Redeye updates on Invisio post Q3-results which were close to our forecast while the order intake was strong and above our expectations. The outlook remains positive, and we have raised our estimate slightly on the back of the solid order intake.

Invisio reported revenue of SEK352m and EBITDA of SEK73m for Q3 2024, which was close to our forecasts of SEK351m and SEK75m, respectively. Gross margin came in at 57.5%, which was slightly lower than our forecast of 59.0%. Excluding the impact of third-party radio deliveries, the gross margin was 59.2%. Total opex came in at SEK145.5m, which was lower than our estimate of SEK147m. All in all, this supported an EBITDA-margin of 20.7%, which was close to our forecast of 21.4%. The table below summarizes the Q3-results outcome compared to our forecast.

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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	1,644.9	1,725.5	1,984.3
Revenue Growth	30.8%	59.7%	32.8%	4.9%	15.0%
EBITDA	112.7	301.4	377.4	481.5	608.2
EBIT	65.1	242.8	316.1	417.0	541.7
EBIT Margin	8.4%	19.6%	19.2%	24.2%	27.3%
Net Income	44.3	178.3	228.7	312.8	406.3
EV/Sales	10.4	7.0	7.0	6.6	5.6
EV/EBITDA	71.4	28.7	30.4	23.5	18.3
EV/EBIT	124	35.7	36.3	27.1	20.6

Q3-results in line with expectations

Solid order intake

Increased estimates

Key financials

Q3-results in line with expectations