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Artificial Solutions

Artificial Solutions

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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 2019 2020e 2021e
Sales 49 59 94
Sales growth (%) 8,8 20,4 59,7
EBITDA -112 -80 -61
EBITDA margin (%) -229,2 -136,3 -64,5
EBIT adj -117 -93 -74
EBIT adj margin (%) -239,6 -157,7 -78,1
Pretax profit -182 -139 -114
EPS rep -7,35 -2,93 -1,9
EPS growth (%) 47 60,1 35,3
EPS adj -6,2 -2,93 -1,9
DPS 0 0 0
EV/EBITDA (x) -3,3 -10 -15,9
EV/EBIT adj (x) -3,2 -8,7 -13,2
P/E (x) -0,8 -4,4 -6,8
P/E adj (x) -1 -4,4 -6,8
EV/sales (x) 7,6 13,7 10,3
FCF yield (%) -102,5 -15,8 -13,2
Dividend yield (%) 0 0 0
Net IB debt/EBITDA -1,9 -2,4 -3,2
N/A N/A N/A
SEKm 2019 2020e 2021e
Sales 49 59 94
COGS 0 0 0
Gross profit 49 59 94
Other operating items -161 -139 -155
EBITDA -112 -80 -61
Depreciation on tangibles 0 0 0
Depreciation on intangibles -12 -13 -13
EBITA -124 -93 -74
Goodwill impairment charges -22 0 0
Other impairment and amortisation 0 0 0
EBIT -146 -93 -74
Other financial items 0 0 0
Net financial items -36 -46 -40
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit -182 -139 -114
Tax 0 0 0
Net profit -182 -139 -114
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders -182 -139 -114
EPS -7,35 -2,93 -1,9
EPS Adj -6,2 -2,93 -1,9
Total extraordinary items after tax -6,4 0 0
Tax rate (%) 0 0,1 0
Gross margin (%) 100 100 100
EBITDA margin (%) -229,2 -136,3 -64,5
EBITA margin (%) -252,7 -157,7 -78,1
EBIT margin (%) -297,8 -157,7 -78,1
Pretax margin (%) -370,8 -235,8 -120,6
Net margin (%) -370,8 -236,2 -120,6
Growth rates Y/Y 2019 2020 2021
Sales growth (%) 8,8 20,4 59,7
EBITDA growth (%) -18,2 28,4 24,5
EBIT growth (%) -22,8 36,2 20,9
Net profit growth (%) -24,4 23,3 18,5
EPS growth (%) 47 60,1 35,3
Profitability 2019 2020 2021
ROE (%) 131,3 74,3 59,4
ROE Adj (%) 110,7 74,3 59,4
ROCE (%) -394,6 -623,1 -738,6
ROCE Adj(%) -332,7 -623,1 -738,6
ROIC (%) -715,2 -549,7 -24185,2
ROIC Adj (%) -575,5 -549,7 -24185,2
Adj earnings numbers 2019 2020 2021
EBITDA Adj -106 -80 -61
EBITDA Adj margin (%) -216,1 -136,3 -64,5
EBITA Adj -117 -93 -74
EBITA Adj margin (%) -239,6 -157,7 -78,1
EBIT Adj -117 -93 -74
EBIT Adj margin (%) -239,6 -157,7 -78,1
Pretax profit Adj -153 -139 -114
Net profit Adj -153 -139 -114
Net profit to shareholders Adj -153 -139 -114
Net Adj margin (%) -312,7 -236,2 -120,6
N/A N/A N/A
SEKm 2019 2020e 2021e
EBITDA -112 -80 -61
Net financial items -36 -46 -40
Paid tax 0 0 0
Non-cash items 19 44 0
Cash flow before change in WC -129 -83 -101
Change in WC -15 -1 12
Operating cash flow -145 -84 -89
CAPEX tangible fixed assets 0 0 0
CAPEX intangible fixed assets -13 -13 -14
Acquisitions and disposals 0 0 0
Free cash flow -158 -97 -102
Dividend paid 0 0 0
Share issues and buybacks 62 140 100
Other non cash items -23 -14 0
Decrease in net IB debt -119 28 -2
Balance Sheet (SEKm) 2019 2020 2021
Goodwill 0 0 0
Indefinite intangible assets 0 0 0
Definite intangible assets 32 33 34
Tangible fixed assets 2 1 1
Other fixed assets 5 6 6
Fixed assets 39 40 41
Inventories 0 0 0
Receivables 32 20 38
Other current assets 0 0 0
Cash and liquid assets 4 6 24
Total assets 75 66 102
Shareholders equity -190 -184 -198
Minority 0 0 0
Total equity -190 -184 -198
Long-term debt 129 177 197
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 19 19
Accounts payable 43 54 84
Other current liabilities 0 0 0
Total liabilities and equity 75 66 102
Net IB debt 219 190 193
Net IB debt excl. pension debt 219 190 193
Capital invested 28 6 -5
Working capital -11 -34 -46
EV breakdown 2019 2020 2021
Market cap. diluted (m) 154 616 776
Net IB debt Adj 219 190 193
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 373 806 969
Capital efficiency (%) 2019 2020 2021
Total assets turnover (%) 54 83,7 112
Capital invested turnover (%) 240,2 348,1 30967,6
Capital employed turnover (%) 106,4 264,2 612,6
Inventories / sales (%) 0 0 0
Customer advances / sales (%) 0 0 0
Payables / sales (%) 91,4 81,7 73
Working capital / sales (%) -35,5 -38,1 -42,6
Financial risk and debt service 2019 2020 2021
Net debt / equity (%) -114,8 -103,2 -97,3
Net debt / market cap (%) 37 30,9 24,8
Equity ratio (%) -253,5 -280,1 -193,3
Net IB debt adj. / equity (%) -114,8 -103,2 -97,3
Current ratio (%) 26,5 35,4 59,6
EBITDA / net interest (%) -313,7 -174,5 -151,9
Net IB debt / EBITDA (%) -194,6 -236,6 -317,1
Interest cover (%) 0 0 0
N/A N/A N/A
SEKm 2019 2020e 2021e
Shares outstanding adj. 25 48 60
Fully diluted shares Adj 25 48 60
EPS -7,35 -2,93 -1,9
Dividend per share Adj 0 0 0
EPS Adj -6,2 -2,93 -1,9
BVPS -7,71 -3,88 -3,3
BVPS Adj -8,99 -4,57 -3,87
Net IB debt / share 8,8 4 3,2
Share price 23,89 12,95 12,95
Market cap. (m) 590 616 776
Valuation 2019 2020 2021
P/E -0,8 -4,4 -6,8
EV/sales 7,6 13,66 10,28
EV/EBITDA -3,3 -10 -15,9
EV/EBITA -3 -8,7 -13,2
EV/EBIT -2,6 -8,7 -13,2
Dividend yield (%) 0 0 0
FCF yield (%) -102,5 -15,8 -13,2
P/BVPS -0,81 -3,34 -3,92
P/BVPS Adj -0,69 -2,83 -3,34
P/E Adj -1 -4,4 -6,8
EV/EBITDA Adj -3,5 -10 -15,9
EV/EBITA Adj -3,2 -8,7 -13,2
EV/EBIT Adj -3,2 -8,7 -13,2
EV/cap. employed 11,5 66,3 52,1
Investment ratios 2019 2020 2021
Capex / sales 27,3 22,5 14,5
Capex / depreciation 116,5 105,6 107
Capex tangibles / tangible fixed assets 0 0 0
Capex intangibles / definite intangibles 42,3 40,4 40,2
Depreciation on intangibles / definite intangibles 36,3 38,2 37,6
Depreciation on tangibles / tangibles 0 0 0
N/A N/A N/A

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Media

Artificial Solutions - Company presentation with CEO Lawrence Flynn
Artificial Solutions - Company presentation with CEO Lawrence Flynn

Main shareholders - Artificial Solutions

Main shareholders Share capital % Voting shares % Verified
Scope 35.3 % 35.3 % 31 Oct 2020
AFA Försäkring 5.4 % 5.4 % 31 Oct 2020
SEB-Stiftelsen 4.6 % 4.6 % 31 Oct 2020
C WorldWide Asset Management 2.8 % 2.8 % 31 Oct 2020
Ulf Johansson 2.5 % 2.5 % 31 Oct 2020
Johan A. Gustavsson 2.3 % 2.3 % 14 Feb 2020
Avanza Pension 1.7 % 1.7 % 31 Oct 2020
John Brehmer 1.6 % 1.6 % 31 Oct 2020
Sven Härgestam 1.5 % 1.5 % 31 Oct 2020
NLISIP 1.0 % 1.0 % 30 Jun 2020
Source: Holdings by Modular Finance AB

Insider list - Artificial Solutions

Name Quantity Code Date
Gareth Walters + 46 000 BUY 16 Nov 2020
Fredrik Törgren + 100 000 BUY 16 Nov 2020
Andrew Peart + 38 500 ALTM 16 Nov 2020
Christopher Bushnell + 33 500 ALTM 16 Nov 2020
Peter Roost + 33 500 ALTM 16 Nov 2020
Andreas Wieweg + 77 500 BUY 16 Nov 2020
Gareth Walters + 46 000 ALTM 16 Nov 2020
Leslie Sauvage + 7 500 ALTM 16 Nov 2020
Leslie Sauvage + 7 500 BUY 16 Nov 2020
Per Ottosson + 2 000 BUY 15 Oct 2020

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