Sale growth will be our main focus metric going forward. Historically, net sales have been sluggish, a development that raises concerns given AS’s competitive offering and the market’s growth. According to management, this stems from the shift to a partner-led model (read our initiation report for further details), which has two effects: i) revenue streams from partners are delayed before AS recognises them, and ii) a dilutive effect on the top line (service revenue accrue mainly to partners).
To get a full picture of the development, one needs to take order intake and order backlog into consideration; thus, these figures will be of utmost interest. In its Q1’19 report, AS communicated that it anticipates increased order intake with more than 40% y/y compared to 2018. The 28% increase for the order backlog (contracts that have been won but not yet generate revenue) during the same quarter supports the view of increased volumes that have not yet been recognised by AS and an accelerated growth profile. This metric provides a projection for future revenues and should be a preferred metric that reflects the future performance of the business.
Moreover, we would appreciate comments around the development of the partner strategy and customer acquisition. As the long-term future of any tech company must be predicated on winning new customers – not simply leveraging them – new customers represent one of the main metrics for investors to follow (we would appreciate having this information to better evaluate the performance of the company).
OPEX (excl. COGS) estimates amounts to SEK 33.6m with a gross margin of 52%. This results in EBITDA and EBIT of SEK -24.4m and SEK -27.4m, respectively.
The report will be released on Wednesday 14 August 2019 at 07:30, followed by a telephone conference and live webcast the same day at 10:00. We will follow up with an updated analysis consisting of our initiation report, which is still very current and a discussion on the Q2'19 report.
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