Xplora Technologies: 4% sales beat driven by core markets - ABG

Q2: 4% sales beat due to 8% better device sales Likely core markets that are performing well New markets should begin to contribute from H2’22e Revenues of NOK 107m was 4% better than our estimate Xplora has released a Q2 trading update showing preliminary sales figures for the quarter (the full Q2 report will be released 17 August). Revenues was NOK 107m, which was +4% better than our estimate of NOK 103m. The reason for the beat was higher device sales than we had assumed. Recurring service revenues was NOK 35m, 4% below our estimate of NOK 36m. The number of mobile subscribers increased to 134.4k, which was just shy of our estimate of 136k. This corresponds to a solid growth of 8% q-o-q and 42% y-o-y.

Device sales was 8% higher than our estimate Device revenues (smartwatch sales) came in NOK 72m, which was 8% better than our estimate of NOK 67m. This corresponds to a growth of 5% y-o-y. If we assume an ASP of ~NOK 850/smartwatch, in line with the average in 2021, this would imply a growth in unit sales of ~7% y-o-y. We estimate that the growth in Q2 was mostly driven by good development in existing markets (Nordics + Germany) as we do not think that the new markets have begun to contribute meaningfully to revenues yet. The Q2 growth rate likely reflects a combination of lower growth in consumer electronics spending as well as the fact that Xplora likely saw very limited impact from its new distribution agreements in Q2.

New distribution deals in UK + US to drive higher growth in second half of 2022 All-in-all, the preliminary Q2 sales figures were better than we had assumed driven by higher device sales. We think it is good to see that Xplora is able to grow its device sales despite a tougher consumer sentiment. Xplora has recently signed several new distribution agreements among other with the largest telco in the UK, EE. It has also begun to sell its watches online through Wal-Mart, Target and Best Buy in the US. Although we have a cautious view on consumer electronics ... Läs mer på ABG Sundal Collier

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