SERSTECH AB: First Quarter Report 1 January – 31 March 2019
SIGNIFICANT COMPARATIVE SALES INCREASE
First quarter 2019
- Net sales: KSEK 3 251 (1 210), +170%
- Profit for the period: KSEK -3 659 (-3 434)
- Earnings per share: SEK -0,06 (-0,06)
- Earnings per average number of shares: SEK -0,06 (-0,07)
The first quarter of the year delivered net sales of 3.2 MSEK, a growth of 170% compared to Q1 2018. In addition, we received an order valued at 1.1 MSEK, which will be delivered and invoiced in the second quarter. The sales growth is significant, but even more significant is the distribution of customers and orders, with a continued shift to “run-rate” business with limited or no direct involvement from Serstech’s sales team. We expect the growth to continue and that what we have seen in the first quarter will be the way of the future – more frequent, smaller orders from many different partners.
Our partner network continued to expand during the first quarter and by the end of it, we had 45 partners, covering the home countries of more than 80% of the world’s population and an even larger part of the world’s security investments. Due to the rapid growth of the partner network, we have shifted focus of our sales team and now prioritize activities directed towards existing partners rather than finding new ones. We expect the goal to reach 60 partners during the year will be met well before the end of the year.
2018 was all about building a foundation for the future and 2019 will be about revenue growth and maturation of the company, the team and the processes. In February, we added one person to the sales team and one former sales person was moved into a technical role, with the primary focus on training our partners in both the applications of our technology and the sales process. We are mainly signing up partners with experience and knowledge from the industry, but we still see a strong correlation between technical training and partner activity level and eventual sales. We will intro-duce an on-demand learning management system over the next few months together with a technical certification program for partners, in order to further strengthen the skills of our sales network.
By the end of 2018, we finalized two major projects, aimed at improving the quality and performance of our instrument and reducing the dependency on third-party licenses. The projects were finalized successfully and we both improved our instrument dramatically and reduced the cost of goods sold. Accounting rules require us to depreciate the capitalized work for own account over a period of five years, and as can be seen in this report the depreciation cost has increased by a bit more than a million compared to the same period last year. We will maintain this higher level of depreciation for the coming years.
Due to the long sales cycles in our industry, most of the investments we make take a year or more to generate revenue. We have during the quarter therefore secured additional credit from several sources to allow us to continue our acceleration and expansion. We believe that we now have more than enough cash for the coming twelve months, even in the unlikely case of significantly lower than forecast sales.
The sales in the first quarter is primarily the result of the work done in early 2018. The majority of our current sales partners were added during 2018 and we therefore expect a strong development in net sales in 2019, especially during the second half of the year. We remain optimistic about the future and the net sales in Q1 are further evidence that we are on the right track and can continue the rapid growth.
STEFAN SANDOR, CEO
For further information, please contact:
CEO, Serstech AB
tel: +46 739 606067
Chairman of the Board, Serstech AB
tel: +46 733 865660
Company website: www.serstech.com
This is information that Serstech AB (publ.) is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out above at 08.45 CET on April 24, 2019.
Certified advisor to Serstech is Västra Hamnen Corporate Finance AB, phone: 040-20 02 50, e-mail: email@example.com.
Serstech delivers solutions for chemical identifications and has customers across the world, mainly in the safety and security industry. Typical customers are customs, police authorities, security organizations and United Nations. The solutions and technology are however not limited to security applications and potentially any industry using chemicals of some kind could be addressed by Serstech’s solution. Serstech is traded at Nasdaq First North and you find more information about the company at: www.serstech.com.