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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 60 100
Sales growth (%) 8,8 21,8 67,5
EBITDA -112 -84 -60
EBITDA margin (%) -229,2 -140,2 -59,8
EBIT adj -117 -97 -73
EBIT adj margin (%) -239,6 -162,6 -73,3
Pretax profit -182 -131 -103
EPS rep -7,35 -2,46 -1,81
EPS growth (%) 47 66,6 26,5
EPS adj -6,2 -2,46 -1,81
DPS 0 0 0
EV/EBITDA (x) -3,3 -8,7 -13,5
EV/EBIT adj (x) -3,2 -7,5 -11
P/E (x) -0,8 -4,8 -6,5
P/E adj (x) -1 -4,8 -6,5
EV/sales (x) 7,6 12,2 8,1
FCF yield (%) -102,5 -14,3 -12,3
Dividend yield (%) 0 0 0
Net IB debt/EBITDA -1,9 -1,2 -2,3
N/A N/A N/A
SEKm 2019 2020e 2021e
Sales 49 60 100
COGS 0 0 0
Gross profit 49 60 100
Other operating items -161 -143 -160
EBITDA -112 -84 -60
Depreciation on tangibles 0 0 0
Depreciation on intangibles -12 -13 -14
EBITA -124 -97 -73
Goodwill impairment charges -22 0 0
Other impairment and amortisation 0 0 0
EBIT -146 -97 -73
Other financial items 0 0 0
Net financial items -36 -34 -30
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit -182 -131 -103
Tax 0 0 0
Net profit -182 -131 -103
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders -182 -131 -103
EPS -7,35 -2,46 -1,81
EPS Adj -6,2 -2,46 -1,81
Total extraordinary items after tax -6,4 0 0
Tax rate (%) 0 0,2 0
Gross margin (%) 100 100 100
EBITDA margin (%) -229,2 -140,2 -59,8
EBITA margin (%) -252,7 -162,6 -73,3
EBIT margin (%) -297,8 -162,6 -73,3
Pretax margin (%) -370,8 -219,1 -103,3
Net margin (%) -370,8 -219,4 -103,3
Growth rates Y/Y 2019 2020 2021
Sales growth (%) 8,8 21,8 67,5
EBITDA growth (%) -18,2 25,5 28,5
EBIT growth (%) -22,8 33,5 24,5
Net profit growth (%) -24,4 27,9 21,1
EPS growth (%) 47 66,6 26,5
Profitability 2019 2020 2021
ROE (%) 131,3 90 81,2
ROE Adj (%) 110,7 90 81,2
ROCE (%) -394,6 -248,9 -224,8
ROCE Adj(%) -332,7 -248,9 -224,8
ROIC (%) -715,2 -612,1 1114,4
ROIC Adj (%) -575,5 -612,1 1114,4
Adj earnings numbers 2019 2020 2021
EBITDA Adj -106 -84 -60
EBITDA Adj margin (%) -216,1 -140,2 -59,8
EBITA Adj -117 -97 -73
EBITA Adj margin (%) -239,6 -162,6 -73,3
EBIT Adj -117 -97 -73
EBIT Adj margin (%) -239,6 -162,6 -73,3
Pretax profit Adj -153 -131 -103
Net profit Adj -153 -131 -103
Net profit to shareholders Adj -153 -131 -103
Net Adj margin (%) -312,7 -219,4 -103,3
N/A N/A N/A
SEKm 2019 2020e 2021e
EBITDA -112 -84 -60
Net financial items -36 -34 -30
Paid tax 0 0 0
Non-cash items 19 38 0
Cash flow before change in WC -129 -80 -90
Change in WC -15 3 21
Operating cash flow -145 -76 -69
CAPEX tangible fixed assets 0 0 0
CAPEX intangible fixed assets -13 -14 -14
Acquisitions and disposals 0 0 0
Free cash flow -158 -90 -83
Dividend paid 0 0 0
Share issues and buybacks 62 215 50
Other non cash items -23 -11 0
Decrease in net IB debt -119 114 -33
Balance Sheet (SEKm) 2019 2020 2021
Goodwill 0 0 0
Indefinite intangible assets 0 0 0
Definite intangible assets 32 33 33
Tangible fixed assets 2 1 1
Other fixed assets 5 5 5
Fixed assets 39 39 40
Inventories 0 0 0
Receivables 32 20 33
Other current assets 0 0 0
Cash and liquid assets 4 69 36
Total assets 75 128 109
Shareholders equity -190 -101 -154
Minority 0 0 0
Total equity -190 -101 -154
Long-term debt 129 153 153
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 20 20
Accounts payable 43 56 90
Other current liabilities 0 0 0
Total liabilities and equity 75 128 109
Net IB debt 219 104 137
Net IB debt excl. pension debt 219 104 137
Capital invested 28 4 -17
Working capital -11 -36 -57
EV breakdown 2019 2020 2021
Market cap. diluted (m) 154 627 672
Net IB debt Adj 219 104 137
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 373 731 809
Capital efficiency (%) 2019 2020 2021
Total assets turnover (%) 54 58,8 84,2
Capital invested turnover (%) 240,2 375,8 -1520
Capital employed turnover (%) 106,4 113,6 217,6
Inventories / sales (%) 0 0 0
Customer advances / sales (%) 0 0 0
Payables / sales (%) 91,4 82,3 72,8
Working capital / sales (%) -35,5 -38,9 -46,1
Financial risk and debt service 2019 2020 2021
Net debt / equity (%) -114,8 -103,7 -89
Net debt / market cap (%) 37 16,6 20,4
Equity ratio (%) -253,5 -78,5 -140,8
Net IB debt adj. / equity (%) -114,8 -103,7 -89
Current ratio (%) 26,5 117 63,1
EBITDA / net interest (%) -313,7 -248,3 -199,4
Net IB debt / EBITDA (%) -194,6 -124,7 -229
Interest cover (%) 0 0 0
N/A N/A N/A
SEKm 2019 2020e 2021e
Shares outstanding adj. 25 53 57
Fully diluted shares Adj 25 53 57
EPS -7,35 -2,46 -1,81
Dividend per share Adj 0 0 0
EPS Adj -6,2 -2,46 -1,81
BVPS -7,71 -1,89 -2,69
BVPS Adj -8,99 -2,5 -3,27
Net IB debt / share 8,8 2 2,4
Share price 23,89 11,75 11,75
Market cap. (m) 590 627 672
Valuation 2019 2020 2021
P/E -0,8 -4,8 -6,5
EV/sales 7,6 12,25 8,09
EV/EBITDA -3,3 -8,7 -13,5
EV/EBITA -3 -7,5 -11
EV/EBIT -2,6 -7,5 -11
Dividend yield (%) 0 0 0
FCF yield (%) -102,5 -14,3 -12,3
P/BVPS -0,81 -6,23 -4,37
P/BVPS Adj -0,69 -4,71 -3,6
P/E Adj -1 -4,8 -6,5
EV/EBITDA Adj -3,5 -8,7 -13,5
EV/EBITA Adj -3,2 -7,5 -11
EV/EBIT Adj -3,2 -7,5 -11
EV/cap. employed 11,5 10,1 41,9
Investment ratios 2019 2020 2021
Capex / sales 27,3 22,8 13,8
Capex / depreciation 116,5 101,5 102,2
Capex tangibles / tangible fixed assets 0 0 0
Capex intangibles / definite intangibles 42,3 41,7 41,8
Depreciation on intangibles / definite intangibles 36,3 41,1 40,9
Depreciation on tangibles / tangibles 0 0 0
N/A N/A N/A

Equity research

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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 Aug 2020
AFA Försäkring 5.4 % 5.4 % 31 Aug 2020
SEB-Stiftelsen 4.6 % 4.6 % 31 Aug 2020
C WorldWide Asset Management 2.8 % 2.8 % 31 Aug 2020
Ulf Johansson 2.5 % 2.5 % 31 Aug 2020
Johan A. Gustavsson 2.3 % 2.3 % 14 Feb 2020
NLISIP 1.9 % 1.9 % 31 Dec 2019
Avanza Pension 1.7 % 1.7 % 31 Aug 2020
John Brehmer 1.6 % 1.6 % 31 Aug 2020
Sven Härgestam 1.5 % 1.5 % 31 Aug 2020
Source: Holdings by Modular Finance AB

Insider list - Artificial Solutions

Name Quantity Code Date
Johan A Gustavsson + 2 000 BUY 21 Sep 2020
Johan A Gustavsson + 1 000 BUY 18 Sep 2020
Per Ottosson + 42 000 BUY 18 Sep 2020
Johan A Gustavsson + 2 000 BUY 18 Sep 2020
Per Ottosson + 22 833 BUY 18 Sep 2020
Johan A Gustavsson + 16 000 BUY 18 Sep 2020
Johan A Gustavsson - 42 000 SELL 18 Sep 2020
Darren Ford - 3 607 SELL 4 Aug 2020
Darren Ford - 3 750 SELL 3 Aug 2020
Johan A Gustavsson + 1 000 BUY 31 Mar 2020

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