MSAB: Broadened product portfolio increase both sales and profit

Third quarter

·          Net sales increased 42.5 percent to SEK 102.0 (71.6) million (43.7 percent in local currencies)

·          EBIT increased to SEK 40.0 (23.3) million

·          The EBIT margin reached 39.2 (32.5) percent (39.0 percent in local currencies)

·          Profit after tax was SEK 30.4 (18.3) million

·          Earnings per share reached SEK 1.65 (0.99)

·          Cash flow from operating activities amounted to SEK -1.0 (27.5) million

January - September

·          Net sales increased 27.3 percent to SEK 216.9 (170.4) million (27.0 percent in local currencies)

·          EBIT reached SEK 51.9 (37.1) million

·          The EBIT margin reached 23.9 (21.8) percent (23.9 percent in local currencies)

·          Profit after tax was SEK 38.8 (28.2) million

·          Earnings per share reached SEK 2.12 (1.53)

·          Cash flow from operating activities amounted to SEK -2.7 (36.0) million

·          Cash and cash equivalents and short-term placements att the end of the period amounted to SEK 76.3 (107.1) million

Comments from the CEO

MSAB delivered its best quarter ever with record sales and a good profit margin. Some business deals based on parts of our Ecosystem with long lead times have now materialized into concrete agreements.

Sales in the third quarter grew 43 percent amounting to SEK 102.0 (71.6) million. EBIT rose to SEK 40.0 (23.3) million, corresponding to an EBIT margin of 39.2 (32.5) percent. For the first nine months of the year sales grew 27 percent,    reaching SEK 216.9 (170.4) million. EBIT increased to SEK 51.9 (37.1) million, corresponding to an EBIT margin of 23.9 (21.8) percent. The larger turnover increased profit and gave a stronger EBIT margin. 

We experienced good growth in all our regions and our investments in the MSAB Ecosystem are now showing results. With more products and process solutions, we can address a broader market as well as increase the potential with existing customers.

Mobile forensics is playing an ever greater and increasingly important role in the day-to-day work of the police. This means that more police, even outside of the IT lab, are coming into contact with mobile phones and need a greater understanding of the possibilities for securing evidence from them. In order to do this, an increase in knowledge and training are necessary.

An example of how important information from a mobile phone can be is illustrated by an actual case from Stockholm. The police arrested a suspect in the subway, in connection with the arrest they went through the suspect’s mobile phone where they found an incriminating video of the suspect committing   aggravated assault against another man. This case demonstrates how important it is to give more police access to mobile forensic tools outside of the IT lab.

The case of the fare dodger demonstrates how much evidence there is on mobile phones. But even when it comes to the dramatically growing incidence of cybercrime, it is often a smart phone that holds the key to a successful criminal investigation. There are many examples where crimes against children, threats, break-ins, embezzlement, and many others are concluded only with the help of a mobile phone.

Access to these new technologies and hence new methods to commit crimes also challenges the police’s ways of working as never before. Today, a negligibly small proportion of the police’s budget is spent on modern tools to solve crimes.

I am convinced that law enforcement authorities will start allocating considerably greater resources at an increasingly quicker pace to digitalization in order to be able to solve the increasing number of crimes reported. The most critical component for securing evidence is the mobile phone.

MSAB has a strong offering that can help the police make a difference. Law enforcement authorities that invest in MSAB’s Ecosystem not only have access to the best products on the market, but also greater confidence from the public and more satisfied employees.

MSAB’s third quarter demonstrated strong growth, a large portion of which lies in our broadened product portfolio. We now cover more segments in the market, which strengthens our business opportunities and reduces our business risk exposure.

The strength in MSAB:s business model is the combination of recurring revenues and scalability. The fact that a large portion of operating cost is covered by license renewals gives us the comfort to work with a long-term perspective to continue grow the business. The scalable business model allows large orders to be delivered with retained quality and without bottlenecks. Historically this combination has been reflected in MSAB:s growth, profit margins and cash flow.

Due to our customers’ purchasing patterns, revenue will continue to vary from quarter to quarter wherefore the company performance should be evaluated on an annual basis, especially since we continuously invest in existing and new products, the organization and the market. All to ensure that MSAB continues to be the leading supplier in our market.

We feel confident moving forward because the trend toward long-term growth is strong. The need to read and analyze the content of seized mobile phones continues to rise. We see how more and more authorities around the world are starting to review their entire digital strategy and that is precisely what MSAB has worked and planned for.

Stockholm, October 2017

Joel Bollö

Chief Executive Director

Media Contacts:
Joel Bollö, CEO MSAB
+46 (0)70 930 07 20
joel.bollo@msab.com

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 below, at 08:00 CEST on 20 October, 2017.

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 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.