Q3 20 sharp revenue miss but majority related to exiting B2C. The quarter included two items that took revenues down far lower than we had expected. First, the company discontinued its small B2C (business-to-consumer) operation (announced in spring 2020) in order to focus over the long term on the much larger B2B (business-to-business) opportunity out there. We had no insight into the size of the revenue share that belonged to this unit and our estimate that it was a small share was wrong. Together with revenue streams from the B2B side not recovering, this resulted in a hard hit for group revenues. However, partly mitigating this was a higher gross margin (very low dongle sales) and lower employee costs than we had forecast. This resulted in the loss in the quarter coming close to our estimate.
Sharp estimate cuts. We expect the worsening pandemic to hold back developments for longer for the company. We cut our revenue estimates but raise our gross margin estimates.
Lowered valuation range. We lower our valuation range from SEK90-166 to SEK83-SEK138.
Link to research
https://publication.danskebank.com/SingletrackCMS__DownloadDocument?uid=922d2fd9-366e-42b2-a24d-c19f651cee2b&docRef=e4e0a1ea-645
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