Tessin’s sales for the first quarter amounted to SEK10m, a y/y increase of 14% but below our expectations of SEK12.5m. The value of brokered loans reached SEK184m, which was also lower than our estimate of SEK290m and a y/y decrease of 16%. However, EBITDA and EBIT amounted to SEK-2.1m and SE-3.8m, respectively, which was significantly better than our estimates of SEK-5.0m and SEK-6.2m. Despite lower-than-expected sales, we think Tessin delivered a robust Q1 report, showcasing a strong 14% y/y growth with significant cost reductions.  

The fact that Tessin was able to grow its top line by 14% y/y while experiencing a 16% y/y decrease in the value of brokered loans highlights the company's impressive pricing power in a market where traditional banks are subject to more restrictions. It also demonstrates that the loan demand is still high despite the uncertain macro environment. The company states that it receives more loan requests than it can accommodate, which suggests that access to capital is currently the main factor limiting growth. We anticipate Q2 to be a pivotal quarter for Tessin in terms of profitability, as we expect the company to report its first quarter with positive net income.

While we believe that there is significant upside potential in the company's share price, we recognize that the current financial situation may put pressure on the stock until the company demonstrates that its cash position, cost-saving measures, and additional capital injection from outstanding warrants are enough to achieve positive cash flow. That being said, if the company is able to alleviate these concerns, the stock has significant upside potential. Following the Q1 report, we update our base case to SEK0.55 (SEK0.45) while leaving our fair value range unchanged at SEK0.10-0.80.