Kinnevik Results Presentation Deck
Intro
Net Asset Value
30 June 2022 (as disclosed on p. 12), at a significant premium to the peer
group, and clearly takes the forward outlook into account. The multiple
declines to a level more in line with key peers looking further out into the
future, as Oda is expected to grow at a significantly higher rate fuelled by
its geographical expansion. The valuation also reflects the exceptional
operational efficiency of the company's proprietary fulfilment solution.
The fair value of Kinnevik's 11 percent shareholding in Vivino amounts
to SEK 625m, effectively flat in the quarter save for currency tailwinds. The
valuation is mainly based on forward-looking GMV multiples of a peer
group of global online marketplaces with high user engagement such as
Etsy (ETSY). Our assessed value of the company remains at an unchanged
and relatively material discount to the peer group's average multiple.
As our holding benefits from downside protection from the preferential
terms of our investment in the company's latest equity fundraise, the fair
value of our investment remains largely unchanged.
The fair value of Kinnevik's 5 percent shareholding in Jobandtalent
amounts to SEK 1,098m, effectively flat in the quarter. The valuation is
based on near-term forward-looking revenue multiples of a peer group
consisting of human capital-focused businesses such as Fiverr (FVRR)
and Upwork (UPWK), with reference also drawn to marketplaces such as
Airbnb (ABNB) and Uber (UBER). The peer group's average NTM revenue
multiple remained unchanged in the third quarter, and the company
remains valued at a premium to the peer group, albeit a decreasing
one, considering its significantly stronger revenue growth relative to the
peer group constituents while maintaining comparable margins. Our
holding benefits from downside protection from the preferential terms
of our investment in the company's fundraise in the fourth quarter of
2021, causing an effectively unchanged fair value in spite of reflecting
considerable multiple contraction in our underlying valuation assessment
over the last few quarters.
SOFTWARE
Our Software businesses are typically benchmarked against both recur-
ring revenue SaaS businesses such as Atlassian (TEAM) and Salesforce
(CRM), and more transactional software businesses like Twilio (TWLO)
and Shopify (SHOP). The companies in our peer sets typically grew
KINNEVIK
Interim Report Q3 2022
Portfolio Overview
Sustainability
revenue at around 35 percent in 2021 with gross margins of 80 percent,
compared to our businesses which typically are growing more than four
times faster with almost comparable gross margins. For this reason, we
also consider valuations of "hyper growth" peers comprising the fastest
growing listed software companies as their financial profile more closely
resembles our investees. This peer set typically exhibits growth of over
50 percent and trades at an average revenue multiple more than twice
as high as the overall software level on average.
The fair value of Kinnevik's 8 percent shareholding in Cedar amounts
to SEK 2,023m, down around 2 percent in the quarter. The valuation
reflects a decreased premium to the peer group's average NTM revenue
multiple, which has contracted by around 12 percent in the quarter, to
reflect the market's increased relative valuation of profitability. Our fair
value is supported by continued strong revenue growth and the Swedish
krona's depreciation against the dollar. The company is valued in line with
the richest valued companies in its peer group, corresponding to a mate-
rial premium to the peer group average to reflect Cedar's considerably
stronger growth rate. In relation to this average, the valuation normalizes
materially twelve months out, courtesy of the company's strong outlook.
The fair value of Kinnevik's 14 percent shareholding in Pleo amounts
to SEK 3,719m, down around 17 percent from last quarter's valuation. The
write-down reflects a decreased premium to the peer group's average
NTM revenue multiple, which itself has contracted by around 1 percent
in the quarter, to reflect the market's increased relative valuation of profit-
ability. The valuation still implies a significant premium to the peer group
on an NTM basis, but normalizes over the coming 12 months in relation
to the best-in-class companies in the peer group as Pleo is expected to
grow at a significantly faster pace.
The fair value of Kinnevik's 15 percent shareholding in TravelPerk
amounts to SEK 2,120m, effectively flat in terms of underlying valuation
in the quarter but gaining 10 percent mainly from a weakening Swedish
krona. The assessed valuation is fairly in line with where the company
raised new financing in late December 2021, and where smaller secondary
transactions took place during the second and third quarters, in which
Kinnevik participated. The resilience of the carrying value of our TravelPerk
investment reflects the company's superior performance benefiting from
Financial Statements
Other
a sharp rebound in travel as well as continued strong acquisition of new
clients more than offsetting an approximate 40 percent decline in the
NTM revenue multiple during the first three quarters of 2022.
CONSUMER FINANCE
Our Consumer Finance businesses are typically benchmarked against a
peer set of digital wealth managers such as Avanza (AZA.ST) and Nordnet
(SAVE.ST), and consumer subscription businesses such as Match Group
(MTCH) and Netflix (NFLX). On average, the companies in the broader
composite peer set grew revenue by 40 percent in 2021 with gross mar-
gins above 50 percent, largely in line with our investments in the sector.
The fair value of Kinnevik's 13 percent shareholding in Betterment
amounts to SEK 1,532m. The peer group's average NTM revenue multiple
was virtually flat in the third quarter and we continue to value Betterment
at an unchanged 10 percent premium to the peer group average in con-
sideration of the company's relatively stronger growth trajectory. Per the
end of August, the company's assets under management amounted to
around USD 30.8bn. While the revenue mix is becoming more diversified,
Betterment's revenues are still primarily derived from fees on these assets
under management and therefore remain in part correlated with the
development of the US and global stock market. Our revenue outlook
has been adjusted downwards to take the ongoing drawdown in equity
markets into account. At the current valuation level, the carrying value of
our investment is positively affected by liquidation preferences, causing
an unchanged fair value in USD terms and an increasing fair value in
SEK terms due to currency tailwinds.
The fair value of Kinnevik's 21 percent shareholding in Monese amounts
to SEK 842m, up 60 percent in the quarter, and is at a not immaterial
discount to the valuation where the company raised new capital at during
the third quarter. The discount partly stems from the terms at which this
capital was raised at from a strategic investor. The peer group's average
NTM revenue multiple remained effectively flat in the quarter. Our valu-
ation means valuing the company at a premium to its peer group rather
than at a discount as in the previous quarter - reflective of the company's
strengthened financial position and the strategic value of the investor
that led the investment in the company's recent fundraise.
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