Q1 2019

First quarter

• Net sales increased 1.5 percent to SEK 66.3 (65.3) million (- 6 percent in local currencies).
• EBIT amounted to SEK - 5.6 (3.7) million.
• The EBIT margin was - 8.6 (5.6) percent.
• Profit after tax amounted to SEK - 4.4 (4.3) million.
• Earnings per share were SEK - 0.23 (0.24).
• Cash flow from operating activities amounted to SEK - 6.9 (0.3) million.
• Cash and cash equivalents at the end of the period amounted to SEK 93.1 (128.9) million.

Comments from the CEO:

MSAB has been strengthening and developing its organisation, primarily in development and sales. We do this to help our customer’s world-wide meet the challenge of taking advantage of digital evidence in the best possible way. It is also important to stress that our investments are planned and long-term. To some extent the investments are something we continuously need to do in order to maintain our leading position in a technically advanced and ever changing market. The investments are also done with the aim to create an organisation with the best possible prerequisites to maximise the enormous potential for the growth we see in our market.

Turnover in the first quarter of 2019 amounted to SEK 66.2 (65.3) million. EBIT was - 5.6 (3.7) million. The first quarter of the year tends to be weaker than other quarters as few of our clients close their books in this period, which often results in a lower level of purchases. We have a higher gross margin for sales this year compared to 2018, as turnover then to a larger extent consisted of hardware.  The negative result is due to an increased cost base, primarily related to the investments we made in the organisation over the past twelve months.

MSAB's operations contribute to creating a safer society. Our solutions are crucial for law enforcement authorities' capacity to access the increasingly important evidence found in mobile phones. Accessing digital evidence is of critical interest in all types of crimes. MSAB possesses unique knowledge about mobile phones and apps which we are confident will be crucial for successful law enforcement.

Local presence is important, and as our customers increasingly invest in decentralised mobile forensic solutions, every business deal is in some way unique. The core and great value in what we sell is still our software for extracting and analysing digital evidence. But we’re unique in helping customers with a flexible installation customisation, so that customers receive the optimum workflow for their organisation. This customisation is a small but important part of the business for the customer and can occasionally give longer lead-times to finalise a deal.

In the fourth quarter of 2018, we finalised our establishment of a subsidiary in Japan and in the first quarter of 2019, we opened one in India. India is a country of contrasts, which is no less true of their law enforcement. India has a legal system largely based on the same principles as the United Kingdom. The main responsibility for Indian law enforcement lies with each of the 29 states into which India is divided. There are almost 200 million inhabitants In the largest state, and there are 21 states with more inhabitants than the whole of Sweden.  In a growing country with over 800 million mobile phones, I am convinced that India will become a significant market for MSAB in the near future.

By the end of 2018, Access services was launched, a service where we help our customers gain access to the most advanced phones. We have seen a large demand for this service and we have successfully added new phone models into its framework.

Standards and a harmonised approach to working with digital evidence is increasingly important for law enforcement agencies. In view of this, the EU has initiated a project whose aim is to harmonise and set a standard for how production of digital evidence should take place, as well as how various tools should function and interact. The EU has put together a group with representation from academic institutions, law enforcement agencies and industry to accomplish this. MSAB is representing industry, largely thanks to the fact that our solutions carry the highest standard in the industry as regards legally secure management of digital evidence. This is, of course, an affirmation of MSAB’s unique expertise. In addition, the project also provides an opportunity to educate and influence senior decision makers of the importance for law enforcement authorities to have more and better tools to manage digital evidence, which is crucial to successful law enforcement in today's society.

I am proud of the contribution MSAB and our products provide law enforcement agencies around the world. This, combined with the fact that we exited 2019 with an organisation that is clearly stronger, allows me look to the future with confidence.

Stockholm, April 2019

Joel Bollö

Chief Executive Officer

The information in this report is such that MSAB, Corporate ID number 556244-3050, is required to disclose in accordance with the EU’s Market Abuse Regulation. The information in this report was submitted for publication on 24 April, 2019 at 08:00 CEST through the offices of the contact person listed below.
  
Questions should be addressed to:
Chief Executive Officer Joel Bollö
Tel. +46 8 739 0270
Email: joel.bollo@msab.com

MSAB in brief

MSAB is a world leader in mobile forensics technology with the aim of extracting and analysing data from confiscated mobile devices, mainly from mobile phones. The Company has its own sales offices and sales representatives in Europe, North America, South America, China, Australia, Singapore, Japan and Russia, and together with a number of distributors, covers most of the world. The proprietary products have become a de facto standard in the field and are used for securing evidence in more than 100 countries. These products are complemented by a wide range of training courses with the possibility of becoming certified in a forensically sound methodology. Customers are primarily law enforcement agencies, such as police, military and customs. MSAB is listed on NASDAQ Stockholm under the ticker symbol: MSAB B.