Solid ARR growth, cost control drives Q2’20
Litium reported Q2’20 ARR of SEK 47m, +22.4% y-o-y and 2.7pp above our estimate. Despite strong COVID-19 headwinds in terms of customers delaying investment decisions, which was somewhat counteracted by increased volumes through existing digital channels, Litium was able to maintain ARR growth in line with its new financial target of 20-40%. Litium signed new clients like Thunderful Group and NTM, contributing to ARR. The gross margin of 74.0% was 2.0pp stronger than our estimate, following a favourable mix. During the quarter, Litium displayed solid cost control, with opex growing 12% y-o-y to SEK 16m, a strong showing given the ARR growth. This ultimately yielded EBITDA of SEK -2m, +45.2% vs. ABGSCe, and EBIT of SEK -4m, +21.9% vs. ABGSCe.
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