MSAB sells mobile-forensics software (XRY extraction, XAMN analysis) to law enforcement — an entrenched standard with high switching costs, public-sector procurement lock-in and continuous device-coverage R&D as the moat. FY2025 revenue +14%, ~93% gross margin, ROIC ~34% and economic profit +SEK ~38m; the recurring base is compounding (deferred income +41%, ACV +38%). It runs on negative operating working capital (deferred revenue funds the operating assets) and is net cash.
The constraints are size, public-sector procurement cyclicality (lumpy orders) and valuation — ~29x P/E / ~19x EV/EBIT, modestly above consensus, with the FY2025 EBIT margin (14.7%) still below its potential. A high-quality compounder, fairly-to-richly priced.
At ~29x P/E / ~19x EV/EBIT a quality + recurring-growth premium is warranted, but it sits modestly above consensus with margin recovery still to come.
Base SEK 75 (quality at fair-to-rich value); bull SEK 95 if recurring revenue + margin re-accelerate; bear SEK 55 on a procurement air-pocket or multiple de-rate.
The market pays today’s enterprise value for roughly 22.1% NOPAT growth over 5 years. The business earns 34% on capital against a 10% cost of capital (spread +24.0 pp); the no-growth value is SEK 42/share (54% of price), so the rest is priced-in growth.
| Scenario | 24m target | Impl. g | Upside | Prob. | Driver |
|---|---|---|---|---|---|
| Bull | SEK 95 | +30% | +23% | 30% | Recurring revenue + margin re-accelerate |
| Base | SEK 75 | +21% | -3% | 45% | Quality at fair-to-rich value |
| Bear | SEK 55 | +10% | -29% | 25% | Procurement air-pocket or multiple de-rate |
| Prob-weighted | SEK 76 | — | -1% | 100% | Scenario-weighted expected value |
| WACC \ g | 0% | 3% | 5% | 8% | 10% | 15% |
|---|---|---|---|---|---|---|
| 8.50% | 50 | 55 | 58 | 64 | 68 | 79 |
| 9.25% | 45 | 50 | 52 | 57 | 61 | 70 |
| 10.00% (base) | 42 | 45 | 48 | 52 | 55 | 63 |
| 10.75% | 39 | 42 | 44 | 48 | 50 | 57 |
| 11.50% | 36 | 39 | 41 | 44 | 46 | 53 |
Green = fair value above the current price of SEK 77.00. The reverse-DCF conclusion is dominated by WACC and growth — see the whole surface, not a single fair value.
⤓ Download the full model (.xlsx) — formula-driven sheets; flex the blue input cells and the model cascades in Excel.
Deferred income +41%, ACV +38% — a building subscription/support base.
Switching costs + procurement lock-in in police/forensic labs.
EBIT margin 14.7% below potential — operating leverage to come.
Net cash ~SEK 143m funds R&D + buybacks/dividends.
MSAB is an entrenched, ~93%-gross-margin, net-cash forensic-software leader (ROIC ~34%, fast-growing recurring base), fairly-to-richly priced at ~29x P/E. HOLD (quality); base SEK 75.
Own the quality + recurring compounding; accumulate on procurement-driven weakness.
Every adjustment traces to the cited note/page in the source filing — click to open it there. Source reports archived locally.
| Adjustment / figure | Value | Source | Why mttssn treats it this way |
|---|---|---|---|
| Net sales | 462 | Group income statement / Note 5 | Net sales line, FY2025 column = 461,784 thousand (prior year 404,705). Note 5 disaggregates by region (EMEA 251,017 / Americas 130,493 / APAC 80,275) and by type (product sales 434,188 / training & other services 27,596). |
| Operating profit (EBIT) | 67.843 | Group income statement | Operating profit line = 67,843 thousand (prior year 46,326). Used directly as adjusted EBIT (no verified non-recurring add-backs; MSAB reports no adjusted-EBIT APM). |
| Goods for resale (COGS proxy) / gross margin | 31.935 | Group income statement | Goods for resale 31,935 (the only direct cost of sales; mostly hardware components). Gross profit = net sales 461,784 - 31,935 = 429,849; gross margin 93.1%, consistent with a licence/software model. |
| Tax expense | -13.467 | Note 11 Tax | Current tax -13,467 (no deferred tax); total reported tax -13,467 on profit before tax 62,639 = effective rate 21.5%. The reconciliation starts from the 20.6% Swedish statutory rate; statutory 20.6% used for NOPAT per mttssn methodology. |
| Revenue recognised over time (recurring/support proxy) | 70.897 | Note 5 Operating Revenue | Performance obligations fulfilled over time (support and product updates over the license period) = 70,897 thousand = 15.4% of net sales; point-in-time = 390,887. This is the audited recurring-style component; the company also reports a growing ACV metric for active recurring license & maintenance agreements. |
| Cash and cash equivalents | 160 | Note 18 Cash and cash equivalents | Cash and bank balances 159,546 at 31 December 2025 (prior year 138,155). ALL retained as operational cash in invested capital because the business has negative operating working capital and stripping cash would make IC negative / ROIC undefined (see invested_capital._note). |
| Total equity | 150 | Note 19 Equity / Statement of changes in equity | Total equity 150,200 at 31 December 2025 (share capital 3,834, other contributed capital 28,058, translation reserve 8,063, retained profit incl. year 110,244). All attributable to parent; no NCI. |
| AOCI / translation reserve | 8.063 | Statement of changes in equity / Note 4 | Translation reserve = 8,063 at year-end (opening 14,077 less -6,014 FY2025 translation difference). Stripped from equity for the IC base: equity_ex_oci = 150,200 - 8,063 = 142,137. |
| Interest-bearing debt (lease liabilities, total) | 16.281 | Note 7 Leasing / Note 18 financing reconciliation | Long-term lease liability 14,841 + short-term lease liability 1,440 = 16,281 (right-of-use assets 18,581). IFRS 16 leases are MSAB's ONLY interest-bearing debt — the balance sheet shows no bank loans or bonds. Retained in invested capital. |
| Deferred income (contract liability) | 79.999 | Note 20 Accrued expenses and deferred income | Deferred income 79,999 within accrued expenses and deferred income 126,121 (prior year deferred income 56,876; +40.7% YoY). This software-licence float funds the operating asset base and is the principal driver of MSAB's negative operating working capital; it equals the remaining-performance-obligation backlog in Note 5. |
| Operating cash flow & investments (FCF) | 102 | Cash Flow Statement | Cash flow from operating activities 101,888 (prior year 43,007). Investments (investing activities) -29,704, elevated by a step-up in capitalised intangibles (Note 13 purchases 35,533). Free cash flow = 101,888 - 29,704 = 72,184. |
| Shares outstanding | 18.468 | Note 19 Share capital / Note 12 EPS | Total issued 19,172,000 (1,000,000 Series A + 18,172,000 Series B) less 703,596 Series B in treasury = 18,468,404 shares outstanding at 31 December 2025; matches the EPS average-share denominator (18,468 thousand). Used for market cap with web-verified price SEK 77.00. |
How the mttssn view has evolved — each prior dated note is preserved.