FlexQube presented a weak set of Q3 numbers yesterday. Sales amounted to SEK16.9m (SEK56.4m) relative to our estimate of SKK22.6m, which is a 70% y-o-y decline. The gross margin was also very weak, coming in at 23% (54%), relative to our estimate of 47%, dropping 31pp y-o-y. We do, however, expect a normalization going forward. Adjusted for a SEK3.6m non-recurring item related to a cost structure program, the adj. EBITDA amounted to SEK-22.5m (SEK4.0m), or SEK6.3m lower than our estimate of SEK-16.2m.

We are positive to see that the Q3 order intake picked up following the weak Q2. Q3 Order intake came in at SEK29m, significantly better than Q2’s figure of SEK19m. We also note that October seems to have been the best October ever in terms of order intake – despite no large orders taking place in the quarter. It remains to be seen if this trend will continue. Management also seems hopeful that it will be able to receive its first commercial order for its Navigator (AMR) before the end of 2023. This is something we would consider very positive, as it could fuel both order intake and margins, as well as FlexQube’s share price.

We lower our fair value range following FlexQube’s Q3 report to SEK15(20) – SEK60(65) with a base case of SEK32(40) per share. The main reason for this is because of reduced sales estimates related to a more conservative expected roll-out of the Navigator, which leads to a postponed path to EBITDA break-even. FlexQube’s financial position has improved significantly following the SEK75m net proceeds from its share issue in Q3 2023. This is expected to be sufficient until break-even, which we now expect in Q4 2024, which aligns with management’s communication. Furthermore, management seems rather hopeful in reaching a higher level of sales in 2024 than in 2022 (SEK205m), which would imply an impressive 80% sales growth according to our 2023 sales estimates. However, we are more conservative until we see order intake picking up for at least another quarter, and therefore expect 2024 sales of SEK190m (65% growth).