New FVR of SEK 3-14 (4-14) – 2.9x EV/sales on 2023e
Lower profitability due to higher share of hardware sales
Clavister delivered Q2 sales of SEK 36m (+10% vs. ABGSCe SEK 33m), mainly driven by higher hardware sales, which were up 77% y-o-y (SEK 6.2m vs. ABGSCe SEK 2.6m). Recurring revenues were SEK 24.3m vs. ABGSCe SEK 27.5m, for y-o-y growth of 10%. This sales mix had a negative effect on the gross margin, which was 77% vs. our forecast of 84%. Because of this, gross profit was in line with our forecast despite the beat on sales. The growth in recurring revenue has decelerated in Q1 and Q2 this year, with mgmt. pointing to its new subscription-based revenue model where revenues are recognized over a longer period. Hence, revenues from new contracts will be lower initially, but potentially higher over time. Moreover, slightly higher than expected personnel costs and other opex, coupled with lower capitalization of R&D, led to EBITDA of SEK -10m vs. ABGSCe SEK -3m. EBIT was SEK -20m vs. ABGSCe SEK -11m. The net financials impacting cash flow was SEK -1m, while total financial costs were SEK -18m. The big difference between the cash and non-cash financial items was FX effects on loans, costs for warrants and other long-term liabilities.
Estimate changes
We cut ‘22e-‘24e EBITDA by SEK 9m, SEK 6m, and SEK 4m, respectively, due to the lower EBITDA in Q2’22 and lower growth expectations and gross margins for the rest of 2022e, 2023e and 2024e.
Clavister likely to secure new defence contract near-term
With the cost optimization programme expected to reach full effect by Q4’22 and accelerating activity in the defence market, the outlook for Clavister looks increasingly positive. Its main defence customer, BAE Systems, has signed two new contracts (with Slovakia and Czech Rep.), each potentially worth SEK 50-100m for Clavister. Clavister has been unable to confirm it ...
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