Irisity Q1-25

Persistent Headwinds Delay Recovery Trajectory

Irisity AB (“Irisity” or “the Company”) is a leading provider of AI-driven video analytics solutions, transforming traditional security cameras into intelligent detection systems. Operating in over 90 countries, the Company serves a global market across three core segments: AI Solutions, AI Products, and AI SaaS. While Irisity continues to face a challenging market environment, improvements in collections and regulatory changes benefiting the Security as a Service segment are encouraging signs. Meanwhile, the Company remains focused on improving cash conversion, operational efficiency, and commercial execution. The forecasted net sales for 2026 stands at SEK 108.3m, and by applying an EV/S-multiple of 1.0x, this presents a potential value of SEK 0.5 per share in a Base scenario.

• Challenging Start to 2025..

Net sales for Q1-25 came in at SEK 18.1m (27.6), corresponding to a Y-Y decline of -34.2%. The weak performance is primarily attributable to revised revenue recognition timing for larger projects, along with delays in international sales,  particularly within large city and security infrastructure projects, driven by ongoing macroeconomic uncertainty and a weaker USD. Given the revenue deferrals in Q4-24, Analyst Group had anticipated a partial recovery in Q1, supported by realization of the order backlog. However, the reported figures fell short of expectations. Management guides for continued pressure on sales over the next two quarters, as timing-related effects are expected to persist, with a stronger recovery anticipated in Q4-25. The impact of project delays was also evident in reported invoicing, which reached SEK 16.6m (16.3), reflecting a marginal Y-Y increase of 1.4%. On a more positive note, collections increased to SEK 26.5m (19.0), correspondding to Y-Y growth of 39.4%, a key development that supports improved cash flow and a shorter quote-to-cash cycle.

• ..But Regulatory Tailwinds May Ease Near-Term Pressure

At the beginning of Q2-25, regulatory changes concerning camera permit requirements came into effect. Entities previously required to obtain a permit to install CCTV systems in Sweden must now independently balance surveillance needs against privacy rights, a responsibility previously handled by IMY. Following these changes, Irisity has observed a strong increase in sales activity. Analyst Group believes this development could serve as a catalyst for growth within the Security as a Service segment, helping to mitigate the impact of an otherwise challenging market environment marked by post-poned larger projects.

• Estimate Revisions Reflect Challenging Market Outlook

In light of the weaker-than-expected Q1 report and soft guidance for Q2 and Q3, we have made a substantial downward revision to our top-line estimates. Going forward, we will closely track developments in cash collections, as well as the performance of the Security as a Service segment in response to recent regulatory changes. Applying a 1.0x EV/S-multiple to the 2026E net sales of SEK 108.3m indicates a potential present value of SEK 0.5 per share (0.8) in a Base scenario.