Translating interest to orders main focus ahead - Q3 review

Even though Net Insight’s Q3 revenue came in shy of our expectations, the gross margin and cost control were better, leaving losses as expected. Our estimate revisions lead us to trim our fair value to SEK1.6–4.2 (1.7–4.3) per share. The product launches made in 2026 appear to have received a positive reception from customers. As the development of the products has been done in close collaboration with customers, we should see a growth and earnings recovery in 2027e.

Careful optimism. Net insight’s Q3 result confirmed that it is currently a challenging market. The positive was improved costs discipline. We do not expect any fast top-line and earnings recovery as the length of the sales cycles remain uncertain, but we believe management expressed optimism regarding customer interest for the newly launched products. With easier comparisons ahead, we expect sales growth and profitability levels to improve in 2027. We see it as unlikely that the financial ambitions from 2023–27e will be reached.

Estimate revisions. We reduce our sales for 2026-28e due to the deviation in Q3, but this is mitigated by a lower case base, leaving EBIT broadly unchanged. Negative FX effects in financial net and a higher-than-expected tax reduces our adj. EPS from SEK-0.08 to SEK-0.14 2026 and by 23% for 2027e and by 5% for 2028e.

Key ahead is to turn interest into orders. In order to materially heighten investor interest in Net Insight, we would need to see an improved execution of customer interest into actual orders and revenue. Sequential growth from Q3 into Q4 would be a good start, but further monetisation of new product launches must continue in 2027e as well.

Valuation. At the upper end of our fair value range, Net Insight would meet its financial targets in 2028e and be trading in line with peers. In the lower end, top-line growth would not take off, affecting profitability and, in our view, justifying a value 25% below peers.