RTX is a Denmark-based provider of B2B turn-key wireless technology solutions. The Company operates within three business segments: enterprise communications, pro audio, and healthcare. RTX’s business model revolves around framework agreements where the Company partners with its customers to create, design, and manufacture OEM/ODM wireless solutions. RTX has recurring revenue through royalties on the sales of the partnered product, which means that in the development phase of a contract, costs are high and revenue low, and as the contracts mature RTX achieves further unit economics since development costs stagnate while sales increase. RTX is listed on the XCSE Mid Cap.
Wireless Solutions for the Future
RTX (“RTX” or “the Company”) is a Danish provider of B2B turn-key wireless technology solutions, such as headphones and handsets, operational in three business segments: enterprise communications, pro audio, and healthcare. RTX is estimated to grow with a revenue CAGR of 13.9% between 21/22-24/25 by leveraging the Company’s expertise in end-to-end wireless solutions to establish framework agreements with prominent market players such as CISCO and HP. By utilizing these attractive framework agreements, the Company will acquire ARR with low cost after the initial development phase, thus enabling operational margins through improved unit economics as contracts mature. Analyst Group also expects easing component prices and restored supply chains to streamline contract ramp-up and propel RTX’s gross margins from 49% to 52% between 21/22-24/25. By applying a target multiple of 12x EV/EBIT based on a peer valuation, an implied potential price per share of DKK 129.1 is motivated in a Base scenario.
- Framework Agreements Intensify Growth Prospects
Leveraging niched expertise to acquire framework agreements with key market players is RTX’s primary growth driver. The Company currently operates eight extensive framework agreements, which account for over 60% of the Company’s topline. Four of these framework agreements are in the ramp-up phase, where personnel costs are high and revenue low. These framework agreements are expected to enter the main phase within the next three years, increasing ARR by 50.9% to DKK 700.5M in 24/25. Analyst Group also expects RTX to enhance the Company’s EBIT-margins from 6.7% to 13.4% between 21/22-24/25 by achieving further unit economics as contracts mature.
- Macroeconomical Environment Recovering
RTX is set to capitalize on cheaper semiconductor prices and fewer supply chain complications, contributing to the aforementioned EBIT expansion, and a gross margin expansion from 49% to 52% between 21/22-24/25. Since RTX is exposed to a few large framework agreements, semiconductor-shortages effected the Company to a greater extent than competitors that do not have high exposure to delayed early-stage projects with high cost-burdens. Intuitively this means that if macroeconomic environment eases, RTX’s framework agreements will mature quicker, and will thus benefit more than its competitors through scalability.
- Underlying Market Growth
Market research1 indicates that the enterprise communications market is expected to grow with a CAGR of 7.8% between 2021–2025. This growth is driven by a shift in American demand from Wi-Fi/VoWLAN handsets to DECT handsets in addition to high growth in the wireless headset market. Additionally, the pro-audio segment is rebounding from the pandemic due to accelerating demand for large wireless audio systems driven by large amounts of live concerts that were previously delayed due to the pandemic, which RTX is estimated to capitalize on.
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