Mrkt BUZZ Risk Intelligence: The DHL deal, a great opportunity for upselling
30 Mar 2023
Equity research, Risk Intelligence
Yesterday, Risk Intelligence announced that it had signed a license agreement with DHL Freight for LandRisk Logistics. The agreement also included a development project to enhance the customisation and data integration capabilities. DHL is the second signed giant in the logistics sector after DSV.
DHL Freight will gain access to incidents, alerts, hotspots, country threat assessments, and assessments of secure truck parking areas, which are vital for contingency planning in logistics. Moreover, the development agreement will work on enhancing the existing Lane Threat Assessment tool to allow dispatchers to make better security decisions when the plan changes. This bridge between security and operations is a key area for the client. Risk Intelligence will work with the client’s security team to deliver a user-friendly interface to make security an embedded part of every journey: Providing a threat situational overview of selected lanes and alternative routes.
Increased estimated ARPU
The deal value is not disclosed. However, what may be noted as interesting is that Risk Intelligence increased its estimated average ARPU from clients on its land-based solution by 42% to DKK 425 000 in Q4 2022, from DKK 300 000 in Q3 2022. Nevertheless, we believe the potential of this agreement lies in the possibility of increasing the number of users. The same goes for the agreement with DSV.
Upside in the share and reduced short-term financing risk
In our latest research update published on 26 March 2023, we expect Risk Intelligence to reach revenues of DKK 21 million, corresponding to a growth of 19%. A fair value per share is calculated to DKK 5.7. That corresponds to EV/Sales NTM of 4.9x. The reference group was trading at 7.8x.
On 27 February 2023, Risk Intelligence raised approx. DKK 3.9m through a directed share isse. On 20 March 2023, the company raised another approx. DKK 5.7m through a second directed share issue. That reduces the financing risk.
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