Maintaining financial stability
through unstable times

CFO’s review: Timo Pirskanen

When we look at finances after a year like 2024, it would be easy to talk only about disappointment and poor sales figures. For iLOQ, the year was not all bad. Sales revenue took a hit, but we are financially stable with many recent investments anticipated to start paying off in the immediate foreseeable future.

Europe provided little reason for excitement in 2024

The beginning of 2024 did not see the classic spillover effect from the end of the previous year, which has typically been the case. After a grim start, during Q2 we saw our home market of Finland reach rock bottom and start a slow upward trajectory. Our other stronghold of Sweden is still lagging somewhat behind, and Denmark has also been somewhat underwhelming. In the Nordics, Norway has performed in line with expectations.

In continental Europe, outside of the Nordics, we experienced quite a few positives during an overall challenging year. After years of maturing and establishing a solid presence, we’ve seen the German market finally meeting our current expectations. We are glad to see such a sizable market which we have also invested into heavily, start to provide positive results despite the general global slump we are in. Also, the Benelux have been a subtle success for us within an otherwise slightly underperforming Europe as a whole.

“We anticipate a future where we
are positioned for success thanks
to our courage and foresight
during this latest period of
economical hardship.”

Heavy investments into establishing American presence

Many of the heavy investments made in 2024 are yet to be reflected in sales numbers as we speak. The majority of investments have gone towards establishing iLOQ on the US market. The investments have included establishing an independent American business entity, R&D developments aimed at building up the competitiveness of our keyless portfolio on the American market and most recently the opening of our very own distribution center in Dallas, Texas.

We see great potential for iLOQ in USA. There have been many great discussions, with a number of big clients in the POC or negotiation phases with a long pipeline waiting to materialize into active business. We are quietly optimistic with such strong footwork done in the US and a string of new features and technical developments coming up. While we are looking to expand our presence in the residential sector, particularly in multifamily housing in big cities, we are already seeing the vast interest in our portfolio for the critical infrastructure market.

Promising outlook for critical infrastructure in major markets

The interesting developments in our critical infrastructure business are not just limited to the US. But the geographical size of America, just as is the case for Australia, lends itself to enjoying the benefits of our mobile access management solutions where the real-world location of service personnel or a bunch of physical keys are no-longer an issue. We are seeing interest from new industrial applications such as EV-charging networks, transportation networks and logistics and distribution.

Other segments where our solutions are popular due to often remote locations and the need for sporadic access for a vast number of service and maintenance providers include telecom towers, energy storage facilities and data centers. To this day, iLOQ’s offering for our industrial clientele is completely unique. But these projects obviously take longer to materialize, with long negotiations and POC or testing periods.

Building organisational competitiveness on a global scale

For iLOQ, being technologically ahead of the competition and also having the proof of ESG-compliance already in place, has allowed us to stay outside of any pricing wars and pressures to dish out discounts.  In fact, our sales margins have remained good, and profit margins have even grown during these challenging years. And as with our bigger clients, ESG performance is already something that is expected and affects unit price directly, we have taken steps to be ahead of the curve in terms of CSRD reporting and recognised certifications such as ECOVADIS.

Organisational changes being implemented currently will also give our global organisation better capabilities for making critical business and financial decisions locally and regionally. The three-region structure we are moving towards will provide both more freedom, but also more responsibility to the key geographical markets. Restructuring is being done to ensure that we become more competitive, not just as a company, but as a local player in every market we are invested in.

Solid financial state secured by resilience and strong investor trust

The year 2024, while sales was slower than usual, afforded us the time to clean out our closets. In addition to management training and organizational restructuring, we were also able to shed some of the financial burden that was weighing us down. The year saw us finally clearing out the abnormal stockpile born as a result of futureproofing done during the Covid period to alleviate the subsequent threat of component shortages. While at the time it secured availability, it also tied up capital into stock and affected our cashflow and working capital negatively.

And finally, to show the trust our investors have in our business going forward, in early 2024 we renewed the 55M€ bond with our owners, securing the continuity of our operations for the next five years ahead. We are moving forward with the strong support of our owners and the leadership of visionary management – Finnish Entrepreneur of the Year Award winners (Ernst and Young) into a future where we are positioned for success thanks to our courage and foresight during this latest period of economical hardship.