u-blox AG: u-blox reports full-year 2022 financial results

Ad hoc announcement pursuant to article 53 LR

u-blox reports full-year 2022 financial results

2022 marked a record year in terms of revenue and profitability. The year ended with revenue of CHF 624 million, adjusted EBITDA margin of 27.2%, EPS (adjusted) of CHF 15.65 and cash and cash equivalents of CHF 137.7 million.

2023 guidance: revenue growth expected to be between 6% and 16% and adjusted EBITDA margin between 21% and 24%.

Dividend proposal: a dividend payment of CHF 2.00 per share, 54% higher than 2021, will be proposed to the annual meeting of shareholders on 19 April 2023.

Thalwil, Switzerland – 10 March 2023 – u-blox (SIX: UBXN), a leading provider of positioning and wireless connectivity semiconductor solutions, today announced its financial results for the full year 2022. As announced on 11 January 2023, the company achieved record revenue of CHF 624 million. EBITDA and EBIT margins slightly exceeded guided numbers, reflecting strong demand across all regions and industrial and automotive target markets.

“2022 was an exceptionally strong year for u-blox. Our revenue grew considerably and we achieved a strong level of profitability and cash-flow. During the year, several key customers successfully ramped up promising new product offerings using our solutions. These results confirm the successful implementation of our innovation strategy which is focused on industrial and automotive target markets. Our ability to continuously provide customers with innovative, reliable and easy to implement solutions should fuel our future growth,” said Stephan Zizala, u-blox’s Chief Executive Officer.

Financial highlights for 2022

(All comparisons versus the prior year period unless otherwise noted)

• Revenue of CHF 624 million (previous year: CHF 414 million), an increase of 51% (at constant exchange rates: 47%)
• EBITDA (adjusted) of CHF 170 million (previous year: CHF 72 million), an increase of 136%
• EBITDA margin (adjusted) of 27.2% (previous year: 17.4%), an increase of 983bps
• EBIT (adjusted) of CHF 131 million (previous year: CHF 35 million), an increase of 274%
• EBIT margin (adjusted) of 21.0% (previous year: 8.5%), an increase of 1257bps
• Cash flow from operating activities of CHF 117 million (previous year: CHF 98 million), an increase of 20%
• Free cash flow of CHF 66 million (previous year: CHF 56 million), an increase of 18%

Business Highlights for 2022

New products

Demand was fueled by long-term investments in R&D materializing in strongly ramping up of customer projects. Also in 2022, u-blox launched numerous innovative products, which greatly enhanced solution capabilities for our customers and are expected to contribute to future growth. Some of these product launches are listed below:

• LARA-L6 module: the world's smallest LTE Cat 4 module with global coverage which is ideal for demanding size-constrained applications including video surveillance, dashcams, high-end telematics, gateways and routers, and connected health devices.
• MIA-M10 module: the world’s smallest GPS module, roughly half the size of competing products, offers the most power-efficient solution for size-constrained battery-powered asset tracking devices and allows developers to design more attractive and comfortable solutions.
• MAYA-W2 module: a tri-radio Wi-Fi 6, Bluetooth LE 5.2 and Thread module, extends the benefits of highly efficient Wi-Fi 6 to industrial applications, particularly when handling crowded networks, while supporting Bluetooth LE 5.2 and Thread.
• Security as a Service: a Certificate lifecycle control Security-as-a-Service (SaaS) that continuously renews device credentials in a fully automated mode which together with u-blox’s existing zero touch provisioning service provides out-of-the-box onboarding to IoT Cloud platforms with total control of the device certificate lifecycle. 

Partnerships

We continuously partner with customers to create or co-develop innovative solutions and complement our internal capabilities with third-party partnerships. During 2022, u-blox entered into several partnerships, including:

• Li Auto, an electric vehicle innovator in China, chose the u-blox ZED-F9K high precision dead reckoning module to provide lane-level accurate positioning data for the assisted driving system in their latest model, the Li L9 6-seat smart SUV. 
• Ricoh integrated u-blox’s ZOE-M8B GNSS module into the new RICOH THETA X. Ricohs’ latest camera, the first of its kind, allows users to shoot high-quality 360-degree spherical images and videos in just one click and to visualize them immediately on a large LCD touch panel. 
• Universal Douglas Lighting Americas, a leading manufacturer of scalable lighting solutions, develops a new open standard Bluetooth Mesh platform based on the u-blox NINA-B406 Bluetooth low energy module which will serve building automation use cases, including smart lighting, access control and energy management.
• GMV, a leader in functional safe positioning systems, to provide ready-to-use functional safe positioning solutions which complement u-blox’s existing GNSS receiver portfolio and advanced GNSS augmentation service PointPerfect. 
• NXP® Semiconductors integrated u-blox positioning and wireless communications modules in their new Orange Box connectivity domain controller (CDC) development platform.

Financial Overview

During 2022, u-blox generated revenues of CHF 623.9 million, EBITDA (adjusted) of CHF 169.9 million and an EBIT (adjusted) of CHF 131.3 million. Revenues in all regions were higher in 2022 compared to the previous year, reflecting strong and broad-based expansion of overall demand for existing and new products and solutions. In particular, the automotive and industrial end markets exhibited robust year-over-year growth. Revenues benefited from increased USD/CHF exchange rates. At 2021 exchange rates, revenue growth would have been 47%.

Revenues by region:

All regions contributed to the encouraging business expansion, with APAC showing the strongest increase.

• APAC: 2022 revenues increased to CHF 245.0 million from CHF 152.7 million in 2021 (+60.4%), driven by strong growth with applications in healthcare, infotainment and navigation, with strongest growth in Australia, Japan and Korea.
• EMEA: 2022 revenues rose to CHF 176.0 million from CHF 124.8 million in 2021 (+41.0%), driven by good business with applications in infotainment and navigation, industrial automation and asset tracking.
• AMEC: 2022 revenues expanded to CHF 202.9 million from CHF 136.6 million in 2021 (+48.5%), driven by robust growth with applications in infotainment, navigation, telematics and healthcare.

Revenues by segment:

• Positioning and wireless products: 2022 revenue for chips and modules for positioning and wireless connectivity that are used in automotive, industrial and consumer applications increased to CHF 622.9 million compared to CHF 413.5 million in 2021.
• Wireless services: 2022 revenues for wireless communication technology services in terms of data services, reference designs and software decreased to CHF 34.1 million compared to
  CHF 35.8 million in 2021 (including intra group revenue).

Adjusted gross profit reached CHF 307.2 million in 2022 from CHF 193.9 million in 2021, resulting in an adjusted gross profit margin of 49.2% (2021: 46.8%). The gross margin benefitted from u-blox active shift of the product mix to higher-end products, price increases, positive scale effects and cost improvement measures.

Adjusted operating expenses, which include R&D, Sales, General & Administration (SG&A) expenses, totaled CHF 177.9 million for 2022, compared to CHF 163.9 million in 2021. As a percentage of revenue, operating expenses were 28.5% of total revenue compared to 39.6% the year before.

R&D expenses (adjusted) increased only slightly to CHF 106.3 million in 2022 compared to
CHF 102.2 million in 2021, while as a percentage of revenue R&D expenses reduced to 17.0% (2021: 24.7%). Improved operational effectiveness resulted in better use of R&D spendings.

Sales, General & Administration (SG&A) expenses (adjusted) in 2022 were CHF 71.6 million, an increase compared to CHF 61.7 million in the previous year, while as a percentage of revenue SG&A expenses (adjusted) decreased to 11.5% in 2022 compared to 14.9% in 2021. SG&A expenses increased due to the fast-growing business.

Share based payment expenses recognized according to IFRS in 2022 were CHF 4.4 million compared to CHF 3.3 million in 2021.

Financial costs of CHF 2.1 million (2021: CHF 6.9 million) consisted primarily of the interest of the outstanding bond and the interest accounted for financial leases under IFRS-16. The share of loss of equity-accounted investees net of tax was CHF 0.2 million in 2022 (2021: CHF 1.8 million).

Net profit (adjusted) before minority interests went up to CHF 109.0 million, compared to CHF 22.9 million in the previous year. EPS (adjusted) in 2022 increased to CHF 15.65 per share compared to CHF 3.30 per share in 2021.

Net cash generated from operating activities

Cash from operating activities further increased to CHF 117.3 million in 2022, compared to
CHF 97.7 million generated in the previous year, thanks to growing business.

Investing Activities

Investments in property, plant and equipment and intangible assets totaled CHF 51.0 million for 2022, compared to CHF 43.1 million in 2021. Free cash flow (before acquisitions) was CHF 66.2 million, compared to CHF 56.0 million in 2021.

Financial Position

At 31 December 2022, u-blox had a solid balance sheet with an equity ratio of 61.6%. Cash and cash equivalents totaled CHF 137.7 million as of 31 December 2022, compared to CHF 83.7 million as of 31 December 2021.

With regard to this strong financial position and the positive outlook, the Board of Directors plans to propose to shareholders at the Annual General Meeting, scheduled for 19 April 2023, a dividend payment of CHF 2.00 per share. This is an increase of 54% and underlines u-blox positioning as an attractive growth stock.

Outlook

The strong orderbook at year-end provides good visibility into 2023. Revenue growth in 2023 is expected to continue at more normalized rates which are in line with our historical average rates while EBITDA (adjusted) and EBIT (adjusted) margins are expected to remain on an elevated level compared with our historic results.

¹⁾ Exchange rate assumptions for 2023: USD: 0.98, EUR: 0.99, GBP: 1.18

Ad Hoc press release with tables

2022 full year report

Presentation

Webcast details

Stephan Zizala, CEO, and Roland Jud, CFO, will host a press conference and webcast with analysts and investors, 10 March, 2023, at 14:00 CET.

Registration Link: https://www.webcast-eqs.com/ublox-2023-fy

The archived version of the webcast will be available at u-blox website:

https://www.u-blox.com/en/presentations

About u-blox

u‑blox (SIX:UBXN) is a global technology leader in positioning and wireless communication in automotive, industrial and consumer markets. Its smart and reliable solutions, services and products let people, vehicles and machines determine their precise position and communicate wirelessly over cellular and short-range networks. With a broad portfolio of chips, modules and secure data services and connectivity, u‑blox is uniquely positioned to empower its customers to develop innovative and reliable solutions for the Internet of Things, quickly and cost‑effectively. With headquarters in Thalwil, Switzerland, the company is globally present with offices in Europe, Asia and the USA. (www.u‑blox.com) Find us on Facebook, LinkedIn, Twitter @ublox, Instagram and YouTube

Financial calendar                                                                                              

Three-month 2023 revenue:12 April 2023

Annual General Meeting:   19 April 2023

Six-month 2023 revenue:   12 July 2023

Half-year 2023 results:       18 August 2023

Nine-month 2023 revenue:   11 October 2023

Disclaimer
This release contains certain forward-looking statements. Such forward‑-looking statements reflect the current views of management and are subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance‑ or achievements of the u‑blox Group to differ materially from those expressed or implied. These include risks related to the success of and demand for the Group’s products, the potential for the Group’s products to become obsolete, the Group’s ability to defend its intellectual property, the Group’s ability to develop and commercialize new products in a timely manner, the dynamic and competitive environment in which the Group operates, the regulatory environment, changes in currency exchange rates, the Group’s ability to generate revenues and profitability, and the Group’s ability to realize its expansion projects in a timely manner. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this report. u-blox is providing the information in this release as of this date and does not undertake any obligation to update any forward-looking statements contained in it as a result of new information, future events or otherwise.

This press release is published in German and English. Should the German translation differ from the English original, the English version is binding.