INVISIO (IVSO) Q4 2017 earnings summary

Executive summary

• Q4 revenue rose 45% YoY to SEK 118.1m, supported by US contract deliveries and deferred Q3 orders; FY revenue increased 11% to SEK 365.7m.

• FY operating profit was SEK 78.6m, down 13%, following increased investment in R&D, sales and marketing; growth investments were expected to continue at a calmer pace in 2018.

• Direct sales expansion, contract wins and the vehicle-communications product category strengthened market reach.

Financial highlights

• FY gross profit was SEK 202.3m (+18%), EBITDA SEK 82.9m (-15%), and net income SEK 62.3m (-32%).

• Q4 gross profit rose 76% to SEK 71.1m and operating profit rose 61% to SEK 27.3m; net income was SEK 15.0m versus SEK 16.3m.

• FY operating expenses were SEK 123.7m versus SEK 80.6m and included SEK 11.7m in non-recurring costs for ending the US main-distributor relationship.

• Direct US sales contributed to gross-margin improvement; future US sales shifted to the owned sales organization, with no further payments of that kind expected.

Outlook and guidance

• Growth investments were expected to continue in 2018 at a slightly calmer pace, with selective hiring in sales and R&D.

• INVISIO Intercom was planned for commercial introduction in late 2018; management viewed its long-term market potential as at least as large as existing products.

• Financial targets were average annual sales growth of 20% and an operating margin of at least 15%; the gross-margin target was 50%–55%.

• Management expected normal tax payments as Danish tax losses were used up and described the long-term industry outlook as positive despite uneven order timing.