RevolutionRace is a vertically-integrated own-brand outdoor-apparel company sold direct-to-consumer online. The model is excellent: ~70% gross margin, a direct customer relationship, capital-light operations (inventory + a little PP&E), and net cash. We make no non-recurring add-backs (a clean reporter) and explicitly REJECT the company's add-back of ~SEK 26M of SBC, so our adjusted EBIT (SEK 357M) is ~7% below the company's figure. On that conservative base, adjusted ROIC is ~26% (EP +SEK 186M) — roughly 3x the 9% WACC.
The issue is price against a maturing growth rate. FY2024/25 was a maturation year: sales grew only +4.6% and the EBIT margin fell 2.5pp to 18.6% as the business invested in new markets and absorbed marketing/CAC pressure, with heavy concentration in DACH (~57% of sales). Yet at EV/IC ~6.4x, PEBV ~2.2 and ~25x P/E, the reverse-DCF implies ~20% sustained growth — demanding for a business decelerating into the high-single-digits. The quality and economic-profit spread are genuinely excellent; the valuation leaves no margin of safety.
On adjusted NOPAT (SEK 283M) the reverse-DCF is ~−37% to the ~SEK 67 price at 5% growth and ~−26% at 10% (PEBV ~2.2, EV/IC ~6.4x, implied 5-year growth ~20%) — the market prices high-teens/20% growth into a decelerating top line.
Base SEK 62 (slight downside; prices ~high-teens growth that FY24/25's +4.6% doesn't support); bull SEK 80 if growth re-accelerates beyond DACH and margins recover toward 21%+; bear SEK 48 if German demand softens, CAC rises and growth settles in the high-single-digits with multiple compression.
The market pays today’s enterprise value for roughly 19.7% NOPAT growth over 5 years. The business earns 26% on capital against a 9% cost of capital (spread +17.2 pp); the no-growth value is SEK 37/share (55% of price), so the rest is priced-in growth.
| Scenario | 24m target | Impl. g | Upside | Prob. | Driver |
|---|---|---|---|---|---|
| Bull | SEK 80 | ≥25% | +20% | 30% | Growth re-accelerates beyond DACH; margins recover |
| Base | SEK 62 | +17% | -7% | 45% | Prices ~high-teens growth FY24/25's +4.6% doesn't support |
| Bear | SEK 48 | +9% | -28% | 25% | German demand softens, CAC rises, growth decelerates |
| Prob-weighted | SEK 64 | — | -4% | 100% | Scenario-weighted expected value |
| WACC \ g | 0% | 3% | 5% | 8% | 10% | 15% |
|---|---|---|---|---|---|---|
| 7.50% | 47 | 52 | 56 | 62 | 66 | 78 |
| 8.25% | 41 | 45 | 48 | 53 | 57 | 67 |
| 9.00% (base) | 37 | 40 | 43 | 47 | 50 | 58 |
| 9.75% | 33 | 36 | 38 | 42 | 44 | 51 |
| 10.50% | 30 | 33 | 35 | 38 | 40 | 46 |
Green = fair value above the current price of SEK 66.85. The reverse-DCF conclusion is dominated by WACC and growth — see the whole surface, not a single fair value.
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~70% gross margin + direct customer relationship + capital-light = ~26% ROIC.
Growth beyond the DACH core (Nordics, UK, new markets) is the re-acceleration lever.
The key swing factor — efficient customer acquisition sustains margin + growth.
Net-cash balance sheet, EP +SEK 186M (~3x WACC).
RevolutionRace is an exceptional capital-light, net-cash own-brand D2C compounder (~26% ROIC, +SEK 186M EP, ~70% gross margin), but at EV/IC ~6.4x / ~25x P/E the market prices ~20% growth into a business that grew +4.6% last year. HOLD with a quality bias; base SEK 62.
A quality-Buy on a meaningful dip — the economics are excellent, but the valuation needs either re-acceleration beyond DACH or a lower entry; at SEK 67 the margin of safety is the gate.
Every adjustment traces to the cited note/page in the source filing — click to open it there. Annual report / 10-K: 📄 open · Latest interim: 📄 open
| Adjustment / figure | Value | Source | Why mttssn treats it this way |
|---|---|---|---|
| Net sales | 1,925 | Group income statement / Note 3 | Net sales line, July-June 2024/25 column = 1,925 (prior year 1,840). Note 3 confirms by geography (Germany 935, Sweden 221, RoW 769) and region (Nordics 446, DACH 1,093, RoW 387). |
| Operating profit (EBIT) | 357 | Group income statement | Operating profit (EBIT) line = 357 (prior year 386). Used directly as adjusted EBIT (no verified non-recurring add-backs). |
| Gross profit / margin | 1,344 | Group income statement | Net sales 1,925 less goods for resale 581 = 1,344; gross margin 69.8%, matching the company's stated figure. |
| Tax expense | -74 | Note 9 Taxes | Current tax -74; deferred tax ~0; total reported tax -74 on profit before tax 357 = effective rate 21% (20.7%). Statutory 20.6% used for NOPAT. |
| Inventory (total) | 521 | Note 19 Inventories | Goods in warehouse 439 + goods in transit 72 + return-rights assets 10 = total inventory 521 (prior year 448). FIFO; written down on an obsolescence ladder. The principal operating-capital item for this D2C apparel model. |
| Interest-bearing debt (ex-lease bank/bond) | 0 | Consolidated balance sheet | Balance sheet shows NO borrowings from credit institutions or bonds. The only interest-bearing items are IFRS 16 lease liabilities (see next row). RVRC is financial-debt-free. |
| Lease liabilities (IFRS 16, total) | 12 | Note 18 Lease agreements | Non-current lease liabilities 7 + current lease liabilities 5 = 12 (right-of-use assets 11). Excluded from invested capital (peripheral, asset-light; warehousing is outsourced to 3PL). |
| Cash and cash equivalents | 189 | Note 12 Cash and cash equivalents | Cash and bank balances 189 at 30 June 2025 (prior year 295). 38.5 (~2% of revenue) retained as operational cash; 150.5 treated as excess and stripped from IC. |
| Total equity | 1,220 | Note 13 Equity / Statement of changes in equity (p.96) | Total equity 1,220 at 30 June 2025 (share capital 1, other contributed capital 746, reserves ~0, retained earnings 190, profit for year 283). All attributable to parent; no NCI. |
| AOCI / translation reserve | 0 | Statement of changes in equity / Note 21 | Reserves (translation differences) = 0; foreign-subsidiary translation effect is negligible (operations run from Swedish entities). equity_ex_oci = total equity 1,220. |
| Share-based comp (items affecting comparability) | 26 | Financial overview / footnote 1 (Adjusted EBIT bridge) | FY2024/25 EBIT 357 vs company Adjusted EBIT 383 implies ~26 of share-based incentive-programme cost for the year (per-quarter items disclosed, e.g. Q3 24/25 SEK 21m). mttssn KEEPS this in opex and rejects the add-back. |
| Shares outstanding | 106 | Note 13 Equity | Shares outstanding net of treasury = 106,421,286 at 30 June 2025 (4,644,371 repurchased in the year at avg SEK 44.15). Used for market cap with verified price SEK 66.85. |
How the mttssn view has evolved — each prior dated note is preserved.