Milestone Revenue Up, Profits Down

Published May 18, 2023 11:49 AM

While Milestone's revenue grew significantly in 2022, the ~25-year-old company's profits plunged. The company told IPVM that it would sacrifice profit for it to make investments for long-term growth but is this the right move?

IPVM Image

In this report, based on an interview with Milestone CFO Lars Larsen, IPVM examines Milestone's financial status and future positions.

For more IPVM's coverage on Milestone, read the following:

Growing ******* *** ******** ******

*********'* *** ******* **** **% ** 2022 ** $*** ******* *** (*.** billion ***), **** ****** **** *** 12% ****** ** ****,**** *** **** ****** ******:

IPVM Image

******* *** ******* ******, *********'* ****** declined **% ***, *******, ** ***, the ****** ***** ** *** **** 5 *****. ****** ****, *********'* ****** trended **** ** *** * ***** leading ** ** **** *** ********* in ****.

IPVM Image

********* *** ****** **** **** ******* is * ********* *** ****-**** **********, and ***** ** ****** ***** *** investment ** *** **** ******* *****:

** **** *** ****** **** ** would ********* ****** *** ** ** invest ** ****-**** ******.

[**] ****, ****, ** ******** ** our *********** ************, ***** ** ********* our ********* ******** ** **%. *** in ****. ****, ** ******** ** our ************ ** **** ** ******** our ****** ******** ** ***** ***********. In **** *** ****,we **** *********** *** ********** ** ********* *** *** ******** ** *** ********. [Emphasis added]

****** **** **** ** * ****-**** journey ** ********** ****** *** **** the ****** ** *** ** ** an ******* ** ****** ** **********:

** ** * **** **** ******* that ** *** ** **accelerate *** ****** *** *** **** **** *** ********* *** ** *** *** ***********. What we have done there was increased presence in the US market. [Emphasis added]

******* ******* *** ******, *********'* ***** margin **** **** **% ** **** to **% ** ****. **** ***** margin ** ****** *** ****** ** the *** ****** ***** ** *********'* Husky ******** (*****, ** ******, **** much ***** ***** ******* **** **** software).

Market ********* *** *********'* ****** ********

****** **** *** ****** ********* ******** in ** ******* ** ~**% * year:

*** ******** **** **** *** ****** is ******* ** ****** **%.

***** ** **** **********, ********* **** significantly ****** **** *** ****** ** 2022 (**% *.*. **%). ** ***** this ** ******* ********, ****** ** we ******* ** *** ********** * key ****** **** ** ***** ****** growth).

**********,********* ********* *** **** ** ****** its **** ******* ** ****, *****, ***** *** **% ****** last ****, ******* **** ** ~**% CAGR *** ****-****. ********* **** **** that ** ** *********** **** **** despite *** *********** ******* ****** ** 2022:

** *** **** ********* ******* ****** (MIPS), ********* ******* ********* *** ******** to **** **** ****** *** **** revenue ** ****.This **** ******* * *** ********* ********. [Emphasis added]

*** ********** ******** ******* * ************ growth ******** **** ** *** **** higher **** *** ****** *******.

************, ****** **** **** **** ********* expects * ****** **** *** ****** growth ** *** ******* **** **** because ** **** *** ******* ** much ********** ** ** ****:

** ***** ****** *higher **** *** ****** ****** ** *** *******. [Emphasis added]

** *** ********** *** ********** ********. But *** ** *** **** ***** as **** ****.

********* **** ***** ** *** **** annual ****** **** ** ******* ** improve ************* ** ****:

*** ********* ********** **** ******** **** there *** **** ******** ************* ** 2023.EBIT(operating ******) *** **** ** ******** ** ** ****** **** ** **** as a result of the anticipated profitability increase from our strategy. [Emphasis added]

High ********* ******* *** ** ******* *********

******* ***** **** ************* **** * 46% ******** ** "************ *** *****" costs, **** ***** ***** ********** **** just **** **** ** ******* (**%) to *** **%.********* ****** ** *** ****** **********:

*** ******** ** ****** ****** ** highercosts *** ********* as a consequence of pursuing Milestone’s growth strategy. [Emphasis added]

********* *** ***** **** *** ********* in **** ** *,*** ** ****. Specifically, *** ******** **** **** **** ~200 ********* ** ~***, * **% growth, ** *** **** ****. *** company ***** ***** *** ********* ** North *******, *** ********* ********** ***** spent ** ******* ******** ** *** 2022 ****** ******:

********* *** ********* ** *** *** members ** *** ******** ***** *****. The **** ********** *** **** ** the ***** ******** ****** ** * part ** *** ******** ********.

***** ******* ** ******, *******, *** marketing ********** ********* ******** ** ****. This *** *** ***** *** ** the *** ****-**-**** **** ******* ******.

Significant ****** ** *** ******** *** ****, **** ** ****

********** *********'* ***** ********** ** *** Americas, *** ******* *** *** ******* growth ** **** ******:

IPVM Image

****** **** **** **** ****** ***** specific ******** ****** ****** *** ********:

****** *** ******** ************, [***** *******] region **** ** **%. ** **, of ******, * ******* ****** ****** the ********. *** *** ** *** key ******* *** *** ***** ****** in ***** *******, ***** **** *** key ************.

*** ** **** *** ***** ***** came. *** **** ** ***** **** later ** ***** ******* **** ** did **, ** *** ** *** the **** ** *** *****. *** comparisons **** **** **** ******.

*** ***** *********** ** **** ** have **** ********* *** ******** ** Mexico. ** ** **** ******** *** staff **** ** ****** *** **** established * *** ****** ** ****** in ****, ** ********** *** ****** in ***** *******.

Product ******* ****** - *****

********* ******** ******* ********, ****** **** Milestone's ***** *** *********** *********** ****** in *** **** **** *** ** more ********* ****** *** **** ****** relationships:

Husky **** ***% **** ****, which was a significant growth. The reason for that was that we did a new, more efficient operational setup and that meant that we were very, say good or lucky in managing our vendor relationship. So we were able to deliver hardware during 2022 when a lot of other hardware vendors were having difficulties due to component shortages and supply chain challenges. [Emphasis added]

************, ****** ******* *** **** ***** is * ******* **** ** *** overall ********* ********, *** ***** ** no **** ** ****** *** *****:

*** **** ** ***** **** ** will ** * ******* ***** ** our ******** ** ** ** ******** the ****** ** *** ********. ** are ************* [*] ******** ******* *** we **** ** ********* ** *** hardware ******** [****] ** ******* *** software.

Product ******* ****** - ****

********* ******** "****,"* ********* ******* ***** ***** ********** *** ***** ** **** ****. Larsen **** ** *** *** ****** this ** ** * *** ****** component *** ********* ** ****:

** ***'* ****** ** ** ** a *********** ****** ** *** ****** in ****. ** ******** ** ** the ** ** *******, *** ** is ***** ** *** ***** ****-** phase, ** ***'* ****** ** ** be * *********** ****** *** ****.

Customer *******

****** **** ********* *** **** **** growth ****** ********* ** ********* *****:

** *** ******* ** *** ** the ********, *** ** *** ****** about *** **** ****** ** *** of *** ********. ** *** *** growing ** *** ** *** ********** segments **** **** *** ******.

** *** **** ******* ** *** USA **** **-** ****** *************, ** the **** **** **** ** *** in *** ***** *************.

********* ********* **-** ****** ******** ** the *****-*** ******, *** ** **** not **** ***** ** ********* ***** in ******** ******* **** ** ******* since ** ** *** * ***** for *** ****.

Relationship **** ********

********* **** **** **** ** ***** to ****** ******** ** **%*** ****** ********* ** *** **** dedicated *******. ****** ********** ** *** its ******* ************* *** ***** ****** in *** *** *** ******* ******:

** **** ******* *** ****** ** partners, *** * *** ** ******** did *** ** * *** ** business **** ** *******. **** ** can *** ** ****it *** *** *** ****** **** ** **** **** ******* ***. The partners that we do work with, and the new structure of the partner program, their US partners also want to grow up with us. We are seeing that a ******** ** *** ******** *** ******* ****** **** **** **** **** **** ************. [Emphasis added]

** **** *** ** *********** *** a ****** **** *** ******, *** the ********** **** ** *** ******* at **** ** ***** ****.

****** ********* **** *** ******** ** the ********** *** ******* **** ** the ******** *** *** ******* ******, not ****** ***** ***************. ** **** emphasized **** ********* **** *** **** direct:

The ******** ** ****[*** **********] ** ** **** **** *** ******** and make sure that we can enable our partners to grow. [Emphasis added]

** *** *** ************ *** ********* in * ********* *** ** *** US ** ** **** **** ************. We *** **** ********* *** ******** in *** **.

*** ****** *** *********, ********* ***** direct **** ** *********** ********:

** *** ******* ***, **** *** try ** ***** *** ******** ** us *** **** ** ** ** a ******* *** **** ** ** to ***** *** ************* ******** **** the ******** ** ** **** ******* partners ****. ****'* ********* *** ** always *** ****.

The ***** ******* ** ** *** * ****** ************ **** *** ********, i.e. spending more time with the partners that have the same ambition of rolling with Milestone as we have grown with them. [Emphasis added]

LenelS2 ************

********* *********** **** *** ****** ******* provider *******, ****** **** ********* ********* it ** ********* ******* ** *** US *** ** **** ***** **** other ******* ** ****:

******* ** * ****** ******* *** us. ** **** **** ******** ****** control *******, *** ** ******, ***** has * **** ********* ********, ************ in *** **. ** ** ** an ********* ******* ****** *** ** work ******* **** *****. [** ****] done **** *** **** *****.

Canon *** ******* **** ************

****** ****** **** ********* ********* ** operate ************* **** *** ****** ***** Canon, ***** ******** ** *** * years ***:

** *** ********* ** *** **** model ** ** **** **** **********. There *** *** **** *** ****** to ****.

********* *********'* ************ **** ****, ***** Canon ******** * ***** ***, ****** said ********* *** *** ******* *** stance *** ******** ** ******* ** usual:

** *** ******* **** **** ** we **** **** ********** *** **** 25 *****.

*******, **** *** ******* ****** **** aggressive ** ********* **** ********* (*.*.,**** ******** "*** ******** ** ******* Them ***",**** ****** ******* * *** ******).

No ********* *&**

********* *** *** **** *********** ************, and ****** **** *** ******* **** not **** *** *&* **********:

*** ** *** ** * ********* basis. ** ******, ** ** ****** on ** ************* *****.

********* *** *** **** * *** minor ************ **** *** *****.

*******

** *** * *** ******* *** Milestone's ****** ******:

(*) *** **** **** ********* ** with **** *********** ******** ** ******** sales *** ************ *****? ** ***** be **** ***** *********** *** ********* to *** **** ***** ** * changing *********** *********** *** ** ***** also ** **** ********* ** ******** too **** *** **** **** **** revenue *** ** *** ************* ******* of ****-**** *******.

(*) *** **** **** ********* ** with *****?********* ********* ******** ********* **** * ***** *** *** that ** ***** *** ******** *** earlier **** ****,********* ******* ********* *******. *** ********* ********* **** ********** and ******* *********** ****** ********** **** be ******** **** ****.

Comments (2)
UI
Undisclosed Integrator #1
May 22, 2023

*** *** ****** *** ******* ** hard *** *** *****, *** *** a *** ** ********* **** **** margin **** ********, *** ********* ***** pushing **** ** ********* ***** *** the ******** ******* ***** ****** **** what **'** ****. ***** **** **** have **** ****** **********. ***** *** solid ****** ******* *** *********, **** need ** ** * ******** ********** for ******* *** *** ******** ** change **** ****.

JH
John Honovich
May 22, 2023
IPVM

*** *** ******

#*, ****** *** *******. *** **** cut **** ****** ** ****** *** to * ****** **** **** ***** discounts **?

**** **** ***** *** ******** ********?

***, *******,*** ************ ** *********