SSH Communications Security Q2’23: Robust top line growth and 9th straight quarter with a positive EBITDA
Research Update
2023-07-21
07:15
A 9.2% increase in sales throughout the quarter signifies the robust nature of SSH's subscription model. This quarter also marks the 9th straight quarter with a positive EBITDA. Given the substantial pipeline of pending deals, we anticipate that the second half of 2023 might yield pleasantly surprising outcomes.
Fredrik Reuterhäll
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Review of Q2 2023 – Net sales grew 9.2%
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Throughout the quarter, sales activity has continued to be high. According to the management and the CEO, their pipeline of deals is higher than ever, but customers continue to delay new orders. However, SSH received an order worth USD1m for three years after the quarter from one of their customers in Asia, which is a good sign.
PrivX experienced a 20% growth YTD. SSH launched Zero Trust Suite during the quarter, and PrivX is part of the new offering and should therefore grow faster coming quarter.
In light of the somewhat subdued quarter, our Base case has been revised from EUR2.20 to EUR2.04. The Bear case is EUR1.20 (1.70), and the Bull case is increased to EUR4.0 (3.7). Based on multiple valuation methods, EV/Sales for 2024 is estimated at 2.5, an attractive level for a high-quality, profitable business with robust tailwinds.
| EURm | 2022 | 2023e | 2024e | 2025e |
| Revenues | 19.2 | 21.9 | 26.1 | 31.6 |
| Revenue Growth | 20.7% | 14.1% | 19.2% | 20.7% |
| EBIT | -0.38 | -4.2 | -0.29 | 1.2 |
| EBIT Margin | -2.0% | -19.3% | -1.1% | 3.8% |
| Net Income | -0.95 | -3.9 | -0.23 | 0.95 |
Redeye concludes SSH Communications Security Q2’23 sales were in line with our estimation. Net sales came in at EUR4.9m vs our estimate of EUR5.0m, where Subscriptions were slightly stronger while Maintenance was slightly weaker. Profitability was on the weak side, though.
Disclosures and disclaimers
Contents
Review of Q2 2023 – Net sales grew 9.2%
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