Interview with Erik Penser Bank

Irisitys CEO Marcus Bäcklund and stock analyst Rickard Engberg from Erik Penser Bank discuss Irisitys third quarter 2021

 

Summary of the third quarter

“We have seen a clear increase in volume and rollout speed, within all main channels. As predicted, this has happened during the third quarter of 2021. All three main channels of camera manufacturers, security companies, and large enterprises have delivered unexpectedly well with good growth and speed. It is positive that we see such a strong development within all three segments at the same time. “

Gross margin and high growth

“Gross margin gets affected by the reverse relations between the rate of growth and how much it accelerates, as well as how much it burdens the margins. In all new customer relations, we work with a few initial assets that are connected through a pilot for free. When the volume then arrives, these costs are negligible in relation to the total volume for that customer. At the beginning of an acceleration phase like this, the gross margins are burdened. We still have a target margin that is very high long term. We don’t see any reason to change that target. We will reach very high gross and net margins looking forward. “

The integration of Agent Vi

“In the start of October, we did a closing of the acquisition of Agent Vi. From Q4 and forward we will consolidate Agent Vi into our reports. The integration process started before that and is still ongoing. This process will last throughout the fourth quarter and a bit into the next year. Remember that this is a so-called “side by side”-integration and acquisition. We have not bought the company to try to rationalize the competition away, but to add execution power to the company. Not only within sales and marketing but also product and development. Rather than a pure integration, this work consists more of coordination of the doubled manpower added to the company. “

The difference between Irisity and Agent Vi gross margins

“Many of Agent Vi’s customers and markets has long sales cycles and processes. They have customers that they have worked with over a long period of time that has already passed the discussed initial stages. This results in an overall higher gross margin. Last year Agent Vi reported a gross margin of closer to 90%, which is close to our target margins. “

New business

“Irisity has recently declared a series of large new deals globally in Singapore, the Netherlands, and UAE. These are both the result of the recent acquisition as well the fruits of much hard work during the past years, within both companies, to close large new customers within each territory and segment. These new contracts are deals both as monthly recurring revenue and upfront payments. Some clients still prefer upfront payments with ongoing service payments, while others pay annually or monthly. “

Altas and Gold IP

“Examples of these new clients are integrators Atlas and Gold IP. Integrators assemble security systems such as cameras, software, and VMS systems to provide solutions to end customers. Altas is the biggest player in its field in the Baltic region with a large number of customers that already have cameras installed. Altas will include IRIS™ in both new and existing security solutions for its clients. The same goes for Gold IP in the Netherlands. These integrators are an important player in the value chain and for Irisity another way to reach end customers and get closer to the market. Both companies are ambitious and believe in a successful rollout.”

– Marcus Bäcklund, CEO, Irisity