• Initiates strategic review to evaluate funding and ownership
• No timeline; FY'23 guidance unchanged
• Wording leaves many scenarios open (M&A, capital raise, etc.)

What has happened?

Today Relesys' BoD has decided to initiate a strategic review, seeking to evaluate funding options and ownership structures to allow Relesys to deliver on its expansion plans and to accelerate growth. Given the company's international expansion and enhanced product offering in the last couple of years, the Chairman of the Board states that "it is natural for us to analyse the next steps in the company's strategic development and as such we have initiated a strategic review of Relesys's options to accelerate growth".

No timeline for strategic review; FY'23 guidance unchanged

It is worth highlighting that no definitive time schedule has been set to complete the review, and the company keeps the FY'23 guidance unchanged (ARR of DKK 59m-64m vs. ABGSCe DKK 61m and revenues of DKK 54m-62m vs. ABGSCe at DKK 56m).

Wording leaves many scenarios open

The wording in the statement, "the strategic review shall evaluate options and ownership structures to allow the company to execute its expansion plans and accelerate growth", leaves many scenarios open, i.e. it is very difficult to determine whether we should expect M&A, a new capital raise, or something third. Regarding the former, we note a high M&A interest in the workforce management space lately. In the event of a potential new capital raise, today's announcement does not appear very surprising to us. In our recent research on Relesys, we have highlighted the risk that Relesys may choose to raise new capital given the company's high cash burn and growth ambitions. To illustrate, Relesys had a cash position of DKK 25m at H1'23, and we expect this figure to drop to DKK 12m by YE'23e (and to DKK 8m by YE'24e). In such a scenario, we argue that the medium-to-long-term benefits of a potential equity issue will compensate for the short-term dilution