Message from the CEO

In 2024, many elements of our Step Up! process came together, creating a natural moment for our new strategy release, Create & Scale. This new release, introduced at Capital Markets Day, speaks to what we believe in at Nedap: that fixed, long-term strategies do not fit our volatile world. The year 2024 served as proof of that volatility. Challenging market conditions lasted longer than expected. Consequently, revenue for 2024 was 4% lower than in 2023. At the same time, we saw our recurring revenue increase by 19%, a testament to the successful transformation of Nedap over the last few years.

In the years leading up to 2024, our biggest challenge was keeping up with a spike in demand from our customers. In 2024, we instead had to work hard to slow down the well-established flows of components and finished products, reduce inventory levels and scale down production capacity.

As conditions in some of our markets worsened, our partners saw their inventory levels grow rapidly. We first felt the effects in the final quarter of 2023. These developments continued to put pressure on demand for our products in 2024. The negative impact of these challenging conditions lasted longer than expected, particularly in Livestock. Similarly, Security experienced a decline in revenue. This was expected, as its revenue surged in 2023. We achieved an increase in revenue in Retail and Healthcare in 2024.

In the second half of 2024, we began to see the early signs of growing confidence in various key markets. This improvement in market conditions, along with the resulting increase in demand for our products, led to revenue growth during the final quarter of the year.

Step Up! 

Over the last five years, we have taken a dynamic approach to our strategy as part of Step Up! This ongoing process of developing, executing and refining our strategy based on the latest insights has proven valuable for our company. The selection of four key markets—Healthcare, Livestock, Retail and Security—has brought focus and has reduced operational complexity. It has also contributed to our other Step Up! objectives. We have experienced that our greater execution power on the one hand and market focus and entrepreneurship on the other, have become an important part of our competitive edge.

With the introduction of our growth strategy Create & Scale, we articulate our Nedap-wide approach for realizing organic revenue growth. Already, we have developed groundbreaking solutions and scaled them to market-leading positions. With our concrete growth plans, we are well positioned to seize opportunities in our key markets.

Leading Digital Twin Technology company 

In the 2024 fiscal year, we surpassed the milestone of €100 million in annual recurring revenue. Moreover, we now offer subscription-based software services in each of our key markets. While we have definitively left our industrial past behind, we carry forward 95 years of experience. By combining our heritage with the latest technological insights, we have become a leading company in Digital Twin Technology. Our technology stack, based on IoT, RFID, Vision and SaaS, bridges the gap between the physical and digital worlds, helping our customers unlock more of their potential.

Capturing the potential of AI

Over the past year, developments in artificial intelligence (AI) have progressed at an incredible pace. Breakthroughs are happening weekly, and AI is rapidly being integrated into existing solutions. Within Nedap, AI has our full focus too. But more than just enhancing our products and services, we see even greater potential in applying AI within our own organization.

That is because of our long-held emphasis on added value per employee. This is not just a financial KPI but a leading indicator of how effectively we turn market and technology expertise into valuable solutions for our customers. This metric provides insight into high-value activities and low-value activities and has guided major strategic choices, such as focusing on our four key markets, phasing out certain solutions and outsourcing production.

AI offers unique opportunities to further grow our added value per employee. From software development and user interface design to marketing, financial analysis and customer support, AI can accelerate processes, improve quality and boost employee development. At Nedap, we approach AI as we have any opportunity to grow our added value: by creating room for exploration and fostering independent, smart decision-making. With our culture and the quality of our people, we are uniquely positioned to leverage AI's potential.

A proactive approach to sustainability

We made significant progress in our sustainability efforts this year, particularly in preparing for and implementing the Corporate Sustainability Reporting Directive (CSRD). Our team proactively aligned our reporting practices with the new requirements, viewing them not as a compliance exercise, but as an opportunity to make our sustainable practices more explicit and impactful. Because of their hard work, we have successfully reached the milestone of publishing our first sustainability statement in accordance with the CSRD.

The expertise we have gained from implementing CSRD within our company has proven to be a valuable asset, not only as we move forward with our own sustainability efforts but also as customers choose their partners. Like Nedap, many of our customers are dedicating significant resources to CSRD implementation. We have been able to support them in this process, from exchanging knowledge to sharing the ESG data that they need to meet the requirements. On top of that, our innovative digital twin solutions contribute to more sustainable operations for our customers. By optimizing processes and enabling data-driven decisions, our solutions help them to reduce waste and improve resource efficiency. 

Our focus on added value per employee will continue to drive our internal sustainability efforts. Investing in our people's development and fostering a diverse and inclusive work environment are key to sustaining and enhancing our competitive edge.

From recruitment to development

As we prepare to capture the excellent growth opportunities in the four key markets, we consciously invest in strengthening our organization. In recent years, we have invested heavily in attracting talented and driven people to accelerate product development. Additionally, we now have ‘boots on the ground’ in key regions, including our new subsidiary in New Zealand, where our people leverage their local expertise and connections to support our Livestock business partners and pursue commercial opportunities. This is key to building and expanding leading positions in these markets. Our decision to build a dedicated commercial and support team in North America has also proven crucial to growing our market share in the retail market.

As of 2024, we have shifted our focus from recruitment to people and leadership development. The growth in the number of employees consequently slowed in 2024. We have expanded our training offer to further improve effectiveness of our teams and individual contributors, and we will continue to prioritize their growth moving forward.

Looking ahead

In the second half of 2024 we began to see signs of improved market sentiment, although the speed of the markets' recovery remains uncertain. For 2025, we expect revenue growth in each of our key markets, driven by our investments in Create & Scale solutions and the anticipated recovery of the livestock dairy market, unforeseen circumstance notwithstanding. We reiterate our Step Up! financial ambitions, including an EBIT margin growing toward 15%, albeit in 2026. 

I want to express my heartfelt thanks to all my colleagues for their dedication and perseverance. Together, they are the heart of Nedap, and I am proud to be a part of this exceptional team. I also extend my gratitude to our customers, partners and shareholders for their continued trust and confidence in Nedap.

3 March 2025
Ruben Wegman, CEO