NextVision eyes US listing after record-breaking IPO and 187% profit surge
NextVision eyes US listing after record-breaking IPO and 187% profit surge
The Israeli company aims for further growth with a potential U.S. stock market debut.
The wave of IPOs in 2020–2021 has led to some significant disappointments for investors in the Israeli capital market. However, among the 120 companies that went public during this period, a few notable successes have emerged. One such company is NextVision, a leader in developing, manufacturing, and marketing day-and-night imaging solutions for ground and aerial platforms like UAVs and drones. This success is demonstrated by the company's latest quarterly report.
NextVision has experienced rapid growth in its business, driven largely by the geopolitical events of recent years, particularly Russia’s invasion of Ukraine in February 2022 and the October 2023 war following Hamas’s attacks on the residents of the Western Negev. These conflicts have spurred an increase in demand for NextVision’s products, especially its cameras, among Israeli customers. Both wars highlighted the growing use of drones, UAVs, and suicide weapons in military operations, prompting many governments worldwide to ramp up defense spending and military procurement.
The company’s customer base has expanded significantly, with the number of active customers growing from 146 in the first three quarters of 2023 to 173 in 2024. This surge has led to increased demand for NextVision’s products, and the company expects this trend to continue in the coming months. As a result, NextVision has raised its 2024 growth target from 70% to 112%, forecasting revenues of $110 million compared to $51.9 million in 2023.
In its Q3 2024 report, NextVision reported a 129% year-over-year increase in revenue, reaching $29.1 million. The company’s net profit soared by 187%, hitting $18 million, while its gross margin improved to 72%, up from 66% in the same quarter of the previous year. This increase in profitability is attributed to improved production processes, more efficient labor, and cost reductions due to higher volumes. Following the report’s release, the company’s stock rose by 9.4%.
The company's current order backlog stands at $77.4 million, which, while lower than the $79.1 million at the end of Q2, is significantly higher than the $48.5 million backlog in the same period last year.
Profitability of a software company
At the conference call for investors that took place on Monday, NextVision chairman, Chen Golan, referred to the decrease in the order backlog and said that "it is a relatively small decrease. The backlog of orders reflects the backlog today, it is very dynamic and changing, so it is possible that while we are talking the backlog has changed, and it is possible that an order will come in and it will change." According to Golan, the military world assess its budgets towards the end of the year, and therefore he believes that the trend of a strong fourth quarter that characterized 2022-2023 will continue this year as well.
Regarding the possibility that Trump's election to the U.S. presidency will bring an end to the Russia-Ukraine war, Golan said, "Wars are not something that ends with a bang. It's not something that happens from one day to the next. These are long processes and we are not talking about a few months either. I think the entire period of the last three years has repositioned the future battlefield that everyone sees in two arenas that exist today, the Middle East and Ukraine. It's a battlefield that's heavily based on drones and UAVs.
"We predict that in the next decade, in fact, in the next seven years, we also see this in market studies, the issue of stocking up in countries will be very significant. If until now things have been bought to use them, I think there will be a massive wave of stocking up. This is about countries, about governments, it's not about short processes, so I think that on a personal level I don't see an immediate effect here. We see a continuation of the trend that exists today in the market for the company's products."
NextVision's big rally
NextVision, which went public in June 2021 at NIS 5.4 per share, reached a record high of NIS 58.1 in May 2024 and was trading at NIS 44.4 as of Monday, representing a market value of over NIS 3.5 billion, a 763% increase since the IPO. With this strong performance and a solid financial position, the company is exploring a potential U.S. listing. CEO Michael Grossman confirmed that while internal discussions are ongoing, no decision has been made yet.
"NextVision is discussing this issue internally, it is an issue that is on our table. At the moment there is still no decision to report on," said Grossman.
As of September 30, 2024, NextVision has a cash balance of $102 million and no financial debt, with equity making up 86% of its total balance sheet. However, the company is actively considering acquisitions to support its growth.
"The company understands that as part of its growth process it needs to make an acquisition. We are working on it a lot, and putting a lot of effort into it," Golan said. According to him, NextVision will not make an acquisition just to "check off a box". He also added, "Recently we have identified many opportunities, we are talking to many companies and I hope that we will be able to share good news in the near future."
