Sarine Technologies Ltd has announced a return to profitability in the first quarter of 2024. The company reported a net profit of USD 0.6 million for Q1 2024, a significant turnaround from a loss of USD 2.8 million in Q4 2023.
This recovery is attributed to increased revenue from new services and strategic cost-cutting measures.
New Services and Market Developments
Most Valuable Plan (MVP)
Launched in Q1 2024, the MVP paradigm optimizes the planning of rough diamonds weighing 40 points and below, with plans to extend up to 90 points later in the year. This service has an addressable market of 33 million stones scanned on Sarine’s systems in 2023. Since its launch in February, MVP has been steadily gaining traction. The new Meteor Plus inclusion scanning system, released in May 2024, supports the adoption of MVP.
Lab-Grown Diamonds (LGD)
Sarine has adapted its rough planning technologies for LGD, offering them as a pay-per-carat service. This technology is currently being utilized by several LGD manufacturers, with monthly usage doubling since its launch in February 2024. The GCAL by Sarine LGD grading lab in India began operations in January 2024. The company targets an 8-10% share of the estimated USD 100 million LGD grading market in FY2024. LGD-related revenues are expected to contribute 15-20% of Sarine’s overall revenues for the fiscal year.
Industry Context
Economic challenges in China have continued to suppress consumer demand for diamond jewelry, with consumers preferring gold. The rapid expansion of the LGD segment in the U.S. has slowed, with prices for one-carat LGD falling to USD 500. DeBeers’ sales have partially recovered, but remain 16% lower year-on-year for the first four months of 2024. The G7 sanctions on Russian-sourced diamonds, set to expand in September 2024, have added uncertainty to the market.
ESG and Traceability Solutions
Sarine’s AutoScan Plus and Journey combined solution, along with its collaboration with DeBeers’ Tracr, addresses ESG issues and supports compliance with G7 sanctions on Russian-sourced diamonds. The sanctions will broaden in September 2024 to include polished diamonds weighing half a carat and up, potentially impacting over 3 million diamonds annually. This solution may be adopted by high-end luxury brands.
Outlook
Sarine expects continued growth in recurring revenue from its new services throughout 2024. The MVP paradigm is expected to contribute to revenue in the second half of the year, supported by the Meteor Plus system. The company also expects revenue from its traceability technology as G7 sanctions take effect.
Sarine Technologies’ Q1 2024 performance reflects its strategic focus on new services and operational efficiency. The company is positioned to navigate market fluctuations and regulatory changes, continuing its role in diamond technology solutions.
