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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.

SEKm 2018 2019e 2020e
Sales 45 62 84
Sales growth (%) -5,6 36,8 36
EBITDA -95 -95 -73
EBITDA margin (%) -210,9 -153,6 -87,6
EBIT adj -110 -103 -90
EBIT adj margin (%) -245,2 -166,5 -106,9
Pretax profit -146 -140 -102
EPS rep -13,86 -4,57 -2,37
EPS growth (%) 0 67,1 48,1
EPS adj -13,07 -3,71 -2,37
DPS 0 0 0
EV/EBITDA (x) -4,6 -9,8 -16,3
EV/EBIT adj (x) -4 -9 -13,3
P/E (x) -1,7 -6,1 -11,8
P/E adj (x) -1,8 -7,5 -11,8
EV/sales (x) 9,8 15 14,3
FCF yield (%) -48,9 -13,5 -8,2
Dividend yield (%) 0 0 0
Net IB debt/EBITDA -1 -0,7 0,2
SEKm 2018 2019e 2020e
Sales 45 62 84
COGS 0 0 0
Gross profit 45 62 84
Other operating items -140 -156 -157
EBITDA -95 -95 -73
Depreciation on tangibles 0 0 0
Depreciation on intangibles -24 -12 -16
EBITA -119 -107 -90
Goodwill impairment charges 0 -22 0
Other impairment and amortisation 0 0 0
EBIT -119 -129 -90
Other financial items 0 0 0
Net financial items -27 -11 -12
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit -146 -140 -102
Tax 0 0 0
Net profit -146 -140 -102
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders -146 -140 -102
EPS -13,86 -4,57 -2,37
EPS Adj -13,07 -3,71 -2,37
Total extraordinary items after tax -8,4 -4,1 0
Tax rate (%) 0 0 0
Gross margin (%) 100 100 100
EBITDA margin (%) -210,9 -153,6 -87,6
EBITA margin (%) -263,8 -173,1 -106,9
EBIT margin (%) -263,8 -209 -106,9
Pretax margin (%) -324,3 -227,5 -121,8
Net margin (%) -324,4 -227,5 -121,8
Growth rates Y/Y 2018 2019 2020
Sales growth (%) -5,6 36,8 36
EBITDA growth (%) -45,1 0,4 22,5
EBIT growth (%) -30,6 -8,4 30,4
Net profit growth (%) -38,7 4,1 27,2
EPS growth (%) 0 67,1 48,1
Profitability 2018 2019 2020
ROE (%) 182,1 192,4 403,8
ROE Adj (%) 171,7 156,5 403,8
ROCE (%) -335,8 -183,4 -200,2
ROCE Adj(%) -316,5 -149,1 -200,2
ROIC (%) -671,6 -1351,6 -5298,7
ROIC Adj (%) -624,3 -1076,6 -5298,7
Adj earnings numbers 2018 2019 2020
EBITDA Adj -87 -91 -73
EBITDA Adj margin (%) -192,4 -147 -87,6
EBITA Adj -110 -103 -90
EBITA Adj margin (%) -245,2 -166,5 -106,9
EBIT Adj -110 -103 -90
EBIT Adj margin (%) -245,2 -166,5 -106,9
Pretax profit Adj -138 -114 -102
Net profit Adj -138 -114 -102
Net profit to shareholders Adj -138 -114 -102
Net Adj margin (%) -305,8 -185 -121,8
SEKm 2018 2019e 2020e
EBITDA -95 -95 -73
Net financial items -27 -11 -12
Paid tax 0 0 0
Non-cash items 0 0 0
Cash flow before change in WC -122 -106 -86
Change in WC 1 5 6
Operating cash flow -111 -105 -86
CAPEX tangible fixed assets 0 0 0
CAPEX intangible fixed assets -13 -10 -14
Acquisitions and disposals 0 0 0
Free cash flow -124 -116 -99
Dividend paid 0 0 0
Share issues and buybacks 132 148 170
Other non cash items -11 1 6
Decrease in net IB debt -3 34 77
Balance Sheet (SEKm) 2018 2019 2020
Goodwill 0 0 0
Indefinite intangible assets 0 0 0
Definite intangible assets 29 28 25
Tangible fixed assets 2 2 2
Other fixed assets 6 6 6
Fixed assets 37 36 33
Inventories 0 0 0
Receivables 23 42 48
Other current assets 0 0 0
Cash and liquid assets 47 87 12
Total assets 107 164 93
Shareholders equity -86 -59 9
Minority 0 0 0
Total equity -86 -59 9
Long-term debt 52 59 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 71 84
Other current liabilities 0 0 0
Total liabilities and equity 86 64 107
Net IB debt 99 65 -12
Net IB debt excl. pension debt 99 65 -12
Capital invested 13 6 -3
Working capital -24 -29 -36
EV breakdown 2018 2019 2020
Market cap. diluted (m) 341 859 1206
Net IB debt Adj 99 65 -12
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 440 925 1194
Capital efficiency (%) 2018 2019 2020
Total assets turnover (%) 52,7 45,5 65,2
Capital invested turnover (%) 254,5 646,7 4954,5
Capital employed turnover (%) 103,5 80,6 164,4
Inventories / sales (%) 0 0 0
Customer advances / sales (%) 0 0 0
Payables / sales (%) 93,1 95,8 92,5
Working capital / sales (%) -51,9 -43,1 -38,7
Financial risk and debt service 2018 2019 2020
Net debt / equity (%) -114,8 -110,5 -133
Net debt / market cap (%) 7,9 7,6 -1
Equity ratio (%) -81,1 -36 9,4
Net IB debt adj. / equity (%) -114,8 -110,5 -133
Current ratio (%) 49,6 78,2 71,3
EBITDA / net interest (%) -348,5 -830,2 -590,3
Net IB debt / EBITDA (%) -104,4 -69,2 15,8
Interest cover (%) N/A N/A N/A
SEKm 2018 2019e 2020e
Shares outstanding adj. 14 31 43
Fully diluted shares Adj 14 31 43
EPS -13,86 -4,57 -2,37
Dividend per share Adj 0 0 0
EPS Adj -13,07 -3,71 -2,37
BVPS -6,08 -1,93 0,2
BVPS Adj -8,15 -2,85 -0,39
Net IB debt / share 7 2,1 -0,3
Share price 88,06 28 28
Market cap. (m) 1252 859 1206
Valuation 2018 2019 2020
P/E -1,7 -6,1 -11,8
EV/sales 9,78 15,02 14,25
EV/EBITDA -4,6 -9,8 -16,3
EV/EBITA -3,7 -8,7 -13,3
EV/EBIT -3,7 -7,2 -13,3
Dividend yield (%) 0 0 0
FCF yield (%) -48,9 -13,5 -8,2
P/BVPS -3,95 -14,51 138,66
P/BVPS Adj -2,95 -9,82 -72,15
P/E Adj -1,8 -7,5 -11,8
EV/EBITDA Adj -5,1 -10,2 -16,3
EV/EBITA Adj -4 -9 -13,3
EV/EBIT Adj -4 -9 -13,3
EV/cap. employed 7,4 9,9 137,3
Investment ratios 2018 2019 2020
Capex / sales 29,1 16,6 16,1
Capex / depreciation 55 85 83,1
Capex tangibles / tangible fixed assets 0 0 0
Capex intangibles / definite intangibles 44,6 36,1 53,1
Depreciation on intangibles / definite intangibles 81 42,5 63,9
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 % 31 May 2019
SEB-Stiftelsen 4.8 % 4.8 % 31 May 2019
Longshore AB 3.2 % 3.2 % 31 May 2019
Peter Lindell 3.1 % 3.1 % 31 May 2019
Acervo AB 2.8 % 2.8 % 31 May 2019
Andrew Walton-Green 2.7 % 2.7 % 12 Mar 2019
NLISIP 2.1 % 2.1 % 12 Mar 2019
Johan A. Gustavsson 2.0 % 2.0 % 2 Apr 2019
John Brehmer 1.6 % 1.6 % 31 May 2019
AB Possessor 1.4 % 1.4 % 31 May 2019
Source: Holdings by Modular Finance AB

Insider list

Artificial Solutions

Name Quantity Code Date
Johan Gustavsson + 130 BUY 10 Jun 2019
Johan Gustavsson + 70 BUY 7 Jun 2019
Johan Gustavsson + 800 BUY 5 Jun 2019
Johan Gustavsson + 936 BUY 29 May 2019
Johan Gustavsson + 64 BUY 28 May 2019
JAN ERIK UDDENFELDT + 3 000 BUY 24 May 2019
Johan Gustavsson + 2 000 BUY 17 May 2019
Johan Ekesiöö + 10 000 BUY 16 May 2019
Johan Gustavsson + 1 100 BUY 16 May 2019
Johan Ekesiöö + 10 000 BUY 16 May 2019

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