Mips

July-September 2024

• Net sales increased by 61% to SEK 123m (77), organic growth amounted to 69% during the quarter
• Operating profit increased by 219% to SEK 48m (15)
• Operating margin increased by 19.0 percentage points to 38.5% (19.5)
• Cash flow from operating activities increased by SEK 24m to SEK 36m (12)
• Earnings per share, diluted, increased by 165% and amounted to SEK 1.37 (0.52)

January-September 2024

• Net sales increased by 27% to SEK 339m (266), organic growth amounted to 29%
• Operating profit increased by 112% to SEK 113m (53)
• Operating margin improved by 13.3 percentage points to 33.3% (20.0)
• Cash flow from operating activities increased by SEK 77m to SEK 56m (-21)
• Earnings per share, diluted, increased by 83% to SEK 3.33 (1.82)

Another strong quarter with good growth in all categories
Once again we delivered a strong quarter with organic sales growth of 69 percent compared with the prior year. This growth is mainly being driven by the Sports category, which is our largest category in terms of sales. It is also positive that all categories show strong development.

In the Sports and Motorcycle categories, we are seeing that the more normal inventory levels at retailers and at helmet brands mean that they have started to order products from us again rather than taking products from their own stocks. At the same time, Mips continues to win new customers and grow the number of helmet models at existing customers, and the rate of new projects is still at an all-time high. We are now seeing the effect of the fast rate of implementation of Mips’ technology in new helmets being reflected in sales. The decrease in revenue from services this quarter is entirely attributable to the prior year’s revenues from tools development for specific projects, and is not due to a reduction in the number of projects started.

We have delivered our best quarter ever in the Safety category. Here we are seeing that the roll-out of all the new helmet models equipped with our technology is starting to generate the expected market demand.

There has been good development so far this year and organic growth during the first nine months of the year increased by 29 percent, and has accelerated during the course of the year.

The increase in net sales has led to a substantial improvement in profitability during the quarter, thanks to our scalable business model. Operating profit improved by 219 percent to SEK 48m (15) this quarter, and the operating margin therefore improved to 39 percent (19). During the first nine months of the year, the operating profit has increased from SEK 53m to SEK 113m, and the operating margin has improved, reaching 33 percent (20). The operating cash flow amounted to SEK 36m (12) in the quarter, and for the first nine months of the year the cash flow was SEK 56m (-21).

Helmet category Sports – continued strong progress in all sub-categories
We achieved growth of 61 percent in the Sports helmet category this quarter, and for the fourth quarter in a row we delivered growth in the bike sub-category, our largest sub-category. Global inventory levels are now at a healthier level than in the very unstable years during and just after the pandemic. However, many retailers are still trying to come to terms with an unfavourable product mix in the bike category as a whole, but the situation is now far better than during the last two years. According to current market data for North America, the growth in volumes has been better than the growth in sales, which indicates that there is still high pressure on clearance sales on bikes in this important market for Mips.

Eurobike, the largest trade fair of the year in the bike sector, took place this quarter. Visitor numbers were high, and we experienced a continued great level of interest in Mips. The trade fair reinforced our sense that the sector is starting to feel more positive after a challenging period of high inventory levels and reduced sales. These high levels of inventory have meant that many helmet brands have not launched as many products as usual. It will therefore be interesting to see how all the new helmet models are received as they are launched during the upcoming season.

Helmet category Motorcycle – strong growth in the quarter
In the Motorcycle helmet category we delivered sales growth of 55 percent for the quarter, and we are happy to see our growth taking off again in this category too. As in the Sports category, growth was primarily driven by customers buying from us again rather than focusing on reducing their inventories, coupled with market launches of new helmet models equipped with Mips’ safety system.

Our assessment is that the market has recovered slightly during this recent period, but we are still seeing a challenging consumer market and do not expect the general market situation in the Motorcycle category as a whole to contribute to our growth journey in the short term. Our growth will mainly be driven by taking greater market share and the roll-out of new helmet models equipped with Mips’ technology.

Helmet category Safety – best quarter so far
We delivered our largest quarter so far in the Safety helmet category and we see good growth of 92 percent. The two largest trade fairs, ASSP and NSC, were held in the US during the quarter. At these events we saw that interest in Mips’ technology is still on the rise, above all amongst end users who increasingly demand helmets with our safety system. While larger volume sales with selected helmet brands have been slightly slower than we had hoped, we are delighted to see that growth is now starting to take off and we remain very positive about this category over the long term.

Recovery consistent with our expectations, but the consumer market remains challenging
Developments in the third quarter were strong, and in line with our expectations. I’m pleased that all of our sub-categories grew during the quarter, despite a challenging consumer market. Our customers are still showing plenty of interest in developing new helmets equipped with Mips’ safety system in all three categories, and the number of completed helmets developed with our technology will be the highest ever this year.

It is nevertheless important to point out that the consumer market is still challenging and even though Mips is experiencing positive developments, the consumer market is still neither fully normalized nor particularly stable.

We remain convinced that we have the right long-term strategy, with a major focus on innovation and on steadily building a well-recognized ingredient brand that makes us an essential partner within the helmet sector. This strategy will support our long-term plan going forward and our journey towards achieving our financial targets.

Stockholm, October 2024

Max Strandwitz
President and CEO