NEXT Biometrics Q2 2025 slides: Revenue falls sharply amid market challenges and restatements

NEXT Biometrics Group ASA reported a significant Q2 2025 revenue decline to NOK 4.3 million from NOK 18.3 million year-over-year, with adjusted EBITDA deteriorating to negative NOK 14.2 million, primarily attributed to market slowdowns in China and India, coupled with substantial revenue restatements including a NOK 1.7 million Q2 reversal and a NOK 12.6 million restatement for 2024 due to sales irregularities. Despite these severe financial setbacks, the company launched new products like NEXT Granite and Basalt L1 Slim, securing breakthrough orders such as a NOK 3.2 million FAP30 deal and a NOK 2.5 million IAM order with recurring revenue potential. Management maintains an optimistic outlook, projecting a recovery in the second half of 2025 to achieve NOK 25-30 million in quarterly revenues by Q4 2025/Q1 2026, banking on new product adoption and market rebound.

Analysis

NEXT Biometrics Group reported a severe deterioration in its financial performance for Q2 2025, with adjusted revenues plummeting to NOK 4.3 million from NOK 18.3 million year-over-year. This top-line collapse, driven by persistent market weakness in China and India, was compounded by a contraction in adjusted gross margin to 39% from 57% and a widening adjusted EBITDA loss to negative NOK 14.2 million. Critically, the results were impacted by significant accounting issues, including a NOK 1.7 million revenue reversal in Q2 and a NOK 12.6 million restatement for 2024 due to sales irregularities in China, which raises serious governance concerns. These adjustments, along with NOK 4.8 million in extraordinary discounts, led to a highly unusual reported revenue of negative NOK 2.2 million for the quarter. In response, management is pivoting towards new, higher-value products, securing a NOK 3.2 million breakthrough order for its new FAP30 sensor and a NOK 2.5 million order in the Identity & Access Management (IAM) space, which management claims could generate recurring annual revenue of NOK 2.5-5 million. Despite the catastrophic quarterly results, management has issued highly ambitious guidance, projecting a recovery to recurring quarterly revenues of NOK 25-30 million by Q4 2025 or Q1 2026. This creates a stark dichotomy between current operational and governance failures and a promised, but unproven, future recovery.

Key Decisions for Investors

• Given the significant revenue restatements due to sales irregularities, investors should treat management's optimistic forward guidance with extreme caution and await tangible evidence of a turnaround in the second half of 2025.
• The company's recovery thesis hinges entirely on the market adoption of its new FAP30 and IAM products; therefore, closely monitor new contract announcements and the execution of recently secured orders as the primary validation points.
• With a negative adjusted EBITDA of NOK 14.2 million and negative reported revenue, it is critical to evaluate the company's cash position and burn rate, as a failure to rapidly increase sales presents a significant liquidity risk.