Xaar (LON:XAR) Announces Quarterly Earnings Results

Key Points

• First-half revenue increased 9.2% like-for-like, while adjusted profit before tax improved to £0.2 million from a £0.7 million loss. Printhead revenue rose 5.5% and Megnajet revenue climbed 27%.
• The Flashforge Desktop 3D launch was delayed again, contributing to a £4.3 million adjusted free-cash-flow outflow from inventory buildup, though Xaar has received initial production orders.
• Xaar sees long-term growth potential in high-viscosity printheads and Desktop 3D applications, but near-term results remain exposed to delayed customer spending, lengthy qualification cycles and broader economic volatility. Berenberg maintained a “Buy” rating with a GBX 140 price target.

Xaar (LON:XAR - Get Free Report) announced its quarterly earnings results on Tuesday. The company reported GBX (1.80) earnings per share for the quarter, Digital Look Earnings reports. Xaar had a negative return on equity of 5.90% and a negative net margin of 5.65%.

Here are the key takeaways from Xaar's conference call:

• Revenue rose 9.2% like-for-like in the first half, with printhead revenue up 5.5% and Megnajet revenue up 27%. Adjusted profit before tax improved to £0.2 million from a £0.7 million loss, keeping the company on track with consensus expectations.
• The Flashforge Desktop 3D product launch has been delayed again, although Xaar says it is in pre-launch and has received orders for initial production batches. Inventory buildup to support the launch contributed to a £4.3 million adjusted free-cash-flow outflow and could reverse quickly if the launch proceeds as planned.
• Xaar highlighted expanding adoption of its high-viscosity printhead technology across advanced manufacturing, PCB coating, ceramic glaze, batteries, semiconductors and solar panels. Management is also pursuing higher-value integrated print modules and expects its Dongguan facility to improve cost efficiency, supply-chain resilience and regional responsiveness.
• Management sees substantial long-term opportunity in Desktop 3D, estimating that full-color digital printing could eventually represent about 10% of an 8.8 million-unit annual desktop 3D printer market. The company also expects recurring replacement-printhead revenue from a growing installed base and is targeting gross margins in the high-40% range, potentially reaching 50% over time.
• Near-term performance remains exposed to delayed capital spending, geopolitical and economic volatility, and lengthy customer qualification cycles that can take several years. Battery, automotive coating, semiconductor and solar opportunities are progressing, but management expects meaningful revenue from many of them only over the medium to long term.

Xaar Price Performance

Shares of XAR opened at GBX 124.50 on Tuesday. The stock has a market capitalization of £97.70 million, a P/E ratio of -28.95, a P/E/G ratio of 3.73 and a beta of 0.78. Xaar has a twelve month low of GBX 96.33 and a twelve month high of GBX 150. The company has a 50 day moving average of GBX 127.22 and a 200-day moving average of GBX 123.08. The company has a quick ratio of 1.31, a current ratio of 2.55 and a debt-to-equity ratio of 9.54.

Analyst Ratings Changes

Separately, Berenberg Bank reaffirmed a "buy" rating and set a GBX 140 price objective on shares of Xaar in a research note on Tuesday. One analyst has rated the stock with a Buy rating, Based on data from MarketBeat, the stock has a consensus rating of "Buy" and a consensus price target of GBX 140.

About Xaar

Xaar plc designs, develops, manufactures, markets, and sells printheads and associated products in Europe, the Middle East, Africa, Asia, and the Americas. It operates through four segments: Printhead, Product Print Systems, Digital Imaging, and Ink Supply Systems segments. The company offers print head products; digital imaging solutions, comprising digital inkjet label presses and digital pathology scanners; industrial ink management and supply systems for digital inkjet; electronic products; industrial printing machines; and system components, such as ink system test kit, print manager, hydra ink supply system, midas ink supply system, inkjet development system, head personality card 1000, and 2001+ head personality card.

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