Equity Research Mindark PE, First impression Q3 2023: Revenues as expected, but still high capitalized development costs

Today, Mindark PE published its interim report for the third quarter of 2023. Below is a summary of our first impressions of the report’s outcome and the income statement’s deviations from our forecasts.

• Net sales increased/decreased by 7.1 per cent to SEK 22.9 million. Our forecast was SEK 22.7 million. The outcome was thus about 1.1 per cent above our expectations. About 2.5 per cent of the growth is explained by a stronger dollar exchange rate.
• The adjusted EBITDA result (EBITDA adjusted for capitalized development costs) decreased from SEK 0.8 million to minus SEK 0.6 million. Our forecast was SEK 3.5 million and the outcome was thus significantly lower than expected, mainly due to higher-than-expected capitalized development costs.
• The unadjusted net result increased from minus 1.62 MSEK to 2.17 MSEK. Unadjusted earnings per share amounted to SEK 0.07, compared to our forecast of SEK 0.08.

CEO Henrik Nel Jerkrot states that Q3 2023 marks the final quarter for charging earnings with costs from this year’s restructuring. Although the company has notably high capitalized development costs, it adds to a favorable net result. While our anticipation included a lower share of these costs, it’s positive that approximately 4-5% of the net sales growth is attributable to inrceased activity in Entropia.

We intend to publish an updated equity research report on Mindark PE shortly.

Read the initiation report here.

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