Research note


Verisec Q1: We believe in Freja eID

Verisec’s Q1-report was below our expectations. Revenues of SEK 14.8 million (our estimate was SEK 19 million). The gross margin, however, was significantly better than we expected. EBIT therefore was in line with our estimate, ie SEK -4.1 million (expected -3.5 million). We believe Freja eID will be the major growth driver in 2018 and beyond.

Estimates vs actual: 

Half of Verisec's development resources have been allocated to work with Freja eID. The cloud-based architecture underlying Freja eID is a further refinement of existing products, providing unparalleled scalability in terms of number of users and transaction volumes. 

A partnership agreement with Tieto regarding Freja eID was concluded after the quarter. All county councils and 275 of Sweden's municipalities have Tieto's systems and services integrated into its IT environment. The collaboration opens up the opportunity to support Freja eID in several of these digital services and eventually build a portfolio of relevant services that can drive traffic and revenues for Verisec. 
We believe in Freja eID
The quarterly report shows that our expectations regarding growth were too high. We also begin to think that they are too high for most of 2017. Versiec is in an establishment phase where much of the sales efforts and development work focuses on Freja eID. We assume after reading CEO’s statements in the report that this priority will continue for most of 2017. We will thus reduce our growth expectations for 2017, currently 38 percent to about 20-25 percent. However, we believe that Freja eID be a big thing in Sweden, which means that the long-term case in the coming year will look considerably more interesting than before. Verisec is considered to have a unique position on this field in Sweden . With an established partnership with Tieto, a long experience in the industry and a proven technology platform the company’s outlook looks bright.  

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