Q3: The long and winding road

Atea reported Q3 results slightly below our estimates, but with a DPS at NOK 5 and a new dividend policy. Revenues declined by 2% y-y FX-adjusted and we expect headwinds on hardware to persist, offsetting solid software growth. While Atea is trading at a discount to peers but in-line with its historical figures on EV/EBIT NTM, we need to see revenue improvements as well as cost efficiencies before we find it attractive. As such, we maintain our Hold rating.

Q3 first read: ahead on EBITDA

Q3 results -3% below on consensus revenues but 11% ahead on EBIT Software (+16% y-y) was strong – positive read across to Crayon We will make minor estimate changes, consensus EBITDA may increase

Read-across from Dustin’s results

Dustin’s Q4 results (announced today) shows slight decline in LPC ..stating stable demand in public, but delayed for large corporates The results supports our estimates for Atea

Read-across from Dustin’s results

Dustin’s Q4 results (announced today) shows slight decline in LPC ..stating stable demand in public, but delayed for large corporates The results supports our estimates for Atea

Read-across from Dustin’s results

Dustin’s Q4 results (announced today) shows slight decline in LPC ..stating stable demand in public, but delayed for large corporates The results supports our estimates for Atea

Read-across from Dustin’s results

Dustin’s Q4 results (just announced) shows slight decline in LPC ..stating stable demand in public, but delayed for large corporates The results supports our estimates for Atea

Q2: Largely driven by software and FX

Atea’s Q2 results were already pre-announced and driven by solid results in Norway, while Sweden was broadly in-line and Denmark was slightly weaker than expected. Denmark remains the largest swing factor to estimates, but its EBIT improvement was solely due to cost reductions. Software growth was stronger than expected, and is a positive read-across to software peers such as Crayon. We reiterate our Hold rating and lift our TP to NOK 109 (105).

Q2 first read: Software being particular strong

Q2 results were already preannounced in the recent profit upgrade Sweden, Norway and Baltics ahead; but Denmark weaker than estimated Software was especially strong (+21% y-y) – positive read-across to Crayon We expect to make minor estimate changes

Risk on after profit upgrade – but not gone

Atea announced a profit upgrade yesterday, following solid results from Dustin from the public sector. Though this signals underlying improvements, some of this is likely due to temporary positive effects from Covid-19. The results is also a positive read-across to Nordic IT companies including Crayon. We maintain our Hold rating until we get more colour in the Q2 report on the underlying improvement – in such a scenario Atea’s discount to peers should narrow.

Read-across from Dustin report

Dustin just reported its results; with LCP (large corporates) up 7% y-y Dustin’s LCP segment was driven by strong sales to the public sector …offsetting soft development in the SMB segment and for large corporates Supports our est. for Atea, expecting strong public sales(60% of revenues)

Q2e: Temporary positive Covid-impact

Atea reports Q2 results on July 15. We expect a temporary positive effect from higher hardware sales (remote working products) and extended payment terms in Q2 and part of Q3. Still, the underlying trends in hardware is soft with potential risk on delivery issues from certain hardware vendors. As such, we maintain our Hold rating as we view several other TMT shares as more attractive, including pure-play software companies with a higher cloud exposure.

Near-term results might be on the upside

Public sector agreement in Sweden today already reflected in estimates Expect near-term improvements in revenues in software and hardware Solid software growth in the Nordics (ref Crayon’s Nordic results) Temporary stronger hardware sales (remote working products) in Q2

Q1: Underlying trends still soft

Atea’s Q1 results were weaker than expected, due to soft results in Denmark and Sweden in especially hardware. While this has improved into Q2, with a stronger backlog y-y, we consider this improvement as temporary. As such, we maintain our Hold rating, and consider the discount to peers – with some seeing a multiple expansion recently - as fair until further data points on underlying improvements. We view several other TMT shares as more attractive.

Q1 first read: Soft Q1, but Q2 improvements

Q1 results below estimates due to weaker results in Denmark and Sweden Slow start of Q4 for product revenues but improved through the quarter Revenues “accelerated into Q2”, cost cuts initiated in Denmark Expect to cut our estimates, depending on details on Q2 improvements

Positive signs, though uncertainty persists

Atea reports Q1 results on April 22. While the initial start to Q1 was soft, we model improved revenues through the quarter from increased hardware sales since COVID-19. This, and positive FX effects on reported figures, should be enough to offset weakness in project related services. While recent comments from Dustin and Atea’s CEO could indicate a solid Q1 report, the estimate risk remains large – also considering the decision to withdraw its dividend payment.

Audioboom Group - Q1 24 revenue growth of +11%, FY24E forecasts reiterated

Audioboom’s FY23 results and Q1 trading update show Q1 24 revenue growth of +11% yoy, $6.7m of March 2024 revenue marking the platform’s highest revenue month since May 2022, and a confident outlook that leads us to reiterate our FY24E forecasts. Following the focus on new initiatives through FY23, the platform is now in its strongest ever operational position, with a record 1.1bn monthly ad impressions created in March 2024, record global audience reach of 38.6m unique global listeners in Janua

Morning Note – 16 April 2024

Soft growth patch

Morning Note – 15 April 2024

Checkit - New product launch and contract wins

Checkit has won contracts with two customers worth at least £417k over the three-year lives of the contracts, confirming its ability to upsell to its existing customer base and supporting our forecasts. Having trialled the new technology with multiple customers, Checkit has launched its Asset Intelligence module, which uses advanced analytics and machine learning to enhance customer sustainability, reduce costs and increase revenue.

Auction Technology Group - H1/24 Trading update

ATG’s H1/24 trading statement indicates revenue for the six-month period to 31 March 2024 was $86m, a 6% increase on H1/23 (1% organic growth), helped by the addition of the EstateSales.Net (ESN) marketplace last year, which performed well in the period. Total marketplace revenue increased 2% (organic), driven by growth in value-added services (VAS) and event fees, offsetting a decline in commission revenue (mainly through lower asset prices).

Alphawave Semi: FY23 trading update, amended forward guidance

Alphawave Semi has reduced guidance for FY23 and prospectively citing lower revenues from China, changes in expected revenue recognition from long-term contracts, and continuing investment in R&D. The share price has reacted negatively, giving up most of the gains since the trading statement at the end of January. Current consensus, which is a good match for pre-existing guidance, should be reduced, most likely following release of the FY23 results and full 1Q24 trading update due on 23 April. H

Engage XR Holdings - Expanding from FY23, FY24E forecasts reiterated

ENGAGE XR’s FY23 results show revenue and net cash in line with the February trading update, EBITDA ahead at -€4.0m vs -€4.5m due to the split of cash outflow between opex and working capital, and a confident outlook that leads us to reiterate our FY24E forecasts. FY23 revenue for the core ENGAGE platform was unchanged vs FY22 at €3.3m, as H2 23 revenue was impacted by the record seven-figure contract announced in February shifting to 2024, and several enterprise customers scaling back renewals

FY23 results in line – and a flying start to FY24

ENGAGE XR has published its FY23 full year results, the headlines of which reflect the details provided in February’s post close trading update in terms of revenue, EBITDA loss and net cash. ENGAGE XR has signed a rapidly growing number of strategic and commercial partnership agreements with companies invested in promoting the VR medium and the development of corporate metaverses.

It’s not what you sell, it’s the way that you sell it

This report is intended to help UK small- and mid-cap investors gain a better understanding of software companies’ routes to market, and to highlight how one of the most important facets of the way in which they grow and deliver value is routinely ignored.  We examine sales processes for six UK-listed companies and one that has recently been taken over, and consider why they have followed their respective paths.

Hybridan Small Cap Feast - 15 April 24

15th April 2024 * A corporate client of Hybridan LLP ** Arranged by type of listing and date of announcement *** Alphabetically arranged **** Potential means Intention to Float (ITF) has been announced Dish of the day Admissions: Delistings: What’s baking in the oven? ** Potential**** Initial Public Offerings: Reverse Takeovers: Change of Market: TheWorks (WRKS.L) a multi-channel value retailers of books, arts and crafts, stationery, toys and games, offering customers a differentiated propositio

CML Microsystems+ (CML, House Stock at 395p) - Board & Senior Management Appointments

PROGRESSIVE: CML Microsystems: Ripples not waves – still on growth course

The trading update confirms revenues in line with our expectations. Excess inventory flow through and market softness in China have impacted CML’s core business, but Microwave Technologies Inc (MwT) is performing ahead of expectations. The net effect, along with MwT acquisition related costs, is that Reported PBT and EBITDA are to be lower than expectations, but not substantially so. The long-term investment case is founded upon the opportunity in next-generation wireless and, with £18m cash and

iomart - FY24 trading update

The March FY24 trading update reports revenue broadly in line, and adj EBITDA in-line, with consensus. Revenue of £127m at +10% yoy (Cav: £129mE; consensus range £128.4m- £130.7mE) delivered adj EBITDA of £37.5m (Cav: £38.7mE, cons £37.4m-£38.7mE) and adj PBT of £15.0m (Cav: £16.0m, cons £14.3m-£16.0m). £25m net debt (Cav est after excluding IFRS16) was slightly better than our £26.2mE, with typically strong cash generation a feature of the model but consensus mangled by IFRS16 inclusion/exclusi

Trustpilot - FY23 trading update – Another beat, £20m SBB

Trustpilot has announced another beat to expectations and the implementation of a £20m share buyback programme. The company has guided to full year revenue of US$176m, with annual recurring revenue of US$197m and total bookings of US$195m. Trustpilot expects to report adjusted EBITDA above the US$14.1m top end of the range of market expectations. This was another strong performance from Trustpilot with revenue growth coming in a little better than guidance at the interims and further operational