Clavister: Security by Sweden - ABG

Major potential, but it has struggled with execution
Media reports about critical infrastructure such as hospitals and businesses being paralysed for days by hackers are becoming increasingly common. The total economic damage from cybercrimes is expected to reach USD 6tn in ’21, or 40x total cybersecurity spending. Clavister is a Swedish cybersecurity firm that helps keep critical government agencies, enterprises and 5G networks safe. Despite its small size, it is well positioned as a leading European vendor to capitalise on a growing market and to fend off large US multinationals in light of mounting geopolitical tensions and EU privacy regulations. We believe that Clavister will outgrow the market, which Gartner expects to expand at 12% p.a. The main growth driver will be the 5G roll-out, where Clavister already works with ~5% of all operators globally. Since its IPO in 2014, it has been struggling with major losses and poor strategic execution. But we see light at the end of the tunnel, due to the growth potential and the company’s relatively fixed cost base.