MSAB's Record Quarter Is an Upgrade Cycle Only 20% Complete
The Swedish forensics specialist just posted its best quarter ever, but the real engine is a 4x-priced product migration that has barely started — and a balance sheet now aimed at acquisitions.
MSAB-B.ST · Earnings Call · 2026-10-23
The headline is a record; the engine is a migration
MSAB just posted the best quarter in its history: net sales of SEK 175 million, up 19.4% reported and 17.6% currency-adjusted, with EBIT of SEK 72 million and a 95% gross margin. The CEO did not bury the lede — this was, in his words, the “best quarter in the MSAB history, both in terms of revenue and in terms of EBIT” — Peter Gille, CEO · 2026-10-23. But the more important number is buried in the Q&A: only about 20% of the customer base has migrated to XRY Pro, the company's flagship forensic extraction product. CFO Tony Forsgren put it plainly: “No, it is closer to 20%. So we have a few years left” — Tony Forsgren, CFO · 2026-10-23 to address the existing base. The upgrade carries roughly “4x pricing for the Pro version versus the Logical & Physical” — Tony Forsgren, CFO · 2026-10-23 legacy product. That is the real story: a multi-year mix-and-price upgrade cycle that is only one-fifth complete, not a single blowout quarter. The ACV metric, which management uses to track the underlying software base, rose 16% to SEK 460 million. New sales were 56% of the mix versus 43% a year earlier — a sign the growth is coming from new customers and new markets, not just renewals. Management warned that big deals create quarterly volatility, but the migration math is structural.Geography, defense, and the lumpy big-deal problem
EMEA remains the largest region at roughly 55% of sales and grew 24%, helped by a large defense-industry deal. APAC grew 90% off a low base, while the Americas declined 4% because a big deal that normally lands in Q3 slipped into Q4. That geographic skew matters: the quarter was not uniformly strong. Management also flagged interest from military customers after the September defense deal, but cautioned that military procurement moves slowly. “There are long cycles, so I wouldn't expect any big deals coming next quarter.” — Peter Gille, CEO · 2026-10-23 In the long run, the CEO expects a good military business; in the near term, the defense kicker is more option value than forecastable revenue.The competitive window is real, but narrower than the question implied
An analyst asked whether governance, transparency and data sovereignty are winning share from Cellebrite. The CEO gave a more nuanced answer: Cellebrite's problems look mostly U.S.-driven and later-arriving than MSAB's own U.S. issues. MSAB wins because it has a better product in some respects and a better price in others. The sharper competitive event is Oxygen Forensics being effectively “wiped out from the market” — Peter Gille, CEO · 2026-10-23 after what the CEO described as tricky behavior. That, plus MSAB's inclusion in IDC's leaders quadrant alongside Cellebrite and Magnet, supports the market share from Cellebrite narrative. Still, the CEO explicitly said customers generally do not buy on ethics alone; trust and European ownership help, but product and price do the heavy lifting.The margin catch-up nobody should ignore
The 95% gross margin and SEK 72 million of EBIT look spectacular, and they are. But Q3 benefited from temporary cost reductions: summer holiday seasonality and a reversal of accrued holiday pay. Management said the current operating cost run rate is about SEK 35 million per month, which is the better base for future quarters. More importantly, product investments planned for Q3/Q4 2026 have slipped into later periods, and management now sees additional product needs — including a lighter frontline software offering — that could address 2028 business. The CEO insisted the higher investment would not reduce the EBIT margin: “we don't see that we will decrease the EBIT margin” — Peter Gille, CEO · 2026-10-23. But he also conceded that “the scalability will not be as good” — Peter Gille, CEO · 2026-10-23. That is the tension: record margins today, a rising product investments line tomorrow, and a market that will judge whether the upgrade cycle can outrun the cost base.Cash, acquisitions, and the next leg
Cash rose to SEK 147 million from SEK 86 million a year earlier, and equity increased to SEK 203 million from SEK 128 million. With that balance sheet, management is now openly shopping.The CEO stressed discipline in a niche market where targets are scarce. That is a new strategic option for a company that has historically grown organically and through product investment. It also introduces execution risk: acquisitions could accelerate the addressable market, or they could dilute the clean operating leverage story.I think that as a company, we are now ready for acquisitions. We have everything in order, but we need to find the right ones.