Redeye updates on Invisio following its Q1-results which were in line with our expectations. The strong order book of SEK1bn and the upcoming deliveries of the recently announced Intercom orders suggests strong growth potential in the short-term while growing defence budgets supports the long-term outlook.

Invisio reported revenue of SEK 308m and EBITDA of SEK65m which was largely in line with our expectations of SEK311m and SEK69m, respectively. Gross margin came in at 61.0% which was in line with our estimate and an increase from 57.4% in Q4 2023, albeit slightly lower than 62.5% in Q1 2023. Opex was also close to our forecast, coming in at SEK137.6m compared to our estimate of SEK136.2m. Order intake was strong as expected, and amounted to SEK673m, supported by the large Intercom and third-party radio order announce in March which in total was SEK465m (ow SEK230m was for Intercom and SEK235m was for third-party radios). The order book stood at SEK1bn at the end of the quarter and the company expects that 80% of the order book will be delivered within 12 months.

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Invisio

* Lack of recurring revenue model, leading to potential volatility in quarterly sales despite framework agreements providing some revenue stability.
* Growth potential, while strong, may not reach five-fold expansion within a decade, potentially limiting long-term investment returns.
* Unclear stance on environmental sustainability initiatives, which could be a concern for environmentally conscious investors and stakeholders.
* Possible overreliance on defense sector spending, which could expose the company to risks if global defense budgets face unexpected cuts or shifts in priorities.

* Strong competitive position with unique products and limited competition, enabling Invisio to capture significant value in the market and maintain pricing power.
* Robust scalability potential through heavy R&D investment, successful geographic expansion, and strong operating leverage with high fixed costs.
* Benefiting from secular tailwinds such as growing defense budgets and increasing focus on hearing protection, supporting long-term growth prospects.
* Demonstrated operational stability with diversified revenue base, minimal regulatory interference, and limited exposure to commodity price fluctuations.
* Products contribute positively to society by addressing hearing protection needs, and the company maintains good relationships with customers and employees.

* Higher variance in Return on Assets compared to industry average, potentially indicating less predictable profitability.
* Lack of stable earnings growth over the past 10 years, suggesting some volatility in long-term performance.
* Current dividend yield not within the ideal range of 1-2.5 times market median, possibly indicating suboptimal dividend strategy.
* No consistent dividend increases over the past 10 years, which may be a concern for income-focused investors seeking reliable dividend growth.

* Strong profitability with gross profit margin >40%, operating margin >20%, and consistently high ROE and ROA, indicating efficient operations and competitive advantage.
* Robust financial health, with favorable current ratio, low debt levels, and strong interest coverage, suggesting stability and capacity for growth.
* Excellent earnings quality, demonstrated by efficient inventory and accounts receivable management, low one-time charges, and high cash flow conversion rates.
* Consistent revenue and earnings growth, outperforming industry averages and maintaining strong momentum over the past five years.
* Healthy dividend growth and coverage, with over 7% annual increase in the past three years and well-covered by cash flows.

* Limited board member share ownership, potentially reducing alignment with shareholder interests.
* Lack of a controlling owner with a long-term commitment (largest shareholder owns 18%), which may impact strategic decision-making and stability.
* Uncertainty regarding sustainability-related performance incentives, potentially indicating a gap in aligning executive compensation with ESG goals.
* Absence of insider ownership reaching the 10% threshold, which could be seen as a missed opportunity for stronger management-shareholder alignment.
* Limited information on the company's approach to sustainability reporting, potentially indicating a need for improved ESG disclosure and strategy.

* Strong, visionary leadership from CEO Lars Højgård Hansen, who has successfully transformed Invisio into a market leader with a focus on innovation and long-term growth.
* Consistent delivery on financial targets, with a clear strategic plan and commitment to R&D, demonstrating effective execution and capital allocation.
* Transparent and candid investor communication, focusing on long-term value creation and maintaining consistent messaging over time.
* Significant insider ownership, particularly by the CEO and CFO, aligning management interests with shareholders and fostering an entrepreneurial spirit.
* Diverse and experienced board of directors with strong female representation, indicating effective governance and oversight.

SEKm	2022	2023	2024e	2025e	2026e
Revenues	775.4	1,238.5	1,609.7	1,656.9	1,905.4
Revenue Growth	30.8%	59.7%	30.0%	2.9%	15.0%
EBITDA	112.7	301.4	376.7	481.0	597.8
EBIT	65.1	242.8	316.1	417.6	532.2
EBIT Margin	8.4%	19.6%	19.6%	25.2%	27.9%
Net Income	44.3	178.3	233.7	313.2	399.2
EV/Sales	10.4	7.0	5.6	5.4	4.6
EV/EBITDA	71.4	28.7	24.1	18.5	14.6
EV/EBIT	124	35.7	28.7	21.3	16.4

Q1-results in line with expectations

Intercom order supports strong growth

Limited estimate changes

Key financials

Q1-results in line with expectations