* Sales up 2% y-o-y, although strong adj. EBIT up 6% y-o-y
* Adj. EBIT growth of 6% y-o-y, margin of 24% (23% Q3'25)
* DOCS now penetrated >30% of municipalities
Q3'26 details
Generic Sweden reported Q3'26 sales of SEK 46m, slightly below our expectations at SEK 49m, mostly affected by slower growth in the operator solutions (~20% of sales), which decreased 9% y-o-y on a slow summer period. The messaging segment continued growing its volumes by 4% y-o-y, and digital products (such as DOCS and fax) grew by 19% y-o-y. Even though the growth came in softer, the GM held up strongly at 46% (we estimated 44%), driven by a favourable mix. Adj. EBIT came in at SEK 11m (vs ABGSCe SEK 10m, +13%), a growth of 6% y-o-y and a margin of 24% (23% last year).
The earnings quality looks good
Although the report came in with a softer top line, the earnings quality looks good, as we see some seasonality in the numbers. The company has continued growing into e-health, with less cyclical volumes; however, we think the company has a weighted part of its business in logistics, which has been tough on volumes in the latest quarters. Municipalities continue to adopt DOCS, and is now in 33% of all of them, giving the company recurring revenue.
Valuation
The company is valued at 9x adj. EV/EBIT on our unrevised numbers for ‘27e, around 40% below its historical multiple. Generic continues to operate with 22 employees (22 in Q3'25), making it one of the highest sales-per-employee companies in the Swedish tech sector, at around SEK 9m per employee in FY'26e.