Nexteq plc Reports Significant Decline in Revenue and Profits for 2024
Why we think this is bad
Nexteq's financial performance in 2024 shows significant deterioration across key metrics. Revenue declined by 24% to $86.7m, with both Quixant and Densitron segments experiencing substantial decreases. More concerning is the sharp drop in profitability, with adjusted profit before tax falling 67% to $4.8m and reported profit before tax down 87% to $1.7m. Margins have compressed considerably, with the adjusted profit before tax margin more than halving to 5.5%. While the company maintains a strong cash position, operating cash flow has decreased, indicating potential future challenges. The outlook remains uncertain, with management expecting material revenue growth only from 2026 onwards. Despite long-term growth targets, the near-term headwinds, including customer destocking and economic uncertainty, pose significant risks to the company's performance.
Key Points
- Group revenue down 24% to $86.7m
- Adjusted profit before tax decreased 67% to $4.8m
- Reported profit before tax fell 87% to $1.7m
- Adjusted diluted EPS down 72% to 5.08c per share
- Gross margin reduced by 40bps to 35.9%
- Net cash increased 4% to $29.1m
- Operating cash flow decreased to $13.0m from $19.8m in 2023
- New three-year strategy targeting revenue of $108m-$120m by end of 2027
- Material revenue growth expected from 2026 onwards
- Ongoing challenges from customer destocking and economic uncertainty
Summary
Nexteq plc, a leading technology solutions provider, reported challenging results for 2024. Group revenue fell 24% to $86.7m, with both Quixant and Densitron segments experiencing significant declines. Adjusted profit before tax dropped 67% to $4.8m, while reported profit before tax plummeted 87% to $1.7m. Margins compressed substantially, with adjusted profit before tax margin falling to 5.5% from 12.9% in 2023. Despite these challenges, the company maintained a strong net cash position of $29.1m. Nexteq is implementing a new three-year strategy, targeting revenue of $108m-$120m by the end of 2027. However, the near-term outlook remains uncertain, with material revenue growth expected only from 2026. The company faces ongoing challenges from customer destocking and economic uncertainty, particularly in its core gaming and industrial markets.