Interim report Q2, April - June 2023
• Net sales amounted to SEK 104.7 (87.1) million, an increase of 20 percent compared with the same period last year. Adjusted for currency fluctuations, growth was 15 percent.
• EBIT amounted to SEK 2.7 (2.7) million, corresponding to an EBIT margin of 2.6 (3.1) percent.
• EBIT adjusted for severance pay amounted to SEK 9.2 (2.7) million, corresponding to an EBIT margin of 8.8 percent.
• Profit after tax amounted to SEK 2.9 (2.7) million.
• Earnings per share before/after dilution amounted to SEK 0.16 (0.15).
• Cash flow from operating activities amounted to SEK 21.7 (1.0) million, primarily driven by profit for the period but also by positive changes in working capital.
The second quarter of 2023 saw continuing high levels of activity, resulting in a successful quarter for most of the markets where MSAB is active. We finalised a number of important contracts, but in particular, there was a very high degree of license renewal for our extraction and analysis software. Our customers demonstrate firm confidence in our solutions, partly through the renewal of multi-year contracts, and partly through previous customers reactivating their licenses when they discover the number of new functions our products offer.
During the quarter, the marketing and sales organisation was fully focused on introducing and presenting our latest premium product XRY Pro, which complements and upgrades our software family
of mobile forensic solutions. We are continually developing our offering; hence there is an ever-rising demand for them from law enforcement agencies and in the justice system.
Net sales in the second quarter amounted to a total of SEK 104.7 million, compared with SEK 87.1 million the previous year. It is the Company’s best second quarter ever. EBIT, adjusted for a one-time cost for the severance pay of former CEO, amounted to SEK 9.2 million, compared to SEK 2.7 million in 2022. The improvement in earnings was driven by a favourable mix of products and services, as well as effective cost control. A good mix in our offering, and satisfactory handling of other expenses contributed to the increase. Cash flow from operating activities amounted to SEK 21.7 million compared to SEK 1.0 million for the corresponding period in 2022. Focused efforts on accounts receivable also contributed to the improvement.
The mobile forensic industry continues to be characterised by a high pace of development. The need to handle and expand new technology, to meet customers’ process changes and support their digital transformation places strong demands on MSAB to continue developing its products, services, and new business models. Our continuing growth also demands competence development for current personnel and a high pace of recruitment of new employees. Today, we seek competence in a more global perspective than previously in order to secure the right specialist competencies.
European sales were very strong during the quarter, driven primarily by the French and UK markets, and we saw many previous customers return to us because of the product development of recent years. The North American market delivered as expected, but we continue our efforts to growth this market further. In Asia
and Oceania, sales were lower than expected, but authorities are showing a great deal of interest in our Frontline solutions, so we will be focussing our efforts on those markets where we see the greatest potential.
We see defence authorities and intelligence agencies requesting high performance levels to improve their mobile forensic operations, especially for our Frontline solutions, where their personnel can quickly read mobile phones out in the field, or at their place of work, instead of going through the forensic lab. In this way, lead times can be shortened, and labs can focus on more difficult cases. Many authorities have also realised the value of having access to technology developed by a company that operates in accordance with EU legislation, as EU legislation is generally stricter when it comes to integrity and ethics. MSAB is the only European supplier of mobile forensics.
MSAB’s solutions are increasingly important for authorities in need of digital forensic solutions. Mobile data can, for example, be part of tax and customs investigations, and we see requests for our solutions increasing from authorities other than our traditionally largest customer segments: the police, defence, and intelligence services. Being able to extract and analyse data from mobile phones in a broader perspective can generate additional business opportunities for MSAB, thereby contributing to an expanding market for the Company.
Additionally, we see an increase in interest from private actors and to meet this need we introduced during the quarter a number of new software fuctions that have already generated new business. We believe these new capabilities can provide future growth.
I am proud of MSAB’s accomplishments during the first half-year and I’m convinced that our strong brand, innovative product development, and broad offering within mobile forensics will continue to generate new business on our prioritised markets globally in the coming years.
Stockholm, July 2023
Interim CEO, MSAB