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MSAB continues to invest in future growth

During 2018, MSAB significantly strengthened and developed its organisation, primarily within development and sales. We have done this because we are convinced that it will lead to future growth.

Sales for the year amounted to SEK 303.9 (301.8) million. EBIT amounted to SEK 32.7 (68.9) million, corresponding to an EBIT margin of 10.8 (22.8) percent. In summing up 2018, I can state that new sales were not on par with the record year of 2017. It is also important to stress that the increased expense base is planned, and long-term investments aim to create an organisation with the best possible prerequisites to maximize the enormous potential for growth we see in our market.

MSAB’s operations contribute to the creation of a safer society. Our solutions are crucial for law enforcement authorities’ capacity to access the increasingly important evidence to be found in mobile phones. In all types of crimes, it is always vitally interesting to access the digital evidence. MSAB possesses unique knowledge about mobile phones and apps which we are confident will be crucial in successfully fighting crime.

MSAB’s core competence is the capacity to unlock, extract and decrypt information in digital devices. Maintaining and developing the world-leading position we have in this area is a must for the Company’s continued success.

In terms of sales, it has been our experience that having our own staff on site is a key factor for achieving success in a specific market. In 2018, we expanded and established our own staff in the countries where we see the greatest potential in 2019 and onwards.

Over the past year and especially during the last two quarters, MSAB launched several market-unique solutions involving two of the most important things in our industry. One is an innovative way to get past the hard encryption of some of the best-selling mobile phones. The other is to access information in the world’s most widely-used applications.

At the end of the last quarter of 2018, we launched MSAB Access services. We have developed unique ways to overcome security barriers in several of the world’s most popular mobile phones, a solution that we have designed as a service for our customers. The response from our users has been very positive.

XRY Photon, which was launched in the last quarter, is an entirely new, cutting edge feature for securing evidence from different apps on mobile phones. Thanks to our unique code, we can let the app “play” all its content which is then recorded and stored by XRY.

These two examples demonstrate how we continue to deliver innovative solutions to our customers and why we continuously invest in innovation and our development department.

I see several areas in which MSAB will be able to continue to grow. Traditional police forces are our main customer; 99 percent of our customers report that they don’t have time to read and go through so many phones as quickly as they would like. I am therefore convinced that it is only a matter of time before they will need to further decentralise their work. Not least, there is a need to increase the efficiency for dealing with less serious crimes. We call our decentralised solutions Frontline, and this comprises the products XRY Kiosk, Tablet and Express.

Thus, we expect to be able to grow our business with our existing customers. The need to secure evidence in digital devices can also be found in far more societal functions than just the police. The military, intelligence services, prisons, border control, customs and immigration authorities are some examples of other customers we already do business with, but where we also see great potential to grow and develop even more.

In 2018, our recurring license revenues continued to grow. The fact that we have a license-based business model, where the vast majority of customers renew their licenses, gives us a high degree of recurring revenues and a scalable business. All in all, this gives us a sense of security in maintaining a long-term perspective on our investments.

MSAB’s average growth over the past five years is about 17 percent. Our reinforced organisation, in combination with our view that the market for our solutions is only at the beginning of its development journey, secures my confidence in continued future growth. Historically, our growth has varied greatly, always between quarters but in some cases also between years. MSAB is one of the leading pioneers in a young and very promising market where we believe in the growth potential. But we know from experience that the development will be neither linear nor perceived as stable.

I am proud of the contribution MSAB and our products provide law enforcement agencies around the world. This, combined with the fact that we exit 2018 with an organisation that is clearly stronger, makes me look to the future with confidence.

Stockholm, February 2019

Joel Bollö
Chief Executive Officer