REG - Nexteq PLC - Trading Update and Notice of Results

NexteqAnnouncement

Tue 07:00

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RNS Number : 9480R  Nexteq PLC  22 July 2025

22 July 2025

 

Nexteq plc

 

("Nexteq, the "Company" or the "Group")

 

Trading Update and Notice of Results

 

Nexteq plc (AIM: NXQ), a leading technology solutions provider to customers in
selected industrial markets, today provides an update on trading for the six
months ended 30 June 2025 and outlook for the remainder of 2025 into 2026.

 

Trading

 

Customer demand across both divisions as demonstrated by order intake levels
continues in line with management's expectations. As such, we conclude that
the industry de-stocking experienced in late 2023 and 2024 has subsided.

 

Group H1 results are expected to be in line with market consensus, with Group
revenue for the six-month period expected to be c $40.7m (H1 2024: $48.2m) of
which Quixant revenues will be approximately $26.9m (H1 2024: $30.9m) and
Densitron revenues of approximately $13.8m (H1 2024: $17.3m). The Group's
focus on diversification of revenue is showing excellent progress, as we
target new customers, and focus on organic growth within our current customer
base. As an example, one of the Group's previously lower top ten customers is
now expected to be in the top two customers at year end.

 

As expected, gross margin has been lower than in recent years as a result of
customer and product mix changes. As outlined at our 2025 Capital Markets Day
("CMD"), we have proactively targeted our two largest Quixant customers with
new products, at lower margins, to focus on their retention, and potential
volume growth, as they move through their own acquisition processes.

 

The Group's net cash at 30 June 2025 was $28.1m (30 June 2024: $36.9m) after
generating operating cash inflows of £2.1m in H1 2025 partially offset by
$13.1m returned to shareholders since H1 2024 through share buy-backs and
dividends paid in August 2024 and May 2025.

 

Signposts to Success - Progress in H1

 

Continual progress is being made against the Group's 'Signposts to Success' as
outlined at the CMD in February 2025.

 

·   Growth in order intake - Order intake in H1 is significantly ahead of
revenue, despite the reliance on the two traditionally largest customers
reducing, as the Group focusses on revenue diversification.

 

·    Number of >$1m customers - The Group is on track to deliver an
increased number of $1m customers in 2025, up from 10 customers within the $1m
cohort in 2024.

 

·   Nexteq IP revenue growth - Nexteq new IP-based revenue increased
significantly in H1 2025 with over $1m of revenue delivered through its
Prodeck, Tactila and Gaming Cabinet solutions.

 

Outlook

 

H2 2025 revenues are expected to exceed H1, returning to the historic pattern
of H2 weighted revenues, and in line with FY25 market expectations(1). There
continues to be attention on controlling costs, alongside focused investment
in the delivery of key growth projects, with H2 and full year 2025 profits
expected to be in line with market expectations.

 

As discussed at the CMD, the acquisition of Everi, and IGT, by Apollo is now
complete, and discussions about our ongoing relationship are positive and
continuing as we seek to capitalise on the opportunities across their enlarged
Group.

 

The on-boarding of our three new Broadcast market customer wins will continue
through H2 2025, with mass production starting in Q1 2026.

 

Currently, the Group is managing the developing market uncertainty around
availability and price of DDR4 memory, a key element of the Gaming hardware
platforms.  Plans have been implemented to manage supply for our customers,
and to ensure Nexteq controls the commercial impact for customers, whilst
protecting its own margin position.  As a result of our planning, we expect
to see minimal disruption in H2 2025, but this remains a top operational focus
for the Group.

 

The Board also continues to evaluate strategic acquisitions which leverage,
and add to, our IP, supply chain and sales capability across adjacent high
growth niche sectors. Combined with a return to organic growth and building
out our product suite into software, acquisitions complete the strategic
growth levers in our revised three-year plan. Our strong balance sheet
facilitates our ability to further diversify the revenue base and accelerate
growth in a measured, considered and sustainable way.

 

Notice of Results

The Board expects to announce its results for the six months ended 30 June
2025 on 10 September 2025.

Duncan Faithfull, CEO of Nexteq, commented:

"As markets continue to normalise, I am delighted with the progress that the
Group is making as we focus on revenue diversification; new product
development; on-boarding new customer wins and the investigation of bolt on
acquisitions is continuing at pace.  The business is coalescing around the
'Signposts to Success' as outlined at the CMD, and confidence in our ability
to deliver our three-year objectives is high.  The Board is confident in
meeting expectations for 2025.

I am proud of the Nexteq team for its H1 delivery as per our plan, and
delighted with the progress made against the headwinds of Tariff
implementation, and component shortages, and am excited for the future
delivery of our 'Signposts to Success'."

Chairman's comment

H1 demonstrates to our investors that changing the skill set round the board
and senior team has allowed us to add energy, drive and fresh perspectives to
the business with growth in mind. Not just in revenues but also in skills, IP,
markets and ambition. The team have shown high levels of engagement with
customers and suppliers alike to navigate the uncertainty of US tariffs and
global instability in markets. The business is substantially unaffected by the
Tariff changes, and we continue to plan for end-of-life components and risk
assess territories experiencing political instability.

We are well positioned to return to growth and reduce the key risk areas such
as customer concentration and changing trends in our end customers'
requirements, working closely with them on next generation products. An
approach which has created value throughout Nexteq Plc's lifetime.

We are currently looking to add to the breadth of experience at the Board by
recruiting a NED Chair of Audit & Risk Committee, with the selection
process ongoing at this time.

 

(1) Management consider current consensus forecasts are $85.5m revenue, $6.0m
adjusted EBITDA and $3.6m adjusted PBT

 

 Nexteq PLC

 Duncan Faithfull, Chief Executive Officer        Telephone: +44 (0)20 3597 6800

 Matt Staight, Chief Financial Officer
 Nominated Adviser and Broker:

 Cavendish Capital Markets Ltd

 Matt Goode / Edward Whiley (Corporate Finance)

 Tim Redfern / Harriet Ward (Corporate Broking)   Telephone: +44 (0)20 7220 0500

 Financial PR:

 Alma Strategic Communications                    Telephone: +44 (0)20 3405 0205

 Hilary Buchanan / Emma Thompson

 

About Nexteq

Nexteq (AIM: NXQ) is a strategic technology solutions provider to customers in
selected industrial markets. Its innovative technology enables the
manufacturers of global electronic equipment to outsource the design,
development and supply of non-core aspects of their product offering. By
outsourcing elements of their technology stack to Nexteq, customers can focus
their product development effort on the most critical drivers of their
business' success.

 

Our solutions are delivered through a global sales team and leverage the
Group's electronic hardware, software, display and mechanical engineering
expertise. Our Taiwan operation is at the heart of Asian supply networks and
facilitates cost effective manufacturing and strategic supply chain
management.

 

The Group operates in six countries and services over 500 customers across 47
countries.

 

Nexteq operates two distinct brands: Quixant, a specialised computer platforms
provider, and Densitron, leaders in human machine interface technology, each
with dedicated sales, account management and product innovation teams. Founded
in 2005, and later floating on the London Stock Exchange's AIM stock market as
Quixant plc, the Group rebranded to Nexteq in 2023.

 

Further information on Nexteq and its divisions can be found
at www.nexteqplc.com (http://www.nexteqplc.com/) .

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