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Phase One Group 2024 Annual Report Summary

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Paul Spinnler

Well-known member
TechTalk - your statement fundamentally misrepresents ("sugarcoats") Capture One's financial reality and ignores the substantial operational turmoil that directly correlates with the profit collapse documented in their annual reports. Yes it stayed profitable - with extreme fluctuations and is actually a shrinking business. The worst case scenario for a PE investor who actually aims to more than double a businesses profitability within the typical 4-5y holding period. C1 is just a mess these days.

Let's talk about that "Consistent Profitability" viewpoint for a second - using today's EUR to DKK exchange rate of approximately 7.46, the "Profit for the year" figures tell a story of severe instability which is problematic for a highly leveraged investment (LBO):
  • 2020: 32,756 DKK (€4.39M)
  • 2021: 15,400 DKK (€2.06M) - 53% decline [15,400÷32,756 = 0.47x]
  • 2022: 25,718 DKK (€3.45M) - 67% increase [25,718÷15,400 = 1.67x]
  • 2023: 5,468 DKK (€0.73M) - 79% collapse [5,468÷25,718 = 0.21x]
  • 2024: 25,055 DKK (€3.36M) - 358% rebound [25,055÷5,468 = 4.58x]
This is "consistent profitability" only in the literal sense, but not really - it's extreme volatile performance with a near-death experience in 2023, ie barely staying profitable at one point.

Your also ignoring some key context, links below: the 2023 profit collapse wasn't isolated - it coincided with their cash grab to introduce subscriptions which led to organizational chaos after their retail customer base collapsed:
  1. Subscription Model Disaster: In February 2023, Capture One eliminated upgrade pricing and stripped new features from perpetual licenses, forcing customers toward subscriptions. This move was widely criticized as making "perpetual licences as unpalatable as possible" and leaving customers feeling "duped." Source: https://www.dpreview.com/news/31643...ude-new-features-functionality-after-purchase User reactions: https://blog.thomasfitzgeraldphotography.com/blog/2023/1/thoughts-on-capture-ones-licensing-plans
  2. Mass Layoffs and pivot: Capture One conducted significant layoffs in January 2024 as part of what they termed "significant changes," following earlier layoffs after their unpopular subscription model transition. Source: https://www.videomaker.com/news/capture-one-confirms-layoffs-as-part-of-restructure/ Also: https://petapixel.com/2024/01/30/capture-one-lays-off-staff-amid-a-significant-internal-restructure/ and then pivoted to the digital ops / pure pro user base
  3. Failed mobile strategy: The company's iPhone app "failed to impress" when launched in 2023, and they discontinued Capture One Express - the iPhone app was a pure joke at release and the use case to edit on the go still only caters to a subset of users who'd need that.
The real story is this: when a software company's annual profits crash 79% to just €730,000 while conducting layoffs after implementing a SaaS strategy, alienating customers with pricing changes, and discontinuing products, this represents operational crisis, not "normal business variation." The SaaS play almost killed them. After they introduced it I also never upgraded again.

Dismissing these warning signs as routine profit fluctuation demonstrates either a fundamental misunderstanding of corporate financial analysis and is a misrepresentation of a company clearly struggling with strategic direction under private equity ownership. C1 is a horribly underperfoming software investment for Axcel. They work with high leverage and need to provide compounded annualized returns in the region of 20% over the holding period to their investors (ie IRR of 20% or more) - from this perspective this is a value destructive investment as their investors could have just put the money into some conservative assets and made ANY return vs. this being a shrinking business that's on top threatened by the AI shift which kills jobs in the pro fashion and people photography segment they try to specialize in.

If the big brands hiere AI agencies to do campaigns you don't need fashion photographers, P1 cameras and digital operators checking tethered images coming in on their macbooks via C1. You just prompt away for 10% of the cost ...

C1 has a huge problem. Their strategic missteps on one side in the past and now generative AI and difficult business environment for pro phorographers.

All these things were unforeseeable in that way in 2020 ...
 
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TechTalk

TechTalk

Well-known member
I'm not dismissing anything. I'm not saying the amount of profits are consistent. I'm not saying that revenue doesn't vary. I'm certainly not dismissing the losses of the group as misleading. I'm not dismissing the profits on the software side as not consistent enough nor large enough to be a welcome and positive contribution to the group.

I am saying that the profits produced vary — up or down from year to year — which is not unusual for businesses and occurs for a multitude of reasons. I am saying that they aren't recording losses in some years and profits in other years, although that would also not be unusual for a business, but consistently have produced a profit of some amount. Period. This is in the context of their contribution to the group as contrasted to the hardware side of the business which is a money pit.

To quote from the start of this thread: "I'm just interested in the broad picture with some top line and bottom line numbers. As a consumer, I'm not interested in engaging in a complete financial analysis since it is photo equipment which I buy, not the businesses who produce it."
 
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Doppler9000

Well-known member
Precision said:
Not especially. Margins generally increase over time….this is often called a “get well” strategy. IManufacturing gets better, components decrease in cost. Note the correlated shrinkage in the COGS. In the not-unrelated world of computer hardware, I have been party to large product launches and large deals. First unit shipped may even show a negative margin (I.e subsidized) where unit #1000 will be at the desired 30 points.
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Remember that this is in the context of a company making low-volume, labor-intensive products that losing more and more money. Presumably your example is different in this regard.
 
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Paul Spinnler

Well-known member
No, it'll survive, they just need to pivot to defense which I am sure they're doing. Its more like the investors have a lot more work ahead to make this a good investment as they bought it at a peak of medium format photography outlook before they lost market sure to Fuji, Hassy and before the world went totally crazy post Covid.

There's a ton of money in European defense, if they pivot right they can grow.

Photography business is just an offshoot of the industrial business, so it'll stay as long as they'll use new sensors there - which they do.
 
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Johancv

New member
DJI could buy P1 and combine with Hasselblad which they picked up in 2017.

C1 has no future stand-alone.
 
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Precision

Member
Paul Spinnler said:
No, it'll survive, they just need to pivot to defense which I am sure they're doing. <snip>

Photography business is just an offshoot of the industrial business, so it'll stay as long as they'll use new sensors there - which they do.
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This matches my thoughts. Phase One, as a manufacturer at the extreme high end of a very tiny market of photographers using weird-ass cameras.- not viable. Branching out into the Heritage space made sense for a while, but that market was even easier to saturate. But Aerial reconnaissance, particularly given the state of the world…larger market.

photography, as we think about it here, is an afterthought At best, and not a particularly well executed one. the iXM variants could easily have been modified to a mirrorless model like the 907x but instead seem to have been designed specifically to preclude that use case. The IQ4 has many “features” that defeat backward compatibility, (8 pin to 12 pin for no real reason, remove zero latency functionality, incompatible with older DF models) which was touted as “Infinity platform”…but I percieve as a ham fisted attempt at forced obsolescence. Meanwhile, Hasselblad rolls out backs with the bold statement “Use it with about anything we have built for the last 50 years, here’s some cool new lenses for it, but use whatever glass you want”…and they are flying off the shelves at a much more palatable price point.

I know some folks are excited for the release of the semi-mythical IQ5 - but I fully expect that P1 will continue the track record of obsolescence and instead announce, with all the new “innovations”, backwards compatibility is again limited or eliminated. Those Blue Ring lenses are no longer good enough, you need these Purple Ring lenses, and that old XF, well, no one uses those anymore so that body is not a usable. Better get a new XT, and ditch your old inferior glass!

Johancv said:
DJI could buy P1 and combine with Hasselblad which they picked up in 2017.
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To what end? What little IP Phase one has is all centered in Capture One. DJI knows how to make drones, and drone payloads. Hasselblad probably knows a thing or two about cameras. They certainly have the marketing thing figured out. Phase One achieved their market position through acquisition of flailing companies (Leaf, Mamiya) and not strictly through innovation.they are best at cotract manufacturing. Their Dealer network is smaller than what Hasselblad already has. More likely they get swallowed whole by something like Raytheon or Halliburton.…or maybe Sony if there is an appetite to try to grow a medium format market…but I truly doubt their current position is tenable for long.
 
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ThdeDude

Well-known member
Precision said:
...some folks are excited for the release of the semi-mythical IQ5 ...
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As I wrote before, the IQ4-150 was announced (2018) when the iPhone X was then still the current iPhone. In two months, we should see the introduction of the iPhone 17 line. The pro line is expected to have three 48MP sensors.

By all metrics, there is a huge jump in photographic capability between the iPhone X and iPhone 17 Pro. What can we expect to see between IQ4-150 and an IQ5?

Many here would be happy if we would see just updated/upgraded electronics that fulfills what was promised with the "Infinity platform" for the IQ4.
 
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Precision

Member
ThdeDude said:
By all metrics, there is a huge jump in photographic capability between the iPhone X and iPhone 17 Pro. What can we expect to see between IQ4-150 and an IQ5?
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I thought I posted what is to be expected- another round of backward incompatibility. I expect the XF to be in the crosshairs because of those terrible Blue Ring lenses, incapable of delivering against the pixel size/density and aspect ratio of the Jesus back.

now…here is a poser…what if Phase One offered an PAID upgrade to the IQ4, like the HAP-2 effort? Keep the sensor, blow in a premIum firmware that addresses the gaps in the IQ4 and adds some new functionality? Would anyone sign up for that, or is any Firmware upgrade expected to be free? There is absolutely no incentive for a manufacturer to spend cycles developing firmware advancements other than to reduce warranty claims…it’s just NRE and potentially bleeds sales from the new hotness.

Would that be perceived as another Phase One money grab like the C1 subscription fiasco?
 
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Paul Spinnler

Well-known member
The losses are mostly accounting losses, EBITDA / operational cashflow are still positive. It means just that they can offset a lot of the profits with non-cash charges ie acquisition related amortization (if memory serves well as I looked into this a year or two ago). Ie it helps them to pay less or no taxes.

This said, the business has been underpeforming vs. expectations on all fronts and the current tariff situation with the uncertainty on the corporate side where to invest will also hit their H1 heavily, I am sure.

They are however forced in aerial to use the new chip as their competitors already offer it and if they successfully enter the defense sector we could see a turnaround.

Think about high res camera systems for drones, etc. Because IQ5 is essentially a "dual use" product for "consumers", which was developed for industrial use, I am sure we'll see one. According to the report it looks like 2026.
 
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ThdeDude

Well-known member
anwarp said:
New Apple sensor patent
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Apple is already well established in making in-house the ARM-chip, just started making the cellular modem chip, and a Wi-Fi chip is supposedly also on its way.

Considering the ever increasing importance of photographic capacity, especially for photocentric, high-end smartphones, wouldn't surprise me if Apple might decide to design and built their own photo sensors.
 
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jduncan

Active member
ThdeDude said:
Apple is already well established in making in-house the ARM-chip, just started making the cellular modem chip, and a Wi-Fi chip is supposedly also on its way.

Considering the ever increasing importance of photographic capacity, especially for photocentric, high-end smartphones, wouldn't surprise me if Apple might decide to design and built their own photo sensors.
Click to expand...
Hi,
I am not saying you are wrong, but it will be a mistake, they can't compite with Sony, it's a capital intensive product category. Now it will be funny if you are right and they try tp have TSMC or Samsung build the chips.
Best regards,
 
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