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Artificial Solutions

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.

SEKm 2019 2020e 2021e
Sales 54 82 119
Sales growth (%) 19,9 51,5 45,7
EBITDA -110 -82 -52
EBITDA margin (%) -203,2 -100,3 -43,3
EBIT adj -115 -93 -63
EBIT adj margin (%) -212,4 -113,7 -52,6
Pretax profit -178 -108 -74
EPS rep -5,8 -2,28 -1,37
EPS growth (%) 56,8 60,7 39,7
EPS adj -4,87 -2,28 -1,37
DPS 0 0 0
EV/EBITDA (x) -3,5 -5,5 -9,8
EV/EBIT adj (x) -3,4 -4,9 -8
P/E (x) -1,3 -3,3 -5,5
P/E adj (x) -1,5 -3,3 -5,5
EV/sales (x) 7,1 5,5 4,2
FCF yield (%) -63,2 -26,2 -13,5
Dividend yield (%) 0 0 0
Net IB debt/EBITDA -1,4 -1,2 -2
SEKm 2019 2020e 2021e
Sales 54 82 119
COGS 0 0 0
Gross profit 54 82 119
Other operating items -164 -164 -171
EBITDA -110 -82 -52
Depreciation on tangibles 0 0 0
Depreciation on intangibles -11 -11 -11
EBITA -121 -93 -63
Goodwill impairment charges -22 0 0
Other impairment and amortisation 0 0 0
EBIT -143 -93 -63
Other financial items 0 0 0
Net financial items -35 -15 -11
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit -178 -108 -74
Tax 0 0 0
Net profit -178 -108 -74
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders -178 -108 -74
EPS -5,8 -2,28 -1,37
EPS Adj -4,87 -2,28 -1,37
Total extraordinary items after tax -6,4 0 0
Tax rate (%) 0 0 0
Gross margin (%) 100 100 100
EBITDA margin (%) -203,2 -100,3 -43,3
EBITA margin (%) -224,3 -113,7 -52,6
EBIT margin (%) -265,2 -113,7 -52,6
Pretax margin (%) -329,4 -131,4 -61,9
Net margin (%) -329,4 -131,4 -61,9
Growth rates Y/Y 2019 2020 2021
Sales growth (%) 19,9 51,5 45,7
EBITDA growth (%) -15,5 25,3 37
EBIT growth (%) -20,5 35 32,5
Net profit growth (%) -21,8 39,5 31,4
EPS growth (%) 56,8 60,7 39,7
Profitability 2019 2020 2021
ROE (%) 159,4 93,1 69,4
ROE Adj (%) 133,9 93,1 69,4
ROCE (%) -305,4 -343,9 5993,6
ROCE Adj(%) -256,5 -343,9 5993,6
ROIC (%) -964,2 -969,8 857,4
ROIC Adj (%) -772,3 -969,8 857,4
Adj earnings numbers 2019 2020 2021
EBITDA Adj -103 -82 -52
EBITDA Adj margin (%) -191,4 -100,3 -43,3
EBITA Adj -115 -93 -63
EBITA Adj margin (%) -212,4 -113,7 -52,6
EBIT Adj -115 -93 -63
EBIT Adj margin (%) -212,4 -113,7 -52,6
Pretax profit Adj -149 -108 -74
Net profit Adj -149 -108 -74
Net profit to shareholders Adj -149 -108 -74
Net Adj margin (%) -276,7 -131,4 -61,9
SEKm 2019 2020e 2021e
EBITDA -110 -82 -52
Net financial items -35 -15 -11
Paid tax 0 0 0
Non-cash items 15 0 0
Cash flow before change in WC -130 -97 -63
Change in WC -3 16 22
Operating cash flow -135 -81 -41
CAPEX tangible fixed assets 0 0 0
CAPEX intangible fixed assets -11 -12 -14
Acquisitions and disposals 0 0 0
Free cash flow -146 -93 -55
Dividend paid 0 0 0
Share issues and buybacks 112 150 50
Other non cash items -21 0 0
Decrease in net IB debt -55 57 -5
Balance Sheet (SEKm) 2019 2020 2021
Goodwill 0 0 0
Indefinite intangible assets 0 0 0
Definite intangible assets 30 32 34
Tangible fixed assets 2 2 2
Other fixed assets 6 6 6
Fixed assets 38 39 42
Inventories 0 0 0
Receivables 37 53 77
Other current assets 0 0 0
Cash and liquid assets 40 3 9
Total assets 114 96 128
Shareholders equity -137 -94 -118
Minority 0 0 0
Total equity -137 -94 -118
Long-term debt 100 100 110
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 0 0
Accounts payable 58 90 136
Other current liabilities 0 0 0
Total liabilities and equity 64 107 114
Net IB debt 154 97 101
Net IB debt excl. pension debt 154 97 101
Capital invested 17 2 -17
Working capital -21 -37 -58
EV breakdown 2019 2020 2021
Market cap. diluted (m) 231 355 403
Net IB debt Adj 154 97 101
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 384 451 505
Capital efficiency (%) 2019 2020 2021
Total assets turnover (%) 48,9 77,9 106,7
Capital invested turnover (%) 363,6 853 -1629,1
Capital employed turnover (%) 92,7 261,7 -9689,9
Inventories / sales (%) 0 0 0
Customer advances / sales (%) 0 0 0
Payables / sales (%) 96,8 90,2 94,7
Working capital / sales (%) -41,4 -35,2 -39,9
Financial risk and debt service 2019 2020 2021
Net debt / equity (%) -112,4 -102,4 -85,7
Net debt / market cap (%) 21 27,2 25,1
Equity ratio (%) -119,5 -98,6 -92,4
Net IB debt adj. / equity (%) -112,4 -102,4 -85,7
Current ratio (%) 50,8 62,8 63,5
EBITDA / net interest (%) -316,3 -564,7 -469,5
Net IB debt / EBITDA (%) -140 -117,8 -195,9
Interest cover (%) N/A N/A N/A
SEKm 2019 2020e 2021e
Shares outstanding adj. 31 47 54
Fully diluted shares Adj 31 47 54
EPS -5,8 -2,28 -1,37
Dividend per share Adj 0 0 0
EPS Adj -4,87 -2,28 -1,37
BVPS -4,46 -2 -2,2
BVPS Adj -5,45 -2,67 -2,83
Net IB debt / share 5 2 1,9
Share price 23,89 7,52 7,52
Market cap. (m) 733 355 403
Valuation 2019 2020 2021
P/E -1,3 -3,3 -5,5
EV/sales 7,12 5,52 4,23
EV/EBITDA -3,5 -5,5 -9,8
EV/EBITA -3,2 -4,9 -8
EV/EBIT -2,7 -4,9 -8
Dividend yield (%) 0 0 0
FCF yield (%) -63,2 -26,2 -13,5
P/BVPS -1,69 -3,76 -3,42
P/BVPS Adj -1,38 -2,82 -2,65
P/E Adj -1,5 -3,3 -5,5
EV/EBITDA Adj -3,7 -5,5 -9,8
EV/EBITA Adj -3,4 -4,9 -8
EV/EBIT Adj -3,4 -4,9 -8
EV/cap. employed 6,8 80 -62,3
Investment ratios 2019 2020 2021
Capex / sales 20,4 15,2 11,3
Capex / depreciation 96,9 112,7 121,6
Capex tangibles / tangible fixed assets 0 0 0
Capex intangibles / definite intangibles 36,3 39,2 39,9
Depreciation on intangibles / definite intangibles 37,5 34,8 32,8
Depreciation on tangibles / tangibles 0 0 0

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Media

Artificial Solutions - Company presentation with CEO Lawrence Flynn

Main shareholders - Artificial Solutions

Main shareholders Share capital % Voting shares % Verified
Scope 43.8 % 43.8 % 31 Dec 2019
AFA Försäkring 5.9 % 5.9 % 31 Dec 2019
SEB-Stiftelsen 4.2 % 4.2 % 31 Dec 2019
C WorldWide Asset Management 2.8 % 2.8 % 31 Dec 2019
Peter Lindell 2.7 % 2.7 % 30 Nov 2019
Andrew Walton-Green 2.7 % 2.7 % 12 Mar 2019
Acervo AB 2.4 % 2.4 % 30 Nov 2019
Johan A. Gustavsson 2.3 % 2.3 % 31 Dec 2019
NLISIP 1.9 % 1.9 % 31 Dec 2019
Sven Härgestam 1.6 % 1.6 % 31 Dec 2019
Source: Holdings by Modular Finance AB

Insider list - Artificial Solutions

Name Quantity Code Date
Johan A Gustavsson + 2 069 BUY 23 Dec 2019
Johan A Gustavsson + 2 000 BUY 19 Dec 2019
Johan A Gustavsson + 3 000 BUY 19 Dec 2019
Johan A Gustavsson + 2 931 BUY 19 Dec 2019
Johan A Gustavsson + 3 000 BUY 18 Dec 2019
Johan A Gustavsson + 5 000 BUY 18 Dec 2019
Johan A Gustavsson + 6 000 BUY 18 Dec 2019
Johan A Gustavsson + 9 000 BUY 17 Dec 2019
Johan A Gustavsson + 2 000 BUY 17 Dec 2019
Åsa Hedin + 28 570 BUY 16 Dec 2019

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