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Freja eID's ARR Skyrockets by 108% in Q4 2023: Unpacking The Trends

Freja eID Group's Q4 2023 report shows substantial growth, with revenue and Annual Recurring Revenue (ARR) surpassing 20 million SEK, a first in the company's history. Registered users also reached one million. We see a potentially interesting investment opportunity developing.

Freja eID's ARR Skyrockets by 108% in Q4 2023: Unpacking The Trends

⚡️ Quick: Freja eID Group's Q4 2023 report shows substantial growth, with revenue and Annual Recurring Revenue (ARR) surpassing 20 million SEK, a first in the company's history. Registered users also reached one million. We see a potentially interesting investment opportunity developing.

Freja eID (FREJA.SS) has reported robust growth metrics in its latest ket metric update report, with particular strength observed in the company's Annual Recurring Revenue (ARR). For Q4 2023, Freja's ARR surpassed the 20 million Swedish krona (MSEK) threshold, reaching 20.4 MSEK. This figure represents a significant 108% increase over the same period in the previous year when ARR stood at 9.8 MSEK. The growth trajectory of ARR between Q4 2022 and Q4 2023 further indicates a healthy quarter-over-quarter rise of 22%.

The company’s revenue generation also shows a strong uptrend, with net sales for Freja eID segment amounting to 5.1 MSEK in Q4 2023, which is a dramatic 111% rise year-over-year (y/y) from 2.4 MSEK in the equivalent quarter of the previous year. The net sales figures also improved by 16% from the third to the fourth quarter of 2023.

The subscriber base experienced a 64% y/y expansion, climbing to 355 customers by the close of 2023 from 216 at the end of 2022, alongside a 10% increase from 30 September 2023. The number of registered users grew as well, with a 26% y/y increase up to 996,000 users at the year's end, from 791,000 the previous year, with subsequent achievement of reaching over one million users stated after the quarter's conclusion.

CEO Johan Henrikson highlighted the company's resilience amid economic headwinds and uncertainty, noting that the 108% ARR growth rate and a 64% rise in new subscription customers were driven both by high-value new customer orders and existing customers expanding their usage.

📖 Analysis: These solid financials and growth metrics underscore an accelerated growth curve for the Freja eID segment. With a small but rapidly growing business, a recent capital raise bolsters the trajectory toward profitability. Furthermore, the current trading multiple at approximately 7.5x ARR and 4.0X LTM Sales does not feel high, given the growth rate.

The ARR is growing steadily, and we are also seeing an increase in revenue and subscribers. It also looks like Freja will soon become profitable soon, especially with the cost savings program taking full effect in Q1'24. Overall, we are cautiously optimistic and will further look into the case.

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