. Is it impacting your ability to grow over time? Do you want to say a few words about that, Petyan?
Petter, CFO, Otovo: Yes. I think as Andreas mentioned, we have been through a rough period in the fourth quarter. The transition was hard. I think both of us are very grateful for the efforts that all Autovistas put down to make it work. As Andreas said, we are doing more sales with fewer people.
We are very confident in our ability to do more installations with fewer people. And as we have said before, we have geared the current sales organization to roughly carry on 2,000 installs per quarter and have operated at that installation speed before with an organization that is roughly of that size.
Andreas Torsheim, Founder and CEO, Otovo: And, of course, if we if and when we move beyond 2,000 per per quarter, we will only marginally increase the the staff on on sales as we need to process more, but it’s not nearly proportional to to where we are now. So that’s I I think we’re in a in a good place. We’ve we’ve tested the organization now for for one quarter in its new, shape, and, and the efficiency numbers are are promising. You seem upbeat about Swiss Life. Is there a potential to grow the relationship?
We have grown it this quarter, but Petr, you key No.
Petter, CFO, Otovo: I think our partnership with Swiss Life remains strong. We take it as a sign of confidence as they entered into the transaction that we closed in Q1. We also take it as a sign of confidence that they also seek upside in Dottovo stock through the warrants that they received. Going forward, there is multiple ways of growing that relationship. One is inorganic to do more transactions like the one we did in Australia in Q4, where we added more volume, which was beneficial to them and beneficial to us.
But we could also grow this to cover more geographies. Italy comes to mind to a country where
Andreas Torsheim, Founder and CEO, Otovo: Because keep in mind, we do not have leasing in Italy currently. Yes.
Petter, CFO, Otovo: And being one of our biggest markets, unleashing that product in Italy would have a very high potential.
Andreas Torsheim, Founder and CEO, Otovo: And then, of course, these transactions have both in Scandinavia last year and in the European portfolio this year contain two parts. One was the existing asset that had been built that we sold to to Swiss Life asset managers. But the other part and more importantly for investors going forward is the agreement to keep purchasing leasing systems into the setup that we’ve sold every single month as we install. And, of course, that is that is important. It lasts for the the immediate and and midterm future.
There is, of course, in the potential of of expanding that partnership beyond the dates that are already pre agreed. So in short, I think we’re happy about that relationship. We feel we feel trusted. We trust them, and it’s it’s a serious player to have as as a partner in in this unique product that we have on on leasing. Your negative cash flow was high.
Any view on how
Petter, CFO, Otovo: it will develop? I guess that goes to me.
Andreas Torsheim, Founder and CEO, Otovo: I I guess you can. Yes.
Petter, CFO, Otovo: So if you look forward and you take the order intake that we had in Q1, and we assume we can install that in a quarter or so, our underlying negative cash flow would be around 35,000,000 to 40,000,000. Gross profit would be around NOK 40,000,000. Payroll is around NOK 40,000,000 and then you deduct another NOK40 million in other OpEx, but you also have other income that is from the portfolio, recurring payments from Swiss Life for management services of another NOK3 million to NOK4 million, bringing us to that net. And then, of course, what has changed in the subsequent quarter is that we will not have investments in subscription assets flowing over our P and L. That was roughly SEK 25,000,000 in this quarter.
And we will also not have interest payments on the debt facility as debt facility to a large extent is paid down, which of course helps to reduce negative cash flow.
Andreas Torsheim, Founder and CEO, Otovo: And then I think last point is working capital. Yes. Is we have negative working capital, meaning that we get paid before we pay. And that means this ship that we’ve built sales well in in tailwinds. And and with the growth in order intake, the that also expands the the cash cash.
Yeah. So that’s that’s that’s good stuff. So we’re happy about the about being in in that position after a few quarters of of contraction. Good. I think there seems to be no further questions.
So, thank you for your trust in the company. Keep buying solar and batteries and backup boxes, and thank you for your time this morning.
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