Earnings call transcript: Strongpoint Q2 2025 sees positive EBITDA, 18% revenue growth

Strongpoint ASA reported strong financial results for the second quarter of 2025, showcasing significant improvements in revenue and profitability. The company achieved an 18% year-over-year revenue increase, reaching NOK 350 million. EBITDA turned positive at NOK 7 million, a notable improvement from a loss of NOK 9 million in the same quarter last year. The stock, however, experienced a slight decline of 0.85% in recent trading, closing at NOK 11.6. According to InvestingPro analysis, the stock is currently trading near its 52-week high, with the platform’s Fair Value calculation suggesting the stock is undervalued. For comprehensive valuation insights, explore our Most Undervalued Stocks list.

Key Takeaways

• Revenue increased by 18% YoY to NOK 350 million.
• EBITDA improved to NOK 7 million from a loss of NOK 9 million.
• Cash flow from operations was positive at NOK 20 million.
• Stock price decreased by 0.85% following the earnings announcement.
• Strongpoint maintains a 46% equity ratio.

Company Performance

Strongpoint’s performance in Q2 2025 reflects robust growth and operational efficiency. The company reported a significant improvement in EBITDA, turning from a negative NOK 9 million to a positive NOK 7 million. This growth is supported by a strong focus on grocery retail technology, where over 80% of its revenue originates. The company continues to expand its international presence, operating in nine core markets and serving grocery retailers in over 20 countries. InvestingPro data reveals that while the company maintains strong gross profit margins above 80%, its overall financial health score remains weak, suggesting room for improvement. Discover more insights with InvestingPro’s comprehensive Pro Research Report, available for over 1,400 US stocks.

Financial Highlights

• Revenue: NOK 350 million, up 18% YoY.
• EBITDA: NOK 7 million, improved from a loss of NOK 9 million.
• Cash flow from operations: NOK 20 million.
• Cash on hand: NOK 84 million.
• Equity ratio: 46%.

Outlook & Guidance

Strongpoint is optimistic about its long-term financial goals, aiming for healthy revenue growth and an EBITDA margin exceeding 10%. The company plans to complete its project with Sainsbury’s by the summer of 2026 and continues to develop its cash automation solutions. Future EPS and revenue forecasts suggest a challenging environment, with expected EPS losses in the upcoming quarters and years. InvestingPro analysis forecasts 3% revenue growth for FY2025, with the next earnings announcement expected on August 7, 2025. InvestingPro subscribers have access to 7 additional key insights about Strongpoint’s future prospects and valuation metrics.

Executive Commentary

CEO Jakob Twerabach emphasized the company’s focus on efficiency, stating, "We make grocers more efficient." This sentiment is echoed by CFO Marius Drevelyn, who expressed satisfaction with the company’s financial turnaround, noting, "We are pleased to deliver another quarter with positive EBITDA."

Risks and Challenges

• Economic uncertainties may impact consumer spending and grocery retail demand.
• Competition in the retail technology sector could affect market share.
• Execution risks associated with international expansion and large-scale projects.
• Potential supply chain disruptions could impact product delivery and costs.
• Currency fluctuations may affect financial results due to international operations.

Strongpoint’s latest earnings report highlights its strategic focus on innovation and market expansion, positioning the company well for future growth despite the stock’s slight decline post-announcement.

Full transcript - Strongpoint ASA (STRO) Q2 2025:

Jakob Twerabach, CEO, Strongpoint: Good morning, everybody, and welcome to this Q2 presentation by Strongpoint and its results. My name is Jakob Twerabach. I’m the CEO of Strongpoint. And as always, I have Marius Drevelyn, our CFO with me here today to take you through today’s agenda. I’ll start off with this quarter’s highlights.

First of all, we have a 18% growth in our revenue to NOK $350,000,000 driven by strong growth in The UK, in Sweden and The Baltics. Our recurring revenue is also growing very significantly with 16%. This is predominantly driven by our order picking growth and also a number of other solutions that we have both proprietary, but also third party. Our EBITDA in the quarter is NOK 7,000,000, a NOK 16,000,000 improvement from last year, which gets us to a slightly more than 2% EBITDA margin. And we have cash flow from operations of plus NOK 20,000,000.

I’ll dive more into the customer success stories for this quarter, but I must say we’re very proud to have landed Carrefour Belgium with our order picking solution. We’re also very proud to have landed a deal with a Nordic grocery retailer on artificial intelligence scales to be used out in stores. And also in this quarter we are reaffirming our position in The Baltics as the go to market player when it comes to self checkouts with Koop Estonia order on exactly the self checkouts. Now for our new listeners, I’d like to just give a short introduction of what StrongPoint does. And StrongPoint, well, we are a technology company focused on serving grocery retailers with efficiency saving software and products.

Last year, we had a revenue of about billion, of which about one third is recurring. More than 80% of our revenue stems from grocery retailers, which is our focus. And we have around 500 staff across Europe. Our software solutions are developed in house by our own development team. And in short, our purpose is to bring retail technology into every shopping experience for a smarter and better life.

Why? Because we do that or doing that we believe we can help grocery retailers increase their margins and save costs. In short, we make grocers more efficient. So what about the technology solutions we provide? Well, we essentially solve five problems for grocery retailers.

I’ll go into each of these steps. Firstly, e commerce. We have an end to end e commerce platform that is truly world class. We provide everything a grocery retailers or a retailer needs for e commerce from software to pick and process online orders to last mile solutions. We’re in particular proud our proprietary order picking solution, which is the world’s most efficient in store picking solution.

And this solution is getting traction from one of the world’s most esteemed grocers. Additionally, we provide other picking and last mile solutions aimed to ensuring the highest possible levels of efficiency and profitability for grocers. Secondly, we have theft and shrink. We have a number of anti theft solutions, many of which are AI powered. This includes our VentSafe select and collect, our AI powered weighing schedules that we recently landed this Nordic deal on, and AI powered theft detection in store both at checkout but also in Aisle.

Thirdly, we ensure store efficiency. We provide our proprietary self checkout solution, ShopFlow Logistics, which is our proprietary SaaS based inventory order and task management solution, AI powered edge verification and also AI powered shelf monitoring solution in cooperation with Group. Fourthly, we’re helping customers with pricing and promotions. We provide digital solutions for pricing and promotions as a proud partner of Usion Group, which is the world’s leader in store digitization and the largest producer of electronic shelf labels. And fifth, we’re helping grocery retailers handle cash.

Still, even with low single digits percentage of cash usage as we have in Norway and Sweden, the sheer volume of transactions in grocery stores mean that cash needs to be handled efficiently. And we are doing this through our CashGuard solution. Furthermore, we are developing a revolutionary cash automation solution with the largest grocery retailer in Iberia that makes cash handling as easy as using a payment card. So that is shortly or short about what we do as a technology solution provider. So where do we operate?

Well, we have nine core markets which we focus on. These are The Nordics, The Baltics, UK and Ireland and Spain. These countries are places where we have our own teams on the ground ensuring that we cover the entire value chain. From sales to installation to service and support. Why do we do that?

Well, we do that because that way we can capture more revenue and build deeper customer relations and intimacy. And customer intimacy is an extremely important value of Strongpoint. This is the way that we deepen our relationships with grocers and over time become trusted partners. However, we’re not only limited to these nine countries. We serve grocery retailers in over 20 countries with the support from our partner network.

In particular, we’re our award winning order picking solution. We’re showcasing our ability to serve customers well beyond our nine focus countries. This is a very important part of our strategy forward, building ever more recurring revenue with our order picking solution across the world. So now back to this quarter. Customer success and again I want to point out these three specific wins, lots more, but three specific wins that we are in particular proud of.

Firstly, the fact that Carrefour Belgium has chosen Strongpoint’s order picking solution. There are very few grocery brands that are as known internationally as Carrefour. And of course, this is a amazing win for us and then yet another example of how our e commerce solution is international scalable and we are able to win major contracts with world leading brands also outside the nine countries in which we are very present. Secondly, we have sold more than 20,000,000 Norwegian Kroners of AI scales to a Nordic based grocery retailer. These are AI based scales that provide instant product recognition.

That means that when you place the item on the scale, it automatically recognizes this item. And let’s face it, who hasn’t been frustrated trying to look up a specific item on the scale menu. And not least for the grocer, this also means no more mistakes by its customers whether intentional or accidental. So our solution solves these customer pain points and we’re extremely proud of this accomplishment. Now thirdly, Estonia.

We at Strongpoint have been working with Koop Estonia since 2016 and we have a long standing relationship with this esteemed grocery retailer. And so this is what I mean when we say we build customer intimacy in our core markets. And again, this reaffirms StrongPoint’s position as the go to market player certainly in The Baltics when it comes to self checkouts. And we’re adding now another 130 self checkouts to Koop Estonia. Now lastly, before handing over to Marius, I’d like to provide a short update on two of our strategic and long term projects.

Firstly, on Sainsbury’s. I’ve said in the past and I’m happy to say again that the win of of Sainsbury’s and order picking is probably the most important customer win in the history of Stromford. Not only is this a major project in itself, but it also opens opportunities both within Sainsbury’s as well as building credibility and opportunity outside and inside The UK, both for order picking, but also our other technology solutions. Regarding their rollout, nothing new compared to what has been communicated earlier, namely that we are still planning to be completed by summer of twenty twenty six. We expect some more stores to be implemented now through summer and fall before Christmas freeze period starts in September, October.

In early Q1, next year we’ll roll out and continue on the rollout of the order picking solution at Sainsbury’s. Secondly, have our cash guard product project. So this is a project that we have been working with the largest grocery retailer in Iberia for quite some time and it is building a revolutionary solution that automates the use of cash in store and significantly reduces the costs for retailer and making it both easier and faster for customers in store. So where are we on this very exciting project? Well, the pilot or piloting continues and the latest version of the solution is being tested in store.

In addition, we are preparing additional units to be testing the solution with multiple checkouts simultaneously and we have an ongoing dialogue with the customer to prepare the industrialization of production of the solution. Right now, I’d like to hand over to Marius, our CFO, to share some more details on our financial performance. Marius, please.

Marius Drevelyn, CFO, Strongpoint: Thank you, Jacob. I will now go through the key financials for the second quarter this year. Starting with revenue. The Q2 revenue this year was million, an increase of 18% compared to last year. We had solid growth in the majority of our business units.

In The UK, revenue increased by 45%, driven by the ongoing Autostor project, as well as ESL installations. In The Baltics, we had 24% growth as we are continuing the rollout of several self checkout orders. Finally, The Nordics increased by 10%, driven by higher volumes in Sweden across several products. This was partly offset by a 16% decrease in Norway as we had large ESL rollouts last year. Moving on to recurring revenue twelve months rolling.

Now this increased by 16% compared to Q2 last year. This growth is fueled by a 45% increase in license revenue, mainly from our order picking on the back of the Sainsbury’s contract that started Q2 last year. In addition, the growth was fueled by self checkout solutions. If we move to the EBITDA, this improved from minus 9,000,000 in Q2 last year to a positive 7,000,000 in Q2 this year. Last year included restructuring costs of 10,000,000, but there were underlying improvements, particularly in The Baltics, The UK and Sweden.

Furthermore, in Q2, we capitalized SEK 8,000,000 in development costs, mainly for the Cashguard Connect project in Spain. Overall, we are pleased to deliver another quarter with positive EBITDA, even if we are not at the levels yet where we want to be. The improvement measures that we started on in late twenty twenty three and further into 2024 have had positive effects. So, these were the main P and L items. Let’s look at the cash flow movements so far this year.

We started the year with SEK82 million in cash and ended Q2 with SEK84 million, so a fairly flat development. This includes a positive contribution from the operating result of SEK18 million and changes in working capital. Earlier this year, we increased the interest bearing debt of SEK20 million. We have spent 23,000,000 on CapEx relating to the development of the Cash Card Connect project in Spain and our own POS solution in The Baltics. Now let’s move further into the key components of the working capital development.

Overall, capital has decreased by 5,000,000 since the start of the year. This includes a reduction in inventory of 33,000,000, mainly from deliveries of ESLs in Sweden and self checkout in The Baltics. It also includes a reduction of grocery lockers in Sweden. This reduction was offset by increases in accruals and other short term liabilities, mainly deferred income. To conclude, let’s look at the development in net interest bearing debt.

During the quarter, the net interest bearing debt remained flat and ended at €74,000,000 Similarly, there were a few changes in disposable funds ending at €84,000,000 as per Q2. Finally, the equity ratio remained stable at 46% at the end of the quarter as compared to our covenant of 30%. With this, I will hand it back to Jacob for some final remarks.

Jakob Twerabach, CEO, Strongpoint: Thank you, Marius. And allow me to spend this last few minutes on sharing the outlook for Strongpoint. First and foremost, short term. We are pleased with a improvement in our EBITDA and in our recurring revenue base. Although it could be said that we were anticipating a faster improvement.

But we are longer term, if you look at the longer term fundamentals, very pleased with the traction we are having on order picking solution, SaaS based order picking solution and expectations forward are high. If you then look at where do we aspire to be, I’d like to reiterate our long term financial ambition which is to have a healthy revenue growth. Healthy meaning also seeing a increase in the recurring revenue base that we have, as well as a EBITDA margin that will get in excess of 10%. So with that I’d like to thank you all for listening and have a great day.

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