Nanosonics Limited ((AU:NAN)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Nanosonics Limited reflects a generally positive sentiment, underscored by substantial revenue growth across key regions, particularly North America and Europe. Despite facing some challenges in European installations and regulatory delays in Japan, the company’s financial health remains robust, with strategic growth initiatives showing promise.
Strong Revenue Growth
Revenue for the first half of FY 2025 reached AUD 93.6 million, marking an impressive 18% increase compared to the previous corresponding period. This also represents a 4% rise over the second half of FY 2024, showcasing the company’s robust financial performance.
North American Market Success
The North American market demonstrated substantial growth with the installation of 940 new units, raising the total installed base to over 31,000 units. Annuity revenue in this region also grew by 19%, highlighting the growing customer base and increased utilization.
European Region Revenue Increase
In Europe, revenue surged by 37%, reaching AUD 5.9 million. Although the installation rate of new units was slower than expected, the significant revenue growth underscores the potential of this market.
Profitability and Operating Leverage
Profit before tax for the Trophon-only business was AUD 25.6 million, with the PBT as a percentage of revenue improving from 23% to 27%. This indicates enhanced operational efficiency and profitability.
Cash Flow and Financial Health
Nanosonics generated AUD 13.8 million in cash flow, culminating in a cash balance of AUD 144.5 million, with the company remaining debt-free. This strong financial position provides a solid foundation for future investments and growth.
Gross Margin Improvement
The gross profit margin improved to 78.5%, up from 76.3% in the second half of 2024, reflecting better cost management and operational efficiencies.
Challenges in European Installations
The installation of new units in Europe has been slower than anticipated, with only 70 units installed in the first half. However, improvements are expected in the second half, which should drive further growth.
APAC Capital Revenue Decline
In the APAC region, there was a decline in capital revenue, although this was offset by a 14% increase in recurring annuity revenue, indicating a shift towards more stable and predictable income streams.
Regulatory Delays in Japan
The absence of guidelines for ultrasound probe disinfection in Japan continues to hinder market penetration, presenting a challenge for growth in this region.
Forward-Looking Guidance
Nanosonics has updated its revenue growth projections for the fiscal year, increasing them from 8%-12% to 11%-14%, with potential for up to 16% growth depending on FX rates. The company plans to commence consumables manufacturing at its Indianapolis site by year-end, which is expected to enhance margins. Growth is anticipated across all regions, supported by strategic initiatives and operational improvements.
In conclusion, the earnings call for Nanosonics Limited paints a picture of robust growth and financial health, with strong performances in North America and Europe. While challenges remain, particularly in Japan and with European installations, the company’s strategic focus and operational efficiency position it well for continued success.
