Slightly better Q1 than expected.
Revenues were SEK40m (+35% y/y) and EBIT was SEK-8.5m (was SEK-27.7m in Q1 19). The order intake of SEK18m was lower than management had expected but GomSpace reiterated its SEK160-185m 2020 revenue guidance. We attribute the maintained guidance to the fact that 22-25% has already been booked in Q1, with an order backlog of SEK140m remaining and the fact that the European Space Agency is the largest customer. We estimate SEK178m in 2020 revenue. While GomSpace removed its 2023 revenue target of SEK1.5bn, it kept the target of positive operational cash flow. We believe this to be a wise approach given the current pandemic. We note that GomSpace has been able to slow the cash outflow considerably over the past quarters, mainly through reducing the headcount to c.130 by end of Q1, down from c.200 one year ago. GomSpace ended Q1 with SEK120m in cash, which we estimate to be enough, given that we estimate the 2020 order book will be delivered as planned.
Pandemic increases risk for client funding, i.e. delays.
We expect satellite launch delays in this nascent market and, currently, the majority of GomSpace’s most important clients are facing delays due to funding issues or to a crowded launch market. Most companies need to pass certain milestones (such as satellite launches) to ensure further financing, which adds to delays. Commercial orders have higher gross margins than science orders.
Estimate revisions.
Given the uncertainty on orders from the commercial segment towards the latter part of 2020 we have lowered our revenue and gross margin assumptions.
Valuation.
We continue to see good value in the shares but also acknowledge that this is not without risk, as clients need to progress further with their projects in order for this to materialise, i.e. the outlook for commercial orders needs to get clearer, which might take into 2021. We lower our valuation range to SEK9-28 (from SEK11-30 previously).
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