Release Date: October 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- SSH Communications Security Oyj (OHEL:SSH1V, Financial) achieved a 14th consecutive quarter with positive EBITDA.
- PrivX subscription sales grew significantly by 15.6% in Q3 and 25.7% year-to-date.
- The company secured NATO approval and Finnish authority approval for its NQX network encryption solution.
- SSH Communications Security Oyj is actively expanding its market presence with new partner agreements in various regions, including Central Europe and Asia.
- The company is at the forefront of implementing Quantum-Safe and post-quantum cryptography technologies, enhancing its competitive edge.
Negative Points
- Overall sales growth was moderate, with net sales increasing by only 1.5% in Q3.
- Cash flow from operations was negative EUR0.7 million, contrasting with a positive figure in the same quarter last year.
- There are delays in customer decision-making and project implementations, affecting revenue recognition.
- The cash position was notably low at the end of Q3, raising concerns about liquidity.
- Despite new partner agreements, the expected sales boost has not yet materialized, with some projects taking up to 18 months to convert into revenue.
Q & A Highlights
Q: Can you provide more details on the customer delays mentioned in the report, particularly how they are distributed across regions and if any large orders were pushed to Q4?
A: The delays are fairly generic and not specific to any region. Some are due to organizational, financial, or resource allocation reasons. While some deals have been postponed, they are not lost, and we expect many to materialize. Some customers prefer starting with a restricted pilot before full implementation, affecting revenue timing.
Q: Regarding the new partner agreements, when can we expect them to start contributing to sales?
A: The partnership process involves initial customer cases, formal agreements, and training. Some projects take about six months, while others can take up to 18 months to materialize into monetary terms.
Q: Is there any concern about cash flow and liquidity?
A: The cash position was low at the end of Q3, but measures have been taken to secure liquidity through operational cash flow. The cash position has improved since the end of Q3 and is expected to continue improving towards the end of the year.
Q: Is SSH actively looking for a new CEO, or will Rami Raulas be made permanent CEO?
A: This question cannot be addressed directly by Rami Raulas. He is committed to his role as Interim CEO, and any decision regarding the CEO position should be directed to the board.
Q: Can you comment on the progress with the NATO procurement agreement and its impact on market opportunities?
A: The NATO procurement agreement and approvals for NQX by Finnish authorities expand market opportunities in Europe and worldwide. Further steps are being taken to get solution-level approvals for NATO and Europe, enhancing the entire portfolio's market potential.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
