Estimates and outcomes

Net Sales came in at SEK43.5m, -12% y/y, below our estimated SEK51.2 m (deviation -15%). The main reason for the lower sales is the lower project-based sales because of the macroeconomic situation. However, recurring revenue decreased 13% from SEK55m to SEK48m. The decrease in recurring revenue is related to Binero losing one larger customer and smaller customers consolidating their solutions, which has negatively affected Binero. On the positive side, Cloud ARR grew from SEK9.6m to SEK16.1m (68% y/y).

Binero presented 9-month figures in conjunction with announcing the proposed acquisition of Infrateq (completed in Q1/H1 2024). The run rate figures from the Q3 report implied a 15% beat on our H2 2023 net sales estimate, not considering that historically, Q4 had been stronger than Q3. However, the net sales in Q4 2023, implied from Binero’s H2 2023 report, indicate net sales of SEK14.1m (-48% y/y, -52% q/q).

Considering Q3 aligned with expectations, we believe the fundamentals deteriorated significantly during Q4 2023, especially within project-based sales.

Binero states that the lower H2 2023 sales are due to fewer project-based sales during the period and that the end of the year is typically a low point for consultants. Additionally, sales were hurt by a challenging market and a significant amount of time spent on executing the Infrateq transaction.

Historically, Q4 has been a strong quarter, and we do not understand the seasonality argument as comparing year-over-year figures indicates a 48% decline between Q4 2022 and Q4 2023. Instead, we believe that the macroeconomic situation limited the customer’s willingness to invest, which resulted in lower project sales. Our calculations point to project-based sales decreasing to SEK2.1m in Q4 2023 from SEK13.4m in Q4 2022 (-84% y/y). We cannot triangulate Q1 2023 or Q2 2023 figures from the available information.

We expect project-based sales to improve sequentially from Q4 but be at a lower level during H1 2024e than H2 2023. We expect a recovery in the second half of 2024.

For 2024, we have estimated Binero’s ‘legacy’ business and Infrateq. However, moving forward, we will not separate these.

For Binero, we have reduced our net sales estimates considering the sharp implied downturn in Q4 2023. We have also reduced our OPEX estimates based on the communicated cost reduction program (expected SEK2.5m over 2024) and efficiencies from migrating Redbridge’s customers to Binero’s platform.

Infrateq specializes in managing technical network projects and offers a digital platform for distributing media content across the Nordic region. An example of their services includes acquiring sports broadcasting rights for venues like sports bars, enabling them to broadcast games legally. Infrateq’s business model involves purchasing these rights from license holders, such as Viaplay, and then reselling them to their customers at a markup. Infrateq’s digital platform simplifies the process for customers by consolidating the management of all their media rights with a single provider, eliminating the need to negotiate with each license owner individually.

Infrateq had an adjusted turnover of SEK321.0m with an EBITDA of approximately SEK18.3m for the full year 2022 and had about 45 employees. Infrateq’s customers include Aftonbladet, Danske Bank, the Swedish Parliament, Sats, Attendo, and Humana. Binero has not disclosed full-year figures for Infrateq, but in conjunction with the proposed merger, Infrateq had a turnover of SEK266.0m and EBITDA of SEK 23.7m for the first nine months of 2023. Annualizing these figures results in a turnover of SEK354.7m and EBTIDA of SEK31.6m. Due to the limited information currently available about the acquisition, Binero plans to provide more details in the spring. As a result, we must acknowledge that our estimates carry significant uncertainty and could vary widely.

Our consolidated estimates are as follows:

We narrowed our valuation range and lowered our base case. We update our fair value range from SEK1.6-6.5 with a base case of SEK4.2 to SEK2.6-5.7 with a base case of SEK3.4. Binero trades at a slight premium based on the current market price and our base case.