Tecnotree lands new contract with Tier 1 US operator

Translation: Original published in Finnish on 1/22/2025 at 7:23 am EET.

According to the press release, the new contract is multi-year and worth several million dollars. However, the announcement came in the form of a press release, which somewhat limits the potential size of the deal. In any case, the agreement is very positive for the company, as it is the first major contract in the US market and serves as a first indication of competitiveness there. 

Parties to the agreement not yet disclosed

According to the press release, the customer is a Tier 1 US operator, but the customer's name was not disclosed. The deal was done in conjunction with a system integrator that was not named in the press release. We believe the integrator may have been HCLTech, with whom the company has worked to win contracts in North America. However, there is no certainty at this stage.

Positive news for the company, but no need for immediate forecast changes

Tecnotree has been pursuing growth in developed markets for some time, particularly in the United States. In particular, we believe that growth in developed markets would have a positive impact on the company's cash flow profile, as we expect receivables from these markets to be repatriated more quickly than in emerging markets and the company would not be exposed to the same degree of foreign exchange risk. Competition in the US market is naturally fierce, which can put pressure on margins, and success in the country also requires success on the product development front. Nevertheless, the current agreement is one of the first promising signs of expansion in the US and is therefore positive for the company.

The agreement was announced in a press release, which somewhat limits the potential size of the agreement (the threshold for a stock market release is at least 10% of the previous fiscal year's revenue). The contract will also run for several years. As a result, the notified agreement does not put any immediate upward pressure on our estimates, which already assume growth in the coming years. We expect to have more information on the deal no later than when the financial statements are released. However, we believe that the signal value of the agreement is greater than its pure economic value.