Q3’20 details
Litium reported its Q3’20 figures today, which offered ARR of SEK 49m, -1.2% vs. ABGSCe, for a solid y-o-y growth of +28.2%, which is within Litium’s financial target of growing ARR by 20-40% annually. Net sales were SEK 12m, -4,7% vs. ABGSCe, of which 98.4% were recurring, in-line with last year. The gross margin, which has been known to fluctuate between quarters (an effect which will be mitigated as Litium grows) was solid at 70.5%, -2.ppp vs. ABGSCe. Litium also appears to yet again have had good control over its operational costs during Q3, where Q3 opex amounted to SEK 15m, growing 2% y-o-y, while ARR grew 28.2% y-o-y. Ultimately this yielded an EBITDA of SEK -1m, +56.9% vs. ABGSCe, and an EBIT of SEK -4m, +27.3% vs. ABGSCe.

COVID-19 continues to drive digital transformation
Management reports that COVID-19 appears to have continued to accelerate the digital transformation during Q3, and despite consumers returning somewhat to physical retailers in Q3, the underlying demand for Litium’s product remains enhanced. However, Litium’s customers currently remains somewhat cautious in making new investments in terms of digital commerce solutions.

Final thoughts
Litium has been on a solid run so far this year, the share is up ~31% YTD. We think Litium is well-positioned to continue capitalising on the ongoing, and increased, shift towards retailers needing a digital commerce platform. During the quarter several new clients, like BE Group in Sweden, but Litium also signed its first Danish customer in Swim & Fun.

Länk till analysen