The business has indeed been very effectively stagnant. And the company itself hasn’t announced any significant deals from the Utilities side for a long time. Plus, as someone working in the industry (utilities), it seems that the transition is increasingly towards modular entities. Whereby agile development and the creative possibilities of artificial intelligence even lower the barrier for in-house development.
As a bonus, there’s also utilities consulting, whose role as part of the system business I haven’t quite understood at any point. We’ll see how the situation develops regarding that.
It’s a shame for my wallet, as growth remained stunted, and the blissful times didn’t continue after the Datahub and ATJ update projects.
This whole company would be at its best if, firstly, the entire retail&commerce side were sold off, and the company focused only on the utilities side. And even there, focusing on precisely defined sub-areas. Otherwise, it’s hard to grasp this as an investment case..
Here are Joni’s preview comments as Solteq publishes its quarterly report on Wednesday.
We expect revenue to have continued to decline significantly, but only slightly organically. We forecast profitability to have been at the comparison period’s level, which is not quite enough to cover financing costs. Furthermore, we are still particularly interested in comments on new sales and signs of a business turnaround, as the company needs to get back on a growth path for the earnings turnaround to be on a more sustainable footing. We consider it very possible that the company will announce new efficiency measures to bring profitability to the necessary better level.
Solteq’s struggle continues. Soon, quarterly revenue will be less than 10 million and profitability is what it is. Gone are the days when the share traded around 7 euros with an operating profit margin of over 10%. At that time, grand promises were made, but then everything collapsed in practically one quarter, and the sales by the ex-CEO started a nosedive.
Well.. We probably botched the entire utilities segment with unfinished products, even though we poured money and effort into it diligently.. The whole operation has truly been such an arduous journey for years..
At least some bright spot, and note: product development is not capitalized, which would beautify the result..
The performance of the Utilities segment was still burdened by the low utilization rate of the consulting business. In contrast, the software business developed well, and successful product development projects will bring new, innovative software solutions to the market in the near future.
Qt was also at a loss within Digia at one point; its value was approximately zero, but there was enough money for development work.. How about Solteq?
If that utilities segment has been messed up once, it’s pretty hard to gain trust in the future… Weak billing rates, sales aren’t picking up… And great innovative software somewhere in the future… Blah blah blah… If there was some concrete information about what’s coming, when, and who will buy it… This utilities operation has been supposed to take off for the past 5 years but it hasn’t… Thanks to poorly managed projects and unfinished products…
Here are Joni’s comments on Solteq’s morning results.
Solteq published its Q3 report this morning, which was unfortunately again clearly weaker than our expectations. Revenue decreased only slightly more than our forecasts, but the critical profit level was too weak. The profit level was in no way sufficient to cover high financing costs, and weak cash flow is eroding cash. Market comments were also more cautious than before, and there is a clear risk of a profit warning for the end of the year. Unfortunately, it was difficult to find bright spots in the report, and we consider new efficiency measures in Q4 very likely.
Evli’s and OP’s reports are generally more pleasant for an owner to read, as many analysts at Inderes (unlike in 2021) often have quite gloomy [views]..It’s easy to stop reading in the middle of a “lament.”
Evli: Solteq’s Q3 fell slightly short of our expectations.
Earnings guidance for 2025 remained
Comparable revenue decreases slightly and comparable operating profit improves clearly. Comparable revenue, excluding the sold healthcare software solutions business, was 48,818 thousand euros in the fiscal year 2024. Comparable operating profit was 710 thousand euros in the fiscal year 2024.
Joni has published a company report on Solteq immediately after Q3.
We reiterate our Reduce recommendation for the share and lower the target price to EUR 0.45 (previously EUR 0.55), reflecting changes in forecasts. The company’s Q3 report was subdued and showed few bright spots. Solteq’s turnaround has progressed slower than expected, and there is a clear earnings warning risk for the current year. Furthermore, the refinancing of next year’s JVK loan threatens to be challenging again. The share’s valuation remains challenging, especially considering the uncertainty of the earnings turnaround and the high-risk profile caused by financial leverage. A positive view on the share would require a clear earnings turnaround and visibility into a healthier financial structure.
I have to agree. The only thing is that from an investment perspective, I myself wouldn’t leave anything left of this decaying company. Off the stock market through a strategic corporate arrangement, with a valuation at least somewhat tolerable from the shareholders’ perspective. To homes that know what they’re doing. The company has already fallen behind in development in all areas, and quarterly communication is now just useless repetition of the old.
“The company lowers its guidance for the comparable operating profit for 2025 and estimates the comparable operating profit to be at the same level or better. The guidance for revenue remains unchanged.”
“The earnings development at the end of the year has been affected by slightly weaker-than-expected customer demand and delays in decision-making for several new customer projects, which is reflected in the company’s profitability.”
Kicking the can down the road. The debt burden is such that the company should make money to reduce its debts
Here are Joni’s latest comments on Solteq’s negative profit warning.
Solteq issued an expected profit warning yesterday and lowered its guidance for comparable operating profit for 2025. Revenue guidance remained unchanged. The new guidance is in line with our current forecasts and does not cause pressure for changes. Due to the weak earnings level, the refinancing of next year’s JVK loan threatens to become challenging again.
Here are Joni’s comments on the change negotiations.
Solteq announced yesterday that it is initiating change negotiations in Finland, with the goal of adjusting the headcount to the prevailing demand situation, streamlining operations, and improving profitability. The negotiations concern the Retail & Commerce and Utilities segments and aim for annual cost savings of at least EUR 2.1 million. The announced measures were largely expected due to the company’s challenging earnings performance and tight financial position. However, the announcement creates slight downward pressure on forecasts.
Joni has published a preview report on Solteq, which will release its results on Thursday, Feb 12.
We expect the company’s revenue decline to have continued at the end of the year due to the challenging market situation and delayed customer projects. In the report, focus is especially on the 2026 outlook, the effects of the savings measures announced in January, and the company’s tight financial position, which is further emphasized by the upcoming bond refinancing this year. The stock’s valuation remains stretched. We reiterate our Reduce recommendation and lower the target price to EUR 0.43 (prev. EUR 0.45).
Here are Joni’s quick comments on Solteq’s Q4 result.
Solteq released its Q4 report this morning, which for the first time in a while was relatively in line with our expectations. Revenue grew organically for the first time in ages, but unfortunately, this did not trickle down to the bottom line and profitability remained weak. The earnings level is not yet sufficient to cover high financing costs, and weak cash flow is depleting the cash reserves. Market comments were mixed, and the guidance was as expected. The focus in today’s interview will be on how to strengthen the earnings turnaround and on the financing negotiations.
I don’t own Solteq, but Joni Grönqvist’s interviews with Aarne Aktan are definitely among the best content Inderes has to offer. They’re a pleasure to watch.
I can’t quite describe what’s so fascinating about them, but there’s something authentic, unique, and—in a good way—peculiar about them.
Many other CEO interviews are predictable, but when Aarne Aktan is interviewed, there’s a sense of unpredictability in the air—you never quite know what he’s going to say (in a good way).
Aktan is a colorful character, and Joni Grönqvist is a great match for interviewing him. My thanks to both of you for these.
