WOOD Flash - AROBS Transilvania Software: falling 1H24 automotive orders put spotlight on higher fixed cost base
AROBS has posted disappointing 1H24 earnings, as falling orders for embedded software from automotive customers collided with sticky cash wage costs; while the 1H24 revenues contracted by 6% yoy, wages (excluding the employee share option scheme; ESOP) were 13% higher yoy. Wages now represent c.65% of the cash opex, vs. c.59% in 1H23 (the FY22 figure was c.46%). The company has announced remediating steps already, including headcount cuts in the software services segment and a 5-10% reduction in the pay for selected managers; these should bring a modicum of relief in 2H24E, as should the still ongoing integration of the companies acquired over the past couple of years. All this should better position the company for the uptick in 2H24E revenues that management still expects; for the moment, however, we believe that investors will want the proof that customers are reopening their wallets, before revisiting the story.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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