Interview
with André Kudelski

2024 has been a milestone year for the Group, particularly with the sale of SKIDATA. Could you share your perspectives on this significant year?

The divestment of SKIDATA was the tip of the iceberg – one part of a major transformation effort that fundamentally repositions the Kudelski Group. SKIDATA joined the Group over 20 years ago as part of a strategy of convergence between the virtual and the real world. Over the years, the evolution of the market was significantly impacted by the remarkable growth of smart phones following the introduction of the iPhone and Android phones. At the same time, the evolution of security technologies and public access ecosystems limited the positive synergies that could be realized between SKIDATA and the other activities of the Group.

In response to this market evolution, the Board of Directors considered several different options for sustainably growing the Group’s business lines in the future. Fundamental to the Group’s strategy is the conviction that security is part of our core DNA. We believe that aligning our business focus around Digital TV, Cybersecurity and IoT will better enable the Group to realize synergies that support profitable growth in the future. Divesting SKIDATA also has the benefit of fundamentally strengthening the company’s balance sheet.

With a renewed focus on security technologies and the divestment of a business unit representing 40% of the Group’s revenues, it should be evident that the Group is not continuing business as usual. The Group’s transformation effort is a significant one that we expect to increase the future trajectory of growth and decrease the operating costs we incur to achieve that growth.

As we move into 2025, we believe the Group is well positioned to leverage its leading security technologies to drive profitable growth in the future. With the transformation, we now have a more focused and more efficient organization that is committed to delivering that growth, and we have a strong balance sheet, with no financial debt, that serves as a solid foundation for our future.

Could you provide some insights about the Group’s new strategy, which is to focus on core digital security?

For more than 70 years, the Group’s strength has been delivering innovative technologies that address problems many considered to be impossible to solve. Digital security was the core element of many of our most innovative and profitable solutions. By placing a strong emphasis on core digital security technologies for our future, we are back to our roots, with proven capabilities and a commitment to deliver innovative solutions to existing and new markets.

What are your views on the general performance of the Group in this context?

2024 was a challenging year for the Group. Our management team was keenly focused on executing on our transformation plan, including the sale of SKIDATA on terms and conditions that were in line with the expectations of our Board of Directors, and the repayment of all of our financial debt. Of course, we were also managing closely SKIDATA’s performance in 2024 in order to minimize any disruption caused by the sale process. Overall, the financial performance of our three continuing business activities were below our targets for the year, but with the closing of the SKIDATA transaction in September and the successful repayment of our financial debt obligations, we achieved our primary goal for the year, which was to fundamentally reposition the Group for the future.

With the transformation, we now have a more focused and more efficient organization.

Could you shed light on the transition of the Digital Television segment to Core Digital Security, particularly with NAGRAVISION now taking over activities previously managed by Kudelski IoT?

Last year, as part of its ongoing strategy review, the Board of Directors seized the opportunity to redefine the objectives and structure of each of the Group’s business lines, with the goal of maximizing future potential and addressing key issues, such as the need to reduce complexity and operating costs. The result is a transformed structure that puts both Kudelski Security and Kudelski IoT on a better path to growth and profitability. For Nagravision, the transformation is more fundamental; we have taken the opportunity to ensure that this business is equipped with the key technologies it needs to deliver innovative solutions in the field of digital security that address new and emerging opportunities in video and beyond. This required that the sales organization be reinvented, with two distinct approaches, one strategy for key accounts and another for new technologies. We believe this new organization will more efficiently serve existing clients while more effectively promoting new innovative solutions to both new and existing clients.

How do you foresee this shift benefitting NAGRAVISION’s performance?

For Nagravision, the transformation means continuing to do business with key clients in an efficient way while more successfully selling new solutions with dedicated teams to clients and prospective clients in both existing and new markets. The combination of the technology teams from Digital TV and IoT creates a digital security technology powerhouse that is able to address new market needs while in parallel reducing the cost structure by eliminating complexity and redundancies.

Will focusing on RecovR help Kudelski IoT reach profitability?

Kudelski IoT has proven its capability to address market needs with an innovative tracking solution for the automotive industry. Based on the growth and profitability potential of this product line, we expect Kudelski IoT will reach profitability before the end of 2026. In addition, new applications for our asset tracking solution are currently under development and are expected to contribute to future growth. 

And what about Kudelski Security in this new context?

The priority for Kudelski Security in 2024 was to improve its profitability and to adapt its strategy for new market segments, such as operational technology (OT) security. Another key priority has been to better integrate its US and European teams in order to achieve more synergies and share best practices. Important progress was made in these two areas during the year, and the business unit remains on track for achieving its profitability goals.

What are the key risks and opportunities that AI presents for digital security, and how is the Group addressing them?

There is little doubt that AI is a significant disrupter in several industries, including ours. We see this as an important opportunity to innovate and to deliver new solutions in a number of fields, including for customer retention (Core Digital Security), faster, more efficient and cost-effective responses to cyber threats (Kudelski Security), and high-precision localization and tracking capabilities (Kudelski IoT). It is also worth highlighting that AI gives the bad guys, including hackers, some powerful new tools to be more effective, both in terms of their costs and impacts, which represents another opportunity for Kudelski Security to help address a serious threat in the market.

In your opinion, what do you consider to be the most impactful long-term innovation for the Group?

We are currently working on some highly confidential projects that are quite exciting, but we are not yet able to disclose them. Regarding the projects that we can discuss, we are very excited about our unique digital security technology that allows decisions to be taken in a secure and autonomous way. This technology will get additional traction with the development of Edge AI computing and will enable new innovative solutions that require quick and secure actions to be taken.

What are the key market trends shaping 2025?

We see opportunities in our key markets, including video streaming, cybersecurity, asset tracking and core digital security. However, the current volatile geopolitical situation has the potential to bring some head winds to global growth in 2025. Agility and flexibility remain extremely important attributes for any business operating in the current environment. With our transformation, we believe the Group is better positioned to take advantage of the market opportunities while navigating the head winds.

How do you anticipate the international geopolitical context influencing the activities of the Group?

By investing in the US market, including our second headquarters, the Group has become more resilient in the face of growing geopolitical tensions. With our market presence in both Europe and the US and a strong balance sheet, we are better positioned to address opportunities in these markets and to weather any storms in today’s more complex world.

With our market presence in both Europe and the US and a strong balance sheet, we are better positioned to address opportunities in these markets and to weather any storms in today's more complex world.

Do you have any closing thoughts?

We are excited by the progress of the transformation that we initiated in early 2024. Our business units are more focused around our core technologies, and our teams are committed to delivering sustainable profitability in the future. We look forward to providing further updates as our progress develops. In the meantime, on behalf of the Board of Directors, I would like to thank our clients, employees, shareholders and partners for their trust and patience as we navigate the challenges and opportunities of our journey together.