12-05-2025
Nepa AB (OSTO:NEPA) Q1 2025 Earnings Call Highlights: Strategic Initiatives Drive Profitability ...
Release Date: May 09, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Nepa AB (OSTO:NEPA) reported a positive net cash flow of 3 million for Q1, indicating strong financial management despite revenue challenges.
The company achieved a gross margin of 76.1% in Q1, reflecting improved profitability.
Strategic initiatives, including cost-saving programs in the UK and Sweden, are expected to generate annualized savings of approximately 19 million.
Nepa AB (OSTO:NEPA) has successfully redefined its ideal client profile, leading to increased order intake and new client acquisitions.
The launch of the continuous marketing mix modeling (CMMM) product has been well-received, allowing the company to engage with higher-level executives within client organizations.
Net sales for Q1 were down by 13% compared to the previous year, primarily due to phasing out low-margin contracts.
The company experienced a 19% decline in annual recurring revenue (ARR), although this was partially offset by strategic contract adjustments.
Despite strategic realignments, the market remains unpredictable, with macroeconomic factors such as tariffs impacting client spending.
The restructuring of the UK office resulted in a 2.6 million impact on operating expenses.
Nepa AB (OSTO:NEPA) acknowledges that the transformation process is ongoing, requiring patience and continued effort to achieve long-term growth and profitability.
Warning! GuruFocus has detected 2 Warning Sign with OSTO:NEPA.
Q: The quarter showed a 13% decline in organic sales due to phasing out low-margin contracts. Was the quarter slower than expected? A: (CEO, Anders Doll) It was a soft start, but the end of the quarter ramped up, helping us enter Q2 stronger. We anticipated these challenges and initiated cost-saving measures early in the quarter, which are part of a broader transformation process to remain competitive.
Q: What drove the increase in order intake in April? Was it due to better sales efforts or a shift in client focus? A: (CEO, Anders Doll) We've transitioned from an inbound to an outbound company, which has significantly improved our client engagement. This change, along with a clearer client success strategy, has helped us secure new clients, some of whom are new to the market research industry.
Q: Can you elaborate on the cost-cutting measures in Sweden and the UK? A: (CFO, Philip Totti) The measures are part of a transformation to make Nepa more scalable and profitable. While some roles were made redundant, we are also optimizing software and premises, and changing how we deliver services using AI tools to enhance efficiency.
Q: How has the continuous marketing mix modeling (CMMM) product been received by clients? A: (CEO, Anders Doll) The feedback is strong. CMMM allows us to engage with higher-level executives like CMOs and CFOs, as it provides a holistic view of marketing spend. This product is gaining traction as clients seek to optimize their media investments.
Q: Are you more optimistic about the market now compared to six months ago? A: (CEO, Anders Doll) Yes, we are more optimistic due to increased activity and experienced personnel in sales and marketing. While there is still unpredictability in the macroeconomy, we are better positioned to help clients navigate these challenges.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
