Q1 2023 net sales amounted to SEK31.0m, corresponding to -5% y/y growth. This was 6% below our expectations of SEK32.9m, while the number of working days in the quarter amounted to 64 (63). With the number of employees and working days as the main sales growth driver for a consultancy business, we note that the deviation from our expectations can largely be explained by the loss of 7 headcounts during the quarter. At the same time, EBIT amounted to SEK1.2m, 23% above our expectations of SEK1.0m in the quarter, stemming from continued operational streamlining.

According to management, the somewhat softer sales in the quarter stem mainly from Xavi Solutions’ Serve segment, where the company has seen a certain slowdown on the customer side from both existing and new customers, while the current macroeconomic conditions continue to affect the business. While management expects future hirings to compensate for the headcount loss, we believe covering up the quarter’s employee churn will take some time. Consequently, the slower net recruitments than our previous assumptions make us decrease our short-term forecast somewhat.

Following Xavi Solutions’ Q1 2023 report, we decrease our 2023e–2024e sales forecasts by 6–4%, mainly affected by the loss of headcount in Q1 2023. Despite headcount also being the primary cost driver, we believe the customer churn will influence margins, resulting in slight EBIT forecast changes. Overall, our DCF suggests a new fair value range, with a Base Case of SEK0.55 (0.60) and Bear and Bull Cases of SEK0.15 (0.20) and SEK1.20 (1.25), respectively.