International Expansion And Connected Device Demand Will Shape Future Opportunity

Key Takeaways

• Strong recurring service revenue growth and international expansion are increasing revenue predictability, profitability, and broadening the addressable market.
  
• Platform licensing and higher-margin products support scalable, high-margin revenue growth independent of Xplora's own device sales.
  
• Heavy reliance on European sales and a narrow product focus make Xplora vulnerable to regional slowdowns, shifting consumer preferences, regulatory pressures, and intensifying competition.

Catalysts

An information technology company, develops wearable smart devices and connectivity services for kids and families in Germany, Sweden, Norway, the United Kingdom, Finland, Denmark, Spain, the United States, and France.

• The company is experiencing strong growth in recurring subscription revenue, driven by higher conversion rates of hardware customers to service subscribers (now reaching a 12-month rolling average of 37%, and 50% in the latest quarter), supported by growing parental demand for safe technology solutions for children. This increases revenue predictability and supports margin expansion.
  
• Xplora is executing a significant international expansion, particularly across senior and youth segments (Doro Connect launch across Nordic and European markets, Best Buy rollout in Canada), tapping into the rising penetration of connected devices in households. This broadens the addressable market and accelerates topline revenue growth.
  
• Launch and scaling of new, higher-margin product lines (X6Play second generation, Aurora and Leva series for seniors) combined with improved supply chain flexibility have driven a 6 percentage-point improvement in gross margins, directly supporting improved earnings.
  
• The company is leveraging B2B partnerships and platform licensing (notably with HMD), allowing its proprietary Guardian/parental control platform to be adopted by other hardware manufacturers. This enables service revenue growth decoupled from Xplora's own device sales and is likely to drive sustained high-margin revenue.
  
• Continuous annual price adjustments, premium upselling, and growing ARPU (average revenue per user) from new and existing customers, coupled with rising technological engagement from families, are directly increasing both total revenue and EBITDA.

Xplora Technologies Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Xplora Technologies's revenue will grow by 24.0% annually over the next 3 years.
• Analysts assume that profit margins will increase from -8.1% today to 8.3% in 3 years time.
• Analysts expect earnings to reach NOK 206.4 million (and earnings per share of NOK 4.48) by about August 2028, up from NOK -105.6 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting NOK228.4 million in earnings, and the most bearish expecting NOK120 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 19.0x on those 2028 earnings, up from -21.7x today. This future PE is lower than the current PE for the NO Electronic industry at 33.4x.
• Analysts expect the number of shares outstanding to grow by 3.57% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.4%, as per the Simply Wall St company report.

Xplora Technologies Future Earnings Per Share Growth

Risks

• Xplora's geographic revenue concentration in Europe, with only 2% of Kids & Youth sales in North America and limited presence elsewhere, exposes it to regional market saturation and leaves future revenue growth highly vulnerable to slowdowns or competitive shifts in its core markets.
  
• Despite strong service subscription growth, Xplora's product portfolio remains focused on smartwatches and basic phones for Kids, Youth, and Seniors, making it susceptible to changing consumer preferences-especially if multifunctional smartphones or broader IoT solutions for families become preferred, which could sharply reduce future addressable market and long-term revenue growth.
  
• The Kids & Youth wearable and senior phone markets are facing increasing competition from large technology firms and alternative device makers, raising customer acquisition costs and potential for declining device and service margins, which could erode profitability over time as industry commoditization accelerates.
  
• High gross margins and EBITDA are currently supported by price increases, product mix shifts, and recurring service fees-but ongoing regulatory changes, especially around data privacy, online safety, and children's/elderly data management, could increase compliance costs and constrain feature sets, thereby impacting both net margins and recurring revenue streams in the long term.
  
• Xplora's scaling ambitions are predicated on successful execution of large rollouts (e.g., Doro SIM launch, Youth segment expansion, North American growth, B2B partnerships), but significant execution risks exist-including delays in technical integration, underperformance in new geographies, and backend/logistic challenges-which could halt or reverse operating leverage gains and limit EBITDA or earnings growth.

Valuation

• The analysts have a consensus price target of NOK62.75 for Xplora Technologies based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of NOK70.0, and the most bearish reporting a price target of just NOK55.5.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be NOK2.5 billion, earnings will come to NOK206.4 million, and it would be trading on a PE ratio of 19.0x, assuming you use a discount rate of 8.4%.
  
• Given the current share price of NOK51.6, the analyst price target of NOK62.75 is 17.8% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.