Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Qt Group PLC (QTGPF, Financial) reported a 23% increase in net sales, reaching EUR 53 million, with a strong EBITA margin of 35%.
- The company's license sales performed well, particularly in the USA and APAC regions, indicating robust demand.
- The QA business segment showed significant progress, contributing positively to the overall performance.
- The company successfully increased its headcount by 31 employees, focusing on strategic areas such as sales and R&D.
- Qt Group PLC (QTGPF) maintained a strong cash flow, with operating cash flow reaching EUR 28 million, and increased its cash reserves by EUR 6 million despite loan repayments.
Negative Points
- The European market showed sluggish performance, impacting overall growth compared to other regions.
- The automotive industry, a significant segment for the company, experienced a slowdown compared to the previous year.
- Maintenance revenues continued to decline year-on-year, although a slight sequential increase was noted.
- The company faces challenges in consulting services as customers tend to do more in-house work during economic slowdowns.
- Global economic uncertainties, including tensions between China and the USA and the war in Ukraine, pose risks to future growth.
Q & A Highlights
Q: Could you provide details on the large US license deal, including its size and customer sector?
A: The deal primarily involved developer licenses, and the customer is from a sector that produces large vehicles, but not cars. The deal size is in the millions, similar to previous large deals, typically around EUR5 million.
Q: How is the distribution license business performing, especially given the decline in automotive volumes?
A: Distribution license revenue is growing, albeit slower than last year, which was exceptionally good. The revenue comes from various sources, not just automotive, and we expect to meet our yearly expectations.
Q: Is there a risk that the second half could be softer than expected, impacting distribution licenses?
A: While it's difficult to predict, we are prepared to counteract potential slowdowns with developer license sales. However, the overall market remains strong, and we don't foresee a complete halt in our key regions.
Q: Regarding headcount, do you anticipate an increase in recruitment to match growth acceleration in the second half?
A: The current pace of recruitment is expected to continue. We are focusing on hiring in the testing business, but overall, the headcount increase will remain steady.
Q: Has the large US deal included quality assurance licenses, and was it a new customer?
A: Yes, the deal included quality assurance licenses, but it was not a new customer.
Q: How is the quality assurance business performing, and is growth coming from existing Qt customers or outside the ecosystem?
A: The quality assurance business is growing faster than Qt overall, with Squish selling well to existing customers and Axivion more to external ones. We aim for 30% of QA revenue to come from outside the Qt ecosystem.
Q: When will maintenance revenue start growing in line with developer license sales?
A: Sequential growth in maintenance has begun, and year-on-year growth should be visible next year, aligning with developer license revenue growth.
Q: What are the key assumptions behind the higher end of your guidance range, given the 18% H1 growth?
A: The higher end of the guidance depends on economic improvement and the finalization of larger deals. The timing of these deals is difficult to predict, but they could significantly impact growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
