Another quarter of stellar performance

Q2 2024 consolidated results

20 August 2024

  • Shelly Group continued their strong sales push in Q2 amid overall turbulent environment. Total revenue marked an impressive growth of 49.7% reaching EUR 42 mln (BGN 82.2 mln), which was due to the focused sales strategy.
  • The sales of IoT products make up more than 98.8% of the revenues, hence the additional revenues, which compromise of sales of services, rents, FX instruments, etc play a marginal role and their movements are largely irrelevant.
  • The geographic focus of sales as before is dominated by the DACH region. The company offers breakdown in its annual reports only, but mentioned that the DACH region had the greatest contribution to the growth increasing by 61.8% YoY to EUR 21.5 mln (BGN 42.1 mln). The rest of Europe also marked positive growths and especially Italy, Spain, Belgium, Netherlands and Luxembourg are expected to offer the biggest potential in the near future. As of the rest, Asia and Australia marked growth as well indicating significant potential.
  • Analysis of sales cost changes indicate the implementation of a focused marketing based sales strategy. Sales cost have ballooned from EUR 1.4 (BGN 2.7mln) to EUR 4mln (BGN 7.8mln). The real chunk of that – advertising has grown from EUR 0.7mln (BGN 1.3mln) to EUR 6mln (BGN 5.8mln). Naturally, this is targeting retail clients. There is also an additional account, which was not present in the past- exhibitions – standing at EUR 0.5mln. As exhibitions are open for all but really sought after corporate representatives, this indicates a more focused B2B approach. Other account movements, for example those for all cash payments and all other unaccountable smaller scale activities, have decreased, which indicate a serious push towards efficiency.
  • EBIT increased 54.9% to reach EUR 10.8mln (BGN 21.1mln), which is the result of the increased investments last year in the sales channels, RND processes and efficiency. Even though COGS increased slightly more than Sales revenue (51.5% vs 49%) and Sales cost went up significantly by 186%, keeping control of Labor cost (a 23% increase to EUR 5.6mln) and External services (a marginal decrease) was essential to improve the profitability metrics.
  • Considering the increased sales, the “Other expenses” account, which represents a provision for possible future client claims as required by EU regulation for operating on EU markets, increased to EUR 0.3mln. As mentioned before, we notice a very positive shift towards efficiency from the management.
  • Net profit of the group increased by over 58% to EUR 9.3mln (BGN 18.1mln) as a result of the abovementioned improvements and the Net margin improved by 1.2% to 22.01%.
  • Total Assets increased by 30% due to the larger inventory (a 48.6% rise to EUR 13.5 mln) and Trade Receivables (125% rise to BGN 31.6 mln). The increase in the Current Assets and the decrease of Current Liabilities lifted the Current ratio to 8.6. The halved Cash, however, dropped the Cash ratio further to 1.5.
  • The company remains very liquid and stable with cash representing 10x total debt and 21x short term debt.
  • The company lent EUR 280,000 to Expat Capital for 1 year at 1% p.a.
  • On 11.07.2024 the company announced they had acquired 100% of the assets and intellectual property of the troubled Dutch smart lock producer LOQED B.V., currently in bankruptcy proceedings. The deal included access to the production facilities of their main supplier in China, as well as the agreements with all the sub-suppliers, indicating that the whole production process can continue without interruptions. The price of the acquisition was EUR 150,000.
  • On 03.07.2024 the company announced the increase in capital with BGN 54,614 via common shares of BGN 1.00 each. The capital after the increase is BGN 18,105,559 distributed among shares with nominal value of BGN 1.00 each. Note, 1 EUR = BGN 1.95583
  • On 23.07.2024 the company announced they had approved a plan to change the legal form of the company to European Enterprise (“SE”). The Board of Directors of „Shelly Group“ AD will propose to the shareholders a decision on the transformation of the company into a European company at an extraordinary general meeting planned for the fourth quarter of 2024.
  • On 18.07.2024 the company started trading in EUR to comply with the listings on the Frankfurt Stock Exchange. The price change is not represented in the graph as the BGN prices are calculated in EUR.

Ivaylo Valchev
Equity Analyst
Tel.: +359 2 937 9862
e-mail: valchev@sis.bg

Svetozar Abrashev
Senior Managing Partner
Tel.: +359 2 937 9869
e-mail: abrashev@sis.bg

Sofia International Securities
Sofia 1000,
140 G. S. Rakovski Str.
Tel.: + 359 2 937 98 65
e-mail: info@sis.bg

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