Hello, everyone. Today I am joined by Andreas Lifvendahl, who is the CEO of IMINT. Today we're going to discuss their Q4 report, which was released earlier this week. My name is Jacob, and I work as an equity analyst at Kalqyl. Welcome, Andreas
Thank you. Thank you.
First and foremost, would you like to tell me about the quarter and the opportunities and challenges that you saw during the quarter?
Absolutely. That's a good place to start. I could first apologize for the noise. I'm doing this live from Mobile World Congress in Barcelona, that's opened up now again after a couple of years of COVID lockdown. It's good to be back in this crowded environment, meeting customers again.
Very nice.
A short excuse for this setting. Well, the quarter was I think mixed signals. Of course it was disappointing on the top line. We've been fighting the decline in the smartphone business that had been going on now starting actually with the pandemic, really accelerating with the global recession in 2022. We kept a higher growth rate than the market decline. In Q4, several factors combined to make it a very sour quarter, I must say which also made that the first quarter with a negative EBIT for actually nine quarters. We broke that good trend, but I regard this as an anomaly, basically, due to the really harsh market conditions and some other factors.
I think, longer term in the consumer market, it's really hard to tell. Smartphones and those kind of products are really first things hesitant consumers wait with buying new one. We get a lot of signals now that the market is expecting a turnaround maybe at the second half of this year. From what I can judge from the show and the investments done here by the smartphone makers, there is a sense of optimism and going back to the good old days.
Interesting. some in, some positive signals from the market and also the people around you, in Barcelona.
Exactly. Exactly. Also since now China's opened up, they made this U-turn in the COVID, the zero-COVID policy. We've been able to visit customers, having multiple meetings and that is, has been really important and healthy as well.
I mean, we have survived well with, like, video and email correspondence, getting projects done. After a couple of years, you actually lose some of the more, human aspects of a relationship. Some things you really, especially if you have concept products, they are really hard to explain remotely. You need to sit down and, with a whiteboard and show concept demos and so on. Now making up for lost time and having these kind of meetings, and that also gives a lot of good vibrations on a more positive 2023, actually.
You touched a little bit about it there. China is opening up again, in the report you mentioned that it's looking optimistic. Could you specify what you think about the Chinese market going forward?
It's hard to say. I mean. But the larger Chinese, I mean, they are determined to be global brands. Of course you have this trade conflict lingering as well. In terms of, especially on the larger Chinese makers, they seem to strive to be really, really global brands, and making sort of the arrangements so that they can act like that . For the domestic market in China, I also think they have suffered even more than the Western part of the world due to the zero-COVID policies.
I mean, all these lockdowns and not being able to travel, not going, not being able to go out and so on and so on.
Yeah. Hope it's...
It's, I mean, it's speculation of course. 2023 saw the lowest volume since 2013. It was quite an extraordinary bad year for smartphones.
Okay. Well, we'll hope that it that the market will brighten up a bit in the future. In the Q4 report, you announced that you will be reporting your operations in two business areas. You will have consumer and professional. Do you wanna talk a little about this strategy? And also y our new financial goals?
Sure. Yes. That's a good question. I think this was a good move from our side because we see a lot of long-term potential in the professional segment. That's really not a segment, but it's a good phrase for that business unit. Basically it's user of video, especially live video scenarios, where there is really mission critical value at stake. That can be in field medics, ambulances, industrial maintenance. There's really a wide variety of verticals where this apply, but the common denominator is that they are really relying on video feeds for remotely operated vehicles or remotely remote assistance and so on. There's a lot of use cases. To really get this going, because the smartphone market and the consumer market is very tempting.
There can be short victories, like you make a new product, have a good design win, and maybe within six-nine months you can start to invoice. If the product is successful, it's very satisfying, but it's a quick win, right? Because you might get an revenue horizon of one or two years, after that you need to fight again. In the professional segment, we've seen much more of blue ocean opportunities where we can get in together with hardware providers and form really strong and strategic partnership and be the sole video software provider and create new products that solve very specific use cases, and have this maybe five-10-year type of relationship, where also subscription models is more and more common.
Because also the device makers, like smart glasses or head mount cameras and so on, realize that they can't really grow being just a hardware maker. They need to add value and services and get recurring revenues as well. They are investing a lot and looking into opportunities to find cloud solutions or other typical SaaS models, where they constantly can add new value to the customers and get them to stay within a subscription model. That is of course, long-term, extremely interesting for a software company like us that wants to wants to scale and grow.
My last question is about your strong balance sheet. You have a net cash position of SEK 78 million. How do you plan to use this money, and what's your view on M&A activity going forward?
We're really happy to have this position of strength. It gives us freedom to operate in so many aspects. Basically SEK 50 million out of this close to SEK 80 million has been added from our smartphone customers over the last three, four years. We see them both as customers, but also as investors in the professional business unit. Because not only are they providing us cash, they also provided very solid, efficient technology that we now can retarget for other purposes. We're going to use that cash to continue to invest, especially in the professional business unit. A very important part of this type of investment is to look at companies to acquire or to merge with. We've been open with that.
We are in no position of stress, which is also good with that kind of cash. But w e see a lot of interesting complementary technologies that we think within the framework of IMINT and the mature operations we have, can actually provide higher value and quicker. We are certainly on an M&A trajectory as well, but without stress. We don't wanna make nothing hasty that doesn't really work out. A lot of things that needs to work well.
Okay. I understand. Interesting. Last of all, is there anything you would like to add? Any highlights that you would like to talk about?
I think for those listening in, go to our website, subscribe to our newsletter or follow us on LinkedIn, there will be interesting developments this year. I'm pretty certain about that, especially since we are making new grounds in the professional business unit and also in the consumer space, where we actually have some new products being designed in. Some are still confidential, that is for sure not a failing market for us. That's. We're optimistic about both, we like the combination when we are running these with two business units. They have different cycles, different business models. If we are successful in both, which is my strong belief that we will be, it will be a really healthy balance of revenues and business models that we apply. We create a very robust company that can sort of provide a long-term growth for many, many years.
Right. A lot of exciting developments going forward. I would like to thank you, Andreas, for taking the time to talking to our viewers. I wish you good luck on the fair continuously in Barcelona. Thank you very much.
Thanks. Thanks so much. Have a good day now.
Bye.
Bye now.