Earnings call transcript: Shape Robotics Q4 2024 revenue jumps 44% YoY

Shape Robotics reported a strong finish to 2024 with a 44% year-over-year increase in fourth-quarter revenue, reaching 125 million SEK. The company also achieved its full-year targets with revenue of 300 million SEK and an EBITDA of 25 million SEK. Despite these achievements, the company’s stock experienced an 8.64% decline, closing at 16.2 SEK, reflecting investor concerns about future growth prospects and market conditions. According to InvestingPro data, the company’s market capitalization stands at $36.15 million, with an overall Financial Health Score of 2.28, rated as "FAIR."

Key Takeaways

• Shape Robotics’ Q4 2024 revenue rose by 44% YoY, hitting 125 million SEK.
• The company met its full-year revenue and EBITDA targets.
• Service revenue, introduced in Q3 2024, accounted for 30% of Q4 revenue.
• The stock fell by 8.64%, closing at 16.2 SEK, amidst broader market concerns.

Company Performance

Shape Robotics demonstrated robust performance in Q4 2024, with significant revenue growth and improved margins. The company achieved both its revenue and EBITDA targets for the year, highlighting its strong operational execution. InvestingPro data reveals impressive revenue growth of 94.41% in the last twelve months, though the company trades at a high EV/EBITDA multiple of 75.74x. The growth was driven by a substantial contribution from SmartLab projects, which accounted for 70% of total revenue. The introduction of service revenue in Q3 2024 further diversified the company’s income streams.

Financial Highlights

• Q4 2024 Revenue: 125 million SEK, up 44% YoY
• Full-Year Revenue: 300 million SEK
• EBITDA: 25 million SEK
• Contribution Margin: 38%, up from 28% in Q4 2023
• Adjusted EBITDA: 26 million SEK, up 56% YoY

Outlook & Guidance

Shape Robotics projects revenue growth of 20% to 35% in 2025, aiming for revenue between 360 million and 410 million SEK. The company expects EBITDA to be at least 10% of revenue. Key growth markets identified include Romania and Poland, with plans to secure additional financing to support expansion. The long-term goal is to reach €1 billion in revenue by 2027. InvestingPro analysis shows the company maintains a healthy current ratio of 1.42, indicating sufficient liquidity to fund near-term operations. Subscribers can access 6 additional ProTips and comprehensive financial metrics to better evaluate the company’s growth potential.

Executive Commentary

Marc Abraham, CEO of Shape Robotics, expressed optimism about the company’s trajectory, stating, "Together, we are shaping the future of education." He emphasized the company’s success in meeting financial targets, saying, "We succeeded and delivered both [financial] targets." Abraham also noted the company’s strong momentum going into 2025.

Risks and Challenges

• Potential supply chain disruptions could impact production and delivery.
• Market saturation in key regions may limit growth opportunities.
• Economic uncertainties in Europe could affect school budgets and investment in educational technology.
• Competition from other Edutech companies may pressure margins and market share.

Shape Robotics’ strong financial performance in Q4 2024 sets a solid foundation for future growth, although market conditions and competitive pressures remain key challenges moving forward.

Full transcript - Shape Robotics AS (SHAPE) Q4 2024:

Marc Abraham, CEO, Shape Robotics: Welcome and thank you for joining us for the presentation of Shape Robotics quarter four twenty twenty four interim report, which also presents the results for the full year ’24 as presented in our annual report. My name is Marc Abraham, and I’m the CEO of Shape Robotics. Today, I will walk you through our results and highlight as well the guidance for ’25, which were also announced earlier today. Following this presentation, I invite you to a live q and a session on Thursday, April 10. All the information regarding the q and a session and the link for sending questions will be shown below this video.

Now let me turn to slide two for the key takeaways for quarter four. The key takeaways of quarter four twenty twenty four. We had set very ambitious financial targets for 2024, but we succeeded and delivered both of them. The revenue target, SEK300 million and the earnings target with an adjusted EBITDA of SEK25 million. Kr.

We are very proud of this result and quarter four was our strongest quarter to date with a revenue of 125,000,000 kr, 40 4 percent year over year increase. Our contribution margin also reached an all time high, 38%, supported by strong service revenue and improved product mix. The adjusted EBITDA reached million just in quarter four alone, bringing us to the full year EBITDA target. With strengthened financial backing, new distribution partnership and growing demand across key markets, we have finished ’24 with momentum. On the slide number three, I will address the financial numbers in more detail.

As you can see on the bar charts on the right side of our slide showing the last four quarters, we have a strong momentum. Revenue reached 125,000,000 crowns just in q four, up from 86,000,000 crowns in q four twenty twenty three. Growth was driven by strong deliveries in the Smart Life project in Romania and a rising in service revenue, primarily under the TechUCATA teaching concept. Service revenue, which is something new for the company, made up a significant 30% of our quarter four revenue. Remember, we only introduced this service revenue in the third quarter in twenty twenty four.

Therefore, the contribution margin improved to SEK48 million or a record high 38%, up from 28% in Q4 twenty twenty three. The adjusted EBITDA came to 26,000,000 crowns. It’s a 56% increase year over year. Turning to our financial guidance for ’25 on Slide four. The financial guidance for ’25.

We expect the 2025 revenue to grow between 2035%, which will lead to a revenue between SEK360 million and SEK410 million. The expected revenue growth is lower than in ’24, but supportive of our long term ambitions and higher margin plans. The adjusted EBITDA is expected to reach at least 10% of our revenue, with an EBITDA margin of at least 8% before adjustments related to acquisition of STORY Kids and other investments that we have done in the past. There are some important assumptions of our guidance. Important drivers for growth alongside Romania will be Poland, a market we expect to contribute significantly to our revenue in ’25.

The contribution margin in line with previous year, high 20s or lower 30s, will be maintained and we expect service revenue to be an important revenue and margin driver. The operational efficiency gain and cost optimization will also underline the margin improvements in ’25. Specifically, as announced earlier today, we expect to reduce the company’s cost base at the current level of activity with an impact of at least 12 to 15,000,000 crowns. This is for the full year ’25 with initiative that will be fully implemented by the June ’25. Finally, we expect also to secure additional financing through banking agreements or other means to enable the continuous ambitious growth.

Now let me turn to slide five for an overview of the important business events of ’24. Now one of my favorite slides, the business updates of ’24. We have managed to secure a €139,000,000 financing facility from MuniCredit. We are supporting with that the R and D, the production and the working capital. We have signed a strategic distribution agreement with Ingram Micro, creating thus a dual distribution model with Network one in Romania, which has provided financial flexibility and reduced our operational risks.

After the end of the year, in May ’25, we have announced and communicated publicly that we have received also an order of 50 Tinker mobile steam labs via the Lenovo DPO partnership. This is a €1,500,000 value deal. We have also welcomed two new independent board members, Aureonetzin and Per Ecov, and Yepe Franssen was reelected as chair at the extraordinary general meeting in January 25. Together, all these developments strengthen our operational and strategic foundation for the growth. On the next slide, slide number six, I will dig a bit into our revenue composition and our product mix so you can better understand our business model.

Now on slide number six, we shall dig in a little bit in our product mix and the revenue composition. In the full year ’24, SmartLab projects remained our key revenue driver. This contributed to 70% of our total revenue. Fable robot sales remained stable at 8% with new sales channels opening through the Ping An products. Service revenue under the Techducator initiative reached K22.6 million in the financial year 2024, which corresponds to an impressive 7% of total revenue in 2024.

This first result of the Techducator has supported the management ambition to create a more diversified foundation for the growth and, of course, improve the contribution margin. The other revenue channels, mainly custom lower margin AV technology hardware solution, was reduced to 50% of the revenue, down from 30% in 2023. Geographic diversification also has a key role. 12.5% of the financial year revenue came from outside Romania. This is up from 4.6% in 2023.

Finally, but also very importantly, I will address our ability to service the revenue growth. How do we our capital management? This is slide number seven. Net working capital increased to 176,000,000 crowns. This is aligned with our high Q4 activity level and revenue growth for the full year, largely driven by receivables and inventories.

Trade receivables was also up by year end, as expected due to high activity level in Q4. The 139,000,000 financing agreement with UniCredit is key for our operation. It bridges the working capital needs, funds for R and D and expansion and provides stability despite volatile cash flows. To further strengthen our capital operations, the management and the board have decided and taken initiatives to reduce the company’s base cost by at least 12,000,000 crowns for the full year 2025. But this is in taking consideration the current level of activity.

In addition, an increased focus on Shape Robotics cash flow management and capital tied up through a greater focus on the company’s supply chain management and the terms associated there within on both customers and the supplier side. Finally, tighter prioritization of Shape Robotics development activities. These efforts reflect our focus on operational efficiency and creating a solid financial foundation for the future expansion. This concludes my comments for the quarter four and the full year 2024 financial results and business highlights. Let me conclude by showing our next investment highlights on the next page.

Investment highlights. We are very strongly positioned in the Edutech market. Our presence spans across 2,000 schools already in Europe. More than 25 FABER robots have been sold. And together Tinker and TechDucator are gaining traction.

The ongoing investments that we do in AI with power tools like ADI also are targeting subscription based learning tools. The strong demand drivers still remain the EU thirteen point eight billion commitment to digitalization of education by 2027. And this is creating still a clear path for us for the reaching of 1,000,000,000 revenue goal in 2027. Thank you very much for your attention. As noted in the beginning, please join our live Q and A session so that we have an opportunity to discuss all the questions that you have on Thursday, April at seventeen Central European Time via LinkedIn.

We look forward to your questions and to your continuing this exciting journey together. Together, we are shaping the future of education.

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