In this pitch deck, analysts Nils Arvidsson, Hampus Fredriksson and Emil Liljeborg present
an investment case for Yubico, a leading provider of hardware security keys. The deck highlights
multiple value creation levers, including a subscription shift, inventory optimization, and right-
sizing of the workforce. Using a valuation framework spanning precedent transactions, trading comps,
an LBO analysis, and a DCF, the analysis estimates Yubico’s enterprise value in the range of SEK
5.7–10.7bn.
Key Takeaways
● Yubico trades at 12.2x 2027E EV/EBITDA, a steep discount to the 22.0x peer median, despite
a strong competitive position as a co-creator of the FIDO authentication standard. With
~80% of data breaches involving weak or stolen credentials and EU regulation now
mandating phishing-resistant authentication, demand is increasingly regulatory rather than
discretionary.
● The large share price decline reflects accounting noise, not fundamental deterioration. The
subscription transition creates a temporary valley of death in reported margins, the same
illusion that has preceded outsized returns in several software businesses undergoing the
shift. By 2030, subscription revenue is projected to reach nearly 60% of total sales, re-rating
the business from cyclical to high-visibility.
● Two operational levers offer significant value creation independent of revenue growth.
Inventory days above 500 are abnormal, and conservative inventory management alone
could free two-thirds of trapped working capital, lifting FCF conversion. Headcount has
grown at a 12% CAGR against 9% revenue growth, and right-sizing the workforce could
unlock a 64% incremental EBIT margin. Together, these levers underpin an LBO analysis
implying a 23.3% IRR.