Huddly AS “We build things that see”

[sillinkutoja]

Can someone interpret this options stuff, my knowledge isn’t enough. Still almost 19m options unredeemed?

Operational expenses include 273,201 TNOK in expenses related to the option programs in Q1 2021 after IFRS 2, including valuation of 2021 Incentive Plan and 2017 Incentive Plan as of end March 2021, exercised options under both plans, social security tax on exercised options and accrued social security tax on unexercised options. 236,812 TNOK is accrued versus Other equity and 36,389 TNOK is accrued versus Other current liabilities. Operational expenses for full year 2020 include > 3,515 TNOK in expenses related to the 2017 Incentive Plan. Adjusted statement of comprehensive income excludes option expense in Q1 2021 and FY 2020. As of end March 2021 remaining option expenses for future quarters versus Other Equity are 34,928 TNOK under the 2021 plan and 68 TNOK under the 2017 plan.

[Helel]

If a company grants an option and then the share price develops favorably, it causes an accounting loss in the company’s income statement. An option is merely the right to buy or subscribe for a security at a predetermined price. The company can at any time arrange an issue for itself and sell its shares to the market at market price, so the accounting loss is the difference between this market price and the option’s subscription price.

It is worth thinking about the share “on a fully diluted basis”, meaning you calculate the earnings per share imagining a situation where all options have been exercised.

If the share price development is favorable, it is realistic to assume that all in-the-money options will be exercised. There are quite a lot of these options in relation to the share capital, almost 17%.

I estimate that after yesterday’s decline, at a 10 NOK level for 2021, adjusted for options but fully diluted, the P/E might be 35, assuming that future quarters are in line with Q1 YoY in terms of growth and profitability.

I’m afraid there’s still a real possibility of disappointment here because the QoQ growth trend clearly broke, meaning Q1 2021 corresponds to Q2 2020 levels, and the latter quarters of 2020 saw peaks. Thus, Q4 might even see a decrease in revenue YoY.

I would be surprised if it doesn’t continue to hit the board quite badly, but the worst is certainly behind us.

[sillinkutoja]

Insider purchase 850k units:

On 11 May 2021, Kolberg Motors AS and Multiplikator AS have acquired a total of 50,000 shares in Huddly AS, 500,000 by Kolberg Motors AS and 350,000 by Multiplikator AS, each at a share price of NOK 9.9849. Both Kolberg Motors AS and Multiplikator AS are related parties to Kristian Kolberg, board member in Huddly AS. Multiplikator AS is 100% owned and controlled by Kristian Kolberg, and Kolberg Motors AS is owned by Kristian Kolberg and his family. In addition, and also on 11 May 2021, Isar Invest AS, owned by Jan B. Kolberg, acquired 200,000 shares in Huddly AS, each at a share price of NOK 9.9849. Isar Invest AS is not formally defined as a related party to Kristian Kolberg under MAR art. 19, but the company is managed by the Kolberg family office, together with Kolberg Motors AS and Multiplikator AS.

Following the transaction, Kristian Kolberg and related parties as per the MAR definition, jointly hold 10,450,000 shares in Huddly AS, representing 4.83% of the share capital. When Isar Invest AS and TK Motor Invest AS, also managed by the Kolberg family office and not formally defined as related parties under MAR art. 19, are included, Kristian Kolberg and said associated parties hold in aggregate 11,450,000 shares in Huddly AS, representing in aggregate 5.29% of the share capital.

[Helel]

That will probably calm the markets quite well for a moment, but the valuation picture will not change, of course. The coming quarters now just have to be better than the corresponding period in 2020, which unfortunately is subject to quite serious doubts.

Especially in March, a revenue forecast of 500-600 MNOK was given, but it quickly dropped by one hundred million within a couple of months. The range of 400-500 is presumably maintained even if the lower end were to be hit, because falling below that would mean a possible contraction in revenue on an annual basis compared to last year.

[Alfred]

ABG Sundal Collier lowers target price from 23kr (buy) to 11kr (hold). The justification is a reduction in outlook. Whether that 23 kronor target price was very realistic is another matter

[Helel]

The target price has received a small haircut since we last saw it.

It’s clear by now that it certainly wasn’t. Many investors, however, take these target prices seriously, and at best, a skilled analyst can create significant added value. In this case, ABG and Pareto just did something else. Pareto’s blunder is particularly frustrating; I’ve always considered them top-notch professionals.

It’s somewhat difficult to see this as a buying opportunity until future quarters help determine a fair, evidence-based value for the company.

[jaska7]

Yes, the old target prices lost their basis when the company itself lowered its full-year guidance. Of course, it’s a different matter whether the company should have communicated its own guidance a bit more cautiously earlier

[jaska7]

NewsWeb

"Update on synthetic option claim
Oslo, 21 May 2021: Reference is made to previous descriptions of a matter related to a claim from former Huddly employees for compensation based on certain synthetic options. This matter was detailed in the Information Document for Huddly AS admission to trading of shares on Euronext Growth, dated 15 February 2021, section 1.2.1 on page 10. A description of the claim was also given in the Huddly Annual Report 2020, dated 2 March 2021, note 17 on page 23.

Huddly AS has received a lawsuit from seven former employees and one current employee regarding this claim. The claim approximately totals NOK 153 mill. Huddly shall submit its response to Oslo District Court within 8 June 2021.

As stated in the Information Document referred to above, the Company’s opinion is that the claim lacks both factual and legal basis, and that the claim now raised is unfounded and without merit."

Juttu aiheesta: https://www.dn.no/marked/tidligere-huddly-ansatte-til-soksmal-mot-videokameraselskapet-krever-153-mill/2-1-1014520

Former Huddly employees to sue video camera company - demands 153 million.

The lawsuit is related to the fact that the employees believe they are entitled to compensation related to synthetic options. The company believes that the lawsuit lacks a legal basis."

[Helel]

The market seems to be taking that quite well. As someone perhaps most familiar with the company, could you tell me more about that options dispute?

If the claim were to go through as is, the compensation would be equivalent to about a year and a half’s net income. If realized, it would certainly open up further downside to the current price.

[Puulituku]

Yeah, it looks like we’ll have to wait a year or two for this ship to turn around.

[jaska7]

NewsWeb

"Oslo, 21 May 2021: Reference is made to previous descriptions of a matter

related to a claim from former Huddly employees for compensation based on

certain synthetic options. This matter was detailed in the Information Document

for Huddly AS admission to trading of shares on Euronext Growth, dated 15

February 2021, section 1.2.1 on page 10. A description of the claim was also

given in the Huddly Annual Report 2020, dated 2 March 2021, note 17 on page 23.

Huddly AS has received a lawsuit from seven former employees and one current

employee regarding this claim. The claim approximately totals NOK 153 mill.

Huddly shall submit its response to Oslo District Court within 8 June 2021.

As stated in the Information Document referred to above, the Company’s opinion

is that the claim lacks both factual and legal basis, and that the claim now

raised is unfounded and without merit."

Edit:

Came across this.

https://www.earpro.es/es/2021/05/27/huddly-uc

Text understandable to a translator

" EARPRO, a company belonging to the Midwich Group specialized in 360º audiovisual solutions for audio, lighting, visual media and video & UC, has announced a distribution agreement for Spain and Portugal with the camera manufacturer Huddly ."

[jaska7]

NewsWeb Q2 and compiled explanations.

Again, the guidance range was narrowed.

“Huddly forecasts revenue to be in the range from 400 MNOK to 450 MNOK and gross margin percentage to be around 50% in FY 2021.”

Still not a pass

[Pyrde]

Especially considering the disappointing results from over a week ago, the recent rise is starting to raise questions. The stock has risen >30% from its levels before the earnings release. I wonder if I’ve missed something, as I haven’t found any potential drivers for this?

[yellowbeak]

Probably due to insider purchases (August 20 and 23). Link to press releases: Investor relations | Huddly

Edit. I agree with the comment below that it’s an overreaction if this is the only driver.

[Pyrde]

They might have some effect, but in my opinion, these are quite minimal additions relative to their existing holdings. So, the market’s reaction seems a bit overblown if these are the only drivers.