MSAB: Strong quarter – profitable growth

Third quarter

• Net sales increased 4.4 percent to SEK 93.3 (89.4) million (-1 percent in local currencies).
• EBIT amounted to SEK 19.9 (20.1) million.
• The EBIT margin was 21.3 (22.5) percent.
• Profit after tax amounted to SEK 19.1 (14.7) million.
• Earnings per share before dilution amounted to SEK 1.03 (0.79).
• Cash flow from operating activities amounted to SEK 13.5 (-12.6) million.

January - September

• Net sales increased 2.8 percent to SEK 223.7 (217.7) million (-3 percent in local currencies).
• EBIT amounted to SEK 2.7 (24.0) million.
• The EBIT margin was 1.2 (11.0) percent.
• Profit after tax amounted to SEK 3.8 (20.4) million.
• Earnings per share before dilution amounted to SEK 0.13 (1.10).
• Cash flow from operating activities amounted to SEK 7.3 (-23.7) million.
• Cash and cash equivalents and short-term investments at the end of the period amounted to SEK 58.0 (70.5) million.

Comments from the CEO

The third quarter profit after tax amounted to SEK 19.1 million, a 30 percent improvement over the same period last year. This result is based on sales of SEK 93.3 million – the second highest quarterly turnover in the Company’s 35-year history.

We have streamlined our ways of working and our sales and marketing efforts, the effects of which I can see in this strong third quarter. MSAB has a gross margin of more than 91 percent. With such a high gross margin, it becomes even more important to focus on growth. An increase in growth automatically means an increase in both profit and the profit margin.

At the beginning of 2018, MSAB began working consciously on strengthening the organisation at a faster pace than we had previously done. The reason we took this decision is simple. We saw that some parts of the organisation needed shoring up to ensure we stay in business. In addition, we saw two major growth areas: decentralised data extraction; and fast, precise analysis of the recovered data. Our solutions are now more efficient and powerful than ever within both recovery and analysis of mobile phones.

Through our decentralised solutions, we offer non-experts the possibility to extract and secure evidence on seized mobile phones in a forensically sound manner. Our success with our Frontline solutions continues. Although this latest quarter has temporarily seen fewer Frontline sales than last year, it remains one of the Company’s largest future growth areas. MSAB has installed more Frontline solutions globally than any other company. Every customer, where there is a limited number of experts working on data extraction from mobiles, is experiencing long backlogs in data extraction – unacceptably long backlogs. Frontline is the solution.

We have mapped all major cities worldwide and only a small fraction of these has implemented some form of decentralised solution for securing digital evidence. It is our firm belief that we can help the police become far more efficient in their law enforcement efforts through implementation of Frontline solutions.

Once the content has been extracted from a suspect’s mobile phone, it is important to quickly and precisely locate relevant information. Mobile phones contain so much data that it is virtually impossible to find evidence within a reasonable time span by manually searching for relevant information.

XAMN – our analysis tool – has been refined to become the most technically advanced, tactical analysis tool on the market. In just a few minutes and with only three button presses, the police can find exactly what they are looking for amongst millions of artefacts. No other tool available today is as fast and precise as XAMN.

As mobile phones become more and more secure, it has become increasingly difficult to unlock them. Part of our strengthening efforts have been directed successfully to increased support for even the most complex phones on the market. Our goal is to be best in the world at gaining access to the content of all mobile phones present on the market.

We continue to invest in our organisation and our product offering, while at the same expanding our sales and marketing efforts in existing markets and particularly in new regions where we see potential. Synonymous for all our investments is that they are entirely focussed on maximising the great potential we see in those markets where we are active.

I am proud to be MSAB’s Chief Executive Officer, because the work we do contributes to the creation of a safer society. With our tools, our customers can become even more efficient in their efforts to prevent crime.

Stockholm, October 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 23 October, 2019 at 08:00 CEST.

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.