u-blox reports third quarter 2024 trading update

Thalwil, Switzerland – 23 October 2024 – u-blox (SIX: UBXN), a global provider of leading positioning and wireless communication technologies and services, announces its trading update for the third quarter of 2024.

Financial overview

In Q3 2024, u-blox recorded revenue of CHF 77.6 million, 19% higher compared to Q2 2024. Year-over-year, revenue decreased by 25% compared to CHF 103.9 million in the same period of 2023. Revenue at constant exchange rates decreased by 23%.

Quarter-on-quarter, the Locate business grew faster than Connect. In terms of markets, Automotive performed better than Industrial, and on a regional basis, APAC and EMEA contributed to the gradual growth, while AMEC remained soft.

EBIT, as reported under IFRS, fell to CHF -11.1 million, compared to CHF -4.4 million in

Q3 2023. The corresponding EBIT margin declined to -14.4%, from -4.2% a year earlier. This includes a reduction of CHF 5.3 million in the capitalization of development costs in Q3 2024 compared to the previous year.

EBIT (adjusted) fell to CHF -7.0 million in Q3 2024, compared to CHF 2.4 million in Q3 2023. EBIT margin (adjusted) decreased to -9.1%, down from -2.3% a year ago. The reduction in margins reflects decreased operational leverage resulting from lower revenue.

Business highlights

X20, u-blox’s next generation high-precision GNSS platform

u-blox launched its next-generation X20 platform which will bring centimeter-level accuracy to the mass market, globally. X20 combines the unique capabilities of u-blox GNSS chips, software, modules and correction services for a new offering that outperforms alternative solutions in accuracy, performance and security.

Strategic partnership with Topcon Positioning Systems

In August, u-blox announced a strategic partnership with Topcon Positioning Systems creating one of the world’s largest high-precision GNSS correction service offers. This collaboration brings together Topcon’s cm-level network correction service solutions for agriculture and infrastructure with mass-market capabilities, enabling u-blox to offer the widest range of correction service performance choices in the industry.

Cost optimization program update

In August 2024, u-blox expanded its cost optimization program, originally launched in 2023. The expanded initiative targets annual savings of over CHF 20 million. One-off costs of up to CHF 20 million are expected in H2 2024.

As of October 2024, approximately 70% of the cost-saving measures have been implemented, with the majority of the remaining actions to be completed by the end of the year. The first savings will be reflected in the P&L in H2 2024, while the full effect is expected in H1 2025.

Outlook

u-blox anticipates market conditions will remain challenging in the near term. The company remains optimistic about its long-term growth prospects, driven by increasing demand for semiconductor solutions across key sectors such as automated and autonomous driving, asset tracking, healthcare, and industrial automation. At this stage, we assume double-digit revenue growth for the Locate business in 2025.

Guidance for Q4 2024

u-blox expects revenue of CHF 60 – 70 million in the fourth quarter of 2024, and EBIT margin (adjusted)[1] of -25% to -15%.

CEO commentary

Stephan Zizala, CEO of u-blox, stated, “In Q3 2024, revenue continued to improve, but challenges remain with overstock in the value chain and continued weakness in industrial and automotive end markets. As a result, we expect Q4 2024 to remain subdued, with the recovery anticipated to resume in 2025.

In the meantime, we are shaping our future: we are progressing well with the review of strategic options for our Connect business by the end of 2024. We are on track with our cost optimization and net working capital management initiatives. We launched our next-generation GNSS platform, X20, which will bring centimeter accuracy to mass markets, and we broadened our correction service offering with a strategic partnership with Topcon."

Webcast

u-blox will host a Q&A session to discuss its Q3 2024 trading update today, 23 October 2024, at 14:00 CET. To register, please visit the webcast registration page.