Q4 2022 net sales amounted to SEK27.2m, corresponding to 36% y/y growth and were approximately 14% above our expectations. The growth is mainly explained by the RedBridge acquisition being consolidated in November Q4 2021. Actual OPEX (other external costs and personnel expenses) amounted to a negative of SEK25.8m, c9% above our expectations of a negative of SEK23.6m. 

Despite the higher-than-expected OPEX, The EBITDA amounted to SEK2.0m compared to our estimate of SEK0.3m, clearly beating our expectations. Consequently, the EBIT was less negative than expected (negative SEK1.7m versus estimated negative SEK3.5m).

The annual recurring revenues (ARR) amounted to SEK55.2m in Q4 2022, while cloud-based revenues increased to SEK9.7m. Furthermore, the cash position ended at SEK10.1m in the quarter, compared to SEK8.8m in Q3, while the operating cash flow turned positive at SEK2.4m. According to management, the recently communicated restructuring initiatives in the wake of the RedBridge acquisition continue to pay off while expecting it to continue in the next few quarters. Moreover, management sees strong demand for its products with a strengthened customer pipeline, while the focus will continue to be on its growth strategy, with new sales to both existing and new customers in 2023.

We claim that Binero’s Q4 2022 report was stronger than our expectations, where the sales exceeded our expectations which, despite higher-than-expected operating expenses, led to a stronger EBITDA than our expectations. Thus, we appreciate seeing that the EBITDA, like Q3 2022, continue to stay in positive territory, which we believe is positive for the future and Binero’s path to stable profitability.

According to management, the outcome of the sales in Q4 depends on several factors. First, management has seen continued demand with an improved customer pipeline. Second, Binero turned its net recruitment positive again in Q4, which we argue should have impacted its business with its relatively large share of consulting services. Further stated by management, Binero expects to continue hiring going forward, albeit at a slightly slower pace, due to the current macroeconomic outlook. As such, we believe that Binero has solid growth prospects, while it is worth mentioning that the y/y growth will naturally come down going forward, as Q4 2022 was the last quarter containing acquired RedBridge-related growth.

In addition, Binero continues to improve its website to increase its inbound sales to a greater extent, making the company less dependent on salespeople. We find this interesting as it would make Binero more efficient with lower customer acquisition costs, increasing its scalability as its business model will have a more self-playing approach.

We note that a highlight in the quarter was that Binero continued with an EBITDA level in positive territory, which we argue saw a breakthrough in Q3 2022. As such, it appears not to have been a one-off occurrence in Q3, which we argue is positive for the future while it paves the way for continued improvements at this level.

According to management, Binero has continued improving the cost side in Q4, with cost synergies from the RedBridge-acquisitions still materialising. For example, the most substantial parts have been done, such as merging offices, implementing the same culture, starting to collaborate as one organisation, etc. However, there is still work to be accomplished regarding underlying structures, such as internal systems and platforms, as the two organisations had different systems for managing the same kind of work before the merger.

As such, we believe Binero has completed the most significant part of the RedBridge implementation, while minor cost synergies will still be realised ahead. Therefore, we believe the company can gradually increase its growth focus with continued cost control, backed by management’s words of a continued focus on its growth strategy to both new and existing customers in 2023.

We make minor forecast adjustments following Binero’s Q4 2022 report as we increase our sales forecast by c4% for 2023e and 2024e while raising our OPEX forecast slightly for the same period. Overall, this leads to significant improvements at the EBITDA level, which makes us believe that Binero can reach full-year break-even at this level by 2023e while approaching profitability at the EBIT level. 

As such, and based on our new estimates, we believe its current cash position will be enough until Binero reaches stable profitability. In addition, we argue this is supported further by its Q4 2022 figures suggesting that Binero is closing in on profitability while we believe Binero can continue to grow under cost control. 

Following the forecast adjustments, we raise our fair value range with a new Base Case of SEK4.9 (4.8) and new Bear and Bull Cases of SEK2.0 (1.9) and SEK7.6 (7.5), respectively. As such, Binero is currently trading at an EV/S of 1.2x based on our 2023e.