B&O releases preliminary Q3 numbers and adjusts revenue outlook………

[Millemissen]

Here is the official announcement:

B&O Q3 2024

MM

[Ianc2]

I wonder what 2 new products we are getting for Christmas …

BL18 replacement ?

 

[kuyttendaele]

BeoConnect Core and a new headphone.

[Sandyb]

Lowering guidance out of reporting cycle is not great news.

I know they have done this before (last March) on occasion, but still.

Smoothing out the (modest) pandemic era bump in revenue, overall company revenue is broadly unchanged over the last few years, despite price 30% (at least) higher.   Logic suggests volume must be down a similar 30%!

I know they are ok with transitioning to a “leaner” model, but selling less and less at higher and higher prices is awfully risky.

 

[Millemissen]

Sandyb wrote:

I know they are ok with transitioning to a “leaner” model, but selling less and less at higher and higher prices is awfully risky.

I could add….to less and less people.

MM

[Hiort]

Sandyb wrote:

Lowering guidance out of reporting cycle is not great news. I know they have done this before (last March) on occasion, but still. Smoothing out the (modest) pandemic era bump in revenue, overall company revenue is broadly unchanged over the last few years, despite price 30% (at least) higher. Logic suggests volume must be down a similar 30%! I know they are ok with transitioning to a “leaner” model, but selling less and less at higher and higher prices is awfully risky.

Agree. “We improved our earnings despite a lower level of revenue compared to Q2 of last year.”
That does not help if you cannot increase your revenue.

“Our customer base grew by 5%” Wonder how they measure that? Also strange since the revenue decline. Is that maybe people buying headsets that in comparison represent a smaller investment.

[Sandyb]

yes, that 5% is probably accurate is some weird sense / by some highly specific calculation and assumption.   How do they know or define customer base? Some estimate of existing customers +/- new purchasers?  Seems a bit tenuous.

Bigger picture though, I prefer my value vs volume inference – broadly flat revenue (over recent years) adjusted buy 30% higher prices must mean volumes down by approximately 30%.

They wanted to be leaner, so I guess they’re succeeding in that at least.

[trackbeo]

@Sandyb wrote, “I know they are ok with transitioning to a “leaner” model, but selling less and less at higher and higher prices is awfully risky.”  Can you or someone give me the Econ-101 on this?

Presumably there is a breakover point where less&less&less&less becomes “awfully” risky, but at the beginning of the curve, what makes it risky at all?  Ignoring any alleged marketing benefits like “scarcity breeds interest”, “rich people buy B&O”, etc. is there any inherent reason to desire, or fear, same revenue on fewer sales?  The weak spot seems to be the assumption that you actually *do* continue to keep revenue the same and it doesn’t gyrate unexpectedly, but I don’t see how that’s any riskier than being in business in the first place?

[Sandyb]

Note I said risky. Some amongst the existing community assume the strategy of targeting VHNWI’s is doomed to failure, but I’ve counselled caution against that doom.    (since they embarked on this re-targeting 18-24 months ago, I’ve always described it as a survival strategy).

After all there is a certain logic is shifting more of your customer base to where the vast pools of money are concentrated, those who are unaffected by global economic cycles.

The risk comes, to me at least, from holding onto customers you have targeted with scarcity / super luxury / halo status type marketing, in that they may well be more fickle and less sticky as long term customers than before.

And generally, VHWNIs (or even those who stretch to buy 20k+ speakers) have pretty high expectations of both service and performance. In both of these areas we all know B&O, for all their attractive designs, can test the boundaries of acceptability.

If one wanted to set aside these concerns, then yes there is nothing inherently wrong with making current revenues with 30% lower volumes, and their gross margin is improving.   But the size of the customer base you have left then becomes both super important and your existence a bit fragile.

[Bieele]

Being a long term fan and loving my gear, but I have a hard time understanding this approach.
As an example:
– BL5 was priced Euro 19,400 a pair in 2016, the successor BL50 was priced Euro 26,000 a pair at that time. Both a lot of money, but also still felt like value for money (also compared to other brands).

– But: Price of a BL50 pair over the last couple of years:
– 2022: Euro 38,000
– 2023: Euro 46,500
– 2024: Euro 53,500
The BL50 did not get better over time to explain this increase and these increases are way above inflation. I do not see how this strategy can make sense.
Hopefully I can keep my beloved BL5’s up and running for a long time….

[matteventu]

Ianc2 wrote:

I wonder what 2 new products we are getting for Christmas … BL18 replacement ?

Headphones (H100) and earphones.

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