Yep. The market’s interpretation of the “top result” is then -8% on the board.
The difference between operating profit and net profit is a mere -80%. (5m->1m). Foreign exchange losses are over 50% of operating profit. Quite confusing.
Still, the only metric that makes sense for TT is free cash flow in euros. It is now at about 5% relative to market value. In other words, P/FCF ~20. It is quite expensive when considering negative growth (or, according to rose-tinted glasses, zero growth at constant exchange rates), the company’s risk profile, and track record. The company only seems cheap if one is mentally anchored to some historical share price.
It’s worth noting, however, that yesterday it surged over 5% in the name of the earnings lottery. So, it’s pretty much a flat reaction when you take that into account. (-3% is noise in this case)
What makes this report good, in my opinion, is the guidance, which has held up well in recent years.
At constant exchange rates, revenue is growing by a high single-digit number.
A 7.5% increase would mean 77 million in revenue in 2025 (71.6 in 2024). The operating profit margin guidance is still at least 35%. In euros, this amounts to 27 million with 7.5% revenue growth, when currently, after H1, there is 9.6 million. For the rest of the year, operating profit would accumulate to approximately 17 million. Exchange rate losses have mainly resulted from the dollar’s slide, which now appears to have stabilized. In Nigeria, inflation is rapidly decreasing, and the currency has stabilized significantly. The cash flow guidance of 4 million is, according to management, very conservative and was not changed. And indeed, the order book growth of +35 million per quarter is a strong performance.
Conversely, one could say that it’s high time to stop grumbling in light of the figures and justify an 80 million euro market capitalization with 20 million in cash, when the business has, in line with its strategy, turned to growth, and ARR (Annual Recurring Revenue) invoicing provides a strong foundation.
Yep, and everyone gets a boost from the dollar. It’s a question of choice: do we look in the rearview mirror or forward? If those materialize, the company has its pieces reasonably in place. Additionally, comparisons to previous quarters will show strong change figures for the positive earnings revision. Good news from the savings programs, and they learned to execute projects more efficiently. One of the few listed companies that are raising their forecasts. Unfortunate headlines in the business media… they could also state directly that it’s a positive earnings revision regarding revenue.
In tomorrow’s interview, it would be worth asking about the cash and what will be done with just under 20 million? I wouldn’t let it sit idle in the company’s account, and surely they could get some interest on it. Those who subscribed to the Vvk-loan don’t get any interest, and are any new subscriptions still needed, or can it be canceled back with a mutual agreement?
Roni has prepared a new company report on Tecnotree.
Tecnotree’s Q2 figures fell short of our forecasts, but this was largely due to the weakening of the dollar. The order book grew with major contract wins, and the upper end of the growth guidance was raised as expected, which we had already factored into our forecasts. We believe that improving cash flow is significantly priced into the stock. We raise our target price to 4.5 euros (previously 4.3 euros) due to a decreased required rate of return and reiterate our reduce recommendation.
“With an improved growth outlook and reduced exposure to emerging market currencies, however, we also see opportunities for positive surprises.” The tide is turning😄 Was an interview coming up?
In my opinion, Tecnotree has good opportunities for positive surprises towards the end of the year! Billing and profit generation are strongly concentrated on H2. The Naira has stabilized, and its impact on billing has significantly decreased. If the guidance holds (it has held well previously) and IF the dollar does not weaken significantly anymore, the cash flow should inevitably be closer to ten million than four million.
The H1 report looked at the past, and in my opinion, Tecnotree has improved in many areas that have previously caused friction. It must also be remembered that new contracts are not yet reflected in these figures. I personally prefer to focus on the future, which looks even excellent in my eyes. A significant role in this is played by the order book, which grew substantially, especially in Europe and the United States. Furthermore, Padma implied in Ron’s interview that more business would be coming, for example, to the United States (if I understood Indian English correctly). Additionally, Padma described H2 as very healthy financially.
With a peaceful mind towards H2 and the coming years!
Nieminen has apparently stocked up significantly more last month and is already approaching Kakkonen in the number of shares managed. He has not subscribed to VVK, so 06/2026 is not in his interest if the price is below 11.50. It seems to be a pretty clear view when buying more…
Let’s put this here too, in case someone didn’t notice it in the other thread or hasn’t thought about the matter more.
That 3.2 million euros was 13% of the company’s total salary costs.
Addition: I was just wondering, if the CEO would agree to give up, say, a million in their salary, could it improve the company’s cash flow profile in such a way that investors would dare to allow, for example, a smaller WACC in their cash flow calculations. With Inderes’ DCF, a 2 percentage point change from 14%->12% in WACC would mean a one-euro increase in the share price. That would result in a 2 million euro increase in wealth for the CEO’s shareholding. And even that WACC% wouldn’t be among the smallest on the stock exchange.
Edit. @Junnu2 indeed it was. I should read these bundles carefully. Still a high salary. I used the full amount including benefits in other cases too.
Most of Padma’s compensation has been in shares, the value of which is quite different from a few years ago when it was recorded in the financial statements at the then-current market price. He has not sold any of his shares at any point. Padma’s cash compensation has been approximately one million euros, including all fringe benefits, pension, etc. This amounts to about 700k per year, if one wants a comparable figure.
In a management interview, Padma stated that a certified product related to trust in governance would be a “critical game changer” for Tecnotree in the European market. Usually, something essential can be gleaned from Padma’s speeches, just as he/she previously said about orders that he/she expects more of them, as has now been demonstrated. Can someone assess whether Tecnotree has the opportunity to expand into new industries with the new product, or if it is intended only for telcos, and what stage the EU is at regarding regulation?
This should probably be corrected so that no misunderstanding remains on the forum.
So, the guidance does not promise high single-digit revenue growth. The range of the guidance was changed so that the upper end was raised from “mid-single-digit” to “high single-digit”. The lower end remained “low single-digit”.
So, compared to previous guidance, there is a possibility of better revenue growth than before. But the lower end of the guidance was not touched, meaning “low single-digit” is still possible in Tecnotree’s guidance.
If the lower guidance had also been raised by one notch (“mid-single-digit”) at the same time, the guidance would be significantly more positive.
I watched Tecnotree’s Q1 and Q2 interviews and did quick video analyses. I am hypersensitive to facial expressions, gestures, and vocal tones, and I enjoy reading literature about body language. Apparently, that’s why I often succeed in reading between the lines things that are not said aloud. However, I emphasize that these are just my own interpretations and I am no expert. I haven’t followed Tecnotree much, and Padma is clearly a difficult case. That’s why I’m asking this group if my intuitions might seem reasonable to those who have followed Tecnotree more closely. I hope for a constructive discussion, although I know that Tecnotree owners who only follow the words in interviews will probably disagree with me. I also know that this approach will surely annoy many. Nevertheless, I’ll take the risk.
Q1
Padma is very expressionless and devoid of gestures. Evokes a strong feeling of distrust.
The CFO is Padma’s opposite in terms of body language and even inspires confidence. That’s why I end up mainly observing the CFO even during Padma’s speech.
The CFO is clearly uncertain about growth in Africa but particularly confident and happy that not all African countries are currency risks. Clearly happy about the revenue growth brought by cognitive scale. Relatively confident about the guidance for delivery growth. Not entirely sure about cash flow and oddly considers it okay if over half of receivables are over 90 days old. Looks neutral regarding positive cash flow. Diversifying the product portfolio evokes negative feelings, as do selected projects in emerging markets. Doesn’t really like Padma’s AI talks.
Q2
It is very difficult for me to listen to Padma attentively because he is so devoid of gestures. A strong feeling of distrust arises in me again. Hopefully Padma is not the type of person who often lies, but I just assume no one notices anything when he does. It’s a shame that in this interview, one cannot observe the CFO during Padma’s speech.
During his own speech, the CFO is unusually smug, like a child who has just caught the biggest fish of his life. Clearly, Q2 went better than expected. The CFO is practically bursting with extra positive energy, which partly manifests through his hands. This positive energy is contagious, and I myself start to wonder if I should jump back into Tecnotree after a long time. Usually, when an interviewee has been so smug, it has been the peak of a cycle. Judging by the stock price, this is rather a good phase of the cycle and a turnaround, or perhaps a temporary peak in a longer uptrend. The CFO is particularly happy about the positive free cash flow despite the weakening dollar, and about the record order backlog.
The CFO sounded and looked at least somewhat convincing when he said that convertible bonds were never intended for running operational activities.
Conclusions: Now is a good phase of the cycle, and I will wait for a possible autumn dip, from which I will lightly get on board unless the valuation has run away by then. I will hardly ever become a long-term Tecnotree investor as long as Padma is at the helm. Not because Padma couldn’t be a good CEO, but because he fails to inspire my personal trust.
A comparative analysis originating from within the country feels artificial unless various body language and communication cultures are also taken into account. Do you have experience working with Indians? The position of a female CEO is certainly culturally more interesting than even for us. For example, delving into how female politicians are taught to communicate in the United States can be interesting: in short, nothing is ever entirely right. I find the Botox jabs tasteless, to say the least. After all, our purely Finnish CEOs are, indeed, known for their expressiveness!
I would also hope that passive-aggressive bickering is kept to a minimum. Here’s a little background, dug up from a language model, on why I referred to the CEO’s gender twice:
1. Patriarchal Expectations and the Concept of Honor
In the Indian cultural context, female politicians are often expected to embody the role of a “good woman” – family-centricity, chastity, and community honor.
If a woman communicates too independently or radically, she may face criticism for “not respecting traditions” or breaking roles belonging to the family and community.
2. “Mother Figure” and “Goddess” Discourses
Female politicians are often compared to “Bharat Mata” (Mother India) or Hindu goddesses, such as figures like Durga or Lakshmi.
This can grant them symbolic authority, but at the same time, it restricts communication: they are expected to be both gentle and nurturing, yet powerful and morally irreproachable.
In practice, this is again a double bind: a politician who is too “tough” loses her maternal or divine symbolic role, while one who is too “soft” does not appear as a strong leader.
3. The Impact of Class Division and Language
In India, political communication is also intertwined with the language spoken: English is associated with the elite and global modernity, while Hindi (and regional languages) are linked to populism and the image of “authentic Indianness.”
When speaking English, female politicians may be expected to project a restrained, intelligent, and “civilized” demeanor, whereas when speaking local languages, they are expected to display emotional warmth and community spirit.
4. Examples in Research and Practice
Indira Gandhi had to navigate precisely such a double bind: she was seen both as an authoritarian “Iron Lady” and as the nation’s mother figure.
Today, politicians like Sonia Gandhi or Mamata Banerjee still demonstrate how communication must balance leadership perceived as masculine with moral authority perceived as feminine.
This aligns quite a bit with what a couple of Indian supervisors I know have said. But that’s enough about that.
I guessed these things would be addressed first. Yes, I have experience working with Indians, and from my university days, also literary research on Indian work culture. I have also had many Indian friends. The CFO is, to my understanding, also Indian and particularly expressive. I can remove the Botox comment if it bothers too much. However, this view is quite common globally. Unfortunately, often a lack of expression is a learned skill used to hide something. Sometimes it can also indicate that the person doesn’t genuinely feel strong emotions one way or another, and therefore doesn’t consider risks in the way I would hope. I didn’t quite understand your Finland comparison, so I’ll leave it unanswered.
Edit: “Emotions are universal and culture-independent, as are the expressions caused by emotions. What causes the emotion is a different matter. A micro-expression of disgust might appear on one’s face due to very different things in Finland than, for example, in India.” This quote is from the book ‘Ajattele kuin mentalisti’ (Think Like a Mentalist) and corresponds quite well with what I’ve read elsewhere and learned in practice.
