Q2 2023 net sales amounted to cSEK25.1m (29.0m), corresponding to -13% y/y growth. This was 11% below our expectations of SEK28.1m, while the number of working days in the quarter amounted to 59 (60). According to management, the market slowdown that began in 2023 is now playing out within all business segments, with increased competition for customer contracts and lower utilisation rates as a result. Consequently, EBIT amounted to negative SEK3.9m (-1.9m) in Q2 2023, clearly below our estimated negative SEK1.6m.

We note that the current market conditions continue to affect Xavi Solutions’ business, as seen in the quarter’s lower sales and contribution per employee and working day than expected. To meet the market situation, Xavi Solutions reviews its internal administrative resources and renegotiates contracts to manage the lower utilisation rates while focusing sales on both new and existing customers to stand firmly once the market sentiment turns. However, we expect the lower utilisation rates and employee churn will impact both short-term sales and margins, which leads us to decrease our forecast.

Following Xavi Solutions’ Q2 2023 report, we decrease our 2023e–2024e sales forecasts by 6–8% due to employee churn, lower utilisation rates and increased competition for customer contracts. This also affects the contribution per employee and working day, leading us to decrease our EBIT forecast for the same period. Overall, our DCF model suggests a new fair value range, with a Base Case of SEK0.50 (0.55) and Bear and Bull Cases of SEK0.13 (0.15) and SEK1.00 (1.20), respectively.