Sales +39% y-o-y (+5% vs. ABGSCe), ARR +34% y-o-y

We raise ’22-‘23e sales and EBIT by 1%

‘21e, ‘22e and ‘23e EV/sales of 37x, 23x, and 17x

Continued accelerated sales growth – +39% y-o-y
Briox’s Q2 sales grew 39% y-o-y and were 5% better than our expectations (SEK 1.63m vs. ABGSCe SEK 1.55m). EBIT of SEK -5.0m was SEK 0.6m below our expectation of SEK -4.4m. Encouragingly, opex continued to increase at a slower rate than sales, which highlights the underlying scalability of the business model. The lower-than-expected EBIT was explained by higher-than-expected personnel costs in the quarter. Briox continued to grow the number of licenses, which increased by 985 q-o-q, to 10,228. ARR increased by 6% q-o-q and 34% y-o-y to SEK 7.5m. The number of bureau partners decreased by 3 q-o-q to 198, reflecting the ongoing processes of onboarding existing bureaus to the new product offering, which has caused some churn. Moreover, Briox announced that it will intensify its focus on micro businesses (businesses with fewer than 10 employees, i.e. +90% of all businesses in Europe). It communicated that it sees good opportunities in this market segment, where the need for local customisation is relatively low. It is also a segment that lacks good, comprehensive solutions, according to the company. This strategy is reminiscent of Fortnox’s current strategy in the Swedish market, which indicates to us that it could be an attractive business opportunity.

Positive revisions on ‘22e-‘23e sales and EBIT
We raise our sales forecasts for ‘21e-‘23e by 3-1% on the back of the accelerated sales growth in Q3’21. Based on the higher opex seen in Q3, we cut ‘21e EBIT by 3%, but raise ‘22e and ‘23e EBIT by 1%, in line with the raised sales forecast.

Final thoughts
Briox continues to execute on its business plan, which is centred on setting up the right structures and processes to scale with its partners. We forecast a ‘21e-‘23e sales CAGR of 58% for Briox, and an EBIT improvement from SEK -23m in ’20
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