INVISIO (IVSO) Q3 2018 earnings summary

Executive summary

• Q3 revenue rose 7% YoY to SEK 80.9m; 9M revenue increased 5% to SEK 258.8m, while profit declined amid higher strategic growth costs.

• Gross margin improved, but weaker, irregular order intake and an order book of SEK 82.3m versus SEK 171.1m reflected delayed and lumpy defense procurements.

Financial highlights

• Q3 revenue was SEK 80.9m, up 7% YoY (3% in comparable currencies); 9M revenue was SEK 258.8m, up 5% (1% in comparable currencies).

• Q3 gross profit rose 11% to SEK 47.0m and gross margin was 58.1% versus 56.2%; 9M gross profit rose 16% to SEK 152.4m and margin was 58.9% versus 53.0%.

• Q3 operating profit fell 19% to SEK 11.6m; 9M operating profit fell 16% to SEK 42.9m. Operating margins were 14.3% and 16.6%, versus 18.9% and 20.7%, respectively.

• Net income was SEK 8.4m in Q3, down 35%, and SEK 32.2m for 9M, down 32%; EPS was SEK 0.19 and SEK 0.73, versus SEK 0.30 and SEK 1.08.

• Operating expenses rose to SEK 35.4m in Q3 from SEK 28.2m and to SEK 109.5m for 9M from SEK 79.9m; rolling 12-month sales grew 15%.

Outlook and guidance

• First individual pilot orders for the vehicle intercom system were expected before year-end 2018; significant revenue was expected later in 2019.

• A first major order in newly addressed countries was expected within the next few quarters, following initial special-forces orders; management cited long lead times and limited transparency.

• Management reported confidence in targeted orders despite customer-side delays and had built inventory to support rapid delivery; financial targets were average annual sales growth of 20% and operating margin of at least 15%.