Embedded Device And IoT Demand Will Unlock Future Opportunities

Key Takeaways

• Short-term revenue is pressured by macro uncertainty, but long-term prospects remain strong due to digital transformation and expanding cross-industry demand for advanced UI/UX solutions.
  
• Strategic acquisitions, sector diversification, and ongoing product innovation enhance upsell opportunities, recurring revenues, and position Qt for enduring growth as market conditions improve.
  
• Ongoing macroeconomic uncertainty, regional risk concentration, and acquisition integration challenges threaten revenue growth, margin stability, and predictability of future recurring earnings.

Catalysts

Offers cross-platform solutions for the software development lifecycle in Finland, rest of Europe, the Asia Pacific, and North America.

• The delay in customer projects due to macroeconomic uncertainty and trade tensions, particularly in automotive and Western markets, has led to below-trend revenue, but management sees this as temporary; as investment decisions normalize and global digital transformation initiatives resume, pent-up demand should convert to stronger top-line growth in upcoming quarters and into next year.
  
• The ongoing proliferation of embedded devices and IoT across industries (automotive, medical, industrial, consumer electronics, and more) continues to expand the need for sophisticated UI/UX frameworks, expanding Qt's addressable market and supporting a long runway for multi-year revenue and client base growth.
  
• The planned acquisition of IAR Systems Group offers immediate cross-sell opportunities, expands the product portfolio, opens new "lead generation" channels, and promises to accelerate IAR's transition from perpetual to higher-margin subscription licensing, all of which could enhance consolidated revenue growth and boost margins.
  
• The continued investment in R&D, particularly in QA tools and new modules (including e-bridging technology), is broadening the product ecosystem, creating more upsell/cross-sell potential and supporting rising average revenue per customer and long-term margin expansion as recurring revenues grow.
  
• Despite short-term weakness in markets like automotive, sectoral diversification (over 70 industries), positive feedback from large global customers, and the absence of major competitive threats position Qt to benefit from long-term trends in increased cross-platform software demand and complexity of embedded user interfaces-offering potential for both revenue and earnings recovery as macro headwinds subside.

Qt Group Oyj Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Qt Group Oyj's revenue will grow by 13.2% annually over the next 3 years.
• Analysts assume that profit margins will increase from 23.0% today to 27.3% in 3 years time.
• Analysts expect earnings to reach €82.8 million (and earnings per share of €3.26) by about August 2028, up from €48.0 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 27.1x on those 2028 earnings, up from 24.5x today. This future PE is lower than the current PE for the GB Software industry at 39.5x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.18%, as per the Simply Wall St company report.

Qt Group Oyj Future Earnings Per Share Growth

Risks

• Persistent macroeconomic uncertainty, particularly in Western automotive and consumer electronics sectors, has led to repeated budget and hiring freezes among key customers, causing delays in both new project initiations and customer expansions-which may result in stagnating or declining revenue growth if these headwinds remain protracted.
  
• Overreliance on economic recovery in specific regions, especially APAC/China, to offset declining or delayed investments in Europe and the Americas, exposes the company to region-specific risks and may create volatility or limit total addressable market growth, impacting future revenue predictability and earnings.
  
• Acquisition risks tied to the proposed IAR Systems deal-including integration challenges, unquantified synergy realization, and the potential for higher operating costs or slowed execution-could weigh on net margins and create uncertainty in realizing long-term profitability gains.
  
• Rising personnel, R&D, and operating costs (including increased headcount, professional services, and costs related to acquisitions and events) are driving EBITDA margin compression amid flat to declining revenue, making sustained profitability dependent on quickly restoring top-line growth.
  
• Customer hesitation in renewing or expanding developer and distribution licenses-driven by uncertainty in end-market demand, global trade tensions, and tariff-related disruptions-may reduce renewal rates or push license volumes lower, posing a risk to recurring revenue streams and future earnings stability.

Valuation

• The analysts have a consensus price target of €73.0 for Qt Group Oyj 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 €85.0, and the most bearish reporting a price target of just €65.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €303.0 million, earnings will come to €82.8 million, and it would be trading on a PE ratio of 27.1x, assuming you use a discount rate of 7.2%.
• Given the current share price of €46.28, the analyst price target of €73.0 is 36.6% 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.