Erik Penser: Irisity acquires Agent Vi

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Analysis by Erik Penser Bank, on the 6th September 2021

Irisity acquires Agent Vi

Creates a global player
Irisity has acquired the Israeli software company Agent Vi. Agent Vi ia a software company that provides algorithms for IP cameras. The company has a strong geographical presence in EMEA and APAC as well as North and South America. The algorithms provided by the company complement Irisity’s product. We also believe that Irisity will be able to benefit from Agent Vis’s global distribution network.

Significant update of estimates…
In connection with the acquisition, Irisity guides the acquired company to contribute with sales over USD 12m NTM and contribute positively to cash flow. In connection with the transaction, it was announced that Agent’s sales for 2020 amounted to USD 6.1m. We estimate that Agent will grow somewhat slower than Irisity, which means that we will increase sales estimates by approximately 40% in the coming years and EPS approximately 7%.

… Which leads to an increase in justified value
We increase our motivated value from SEK 82–84 to SEK 95–100. The main driving force in the increase is not the estimate increases but that the commercialization risk in the company decreases, which is reflected in DCF and the relative valuation. We estimate that the new company will be closer to the market and have a stable installed base where you can grow the number of algorithms per camera, which increases the gross margin.

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