Tecnotree Corporation Stock Exchange Release 29 April 2025 at 9.00 EEST
Stable Performance with Improved Free Cash Flow
Q1 Results
· Net sales of EUR 16.9 million (16.3) +3.7% Year on Year, In constant
currency,
EUR 17.1 million, +4.6% Year on Year.
· Operating result of EUR 4.5 million (4.4) +2.3% Year on Year.
· Operating margin of 26.9% (27.2%).
· Foreign exchange losses reduced to EUR 1.4 million (1.7).
· Net result EUR 1.5 million (1.6) -5.6% Year on Year.
· Gross cash flow from operations EUR 6.4 million (1.0).
· Positive free cash flow EUR 1.0 million (-4.7).
· Earnings per share EUR 0.1 (0.1).
· Order book at the end of the period EUR 70.3 million (74.8).
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Key figures, MEUR 1-3/2025 1-3/2024 1-12/2024
Net sales 16.9 16.3 71.6
Operating result 4.5 4.4 23.8
Result before taxes 2.3 2.1 12.8
Adjusted result for the period [1] 1.5 1.6 15.6
One-time items 0.0 0.0 -7.3
Result for the period 1.5 1.6 8.3
Earnings per share, basic, EUR 0.1 0.1 0.5
Order book 70.3 74.8 79.6
Gross cash flow from operations 6.4 1.0 21.3
Free cash flow 1.0 -4.7 -1.8
Change in cash and cash equivalents 1.1 -4.4 -4.0
Cash and cash equivalents 18.0 16.4 16.8
Equity ratio % (Equity/Total Liabilities) 67.5 65.9 66.7
Debt Equity ratio % (Debt/Equity) 4.8 6.1 4.2
Personnel at end of period 726 892 758
1) Adjusted result for the period = result before one-time items.
Unless otherwise stated, all figures presented below are for the financial
period 1-3/2025 and the figures for comparison are for the corresponding period
in 1-3/2024.
Guidance for 2025
· Net sales are expected to grow by low to mid-single digit percentage in
constant currency terms.
· Operating result margin expected to see margin expansion of at least +200bp
(2%).
· Free cash flow guidance > EUR 4 million for the full year.
· Capex as a percentage of net sales is targeted at 10-12%.
· Receivable days are expected to range between 100-140.
· Dividend pay-out policy targets 10% of free cash flow.
· Foreign exchange exposure to frontier country risk will be reduced to 10-15%
within three years.
Assumptions for 2025
· Industry analysts forecast that the long-term growth of the Business Support
Systems (BSS) industry is forecasted to grow at +2.1% per annum 2022-2027.
However, 2025 is forecast to be negative growth year. Despite this, Tecnotree
still sees top line growth due to anticipated significant market share gains and
the current order backlog.
· The company will continue its focus on increasing license sales, while
evolving its delivery model to an Annual Recurring Revenue (ARR) model and
continue to increase it in 2025. This will ensure that the company will have
more predictable and stable quarter on quarter net sales.
· The cost optimisation programme that commenced in 2024 will continue to
provide margin benefits in 2025 and beyond.
From CEO's Desk:
Resilient start of Q1 - 2025 with enhanced Cashflow performance
The first quarter of 2025 represents an encouraging start to the year, marked by
stable financial performance and significant achievements in our strategic
initiatives. I am particularly pleased to highlight our positive free cash flow
generation of EUR 1.0 million, a substantial improvement from the negative EUR
4.7 million in the same period last year, demonstrating tangible progress in our
cash flow optimization strategy.
Net sales increased modestly by 3.7%, underpinned by strong growth in license
revenue. This strategic shift toward high-margin licensing agreements is aligned
with our continued focus on predictable, stable revenue streams, primarily
through our Annual Recurring Revenue (ARR) model. Our efforts in cost
optimization have also supported profitability, reflecting effective execution
against our margin expansion targets. We will continue our focus on cost
optimization going forward. We have also reduced CapEx to Sales (product
capitalization) to 14.7% from 20.8% in Q1 2024. This is facilitated by the fully
invested nature of our market leading product stack.
Our order book reduced by 6.0% to EUR 70.3 million from EUR 74.8 million last
year, which reflects the timing of contract deliveries in the quarter, as well
as execution of our strategy to alter our geographic mix. Geographically, we
have significantly increased our order backlog in Europe & Americas to EUR 12.1
million from EUR 8.7 million compared to Q1 2024, demonstrating success in our
market diversification strategy and stronger presence in mature markets, while
strategically reducing our exposure to frontier markets MEA & APAC regions. As a
result, the percentage of revenues booked in volatile currencies in Q1 of 2025
has dropped to 15% from 45% in Q1 of 2024. Our bid pipeline remains strong and
we expect to see the order book bounce back in the near term.
DSO days have significantly reduced to 155 days from the comparative quarter Q1
2024 of 216 days. This is one of the key contributors of a positive free cash
flow for the quarter. By improved collections, we have been able to reduce trade
receivables by EUR 7.4 million compared to Q1 2024.
Our brand equity continues to grow, with TMForum and Gartner recognitions for
innovation in the areas of AI, 5G network monetisation, cloud services.
Tecnotree is among the few ODA (Open Digital Architecture) Hero's as we have
been agile in adopting frameworks for enterprises and consumers. With a
confident outlook for 2025, including targeted margin expansion and growth in
recurring revenues, Tecnotree is well-positioned for sustainable long-term value
creation.
We remain confident in our guidance for the full year 2025, particularly
encouraged by our early success in achieving positive cash flow.
Thank you to our dedicated employees, customers, and investors for your
continued trust and support as we strengthen Tecnotree's foundation for
sustainable growth and shareholder value.
Financial Performance
Tecnotree has successfully transitioned toward generating positive free cash
flow, driven by disciplined cost management and improvements in receivables
collections. License revenue notably increased due to strategic deals. The
decline in the order book was due to a deliberate reduction in frontier markets,
while Europe & Americas segment saw strong order intake growth, indicating
successful geographic diversification.
Further information
Padma Ravichander, CEO, tel +97 156 414 1420
Indiresh Vivekananda, , CFO, tel +971 56 410 8357
About Tecnotree:
Tecnotree is a global provider of AIML and digital solutions for the management
of services, products, customers and revenue for Communications Service
Providers. Tecnotree helps customers to monetise and transform their business
towards a marketplace of digital services. Together with its customers,
Tecnotree empowers people to self-serve, engage and take control of their own
digital life.
Tecnotree is listed on Nasdaq Helsinki (TEM1V). For more information, please
visit
www.tecnotree.com (https://eur03.safelinks.protection.outlook.com/?url=http%3A%2F
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