XPLORA TECHNOLOGIES Contents
Q1 2024 Operational Highlights | 11 |
Outlook | 13 |
Xplora Technologies Group | 14 |
Profit & Loss | 14 |
Balance Sheet | 15 |
Cash flow | 16 |
Notes | 17 |
About Xplora
Xplora was founded with the mission of giving children a safe onboarding to digital life and encouraging a better balance between screen time and physical activity.
Our product portfolio includes smartwatches for children, connectivity (mobile subscriptions) and premium services that encourage physical activity through an online platform where children can convert steps into awards. Our broad portfolio of connected products and services allows families to connect with their loved ones and delay children's exposure to digital platforms, while increasing their everyday activity. Headquartered in Oslo, Xplora has offices in four Nordic countries, Germany, Spain, the US, and the UK, where our engineering team is based. Additionally, the Company has Mobile Service Provider (MSP) operations in 9 markets.
Building on our success in the kids' market, Xplora is now expanding its reach into the senior segment. Complementing this expansion, our SaaS division is enhancing the company's offerings with SIM - and software services for both B2B and B2C markets, broadening our reach and diversifying our impact.
Q1 FAST FACTS
Total revenue
NOK 119m
Service revenue
NOK 63m
MSP
In 9 markets
107 FTE
Page 4 | Q1 2024 |
The Quarter at a Glance
MESSAGE FROM THE CEO
The first quarter of 2024 has set a strong foundation for the remainder of the year. Despite traditionally being our softest quarter due to seasonal factors, we are pleased to report that Xplora concluded Q1 with total revenue reaching NOK 118.7m, and a positive EBITDA of NOK 1.6m. Our performance this quarter reflects significant strides in both financial and operational areas, building on the strong foundation laid in 2023.
Financially, this period was marked by growth, with total revenue increasing by 24% from the same quarter last year. Our focus on driving profitability through the right product mix and service conversion resulted in a 12% increase in device revenue, even with a slight reduction in unit sales. As expected, due to seasonality, our subscription base saw a flat development from the previous quarter but demonstrated a year-over-year increase in service revenue of 38%. These achievements align with our continued focus on increasing Average Selling Price (ASP), improving the quality experience and lifetime of our products. Notably, our Average Revenue Per User (ARPU) has remained at favourable levels, further supporting our revenue growth.
Operationally, Q1 was marked by strategic advancements and a continued emphasis on attentive cost management. Key highlights include a new partnership with Freenet AG, a leading German telecommunication and digital service provider, and a launch of an Amazon exclusive brand watch, XKidzi.
Being a dominant player in the market for kids' smartwatches, we are always working on finding ways to drive the category forward while continuing to strengthen our position. As part of our price strategy and focus on margins and profitability, it's important to continue to build our brand to increase price points. With this in mind, I would like to highlight that this quarter our marketing team has launched our first global brand campaigns with the concept «Empowering the
Next Generation». Throughout 2024 we will launch a series of videos using engaging storytelling and visit local markets to connect with our younger audience on their premises and increase brand awareness.
Our goal for 2024 is clear - we aim to achieve an annual growth in line with the previously stated CAGR of 15% for the kid's
wearable industry. Our focus will be on selling our three optimized models, at a higher average selling price, and increase the high margin service revenue by increasing our subscription base. We remain confident in our ability to drive top-line growth and achieve higher gross profit through better quality products and efficient service expansion. Following last year's pivot to EBITDA profitability, we are committed to further enhance our financial performance.
Sten Kirkbak
Q1 24 HIGHLIGHTS
- Group revenues +24% y/y to NOK 118.7m
- Recurring service revenues +38% y/y to NOK 62.7m, translating to an ARR of NOK 250.8m
-
255k subscriptions, up 51% y/y, of which
203k are connectivity subscriptions, 10k are revenue share subscriptions, 2k are service
fee subscriptions and 40k are premium service subscriptions
- Gross profit +20% y/y to NOK 68.9m
- Positive EBITDA of NOK 1.6m, an improvement of NOK 4.3m from the same quarter last year
- CAPEX of NOK 3.4m, down from NOK 4.4m in Q1 23
- NOK 119.6m in cash and cash equivalents
Page 5 | Q1 2024 |
KEY FIGURES
Amount in NOK millions | Q1 2024 | Q1 2023* | YTD 2024 | YTD 2023 |
Device revenue | 56 | 50 | 56 | 50 |
Service revenue | 63 | 45 | 63 | 45 |
Total revenue | 119 | 96 | 119 | 96 |
Growth y/y | 24% | 30% | 24% | 30% |
Gross profit ** | 69 | 58 | 69 | 58 |
Gross margin | 58% | 60% | 58% | 60% |
EBITDA | 2 | -3 | 2 | -3 |
-4 | -4 | |||
CAPEX | -3 | -3 | ||
Device unit sale (k) | 54 | 70 | 54 | 70 |
Subscriptions (k) | 255 | 169 | 255 | 169 |
Shares outstanding (million) | 44 | 42 | 44 | 42 |
Quarterly figures are unaudited.
- Q1 23 P&L and Balance sheet was restated after Q1 23 report date. See Q2 23 report for restated Q1 23 figures.
- In Q1 23 there was a net one-off adjustment affecting Gross profit positively by NOK 4.1m.
FINANCIAL GRAPHS
NOK m
220
200
180
160
140
120
100
80
60
40
20
0
Quarterly Revenue | ASP and ARPU |
(4Q rolling)
1,200 | 120 | |||||
1,100 | 1,070 | 110 | ||||
NOK | 1,000 | 91 | 100 | ARPU | ||
887 | 90 | |||||
98 | ||||||
900 | 90 | |||||
ASP | NOK | |||||
800 | 83 | 855 | 80 | |||
819 | ||||||
700 | 70 | |||||
600 | 60 |
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 | ||||||||||||||||
Q1 | Q2 | Q3 | Q4 | 2021 | 2022 | 2023 | 2024 | |||||||||
2020 | 2021 | 2022 | 2023 | 2024 | ASP | ARPU | ||||||||||
Page 6 | Q1 2024 |
Xplora Technologies Group Financials
In Q1 24 group revenues grew 24% y/y, reaching NOK 118.7m. Xplora achieved a positive EBITDA of NOK 1.6m, a NOK 4.3m improvement from Q1 23. Despite a slight decrease in subscription base from Q4 23, service revenue grew by NOK 2.6m. In addition, Xplora managed to increase device revenue by 12%, even when selling fewer units compared to Q1 23. This is a testament to the Company's focus on improving both ARPU and ASP through new generation devices and service offerings. As such, Xplora ended the quarter with a trailing 12-month (TTM) ARPU of NOK 97.9 and a TTM ASP of NOK 1,069.9, a y/y increase from NOK 91.3 and NOK 818.8, respectively.
Q1 24 PROFIT & LOSS
In Q1 24 Xplora achieved a group revenue of NOK 118.7m, which is a y/y increase of 24% from NOK 96.1m in Q1 23. Xplora exited Q1 24 with a total subscription base of 255k subscriptions, up 51% from 169k subscriptions at the end of Q1 23. This resulted in a recurring service revenue of NOK 62.7m in Q1 24, up 38% from NOK 45.3m in Q1 23. As such, Xplora exited the quarter with an ARR of NOK 250.6m, a 38% increase compared to Q1 23. Xplora sold 54k smartwatches in Q1 24 compared to 70k in Q1 23. As outlined in the last quarter of 2023, this anticipated decrease reflects our strategic shift towards driving profitability through the right product mix, emphasizing new generation products at a higher price point. Even with lower device sales, Xplora managed to increase its device revenue by 12%. By achieving a higher ASP by focusing on selling the three optimized watches, Xplora reached a device revenue of NOK 56.1m, up from NOK 50.3m in Q1 23.
Subscription Base (k)
300
250
200
150
100
50
0
2019 | 2020 | 2021 | 2022 | 2023 | 2024 |
IB Q1 Q2 Q3 Q4
Given Xplora's sales and distribution network, revenue is based on fewer legal entities. To provide a picture of geographical sales performance, the company has
chosen to report on end-user activations in addition to smartwatch sales. End-user activation is the number of watches that are activated for the first time by an end- user. This measure does not consider subscriptions, only watch activation.
With a total number of end-user activations, of 71K this quarter, Germany had the highest number of watch activations, with 45k activations in Q1 24. Norway ended the quarter with 7k activations, followed by Sweden that saw 5k activations. Spain was the fourth largest contributor with 4k activations. Lastly, The US had 3k activations in Q1 24. Service revenue for this quarter's top three countries were NOK 29.3m in Norway, NOK 14.2m in Sweden, and NOK 6.5m in Finland. Xplora continues to deliver on its strategy to increase the connectivity operations outside of the Nordics. As a result, the top three represent 80% of total service revenue in Q1 24. This compares to 89% in Q1 23 and 83% in Q4 23.
Watch activations per country in Q1 24
US 5%
ES
5%
SE | 71k new |
7% | activations |
NO | DE |
10% | 63% |
DE NO SE ES US FI DK GB FR
Gross profit is up 20% y/y, ending at NOK 68.9m in Q1 24, yielding a gross margin of 58%. This is compared to NOK 57.6m and a gross margin of 60% in Q1 23.
Page 8 | Q1 2024 |
Total gross margin has historically been higher in Q1 than in the respective quarters given the relatively low number of unit sales. Gross margin per revenue line in Q1 24 was 29% for device revenue and 84% for service revenue. Gross margin reported excludes marketing, selling and distribution cost. Gross margin from device sales is exposed to the EUR/USD exchange rate and reflects the current levels.
Group operating costs ended at NOK 67.2m in Q1 24, an increase from NOK 60.3m in Q1 23. This is equal to 57% of revenue in Q1 24, compared to 63% in Q1 23.
Payroll expenses in Q1 24 were NOK 27.1m. This is compared to Payroll expenses of NOK 27.3m in Q1
- Marketing expenses are up from NOK 9.0m in Q1
- to NOK 12.9m in Q1 24. Other operating costs ended at NOK 27.2m, up from NOK 23.9m in Q1 23. At the end of Q1 24, Xplora had 107 full-time equivalents (FTE), down from 111 FTE in Q4 23.
Not only for the fourth quarter in a row, but also in the most challenging quarter of the year, Xplora achieved a positive EBITDA. Ending Q1 24 with a positive EBITDA of NOK 1.6m. This is a NOK 4.3m improvement from negative NOK 2.7m in Q1 23. Depreciation and amortization costs were NOK 14.6m, up from NOK 13.3m in Q1 23, in large consisting of NOK 9.4m in amortization from the acquisition of Xplora Mobile. EBIT was negative NOK 13.0m, an improvement from negative NOK 16.0m in Q1 23. Profit before tax was negative NOK 17.3m, compared to negative NOK 16.6m in Q1 23.
XPLORA AS A SERVICE PROVIDER
Xplora operates as a service provider in Norway, France, Spain, and the UK, while also serving as an MVNO in Denmark, Sweden, Finland, and Germany. So far Xplora´s connectivity offering in the US is through a partner agreement, with ongoing efforts aimed at enhancing the company's presence in the market.
Xplora exited Q1 24 with 255k subscriptions, up 51% y/y from 169k subscriptions at the end of Q1 23, and down 2k subscriptions from the previous quarter. The total subscription base is comprised of 203k connectivity subscriptions, 10k revenue share subscriptions, 2k service fee subscriptions and 40k premium service subscriptions. At the end of Q1 24, Xplora held 85k connectivity subscriptions in Norway, 47k subscriptions in Sweden, 17k subscriptions in Finland and 17k subscriptions in Denmark. This
amounts to a total of 165k connectivity subscriptions in the Nordics, up 10% y/y.
Xplora had 38k connectivity subscriptions outside the Nordics at the end of Q1 24. The two largest markets outside the Nordics are the US and German markets, with 14k and 15k subscriptions. Equivalent to a y/y growth of 8k and 13k respectively.
The subscription base represents an average market penetration of 8.2% of children aged 4-10 in the Nordic markets. The implicit market share in Norway is 20%, with 5% in Sweden and 4% in both Finland and Denmark.
From Q4 23, Xplora have had a gross addition of 19k connectivity subscriptions, for a net reduction of 2k subscriptions, across all markets. As stated in all the monthly subscription updates in Q1, this small decrease is as expected and is a result of seasonality and the churn of a higher subscription base. Germany was the biggest net contributor, with 2k subscriptions and Spain the second largest with 1k. Churn in Q1 24 was 4.0% on an average monthly rate.
BALANCE SHEET
Total assets increased from NOK 546.8m at the end of Q4 23, to NOK 547.3m at the end of Q1 24. The increase is largely due to prepaid factory orders facilitated by the supply chain financing agreement.
Inventories were down from NOK 108.0m in Q4 23 to NOK 104.8m in Q4 24. Accounts receivable was NOK 32.5m in Q1 24, compared to NOK 38.8m in Q4 23.
Other receivables amounted to NOK 76.4m in Q1 24, up from NOK 36.7m in Q4 23. Other receivables mainly consist of prepaid goods not received and VAT on imported goods.
Cash and cash equivalents ended at NOK 119.6m in Q1 24, a decrease from NOK 137.4m in Q4 23. The decrease is mainly due to an increase in working capital. At the end of Q1 24 consolidated equity was NOK 327.7m for an equity ratio of 60% compared to an equity of NOK 337.8m in Q4 23 for an equity ratio of 62%.
Total non-current assets were NOK 213.9m in Q1 24, compared to NOK 226.0m in Q4 23. The largest component of non-current assets is goodwill at NOK 133.4m, down from NOK 138.2m in Q4 23. The
Page 9 | Q1 2024 |
estimated value of remaining customer contracts ended at NOK 18.4m, down from NOK 23.0m in Q4
23. NOK 45.4m in non-current assets is capitalized development costs, down from NOK 47.3m in Q4 23.
Total interest-bearing debt was NOK 103.2m in Q1 24, up from NOK 69.9m in Q4 23. At the end of Q1 24 accounts payable amounted to NOK 54.2m, up from NOK 47.4m at the end of Q4 23. Other short-term debt ended at NOK 62.2m, down from NOK 91.7m in Q4 23, consisting of deferred income and accruals.
CASH FLOW
Net cash flow from operating activities was negative NOK 47.7m in Q1 24, compared to negative NOK 26.5m in Q1 23. Net change in working capital was negative NOK 45.0m, largely driven by an increase in other receivables and prepayments for goods in production.
Cash from investing activities amounted to negative NOK 3.4m in Q1 24. Capex investments in product- and platform development are the main components.
Cash flow from financing activities was positive NOK 33.3m in Q1 24, with a NOK 2.1m downpayment to Innovation Norway and a draw of the supply chain financing facility of NOK 35.4m.
Net change in cash during Q1 24 was negative NOK 17.8m, with an ending cash balance of positive NOK 119.6m.
SHAREHOLDERS
Xplora had 44,156,619 shares outstanding at the end of Q1 24, compared to 41,656,619 from the end of Q4
23. The company had 1,142 shareholders at the end of
Q1 24 vs 1,182 shareholders at the end of Q4 23. 5.0% of shares were held by investors outside Norway at the end of Q1 24, down from 5.2% q/q. The 20 largest shareholders held 67.0% of shares outstanding at the end of Q1 24. Please see note 4 Share capital and shareholder information for further details.
On January 2, 2024, Xplora announced the completion of a share capital increase. Following the Board of Director's resolution, based on the authorization from the Annual General Meeting on May 16, 2023, the new share capital is NOK 176,626.48, with 44,156,620 shares at a par value of NOK 0.004 each, where each share carries one vote. The contractual subscription rights were exercised and paid in 2023, recorded as paid non-registered equity. Gross proceeds from the capital increase were NOK 17.5m. After this exercise there are no more contractual subscription rights, excluding employee options.
POST QUARTER EVENTS
There are no significant post quarter events.
Page 10 | Q1 2024 |
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Xplora Technologies AS published this content on 16 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 May 2024 05:31:01 UTC.
