Crunchfish: Major TAM expansion with broadening to secure and scalable mobile card payments - Emergers

With the broadening of its Digital Cash technology to support secure Host-based Card Emulation (HCE) for online as well as offline,Crunchfish can now offer both secure and scalable mobile card payments. Thisexpands Crunchfish’s total addressable market (TAM) manyfold as it offers tofill a blank spot in the Android/Google Pay ecosystem, as it addresses thetradeoff between security and scalability facing payment provides, banks, centralpayment systems and card companies today. Crunchfish's approach to HCE paymentsalso enable novel use cases, like offline, scan and pay (QR) and P2P payments. Fordetails on today’s announcement, please see the simplified structure of theimplementation architectures of HCE payment applications below.

As a consequence of the increased potential customerand counterparty base, ranging from Google Pay, card companies, to paymentsystems, banks, central payment systems, and mobile operators, we see improvedchances for one or more agreements. However, we continue to expect that allsuch will be preceded by some form of pilot, which is why the impact onrevenues will come gradually. Following today's announcement, we have adjustedour expectation for initial revenues up to SEK 5 million (2) in 2024E, althoughwe also see a chance for considerably larger deals already this year.

While we continue to note that the company's cashreserves will need to be replenished before the end of the year, we view thesurge in the stock price, with a doubling just in March, as a sign that thevaluation has reached some sort of local bottom. As the investment case nowseems just a tad less binary, we now find support for a fair value of SEK 15-18(13-16) per share. Also, the structural process with EY Corporate Finance,which includes the divestment of Gesture Interaction, adds a potential catalystto the case.

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