Coupling the trend of relatively flat opex but strong ARR growth mentioned above with the upcoming seasonally strong Q4, driven by events like Black Friday and Christmas shopping, we would expect to see positive EBITDA in the upcoming quarter. We forecast Q4’20e ARR of SEK 54m, +35% y-o-y, when we think the variable part of Litium’s revenues (its technology partner add-ons such as Klarna) will offer a strong contribution due to the increased activity in Q4. We conservatively factor in y-o-y opex growth of 7.3% (higher than recent quarters), but we still reach a positive EBITDA of SEK 2m.
Fair value range up to SEK 14-35, EV/sales 5-3x ‘20e-‘22e
Following our estimate changes, our DCF scenario indicates a fair value range of SEK 14-35 (10-25) per share. The increased fair value range reflects our estimate changes, Litium proving its scalability and moving closer to profitability on an EBIT level and further diversifying its revenue base through geographical expansion and new customer intake. We also think that long-term demand for Litium’s product will have increased following COVID-19. Additionally, by discounting our ’22 estimates by a WACC of 11.8% and applying the applicable peer group median multiples (with a 10% discount), we find a multiple-based fair value range of SEK 25-30 per share (16-27).
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