• Sales +10%, EBITDA +13% vs. ABGSCe
• New ARR definition more comparable with peers
• Cost base discipline drives margins

Q1'24 report

Litium reported an ARR of SEK 71.1m (based on a new definition), net sales of SEK 17.7m (+10% vs. ABGSCe 16.1m) and EBITDA of SEK 4.0m (+13% vs. ABGSCe 3.5m). Due to the new ARR definition, our unrevised ARR estimate is obsolete. However, the restated historical ARR values show that sequential growth is still intact, and that is of course positive. Moreover, the company beat slightly on EBITDA again, suggesting continued cost discipline.

Thoughts and outlook

Litium continues to benefit from its relatively fixed revenue base and appears to not display meaningful net churn (i.e., customer additions and upselling less churn). With another beat on EBITDA, we are increasingly comfortable in the company being able to deliver break-even (or even positive) cash flow while growing its ARR. With yet another beat, our view of the company's operating characteristics has improved.

Cons. estimate revisions and valuation

Based on the first impressions from the report, we anticipate consensus to make positive, low single-digit ’24e-‘26e estimate revisions with respect to EBITDA. The company is trading at an EV/ARR of ~2x based on reported figures. Litium will host a webcast today at 11:00 CET to present the Q1 report and to conduct a Q&A session.