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Artificial Solutions

Full-stack platform provider within artificial intelligence

Artificial Solutions is a Swedish B2B software provider and an established leader in conversational AI, which is a form of AI that enables people to converse with applications and services running on computers, mobiles, wearables and other electronic devices in a human-like, intelligent manner.

The market for AI and the company’s niche, conversational AI, look set to growth rapidly in the coming years. Today, Artificial Solutions has a proven product that has put into practice at various large corporations. We therefore expect to see high organic growth. Additionally, we would expect increased sales to result in high margins given the scalable business model. Also, rapidly growing tech companies are often the subject of M&A, and Artificial Solutions could well appear on the radar of potential buyers.

The key risks we have identified are: 1) financial risk given that the company is currently cash-flow negative, 2) technological risk, as a constantly changing market could make its products obsolete, 3) competition risk, 4) partnership risk, as Artificial Solutions is intensifying its use of partners and 5) legal risk, given that the software industry has recently been subject to regulation.

Financials

SEKm 2018 2019e 2020e
Sales 45 57 78
Sales growth (%) -5,6 26,9 35,9
EBITDA -95 -77 -62
EBITDA margin (%) -210,9 -134,7 -79,8
EBIT adj -110 -93 -78
EBIT adj margin (%) -245,2 -162,7 -100,7
Pretax profit -146 -111 -91
EPS rep 0 -3,73 -2,46
EPS growth (%) N/A 0 34,1
EPS adj 0 -3,73 -2,46
DPS 0 0 0
EV/EBITDA (x) -1 -9,7 -13,9
EV/EBIT adj (x) -0,9 -8 -11
P/E (x) N/A -6,7 -10,2
P/E adj (x) N/A -6,7 -10,2
EV/sales (x) 2,2 13 11,1
FCF yield (%) 0 -14,6 -9,5
Dividend yield (%) 0 0 0
Net IB debt/EBITDA -1 0 1
SEKm 2018 2019e 2020e
Sales 45 57 78
COGS 0 0 0
Gross profit 45 57 78
Other operating items -140 -134 -140
EBITDA -95 -77 -62
Depreciation on tangibles 0 0 0
Depreciation on intangibles -24 -16 -16
EBITA -119 -93 -78
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT -119 -93 -78
Other financial items 0 0 0
Net financial items -27 -18 -12
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit -146 -111 -91
Tax 0 0 0
Net profit -146 -111 -91
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders -146 -111 -91
EPS 0 -3,73 -2,46
EPS Adj 0 -3,73 -2,46
Total extraordinary items after tax -8,4 0 0
Tax rate (%) 0 0 0
Gross margin (%) 100 100 100
EBITDA margin (%) -210,9 -134,7 -79,8
EBITA margin (%) -263,8 -162,7 -100,7
EBIT margin (%) -263,8 -162,7 -100,7
Pretax margin (%) -324,3 -193,7 -116,7
Net margin (%) -324,4 -193,7 -116,7
Growth rates Y/Y 2018 2019 2020
Sales growth (%) -5,6 26,9 35,9
EBITDA growth (%) -45,1 19 19,5
EBIT growth (%) -30,6 21,8 15,8
Net profit growth (%) -38,7 24,2 18,1
EPS growth (%) N/A 0 34,1
Profitability 2018 2019 2020
ROE (%) 181,9 263,9 -280,1
ROE Adj (%) 171,5 263,9 -280,1
ROCE (%) -826,2 -1287,9 -4736
ROCE Adj(%) -778,9 -1287,9 -4736
ROIC (%) -959,8 -3028 2165,9
ROIC Adj (%) -892,2 -3028 2165,9
Adj earnings numbers 2018 2019 2020
EBITDA Adj -87 -77 -62
EBITDA Adj margin (%) -192,4 -134,7 -79,8
EBITA Adj -110 -93 -78
EBITA Adj margin (%) -245,2 -162,7 -100,7
EBIT Adj -110 -93 -78
EBIT Adj margin (%) -245,2 -162,7 -100,7
Pretax profit Adj -138 -111 -91
Net profit Adj -138 -111 -91
Net profit to shareholders Adj -138 -111 -91
Net Adj margin (%) -305,8 -193,7 -116,7
SEKm 2018 2019e 2020e
EBITDA -95 -77 -62
Net financial items -27 -18 -12
Paid tax 0 0 0
Non-cash items 0 0 0
Cash flow before change in WC -122 -95 -74
Change in WC 1 6 2
Operating cash flow -109 -95 -74
CAPEX tangible fixed assets 0 0 0
CAPEX intangible fixed assets -13 -13 -14
Acquisitions and disposals 0 0 0
Free cash flow -123 -108 -88
Dividend paid 0 0 0
Share issues and buybacks 132 200 150
Other non cash items -12 6 2
Decrease in net IB debt -3 98 64
Balance Sheet (SEKm) 2018 2019 2020
Goodwill 0 0 0
Indefinite intangible assets 0 0 0
Definite intangible assets 29 27 24
Tangible fixed assets 2 2 2
Other fixed assets 6 6 6
Fixed assets 37 34 31
Inventories 0 0 0
Receivables 23 29 34
Other current assets 0 0 0
Cash and liquid assets 47 148 63
Total assets 107 211 128
Shareholders equity -87 3 62
Minority 0 0 0
Total equity -87 3 62
Long-term debt 52 56 0
Pension debt 0 0 0
Convertible debt 0 0 0
Deferred tax 0 0 0
Other long-term liabilities 0 0 0
Short-term debt 94 94 0
Accounts payable 47 58 66
Other current liabilities 0 0 0
Total liabilities and equity 86 64 107
Net IB debt 99 2 -63
Net IB debt excl. pension debt 99 2 -63
Capital invested 7 -1 -6
Working capital -24 -30 -32
EV breakdown 2018 2019 2020
Market cap. diluted (m) 0 741 921
Net IB debt Adj 99 2 -63
Market value of minority 0 0 0
Reversal of shares and participations 0 0 0
Reversal of conv. debt assumed equity 0 0 0
EV 99 743 859
Capital efficiency (%) 2018 2019 2020
Total assets turnover (%) 52,6 36 45,8
Capital invested turnover (%) 363,8 1861,4 -2149,9
Capital employed turnover (%) 254,7 664,8 4056,6
Inventories / sales (%) 0 0 0
Customer advances / sales (%) 0 0 0
Payables / sales (%) 93,3 92,3 80,1
Working capital / sales (%) -52 -46,9 -39,6
Financial risk and debt service 2018 2019 2020
Net debt / equity (%) -114,8 63,9 -100,9
Net debt / market cap (%) N/A 0,2 -6,8
Equity ratio (%) -81,1 1,3 48,4
Net IB debt adj. / equity (%) -114,8 63,9 -100,9
Current ratio (%) 49,6 116,2 146,6
EBITDA / net interest (%) -348,5 -433,4 -498,6
Net IB debt / EBITDA (%) -104,6 -2,2 101
Interest cover (%) N/A N/A N/A
SEKm 2018 2019e 2020e
Shares outstanding adj. 0 30 37
Fully diluted shares Adj 0 30 37
EPS 0 -3,73 -2,46
Dividend per share Adj 0 0 0
EPS Adj 0 -3,73 -2,46
BVPS 0 0,09 1,68
BVPS Adj 0 -0,81 1,04
Net IB debt / share N/A 0,1 -1,7
Share price 88,06 25 25
Market cap. (m) 0 741 921
Valuation 2018 2019 2020
P/E N/A -6,7 -10,2
EV/sales 2,21 13 11,06
EV/EBITDA -1 -9,7 -13,9
EV/EBITA -0,8 -8 -11
EV/EBIT -0,8 -8 -11
Dividend yield (%) 0 0 0
FCF yield (%) 0 -14,6 -9,5
P/BVPS N/A 275,66 14,85
P/BVPS Adj N/A -30,88 24,14
P/E Adj N/A -6,7 -10,2
EV/EBITDA Adj -1,1 -9,7 -13,9
EV/EBITA Adj -0,9 -8 -11
EV/EBIT Adj -0,9 -8 -11
EV/cap. employed 7,8 168,5 -1480,8
Investment ratios 2018 2019 2020
Capex / sales 28,9 23,1 17,4
Capex / depreciation 54,7 82,5 83,1
Capex tangibles / tangible fixed assets 0 0 0
Capex intangibles / definite intangibles 44,1 49,4 56,6
Depreciation on intangibles / definite intangibles 80,7 59,9 68,1
Depreciation on tangibles / tangibles 0 0 0

Equity research

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Main shareholders

Artificial Solutions

Main shareholders Share capital % Voting shares % Verified
Scope 49.3 % 49.3 % 12 Mar 2019
Björn Persson 14.1 % 14.1 % 31 Dec 2018
Anders Eriksson 6.0 % 6.0 % 31 Dec 2018
Avanza Pension 5.5 % 5.5 % 31 Dec 2018
Peter Vallin 5.4 % 5.4 % 31 Dec 2018
SEB-Stiftelsen 4.8 % 4.8 % 12 Mar 2019
Mattias Andersson 3.7 % 3.7 % 31 Dec 2018
Gunvald Berger 3.5 % 3.5 % 31 Dec 2018
Longshore AB 3.2 % 3.2 % 12 Mar 2019
Vincero AB 3.7 % 1.6 % 28 Jan 2019
Source: Holdings by Modular Finance AB

Insider list

Artificial Solutions

Name Quantity Code Date
Andreas Wieweg + 54 580 BUY 13 Apr 2019
David Parsin + 54 580 TILLD 13 Apr 2019
Bodil Eriksson + 34 BUY 13 Apr 2019
David Parsin + 54 580 TILLD 13 Apr 2019
Christopher Tew + 54 580 TILLD 13 Apr 2019
Bodil Eriksson + 34 BUY 13 Apr 2019
Bodil Eriksson + 34 BUY 13 Apr 2019
Bodil Eriksson + 34 BUY 13 Apr 2019
Christopher Tew + 54 580 TILLD 13 Apr 2019
Lawrence Flynn + 244 536 TILLD 12 Apr 2019

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