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Third party research

Urb-it: Q2 results bang in line with our expectations - ABG

Urb-it

This is a third party research report and does not necessarily reflect our views or values

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Operating losses in line with ABGSC est.Sales growth of 110% y-o-y to SEK 12.4mStrong improvements in France

Operating losses in line with our expectations
Urb-it’s Q2 report came in in roughly line with our expectations. Sales grew by 110% y-o-y to SEK 12.4m (-4% vs ABGSCe of SEK 13.0m), supported by a volume increase of 272% y-o-y but negatively impacted by exited loss-making contracts. The operating loss grew, as expected, reaching SEK -35.6m, which is a doubling from last year but a SEK 8.2m reduction from Q1’22, bang in line with our expectations. Cash flow, continued to be impacted by investments in infrastructure (primarily e-cargo bikes) as the company ramps up its capacity. YTD, tangible assets has increased by SEK 19.8m and total capex in the quarter amounted to SEK 5.5m and FCF SEK -36.2m (SEK -97.5m YTD) versus a cash position of SEK 17.2m.

Positive gross margin after delivery costs in FranceDespite the abovementioned exited contracts, sales grew 14% q-o-q. Looking ahead, we expect a volume ramp-up from here, driven by continuous expansion to new cities (e.g., Urb-it expanded into Liverpool in Q2’22 and its sustainable last-mile delivery went live in Madrid and Barcelona during Q3’22) and a general scale up of existing contracts. EBIT improved by SEK 8.2m from the previous quarter and the company mentioned that it managed to reduce direct delivery costs per delivery by close to 60% in France, leading to a positive “gross margin after delivery costs”. It also entered the fast-growing parcel locker segment. Looking ahead, we believe that Urb-it could continue to benefit from Europe’s increased focus on urban deliveries.

The stock trades at 9.6x-2.4x EV/Sales (‘22e-‘24e) The Urb-it share is down ~30% YTD, currently trading around EV/Sales of 9.6x-2.4x in ‘22e-‘24e.

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