CYBER1 - Moving towards profitability on a full year basis - Mangold Insight Analysis

Mangold is updating Cyber Security 1 ("CYBER1") after the second quarter of 2023. CYBER1’s revenue increased to MEUR 25.1 (19.3) in the first half of 2023 compared to the same period last year. That represents a growth rate of 30 percent. Gross profit increased to MEUR 5.7 (3.9) during the same period, which corresponds to an increase of 45 percent. EBITDA and profit also turned to black figures; MEUR 0.4 (-1.5) and MEUR 0.0 (-1.9) respectively in the first half of the year. Mangold continues to believe that CYBER1 will reach profitability on a full year basis in 2023 driven by its growth and margin improvements. Given that revenue and gross margin were lower than expected in the second quarter, we are adjusting the 2023 estimate downwards. Personnel costs, investments and other costs were lower than expected, and Mangold downwardly adjusts the cost base estimate moving forward. 

CYBER1's operating costs fell by 3 percent in the first half of the year, while revenue increased by 30 percent. This is despite the fact that the company made two acquisitions last autumn. The cash amounted to MEUR 0.5 at the end of the quarter, corresponding to approximately MSEK 6.0. Mangold believes that the cash is sufficient provided that the company continues to be profitable, which we also estimate.

Mangold repeats the target price of EUR 0.055 per share, corresponding to an upside of more than 100 percent. In order to achieve the price target, Mangold believes that the company needs to continue to deliver margin improvements, achieve profitability on an annual basis, and continue to grow at a high pace.