Earnings call transcript: Techstep Q3 2025 sees revenue decline, stock rises

Techstep ASA revealed its third-quarter 2025 earnings, highlighting a 6% decline in revenue year-over-year to NOK 222 million. Despite the dip in revenue, the company reported a record-high net gross profit margin of 37%. The stock price responded positively, rising 3.28% to close at NOK 13.00, reflecting investor confidence in the company’s strategic initiatives and future outlook.

Key Takeaways

• Revenue declined by 6% YoY, but gross profit margin reached a record high.
• Stock price increased by 3.28% following the earnings release.
• Expanded into Spain and launched new strategic partnerships.
• Managed over 3 million devices across Europe.
• Anticipates significant growth in software and services in 2026.

Company Performance

Techstep’s performance in Q3 2025 was marked by a decrease in total revenues to NOK 222 million, a 6% drop from the previous year. However, the company achieved a net gross profit margin of 37%, an increase of 2 percentage points year-over-year. The decline in adjusted EBITDA from NOK 14 million to NOK 11 million, alongside a net loss of NOK 8.5 million, indicates challenges in revenue generation despite operational efficiencies.

Financial Highlights

• Revenue: NOK 222 million (6% decline YoY)
• Net gross profit margin: 37% (record high, +2 percentage points YoY)
• EBITDA adjusted: NOK 11 million (down from NOK 14 million last year)
• Net loss: NOK 8.5 million
• Annual recurring revenue: NOK 340 million (4% growth, all-time high)

Market Reaction

Techstep’s stock rose by 3.28% to NOK 13.00 following the earnings announcement. The positive market reaction can be attributed to the company’s strategic initiatives, including international expansion and new partnerships, which are expected to drive future growth. The stock’s movement is also notable as it approaches its 52-week high of NOK 14.95.

Outlook & Guidance

Looking ahead, Techstep anticipates accelerating partner agreements and exponential growth in software and services in 2026. The company aims to finalize the carve-out process of its OptiDev acquisition before Christmas and expects significant project rollouts in the first half of 2026. Techstep is positioning itself as a leading mobile and circular tech company in Europe.

Executive Commentary

• "We are on a mission and an exciting journey to become the leading European mobile and circular tech partner," stated Morten, CEO.
• "Our ambition is clear: continue to grow and gain market share in both channels and increasing our profitability quarter over quarter," Morten added.
• "We remain committed to our ambition of becoming the leading mobile and circular tech company in Europe," emphasized Morten.

Risks and Challenges

• Declining device sales due to expired public frame agreement.
• Ongoing investments in IT infrastructure and e-commerce platforms may impact short-term profitability.
• Market competition in managed mobility services is intensifying.
• Economic uncertainties in European markets could affect expansion plans.
• The successful execution of strategic initiatives is crucial for future growth.

Q&A

During the earnings call, analysts inquired about the strategic carve-out of OptiDev, which involves its mobile platform and rugged devices. Techstep also discussed a hospital digitalization project with Helse Sør-Øst, involving up to 50,000 devices, and ongoing negotiations for business divestment, indicating a focus on optimizing its business portfolio.

Full transcript - Techstep ASA (TECH) Q3 2025:

Morten, CEO, Techstep: Good morning, everyone, and welcome to our Q3 presentation, followed by a Q&A session. I’m today live from Bryne in Oslo with our CFO, Ellen, and we are ready to share our Q3 results with you, but also to inform you about our strategy, priorities, and execution going forward based on the potential divesting announcement we shared this morning. This is a strategic move we have been working on for some time now, as we want to sharpen our focus and invest more in our execution to become the leading mobile and circular tech partner in Europe. We will get back to more information about this carve-out process in a moment. Let me start by giving you a quick overview of Techstep.

We are a leading provider of managed mobility services in Europe, with dedicated and highly competent employees based in Norway, Sweden, Denmark, Poland, and since the end of Q3, we have expanded into Spain. We are highlighted by Gartner in their latest market guide as a recognized managed mobility provider, managing more than 3 million devices across Europe. We are proud of our European and global reach through our strong and growing partner ecosystem, and our commitment to security and sustainability is shown by our ISO certifications. Our goal is to help organizations operate more effectively, securely, and sustainably. Let me take you through some of the key achievements from this third quarter. Our annual recurring revenue is all-time high, with NOK 340 million, growing 4% year over year, primarily driven this quarter by our managed services.

Our net gross profit margin continued to grow, now at 37%, up two percentage points from third quarter last year, and for the 12th consecutive quarter, we delivered positive EBITDA adjusted. We look back on a solid commercial quarter with great momentum across business areas and our different market channels, with several new signings and milestones secured both with key partners and customers. We have reached an agreement with Helse Sør-Øst’s partner to roll out and manage up to 50,000 role-based mobile devices within the Southeast region to enhance patient care and increase efficiency. This agreement will replace the current interim agreement at the turn of the year. During Q3, we increased our focus on expanding and strengthening our partner ecosystem, and we can now see the investments paid off.

I would like to highlight the strategic partnership with Pradeo to bring market-leading mobile threat defense capabilities fully embedded into our Essentials Endpoint Management platform, as well as the newly awarded contract with Fonua, entering new markets with our device lifecycle management platform in Ireland and the U.K. The strategic partner agreement with Telia is now operational, and market launch has been kicked off with campaigns and customer outreach. The last partnership worth mentioning is with the welfare ISV Tellu, where we will deliver a fully managed device as a service to their customers. Last but not least, we have, together with the board and during strategy sessions, been looking at how we should sharpen our focus and position for further growth by divesting a part of our current business. I will start with a business update and inform you about this strategic move.

Let me explain the strategic business carve-out we are undertaking. Techstep is transferring customers and operations related to the former OptiDev acquisition and the business-critical mobility solution area to a new company. This includes the transfer of related software, hardware, and services, and employees connected to this area. The main goal is to sharpen our focus, strengthen our financial position and flexibility, as well as improve operational efficiency. This transaction supports our mission to be a leader in mobile and circular technology, making Techstep more focused and streamlined. We will continue to focus on managed mobility services, enabling office and frontline workers to optimize their work. The parties have entered the final phase of this process, finalizing the due diligence and final negotiations. An important aspect when considering this carve-out has been to find a potential buyer with a relevant profile, strong competency, and complementary capabilities.

Lexit Group and their subsidiary IDNet are a great match to this profile, which means that both customers and employees have a safe landing place for both the continuation and further development of the solution portfolio, innovation, and value creation. In short summary, by divesting this business, Techstep will be able to pay off our long-term debt, can invest more effectively in its core business, and accelerate the execution of a clear strategic direction. We are on a mission and an exciting journey to become the leading European mobile and circular tech partner for our customers and partner ecosystem. We strongly believe in our core strategy and the growth journey we are on, based on two distinct channels to the market.

The Blue Foundation representing our direct business across Nordics, where our main goal is to deliver more end-to-end mobility services with software, hardware, and services, which will increase our margins and at the same time create more stickiness and become more relevant with key customers. The purple layer on top, representing our indirect channel with sales partners and product partners, is all about scaling with high growth in volumes and expanding into new markets and customer segments. Our ambition is clear: continue to grow and gain market share in both channels and increasing our profitability quarter over quarter. On this slide, I want to highlight our commercial focus and priorities for both our indirect and direct sales channels. Let’s start with our indirect sales. Our approach here is to scale our business through a strong partner network.

By working closely with partners, we can expand across borders, reach new markets, and deliver our solutions faster. We are standardizing our processes and platforms to help partners ramp up quickly and deliver value to their customers. A key priority is to include integrations, automation, and when needed, managed services as part of our offering, so our partners can provide complete solutions, not just products. This strategy allows us to increase speed, improve time to value, and help our partners succeed. For direct sales, our main focus is on managed mobility services. We aim to go deeper with our customers, becoming more relevant by offering lifecycle management, security, and a full suite of software, services, and devices. We want to increase quality and create more value for our customers, especially in areas where our expertise is needed, like the digitalization of healthcare and all kinds of frontline work scenarios.

We also leverage our partner network to strengthen our position and win new business. In summary, our commercial strategy is clear: go wider and scale through partners in indirect sales, go deeper and become more relevant to customers in direct sales, focus on quality, speed, and delivering complete managed mobility solutions. These priorities position Techstep for sustainable growth and increased profitability in the coming years. As repeated, our core focus is on the managed mobility services market. This market is growing fast, driven by more mobile devices and the need for secure, efficient management. We help customers manage the entire device lifecycle, from procurement to deployment to security support and recycling. Our solutions allow IT teams to shift from device administration to driving business innovation. We believe this positions Techstep for continued growth and a strong value creation. Let me give you some recent examples.

Earlier this year, Techstep announced the extension of our exclusive frame agreement to deliver mobile devices, software, and services to the Norwegian health sector. We are currently working together with Helse Sør-Øst’s partner to roll out and manage thousands of clinical role-based mobile devices in the Southeast region, enhancing patient care and increasing efficiency. This covers the complete managed health solution, including devices, lifecycle management, deployment support, and advisory services. The first mobile-first hospital in Drammen is now live, serving more than 4,000 clinical workers, sharing 3,000 managed health devices. We are proud to be trusted by Helse Sør-Øst’s partner and hospitals across the region and to play a key role in the digitalization of the healthcare sector. Our ambition is to deliver fully managed mobility services for all office and clinical devices, serving more than 82,000 users over the next years in the region Southeast.

Moving on to partnerships, we have formed a strategic partnership with Pradeo, a European leader in mobile security. Together, we deliver an EU-compliant solution that combines Techstep Essentials (MDM) and Pradeo MTD, so customers can manage, protect, and comply with one secure platform. This technology is developed, operated, and supported entirely within Europe, giving organizations confidence in transparency and trust. Customers benefit from flexible deployment options, including on-premise, private and public cloud, tailored to their security needs. This partnership and the CCN certification in Spain mark another step in Techstep’s European expansion, building on our commitment to secure, compliant, and scalable mobility solutions. This is a strong signal to the market that Techstep is ready to support organizations across Europe with best-in-class security and compliance.

Another great example: Techstep is expanding into new markets through a partnership with Fonua, a leading IT and mobility services provider in Ireland, with strong growth ambitions and a clear strategy to scale in the U.K. market. Our device lifecycle management platform will be integrated with Fonua’s core offerings, enhancing value and user experience for their customers. The first customers are planned to onboard already in December 2025, with more to follow in the coming quarters. The commercial model includes a license per device per month, supporting scalable growth. Fonua is a trusted provider of mobile devices and services to operators in Ireland and also delivers mobile management solutions to a significant share of large international technology companies based in Dublin. This agreement fits perfectly with Techstep’s strategy to expand our market reach in Europe and globally, helping partners digitize manual processes and emphasizing circular economic values.

With this partnership, Techstep enters new markets and brings highly scalable solutions to new customers. The strategic partner agreement with Telia is now operational, and the market launch has been initiated with targeted campaigns and customer outreach. As a part of this collaboration, Telia has introduced MobileVakt to its enterprise portfolio, a comprehensive mobile protection solution designed to safeguard employees’ devices against cyber threats such as phishing, ransomware, and data breaches. This launch represents the first step in a long-term strategy where Telia integrates Techstep’s capabilities and services into its value chain. Built on Techstep’s expertise in mobile security and device management, MobileVakt is seamlessly embedded with Telia’s holistic offering to business customers, reinforcing both companies’ commitment to delivering secure and resilient digital workplaces. Moreover, Techstep has signed a partnership with Tellu, a Norwegian technology company specializing in welfare technology for healthcare and social services.

Together, we deliver a complete device-as-a-service solution for digital home care, enabling digital home visits for patients across Norway. This partnership allows municipalities and care workers to increase efficiency, reduce travel time, and be more flexible and available for their patients. Techstep provides everything from tablets-as-a-service, lifecycle management, device staging and configuration, management with our Essentials (MDM), and aftermarket services. First orders have already been placed, and we expect rapid growth as Tellu expands in new and existing municipalities. This is a great example of how Techstep can team up with industry specialists to deliver comprehensive, ready-to-use solutions that increase speed and agility in healthcare delivery. With that, I’ll pass it on to Ellen, who will walk you through more of the financials from Q3. Thank you, and good morning, everyone. I’ll take you through the third quarter results.

Total revenues in this quarter were NOK 222 million, which is a decline of 6% year over year. This is consistent with the development since the beginning of this year, where we have seen a decline in revenues year over year each quarter due to the decline in device sales. This is entirely due to the expiration of the large public frame agreement for devices in Norway at the end of last year and represents a year-over-year effect for 2025 isolated. This frame agreement was unprofitable, and Techstep chose not to participate in the new tender, where the potential for earnings was very low. At the same time, our net gross profit margin has increased, and in this last quarter, we saw a record high margin for any quarter over the last few years at 37%.

Within our other revenue streams, advisory and services show a considerable 13% increase in the quarter, driven by growth in higher margin managed services, but mainly by substantial transactional sales of lower margin third-party software. Revenues from our own software were slightly down, with 2% in the quarter. Although there is growth in our core platforms and product solutions, such as Lifecycle and Essentials (MDM), we are seeing some churn on the telecom expense category linked to the historical agreement with Telenor. This decline has been expected, and we have now made the platform operator agnostic, and we can offer the telecom expense capabilities to all major operators in Norway. Net gross profit in the quarter was NOK 81 million, about NOK 500,000 down from last year, as profits from the high-margin products and services outweighed the decline in device volumes.

EBITDA adjusted was NOK 11 million in the quarter, down from NOK 14 million last year. This is due to slightly growing costs in the quarter, about 4% year over year, as we this year are investing heavily in our IT infrastructure, ERP, and e-commerce platforms. These investments will both make us more cost-efficient but also enable an improved customer experience when we complete the projects in 2026. Net loss in the quarter was NOK 8.5 million after amortization of intangible assets of NOK 17 million. Out of the total amortization this quarter, NOK 7.4 million is amortization of purchased technology and customer contracts from previous M&As. These assets will be fully amortized within the next few months, resulting in an amortization level of about NOK 10 million per quarter in the coming years. The net gross profit in the third quarter decreased by 1% year over year to NOK 81 million.

This is below our expectations, as the realization of the product-partner contracts, as well as the rollout of devices under the Syku’s partner corporation, has taken much longer time than we anticipated going into the year. However, there are positive movements within our revenue streams and product solutions. Profits from our own software increased with 4% year over year, as the European partner sales expansion and licenses for the Syku’s partner agreement are slowly adding on. The quarter was negatively impacted by the decline in the telecom expense management solution. Net gross profits from the advisory and services category were in line with last year, despite the increase in revenues, as third-party software licenses with lower margin constituted a larger share of the revenue growth.

Looking at the performance per market in the third quarter, we see that the Norwegian market saw a decline in revenues of 11%, but a slight growth in net gross profits due to the development in device sales year over year, as I mentioned earlier. The Swedish market delivered relatively stable revenues compared to last year, characterized by lower device volumes with improved margins and higher third-party software sales with reduced margins. Overall, this shift in product mix resulted in a modest decline in net gross profit year over year. The Polish European market performed well in the third quarter, but the level of perpetual licenses in the quarter was less than expected, resulting in stable revenues year over year. However, the pipeline has been building up, and we leave the quarter with expectations of accelerated growth within the next quarters.

The recurring revenue contracts have developed positively during the quarter, and total annualized revenues are now at NOK 340 million, which is all-time high for Techstep. As mentioned, our telecom expense platform experienced churn from the partner agreement with Telenor in the quarter, a development we will see going forward as well. This resulted in a slight decline in recurring owned software contracts, although our other software is performing well. The strong improvement in value for the advisory and services contracts is enlarged due to a renewed and expanded contract with Equinor, effective from Q3, in addition to other smaller new implementations of our managed services. We have, throughout the year, anticipated a substantial growth in our partner agreement, and we are working to add further partners to our portfolio.

Although the expected growth has taken much longer time than anticipated, we see customers are continuously added to the platform, and we are upholding our strategy and firm belief in the longer-term exponential growth within this area. Our LTM net gross profit is NOK 350 million, a slight increase from LTM at the end of Q3 last year, and our LTM EBITDA adjusted has increased with 34% year over year, resulting in an EBITDA conversion of 11% from net gross profit for Q3 LTM. We are continuously focusing on cost optimization, but we are also investing in efficiency-improving initiatives. The European e-commerce investments we are currently running will result in an even lower cost base in the coming years. However, in the current project period and until finalization halfway into 2026, the cost level will temporarily be higher.

At the same time, we are continuing our cost optimization and right-sizing of the organization. Our operating cash flow in the third quarter was NOK -20 million after investments in device as a service, compared to NOK 18 million in the third quarter last year, as the change in working capital this last quarter was weaker than last year. This is due to both a very strong development in Q2 this year, driven by payment terms on several significant contracts, as well as complications from our ERP implementation, which resulted in reissue of several customer invoices, an error which is now fixed. The CapEx in the quarter was slightly over last year, as we are investing more of our resources into our software development towards the larger strategic partner channel initiatives, and is now at the level we should expect going forward.

Net cash flow in the quarter was minus NOK 8 million, resulting in a cash position at the end of the quarter of NOK 13 million. In addition, we have undrawn credit facilities available in the amount of NOK 25 million. For our financial position at the end of the quarter, we have a total of NOK 944 million in non-current assets, where of goodwill constitutes NOK 638 million, and purchased technology and customer contracts are NOK 7 million. These assets have been amortized with about NOK 30 million a year, but from next year, they will be fully amortized. Our net interest-bearing debt at the end of the quarter was NOK 155 million, increased from NOK 108 million at the end of the year and up NOK 8 million since Q3 last year, as we have drawn more on the credit facilities this quarter.

As Morten mentioned, the anticipated divestment will result in strengthening not only our operational efficiency but will also strengthen our financial position, as Techstep’s debt structure will be completely revised after the transaction is completed. I will send the word back to Morten, who will sum up this presentation. Thank you, Ellen. To sum up, while we are not satisfied with our financial results for the third quarter and will not reach our full-year targets, we see strong commercial momentum in both our indirect and direct sales channels. Our pipeline is promising, and we are building valuable partnerships across Europe, especially for our Essentials and Lifecycle platforms. Some project rollouts have been delayed, but these are now scheduled for the first half of 2026, and we expect to see positive effects as the market matures.

We are in the final stage of our carve-out process, which will strengthen our focus and financial position going forward. Looking ahead, we expect acceleration in partner agreements and exponential growth in software and services as we move into 2026 and beyond. We remain committed to our ambition of becoming the leading mobile and circular tech company in Europe, with steady execution and a clear focus on profitability. We will come back with more information when the carve-out process is finalized. Thank you for your attention. We will now open for questions. Yes, we’re back and going through the questions coming in. First one here is not a question, it’s a comment, but nice to read. Congratulations with the sale that we hope will soon be signed. This will remove the risk of the funding needs that have been hanging over the company for a while. Yeah.

Thank you for the comment. I just want to emphasize that we are now entering the final phase of the due diligence and final negotiations. We will get back with more information, but as I said, our ambition is to get the agreement signed before Christmas. Okay. Next one. Which business area did you carve out? What were they actually doing? What was their business? Yes, this solution area is mainly related to the OptiDev acquisition that Techstep did at the turn of 2020 to 2021. It is the related software, a true mobile platform, and with related devices, mainly rugged devices and services to that solution area. That is what we are carving out now. We have found a potential buyer which has a very good fit with that solution area, with a lot of competency and complementary solutions.

We are very happy for both the existing customers but also our employees to be a part of a hopefully then new company with a lot of focus in this business-critical mobility area. Okay. Another question here. You’re going to digitalize all the hospitals in Helse Sør-Øst, 50,000 clinical devices in total. How long time before everything is rolled out? Good question. It is not only Techstep that will do this, but we are teaming up with Sykehuspartner, so the IT service provider within the Health Southeast region, to do this. The plan expressed by Sykehuspartner and the health region is to roll out up to 50,000 mobile devices in the coming years. How fast this can be done is up to both funding and politicians and, of course, the hospitals and Sykehuspartner themselves.

We are ramping up, and we have seen a lot of interest from the different hospitals. We have now showed that we can go live with large installations like Radium Hospital and the new hospital in Drammen. I expect we have high expectations for 2026 and 2027 to roll out thousands and tens of thousands of devices. Okay. I think that was it of questions. Thank you, everyone, for attending. You can always submit questions by using our investor relation email. Thank you for listening and have a great Thursday.

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