Release Date: March 12, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ascom Holding AG (ACMLF, Financial) has a solid balance sheet with a positive cash position of CHF18 million and a strong equity ratio.
- The company has a strong position in the healthcare market, particularly in alarm management and medical device integration.
- Ascom has developed a leading position in NurseCall and mobility solutions, leveraging robust DECT technology.
- The company is focusing on increasing recurring revenue, which grew by 2% points last year, with plans to reach 30% in the coming years.
- Ascom has a strong order backlog, with over 50% expected to convert into revenue in 2025, providing a solid starting point for the year.
Negative Points
- Ascom Holding AG (ACMLF) experienced a revenue decline of 1.6% at constant currencies and 3.5% at actual currencies in 2024.
- The company's EBITDA margin decreased to 7.4%, and net profit was substantially lower than initial expectations at CHF3.7 million.
- The financial performance was negatively impacted by non-recurring items, including higher severance costs and depreciation in R&D.
- The company faced challenges in key markets like France and the US, which underperformed compared to expectations.
- Ascom is operating in a volatile macro environment, which has affected investment levels in hospitals and enterprise sectors.
Q & A Highlights
Q: How do you see the sales performance in 2025 for Healthcare and OEM?
A: We have started the year with a positive development in the first two months. In Healthcare, we have a strong backlog, which constitutes about 52% of our revenue. We expect the underlying trends to remain positive despite the volatile environment. For OEM, we anticipate revenue to remain at similar levels as the previous year, around CHF14 million.
Q: What is the assumption for the gross margin in 2025, and what can you do to improve it?
A: The one-off effects that negatively impacted the gross margin in 2024 will be neutralized in 2025, bringing it back to prior year's levels. Our midterm ambition is to grow our gross margin to around 50% through cost structure improvements and platform efficiencies.
Q: What changes are being made to the US go-to-market strategy given past management changes?
A: We have brought on board a new, experienced leader from GE Healthcare to revitalize our sales approach. We are focusing on shorter-term projects to accelerate revenue growth and are working on faster revenue conversion cycles for 2025.
Q: How many employees were laid off, and why did the number of FTEs increase compared to the previous year?
A: We do not disclose specific numbers, but we implemented an efficiency plan in the second half of the year, resulting in some layoffs. The increase in FTEs earlier in the year was based on expected growth, but we adjusted in the second half to align with actual performance.
Q: Why wasn't the integration simplification project of the portfolio completed in 2024?
A: The timeline for the integration simplification project was set to be completed by the end of 2025. We are taking a stepwise approach, and several solutions are already on the new platform, with the rest to follow incrementally.
Q: How do you view the shift in government budgets from healthcare to defense in Europe, and what impact could this have?
A: While there is a shift towards defense spending, the underlying demographic trends necessitate continued investment in healthcare. The European resilience and recovery funds are also channeling investments into healthcare, which we see as a positive development for Ascom.
Q: Why was the midterm guidance postponed or canceled, and when can we expect an update?
A: We decided not to provide midterm guidance due to market volatility. Our focus is on delivering our 2025 guidance, and we will revisit the midterm outlook later in the year.
Q: Do you expect any negative impacts from the US government on your growth markets?
A: The new US administration has created some uncertainty, particularly regarding tariffs. We have taken steps to mitigate potential impacts, such as building up temporary stock in the US and considering supply chain adjustments.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
