u-blox Holding AG (UBXN.SW) Earnings Call Transcript

Ladies and gentlemen, welcome to the u-blox Q1 2025 Trading Update Conference Call and Live Webcast. My name is Sandra, the Chorus Call operator. [Operator Instructions] The conference is being recorded. The presentation will be followed by a Q&A session. [Operator Instructions] At this time, it's my pleasure to hand over to Rafael Duarte, Head of Investor Relations at u-blox. Please go ahead, sir.

Thank you, Sandra, and welcome, everyone, joining us today. As usual, I'm here with our CEO, Stephan Zizala; and CFO, Camila Japur from our offices in Tel Aviv. We prepared a few slides on our Q1 trading update, which we will go through and then open for questions you may have. Handing over now to Stephan for the slides.

Thank you, Rafael. Welcome, everybody. Well, nowadays, there's a little good news, and therefore, I'm even more happy to share good news from u-blox today. Let's go on Page #2. We anticipated that in 2025, we would get out of the severe overstocking situation we experienced in 2024. Indeed, revenue in the first quarter 2025 confirms this assumption. We saw a revenue increase of 26% year-over-year on a group level. In Locate, we even achieved a 43% year-over-year revenue increase. Despite the low base in quarter 1 2024, our strong position in structural growing applications like automated driving is the main reason for this. On this chart, you see that also our Short-Range revenue is on a strong recovery path, while our Cellular revenue development remains as weak as we expected. Let's go to the next page, which is #4. There is more good news. We continue to significantly improve our profitability. Our stringent cost-saving measures and discipline show results. Within 12 months, on a group level with losses by a factor of 5. If we exclude our cellular business, our cash EBIT was positive in quarter volume. This is driven by Locate, while Short-Range is still expected to break even in the second half of 2025. We used this challenging environment as a catalyst to accelerate u-blox transformation into a more focused and resilient company. And needless to say, that resilience has an even higher value today than yesterday. In summary, we achieved the turnaround and are looking forward to further growth. This will make our P&L very beautiful. Let's come to the guidance for quarter 2 2025 on Page 5. We started 2025 with revenue growth and a significant improvement in profitability. We expect the positive momentum to continue into the second quarter, when we target to reach a positive cash EBIT excluding our cellular business. Our sharpened focus on Locate and the stringent execution of our company transformation pays off. For the business excluding cellular u-blox expects revenue of CHF 60 million to CHF 70 million in the second quarter of 2025. This reflects an increase of 15% to 35% versus the same quarter in 2024 and a gradual increase of up to 16% versus the first quarter 2025. Based on this top line, our cash EBIT margin is expected to be between 0% and 10%, again, excluding our Cellular business. You see our P&L is on a good recovery path. In the last weeks, we have faced a significant U.S. dollar headwind as all of us know. For the guidance, we used a rate of CHF 0.82 per U.S. dollar. At constant exchange rates, revenue would be about CHF 6 million higher and cash EBIT would be 4 percentage points better. Of course, we are mindful of how global trade policy changes could affect our markets. The cost base adjustment we carried out in the last 12 months, put us in a very solid position. We continue to monitor developments closely and maintain our strict cost discipline. To conclude on Page #6. We started our transformation journey in 2023. Many of the changes we have initiated have become visible. And I'm happy that now the new u-blox is gaining traction. We go after the right growth markets like automated driving and mobile robotics, We are the undisputed market leader in positioning based on our unique capabilities, and we doubled down on this. And finally, we see us fully on track to creating sustainable value in line with our strategic theme focus Innovate, execute. Thank you, and looking forward to your questions.

[Operator Instructions] It seems that we have no questions from the phone, sir. Back over to you for any closing remarks.