The war in Europe has indirectly affected Litium negatively to some extent in Q1’22 since ~15% of the ARR is variable and is affected by the activity among Litium’s customers. Due to the high inflation (a rise of 4-6% y-o-y from Jan-Mar, according to SCB) on the back of the war, the activity slowed in the quarter. Moreover, the new platform, Litium Commerce Cloud, implies a new price model, which will also influence the ARR in 2022. With the new pricing model, the revenue will be more dependent on the customers platform usage and sales generated. This means that there will be less fixed costs in advance and more variable costs in arrears. Therefore, the new price model will be more sensitive to fluctuations in customer demand. Thus, the Commerce Cloud was implemented in September last year and it is mainly new customers that are run through the new platform, while the existing customers still operate mainly through the old one, so the negative effect on the ARR is limited.
We expect accelerating ARR growth in 2022
On the back of external factors, we slightly lower the ARR for Q1’22e by 2%. To better match the new pricing model, we lower the ARR growth for Q2e and slightly again for Q3e, but we still expect growth to be accelerating during 2022. For the FY 2022 these changes result in a 0.9% cut to the ARR. Moreover, we slightly cut net sales, but leave the margin assumption fairly intact.
Continued focus on growth
Litium reached a positive EBITDA in the last quarter and we believe that the company will continue to improve profitability at the same pace as we have seen in the last couple of quarters. However, we still believe that the company’s main focus will be on growth. In this quarter, Litium issued shares that brought SEK 35m in total, which we believe will be enough ...
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