Desjardins Raises Target Desjardins Securities analyst Benoit Poirier sees "buoyant prospects ahead" for Kraken Robotics Inc. following the release of in-line fourth-quarter 2024 financial results and 2025 guidance, pointing to a growing sales pipeline that is poised to more than double to close to $2-billion amid “significant” growth in its SeaPower subsea battery business increased interest in its ThunderFish XL Autonomous Underwater Vehicle (XL-AUV).
“While 2025 guidance has a slightly wider target range (vs last year), management is confident that if it successfully closes some booking opportunities, it will be able to hit the top end of the range,” he said. “Another element that caught our attention was that Kraken indicated that it is now targeting to secure an additional XL-AUV customer (incremental to Anduril) before year-end. XL-AUVs are significantly more accretive from a volume standpoint as they generally take 50–60 batteries, generating $10-million plus per unit in revenue for Kraken. Using Kraken’s investor presentation as a reference, some of the potential XL-AUV customers could be Boeing, Naval Group, Kongsberg and BAE Systems, to name a few.“
Before the bell on Monday, the St. John’s-based subsea intelligence provider reported quarterly revenue of $28.1-million, exceeding Mr. Poirier’s $27.89-million estimate and up 44 per cent sequentially. Adjusted earnings per share of 1 cent matched both his forecast and the result from the third quarter.
“Looking ahead, Kraken expects capex/intangibles investment of $13–17-million in 2025 (vs $4–5-million last year), within range of our forecast of $16.7-million but higher than consensus of $10.8-million (we would not read too much into this as the facility was wellcommunicated by management)," he said. “Despite this year-over-year bump in capex (mainly driven by the new Nova Scotia facility ($10-million) as well as additional investments in the 3D acquisition and two additional KATFISH units for the service fleet), Kraken expects FCF of $15-million, which is above our previous forecast of $9-million and consensus of $8-million as a result of positive working capital reversals (due to the Canadian Navy RMDS contract assets to be unwound and contract elements). Overall, when including the 2Q cash outflow for the 3D acquisition ($23-million), we now forecast Kraken ending the year with a well-capitalized balance sheet and net leverage ratio of negative 1.0 times ($30-million net cash position), helped by $16-million of FCF.”
After raising his revenue and earnings expectations through 2027, Mr. Poirier bumped his target for Kraken shares to $4 from $3.60, reaffirming a “buy” recommendation. The average is $3.39.
“We now forecast total revenue of $128-million in 2025, driven by $49-million from battery (German facility basically maxed out), $21-million from KATFISH (we estimate three units), $17-million from SAS/sonar (almost doubling revenue vs 2024) and $42-million of service revenue,” he said. “We view the potential new non-Anduril XL-AUV customer as a positive catalyst for the story as it would be incremental to consensus while also lowering concentration risk.”