H1 2024 net Sales reached SEK204m, a 319% increase year-on-year, following the reverse acquisition of Infrateq and the acquisition of Xpeedio Support Solutions AB. Due to extraordinary costs associated with the acquisitions, some one-off items impacted profitability in H1 2024. We are adjusting our Base Case from SEK3.4 to SEK3.3. The new valuation range is SEK2.1 - 5.50 (previously SEK2.6 - 5.7).

Binero Group

* Faces intense competition from global players like AWS and Microsoft Azure, limiting pricing power and market dominance.
* Shows challenges in consistently generating returns above cost of capital, particularly during recent restructuring phases.
* Exhibits some dependence on key individuals for strategy and operations, potentially increasing vulnerability to leadership changes.
* Lacks clear evidence of consistent price increases without customer attrition due to competitive pressures.
* Growth potential may be limited, as achieving a five-fold increase over a decade seems overly optimistic based on current growth rates.

* Strong recurring revenue model with growing ARR, particularly from cloud services and long-term contracts, enhancing business stability and predictability.
* Well-positioned in a niche market with focus on sustainable data centers, European regulatory compliance, and eco-friendly cloud solutions, providing visible competitive advantages.
* Benefits from secular tailwinds in sustainable and European-compliant cloud solutions, with a broad, diversified customer base spanning multiple industries.
* Proactively promotes environmental sustainability through initiatives like Fossil Free Data certification and energy recovery systems, aligning with global efforts for reduced carbon emissions.
* Collaborates closely with clients to develop tailored, innovative solutions, ensuring evolving needs are met while fostering customer loyalty.

* Operating margin (EBIT) below 20%, suggesting potential challenges in maintaining profitability.
* Lack of consistent revenue and earnings growth above industry averages over the past five years.
* Poor stock price performance since IPO, failing to achieve 10% compounded growth.
* Weak Operating Cash Flow (OCF) and Free Cash Flow (FCF) conversion rates, potentially signaling issues in converting profits to cash.

* Strong gross profit margin exceeding 40%, indicating profitable product mix and pricing power.
* Operating margin (EBIT) has increased for three consecutive years, suggesting improved cost management and operational efficiency.
* Healthy current ratio with current assets 1.5 times greater than current liabilities, demonstrating good short-term liquidity.
* Low debt levels relative to cash flow, with net debt less than two times operating cash flow and five times free cash flow.
* Sufficient cash reserves to cover expected cash burn for more than two years, indicating financial stability.

* Limited management tenure: While the CEO has relevant experience, the relatively short tenure of the leadership team at Binero IT may impact long-term stability and institutional knowledge.
* Unclear compensation structure: Lack of evidence linking executive compensation to share performance or sustainability goals could misalign incentives with long-term shareholder value.
* Absence of dividend policy: The company's focus on reinvestment rather than dividends may deter income-focused investors and limit shareholder returns in the short term.

* Strong leadership with clear vision: CEO Annika Rydström demonstrates a commitment to long-term growth, sustainability, and innovation, fostering a customer-centric organization.
* Transparent communication: Management openly addresses challenges and maintains consistent messaging about strategy and key metrics, building trust with stakeholders.
* Aligned ownership interests: Significant insider ownership, including management and board members, indicates strong commitment and alignment with shareholder interests.
* Board diversity and expertise: The board includes strong female representation and members with relevant industry experience, enhancing oversight and strategic guidance.
* Focus on sustainability: Binero IT's emphasis on eco-friendly data centers and sustainable practices aligns with growing market trends and long-term value creation.

SEKm	2022	2023	2024e	2025e	2026e
Revenues	104.3	92.4	412.8	445.8	485.9
Revenue Growth	98.5%	-11.4%	347%	8.0%	9.0%
EBITDA	-0.78	-0.50	19.2	61.5	82.6
EBIT	-16.4	-14.1	4.7	44.6	63.9
EBIT Margin	-15.8%	-15.3%	1.1%	10.0%	13.2%
Net Income	-18.3	-15.1	16.1	35.4	50.7
EV/Sales	1.4	4.6	0.9	0.8	0.6
EV/EBIT	-8.6	-30.2	78.2	7.7	4.5

Some headwinds in the first half of 2024

Trimming the engine

Lowering the Base Case to SEK3.3 (3.4)

Key financials

Estimates and outcomes