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My two cents on the matter

The metrics are truly elite (83% EBITDA margin, ~100% FCF conversion, debt-free, >100% ROIC), but the “deep value” was the February low—at SEK 82, you’re paying ~11x forward, which is moderate, not cheap. The remaining discount relative to software compounders is not a quality discount, but a regulatory discount: ~88% of revenue comes from gray/crypto markets, plus a stake-heavy top-10 concentration of 74%.

I’m out…I already found Evolution AB suspicious ^^

7 Comentarios

Get_Rich_or_Die_Tryin@Get_Rich_or_Die_Tryin

I’d love to see the prompt that spits that out. 🤷🏼‍♂️😅 But the answer is, well, meager and superficial, to say the least. So, in my opinion, it scores a 0.0. Gambling is probably the most regulated business in the world (chance AND risk rolled into one). But hey, you don’t have to dance at every party. To each their own.

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Matthias@Aequitas

It’s not a single prompt; as usual, I’ve added data from fiscal.ai to my Claude project. Of course, this is just the summary—the full report was more detailed.
It’s worth a shot as a small gamble, and I certainly don’t want to talk anyone out of it.

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Get_Rich_or_Die_Tryin@Get_Rich_or_Die_Tryin

@Aequitas Hmm, I think that's a pretty weak argument. I mean, there are countless companies whose fate is determined by a small handful of major clients. Even in the Big Tech sector. I’d be curious to see that summary.🤷🏼‍♂️ And the statement about the valuation discount completely ignores current and future growth. A forward P/E ratio of 11 is absolutely ridiculous for a high-growth company with that margin profile. I’m not trying to convince you, but I consider the analysis (or the data it’s based on) too thin to be a real valuation tool.

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Matthias@Aequitas

@Get_Rich_or_Die_Tryin Relying on a single customer is never a good thing, but it’s not equally bad everywhere. Your Big Tech comparison doesn’t hold up for me: in the case of Apple and TSMC, the major customer and supplier, respectively, are at least stable and heavily regulated. With Hacksaw, the biggest customer is a crypto casino operating in the gray markets.
I don’t dispute at all that the metrics are elite—an ~80% EBITDA margin, the growth, and the ~11x forward P/E are truly cheap on paper. But that’s of little use if a significant portion of revenue comes from markets that can be regulated away with the stroke of a pen. Evolution had exactly that headache, and Hacksaw has already drawn attention in Sweden in 2023 with a warning and a fine for compliance issues. So, to me, the “discount” is more like the risk factored into the price. A low P/E ratio with revenue that can be regulated away isn’t a bargain, but a risk discount.
And regarding the analysis: as I said, that was just the summary; the actual report was much more detailed, and the data is based on all fiscal.ai quarterly metrics—so it’s not just pulled out of thin air.
And honestly, I find the classification “crypto gambling in gray markets” alone to be a helpful valuation tool ;)

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Get_Rich_or_Die_Tryin@Get_Rich_or_Die_Tryin

@Aequitas Of course, regulation is an issue—I don’t deny that at all—I just see it in a more nuanced way.

However, I also think that statements made by AI, such as the assessment you quoted, are a bit exaggerated.

Partner acquisition is underway, the title rollout is underway, but of course there is a concentration of customers—AND unfortunately, that’s completely normal in iGaming.🤷🏼‍♂️ After the top 1 customer (approx. 15% of revenue) comes the who’s who of European online gambling. So I do see it in a more nuanced way.

But as I said, I’m aware of my assessment and the risks, but I’m happy to accept them for the sake of the overall profile and growth.

Good discussion, thanks for that.👍🏻

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Matthias@Aequitas

@Get_Rich_or_Die_Tryin Thanks to you, too.
I'm just already worn out from Evolution, so I'm a bit biased. And I'm nervous about Adobe's earnings report tonight. My lottery ticket ;)

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Get_Rich_or_Die_Tryin@Get_Rich_or_Die_Tryin

@Aequitas Evolution has passed me by, but of course I totally get why you're so sensitive about the business.😉 I'm keeping my fingers crossed for you and Adobe.🤞🏻

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