<a id="bm-comp-c63e949e-b6a1-4a7f-a4a6-fcfcd9d1198e" name="bm-comp-c63e949e-b6a1-4a7f-a4a6-fcfcd9d1198e" class="BMCustomAnchor"></a><table><tr><td bm-component-id="c63e949e-b6a1-4a7f-a4a6-fcfcd9d1198e" style="vertical-align: top; width:100.000000%;"><ul><li>6% organic sales growth y-o-y</li><li>SaaS momentum drives gross margin uplift...</li><li>... and leads to impressive EBIT growth of 41% y-o-y</li></ul></td></tr></table><a id="bm-comp-7e79c261-8a1f-457a-b1f9-54df7e2e0750" name="bm-comp-7e79c261-8a1f-457a-b1f9-54df7e2e0750" class="BMCustomAnchor"></a><table><tr><td bm-component-id="7e79c261-8a1f-457a-b1f9-54df7e2e0750" style="vertical-align: top; width:100.000000%;"><h3 class="bm-h3">Q1: Sales growth of 6%, EBIT margin of 21.7% (16.3%)</h3><p>The Q1 report really showed the scalability of Generic's business model as it was able to record 41% EBIT growth y-o-y despite moderate sales growth of 6% y-o-y (all organic). The main reason for the strong EBIT growth was a continued improvement in the gross margin, up 1.1pp q-o-q and 5.1pp y-o-y to 44.9% as the company currently sees healthy demand for its Saas offering DOCS in conjunction with a lower proportion of low-margin sales (SMS/email). Opex was up in line with sales growth at 6% y-o-y. This resulted in sales of SEK 45m (42m) and EBIT of SEK 9.7m (6.9m), which was 3% below ABGSCe on sales but in line on EBIT. The lower sales growth y-o-y was an effect of tough comparables and low demand within logistics and e-commerce.</p><h3 class="bm-h3">'25e EBIT up 4% despite lower sales estimates</h3><p>We lower our '25e sales by 4% on the back of the report as we think the lower sales growth will persist in Q2 and then gradually improve during H2 as we expect overall demand to pick up. Despite this, we increase our '25e EBIT by 4% driven by a significant hike in our gross margin assumptions after the impressive Q1 outcome. It seems that we are past the point of gross margin pressure from increased sales volumes and that DOCS (which is only 20% penetrated) can continue to push the GM higher.</p><h3 class="bm-h3">New CEO onboard from 19 May</h3><p>Generic recently announced that the new CEO, Helene Henriksson, has already started her new assignment, and she will take over a well-run business with an impressive track record. We argue that finding new ways to grow revenue will be the main challenge as the digital communications market is in a more mature state now. After our revisions the company is trading at an EV/EBIT of 15.8x for '25e with an expected dividend yield of 3.1%.</p></td></tr></table>