Research note


Verisec: Comments on the Q3’18 report and latest agreements

Earlier today Verisec presented their report for the third quarter of 2018. Sales were in line with expectations and the loss on EBIT-level was slightly higher than estimates. Regarding Freja eID Verisec has made great progress in increasing the number of relevant services. The company communicates that they are steadily working to increase the number of users and services. After the report, Verisec published a release where Verisec has signed an agreement with one of Sweden’s largest pharmacy chains (for Freja eID+). Moreover, yesterday it was announced that ATG would use Freja eID as one of the gaming company’s identification methods. There is no doubt that Verisec is executing in line with its strategy and that 2019 will be a very exciting year for the company and Freja eID. We will dig deeper into the two latest agreements (the pharmacy chain and ATG) in our coming research update. These agreements and the quarterly report will on a preliminary basis not lead to any big estimate changes.

Net sales were in line with estimates and amounted to SEK 19.8 (18.5) million (expected: 20.3), an increase of 7.0 percent compared to the corresponding quarter last year. The growth during the quarter was attributable to Sweden and outside Europe. Growth has historically fluctuated, and thus it has been difficult to assess sales on a quarterly basis - the long sales cycle contributes to this.

Profitability wise EBIT was somewhat lower than expectations (EBIT loss of SEK 4.1 million against estimates of 3.4). Gross margin was 63.8 percent (estimates: 63.1),and other OPEX amounted to SEK 16.3 million (estimates: 15.7). Activated costs were in line with expectations at around SEK 1.3 million.

On a preliminary basis we will not make any big estimate changes, and thus our valuation will remain intact. We will return with an updated analysis shortly.


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