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Q3 2024 Sales: Accelerating growth in the third quarter. Full-year guidance confirmed.
- Q3 sales of €207 million under IFRS, and €223 million on an adjusted basis¹, up 22%
- 9-month sales of €616 million under IFRS, and €654 million on an adjusted basis¹, up 16% and in line with guidance
- Record level of orders in the first nine months of the year of €1,156 million (up 63%) driven by strong momentum in the United States and several commercial successes in Europe
- Recurring VAS² sales over the first nine months of €41 million, up 31% and representing approximately 60% of total VAS sales
- Full-year 2024 outlook confirmed for adjusted sales of €1 billion and improved profitability
The following financial figures are presented under IFRS standards, as well as in adjusted terms before IFRS 15 adjustments, with no cash impact, related to the Walmart U.S. contract which began in Q4 2023. Details of these adjustments are provided at the end of this press release.
| In €m | IFRS Sales | Adjustments[1] due to Walmart contract | Adjusted Sales1 |
| Q3 2024 | 207.1 | -15.8 | 222.9 |
| Q3 2023 | 182.5 | – | 182.5 |
| Change (in %) | 13% | N/A | 22% |
| 9 months 2024 | 616.0 | -38.0 | 654.0 |
| 9 months 2023 | 563.2 | – | 563.2 |
| Change (in %) | 9% | N/A | 16% |
| Unaudited figures | |||
Commenting on the figures, Thierry Gadou, Chairman and CEO of VusionGroup, stated:
“Our growth has accelerated in recent months and allowed us to achieve the best third quarter in our history in terms of turnover thanks to our leadership in the digitalization of physical commerce and to our development in North America.
Order intake continues to grow very rapidly and has now reached 1.4 billion euros over the last 12 months, with new contracts in North America and Europe.
The deployment at Walmart is in line with our plan and should continue to ramp up in 2025 and 2026 thanks to significant new production capacities added during the third quarter.
Overall, the fourth quarter should deliver a new all-time high for VusionGroup, with expected growth higher than that of the third quarter to conclude a year in line with our ambition for growth and profitability.”
Sales
| In €m and in adjusted1 figures | EMEA | Americas & Asia-Pacific | Total |
| Q3 2024 | 98.1 | 124.8 | 222.9 |
| Q3 2023 | 156.2 | 26.4 | 182.5 |
| Change (in %) | -37.2% | 373% | +22.1% |
| 9 months 2024 | 336.5 | 317.5 | 654.0 |
| 9 months 2023 | 473.9 | 89.3 | 563.2 |
| Change (in %) | -29.0% | 256% | +16.1% |
| Order entries in €m | 2024 | 2023 | % |
| 9 months | 1 156 | 710 | +63% |
| Rolling 12-month | 1 396 | 848 | +65% |
Q3 and 9-month sales growth in line with expectations and record order entries
The Group’s IFRS revenue reached €207 million in the 3rd quarter, and €223 million on an adjusted basis¹, up +22% compared to the 3rd quarter of 2023, and in line with the guidance communicated during the presentation of the 2023 annual results.
This is the Group’s best 3rd quarter ever. Given the timing of deployments, and the traditional seasonality of the business, the expected growth will be stronger in the 4th quarter.
The Group’s IFRS revenue reached €616 million in the first nine months of the year, and €654 million on an adjusted basis¹, up +16% compared to the first nine months of 2023.
In terms of geography, growth was driven by North America. In accordance with the forecasts announced, the breakdown of revenue in the first nine months was:
51% for EMEA, or €337 million, down -29% due to the planned and announced finalization of the deployment phase of a major European customer. This cyclical effect will only be temporary in 2024 as the many contracts signed in recent months in Europe will generate robust growth again in 2025. In addition, order entries increased in the region in the first nine months of the year, which supports our scenario of a rebound in activity in Europe from the 4th quarter of 2024.
49% for Americas and Asia-Pacific, or €318 million on an adjusted basis, up +256%, driven by the rapid expansion in the United States, which will become the Group’s largest market in 2024. Growth is expected to continue at a sustained pace in the coming quarters. This excellent momentum is due to the acceleration of the deployment at Walmart but also by several major new contracts.
Global order entries increased by +63% to €1,156 million in the first nine months of the year; the level of orders reached a level of €1,396 million at the end of September 2024 on a 12-month rolling basis. This record figure is explained by the strong momentum of new contract signings in both Europe and the United States.
VAS² Sales
Revenue from software and recurring services reached €41 million in the first nine months of the year, up sharply (+31% compared to the first nine months of 2023). It represents nearly 60% of the total VAS revenues, the total amount of which stands at €67 million (-17% compared to the first nine months of 2023).
Recurring revenues³ for the 3rd quarter (€14.9 million) were in line with the target annual rate of €60 million.
Non-recurring services⁴ declined due to a difficult economic context where retailers slowed down some projects or internalized certain services. This situation is in line with the forecasts announced and is expected to continue throughout the year before reversing in 2025 thanks to the continued strong growth of recurring services.
Our cloud installed base grew rapidly in the first nine months of the year to reach approximately 23,000 stores and 135 million labels. This dynamic will accelerate in the coming quarters. As a reminder, the cloud installed base was around 15,000 stores and 72 million labels at the end of September 2023.
Outlook and objectives for 2024
With an order book at an all-time high, VusionGroup confidently reiterates its objective of crossing the €1 billion mark in revenue (on an adjusted basis), and to pursue a strong growth trajectory in 2025.
Given the timing of deployments and the traditional seasonality of the business, the Group’s revenue growth will be more marked in the fourth quarter.
Regarding the geographic distribution of annual sales, VusionGroup targets around 50% of revenue to be generated in EMEA and around 50% in Americas and APAC. The momentum of the latter should be supported by the new contracts signed in the United States this year.
Total annual VAS revenue is anticipated to reach around €100-110 million, a target revised downwards due to a difficult economic context affecting non-recurring services, which still includes €60 million in recurring VAS business.
After a significant improvement in its variable cost margin rate in the first half (+380 basis points), the Group is expecting this improving trend to continue in the second half.
VusionGroup also confirms the continued improvement in its profitability with an adjusted1 EBITDA margin now expected to increase by 100 to 200 basis points over the whole year.
After generating positive free cash flow in the first half of the year, the Group confirms this positive trajectory in the second half of the year.
Note on the IFRS Restatements related to the new Walmart contract
Two IFRS restatements related to the new Walmart contract impact 2024 financial disclosures:
1. On June 2, 2023, at their Annual General Meeting, the Group’s shareholders approved a grant to Walmart of 1,761,200 of stock warrants on the Group’s shares. According to IFRS standards, the fair value of these warrants should be calculated. On June 2, 2023, the fair value of the warrants was established at €163m. A contract asset and a financial debt were thus recorded in the consolidated accounts for this amount. The contract asset, which is a fixed amount, is amortized in proportion to the forecast revenue generated by the Walmart contract over the duration of the roll-out of the VusionGroup platform in Walmart stores. The reduced revenue impact is customary as the warrants will only have a potential dilutive effect, which was modeled and communicated during the allocation of the warrants in early June 2023. This does not impact the actual sales invoiced to Walmart. This restatement has no impact on the Group’s cash flow. It impacts revenue and all of the Group’s income statement lines, in the same proportion. This negative impact to the Group’s IFRS accounts will continue until the end of the Walmart contract, in direct proportion to the sales generated by this contract. The financial debt is subject to revaluation at each closing, depending on the number of exercisable warrants and the market price of VusionGroup shares. Any change is recorded as financial income in the Group’s consolidated accounts. VusionGroup will continue to communicate at each closing the impact on revenue and net income of this IFRS restatement.
2. The impact of future price reductions indexed to the volumes agreed upon with Walmart from the first deliveries of electronic shelf labels (ESLs): The cost of the Group’s hardware solutions is a function of the volume manufactured. A significant increase in volume might thus lead to lower cost. Therefore, it has been agreed with this customer that they will be granted price reductions in relation to the future sales volume to which they contribute. The IFRS standard (IFRS 15) requires prices to be averaged over the life of the contract. The application of this restatement in 2023 impacts reported revenue (IFRS) compared to the revenue invoiced, even though price reductions will only be granted if and when volumes will have reached certain thresholds. The application of this standard has a negative impact on revenue and all income statement lines, down to net profit. Finally, it is important to note that cost reductions have already been negotiated with suppliers to guarantee at least the same level of margin on this contract in 2025.
(1) Adjusted data incorporate IFRS standards before adjusting for certain non-cash IFRS 15 adjustments related to the Walmart US contract, which began in Q4 2023. These adjustments only impact the Americas & Asia-Pacific region. Please see the detailed explanatory note at the end of this press release.
(2) VAS: Software, services and non-ESL solutions
(3) “Recurring VAS” revenue includes revenue generated by subscriptions to VusionCloud and its SaaS computer vision (Captana and Belive) and data analytics (Markethub and Memory) solutions, as well as contracts for recurring services.
(4) “Non-recurring VAS” revenue includes the revenue generated by installation and non-recurring professional services; the sale of equipment such as Captana cameras, video rails and other screens used for retail media (Engage), as well as the sale of industrial and logistics solutions (PDidigital).