Earnings call transcript: Spire Global Q4 2024 sees revenue growth amid stock volatility

Spire (NYSE:SR) Global Inc. (SPIR) reported strong revenue growth for the fourth quarter of 2024, but its stock experienced significant volatility. Despite a 13% increase in quarterly revenue, the stock price fell sharply by 49.02% during regular trading hours, closing at $10.12. In the aftermarket, shares recovered slightly, rising 1.48% to $10.27. According to InvestingPro data, the company’s market capitalization stands at $246 million, with the stock showing high price volatility over multiple timeframes. Analysis suggests the stock is currently trading below its Fair Value, presenting a potential opportunity for value investors.

Key Takeaways

• Spire Global’s revenue for Q4 2024 increased by 13% year-over-year.
• The company’s stock price dropped significantly by nearly half during the trading session.
• Aftermarket trading showed a modest recovery with a 1.48% increase.
• Strong performance in annual recurring revenue and net income.
• The company continues to focus on mission-critical software and market expansion.

Company Performance

Spire Global demonstrated robust performance in the fourth quarter, with revenues reaching NOK 274 million, a 13% increase from the same period last year. The company also reported an 11% rise in annual recurring revenues, indicating strong demand for its software solutions in real estate and public administration sectors. InvestingPro analysis reveals impressive gross profit margins of 58.39% and strong revenue growth of 24.15% over the last twelve months. Subscribers can access 13 additional ProTips and comprehensive financial metrics through the Pro Research Report, offering deeper insights into SPIR’s performance. This growth aligns with the company’s strategic focus on mission-critical software and market-leading positions in the Nordic region.

Financial Highlights

• Revenue: NOK 274 million, up 13% year-over-year.
• Annual recurring revenue: NOK 443 million, up 11% year-over-year.
• Adjusted EBITDA: CHF 51 million, a 29% increase.
• Net income for 2024: SEK 51 million, compared to a loss of SEK 9 million in 2023.

Outlook & Guidance

Looking ahead, Spire Global is optimistic about continued growth in subscription-based revenues and software business. The company plans a capital investment of NOK 90-95 million for 2025, focusing on optimizing investments and improving margins. The positive outlook is supported by a recovering real estate market in Norway and Sweden and growing demand for secure IT solutions.

Executive Commentary

CEO Per Hakon Kollumstau emphasized the company’s role in delivering mission-critical software, stating, "We are a company delivering mission-critical software for our two main business areas." CFO Cecilia Heckenbe highlighted the demand for secure IT solutions, adding, "There is a pressing demand for secure and efficient IT solutions across both our business areas."

Risks and Challenges

• Market volatility: The sharp decline in stock price may indicate investor concerns about future performance.
• Economic conditions: Fluctuations in the real estate market could impact revenue growth.
• Competition: Maintaining market-leading positions requires continuous innovation and investment.
• Integration risks: The successful integration of acquisitions like Unbolt is crucial for growth.
• Regulatory changes: Potential impacts from open data implementation could affect operations.

Q&A

During the earnings call, analysts inquired about the Unbolt acquisition strategy, market recovery in Norway and Sweden, and cost optimization efforts. The discussions highlighted the company’s strategic focus on expanding its ecosystem of property data and analytics while optimizing operational costs.

Full transcript - Spire Global Inc (SPIR) Q4 2024:

Per Hakon Kollumstau, Chief Executive Officer, SPIE Group: Good morning, and welcome to the presentation of the Fourth Quarter and Full Year twenty twenty four Financial Results for SPIE Group. My name is Pero Kollumstau and I am the Chief Executive Officer of SPIE Group. And I’m here together with our CFO, Cecilia Heckenbe, to present our results. Cecile will cover the financials as usual, but let’s kick off this presentation by looking at some of our key KPIs from the fourth quarter. We are a company delivering mission critical software for our two main business areas, real estate and public administration with a high share of recurring revenue.

SPEED Group’s annual recurring revenues reached a record high level, increasing 11% compared to a year ago to NOK $443,000,000. Total (EPA:TTEF) revenues reached NOK $274,000,000 in the quarter, up 13% from Q4 last year. Our scalable business model has also resulted in stable and high margins. Cross profit came in at NOK 191,000,000, an increase of 19%, while EBITDA ended at NOK 46,000,000 in the quarter, increasing 17% from last year. Overall, 2024 was a positive year for SPIE Group with a strong progress across the portfolio.

Copies are on the rise and looking ahead, we continue to see potential for growth and value creation. I’ll now leave the floor to Cecile, who will give you some more details about our financial figures from the quarter.

Cecilia Heckenbe, Chief Financial Officer, SPIE Group: Thank you, Per Hakon, and good morning, everyone. I will take you through the financial results for the fourth quarter and full year 2024, starting with the highlights for the quarter. We use Norwegian Krumeter as reporting currency. I’m pleased to report another quarter of double digit revenue growth and improved profitability as key KPIs like total revenues, gross profit, adjusted EBITDA and cash EBITDA all continue to improve. Revenue increased by 13% to SEK $274,000,000 in the quarter, driven by strong development in the real estate business area.

The revenue increase is attributable to 9% organic growth and SEK 10,000,000 in new revenue from unbolt with its subsidiaries, in particular, eValley. We have steady growth in our SaaS revenues, and annual recurring revenue had an increase of 11% to SEK $443,000,000 compared to one year earlier, including SEK 15,000,000 in annual recurring revenue from EVAD. Margins and profitability are increasing. We had double digit EBITDA growth as adjusted EBITDA increased by 29% to CHF51 million and adjusted EBITDA margin increased from 16% to 17%. Cash EBITA increased from SEK 9,000,000 in the fourth quarter twenty twenty three to SEK 20,000,000 in fourth quarter twenty twenty four.

Net finance of minus SEK 9,000,000 is up from minus SEK 19,000,000 in fourth quarter twenty twenty three, positively impacted by gain on interest rate swaps. Net income in the quarter was SEK7 million, up from minus SEK17 million in the fourth quarter twenty twenty three. The financial results for full year 2024 are impacted by a slow start of the year, but results have improved during the second half of twenty twenty four, following strong development in the real estate market in Norway, market recovery in Sweden and effects of internal initiatives to improve profitability. Revenue for full year 2024 ended at SEK 1,100,000,000.0, up 7% from full year 2023, with gross profit up 8%. Unbought with subsidiaries are consolidated with four months and impacts full year revenue with SEK 14,000,000.

Adjusted EBITDA of SEK $2.00 1,000,000 is up 6% and cash EBITDA is up 30% to SEK 95,000,000. Net finance of minus NOK 6,000,000 is up NOK 49,000,000 from full year 2023, impacted by increased financial income of NOK 54,000,000 related to a one off noncash financial gain following the consolidation of unbolt of SEK 32,000,000 gain in fair value interest rate swaps of SEK 13,000,000 and interest on bank deposits. Net income for full year ’24 of SEK 51,000,000 is up from minus SEK 9,000,000 in 2023. Let’s look into some more details in the revenue development. The 13% revenue growth in the quarter is driven by 23% growth in the Real Estate business area, including SEK 9,000,000 in new revenue from EVEAD and SEK 4,000,000 from Forecast Media.

Organic growth in the Real Estate business area is 15%. Forecast Media delivers content marketing and is earlier reported under Other, but was merged with Bulimapa in December. We see double digit revenue growth in Nambita, Bulimapa and Netria following high activity in the real estate market. Within public administration, Sigri has steady revenue growth of 4%. The underlying growth in annual recurring revenue year on year was 12% when adjusting for the extraordinary churn of SEK10 million in the beginning of twenty twenty four.

The gross margin is up 2% compared to last year. For full year 2024, SPEED Group’s overall revenue increased by 7% compared to full year 2023 to SEK 1,100,000,000.0. Revenue growth adjusted for external data shown in the beginning of 2024 and by annual election revenue in 2023 was 9%. The unbolt subsidiary, EBRD, is consolidated with four months and adds revenue of SEK 13,000,000 to the Real Estate business area, in addition to revenue from forecast media earlier reported as other elimination. SpiritGood deliver its offerings as subscriptions, transaction based data and software sales and consulting services.

The subscription based revenues are primarily based as software as a service licenses to customers characterized by long term contracts and low churn. Subscription revenues are up 4% in the quarter and 8% for full year 24% following steady development in annual recurring revenues across the companies. Transaction (JO:TCPJ) based revenue is up 23% in the quarter, impacted by strong development in the real estate market in Norway and market recovery in Sweden. Revenue for full year 2024 is up 8%, although hampered by a weak first quarter. Revenue from consulting constitutes a small part of total revenue in Spirit Group, but our consulting service is an important success factor for implementation and utilization of our data and solutions.

There have been fewer upgrade projects in Sikre since the majority of customers have migrated to cloud, but this is offset by increased demand for Metria’s consultant services within climate and sustainability. These are some of the drivers for the quarter’s results. I will now dive into more details in the key segments of SPIL Group. In the fourth quarter, total revenues in Ambita were up 15% to SEK 94,000,000. A major part of the revenues correlates with activity in the Norwegian real estate market and number of properties put out for sale, which was up 5% in the quarter.

Following the positive development in the real estate market, transaction based revenue was up 16% to SEK81 million. Annual recurring revenue at the December was steady at SEK41 million. Commencement of new homes in the fourth quarter was down 3%. When conditions for real estate development improve, it is expected that this will positively impact Ambita sale of digital maps and electronic applications. Gross profit in the fourth quarter is positively affected by reversal of provisions for claims that are obsolete amounting to SEK 2,500,000.0 and defined as a nonrecurring item.

Adjusted EBITDA was SEK 14,000,000 with stable adjusted EBITDA margin of 14. Revenue year to date is up 9% to SEK492 million with 17% adjusted EBITA margin. Cash EBITA is up 14% in the quarter and 2% for full year 2024. In the fourth quarter, revenues in Volumappa were up 56% to NOK20 million. The wholly owned subsidiary, Fokas Media, that delivers content marketing, was merged with Volumappa in December 24, impacting revenue in the fourth quarter with EUR 4,000,000 and adjusted EBITDA with minus EUR 2,000,000.

The underlying revenue growth in Boulamapa, excluding forecast media, is 23%. Run rate annual recurring revenue from B2B was EUR 53,000,000, which is up 30% from fourth quarter last year. Transaction based revenues from B2C products introduced late twenty twenty three, sold as monthly subscriptions was NOK 4,400,000.0. It is positive to see that the profitability in Boullumapa is increasing. Adjusted EBITDA of SEK 2,000,000 is up from SEK 0 in the fourth quarter last year with adjusted EBITDA margin of 9%.

Underlying revenue year to date is up 23% to SEK 54,000,000. Total revenue after merger with Forecast Media is NOK 58,000,000 with 10% adjusted EBITDA margin. Cash EBITDA including Forecast Media has improved from minus NOK 6,000,000 in fourth quarter twenty twenty three to minus NOK 4,000,000 in fourth quarter twenty twenty four and from minus CHF 26,000,000 in 2023 to minus CHF 16,000,000 in 2024. We are pleased to see continued double digit revenue growth and increased profitability in Metria. Revenue of SEK 84,000,000 is up 14% from fourth quarter last year.

We have seen strong development and market recovery in the Swedish real estate market lately and transaction based revenues has increased with 34% to SEK 32,000,000. Transaction based revenue in Metria is highly correlated with the volumes of properties sold and sizes of mortgages taken out within banking and finance. Subscription revenue of SEK 28,000,000 is in line with one year earlier in local currency. Annual recurring revenue of SEK116 million is at steady pace. There is a solid demand for Metra’s consulting services, and consulting revenues were up SEK2 million to SEK22 million.

Gross profit is up 11% to NOK 52,000,000 with 62% margin. Profitability is increasing in Metria with adjusted EBITDA of NOK 17,000,000 and adjusted EBITDA margin up from 18% in fourth quarter last year to 20% in the fourth quarter twenty twenty four following increased gross profit and cost initiatives showing results. Revenue year to date is up 8% to NOK305 million with adjusted EBITDA of NOK52 million. Cash EBITDA is up 82% in the quarter and 50% for full year 2024. EVEAD is a new segment in Speed from September 24 and is consolidated with four months in the full year 2024 results.

New revenue from Evari impacts the fourth quarter with SEK 9,000,000 and full year 2024 with SEK 13,000,000. Evari owns the software EBIT, which is Norway’s most used professional software for valuation engineers. The software offers effective process support, data driven quality assurance, and a variation of different valuation reports. It allows direct interaction and sharing of information between real estate agents and valuers systems for increased security and efficiency. In the fourth quarter, EVE revenues amounted to SEK 9,000,000 with 65% gross margin.

Run rate annual recurring revenue from subscription services was SEK 15,000,000 at the December. Transaction date revenues are related to revenues from condition reports and other valuation report generated by more than 700 valuation companies in Norway. There was a 14% increase in the reports in the fourth quarter compared to same period one year earlier and a total increase of 8% year over year. Adjusted EBITDA in the quarter was SEK 2,000,000 with 19% adjusted EBITDA margin. Cash EBITDA in the fourth quarter is minus SEK1 million.

Several initiatives are started to increase profitability in 2025. Approximately 90,000 condition reports are generated through EBIT every year, providing extensive information about the condition on Norwegian homes. Combined with data sources from other Spirit Group companies, this will broaden Spirit Group’s real estate data coverage with unique information about the conditions on Norwegian houses. Silkely continues its steady growth with NOK 73,000,000 in revenues from the quarter, up 4% from fourth quarter twenty twenty three. Revenue from subscription sales increased by 6% to NOK 53,000,000.

Annual recurring revenue also increased by 6% to NOK $210,000,000 at the end of the quarter. The underlying growth is 12% when adjusting for the extraordinary churn and end of life products amounting to NOK 10,000,000 reported in the beginning of twenty twenty four, driven by a stable and high win rate. There are fewer upgrade projects in CQ now than in 2023 as majority of customers are migrated to cloud and hence lower consulting revenue. The gross margin is, however, higher for subscription revenues than for consulting revenues and gross profit of SEK65 million is up 7%. Adjusted EBITA in the quarter was SEK23 million with 32% adjusted EBITA margin.

Revenue year to date is up 3% when excluding biannual revenue from election in 2023. Adjusted EBITDA for full year ’24 ended at SEK81 million with 30% adjusted EBITDA margin. Cash EBITA is up 20% in the quarter and 10% for full year 2024. As an innovative software house, development of new functionality and new features on existing products to strengthen our market leading positions and expansion of the product portfolio is vital for future growth. Total CapEx in full year 2024 was NOK 99,000,000.

This is NOK 2,000,000 higher than in full year 2023, but includes NOK7 million from four months of consolidation of unbilled with subsidiaries. CapEx in Boulemapa prior to merger with Forecast Media is down by NOK10 million for full year 2024 compared to full year 2023, following less need for new development. In 2024, ’9 percent of revenue was invested to strengthen the market leading positions. We have an increased focus on return on investments and optimization of investments across the group. The planned range of CapEx for full year 2025 is NOK 90,000,000 to NOK 95,000,000 compared to NOK 115,000,000 in 2024 when adjusting for full year effect of unbolt and its subsidiaries.

Free cash flow increased from SEK 74,000,000 in 2023 to SEK 86,000,000 in 2024. As illustrated on the left hand side of this slide, you can see that our free cash flow is impacted by seasonal fluctuations. First quarter, as you now have entered, is historically always a strong quarter in terms of free cash flow as Seekly invoices a large part of its customers in advance on a yearly basis in January. Moving on to the illustration on the right hand side, you can see that we have generated SEK $219,000,000 of operational cash flow in 2024. Investment cash flow amounts to SEK 175,000,000 in 2024 and consists mainly of capitalized development costs and acquisition of shares in Anvalt and Prosper I.

Financing cash flow amounted to SEK 55,000,000 and consists of proceeds from borrowings and repayment of borrowing, paid interest and payment for the principal element of leases. Spirit Group’s cash balance at the December was SEK 43,000,000. Our financial position as of December shows that assets to a large degree consist of intangible assets where of SEK 1,200,000,000.0 is goodwill and the remainder is capitalized development cost, customer contracts and trademarks. Equity is close to SEK 1,300,000,000.0, giving an equity ratio of 53%. Net interest bearing debt is SEK $7.00 8,000,000 at the December and is up SEK 57,000,000 from the end of twenty twenty three.

This includes lease liabilities of SEK 73,000,000. The increase in lease liabilities is related to some new office leases. Reducing interest bearing debt has been and still is a priority for us. In August 24, however, we increased debt to finance the strategic acquisition of the remaining shares in unbolt to make it a fully owned company. We have two interest rate swaps at favorable terms of SEK 3.24 and SEK 3.25 covering 60% of the interest bearing loans.

The cash balance at the December was SEK 43,000,000. In addition, Spergeloop has a liquidity reserve of SEK 50,000,000. Summing up the financial results, there are four key areas I would like to highlight. Firstly, double digit revenue growth in our Real Estate business area has accelerated total revenue growth. Secondly, the Public Administration business area continues to deliver steady growth with increasing annual recurring revenue and high win rates.

Thirdly, we have a continued focus on cost control across the group, and I’m pleased to see that the effects from cost initiatives have started to materialize and that profitability is increasing evidenced by the increasing cash EBITDA. Lastly, I would like to highlight the add on acquisition of Envault that was successfully integrated during the quarter. We truly believe that the strategic acquisition will strengthen our real estate offering and make our number one positions even stronger. There is a pressing demand for secure and efficient IT solution across both our business areas, and we have entered 25 with a positive outlook. Now Per Hakon will comment on the business development in the quarter.

Per Hakon Kollumstau, Chief Executive Officer, SPIE Group: Thank you, Jose Sille. It’s great to see that the initiatives we have implemented during the past year really are providing improved results. Let’s look at the main reasons behind our improved financial during the quarter. Spireup is a software house with market leading positions within real estate and public amortization as our companies deliver mission critical software and data to our customers. Based on our extensive real estate and geoinformation data set combined with our deep domain knowledge, we deliver software data and consulting services within five key processes.

Our ambition is to build Speed Group into a lighthouse for real estate software with our core real estate data, geoinformation and deep domain knowledge. We will focus on high margin software and data within mission critical processes. The strategy is to expand our offerings to existing customers to increase the supply power and share of wallet. Our products are available to all companies that need real estate solutions, but our primary focus will be on real estate agents, banks, insurance, construction, appraisal, energy, telecom and forestry. Looking at the real estate business, the positive things signs over the past few quarters have continued during the fourth quarter.

In the quarter, all spare companies within this segment delivered double digit growth, driven by strong development in the transaction based real estate market in Norway and Sweden. The number of properties put up for sale increased in Norway in Q4 positively. This affects Ambita. The number of properties put out for sale in Norway has historically been very stable with about 100,000 properties each year. After a slow start to the year, the numbers picked up again in the second half of the year, providing tailwind for our companies.

It is also great to see that the January numbers grew by as much as 27%. Ambita maintains a strong market position in an environment with high competition and rapid tech changes and delivers strong revenue growth as Cecilie already mentioned. Bulmapa continues to explore new revenue streams and partnerships to leverage scale. These efforts include development of the company’s solutions, functionality, increased emphasis on market visibility and readiness for upcoming revenue models. The Swedish market is also improving with a higher number of properties sold, positively affecting Metra, who grew revenues by 14% in the fourth quarter.

For Ebadi, we saw a 400% increase in reports delivered year on year. And approx 90,000 condition reports are generated through the Ebadi system every year following our exciting acquisition from Q3. So let’s have a brief look at the acquisition of unbolt from Q3. What the company brings us and what we have done following the investment. Unbolt has built a Nordic ecosystem around property condition data, providing unique insight analytics about building stock.

By taking control of unbolt, we strengthened our position within real estate transactions, complementing the group’s property data offerings with unique property condition and energy data. Following the full acquisition of EnBolt in August 2024, we completed a one hundred day integration plan in December with focus on operations, people, synergies and data. The subsidiary EVRD, which is a major player in Norway within software for real estate appraisal, was established as a separate segment. Unbold will be rebranded as Speed Data in Q1 twenty twenty five and serve as a horizontal entity within the group, delivering advanced data services, utilizing the strength of the group to create a unified approach to the Nordic real estate market. The acquisition of unbolt is unlocking the new opportunities through advanced data services, business development, acceleration and next generation data platform.

Our public administration offering is provided by CCLIP, supporting the public sector with insight, control and digitalization of law regulated processes. Sikli are increasing sales to new customers in addition to up sales to existing customers. Sikli has long term contracts with low churn and a steady high win rate on public tenders. And in Q4, Sigler won 80% of its public tenders, gain market share and attracting new customers as also illustrated by the win of Neosoden in Norway and Karskrona in Sweden. Subsequent to the quarter, Seeker won the tender for Indigo IKS, Hamm, Alloten and Stange.

The value of the agreement for these first three years is NOK 8.7 with several options for renewal and add on sales. It is also worth highlighting that Seeker grew RIDE by 12% compared to a year ago due to increased sales to new and existing customers. So let’s wrap up this presentation with an update on our outlook. So entering 2025, our outlook remains very positive. The demand for secure and efficient IT solution is growing across our business areas as customers increasingly seek to reduce costs by streamlining and digitizing their operations.

We expect our subscription based revenues to continue to grow steadily with low churn as they are primarily based on long term contracts. Meanwhile, there are positive developments in the real estate market, both in Norway and Sweden, as we already touched upon. We plan to optimize investments to enhance margins and cash flow and prioritize ROI with a projected capital investment range of MNOOC $90,000,000 to $95,000,000 for 2025. We are positive about the opportunities, the implementation of open data in Sweden creates within new data sources and product development going forward. However, revenue in Metra will be negatively affected, but large parts of data cost, our COGS within ZEUR data will disappear, and Metra’s aim is to further improve the company’s gross profit during 2025.

Cost control remain as a focus and is now beginning to impact on the group’s profits. We use generative AE solutions to optimize and streamline our operational way of work. Overall, we have solid building blocks in place and expect continued growth in our software business for 2025. With that, I’d like to thank you all for watching this presentation and wish you all a great day.

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