Litium: Sailing through a weaker e-commerce market - ABG

ARR of SEK 67m, up 19% y-o-y, -2% vs. ABGSCe Breakthrough deal in the US with a B2B customer Share trading at 2.0x ARR and 15x EV/EBIT on 2024e A solid Q2 where Litium outperformed the underlying market

Litium reported Q2 sales of SEK 16.7m, 8% below our expectation of SEK 18.1m. ARR grew 19% y-o-y to SEK 67.2m, 2% below ABGSCe 68.7m. Growth this quarter came from both new and existing customers, which is positive. Despite weak consumer sentiment and a declining e-commerce market, its clients gained market share and even grew sales in Q2, according to the company. B2B was especially strong, where clients seem unaffected by weaker consumer sentiment so far. Litium continued to grow B2C sales, but at a slightly lower rate due to tougher market conditions. That said, the B2C clients are outperforming the market, partly by offsetting lower volumes in some areas with new business and international expansion. Q2 EBIT of SEK -4m was lower than ABGSCe -1.9m on lower sales (opex was in line). Encouragingly, it also announced a breakthrough in the US where it has won its first customer, a B2B wholesaler. This could facilitate more deals, potentially making the US an important growth driver.

We cut ’22e, ‘23e, and ‘24e sales by 3%, 3% and 6% Although Litium’s e-commerce clients are outperforming their underlying markets, their growth rates and client acquisition are not immune to weaker consumer sentiment. This along with lower-than-expected sales in Q2 leads us to cut ‘22e-‘24e sales by 3%, 3% and 6%. We also cut ‘22e-‘24e opex by 1%, 4% and 7% on its initiative to turn profitable in the near term. As such, we adjust ‘22e-24e EBITDA by -74%, -5% & +12%.

New fair value range of SEK 13-35 per share on lower ests. In terms of outlook, Litium is well-positioned to accelerate growth in the coming years. There is a major opportunity in the B2B sector, which is relatively less penetrated. Litium has a strong market position with great market fit in that segment of the market and should be ... Läs mer på ABG Sundal Collier

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