Rakon Limited Analysis

Overview

Rakon is a global high technology company which was founded in 1967 by Warren Robinson. Rakon designs and manufactures advanced frequency control and timing solutions. The company has four manufacturing plants, including two joint ventures plants, located in New Zealand, France, India and China and five research and development (R&D) centres. Customer support centres are located in ten offices worldwide.

The company's focus is on enabling next generation technologies in the telecommunications, global positioning and space & defence markets.

Rakon designs and manufactures advanced frequency control and timing solutions for telecommunications, global positioning and space and defence applications. Rakon products are found at the forefront of communications where speed and/or reliability are paramount. The company's products provide extremely accurate clocking signals, which are then used to generate precise electrical, radio or optical signals in networks and systems around the globe. Additionally Rakon offers a broad product portfolio to meet its customers timing and frequency control requirements.

Whether it be within wired, wireless and fibre telecommunications networks, navigation devices, or satellites in space. Rakon products enable connectivity.

In May 2006, the company listed on the NZX, raising $66m in a 41.25m offering at $1.60 per share. Since listing, Rakon has achieved a number of key merger and acquisition milestones:

• In 2007 Rakon acquired the frequency control products division of Britain's C-MAC MicroTechnology.
• In 2008 Rakon entered into a joint venture relationship with Indian owned and based Centum Electronics, together establishing Centum Rakon India.
• In 2008 Rakon entered into a joint venture agreement with China based Timemaker Crystal Technology.
• In 2010 Rakon acquired the assets of French based competitor Temex.
• In 2013 Rakon sold its majority stake in Rakon Crystal Chengdu (RCC) to ECEC, as a result of a strategic exit from smart wireless device (SWD) business.
• In December 2015 Rakon announced its investment in Thinxtra, an Internet of Things (IoT) company. Thinxtra became the exclusive Sigfox network operator for Australia and New Zealand and began deploying the network in Australasia in the second quarter of 2016 and announced its expansion into Hong Kong in December 2016.
• In December 2016, Rakon announced that Taiwanese company Siward Crystal Technology Company Limited would invest in Rakon, taking a 16.6 percent share in the company. The investment completed on 15 February 2017.

Performance

The following information was extracted from Rakon Limited's Full Year Results, released 28 May 2025

Hey Highlights

• Rakon navigated one of the most demanding years on record, marked by sharp geo-political shifts and commercial headwinds, recording a net loss after tax of $(5.8)m including $3.6m of one-off restructuring and transaction costs, yet still delivered underlying EBITDA1 of $9.5m, in line with the guidance mid-point and underpinned by a significant second-half rebound.
• 2H25 surge delivered 60% of FY25 revenue, lifted revenue 49% on the first half, and swung underlying EBITDA1 by $16.8 million, setting momentum for FY26.

-Record revenue in Aerospace & Defence segment with 15% year on year (YoY) growth maintaining positive trend for third consecutive year. New contracts secured and strong order book for FY26.

• Telecommunications revenue declined 33% YoY, reflecting muted global 5G capex and, in part, Rakon’s strategic decision to exit supply to a major Chinese telecom-infrastructure customer; encouragingly, orders began to recover in 4Q25 as inventories normalised and selective 5G investment resumed, while Positioning demand remained steady at lower levels.
• AI & Cloud Computing Infrastructure is on track to start delivering significant revenue from FY26, with manufacturing infrastructure in place and latest products, incorporating Rakon’s next-generation semiconductor chips, driving rising demand from Tier-1 players.

-Disciplined inventory management resulted in a reduction of $8.5 million in inventory and improved operating cash flow and strengthened the balance sheet.

• Momentum into FY26 is positive, fuelled by the growth in 2H25 and supported by strong Aerospace & Defence demand and AI & Cloud Computing Infrastructure orders. Further stabilisation expected in Telco. The company is well positioned with its latest suite of products extending Rakon’s technological leadership.

FY25 financial results

More than 60% of Rakon’s FY25 revenue of $103.7m (FY24: $128.0m) was delivered in the 2H, driven by strong revenue growth in Aerospace & Defence and stabilisation in Telecommunications.

Aerospace & Defence delivered its highest ever revenue result, up 15% to $42m, and continues to validate Rakon’s strategy to invest in new high-growth market opportunities. Telecommunications revenue was down 33% to $45m, and Positioning was down 21% to $11m, due to macroeconomic conditions leading to slowed investment in 5G mobile networks globally. Pleasingly, selective global 5G investment was seen in the 2H25, signalling demand recovery. AI & Cloud Computing Infrastructure revenue is currently milestone-focused, with revenue expected to grow significantly from FY26.

Lower gross profit of $45m (FY24: $57.9m) and margin percentage of 43.1% (FY24: 45.2%) were primarily driven by lower order volumes in Telecommunications and Positioning and the impact on economies of scale. Underlying EBITDA1 was $9.5m (FY24: $13.4m), in line with the guidance mid-point. Including one-off restructure and transaction-related costs of $3.6m, the company reported a net loss after tax of $(5.8)m (FY24 profit: $4.5m).