In Q4 2022, Netmore achieved net sales of SEK17m, growing 49% y/y and 44% q/q. The company’s IoT Network Services and Property Network Services were the primary drivers of the solid growth, surpassing our estimated sales of SEK13.2m. However, it's worth noting that a substantial portion of the revenue was non-recurring, which could explain the deviation from our projections. A similar trend was observed in the previous quarter. Recurring revenues, accounted for c58% of sales, reaching SEK9.9m, a 9% increase y/y and +1% increase q/q. The gross profit amounted to SEK9.4m, which translates to a gross margin of 55%, exceeding our expectations of around 45%.

Netmore is pursuing its strategic plan for growth in the European market and aims to strengthen its position by forging partnerships with important players in the industry and will now expand its infrastructure to France. Moreover, the expansion of the IoT market is likely to present ample opportunities for Netmore to establish itself as leading player in the IoT industry. This outlook is reinforced by the forthcoming deployment of LoRaWAN infrastructure in France.

Following the divestment of Netmore’s subsidiary, we have revised our projections by excluding the M2M business while making minor changes to the Property and IoT segments. We anticipate a sharp increase in sales growth over the next five years, with a projected compound annual growth rate (CAGR) of 56% from 2021 to 2025. By the end of 2025, we anticipate sales to reach SEK230m, and this is expected to further increase with sales reaching SEK320m by 2026. In comparison, sales in 2021 amounted to SEK43m. The overall effect our revised projections have not resulted in any significant impact to our valuation. Therefore, we maintain our previously established valuation range of SEK0.8–4.8 and a base case of SEK2.3.