When a company falls short of expectations, the market logically lowers its expectations for the company. A negative opening is certainly coming.
However, breaking below those previous lows is a rather bearish view. I wonder if the market will really start punishing the company based on the most chaotic quarter in its history? From here, margins should start improving gradually, right?
As another example regarding quarterly forecasts: @Juha_Kinnunen has forecasted the bottom for EBITA% in Q3 at -12.8% versus Q2 at 14.6% (actual). Even here, the analyst has likely estimated the timing of non-recurring items a bit tongue-in-cheek, so I wouldnât dare say whether the big picture is quite that bearish. Here are the old quarterly forecasts to help grasp the big picture:
On the other hand, the aforementioned trough, not the ATL, is from less than a month ago, and back then there was no knowledge of clearly lower demand for basic Revenio products.
I wouldnât be surprised if the ten-euro mark is tested soon, unless the conference call provides a good explanation for everything.
Is @Juha_Kinnunen having the CEO interview today like before? Looking at the pro forma figures from last year, losses were made regarding Visionix. Is this due to old financing arrangements or something else, since the financial expenses were quite high, nevertheless? At the latest during the Capital Markets Day, they need to explain how Visionixâs earnings performance will be improved, so that we havenât just bought mere revenue here.
Edit. Not very good credentials were provided for the rights issue. If they fail to convince in the earnings call / Capital Markets Day that this will turn for the better quickly, the subscription price probably wonât be very high.
Are they actually trying to talk the market down now that thereâs a chance, so that accumulation (tankkaaminen) can happen more cheaply ? As I said, I see the numbers of this chaotic period as slightly positive. Slightly, because risks certainly exist.
Having been involved in real estate transactions: The situation is like a major house cleaning; at first glance, it looks like everything is being turned upside down. After the cleaning, a quick reorganization and everything is better than before. Perhaps itâs even better to compare this to a surface renovation, if not a complete overhaul.
In chaos, itâs easy to misprice a place (apartment/house).
Itâs worth taking a breath for a moment and avoiding overreaction.
I jumped off Revenioâs bandwagon about a year ago at around the 24 euro price level when the companyâs growth outlook seemed to be sputtering and earnings per share were on a downward trend. I figured you can get higher-quality business and better growth at a better price elsewhere, so itâs worth taking this comment with a grain of salt.
From the sidelines, Iâve followed Revenioâs journey a bit since then, and based on this track record, the stock has no business coming back into my portfolio. That Visionix acquisition alone raised question marks about whether this is a classic âdiworseficationâ acquisitionâmeaning buying lower-quality business in the hope of growth.
At least to me, glancing quickly at that report, there are orange flags: organic revenue growth wasnât reported as far as I can see, operating profit adjusted for non-recurring items and margins are declining, and operating cash flow dipped into the negative. Managementâs remuneration policy seems to be tied to earnings per share and the companyâs market value, meaning management should theoretically be on the shareholdersâ side, but the companyâs future is now heavily dependent on how well that acquisition is integrated and whether those famous synergies are achieved or not. I canât answer that question myself, being a fool, so Iâll stay far away from the stock until we start seeing some proof.
Yes, there is, thatâs what Iâve been trying to prepare for here using the new data.
Based on the pro formas, the key figures looked to me just like what was communicated. H1â26 is still tricky to interpret, but 2025 is.
Financing is being overhauled anyway, so these donât matter a whole deal. In addition, there are probably expenses related to foreign exchange rate fluctuations here (like with Revenio). Itâs best to focus on the operational side.
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Generally on the Q2 figures in a rush: practically speaking, it was the âold Revenioâ that fell short on earnings. Two things: lack of revenue growth and a weakening gross margin. They donât report it directly, but they stated:
âDuring the quarter, the revenue of the old Revenio remained at the previous yearâs level.â
âThe gross margin percentage in the second quarter was 64.7 (72.6)%. The decline was due to an approximately 2 percentage point dilution effect from Visionix, as well as an approximately 5 percentage point weakening in Revenioâs business, which was caused by, among other things, increased tariffs and rising unit costs for electronic components.â
Visionixâs âmonthâ looked roughly as expected, but there is still plenty of digging to do here. I wonât bother commenting anymore here during the day, the report will be out for all investors at the same time.
? As I said, I see the numbers of this chaotic period as slightly positive. Slightly, because risks certainly exist.