Generic - Investing while growing

• A better mix of growth drivers
• Costs reflect investments in the organisation
• EV/adj. EBIT of 10-9x '26e-'27e, 55% below its peers

Growth on a broader base

Generic Sweden reported Q2 sales of SEK 49m, up 10% y-o-y, in line with our expectations. Messaging, the largest at 73% of sales, grew 11% y-o-y, which supports our view that the volume cycle likely bottomed out in Q1. Operator solutions grew 7% y-o-y, up from 3% in Q1 and following a declining 2025. We think the turn reflects a security environment where customers are placing more value on a nationwide network that works independently of the mobile operators. Digitalisation solutions increased by 11% y-o-y, affected by some timing effects, as one larger municipality went live later than planned. Reported EBIT was SEK 9m, for a margin of 19%, and adjusted for SEK 0.6m of one-off costs, adj. EBIT was SEK 10m, for a margin of 20% (21%).

Costs likely to increase due to scaling

We see '26 as an investment year rather than one of margin expansion, as Generic increases costs to grow. It is adding capacity in product management and platform operations, which we think is needed to reach new customer groups and sell more licences into the existing base. We keep our view of Generic reaching 21-22% EBIT margins over time, and make only marginal changes to our estimates after the report.

Trading 55% below peers

Generic is trading at 10-9x EV/adj. EBIT on '26e-'27e, around 55% below CPaaS peers, despite higher sales growth and higher EBIT margins. Looking further ahead, we still see DOCS as the most important growth driver; it is now in around 31% of Swedish municipalities. In the nearer term, we highlight RCS, where the company reports increased customer interest and notes that the flows carried out during the quarter delivered a high return on investment for customers. We think a richer message format should support margins over time, although we see the effect taking hold beyond '26e.