Apr 28, 2022

Qt Group Plc: Interim Statement for January 1 – March 31, 2022

This release is a summary of Qt Group Plc’s Interim Statement for January-March 2022. The complete report is attached to this release as a PDF file, and it is also available on the company's website at www.qt.io/investors

Interim Statement for January 1 – March 31, 2022: Strong revenue growth continued

January - March 2022

  • Net sales increased 35.1 percent to EUR 31,572 thousand (EUR 23,362 thousand). The effect of exchange rates on the comparison period’s net sales was EUR 1,114 thousand and at comparable exchange rates, net sales increased by 29.0 percent
  • Operating profit (EBITA) was EUR 5,586 thousand (EUR 4,915 thousand), or 17.7 percent (21.0%) of net sales
  • Operating profit (EBIT) was EUR 4,667 thousand (EUR 4,812 thousand), or 14.8 percent (20.6%) of net sales
  • Earnings per share were EUR 0.15 (EUR 0.16)

The figures in brackets refer to the comparison period, i.e. the corresponding period in the previous year.  The percentage of change in net sales at comparable exchange rates is calculated by translating the net sales from the comparison period of 2021 with the actual exchange rates of the reporting period of 2022 and by comparing the reported net sales in 2022 with the calculated 2021 net sales at comparable exchange rates.

Key figures

EUR 1,000   1-3/2022  1-3/2021 Change, %  1-12/2021
Net sales              31,572 23,362 35.1% 121,139
Operating profit (EBITA)                 5,586               4,915 13.7% 31,534
EBITA, % 17.7% 21.0% 26.0%
Operating profit (EBIT)                 4,667               4,812 -3.0% 28,812
EBIT, % 14.8% 20.6% 23.8%
Return on equity, % 7.9% 12.8% 55.0%
Return on investment, %  6.9% 14.8% 57.0%
Interest-bearing liabilities              20,472               2,328 17,028
Cash and cash equivalents              35,315             19,064 85.2% 17,374
Net gearing, % -32.6% -55.4% -0.7%
Equity ratio, % 37.7% 65.3% 51.1%
Earnings per share (EPS), EUR 0.15 0.16 0.91
Diluted earnings per share, EUR 0.15 0.15 0.88
Personnel, on average 535 381 40.3% 445

Juha Varelius, President and CEO:

Qt had a strong start to the new growth strategy period. Net sales in the first quarter amounted to EUR 31.6 million, representing year-on-year growth of 35 percent. The effect of changes in exchange rates, in particular the US dollar, on the company’s net sales was substantially positive for the review period at EUR 1.1 million. At comparable exchange rates, net sales increased by 29 percent. We continue to see growing interest in Qt’s solutions and the near-term growth prospects are very good. We keep our net sales guidance unchanged: we estimate that our full-year net sales for 2022 will increase by 30–40 percent year-on-year at comparable exchange rates. 

Qt’s operating profit (EBIT) in the first quarter was EUR 4.7 million, or 15 percent of net sales. Our level of growth investments was exceptionally high in January–March, and the high recruitment activity seen in the early part of the year will level off during the year, for example. In addition, the operating profit is impacted by the amortization expenses of the intangible assets from acquisitions. At the end of March 2022, Qt had 555 employees, which is 164 more than in the comparison period, and 59 more than at the end of December 2021. We invested particularly in strengthening our sales organization, which supports our growth strategy. We expect profitability to develop favorably during the remainder of the year due to the scalability of our business, and we maintain our guidance of the full-year operating profit margin being 20–30 percent in 2022. Qt’s business is characterized by potentially significant quarterly variation in both net sales and operating result.

A new update to the quality assurance tool Squish 7.0 was released in March 2022. The new software update includes the much-requested feature of recording video footage of the test execution. The video footage is linked directly to the test results and the user can easily view the point of failure on the footage. We also released updates to the user interface design tool Qt Design Studio 3.2 and the programming environment Qt Creator 7.0. 

Operating environment and market outlook

The company estimates the growth prospects for its business in the next few years as very promising. The Group’s business development efforts will focus on desktop applications as well as embedded systems in the automotive industry, consumer electronics, medical devices, and industrial automation sectors. Product development efforts will also focus on the value-added features and tools needed in the creation of embedded systems. Sales growth associated with embedded systems will also reflect on the earnings logic. Volume-based distribution license revenue from these sales accumulates over the long term. Accordingly, it is typical of Qt as a company that quarterly net sales and growth may vary significantly between quarters. In addition to organic growth, the company also actively pursues inorganic growth through acquisitions that support its strategy.

Disruptions in global supply chains may create delays in the production processes of equipment manufacturers and reduce their production volume, which particularly affects net sales accrued from distribution licenses. Logistics problems in international trade and the global shortage of components are likely to affect many of Qt’s customers. Russia’s armed attack on Ukraine, combined with the EU’s sanctions against Russia, add to the general uncertainty in the operating environment. While the war does not have a significant direct impact on Qt’s business operations, increasing energy prices and a general economic slowdown may reduce the demand for the products of Qt’s customers and consequently slow down the growth of Qt’s business.

The COVID-19 pandemic continues to cause increased uncertainty for the company’s short-term outlook. It is obvious that recovery from the pandemic will be uneven between different industries and geographical regions and the recovery may be a long process. At the same time, the pandemic has created pent-up demand for many products. When this pent-up demand is released, it may lead to increased demand for Qt’s solutions. In spite of the challenges and uncertainties in the operating environment, Qt estimates that its chances of success in executing the growth strategy that extends to 2025 remain very good.  

Outlook for 2022

We expect the very strong growth of development license sales to continue in 2022. However, the prolonged COVID-19 pandemic, the sanctions imposed in response to the war in Ukraine, the global component shortage and logistics problems slow down the growth of the embedded displays business, especially with regard to distribution license sales. In spite of the increased uncertainty, we maintain our guidance and estimate that our full-year net sales for 2022 will increase by 30–40 percent year-on-year at comparable exchange rates and our operating profit margin will be 20–30 percent. There may be significant quarterly variation in the development of net sales and the operating result. The figures for the second quarter, in particular, will be influenced by the exceptionally strong comparison figures for the previous year.

News conference

A news conference, where CEO Juha Varelius and CFO Jouni Lintunen will present the results, will be held on April 28, 2022, at 4:00 – 5:00 pm EEST. Analysts and investors can follow the news conference either at www.qt.io/investors or via conference call:

USA: +1 323-701-0170
UK: +44 (0)330 165 3641
Finland: +358 (0)9 7479 0572

Participant passcode: 184945

Espoo, April 28, 2022

Qt Group Plc

Board of Directors

Nasdaq Helsinki
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