Safeture - Strong ARR growth in Q4’20

Q4 ARR growth of 37. 2% vs. ABGSCe 40. 0% Estimates driven by new cost base fuelling growth EV/ARR of 8.

2-4. 2x for ’21e-’23e Strong ARR growth in Q4 driven by new customer intake Safeture reported strong ARR growth in Q4’20, which we think is driven mainly by new customer intake. Safeture has gained significant visibility throughout 2020 due to e.

g. its Corona Exposure Tracker. ARR was SEK 24m, -2.

0% vs. ABGSCe, for a y-o-y growth of 37. 2%.

However, due to Safeture expanding its employee base (primarily within sales but also within marketing), operational costs also increased to SEK -15. 5m, -34. 2% vs.

ABGSCe. This is a consequence of Safeture investing for future growth, and building an organisation which can handle a greater inflow of customers, and consequently servicing those customers. However, given the larger-than-estimated operational costs, EBIT was SEK -8.

7m, -68. 9% vs. ABGSCe.

Expanded sales and market force behind cost increase In terms of 2021e we expect ARR growth to continue ramping up as Safeture’s new sales and marketing team drives new customer intake, and handle the existing pipeline of new customers. We increase our ARR estimate by 1. 5% to SEK 35m, for growth of 45% on an annual basis.

However, due to the new cost base, we also increase our operational costs by 38. 4% in ’21e. We believe that the Q4’20 levels contained certain non-recurring costs associated with fundraising activities.

As such, we could see somewhat lower operational costs in ’21e initially, but we expect a continued ramp-up as management continues building the organisation for future growth. Valuation now only slightly above peers At the current share price, and based on our updated estimates, we find that Safeture is trading at an EV/ARR of 8. 2-4.

2x for ’21e-’23e. See p. 7 for a peer comparison in terms of valuation and operative performance.