Q1 2020

Press Release April 29, 2020  

Interim report January – March 2020

First quarter

• Net sales were at the same level as for last year, SEK 66.2 (66.3) million (–3 percent in local currencies).
• EBIT amounted to SEK –8.8 (–5.6) million.
• The EBIT margin was –13.2 (–8.6) percent.
• Profit after tax amounted to SEK –8.5 (–4.4) million.
• Earnings per share amounted to SEK –0.46 (–0.23).
• Cash flow from operating activities amounted to SEK 9.2 (–3.7) million.
• Cash and cash equivalents at the end of the period amounted to SEK 71.5 (93.1) million.

Comments from the CEO

One of MSAB’s greatest strengths has always been its ability to adapt to new conditions. Without this capacity, we would never have survived 36 years on the absolute cutting edge of technological development. Today, the world has been hit by a pandemic, the consequences of which are impossible to foresee. And our ability to adapt is being put to the test.
We are confident that our capacity to deliver remains intact and our development organization is working effectively under the new circumstances. During the period, we developed new and powerful versions of our leading brands. Through focused, dedicated effort our marketing, training and support departments have adapted their ways of working to care for customer relations at a distance.
And because our business model builds to a large extent on recurring revenues from license renewals, MSAB’s financial position remains strong.
Thanks to good planning and stock strategy, we have not experienced any shortages of components, neither for our office solutions nor our kiosk solutions. With the information we have today, we can continue delivering without problems in the current quarter as well. We depend on well-functioning sub-contractors. Hence, we work continuously to increase our independence from any single supplier.

We have completed all customer meetings, we have not cancelled a single customer meeting, we have switched over and digitalized them. All available tools for communicating with our customers and each other are being exploited. It is efficient, and customers continue to invest.

What we notice is that several new projects have been postponed. Maintaining the same tempo in new projects during the pandemic is not friction-free.

The order intake for the first quarter of 2020 was significantly better than first quarter 2019, but because of Covid-19, we have not been able to deliver everything we would have under normal circumstances. We have sometimes refrained from delivery when our personnel’s safety was in question, but also in response to customer requests. Those solutions we have not been able to deliver are the ones that require our own staff on-site. Examples include on-site training, Advanced Acquisition Laboratory, customer installations and other Professional Services. Exactly how this impacts our turnover is difficult to assess, but we estimate that we would have been able to deliver approximately 10 percent more than we did in the first quarter.

An example of how we have adapted to our customers’ new circumstances is our new offering C.A.R.E (Cellphone, Analysis, Risk Evaluation) which is, simply put, an extremely efficient way to track the spread of infection using mobile phones. We have received a positive response to our offering, which caters to potential customers outside of our traditional customer base within law enforcement.

The UK is one of our largest markets, and our success in the region continues. Our customers within the public service sector in the UK are amongst those who close their financial year at the end of March, so what happens there during the first quarter of the year is important. In March, a procurement was concluded for a significant framework agreement. This framework agreement is for delivery of Frontline solutions to seven regions and will run over several years.

The demands for winning this framework agreement were in many respects high and advanced. MSAB won the contract, which means that we will be delivering Frontline solutions to these districts in the UK for several years.

The British market is probably the area where law enforcement has experienced more success in their work than any other geographic region in the world. This has been the result of focusing on digitalisation and decentralisation. The demands placed on law enforcement’s tools are amongst the toughest from a global perspective. It is no coincidence that MSAB’s Frontline solutions were chosen.

We do not know how Covid-19 will affect MSAB. But we know that both the market and the need are there. Crime does not rest during crises. Rather, it tends to increase, and additional vulnerability is created in societies. We also know that we have the solutions the market is looking for and needs right now. We solve other problems as we encounter them.

Sometimes law enforcement faces new and unexpected demands. MSAB offers tools and best practices to meet these changing demands. And we are proud of this.

This is not the first time MSAB has faced challenges during its 36-year history, and we have always come out the other side stronger. Speed and the ability to adapt is deeply rooted in our corporate culture. In the long-term, and if we do the right things, this means additional opportunities for MSAB.

Stockholm, April 2020

                                                                                                                                      
Joel Bollö
Chief Executive Officer

This information is information that Micro Systemation AB is obliged to make public pursuant to the EU Market Abuse Regulation. This information was submitted for publication, through the agency of the contact person set out above, at 08:00 CEST on April 29, 2020.

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 mobile phones. The company has its own sales offices and sales representatives in Europe, North America, South America, China, Australia, Singapore, India and Russia, and together with a number of distributors covers most of the world. The company's proprietary products have become a de facto standard in the field and are used for securing evidence in over 100 countries. The products are complemented by a wide range of training courses, with the opportunity to become certified in a forensically sound method of extracting data from mobile devices. Customers are primarily authorities involved in performing criminal investigations, and include police, military and customs. MSAB is listed on NASDAQ Stockholm under the ticker symbol: MSAB B.