Xaar’s Half-Year: Growth Amidst Transformation
Xaar’s H1 2025 results land like a precision inkjet droplet – targeted, deliberate, and revealing a company mid-pivot. While the headline numbers show modest revenue growth (7% to £27.2m), the real story lies beneath: a strategic shift towards high-potential industrial applications, particularly in electric vehicles and automotive, while navigating near-term headwinds.
The Financial Canvas
Let’s unpack the palette:
- Revenue Uplift: £27.2m (H1 2024: £25.5m), driven by a standout 20% surge in Printhead revenue to £19.9m.
- Growth Engine: The explosive rise of jewellery wax applications – £3.3m revenue vs. just £0.6m last year – demonstrates Xaar’s tech disrupting new markets.
- Margin & Profit: Gross margin dipped slightly to 36.5% (H1 2024: 37.4%). Adjusted EBITDA softened to £0.76m (£0.90m), while the reported loss widened to £2.6m (£1.8m). Cash reserves dipped to £5.1m (£8.2m at Dec 2024), reflecting deliberate investment for future growth.
- Segment Dynamics: Engineered Print Systems (EPS) felt the sting of tariff uncertainty, revenue down 16% to £6.3m. Megnajet also softened slightly.
The takeaway? It’s a mixed bag, but crucially, performance is in line with expectations, and the company is actively investing cash to capture the substantial opportunities it sees ahead.
Where the Ink is Really Flowing: Strategic Pivot Takes Hold
Xaar isn’t just selling printheads; it’s selling disruption. Their unique ability to jet highly viscous fluids (up to 1000 cP at ambient – a key differentiator) unlocks applications incumbents can’t touch. H1 progress in their target markets is telling:
1. Electric Vehicle (EV) Battery Coating: The Crown Jewel?
This is arguably Xaar’s most exciting near-to-medium term play. The problem they solve is critical: next-gen 800V batteries generate more heat, making traditional plastic wrap insulation risky and spray painting inefficient (~40% paint loss). Xaar’s inkjet solution offers superior heat resistance, higher yield (less waste, no recovery systems needed), and lower cost per unit.
- Progress: Partnerships with major automation players Shifang, Omijia, and Sokan are key. These OEMs supply the battery production lines for leading manufacturers. Revenue is already in the “single-digit millions” from initial orders, with significant ramp-up anticipated.
- Scale: The potential is vast. Converting just the existing ~1,300 battery lines in China could mean £100m+ initial revenue for Xaar, plus recurring revenue from printhead replacements every 2-3 years. They are the clear tech leader here.
2. Automotive Coating: Beyond Decals
Forget cheap stickers prone to damage. Xaar’s tech enables high-quality, durable graphics applied directly on the production line, even on complex surfaces. Collaborators Axalta (coatings) and Dürr (robotics, paints 50% of global cars) are demonstrating the tech to premium manufacturers.
- Milestone: Received first inbound quote requests from a luxury carmaker in Q2 2025 – a concrete sign of interest.
- Model Shift: Crucially, Xaar’s revenue here would be tied to the *number of cars painted*, not just printhead sales. Every 1% of the 90m-car global market (900k cars) using their tech would be materially lucrative.
3. Desktop 3D Printing: Democratising Colour
Xaar aims to bridge the gap between cheap, monochrome hobbyist printers and prohibitively expensive (£50k+) professional colour systems. Partner Flashforge launched the world’s first full-colour, high-resolution desktop printer using Xaar tech last November at an accessible price point.
- Validation: A competitor’s similarly priced 2.5D printer saw “sales a multiple of that initially expected,” boosting confidence in the market. Flashforge is refining its go-to-market strategy for a year-end push.
- Potential: Tapping just 1% of the ~1 million unit annual market translates to multi-million pound revenue for Xaar, plus recurring printhead sales.
Jewellery Wax: The Proof of Concept
This market is Xaar’s current success story, proving their disruptive potential. From zero just two years ago, they now supply 4 of the top 5 OEMs. Revenue rocketed to £3.3m (H1 2024: £0.6m), significantly ahead of plan. Flashforge’s Waxjet 530 launch in April 2025 saw demand almost double expectations.
Navigating the Headwinds
It’s not all smooth jetting:
- EPS Drag: Tariff-induced uncertainty and a weak historic pipeline hit EPS revenue. New management is focused on rebuilding the order book for 2026 recovery.
- Cash Deployment: The net cash reduction (£3.1m outflow) reflects investment in capital equipment and R&D – necessary but noteworthy. The undrawn £5m RCF provides flexibility.
- Macro Jitters: Global geopolitical tensions and tariffs remain persistent risks, acknowledged by management.
Outlook: Confidence in the Trajectory
Management reaffirms 2025 expectations. Revenue is anticipated to be H2-weighted, with Printhead leading the charge while EPS recovers. The core message is clear: the foundations are being laid now in EV, automotive, and 3D printing for substantial medium-term growth at attractive margins. The jewellery wax success is a tangible example of how quickly Xaar’s technology can scale once adopted by key players in a market.
The Investor Lens
Xaar presents a compelling, albeit nuanced, picture. Near-term profitability remains elusive, and cash is being deployed aggressively. However, the strategic pivot towards large, high-growth industrial markets (EV, auto) leveraging their unique viscous fluid tech is demonstrably progressing. The explosive growth in jewellery wax validates their market disruption model. For investors with a medium-term horizon, Xaar offers exposure to potentially transformative industrial technology plays. The key will be watching the conversion of partnerships (Sokan, Shifang, Omijia, Axalta/Dürr) and Flashforge’s 3D launch into sustained, scalable revenue streams. The ambition is clear; the next 12-18 months are critical for execution.
