Release Date: February 26, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- u-Blox Holding AG (UBLXF, Financial) achieved a solid free cash flow of 10 million in a challenging 2024.
- The company exceeded its cost optimization program target, achieving total savings of 25 million instead of the anticipated 20 million.
- Gross margin improved significantly by almost 200 basis points in 2024, reflecting a strong focus on the locate business.
- u-Blox Holding AG (UBLXF) has a strong net cash position of 91 million, with no financial debt.
- The company is focusing on high-growth markets such as automated driving and mobile robotics, which are expected to drive future growth.
Negative Points
- Revenue halved in 2024 due to overstocking by customers and continued softness in the end market.
- The company had to make difficult decisions, including a 20% workforce reduction and phasing out the cellular business, which once contributed a third of its revenue.
- The automotive market outside of China showed weak performance, interrupting revenue improvement trends in Q4 2024.
- u-Blox Holding AG (UBLXF) reported a significant reduction in R&D capitalization, impacting reported R&D and EBIT.
- The company faced a challenging transition year in 2024, with losses and a lower operating leverage impacting financial performance.
Q & A Highlights
Q: On the locate business and your targets, does this include short range?
A: This model is locate only. β Unidentified_3
Q: What gives you confidence in expecting sequential improvements every quarter through 2025?
A: We see lower inventory levels at our customers and a significant elevation in order entry, indicating that the overstocking period is mainly behind us. Additionally, new projects are ramping up, such as robotic lawn mowers with satellite positioning. β Unidentified_3
Q: How much of the 60 million cash inflow from working capital improvements in 2024 was due to structural improvements versus shrinking business?
A: In the first half, the reduction was mainly from accounts receivable due to lower sales. In the second half, it was more about disciplined inventory management. The cellular phase-out will also allow us to harvest substantial inventory. β Unidentified_4
Q: How do you steer R&D spending after reducing cash spending by 10 million?
A: Profitability metrics are now emphasized across the company. We are stringent about which projects to pursue and act quickly if changes are needed. We have increased financial transparency to make faster decisions. β Unidentified_3
Q: Regarding the cellular phase-out, will there be a point when revenues from this business reach zero?
A: Yes, the phase-out means giving customers time to transition to the next generation, but it will come to a fixed end in 2027. β Unidentified_3
Q: What happens if you run out of cellular inventory and a customer still wants a product?
A: We would reorder the necessary chips from suppliers. There is no risk of not being able to fulfill customer demands if margins are attractive. β Unidentified_3
Q: What average annual price reduction have you factored into your 10% growth target?
A: The typical annual price reduction for these products is in the low single digits, in line with other players in the area. β Unidentified_3
Q: How does your market share compare to Broadcom and STMicroelectronics?
A: We are the clear number one in our target markets. Broadcom is not seen in our automotive or industrial customer base, indicating a significant gap to the next competitor. β Unidentified_3
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
