Research note


Talkpool: Q2 expectations

Talkpool will publish its Q2 report on Friday the 31st of August. We expect continued sales growth and estimate net sales around EUR 6.5m. Regarding profitability, we expect the company to report EBITDA about EUR 0.4m. We believe that the most interesting events during the period regard its activities in Saudi Arabia and the recently announced debt issue of SEK 24m, which will secure its future working capital needs.

Our Q2 sales estimate amounts to EUR 6.5m, where we expect sales in the Middle East and Haiti (Talkpool’s largest geographical markets) to remain in line with the Q1 numbers while expecting continued growth in the Benelux region.

Sales in Q1 turned out lower than expected, primarily explained by high expectations of LCC (Q1 was the first quarter where LCC was fully included). Talkpool, however, managed to reach our profit estimates by achieving an increased gross margin (25.5%). Our interpretation is that this was positively affected by LCC but also due to some temporary services that we do not expect in Q2. We, therefore, expect a somewhat lower gross margin (23%), resulting in EBITDA expectations about EUR 0.4m.

Talkpool has announced a couple of news since our last update. The most interesting news concerns the company’s increased focus on new markets (Saudi Arabia) and the company’s financing. Regarding new markets, Talkpool has announced that the company has acquired a corporation (Virtual Connect) that opens up opportunities for business in Saudi Arabia. The venture is still under build-up, but Talkpool announced that its monthly sales in the region amounted to EUR 0.1m in June. We find this interesting given that it implies improved growth opportunities, where Talkpool has stated that it initially will offer IoT consultancy, engineering, and upgrades of telecom networks.

Regarding financing, Talkpool has announced that it has issued debt of SEK 24m (senior secured notes), which will be used for working capital. The company also mentioned that it will use the funds to repay loans related to the capital raising in 2017 and potential M&A activity. The senior secured notes are based on a fixed interest rate (10 percent) and mature in two years (August 2020) with an option of extending the notes for an additional year.

Apart from the mentioned news, we look forward to getting an update of the on-going built-out of IoT networks in Sweden and the IoT opportunities arising in the Middle East. Talkpool will publish its Q2 report on Friday the 31st of August. We will, as usual, get back with a comment stating our view of the report.

Download our latest Research Report from 2018-09-11

Download full report icon-download