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Mrkt BUZZ Risk Intelligence: New client increase ARPU

9 Dec 2021

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Mrkt BUZZ Risk Intelligence, Dec 9 2021

Risk Intelligence (the Company) is a prominent provider of actionable risk intelligence to the maritime and oil- and gas industry. Among the more well-known clients are Maersk and U.S. Navy. A high share of the total revenue comes from long contracted recurring system revenue (81 percent in 2020) with good scalability.

One way to benefit from scalability and improve profitability is to increase the average revenue per client (ARPU). By the end of the third quarter of 2021, ARPU was DKK 128 000. Today, the Company announced that the German third-party ship manager ZEABORN Ship Management GmbH has signed an agreement for the Risk Intelligence System on its entire managed fleet. The value of the three-year contract is EUR 1.9m, corresponding to just above DKK 1.4m. The average revenue per year of about DKK 471 000, substantially above the current ARPU due to the many user licenses. It is an excellent deal and an example of how the Company can increase its overall ARPU on the maritime solution.

In addition to adding new clients to the maritime solution and increasing ARPU, we believe that the launch of the LandRisk Logistics application can push growth rates and margins to the next level. As we write in our initial coverage report of Risk Intelligence published on December 7, 2021, we estimate a CAGR, 2021-2026 of 35 percent. By 2026 we believe the EBITDA margin should reach levels just above 35 percent. Given this scenario, we arrive at a fair value per share of DKK 11.7 corresponding to an E.V./Sales multiple 2022 of 7.0x. The reference group, consisting of intelligence providers, is currently trading at a median E.V./Sales multiple 2022 of 11.0x. Read the initial coverage report here.

The chart below shows that the share is currently trading in a rising trend above EMA9 and MA20, serving as support. The next level on the upside is around DKK 7.3.


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Mrkt BUZZ Risk Intelligence: New client increase ARPU