Earnings call transcript: Subtech Q2 2025 revenue beats forecasts, stock steady

Subtech reported its Q2 2025 earnings, revealing a strong financial performance with revenue surpassing expectations. The company posted a revenue of 383 million Norwegian kroner (NOK), exceeding the forecast of 376.62 million NOK, and an earnings per share (EPS) forecast of 0.1012. According to InvestingPro data, the company’s market capitalization stands at $134.27 million, with a healthy financial score of 2.52, rated as GOOD. The stock closed at $28.11, showing remarkable stability despite market volatility.

Key Takeaways

• Subtech’s Q2 revenue grew by 13% year-over-year, reaching 383 million NOK.
• The company’s gross margin improved by 2 percentage points to 41%.
• EBITDA increased by 29% year-over-year, reaching 44 million NOK.
• The European electric vehicle (EV) market, a key segment for Subtech, saw a 27% growth in plug-in vehicle sales.

Company Performance

Subtech demonstrated robust growth in Q2 2025, driven by strong demand in the European EV market. The company maintained its competitive edge by expanding its product offerings and forming strategic partnerships, such as those with Octopus Energy and BYD in the UK. The increase in revenue and improved margins reflect Subtech’s effective market strategies and operational efficiencies.

Financial Highlights

• Revenue: 383 million NOK, up 13% year-over-year
• Gross Margin: 41%, a 2 percentage point increase year-over-year
• EBITDA: 44 million NOK, representing an 11% margin and a 29% year-over-year increase
• Order Intake: 445 million NOK
• Backlog: 567 million NOK
• Net Cash Position: 166 million NOK
• Total Liquidity: 466 million NOK

Earnings vs. Forecast

Subtech’s actual revenue of 383 million NOK exceeded the forecast of 376.62 million NOK, marking a positive surprise for investors. The company’s ability to surpass revenue expectations highlights its strong market position and effective execution of its growth strategies.

Market Reaction

Despite the earnings beat, Subtech’s stock experienced a modest increase, trading near its 52-week high of $28.76. InvestingPro analysis reveals impressive returns, with a 16.88% YTD gain and an 18.35% return over the past year. The stock offers a dividend yield of 2.06%, providing additional value for investors. For deeper insights into Subtech’s valuation and growth potential, investors can access 12+ additional ProTips and comprehensive analysis through InvestingPro’s detailed research reports.

Outlook & Guidance

Subtech remains optimistic about its growth prospects for the remainder of 2025. The company anticipates continued profitable growth, driven by a strong order backlog and expanding market opportunities in Europe. Subtech plans to capitalize on the growing demand for EVs and expects to see further EBITDA growth in the coming quarters.

Executive Commentary

CEO Kurt Eslam highlighted the company’s achievements, stating, "We have increased revenue, gross margin, and EBITDA compared to the second quarter last year." CFO Eirik Haerem added, "We are now able to grow EBITDA at a higher rate than our top line," underscoring the company’s focus on profitability. Eslam also noted the positive trends in the European EV market, expressing confidence in sustained growth.

Risks and Challenges

• Supply Chain Disruptions: Potential disruptions could affect production and delivery schedules.
• Market Saturation: Increasing competition in the EV market may pressure margins.
• Economic Uncertainty: Macroeconomic factors could impact consumer spending and investment.
• Regulatory Changes: Evolving regulations in key markets may require strategic adjustments.

Subtech’s Q2 2025 earnings highlight the company’s strong performance and strategic positioning in the growing EV market. InvestingPro subscribers can access detailed financial health metrics, valuation analysis, and expert insights through the platform’s comprehensive Pro Research Report, available for over 1,400 US equities. These reports transform complex financial data into actionable intelligence for smarter investment decisions.

Full transcript - Zaptec AS (ZAP) Q2 2025:

Kurt Eslam, CEO, Subtech: Good morning, and welcome to Subtech and our presentation of the financial results for the second quarter twenty twenty five. My name is Kurt Eslam. I’m the CEO in Subtech. And together with me, I have our CFO, Eirik Haerem. And together, we will take you through the financial highlights for the second quarter.

The headlines for this quarter and this presentation is that Saptag has delivering according to plan. Already in the previous quarter, we said that the second quarter will be even stronger than the first quarter. And we have increased our revenue and our gross margin compared to the first quarter this year. And that gives us a stronger EBITDA. But not only compared to the first quarter, but also compared to the second quarter last year, we have increased revenue, gross margin and EBITDA.

At the same time, we have a strong order intake and a solid backlog visibility for the rest of 2025. During the quarter, we have scaling up new product deployment and we have ramping up the sales in major markets. We have showed that our inventory approaching a normalized level And this in total have given us a significant positive cash flow and strengthened our liquidity during the second quarter. Now Erik will take you through the numbers.

Eirik Haerem, CFO, Subtech: Yes. Let’s firstly look at the financial highlights before we dive into a bit more detail. The revenue in Q2 came in at NOK383 million. That’s a 13% increase compared to the same period last year and also up from Q1. We had a strong order intake of NOK445 million, increasing our backlog of firm orders to NOK567 million at the end of Q2.

We increased the gross margin to 41%. We spent NOK 112,000,000 in OpEx, leaving us with an EBITDA of NOK 44,000,000 equivalent to an 11% margin. So I’ll leave it to you, Kur, to dive a bit more into the details.

Kurt Eslam, CEO, Subtech: Yes. And the revenue for the second quarter ended at million. This is a 13% increase from the second quarter last year. And it’s important to notice that the second quarter last year was a really strong quarter. It was in fact the strongest quarter in the entire 2024.

So that show how strong this quarter is because the second quarter twenty twenty five is the strongest second quarter ever for Subtech. But also the order intake was increasing by 30% compared to the second quarter last year. And that leaves us with a backlog of $567,000,000 at the end of the quarter. And this gives us a great visibility for the sales in the upcoming quarters in 2025.

Eirik Haerem, CFO, Subtech: So let’s go into the gross margin in a bit more detail. The gross margin increased with two percentage points compared to the same period last year and also compared to Q1 this year. The growth in the gross margin is driven by a couple of key factors. One is that we started to realize lower cost of production in the charges delivered during the quarter. And the second factor is product mix.

We now have started to deliver Saaptic Go II in a higher volume and Saaptic Go II has a higher margin compared to Saplec Go. And the sum of these two effects contributed to the increased gross margin. When we look ahead, we expect to deliver a continued strong gross margin. Okay, let’s look at EBITDA. Million EBITDA in the second quarter is a record quarterly EBITDA for Saptec.

You can see that the EBITDA increased with 29% from Q2 last year, and this demonstrates the scalable business model we have. We are now able to grow EBITDA at a higher rate than our top line. I’m going to also show you the LTM EBITDA development. As you can see on the graph, the LTM EBITDA has been growing steadily over time. This demonstrates that we’re able to drive EBITDA over time and to create value.

As we move forward, we expect to continue to increase EBITDA and that this graph will increase to will continue to increase. This is driven by the strong order backlog and exciting sales pipeline, the continued outlook for strong gross margin and that we have control of the costs.

Kurt Eslam, CEO, Subtech: This is probably the most important slide in this presentation. This show the strong EV sales growth in Europe in the second quarter. As you can see, the growth in plug in weaker sales in the second quarter was increasing by 27% compared to the second quarter last year. And as you remember, SUBTECT had in the same period an increase in order uptake by 30%. So this shows that we are following the market and above the market increase.

And this slide also showed a great potential in the markets since major markets like Germany and United Kingdom have a really high increase in sales of plug in weakness in the second quarter. This is really positive for Sapdig going forward. We will now take you through how we execute on our strategy. First of all, we build on success in our core markets. And then we also accelerate the rollout of new products and new feature to meet the demand in the market and the new regulation coming up for our industry.

We expand in major markets and all the time we optimize our cash flow. When we look at the core market, we see that the monthly Saabtec installation is now approaching almost 20,000 installation each month. And if you look at the last twelve months, we see an increase of 9% when it comes to Subtech installation. This is really important because this show that all our deliveries is being installed and not ending up as an inventory within our distribution channels. And we are ramping up the production of a new product, both the Subtech Go II and the Subtech Pro Ice Ice.

As you can see, we’re ramping up slowly. And this is deliberate because safety and quality is the first priority for Subtech. And we don’t want to rush the production ramp up, so we risk to deliver products we get in return. So we have successful ramp up slowly, and we have now a steady production for 6,500 units of our new products each month. But we have higher capacity, so if needed, we can ramp up even more very quickly.

And we expand into major new markets. When we look at major markets like the Benelux, France, UK and Germany, we saw an 84% growth in the second quarter compared to second quarter last year. And we are building new partnership for the future in these major countries. In this picture, we show the partnership we have together with Octopus Energy and BYD in UK. Octopus Energy will deliver a BYD car with sub tech charger and free energy for charging this car for lifetime for a price of GBP $2.99 per month.

This is a game changer in the sales of EVs in The UK and they plan to launch this bundle in the fourth quarter and this will have a positive impact for Subtech going forward in The UK market. But we are also gone into other major partnerships in these markets during the second quarter. Okay. So let’s look at our cost base. We have over time last year,

Eirik Haerem, CFO, Subtech: year stabilized and a our OpEx spend. As you can see on the graph, we have been spending from around NOK 100,000,000 to NOK 120,000,000. As we move forward, we continue to focus on increasing sales to grow in the major markets. We also focus on innovation to stay competitive in a fast moving EV charging business. In the second quarter, we had a somewhat higher OpEx compared to the second quarter last year.

That said, we have control and we anticipate a stable OpEx development going forward. And we believe now that we are right sized to be able to drive the top line significantly without adding many new employees. Okay, over to our inventory situation. We have now for the fourth consecutive quarter reduced the inventory. In the second quarter, we reduced inventory with NOK68 million.

This is according to our plans and also as communicated earlier to the market. We are now approaching the target level of around NOK 200 to 300,000,000 in inventory, and we expect this normalization to happen during the second half of twenty twenty five. And then last, but certainly not least from my side today, let’s talk about cash flow and liquidity. We delivered a strong cash flow in the second quarter, driven by profitable earnings and by the inventory reduction. We added NOK139 million in liquidity, bringing the total to NOK466 million at the end of Q2.

We had a net cash position of NOK166 million. And in sum, we now are in a robust liquidity situation to navigate future uncertain market situations if that’s to occur. Looking ahead, we expect to continue to build a higher liquidity, also boosted by the normalization of the inventory.

Kurt Eslam, CEO, Subtech: And to summarize the second quarter, we have increased revenue, we have increased the gross margin and we have increased the EBITDA compared to the second quarter last year and compared to the first quarter this year. Same time, we have a really strong order intake and we have now a solid backlog visibility for delivering the rest of 2025. We are scaling up our new product deployment and we are ramping up the sales in major markets and we expect a higher impact from this sales in the new market in the second half versus what we saw in the first half. And the inventory are now approaching a normalized level. And in total, we have a significant positive cash flow and we have strengthened our liquidity during this quarter.

So what about the outlook for Subtech? First of all and most important is that the European EV market growth is expected to continue. This is the main driver for the sales in Subtech. And Subtech have proven that we maintain a solid position in our core markets. And we have a really robust order backlog, provides operational stability going forward.

And we have a momentum in building sales in The Benelux, UK, Germany and France. So the continued outlook for is profitable growth, and we are really positive about the upcoming quarters and the rest of 2025. And I want to thank you all for supporting Saabtech, and thank you for following our journey. I look forward to meet you next time.

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