Xaar plc

Xaar reported first-half group revenue growth of 9.2% year on year, with printhead revenue up 5.5% and like-for-like revenue including Megnajet and EPS up 9.2%. Gross margin improved by 220 basis points, and adjusted profit before tax was GBP 0.2 million versus a GBP 0.7 million loss in the prior year. The balance sheet ended with net debt of GBP 0.1 million and adjusted free cash outflow of GBP 4.3 million, mainly due to inventory builds for Flashforge’s Desktop 3D launch. Looking ahead, management said second-half revenue should be much stronger if Flashforge launches in the coming months, and they expect EPS recovery to continue into next year; they also said the business is in line to achieve consensus on profit.

John Mills struck an upbeat but measured tone, emphasizing that Xaar’s differentiation comes from its ability to print high-viscosity, high-pigment fluids that larger competitors cannot. He said the company has moved from a single-product, single-market ceramics business to a much broader platform spanning 21 markets, with a growing installed base that should support replacement revenue over time. He framed Flashforge’s Desktop 3D product as the most exciting near-term catalyst and said the launch could begin a change in the company’s growth trajectory.

Paul James said the first half delivered year-on-year growth across the business and marked a return to profitability, with adjusted profit before tax of GBP 0.2 million. He pointed to gross margin improvement of 220 basis points, operational expenditure up 5.7% for front-end capability and R&D investment, and G&A down 1.6%. Cash flow was pressured by an adjusted free cash outflow of GBP 4.3 million and inventory build to support Flashforge, but he said liquidity is comfortable after expanding facilities to GBP 10 million of revolving credit, GBP 5 million of accordion capacity, and GBP 5 million of invoice discounting, for total facilities of GBP 20 million.

Analysts focused on China, working capital, and the scale/timing of new markets. Management said the new China facility combines sales, training, engineering, demo, and manufacturing, with final assembly for Flashforge Desktop 3D done there while keeping the front end and IP in the U.K. On working capital, Paul James said inventory rose by about GBP 3 million since January to roughly 27,000 to 30,000 printheads, but this should reverse sharply after launch because Chinese customers typically pay in advance. On car paint/NextJet, John Mills said the opportunity is real but timing is longer-term, with meaningful revenue more likely in a 3- to 5-year horizon rather than the next 12 to 18 months.