Briox: New product package comes bearing fruit - ABG

Sales +29% y-o-y (+4% vs. ABGSCe), ARR +30% y-o-y
’21-‘23e sales raised by 2%, 6%, and 1%
‘21e, ‘22e and ‘23e EV/sales of 39x, 23x, and 17x

Briox’s Q2 sales grew 29% y-o-y and were 4% above our expectations (SEK 1.4m vs. ABGSCe SEK 1.3m). EBIT of SEK -5.4m was 9% better than expected (ABGSCe SEK -5.9m). Encouragingly, costs were kept under control, with opex increasing only 12% y-o-y. ARR increased 30% y-o-y to SEK 7.1m. Another highlight was the 46% q-o-q growth in licenses. We are under the impression, however, that the increase was partly inflated by the release of the new product offering, which includes an entry-level solution that allows for an easier and less expansive onboarding of end-users. On the other hand, it is encouraging to see that many end-users have decided to opt-in on the new packages. Although we expect lower ARPU for the entry-level package, the onboarding creates a foundation for Briox to scale with the end-users in the future. The new offering consists of four pre-defined packages that bundle the previous product modules into solutions that cater to different customer needs. Despite having to focus on the onboarding of new licenses during the quarter, Briox added five new accounting agencies from last quarter for a total of 201 at the end of Q2.

Releasing the new product offering was an important step in executing on Briox’s new business plan. In combination with the capital raise last quarter, this gives the company good support for its growth initiatives. We now forecast a ’21-‘23e sales CAGR of 59% for Briox, and an EBIT improvement from SEK -23m in 2020 to SEK -17m in 2023. On our new ’21, ’22 and ’23 estimates, Briox is trading at EV/sales of 38x, 23x and 17x.

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