Kahoot AS BUY HOLD SELL

KAHOT NO · TMT · Technology · Equity update · 11 January 2023 · 07:24

Increased uncertainty. HOLD maintained Target NOK 16.00

Following the weak trading update, we once again revise Recommendation
Target (NOK)
Hold (Hold)
16.00 (20.00)
our estimates down (’23-24e sales/adj.EBITDA 5-8%/11- Price (NOK) 16.65
15%). We continue to highlight estimate risk on poor Upside -3.9%

visibility and that the SBC element must be addressed. Market capitalisation (USDm) 828
Enterprise value (USDm) 746
There is considerable downside as FCF w/o working capital No of shares, fully diluted (m) 489.3
(growth) and SBC is ~USD 5m. Although the shares might be
more attractive for General Atlantic for a takeover, Kahoot
still trades at a relatively high sales multiple (5.1x ’22).

12 months share price performance:

Significant growth deceleration and guidance miss in Q4 Price Close Oslo Stock Ex change Benchmark Index

rebased

Kahoot released a PW as it sees preliminary Q4 invoiced revenue at USD 43.5m 48.0

vs its USD 50-55m guidance provided on 3 November. The y-y growth of USD 43.0
3.8m (10%) vs its USD 5.3-10.3m (26-39%) guidance illustrates the significance of 38.0
the miss and questions whether this can be solely attributed to macro will be 33.0
raised, particularly in light of “easy comps” as Kahoot in Q4’21 explained its 28.0
guidance miss as due to lockdowns in December. Moreover, Clever invoiced 23.0
revenue was flat y-y (ARCe: +37%. Q3: +46%) with no explanation provided. Core 18.0
Kahoot grew 15% y-y (ARCe: 21%) and although it added 60k subscribers (ARCe: 13.0
58k) the implied ARPU was only USD 5.7/month (ARCe: USD 8.3). Jan-22 Mar-22 May-22 Jul-22 Sep-22 Nov-22
3m 6m 12m
KAHOT NO -27.4% -17.2% -59.6%
Consensus estimates have a long way down although visibility is poor
OSEBX 4.4% -0.1% -0.5%
We have revised growth on the Clever and Kahoot Work (core) segments down
Source: Bloomberg
and now model 17% invoiced revenue growth in 2023 (14% revenue growth). We
also revise down OPEX, now assuming 5% FTE growth (Kahoot has guided 10%).
This leaves our adj. EBITDA and OpFCF down 11-15% for 2023-2024. The former
is 22-27% below consensus. However, visibility is poor in our view.

We remain cautious to FCF multiples due to equity dilution (SBC)

On our 2023e and NOK 17/sh, Kahoot trades at 12x FCF but 35x our adj. EBIT.
The main risk to using a FCF multiple is that this is boosted by NWC (growth)
and SBC (annualized dilution YTD is 4.4% of 9% potentially). Excluding this, FCF
is close to 0 today. Our NOK 16 TP is based on our DCF (11% WACC) and SOTP.

Key Figures (USD) Dec-20 Dec-21 Dec-22e Dec-23e Dec-24e Estimates Dec-22e Dec-23e Dec-24e
Revenue (m) 30.1 91.3 146.0 167.0 197.0 Revenue
EBITDA (m) (17.58) 9.77 11.68 22.20 39.48 Est. change -0.1% -5.4% -8.1%
EBIT (m) (20.16) (0.44) (3.94) 6.37 23.44 Dev. vs. cons. -0.7% -10.7% -16.9%
EPS (0.12) 0.01 (0.02) 0.00 0.03
Adj. EBITDA (m) 0.72 19.07 29.87 39.66 58.65 EBITDA
Adj. EBITDA margin 2.4% 20.9% 20.5% 23.7% 29.8% Est. change 25.7% -16.2% -18.8%
Adj. EPS (0.12) 0.07 (0.01) 0.03 0.06 Dev. vs. cons. 1.5% -38.5% -39.0%
Revenue growth 243.6% 203.3% 60.0% 14.4% 18.0%
EPS growth 106.3% (353.8%) 585.4% EPS
Est. change 17.7% -58.9% -31.4%
DPS Dev. vs. cons.
Source: Arctic Securities Research,
Dividend yield Infront (31 October 2022)
Net interest bearing debt (m) (256.1) (107.8) (103.0) (129.6) (209.0)
ROE (19.8%) 0.8% (1.5%) 0.4% 2.5%
ROACE (76.9%) (0.2%) (0.8%) 1.3% 5.1%

FCFF yield (2.0%) (41.6%) (0.6%) 3.2% 9.6%

EV / Sales (x) 19.12 7.93 5.00 4.21 3.17
EV / EBITDA (x) na 74.09 62.49 31.67 15.80
EV / EBIT (x) na na na 110.4 26.6
Kristian Spetalen
P / E (x) na 233.5 na 359.0 52.4 +47 95 10 08 87 · kristian.spetalen@arctic.com
P / B (x) 2.62 1.41 1.41 1.36 1.29

See important disclosures at the end of this report. · Powered by the EFA Platform
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ESG profile
Sustainalytics Taxonomy Disclosed ESG
Snapshot ESG risk rating* eligible activities targets
Kahoot’s products promote digital and remote learning and hence allow for a
22.7 Yes No
reduction in travel and unnecessary negative impact on the environment. The
company has a medium ESG rating from Sustainalytics.
*0-100 where 0 is best

ESG disclosure
• Kahoot has a section about sustainability in its annual report

Key ESG risks

Source: Arctic Securities Research, Company data

EU Taxonomy alignment
• Kahoot has not undertaken an external verification by a 3rd party on its EU
Taxonomy alignment

Selected ESG metrics and targets

ESG metric Unit 2019 2020 2021 Target
GHG emissions, scope 1 tCO2e n.a. n.a. n.a.
GHG emissions, scope 2 tCO2e n.a. n.a. n.a.
GHG emissions, scope 3 tCO2e n.a. n.a. n.a.
Carbon intensity (scope 1 and 2) tCO2e/XXX n.a. n.a. n.a.
Share of renewable energy consumption % n.a. n.a. n.a.
Water usage Litres n.a. n.a. n.a.
Hazardous waste Tonnes n.a. n.a. n.a.
Employee turnover ratio % n.a. n.a. n.a.
Employee absence % n.a. 1.3 1.8
Board gender diversity % female n.a. 43 43
Source: Arctic Securities Research, Company data

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Profit & loss statement
Profit and loss (USDm) Dec-19 Dec-20 Dec-21 Dec-22e Dec-23e Dec-24e
Revenue 8.76 30.09 91.27 146.00 167.00 197.01
Cost of sales (0.97) (3.77) (7.03) (7.07) (8.35) (9.85)
SG&A (14.78) (25.60) (65.17) (109.06) (118.99) (128.51)
Other (gain on sale etc.) - (18.30) (9.30) (18.19) (17.46) (19.16)
Operating expenses (15.75) (47.67) (81.50) (134.33) (144.80) (157.52)
EBITDA (6.99) (17.58) 9.77 11.68 22.20 39.48
Depreciation (2.67) (0.69) (1.36) (2.03) (2.47) (2.68)
Amortisation - (1.90) (8.85) (13.58) (13.36) (13.36)
EBIT (9.66) (20.16) (0.44) (3.94) 6.37 23.44
Interest expense - (0.33) (0.21) (0.42) (0.14) (0.15)
Interest income - 0.37 0.43 0.46 0.50 0.75
Net interest - 0.04 0.23 0.04 0.36 0.60
Other - (15.06) 1.73 (5.43) - -
Pre-tax profit (9.66) (35.18) 1.52 (9.32) 6.73 24.04
Income tax 2.13 0.66 1.84 0.37 (4.42) (8.23)
Net income (7.52) (34.52) 3.36 (8.95) 2.31 15.81
Attributable to
Equity holders of the parent (7.52) (34.52) 3.36 (8.95) 2.31 15.81

Per share data (USD) Dec-19 Dec-20 Dec-21 Dec-22e Dec-23e Dec-24e
Revenue per share 0.07 0.10 0.20 0.30 0.34 0.40
Adj. EPS (0.07) (0.12) 0.07 (0.01) 0.03 0.06

Adjusted data (USDm) Dec-19 Dec-20 Dec-21 Dec-22e Dec-23e Dec-24e

Adj. revenue 8.76 30.09 91.27 146.00 167.00 197.01
Adj. EBITDA (6.99) 0.72 19.07 29.87 39.66 58.65
Adj. EBIT (6.99) 0.11 17.42 27.66 37.55 56.35
Adj. net profit (9.68) (33.95) 34.93 (5.11) 16.14 29.53

Margins Dec-19 Dec-20 Dec-21 Dec-22e Dec-23e Dec-24e

Gross margin 88.9% 87.5% 92.3% 95.2% 95.0% 95.0%
EBITDA margin (79.9%) (58.4%) 10.7% 8.0% 13.3% 20.0%
Adj. EBITDA margin (79.9%) 2.4% 20.9% 20.5% 23.7% 29.8%
EBIT margin (110.3%) (67.0%) (0.5%) (2.7%) 3.8% 11.9%
Adj. EBIT margin (79.9%) 0.4% 19.1% 18.9% 22.5% 28.6%
Net profit margin (85.9%) (114.7%) 3.7% (6.1%) 1.4% 8.0%
Adj. net profit margin (110.5%) (112.8%) 38.3% (3.5%) 9.7% 15.0%

Year-over-year growth Dec-19 Dec-20 Dec-21 Dec-22e Dec-23e Dec-24e

Revenue growth 243.6% 203.3% 60.0% 14.4% 18.0%
EBITDA growth 151.3% 19.6% 90.1% 77.9%
EBIT growth 108.7% (97.8%) 794.5% 268.1%
Net profit growth 358.8% (366.6%) 585.4%

Source: Arctic Securities Research and Company

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Balance sheet
Balance sheet (USDm) Dec-19 Dec-20 Dec-21 Dec-22e Dec-23e Dec-24e
Property, plant and equipment 0.31 0.41 0.63 1.01 1.43 1.89
Right-of-use assets - 3.17 2.93 4.25 4.25 4.25
Intangible assets 30.36 112.13 667.71 633.46 656.28 643.22
Other non-current financial assets - (0.00) - - - -
Total non-current assets 30.67 115.70 671.28 638.72 661.96 649.37

Receivables 1.47 3.16 11.76 18.24 18.24 18.24

Other current financial assets - - - (0.00) - -
Other current assets 0.56 3.25 5.30 4.08 4.08 4.08
Cash and cash equivalents 40.85 256.12 107.77 103.04 129.57 208.99
Total current assets 42.88 262.52 124.83 125.36 151.89 231.31

Total assets 73.56 378.23 796.11 764.09 813.85 880.68

Equity attributable to the parent 63.36 286.05 581.52 587.58 607.34 642.32
Total equity 63.36 286.05 581.52 587.58 607.34 642.32

Non-current lease liabilities - 2.31 2.04 2.90 2.90 2.90

Other non-current financial liabilities - 5.84 46.29 43.95 43.95 43.95
Other non-current liabilities - 15.45 40.57 9.62 9.62 9.62
Total non-current liabilities - 23.60 88.90 56.47 56.47 56.47

Current lease liabilities - 0.96 1.01 1.55 1.55 1.55

Payables 7.66 32.50 66.13 83.04 113.04 144.90
Other current financial liabilities - - 0.00 0.04 0.04 0.04
Other current liabilities 2.54 35.11 58.55 35.41 35.41 35.41
Total current liabilities 10.20 68.58 125.70 120.04 150.04 181.90

Total equity and liabilities 73.56 378.23 796.11 764.09 813.85 880.68

Balance data (USDm) Dec-19 Dec-20 Dec-21 Dec-22e Dec-23e Dec-24e

Net interest bearing debt (40.85) (256.12) (107.77) (103.04) (129.57) (208.99)
Net interest bearing debt and lease liabilities (40.85) (252.84) (104.71) (98.59) (125.12) (204.54)
Working capital (8.17) (61.21) (107.62) (96.13) (126.13) (157.98)
Capital employed 22.51 29.93 473.75 484.53 477.77 433.33

Source: Arctic Securities Research and Company

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Cash flow
Cash flow statement (USDm) Dec-19 Dec-20 Dec-21 Dec-22e Dec-23e Dec-24e
Net profit (7.57) (34.52) 3.36 (8.95) 2.31 15.81
D,A&I 2.67 2.63 10.43 15.58 15.83 16.04
Change in working capital 4.31 46.12 1.34 19.76 30.00 31.85
P&L tax (2.13) (0.66) (1.84) (0.37) 4.42 8.23
Paid tax - - (0.06) (1.02) (4.42) (8.23)
Other - 3.82 10.41 16.56 17.46 19.16
Cash flow from operations (2.72) 17.39 23.64 41.55 65.60 82.87

Capital expenditures (0.25) (0.21) (0.78) (1.91) (1.76) (1.94)

Net acquisitions/divestments (9.83) (34.23) (366.97) (39.02) (35.90) -
Cash flow from investing activities (10.08) (34.44) (367.74) (40.92) (37.66) (1.94)

Equity issue 25.96 231.69 196.58 (0.05) - -

Other - (0.62) (1.08) (1.33) (1.40) (1.52)
Cash flow from financing activities 25.96 231.08 195.50 (1.38) (1.40) (1.52)
Other (e.g. FX) (0.48) 1.20 0.28 (3.97) - -
Net cash flow 13.16 214.03 (148.60) (0.75) 26.53 79.42

Cash flow data (USDm) Dec-19 Dec-20 Dec-21 Dec-22e Dec-23e Dec-24e
Free cash flow to firm (13.28) (16.46) (344.90) (4.67) 26.53 79.42
Free cash flow to equity (13.28) (16.46) (344.90) (4.67) 26.53 79.42

Source: Arctic Securities Research and Company

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Key ratios & Valuation
Market data Dec-19 Dec-20 Dec-21 Dec-22e Dec-23e Dec-24e
Avg. shares outstanding (m) 129.4 287.7 466.3 489.7 492.8 492.8
Avg. diluted shares outstanding (m) 137.6 301.9 488.8 523.4 538.8 545.8
Enterprise value 787.4 575.4 723.5 729.6 703.1 623.7

Credit metrics Dec-19 Dec-20 Dec-21 Dec-22e Dec-23e Dec-24e

NIBD / EBITDA (x) 5.84 14.57 (11.04) (8.83) (5.84) (5.29)
EBITDA / Interest (x) (53.4) 47.4 27.9 158.0 260.0
EBITDA / (Interest+Amortisation) (x) (7.90) 1.08 0.83 1.64 2.92
Equity / total assets 86.1% 75.6% 73.0% 76.9% 74.6% 72.9%

Profitability Dec-19 Dec-20 Dec-21 Dec-22e Dec-23e Dec-24e

FCFF yield (1.6%) (2.0%) (41.6%) (0.6%) 3.2% 9.6%
FCFE yield (1.6%) (2.0%) (41.6%) (0.6%) 3.2% 9.6%
ROE (19.8%) 0.8% (1.5%) 0.4% 2.5%
ROACE (76.9%) (0.2%) (0.8%) 1.3% 5.1%

Valuation Dec-19 Dec-20 Dec-21 Dec-22e Dec-23e Dec-24e

EV / Sales (x) 89.91 19.12 7.93 5.00 4.21 3.17
EV / adj. Sales (x) 89.91 19.12 7.93 5.00 4.21 3.17
EV / EBITDA (x) na na 74.09 62.49 31.67 15.80
EV / adj. EBITDA (x) na 795.8 37.9 24.4 17.7 10.6
EV / EBIT (x) na na na na 110.4 26.6
EV / adj. EBIT (x) na 5,328 42 26 19 11
P / E (x) na na 233.5 na 359.0 52.4
P / adj. E (x) na na 22.44 na 51.31 28.04
P / B (x) 3.43 2.62 1.41 1.41 1.36 1.29
Earnings yield (3.5%) (7.1%) 0.4% (1.1%) 0.3% 1.9%

Source: Arctic Securities Research, Company and Bloomberg

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Disclaimer

Arctic Securities AS (“Arctic”)

Arctic’s business in general, as well as the reports it prepares, is subject to supervision by the Norwegian Financial Supervisory Authority (No:
“Finanstilsynet”). Arctic aims always to operate in compliance with appropriate business principles, including Business Standard No. 3 of 6
September 2005 of the Norwegian Securities Dealers Association (No: “Verdipapirforetakenes Forbund”), regarding handling of conflicts of interests
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Authors’ independence/Analyst certification

This report has been produced by Arctic in respect of the company(ies) mentioned in the table below (the “Company(ies)”). The authors of this
report hereby confirm that notwithstanding the existence of any potential conflicts of interests referred to herein, the views in this report
accurately reflect our personal views about the Company(ies) and any securities analyzed herein. The authors of this report confirm that we have
not been, nor are or will be, receiving direct or indirect compensation in exchange for expressing any of the views or the specific recommendations
contained in the report, and confirm that none of our compensation was, is or will be, directly or indirectly, related to the specific
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Company(ies)
Kahoot AS

Basis and methods for assessment

Recommendations in respect of shares, bonds and related instruments are based on estimates using various standard valuation methods. These
methods include analysis of earnings multiples, discounted cash flow calculations, net asset value assessments, credit figures, peer valuation,
recovery valuation and qualitative assessment of credit profiles.

Recommendation structure equity

Arctic’s research department operates with 3 recommendation categories based on the expected relative return within 6 to 12 months:

Buy The return is estimated to be considerably in excess of the applicable sector/market index return.
Hold The return is estimated to be more or less in line with the applicable sector/market index return.
Sell The return is estimated to be considerably less than the applicable sector/market index return.

Recommendation structure bonds

Arctic’s research department uses 3 recommendation categories for bonds based on the expected relative return within 6 to 12 months:

Outperform The bond is currently trading at a wider credit spread than the applicable credit index for the relevant rating category.
Market perform The bond is currently trading at a credit spread in line with the applicable credit index for the relevant rating category.
Underperform The bond is currently trading at a tighter credit spread than the applicable credit index for the relevant rating category.

Please find a list of all research linked to financial instruments or issuers that Arctic has prepared during the past 12 months on www.arctic.com.

Risk of investment - general

There is risk attached to all investments in financial instruments. The opinions contained herein are based on numerous assumptions as described in
this document. Different assumptions could result in materially different results. Furthermore, the assumptions may not be realized. This document
does not provide individually tailored investment advice and all recipients of this document are advised to seek the advice of a financial advisor
before deciding on an investment or an investment strategy.

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This report has been prepared by Arctic’s research department, which is separated from the corporate finance department in order to control the
flow of information. All employees of Arctic are subject to duty of confidentiality towards clients and with respect to handling inside information.

Investment services provided to the Company(ies)

Arctic may have received assignments from the Company(ies), that are not publicly known and that due to professional secrecy we are currently
obliged not to reveal. The table below shows which investment banking services Arctic has provided to the Company(ies) and whether Arctic has
received compensation for investment banking services from the Company(ies) in the previous twelve months.
General
Placement of No investment
investment Market
Company(ies) shares or bonds IPO 3) Compensation 5) banking services No compensation 7)
banking services maker 4)
2) 6)
1)
Kahoot AS - X - - X - -

1) Arctic has provided general investment banking services to the Company in the previous twelve months.
2) Arctic has acted as financial advisor in connection with a placement of shares or bonds of the Company in the previous twelve months.

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3) Arctic has acted as financial advisor in connection with an IPO of the Company in the previous twelve months.
4) Arctic has acted as market maker for the Company in the previous twelve months.
5) Arctic has received compensation for investment banking services from the Company in the previous twelve months.
6) Arctic has not provided any investment banking services to the Company in the previous twelve months.
7) Arctic has not received compensation for investment banking services from the Company in the previous twelve months.

Ownership of shares or bonds issued by the Company(ies)

Arctic may have holdings in the Company(ies) as a result of proprietary trading, market making and/or underlying shares as a result of derivatives
trading. Arctic may buy or sell such shares both for its own account as a principal or as an agent. The table below shows the positions of the
analyst(s) who is/are authors of this report and whether Arctic alone, or together with its affiliates or subsidiaries hold a net short or long position
exceeding 0.5 % of the total issued share capital of the Company(ies).

Company(ies) Analyst shares 1) Analyst bonds 2) Net short position 3) Net long position 4)

Kahoot AS - - - -

1) Number of shares owned by the analysts who are authors of the parts of the report concerning the mentioned Company.
2) Number of bonds owned by the analysts who are authors of the parts of the report concerning the mentioned Company.
3) The size of the position if Arctic alone, or together with its affiliates or subsidiaries hold a net short position exceeding 0.5 % of the
total issued share capital of the mentioned Company.
4) The size of the position if Arctic alone, or together with its affiliates or subsidiaries hold a net long position exceeding 0.5 % of the total
issued share capital of the mentioned Company.

The relationship to other reports prepared by Arctic regarding the Company(ies)

The graph(s) below show the historical share price and how our recommendation(s) for the financial instruments issued by the Company(ies) have
changed over the last 12 months.

Kahoot AS
The part of this report concerning Kahoot AS has been prepared by Kristian Spetalen (Equity Analyst).

Equity recommendations:

Price Close
44.0 Recommendations & Target Price
80.0

50.0

45.0

40.0

45.0

20.0

39.0

34.0

29.0

24.0

19.0

14.0 BUY HOLD SELL NOT RATED

Jan-22 Mar-22 May-22 Jul-22 Sep-22 Nov-22

Source: Bloomberg, Arctic Securities Research

Date Recommendation Target (NOK) Price (NOK)

2022-11-03 HOLD 20.0 19.0
2022-08-15 BUY 45.0 26.7
2022-07-21 BUY 40.0 20.9
2022-06-02 BUY 45.0 25.6
2022-05-09 BUY 45.0 21.5
2022-02-22 BUY 50.0 28.0

Source: Bloomberg, Arctic Securities Research

Planned updates:
There is no fixed schedule for updating. However, Arctic aims to update the recommendation on a company when:

• The price target is achieved/large change in credit spread,

• New accounting figures are released, or
• Any material news on a company or its industry is released.

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an offer to buy securities in any jurisdiction of Canada. Any offer or sale of the securities described herein in Canada will be made in accordance
with applicable Canadian law and under an exemption from the requirements to file a prospectus with the relevant Canadian securities regulators
and only by a dealer registered under applicable securities laws or, alternatively, pursuant to an exemption from the dealer registration
requirement in the relevant province or territory of Canada in which such offer or sale is made.

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Contact Information
Norway
Mailing Arctic Securities AS
Address: P.O. Box 1833 Vika
NO-0123 Oslo
Norway
Visiting Haakon VII’s gt. 5
Address: 0161 Oslo
Norway
Phone: +47 21 01 31 00
E-mail: mail.no@arctic.com
Website: www.arctic.com/secno
Sweden USA Brazil Germany
Arctic Securities AS Arctic Securities LLC Arctic Brasil Escritório de Arctic Securities AS
Sweden Branch 1 Rockefeller Plaza representação Ltda Germany Branch
Regeringsgatan 38 Suite 1706, New York Rua Lauro Müller, 116 - Sala Deichstraße 48/50
NY 10022 4404
111 56 Stockholm 20459 Hamburg
Torre do Rio Sul / Botafogo
Sweden
22290-160 Rio de Janeiro
Arctic Securities AS Arctic Securities LLC Arctic Brasil Escritório de Arctic Securities AS
Sweden Branch 1 Rockefeller Plaza representação Ltda Germany Branch
Regeringsgatan 38 Suite 1706, New York Rua Lauro Müller, 116 - Sala Deichstraße 48/50
NY 10022 4404
111 56 Stockholm 20459 Hamburg
Torre do Rio Sul / Botafogo
Sweden
22290-160 Rio de Janeiro
+46 844 68 6100 +1 (212) 597 5555 +5521 2025 7400 +49 40 29999020
mail.se@arctic.com mail.us@arctic.com mail@arctic.com.br mail.de@arctic.com
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