ARR grew by 21% organically y/y, matching our forecasts, and sequential growth was 4.6%. Although gross profit aligned with our expectations, OPEX was higher than expected, resulting in a lower EBIT and soft cash flow. However, a fall in the number of employees and management’s statements suggest improving margins from now on. Management sees high activity and solid customer demand, particularly within automotive and grocery stores, which the solid ARR growth supports.

For the first time, Vertiseit published a comprehensive table of SaaS metrics for the full group, which we appreciate. Previously, SaaS metrics were published only for Dise. Churn was c8% on annualized numbers, while the NRR was 104%. As Grassfish typically targets larger customers than Dise, we did expect somewhat lower churn and higher NRR. However, management points out that a long tail of smaller customers affects the numbers. On the other hand, considering the CAC/payback of only six months, an NRR above 100% is well enough to make the unit economics solid.

We leave our Base Case at SEK46 (46) following largely unchanged forecasts. We expect the upcoming quarterly reports showing continuing solid organic ARR growth and improving margins to be the catalyst from now on.