That name is APR Technologies, ticker APRTEC, and this is the deep dive I promised in Execution Memo No. 014.

A few words on what this piece is and isn’t. Coverage of this company is close to nonexistent, so I have tried to write the piece I wish had existed when I started digging: thorough enough to actually understand the technology, the people and the economics, but not a 200 page initiation report. Everything performance related that comes from the company is labeled as such; there is, as you will see, an important distinction between what has been claimed and what has been proven. And the standard warning applies with unusual force here: this is a venture stage company on Spotlight, the position is risky and extremely illiquid, I own shares, and nothing here is financial advice.

With that, let’s follow the heat.

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Part 1: The problem

AI compute is thermally gated

Every generation of AI silicon runs hotter than the last. A GB200 package draws up to 2 700W with heat flux above 50 W/cm² on the cold plates. The Rubin generation pushes toward 2 300W per package in its Max configurations, with variants reportedly reaching 3 700W. Racks have gone from tens of kilowatts to 120kW+, with 600kW rack architectures already announced for 2027.

Air cooling died somewhere around Hopper. The industry’s answer is direct to chip liquid cooling: water glycol pumped through copper cold plates pressed onto the chips. It works, it’s deployed at massive scale, and it is being pushed visibly toward its limits.

The stack, and why every layer is a tax

To understand where the opportunity sits, you have to follow the heat from the transistor to the coolant, because heat doesn’t jump into the liquid. It crawls through layers, and every layer resists.

In a classic packaged chip, a desktop CPU say, the journey is: silicon die, then a thermal interface material filling microscopic gaps, then a metal lid, then a second interface layer, then the cold plate’s base, and only then liquid. Nvidia has already stripped this as far as the current architecture allows; H100, B200 and GB200 modules are bare die packages where the cold plate presses onto the silicon through a single interface layer. Even that last layer is a nuisance: it’s a consumable, replaced every time a cold plate comes off, and one of the two dominant resistances in the chain.

The other dominant resistance is the one most people never hear about. Even when heat reaches the liquid, the liquid touching the metal barely moves. Friction pins a thin film of near stationary fluid against the wall, the boundary layer, and heat must conduct through this sluggish film before flowing coolant can carry it away. Conduction through liquid is slow. In a modern direct to chip system, the interface material and the boundary layer together make up the bulk of total thermal resistance.

So all of chip cooling reduces to two questions: how do you get rid of the layers, and how do you kill the boundary layer.

Watch what the industry does, not what it says

Single phase answers both with force. The recipe never changes: push more liquid through finer channels, accept the rising pressure, let the pumps pay in energy and wear. Vera Rubin is this recipe at its logical extreme; trays go fully fanless and the racks run nearly double the coolant flow at the same CDU pressure. For Rubin Ultra, supply chain reporting points to microchannel cold plates where coolant runs directly across the die surface. Microsoft has demonstrated channels etched into the silicon itself, cutting peak temperature rise by 65 percent versus the best cold plates.

Two phase answers the boundary layer question with boiling, which moves heat far more effectively than conduction through a stagnant film. I have written about two phase before and I still believe in it long term. But it leaves the interface layers intact, chip makers haven’t blessed it, questions about maintenance and reliability at hyperscale remain open, and managing boiling vapor inside a chip package is a problem nobody has solved. It is, in my view, further away than the demos suggest.

Put the datapoints in a row and the direction is unambiguous: coolant is migrating toward the silicon. Room, to rack, to plate on the lid, to bare die, and next to channels at and inside the chip. Every step strips one more layer of the tax.

The endpoint has a specification

Follow the migration to its endpoint and write down what it demands:

A fluid that can touch live silicon without destroying it. Water is disqualified on chemistry.

A loop at near zero pressure, because a bonded chip stack cannot take mechanical stress.

A pump that works at chip scale. Mechanical pumps do not miniaturize; bearings, seals and impellers don’t shrink.

Control fine enough to chase hotspots that move around the die in milliseconds, which passive channels, sized once at manufacture for the worst case, fundamentally cannot do.

Neither of today’s camps is built for this. The endpoint belongs to a third kind of solution, and almost nobody is building it.

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Part 2: The company

Fifteen years of preparation

APR Technologies was founded in 2011 in Enköping by microelectronics researchers, Are Björneklett, Peter Nilsson and Robert Thorslund, with backgrounds in industrial research including 3D chip packaging; the founders were inventors or co-inventors of, among other things, XiVia and Bluetooth. Their founding insight, stated in 2011, was that cooling would become an ever larger problem and that new thermal solutions would be needed.

For its first decade the company built thermal control hardware for the space industry. It won development projects from the Swedish space agency, sold temperature regulation systems to ground stations, won (and then walked away from, over price pressure) a component procurement for the NASA/ESA Orion crew vehicle, delivered parts to an instrument on the ISS, and built long-running relationships with ESA and Airbus, who formally approved APR’s pilot production line, manufacturing processes and quality system in 2022. In 2024 the company was selected into NATO’s DIANA accelerator and won a 19 MSEK grant from the Swedish Energy Agency to demonstrate high volume production. It ISO9001 certified its operations based on the quality system from the space division.

Why does this heritage matter for an AI cooling thesis? Because space is the one customer base where a failed cooling component ends the mission. Fifteen years of surviving NASA, ESA and Airbus qualification is the strongest reliability evidence a company this size can hold, and reliability, as we’ll see, is the heart of the product.

One more detail from the company’s own history that I find telling: in 2020 APR built a lab prototype for super efficient cooling of Nvidia chips, judged the market not quite ready, and predicted the need would grow. That was five years before the market agreed.

The company listed on Spotlight Stock Market on January 13, 2026 at a valuation of roughly 330 MSEK, alongside a warrant series (TO 1) that was exercised to 99,85 percent in June, adding roughly 55 MSEK before costs.

Rheion: the technology

APR’s core technology, branded Rheion this spring, answers both of the questions Part 1 reduced cooling to.

The pump is electrohydrodynamic (EHD). Electric fields push a dielectric fluid through microchannels, with no mechanical pump anywhere and essentially no moving parts in the loop. The physics is old and solid; charges injected into a weakly conducting dielectric liquid get dragged by the Coulomb force between electrodes, transferring momentum to the fluid. NASA Goddard has patented pumps in the same family for space thermal control, and EHD hardware has flown on the ISS. What’s remarkable is not that it works; it’s that essentially nobody else has commercialized it. Reviews of the field classify EHD pumping as early stage as a category. APR has spent fifteen years in a discipline that barely has other occupants.

Because the fluid is dielectric, it can sit in direct contact with live silicon. The interface layers can simply go; the layer problem is solved by removing the layers. And because the flow is generated by electrode structures inside the channels themselves, the boundary layer is disrupted actively by electric body forces rather than by brute pumping power. The company claims a 5 to 10x improvement in heat transfer coefficient, practical cooling capacity of 100 to 300 W/cm² versus 20 to 50 for conventional approaches, chip heat loads handled up to the kW range including hotspots, all at 0,1 to 1W of pump power. Multiple independently controlled units can be tiled across a chip, steering fresh coolant to hotspots in real time as they appear. The system runs sealed at near zero pressure, avoiding both the pressure stress of pumped water loops and the vapor management complexity of two phase.

The whole architecture, the pump, the microchannels and the fluid, is patented as one integrated system: 74 granted patents plus 31 applications across 16 families, most of the portfolio’s costs already taken.

Two deeper points worth internalizing.

First, the pump and the fluid are not separable choices. An EHD pump physically cannot pump water; water is far too conductive. And water cannot touch a die. So the thermally handicapped fluid class, dielectrics conduct heat far worse than water, is the only class that works at the endpoint of the coolant migration, and APR’s entire architecture, micro fins multiplying surface area, micrometer proximity to the die, active boundary layer disruption, is a fifteen year old engineered answer to exactly that handicap. They aren’t fighting the fluid’s weakness; the design exists to cancel it.

Second, EHD gets better as it shrinks, which is the opposite of mechanical pumping. Electric field strength is voltage divided by electrode gap, so smaller channels mean stronger pumping at constant voltage, and the electrodes are patterned lithographically, meaning the technology rides the semiconductor industry’s own manufacturing curve. The published record suggests today’s claims sit at perhaps 10 to 20 percent of what the physics permits; academic microchannel work has demonstrated 790 W/cm² with water in 50 µm silicon channels as far back as 1981, and DARPA programs have pushed embedded cooling toward 1 kW/cm². The scaling laws cooperate, which is historically the difference between a product and a paradigm.

The honesty section: claims versus proof

Everything performance related above is a company claim. There is no published thermal test vehicle result, no third party benchmark, nothing comparable to Accelsius’s public 4 500W socket demonstration or the Corintis and Microsoft in chip data. The published academic EHD record demonstrates flow control recovery at 77,5 W/cm² and roughly 2 to 5x heat transfer enhancement, meaning APR’s claims sit above the public state of the art. There are two readings: either fifteen years of proprietary work in a near empty field has put them ahead of a literature that barely exists (ESA’s own workshop material describes the EHD technology as mastered by APR, with deterministic, fast flow regulation), or the claims are marketing forward extrapolations awaiting proof.

What exists instead of published benchmarks is a customer, and this is the spine of the whole thesis.

The anchor customer

In spring 2025 a leading global tech company signed a key agreement with APR: an initial product order of roughly 1 MSEK, plus roughly 14 MSEK paid to fund a year of development, designing APR’s pumps into the customer’s own end products and building APR’s solutions into their complete system toward their customers. In December 2025 the first custom designed products were delivered. In January 2026 a follow on pre-series order of roughly 1,5 MSEK arrived, covering on the order of a hundred pumps built on volume tooling; the company states the order confirms the technology meets its calculated functionality. Live testing at the customer has been running for over six months with, per the company, positive results, and per the Q2 operational update the pre-series units are now delivered and under test.

The disclosed follow on if tests convert: an inquiry for large scale production of 150 000 to 500 000 units per year, which the company states would mean revenues of hundreds of MSEK per year, from one customer. Behind it sits a separately disclosed inquiry from larger data center manufacturers for roughly 100 000 pump units per year with revenue potential of 50 to 100 MSEK annually. Long term, the company estimates volumes of 500 000 to 1 000 000 units per year within electronics, notes licensing negotiations with international companies, and states that over 50 large American tech companies fit its product market.

Who is the customer? Undisclosed. The memorandum calls it a leading global electronics company; the spin off of the China linked battery subsidiary Chillwind was done partly to meet customer requirements on the ownership picture, which tells you the customer is Western and security conscious. On X there has been light speculation about various candidates; none of it is confirmed and I won’t add to it. What matters analytically is the structure: customer funded development is the strongest validation signal available at this stage. A global company does not spend 14 MSEK of its own money designing a Swedish microcap’s component into its products for fun. It is also, for now, the only validation, and everything between “meets calculated functionality” and “runs in volume for years” is precisely what the ongoing tests exist to establish.

The use cases beyond the data center

The company organized itself this spring into three business areas, and the breadth here matters for the downside case.

Chip Cooling is the spearhead: data centers, AI infrastructure and advanced electronics, where heat directly limits performance, energy use and system design. This is where the anchor customer sits and where the volume scenarios live.

Space & Defence is the heritage business: recurring revenue from the space and nuclear industries (a new order from an established nuclear industry customer was announced in May), ESA and Airbus as repeat customers, NATO DIANA funding for test and verification activities, and, most interestingly, an evaluation agreement with Zoppas Industries Heating Element Technologies (ZIHET), a global Italian thermal group. The intended structure: APR contributes core technology, know how and technical support; Zoppas contributes industrial capacity, established sales channels and takes the system integrator role toward customers. Per the Q2 update the evaluation is in its final stage with an agreement expected during Q3. This is the licensing model in miniature, and I’ll come back to why it matters for the economics.

Energy covers battery related applications: energy storage, mobility, drones. The company exhibited at The Battery Show Europe in Stuttgart with a battery cell partner and reports early dialogues with drone companies in Eastern Europe. The battery angle exploits something unique in the architecture: Rheion is bidirectional. It’s not just a cooler; it’s a thermal controller that can heat as well as cool, hold a setpoint, and respond in milliseconds. For batteries that means both high load cooling and cold climate conditioning (lithium plating avoidance, winter readiness), which no cold plate and no boiling system can offer.

And then there is the use case the market hasn’t touched at all: photonics. Co-packaged optics is coming to AI hardware, and thermal is its central engineering obstacle. Laser wavelength drifts roughly 0,1 nm per degree, photonic components need control within about ±1°C while sitting next to 500W+ ASICs, and the industry’s current solution is essentially to give up: exile the lasers to external modules (the ELSFP standard) and stabilize them with thermoelectric coolers, which burn one to three watts for every watt of heat they move. Nvidia’s chosen modulator technology for CPO, micro rings, is the thermally fragile one, requiring continuous active thermal tuning inside the package. A sub 1W, bidirectional, millisecond setpoint controller at component scale is aimed at precisely the problem the industry is currently routing around rather than solving. APR has zero disclosed photonics customers; this is architectural fit, not pipeline. But it’s a real, documented unmet need, and I count it as a free option on the position.

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Part 3: The people

For a company this size with this little coverage, the diligence has to be on the people as much as the product. The good news is that the people are unusually legible, because the board was visibly rebuilt in December 2025, right before listing, around one specific problem: industrialization.

The CEO: Lars Almhem

Almhem, born 1961, took over as CEO in December 2025. His background: SAAB Automobil and Volvo Cars, 25 years running his own business in quality, efficiency and supply chain globally for Ericsson, NOTE, IKEA and Volvo, production chief at Plasman, and most recently CEO of listed SHT Smart High Tech from mid 2022 to February 2025.

The SHT chapter deserves scrutiny because it’s a dress rehearsal for this job, and I’ve looked at it closely. SHT sells graphene enhanced thermal interface materials, one layer of the thermal stack away from APR. Under Almhem, SHT landed development orders from AMD (including for future AI processors), a delivery approval from another large American electronics company, global consumer distribution through Thermal Grizzly, and the partner strategy that matured into the Henkel relationship, built on the insight that giant customers demand size and stability from suppliers, so a microcap must scale through partners. That is item for item the playbook now running at APR: customer funded development from a global giant, partner led scaling via ZIHET.

The honest counterweight: revenue never converted during his SHT tenure. Full year 2023 net sales were under 3 MSEK against a 38 MSEK operating loss, and the actual breakthroughs, first deliveries toward a world leading AI hardware company, advance payments through the Henkel channel, came after his departure, seeded during his time but harvested by his successor. His departure itself was an amicable, planned succession with warm words from the founder. So the fair summary: proven at building blue chip validation and partner rails at a thermal microcap; unproven at converting them to volume. For the phase APR is in right now, that is arguably exactly the right profile. The phase after is where the rest of the board comes in.

The board

Peter Jansson (joined December 2025) is the quiet key recruit. Co-owner of Lintron Elektronik, which became the foundation of NOTE AB, one of Sweden’s larger contract electronics manufacturers; COO and senior adviser at NOTE until 2009; integration lead for nine acquired units and operationally responsible for three factories in Eastern Europe. He has actually done the thing APR must now do: run volume electronics production at industrial quality and cost. Notably, he and Almhem sit together on another board (HEAD Engineering), meaning the CEO recruited a factory veteran he already knew and trusted.

Johan Claesson (joined August 2025) is the balance sheet, and worth a proper look because he’s more than a financier. Born 1951, Handelshögskolan educated, he owns Claesson & Anderzén with his brother: fourth generation family capital founded 1912 in Kalmar, today a group with property assets valued in the 12 miljarder SEK class, operations across southern Sweden, Germany and Estonia, roughly 46 000 hectares of Ukrainian farmland via Grain Alliance, and a history chairing listed Catella. Swedish wealth rankings have placed him around 2,5 miljarder SEK personally, with the family sphere well above that. His investment style, per an old profile literally titled “He waits for the fall”: hold liquidity, wait for dislocation, buy big.

Through his vehicles Movenio Fastigheter and Bremia he put over 90 MSEK into APR during 2025 and controls roughly 30 percent. And here’s the detail I find most interesting, sitting in plain sight in the memorandum’s directorship tables: during 2025 Claesson took the chairman seat of newly formed entities including CA Datacenter Holding AB and a family of CA Batteribalans (battery energy storage) companies. The anchor investor’s own group is concurrently building data center and BESS ventures, two of APR’s three business areas. This is strategic capital with potential first customer channels attached, not a passive allocation. One more connection worth knowing: Movenio participated in SHT’s December 2024 raise, which is very likely where Claesson met Almhem before recruiting him.

Peter Nilsson and Robert Thorslund, two of the three founders, remain on the board (Nilsson as chairman, having stepped up from the CEO role he held since 2012). Together with co-founder Are Björneklett they hold roughly 35 percent. The technical memory of fifteen years lives here.

Mats Ekberg rounds out the board with small cap financial process experience; for completeness, his firm was paid to produce the listing memorandum and he chaired a dairy company through a 2024 bankruptcy. Process support rather than industrial competence.

Ownership and alignment

Insiders control over 60 percent: Claesson’s vehicles around 30 percent including Bremia, founders around 35 percent, all under lock up agreements limiting sales to 20 percent of holdings in year one. The CEO holds about 120 000 shares. Alignment reads well: the people who know the technology stayed, the people who know factories took the wheel, and the balance sheet has a named backstop with real skin in the game.

The gap, stated plainly

Nobody in the building has worked at a hyperscaler, a chipmaker, or a data center operator. The technical chip knowledge exists in the founders (3D packaging researchers) and the commercial adjacency in Almhem (selling TIM into the AMD ecosystem), but the domain where the value is supposed to be realized has no native representative. The company’s implicit answer is structural: the customer brings the domain knowledge, funds the development, and carries the product to market inside its own systems; ZIHET plays that role for space and defense. Component companies have always scaled this way, Bluetooth itself did, but it means APR’s understanding of its most important end market is mediated through counterparties. A data center or semiconductor name joining the board would be the single most bullish governance signal this company could send, and its absence is the first thing I would fix.

The SHT connection, and why the two aren’t competitors

Since Almhem connects the two companies, a word on SHT Smart High Tech, because the relationship is instructive. SHT sells a better version of the interface layer (graphene enhanced TIM); APR’s endgame abolishes the interface layer at the chip. On the surface that sounds like competition. In practice they occupy opposite ends of the same timeline. Every improvement in cold plates and boiling makes the TIM relatively more of the remaining bottleneck, so SHT’s product gains value throughout the transition, and especially if two phase converts; APR’s architecture wins at the terminal state where fluid meets silicon directly, which arrives socket by socket, years out, at the highest value packages first. Almhem has said publicly he sees the companies as complementary rather than competing, and structurally he’s right: they are opposite sides of the TIM elimination trade, separated by time. For a portfolio builder, the pair is closer to a hedge on architecture timing than a redundancy.

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Part 4: The economics

What the financials actually look like

Let’s be blunt about the starting point. Nine month 2025 net revenue was 12,5 MSEK against an operating loss of 6,7 MSEK; full year 2024 was 13,1 MSEK of revenue against a 10,4 MSEK loss. Of the nine month revenue, 7,1 MSEK was service sales to the tech infrastructure key customer, meaning most current revenue is one relationship’s development fees, with the rest coming from ESA project sales, a battery customer in Asia, the nuclear industry, and public grants. Headcount is around 17 to 20 people. This is a venture stage company with a ticker.

The balance sheet, however, was rebuilt for the task. Roughly 115 MSEK was raised across 2025, another 55 MSEK came in via the warrant exercise in June, and cash after the exercise sits in the neighborhood of 140 MSEK. The board’s stated view is that this funds current operations and planned expansion for at least twelve months. The 2026 industrialization program is roughly 40 MSEK of CAPEX, largely equipment for pilot production and controlled environment assembly, partly offset by the 19 MSEK state grant.

Unit economics: component pricing, not metal bending

Here’s where it gets interesting, because APR’s product has electronic component economics rather than cooling hardware economics.

Back out the average selling price from the company’s own disclosed scenarios: 100 000 units generating 50 to 100 MSEK implies roughly 500 to 1 000 SEK per unit, and the anchor customer scenario implies the same range. A Rheion unit is a sealed ceramic device with printed electrodes, microchannels and proprietary fluid; at volume on automated tooling, the bill of materials plausibly lands around 200 to 400 SEK. That’s gross margin potential in the 50 to 65 percent range in theory, and I’d underwrite 45 to 55 percent in practice, because a customer taking hundreds of thousands of units per year will extract volume pricing (the company’s own history contains a lesson here: APR walked away from the Orion space procurement in 2016 over excessive price pressure, which tells you management has margin discipline and tells you what negotiating with giants does to prices).

Why component pricing holds at all: the product is a sole source, spec’d in part that customers design their products around. The business model, in the company’s own words, ties each customer relatively hard to APR as the supplier of cooling for that customer’s product. Add 74 patents and the absence of any functional substitute, and you price on value, not on BOM. Compare commodity cold plates, bent copper in a brutal supply chain running 25 to 35 percent gross, and you see why the distinction is worth 20 margin points.

At a few hundred MSEK of revenue, with a 60 to 90 person organization, patent costs already largely taken, and depreciation on the modest capex base, that translates to EBITDA margins plausibly in the 20 to 30 percent range. Not software. But rare for hardware.

The factory, its ceiling, and the royalty escape hatch

The production plan: from artisanal short series today to roughly 10 000 units per year starting spring 2026 (about 1 000 units a month), scaling toward 100 000 units per month, one million per year, during 2028. Cleanroom process steps run at the Ångström laboratory in Uppsala; assembly, quality control and flows are being built with high automation in Enköping. The capital efficiency is striking: at the implied unit pricing, a fully utilized million unit line generates 500 MSEK to 1 miljard SEK of revenue against a build cost measured in low hundreds of MSEK, meaning the asset pays itself back in roughly a year of gross profit at full utilization.

But notice the ceiling: at their unit pricing, one million units caps manufactured revenue around a miljard SEK. Scaling beyond it means either a much bigger factory, and the company itself flags that a large volume order would likely require expanding production capacity beyond current plans, with capital needs beyond the warrants, or the more elegant path: licensing.

The licensing channel already exists in embryo. Chillwind, the divested battery business, pays running royalties on sales using APR’s technology. The ZIHET structure has the partner manufacturing and selling while APR contributes technology and collects on it. And management explicitly contemplates selling manufacturing licenses against a per unit royalty as a future scenario, alongside an aftermarket in service on installed systems. Every krona arriving through that channel comes in at something like software margins, and it is the channel the company must lean on anyway once its own walls top out. High margin hardware with a royalty escape hatch is a rare structure, and it exists here because the defensible asset is IP and fifteen years of process know how, not the factory.

The financial goal management has put on paper: 500 MSEK of revenue by 2030, with an ambition to have the growth plan fully financed.

The market, sized honestly

The headline numbers are enormous and mostly irrelevant. Data center liquid cooling passing 15 miljarder dollars by 2028; direct to chip alone growing toward 5,6 miljarder dollars by 2030 at roughly 20 percent annually. APR sells none of the racks, CDUs and plumbing that make up most of that.

The honest addressable slice is component level thermal control: chip level devices, precision temperature stages, pack level battery systems, the layer where solid state flow steering is the actual differentiator. I put that at 3 to 4 miljarder dollars by 2030 across data center, photonics, defense, space and batteries. Against that, the realistic base case is simply the company’s own disclosed pipeline: the anchor customer scenario (hundreds of MSEK), the data center manufacturer inquiry (50 to 100 MSEK), and growing space, defense and energy revenue. That lands somewhere around 300 to 800 MSEK by 2030, bracketing management’s own 500 MSEK target, and requiring roughly one percent of the addressable slice. One percent, anchored by a customer already paying, for the only commercialized option in a discipline the rest of the industry hasn’t entered.

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Part 5: Liquidity, Spotlight, and the cash question

This section exists because it will determine more of your practical experience owning this stock than anything in Part 2.

The venue. APRTEC trades on Spotlight Stock Market, an MTF, not a regulated exchange. Disclosure standards are lighter, institutional participation is minimal, there is no liquidity guarantor agreement, and research coverage is essentially zero. This is both the opportunity (nobody is looking) and the tax (nobody is looking).

The float. With insiders above 60 percent under lock ups, the effective free float is small. The stock moves violently on modest volume; it roughly doubled from the 13,50 SEK listing level within months, ran hard into early June, and swings of 10 percent plus on no news are routine. Position sizing and limit orders are not optional here. If you cannot tolerate a 50 percent drawdown on sentiment alone, this is not the name.

The cash math. Roughly 140 MSEK of cash, a burn that will rise with the industrialization program (40 MSEK CAPEX plus growing opex), and a stated runway of at least twelve months. Read that plainly: a further raise in 2027, possibly late 2026, is close to certain, and here is the paradox worth internalizing in advance: good news accelerates it. A volume order from the anchor customer would require production capacity well beyond the current program, and the company says openly that such a scenario could require additional capital, with loans and other financing examined first but further issues not excluded. So model dilution into your expected return now, and decide in advance whether you’d participate. The mitigating factor is the anchor owner: raising is a different exercise when a multi miljard family sphere with a stated preference for dry powder sits at 30 percent and has already followed on repeatedly. The dilution risk is real; the financing risk, the risk that money simply isn’t available, is much smaller than for the average Spotlight microcap.

Part 6: Valuation, and the M&A floor

I’m not going to pretend a DCF on a pre volume company means much. The more honest frame is the one the industry itself has been writing in transaction prices for two years, because the liquid cooling sector has been consolidating at a furious pace, and it gives us marks at every maturity stage.

At the bottom of the ladder: Flex acquired JetCool in November 2024 for roughly 53 miljoner dollars total. JetCool was a venture stage company with clever chip level cooling technology (microconvective jets), modest revenue, and a team. In the middle: Schneider Electric paid 850 miljoner dollars for 75 percent of Motivair, implying roughly 1,1 miljard for a 150 person company with real CDU and cold plate revenue. At the top: Ecolab agreed this spring to buy CoolIT for 4,75 miljarder dollars at 29 times forward EBITDA, explicitly to align with Nvidia’s cooling roadmap. Vertiv took CoolTera along the way, and Boyd has been reported as a sale candidate. In under two years the strategics have swept the shelf; what remains independent is a handful of venture darlings, the two phase players, and APR.

Now place APR on that ladder. Today, at roughly 27,6 miljoner shares and recent prices, the market cap sits around 700 to 800 MSEK, roughly 65 to 80 miljoner dollars depending on the day. That is about one JetCool above the JetCool price, for a company with a deeper patent estate (74 granted versus JetCool’s much smaller portfolio), its own proprietary fluid, fifteen years of flight heritage, NATO selection, and a paying global customer in live validation, none of which JetCool had. I think of the JetCool mark as establishing something close to a floor logic: this is roughly what a strategic pays for a differentiated cooling technology team and IP estate before commercial proof. At worst, the bear case where the anchor customer walks, you own a competent team, 74 patents, a proprietary fluid and fifteen years of progress in a sector where that exact bundle has a demonstrated clearing price not far below the current market cap, plus a real, revenue generating space and defense business underneath it. The floor isn’t zero, and in a consolidating sector it isn’t even particularly far down.

The upside frame is the other end of the ladder. If the volume order lands and APR becomes a company shipping hundreds of thousands of units into a global customer’s products, the comp set jumps from JetCool to the Motivair and CoolIT axis, where strategics have paid roughly 4 to 8 times revenue and up to 29 times EBITDA for proven, roadmap aligned cooling businesses. On the base case revenue range that supports a valuation of 1,5 to 4 miljarder SEK; in the bull case where licensing carries volume past the factory ceiling, meaningfully more. That is the honest shape of the asymmetry: roughly 1 to 2x of downside protection from the tuck in floor against 4 to 10x in the scenarios where execution matches the disclosed pipeline. And critically, the rerating mechanism doesn’t require years of compounding; the CoolIT arc, bought by KKR pre volume, sold three years later for multiples of entry, shows that in this sector a validation event moves a company from one rung of the ladder to another in a single step. If things start rolling, I believe this stock could rerate by an order of magnitude in a fairly short time frame, because that is quite literally what the industry currently pays at the next rung.

Two caveats on the M&A frame. Control sits with insiders who have every incentive to wait for the higher rung; the floor supports the stock, but no near term bid should be expected. And the company itself flags that its products could come to be classified as strategically significant or dual use, which, combined with Swedish FDI screening and the NATO DIANA involvement, trims the list of possible acquirers even as it validates the asset.

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Part 7: Risks

Let me be explicit, because the risk profile here is closer to a venture investment that happens to have a ticker.

Single customer concentration. The thesis spine is one undisclosed customer. If their tests disappoint, or their own product fails commercially, or they redesign around APR, the volume scenario evaporates. The company’s own risk section names customer concentration explicitly.

Claims without public proof. All performance figures are company claims. No thermal test vehicle results, no third party benchmarks. The pre-series testing may prove them; it may not.

The 100x scaling problem. From artisanal production to a million units a year during 2028, executed by an organization of about twenty people. Yield on sealed fluidic ceramic devices at volume is unproven by anyone, anywhere. The company itself rates the production scale up risk as medium probability, high impact.

Dilution. Near certain, as covered in Part 5. Success makes it arrive sooner.

The fluid question. The fluid chemistry is undisclosed. Fluorinated fluids are the canonical working liquids in EHD research, and if APR’s fluid is fluorinated, EU PFAS regulation sits directly on the thesis. Conversely, the company recently advertised for a fluid and coolant specialist to evaluate coolants on thermal, electrical, chemical and environmental requirements, suggesting fluid selection is active engineering. I have not been able to resolve this question from public material and consider it the single most important unanswered item.

Competition converging on the neighborhood. Corintis has raised over 50 miljoner dollars, ships microfluidic cold plates at real volume, and partners with Microsoft on in chip cooling. AVC reportedly builds Nvidia’s coming microchannel plates. None of them do solid state pumping or active flow control, that discipline remains essentially empty, but if passive geometry plus bigger central pumps stays good enough for long enough, APR’s differentiator gets commoditized around. This, more than two phase, is the real competitive risk: the bet is intelligent thermal control versus brute force, and brute force has a lot of budget behind it.

Timeline slippage, the Sivers lesson. Swedish deep tech microcaps with world class niche technology, blue chip engagements, and imminent commercial breakthroughs have a well documented base rate: qualification cycles run longer than retail patience, financing needs compound, and the stock round trips before anything converts. Almhem’s own SHT tenure demonstrated exactly this pattern. Assume every timeline in this piece slips 12 to 24 months and check whether you’d still hold; I did, and I would, but only at the position size I actually have.

Liquidity. Covered in Part 5. It bears repeating: this stock can fall 30 percent because one holder needed a boat.

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Part 8: Recent developments and what to watch

The recent tape

The past quarter has been unusually eventful for a company this size:

The operational update in early July was, for me, the entry catalyst. It brought a visibly sharpened strategy: three clean business areas with Chip Cooling aimed squarely at data centers and AI infrastructure, the Rheion branding and a rebuilt website that finally explains the offering, and confirmation that the pre-series units ordered by the global tech company have begun delivery and are being tested by the customer. Earlier in the spring the story was harder to grade, a jumble of batteries, space and electronics all at once, right as the stock ran roughly 400 percent in short order; the update resolved the jumble in exactly the direction the thesis wants.

The TO 1 warrant exercise landed at 99,85 percent, adding roughly 55 MSEK and removing the near term financing question.

The ZIHET evaluation is in its final stage, with an agreement expected during Q3. If signed on the intended structure, it’s the first live demonstration of the license and royalty model.

A nuclear industry order in May added another qualified demanding environment customer to the heritage business.

A test rig has been built for demonstrating and benchmarking the technology against relevant cooling scenarios, described as a step toward giving industrial customers concrete decision material. Read: the company is preparing to answer the claims versus proof gap.

Hiring signals: recruitment of a PhD level thermal design engineer and a fluid and coolant specialist within weeks of each other, plus a consultancy partnership with Mint Engineering to add engineering capacity. Companies at this size hire ahead of expected demand, not behind it; the roles read like industrialization and qualification, not research. A small insider purchase was also registered recently, modest in size but pointing the right way.

Coverage: still nearly nothing. A handful of X threads and one thoughtful independent write up focusing on the precision control angle. The discovery hasn’t happened, which for current holders is the point.

The catalyst calendar

Q2 report, August 20. First read on post listing momentum, cash position after the warrant money, and any commentary on customer testing.

ZIHET final agreement, expected Q3. Watch the economics: license fees, royalty structure, any committed volumes.

The anchor customer’s volume decision. The big one, and the timeline belongs to the customer, not to APR. The memorandum framed final tests running during 2026 in the customer’s facility; the honest expectation is a decision somewhere between late 2026 and 2027, with slippage more likely than acceleration. This is the binary that moves the company between rungs of the valuation ladder.

Production milestones. The 10 000 unit per year line entering operation; any announcement of expanded capacity plans would itself signal what management is hearing from customers.

Board or advisory additions. A data center or semiconductor name joining would be the strongest possible tell that the volume phase is real.

Q3 report, November 19, and, realistically at some point, a capital raise, which given the anchor owner is more likely to be an event to participate in than to fear.

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Closing

Let me compress the whole piece into its essential shape.

The industry has agreed, in actions if not in words, on where chip cooling is going: coolant migrating step by step toward the silicon. The endpoint of that migration has a physical specification that disqualifies water, mechanical pumps and boiling. One listed company has spent fifteen years building the only commercialized technology that matches the specification, hardened it in space where failure isn’t an option, fenced it with 74 patents including the fluid itself, and convinced a global tech company to pay for the privilege of designing it into their products, a validation now running live, with a disclosed volume scenario behind it that would transform the company’s scale.

Around it, the sector is consolidating at prices that make the current market cap look like a floor: the last comparable technology tuck in cleared a majority of APR’s entire valuation, and the proven names go for miljarder. Against that stands venture grade risk in every direction: one customer, unproven claims, a 100x manufacturing ramp, certain dilution, an unanswered fluid question, and liquidity that punishes impatience.

I own it small, sized like the venture bet it is, watching three things: the volume order, the fluid, and the boardroom. The asymmetry is the position; the patience is the price of admission.

Thank you for reading. Questions welcome, as always.

Disclaimer: This is not financial advice. I hold a position in APRTEC and my view is accordingly biased. The company is a venture stage microcap trading on Spotlight Stock Market with very limited liquidity; the stock can move violently on small volume and the risk of substantial or total loss is real. All performance figures originate from the company unless otherwise stated. Do your own research.

The liquid cooling scene

First, let’s take a look at the liquid cooling scene. It is vital for understanding the bet here. As more and more money is funneled into AI and data centers running state of the art chips, several bottlenecks emerge. The bottleneck I am interested in is heat removal.

With each generation of chips the trend has remained the same: higher temperatures and thus a larger need for cooling. The core problem is that current single phase solutions become less efficient as temperatures rise.

I have previously written quite a bit about two phase cooling, and I still think two phase cooling looks like a pretty clear winner in the long run. However, I think there might still be room for other technologies that bridge the gap.

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The pitch

Currently the market is dominated by traditional single phase cooling; it is the obvious solution. It works well, it is not too complicated and it is reliable enough. However, it likely won’t be very long before chips produce heat flux that can’t be handled by single phase. The main issue is that single phase doesn’t scale linearly in energy use and wear and tear. When scaled to handle more heat and higher heat flux, current single phase solutions start consuming far more energy via pumping power before eventually running into a complete wall, and they also wear out faster as you pump liquid through them at higher rates.

Two phase has the potential to fix this. Instead of having to pump a bunch of liquid at the chip’s metal encasing, two phase relies on the radically more effective heat transfer achieved by the change of state in the pumped liquid. In many ways two phase cooling seems like the obvious play. It doesn’t hit the same bottlenecks in heat transfer as single phase, and we already largely have the tech developed, with ZutaCore and Accelsius leading the push.

However, there are real problems with two phase cooling, and I think there might be space for other tech solutions to thrive in this rapidly expanding market. One of the main issues with two phase is complexity. Yes, we have two phase solutions in testing and even deployed, but questions about maintenance, scalability and reliability remain largely unanswered. Very few players have committed to two phase and chip producers haven’t given the nod yet. The tech is still years out from becoming the number one choice. And most importantly, heat transfer from metal to liquid, and the difference between boiling versus heating, isn’t the only path to radically improving heat removal.

Following the heat

To see where the gap is, you have to follow the heat from the transistor to the coolant. Heat doesn’t jump from the chip into the liquid; it crawls through a stack of layers, and every single layer adds resistance.

In a classic packaged chip, think a desktop CPU, the journey looks like this. Heat is generated in the silicon die, conducts through the silicon itself, passes through a thermal interface material filling the microscopic gaps between the die and the metal lid, then through the lid, then through a second interface layer between the lid and the cold plate, and finally through the cold plate’s base before it ever touches liquid.

Nvidia already understands that every one of these layers is a tax. Its flagship accelerators have stripped the stack down as far as the current architecture allows: H100, B200 and GB200 modules are bare die packages, with the cold plate pressing onto the silicon through a single layer of interface material. Even that last layer is a nuisance; it is a consumable that has to be replaced every time a cold plate comes off, and it remains one of the two dominant resistances in the whole chain.

The other dominant resistance is the one most people miss. Even once heat reaches the liquid, it isn’t home free. The liquid touching the metal barely moves; friction pins a thin film of near stationary fluid against the wall, the so called boundary layer. Heat has to conduct through this sluggish film before the flowing coolant can carry it away, and conduction through liquid is slow. In a modern direct to chip system, the interface material and the boundary layer together make up the bulk of the total thermal resistance.

So the entire game of chip cooling reduces to two questions: how do you get rid of the layers, and how do you kill the boundary layer.

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Watch what Nvidia does, not what it says

Single phase answers both questions with force. The cold plates on a GB200 are already sophisticated pieces of engineering, copper bases with skived microchannel fins, but the recipe for more cooling never changes: push more liquid through finer channels to thin out the boundary layer, accept the rising pressure, and let the pumps pay for it in energy and wear. Vera Rubin, arriving this year, is that recipe taken to its logical extreme; the trays go fully fanless and the racks run nearly double the coolant flow at the same CDU pressure. For Rubin Ultra, the supply chain reporting points to microchannel cold plates where coolant runs directly across the die surface. Meanwhile Microsoft has demonstrated channels etched into the silicon itself, cutting peak temperature rise by 65 percent versus the best cold plates.

Put those data points in a row and the direction is unambiguous: the coolant is migrating toward the silicon. It started in the room, moved to the rack, then to a plate on the lid, then the lid was removed, and now it is heading for channels at the die and eventually channels inside the package. Every step of that migration strips one more layer of the tax. The industry has, without quite announcing it, agreed on the destination.

Now follow the migration to its endpoint and notice what the endpoint demands. A fluid that can touch live silicon without destroying it, which disqualifies water. A loop running at near zero pressure, because a bonded chip stack cannot take mechanical stress. A pump that works at chip scale, which disqualifies mechanical pumping outright; bearings, seals and impellers do not miniaturize. And control fine enough to chase hotspots that move around the die in milliseconds, which passive channels, sized once at manufacture for the worst case, fundamentally cannot do.

Neither of today’s camps is built for that specification. Single phase water fails on chemistry. Two phase fails inside the package, because managing boiling vapor within a bonded stack is a nightmare nobody has solved. The endpoint of the migration belongs to a third kind of solution, and almost nobody is building it.

The land grab

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In this quarter’s edition we have some mind boggling data to deal with. Saying that Haypp Group web traffic was strong in Q2 would be an understatement; their traffic seems to have disconnected from its past growth trajectory. I will begin by showing you the data. After that I will dissect the big elephant in the room, and finally I will share my take on how Q2 earnings will go down.

NFA. Nothing here is investment advice.

Backdrop

Before diving into the numbers it is worth setting the scene, since Q2 was an unusually busy quarter on the regulatory front. Most of what matters for Haypp happened around the edges of policy, so I will keep this part focused.

The first item is the French ban. France’s decree banning nicotine pouches took effect on 1 April 2026, right at the start of the quarter. The ban is the most comprehensive in Europe; it covers manufacture, sale, import, possession and use of all non medicinal oral nicotine products. France thus became the first European country to criminalise possession and use, going further than Belgium, the Netherlands or Germany. A partial legal challenge suspended the manufacturing and export provisions, but the import, possession and use ban all took effect as scheduled.

The second and more important item is the FDA enforcement guidance. On 8 May 2026 the FDA issued guidance titled “Enforcement Priorities for Certain New Tobacco Products Marketed Without Premarket Authorization.” In plain terms, the agency clarified that it does not intend to prioritise enforcement against nicotine pouch products whose manufacturers have a pending and accepted PMTA. Crucially, the FDA also said it will create and maintain a public list identifying which products fall under this policy. This is a big deal for the industry. For four years pouch manufacturers, suppliers and retailers had been stuck in a grey zone of uncertainty; Haypp’s own VP of regulatory affairs described the guidance as remarkably clear, essentially file a compliant PMTA, wait 180 days, get acceptance and then launch. Companies can now push new products with far less fear of being wiped off shelves. It is worth noting the products remain technically unauthorised until the FDA actually grants marketing authorisation, and some state attorneys general have pushed back; but the direction of travel is a more orderly, regulated market, which benefits a compliant retailer like Haypp.

The third item is the most recent, landing just a few days ago. On 30 June 2026 the FDA issued modified risk tobacco product orders for 20 Zyn products, allowing PMI/Swedish Match to market them with the claim that using Zyn instead of cigarettes lowers the risk of mouth cancer, heart disease, lung cancer, stroke, emphysema and chronic bronchitis. These are the first MRTP orders ever granted for nicotine pouches. The implication for Haypp is bullish; the entire category now has an official regulatory stamp saying pouches are less harmful than smoking. That is exactly the kind of legitimacy that pulls smokers into the category, expands the total addressable market, and makes online retailers of authorised products more valuable. It also strengthens the harm reduction narrative that Haypp leans on when arguing against bans like France’s.

The fourth item is on the hiring side. Q2 looks to have been a very active recruitment season for Haypp; their careers page has had a notable number of open positions through the quarter. This lines up with management’s stated plan to invest in growth, and it strongly suggests headcount is growing, which matters for the margin discussion later.

The final item is on the EU side. The bloc’s long awaited revision of the Tobacco Products Directive (TPD3), which would for the first time bring nicotine pouches formally into EU wide scope, has once again slipped. The Commission published its evaluation of the current directive on 2 April 2026, concluding that novel nicotine products including pouches are insufficiently covered, which is the trigger for a revision. But the actual legislative proposal, expected at various points to arrive in mid 2026, has effectively stalled in the evaluation and impact assessment phase due to sharp disagreements between member states. The proposal is now not expected to land in draft form until late 2026 at the earliest, with rules unlikely to take effect before roughly 2028. The implication is neutral to mildly positive for Haypp in the near term; the regulatory overhang that could eventually impose flavour restrictions or tighter standards across the EU keeps getting pushed further out, buying the category more time to grow under the current fragmented national patchwork.

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Web Traffic Breakdown · June 2026

Web traffic is the cleanest leading indicator we have for Haypp Group; a pure-online B2C retailer where every paying customer has to land on one of these domains, and where revenue is single-transaction, so visit volume maps almost mechanically to orders × AOV. In an in-house audit of the last 9 reported quarters, panel visits explained group revenue at Pearson r ≈ 0.94 on a YoY% basis.

Each domain card below leads with the June total, then the month-on-month move vs May, the gap to the Q1 2026 monthly baseline, and YoY.

Core, Mature Nordic

Looking at Haypp's core markets we see strength in the smaller sites, while the biggest core site, snusbolaget.se, is slightly down for the quarter at -6,5%. This was largely expected already at the end of last quarter, as net sales grew more strongly than active customers, a leading indicator for core. The equal weighted average across the Core cohort came in at +8,9% versus the prior quarter baseline, with snushjem.no the standout at +28,2%. See charts below.

snushjem.no — Norway

June 2026: 65K visits — +28.2% growth vs the Q1 2026 monthly average (51K). Month-on-month it’s up 15.0% on May’s 57K. On a YoY basis the site is +112.9%. This is the strongest grower across the segment so far this month.

snuslageret.no — Norway

June 2026: 152K visits — +13.5% growth vs the Q1 2026 monthly average (134K). Month-on-month it’s up 1.7% on May’s 149K. On a YoY basis the site is +32.2%. One of the strongest growers in the segment this month.

snus.com — Norway

June 2026: 45K visits — +6.6% growth vs the Q1 2026 monthly average (43K). Month-on-month it’s down 8.8% on May’s 50K. On a YoY basis the site is +21.0%. Growing in line with the segment composite.

nettotobak.com — Sweden

June 2026: 140K visits — +2.9% growth vs the Q1 2026 monthly average (136K). Month-on-month it’s down 11.4% on May’s 158K. On a YoY basis the site is +42.6%. Growing in line with the segment composite.

snusbolaget.se — Sweden

June 2026: 484K visits — -6.5% decline vs the Q1 2026 monthly average (517K). Month-on-month it’s down 1.6% on May’s 491K. On a YoY basis the site is +32.9%. The weakest performer in the segment, dragging the composite.

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Growth — UK · US · DE · CH (Vape + HNB)

For the growth segment we are seeing something completely unprecedented. In the history of Haypp there hasn't been this aggressive a web traffic inflow to their sites; more on that later. The equal weighted average across the Growth cohort came in at +61,0% versus the prior quarter baseline, driven by haypp.com at a staggering +158,0%. Not everything rose though; snusmarkt.ch was the weakest at -13,5%. See chart below.

haypp.com, (multi-market flagship)

June 2026: 832K visits — +158.0% growth vs the Q1 2026 monthly average (322K). Month-on-month it’s up 32.4% on May’s 629K. On a YoY basis the site is +196.9%. This is the strongest grower across the segment so far this month.

northerner.com — United States

June 2026: 998K visits — +130.2% growth vs the Q1 2026 monthly average (434K). Month-on-month it’s up 33.5% on May’s 748K. On a YoY basis the site is +261.6%. One of the strongest growers in the segment this month.

vapeglobe.de — Germany

June 2026: 31K visits — +25.3% growth vs the Q1 2026 monthly average (25K). Month-on-month it’s down 20.6% on May’s 39K. On a YoY basis the site is +225.8%. Growing in line with the segment composite.

nicokick.com — United States

June 2026: 449K visits — +5.3% growth vs the Q1 2026 monthly average (427K). Month-on-month it’s down 3.9% on May’s 467K. On a YoY basis the site is +0.8%. Growing in line with the segment composite.

snusmarkt.ch — Switzerland

June 2026: 15K visits — -13.5% decline vs the Q1 2026 monthly average (17K). Month-on-month it’s up 12.5% on May’s 13K. On a YoY basis the site is +23.2%. The weakest performer in the segment, dragging the composite.

Note

Although the Haypp and Northerner charts look like they are going parabolic, they seem to be coming down sharply in the last week of June.

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The Elephant in the Room

If you have read multiple Haypp Group web traffic reports by now you will immediately see that something is up with Northerner and Haypp.com. Never in the history of all of Haypp web traffic has there been such a violent move. Not only are the two sites completely synced; they both started rising at the same time and peaked at the same time. Even further, the size of the moves are very close. This does not feel organic. So the question is: why have two of Haypp’s biggest sites all of a sudden seen 200% surges in traffic in Q2.

First I will present some of the evidence so that you can get a look into some of the logic behind my prediction and what I tinker around.

The first piece of the evidence can be found in SimilarWeb. Looking at SimilarWeb data and where that traffic is coming from, you notice that Germany is dominating that traffic. Essentially in one quarter the amount of Germans visiting Haypp’s websites has increased over 400%.

The second piece of evidence can also be found in SimilarWeb. A big chunk of the new traffic seems to be coming from display ads, many of them targeted at adult sites.

Another piece of evidence, or perhaps more of a potential lead, is the fact that France’s ban of nicotine pouches went into effect at the start of the quarter.

Even further, many German gas stations and convenience stores have voluntarily stopped selling nicotine pouches.

Now piecing all this together, it seems like Haypp Group has decided to do a sort of blitz marketing campaign that particularly targets Germans. Essentially we likely have a mix of factors giving Haypp extraordinary growth here. First, the French ban likely has some small part of Frenchman ordering NP to Germany and then using it illegally in France. At the same time Germans also struggle to get NP as a lot of the logical places to buy it don’t sell it, pushing online penetration way up.

Haypp Group must have realized that now is their time to strike, and thus they started a strong ad campaign, likely the largest one they have ever done.

My data roughly shows that Haypp has gotten around 5 million extra visits to their site in Q2. Most of this can likely be attributed to them running ads. Now the cost of running these ads should be very low; we are talking CPC under 10 cents. So essentially the extra cost of their marketing push would likely be under 5 MSEK.

Now the bigger implication here is of course what do these new consumers order, if they order at all. It is almost always the case when there is a huge influx of customers that order value goes down per visit. The difficult part is knowing to what extent. We don’t have any data to estimate the elasticity of current events, but I will try to do my best to predict how well this spike translates into revenue in the next chapter.

Now before I end this section I want to say a word of warning. My interpretation of what is going on can be faulty. Web traffic can be manipulated and there are countless factors that could mislead in this type of situation. Germans all of a sudden ordering a bunch more nicotine pouches seems highly suspicious. It is possible that SimilarWeb’s panel data simply over counts Germany.

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What the street thinks

Before showing my own estimates, let’s take a look at what analysts and Twitter think. First the analyst consensus from Barclays, Deutsche Bank and Pareto Securities; they land at 1140 MSEK. Chart below. Here it is worth noting that the 1140 MSEK likely represents a time series estimate, that is roughly where revenue should land if they grow at the pace of management’s guidance.

And here is the result of Twitter, from my one week poll that got 34 votes. The result can be seen below and averaged shows 1158 MSEK. On average the X crowd has been really good at estimating revenues, with the exception of last year's Q2. Thus 1158 MSEK provides another valuable data point, as last year's Q2 miss was likely caused by a bias to the upside, since very few expected Haypp shrinking.

In total, both X and analysts seem to think that revenue will have grown roughly 25% from last year; a very reasonable estimate. Next, let's dive into my estimate.

The revenue prediction

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To understand the significance of what I have been seeing in the post pandemic years, I will start by taking you back to how things looked roughly ten years ago in places like Capri and Porto Cervo.

Back then, the yachts you saw sat in the 30 to 40 meter range, and very rarely more than that. Spotting something larger happened maybe once a week. I still remember seeing Paul Allen’s Octopus at roughly 126 meters somewhere near Capri. At the time, that boat ranked among the ten largest yachts in the world.

When you hopped off your boat and took a stroll into one of the luxury marinas, things were also very different. There was clearly more moderation. Stuff did not have to sport a strong brand or be well known. Social media was still in its infancy, so the shape of luxury in many of these places was completely different. I will return to social media soon, because it plays a bigger role in this story than one might think.

Now to the present. I just returned from the Mediterranean once again, and it suddenly hit me that the change between now and ten years ago is massive. The first thing you notice is that those 30 to 40 meter yachts, which represented a sort of ceiling back in the day, are now closer to 100 meters. Instead of seeing one very long yacht like Octopus once a week, you now see several 100 meter boats daily. The 100 meter boat is essentially the new 40 meter boat. At first this might sound insane, but I will do my best to explain what is going on.

The same shift shows up across the marinas and the wider luxury ecosystem. Where you previously had a marina filled with nice but unknown restaurants and brands, you now have pretty much the opposite. The towns are filled with all the usual suspects like Stefano Ricci, Kiton, Brunello and Loro Piana. There are very few unknown names left. By unknown, I mean brands that do not already have a store in every major city around the world. Restaurants follow the same pattern. Many are now well known luxury chains. It feels like there is a Zuma or a Cipriani in pretty much every place now.

The thing I want you to keep in mind from this intro is that there has been a massive change over the last ten years, and few have had time to register its magnitude. Many simply hold the wrong perception of reality when it comes to the post pandemic world. This new reality is stark enough to raise an obvious question. What kind of investments will benefit from it? So I decided to map several winners in the field that I believe have the potential to do well. But before that, I will explain the underlying trends driving the stark difference we can now see.

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Why the Boats Got Bigger

As I mentioned earlier, the last ten years have brought a massive change in the luxury yachting scene. I will now explain my take on why the difference is so stark.

The first culprit is social media, and especially Instagram. It was not long ago that Instagram did not exist, let alone the subcultures that I believe are driving a lot of the change we are seeing. Both old money and the wealth and hustle crowd are thriving on Instagram, and this magnifies the whole yachting sector. It is now far easier to see that your boat is not as big as someone else’s. Your wife and children would rather go to Zuma for the pictures. Yachting already represents the top of luxury, and when you couple it with social media, the result is exactly what we see today. Bigger yachts, more exuberance, and importantly, less durable spending. I believe social media is a large part of the puzzle, but not all of it. There are two other factors that are equally important.

The second tailwind is tech, the wealth created from tech, and what it does to the buyer demographic. In the past, yachts could really only be afforded by 70 year olds. Now you have tech billionaires and millionaires who are under 40. The effect is fairly self explanatory. These younger people have more of a need to show off, since they grew up with social media. Many of them sit on more wealth than they know what to do with, and most importantly, they are young. Yachting is not always the most comfortable form of luxury for an older person, but for a 40 year old there is nothing better. On top of that, the fact that under 40 tech billionaires now own yachts and post about them online adds even more pressure on everyone else to get a taste of the lifestyle. That brings us to the third reason yachts are booming like never before.

The third reason ties back to the picture social media paints. If yachting looks common, and not partaking makes you an outsider, then the only solution for someone with less money is to charter. And charter they have. Chartering has grown explosively over the past ten years. A person earning 500k a year obviously cannot afford to buy a 50 meter yacht, but what they can do is gather ten friends, put in 30k each, and split a week on the water. Sustainable or not, it is happening. More and more people are willing to spend an outsized portion of their income and wealth on chartering bigger and bigger boats.

These three forces combined are what, in my opinion, has created this massive influx of money chasing a sector that ten years ago was far smaller. Now let us jump into some of the stocks that enable and profit from this changed reality.

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Sanlorenzo S.p.A. (SL.MI, Euronext Milan)

Of all the stocks I have looked at so far, Sanlorenzo is the one that strikes me as the safest and most reasonable bet. It trades at roughly 11 times earnings, which sits well below its own ten year average, and the business underneath that multiple looks genuinely healthy rather than cheap for a reason.

The story starts in 1958 in Ameglia, on the Ligurian coast. For most of its life Sanlorenzo was a small, almost artisanal builder. The modern chapter began when Massimo Perotti, still chairman and CEO today, took control in 2005 and slowly turned it into the reference name at the top of the market. It listed in Milan in 2019, and since the IPO it has hit every financial target it set, growing revenue, margins and order intake across very different market conditions.

What makes Sanlorenzo interesting for this thesis is how pure the bet is. The company holds its leadership in the 30 to 40 meter segment, which is exactly the part of the market that has migrated upward over the last decade, and through its Superyacht division it builds well beyond that. There is no mass-market boat dragging down the brand. The structure is clean: Bluegame for smaller utility yachts, the core Yacht division, and the Superyacht division at the top. Compare this to many peers who either stretch their range down into far smaller boats to chase volume, or sit buried inside a wider industrial group, or remain private and uninvestable. Sanlorenzo gives you close to a pure play on exactly the kind of large, expensive yacht that now fills Porto Cervo.

The thing they are genuinely good at is scarcity. Management talks openly about choosing value over volume and elegance over extravagance, and they mean it as a financial strategy, not just marketing. They deliberately keep waiting lists long rather than flooding the market, which protects pricing and resale value. Waiting lists currently extend as far out as 2029. That discipline shows up in the margins. EBITDA margin has climbed from 14.5% in 2019 to 18.8% in 2025, and net profit went from about 27 million euros in 2019 to 107 million in 2025.

The buyer base is worth dwelling on, because it ties directly into the trends I laid out earlier. Sanlorenzo sells to a sophisticated, repeat ultra high net worth clientele, and a meaningful share of growth is coming from exactly where you would expect given the demographic shift: the Americas and the Middle East. In Q1 2026, revenue from the Americas rose almost 19% and the Middle East and Africa rose 24%. These are younger, newer money buyers entering a market that used to belong to an older European crowd.

The backlog is the part that makes the whole thing feel solid rather than speculative. As of the end of March 2026 the order backlog stood at roughly 1.23 billion euros, with 90% already sold to final clients rather than to dealers. That backlog covers around 72% of 2026 revenue guidance, and order intake has now grown for seven consecutive quarters, with Q1 2026 up over 25% year on year. In a cyclical industry, that kind of forward visibility is rare and it is what lets you underwrite the earnings with some confidence.

None of this means it is risk free. The broader superyacht market actually normalized in 2025, with total sales down around 8% versus 2024, and Sanlorenzo outperformed rather than escaped that. The business is still cyclical, and a prolonged downturn in new builds would eventually pressure intake. But the combination of a clean balance sheet sitting in net cash, a long backlog, a disciplined scarcity model and a low double digit multiple is exactly why I see this as the anchor position of the basket rather than the lottery ticket.

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Ferretti S.p.A. (YACHT.MI, Euronext Milan)

If Sanlorenzo is the anchor, Ferretti is the close second, and arguably even slightly cheaper. It trades at a similar low double digit multiple while carrying something Sanlorenzo does not have: a stable of the most recognizable names in the entire industry.

That portfolio is the whole reason to own it. Ferretti owns and markets seven brands, including Ferretti Yachts, Riva, Pershing, Itama, CRN, Custom Line and Wally, distributed through roughly 60 dealers across more than 70 countries. Riva alone is arguably the most iconic name in yachting, the brand of the classic wooden runabout that has meant glamour on the water since the 1950s. And for me personally the jewel is Wally, my favorite brand of the lot, the maker of those radical, almost spaceship-like sailing and motor yachts that look like nothing else on the water. Owning Ferretti means owning the heritage and the design language that a large part of the buyer base is actually chasing.

Strategically Ferretti is broader than Sanlorenzo. Where Sanlorenzo deliberately stays narrow and scarce, Ferretti spans everything from serial production boats up through full custom superyachts built at CRN, covering far more of the market. The group runs both a serial market and a superyacht segment, giving it a transversal presence across most segments of yachting. That breadth is a double edged sword. It gives diversification and scale, but it also means the brand isn’t quite the pure top-end play that Sanlorenzo is. You are buying a portfolio rather than a single rifle shot at the largest boats.

The superyacht end, which is the part this thesis cares about most, is in good shape. Production capacity in the superyacht segment is virtually fully utilised out to 2029, which tells you the demand for the genuinely large, expensive boats is still there even as the cheaper end wobbles.

Now the honesty section, because Ferretti has more hair on it than Sanlorenzo. The first quarter of 2026 was clearly softer. New yacht turnover fell about 8% year on year, but the bigger worry was order intake, which dropped almost 34% to roughly 180 million euros, driven largely by geopolitical tension in the Middle East delaying orders and deliveries. The net order backlog slipped to 722 million euros from 829 million at the end of 2025. Margins held up, which is the saving grace. Adjusted EBITDA came in at 48.7 million euros versus 52.5 million a year earlier, so profitability proved resilient even as the top line softened.

The second issue is governance, and it is messier. China’s Weichai Group won a shareholder vote that ended the twelve year tenure of long-time CEO Alberto Galassi, while Czech investor KKCG appealed the validity of that decision, leaving the governance situation unresolved. Italy has also been weighing KKCG’s request for golden power scrutiny, partly because Ferretti owns a small non-core patrol boat division. A new global CEO, Stassi Anastassov, is now in place, but the ownership picture is genuinely in flux, and that is the single biggest reason this sits a notch below Sanlorenzo on the risk scale rather than at the same level.

So the trade-off is clean. Ferretti gives you the better brands, a broader footprint, and a slightly cheaper entry, in exchange for a softer recent quarter and real governance uncertainty. For a basket built around this theme, it earns its place precisely because of Riva, Wally and CRN, names that the post pandemic buyer actually wants, even if you size it a little smaller than the anchor to account for the noise.

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MarineMax, Inc. (HZO, NYSE)

MarineMax is the stock that gives you a completely different way to play this theme, and that is exactly what makes it interesting. The two Italian names are builders. MarineMax is everything around the boat. It bills itself as the world’s largest recreational boat and yacht retailer, marina operator and superyacht services company, with over 120 locations worldwide, including more than 70 dealerships and over 65 marina and storage facilities. If the Italians sell you the boat, MarineMax wants to dock it, broker it, finance it, insure it and service it.

The pieces that matter for this thesis are the ones at the top of the chain. Its superyacht services run through Fraser Yachts Group and Northrop & Johnson, two of the best known names in superyacht brokerage, both acquired over the past decade as part of a deliberate move upmarket. On the infrastructure side, its IGY Marinas operate luxury facilities across the Caribbean, the Mediterranean and major US yachting destinations. This is the part I find most attractive. Marinas and brokerage are the toll booths of the yachting world. As boats get bigger and more numerous, somebody has to berth them and somebody has to handle the sale, and MarineMax owns both functions. It is a way to bet on the activity around the boom rather than on any single hull selling.

Here is where my reservation comes in, and it is a real one. The financials are messy and the headline numbers are going the wrong way. Second quarter fiscal 2026 revenue came in at 527 million dollars, down more than 15% from a record 631 million a year earlier, with same-store sales down 15% against an 11% increase in the prior-year period. The company swung to a net loss of 2.6 million dollars, versus net income of 3.3 million the year before. Used boat sales were the weakest line, falling 44% year over year. This is not a clean compounder. It is a cyclical retailer having a tough stretch as the broader boat market normalizes.

The counterargument, and the reason it still earns a place, is the mix shift underneath the decline. The higher-margin businesses are exactly the ones tied to this thesis, and they are growing while retail shrinks. The superyacht services, marina, finance, insurance and parts operations grew both as a share of revenue and in absolute dollars year over year, even as boat revenue fell around them. That shift shows up in profitability. Gross margin actually expanded to 34.4% from 30% a year earlier, driven by the increasing contribution from those higher-margin businesses. In other words, the part of MarineMax that this whole article is about is the part that is working. The drag is the commodity retail boat business, which is the part you care about least.

There is also an outside chance of a corporate catalyst. The company received an unsolicited, non-binding indication of interest from The Donerail Group to acquire all outstanding shares for 35 dollars per share in cash, and that approach drew further reported interest from large private equity names. Whether anything comes of it is unknowable, but it puts a degree of attention on the valuation that a sleepier name would not have.

So my honest framing is this. MarineMax is not the pure play, and the income statement makes that obvious. You are buying a diversified marine conglomerate with a cyclical retail anchor dragging on a genuinely attractive luxury services and marina core. But it is one of the only listed ways to own the toll booths rather than the hulls, and in a field this thin on options, that uniqueness is worth something. I would treat it as the more speculative, mix-shift bet of the basket rather than a name you underwrite on current earnings.

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The Italian Sea Group S.p.A. (TISG.MI, Euronext Milan)

I want to be completely upfront here. The Italian Sea Group belongs in this article on paper, because it owns some of the most storied names in the business, but the company is currently in the middle of a serious crisis that I do not yet understand well enough to underwrite. I am including it for completeness and transparency, not as a recommendation, and I would rather tell you plainly what I do and do not know than pretend I have it figured out.

The brand portfolio is the reason anyone looks at it in the first place. TISG’s brands include Admiral, Tecnomar, Perini Navi, Picchiotti, NCA Refit and Celi 1920. Perini Navi in particular is a legendary name in large sailing yachts, which ties directly into that trend I mentioned earlier about big sailing yachts being the ultimate flex. In a normal world, this would be a pure-play builder at the very top of the market.

But this is not a normal situation, and the timeline of the last few months is alarming. In early 2026 the company launched an independent forensic investigation into unauthorised overspending, two weeks after taking a 25 million euro shareholder loan to shore up its cash position. Workers staged a two-hour strike in February after wages were delayed by eight days due to liquidity problems, and the board acknowledged the company had incurred significant extra-budget costs in executing orders. The chair and vice chair resigned, with founder and CEO Giovanni Costantino taking over as chair.

It got worse from there. The Italian Stock Exchange ordered the company’s exclusion from STAR status, a complaint was filed against former executives, and the company initiated a negotiated settlement procedure under Italian insolvency law. Then the real shock. In May 2026 the company announced that losses had reduced its share capital below the legal minimum, a material event under Article 2447 of the Italian Civil Code, and the shares fell more than 37% in a single day. The exact amount of the losses is still being determined, pending ongoing accounting reviews, and the forensic due diligence by KPMG has experienced delays. The stock, which traded above 8 euros at its 52-week high, has collapsed to roughly 1.2 euros.

There is also a darker backdrop that I am still trying to make sense of. TISG was the builder of the superyacht Bayesian, which sank off Italy in August 2024. There is now litigation swirling around that event, with the company reportedly pursuing legal action while a UK investigation raises unresolved questions about the yacht’s design and stability. How much of the financial crisis is connected to that, versus separate accounting and order-management problems, is exactly the kind of dynamic I have not yet untangled.

So my honest position is this. I do not currently hold it and I am not telling you to. The brands are real and the underlying market is the same booming market the rest of this article describes, which is precisely why a distressed, restructuring situation like this can become interesting to a certain kind of investor once the facts are clearer. But right now it is a forensic-investigation, capital-below-minimum, court-supervised-restructuring story, and anyone who tells you they know how it resolves is guessing. I am flagging it so you have it on your radar, and I will only form a real view once KPMG’s review is complete and the true scale of the losses is known. Treat this section as a transparent placeholder rather than a thesis.

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Grand Harbour Marina p.l.c. (GHM, Malta Stock Exchange)

The last name on the list is more of an honorable mention than a core idea, but it is worth including because it is about as pure a play as you can find anywhere in this space. Where MarineMax bundles marinas inside a sprawling retail conglomerate, Grand Harbour Marina is essentially just the marina, full stop.

The business is simple to understand, which is part of the appeal. The company owns and operates marina facilities providing berthing and ancillary services for yachts and superyachts, running through two segments: the Grand Harbour Marina in Malta and a stake in the IC Cesme Marina in Turkey. The Malta asset sits in the historic Grand Harbour next to Valletta, and it is built for exactly the kind of boat this whole article is about. The marina offers over 250 berths and 26 superyacht berths able to take vessels up to 135 metres. It is owned and managed in association with Camper & Nicholsons Marinas, a recognized name in the luxury berthing world.

This is the toll-booth idea in its purest form. As the trend pushes the Mediterranean toward more and bigger boats, the constraint that does not move is space in good harbours. Prime superyacht berths in desirable locations are genuinely scarce, the supply cannot be conjured up quickly, and the operator collects on occupancy and berth sales regardless of which shipyard built the hull. Malta has actively leaned into this, with the government pursuing a long-standing policy to make the island a superyacht-friendly destination. So in theory you are buying a slice of the dock itself, the chokepoint that every one of those 100 metre boats eventually needs.

Now the caveats, and they are significant. This is a micro cap in the truest sense. As of May 2026 the stock traded around 1.19 and the entire market capitalization was roughly 24 million dollars, on trailing twelve-month revenue of about 9.4 million. That tininess brings everything you would expect: the stock is thinly traded, listed on the Malta Stock Exchange rather than a deep liquid market, and any position is hard to build or exit without moving the price. The financial performance also partly depends on the timing and number of berth sales, which makes results lumpy from year to year. One offsetting positive worth noting is the income. The shares have carried a high dividend yield, recently in the double digits, though with a micro cap you always have to ask how durable a payout like that really is.

So I would not build a thesis around it, and I am not pretending it belongs in the same tier as the Italian builders. But if what you want is the single most direct, undiluted exposure to the act of parking a superyacht somewhere expensive in the Mediterranean, this is close to the only listed way to get it. Treat it as a curiosity and an honorable mention: a tiny, illiquid, pure-play bet on the scarcity of the dock, suitable only for someone who understands exactly what a micro cap entails and sizes it accordingly.

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Misc.

Beyond those names, I also looked into all of these:

Close Brothers Group plc (CBG.L, London Stock Exchange)
Garmin Ltd. (GRMN, NASDAQ)
Chugoku Marine Paints, Ltd. (4617.T, Tokyo Stock Exchange)
AkzoNobel (AKZA.AS, or OTC: AKZOY, Euronext Amsterdam)
PPG Industries (PPG, NYSE)
Gurit Holding AG (GURN.SW, SIX Swiss Exchange)
Hexcel Corporation (HXL, NYSE)
Toray Industries (TRYIY, or 3402.T, Tokyo)
Rolls-Royce Holdings (RR.L, London Stock Exchange)
OneWater Marine (ONEW, NASDAQ)
Catana Group (CATG.PA, Euronext Paris)
Fountaine Pajot (ALPAJ.PA, Euronext Paris)
Grand Banks Yachts (G50.SI, Singapore Exchange)

They are all related to the trend in some way, but most of them either fall outside the large yacht end of the market or are not pure play enough to earn a full write up. I am leaving them here in case anyone wants to go through them themselves. Think of them as an extension of the same thesis rather than the heart of it.

The connecting logic is worth spelling out, because it is really the second half of the story. The trend does not stop at billionaires buying mega yachts. It cascades downward. As social media makes the water look like the place everyone is supposed to be, the middle class and upper middle class start spending outsized chunks of their income to get a taste too. That is where most of these names come in. Instead of a 100 metre custom build, it is a financed boat, a chartered catamaran, a fractional share, a week split between friends. The money is smaller per head but the population is vastly larger.

You can see how each of these slots into that wider funnel. Catana and Fountaine Pajot build the cruising catamarans that increasingly fill the charter fleets, which is exactly the rental democratization I described earlier. OneWater Marine is another US boat retailer in the same vein as MarineMax, riding the broader ownership wave. Close Brothers touches marine lending and finance, the plumbing that lets people buy boats they could not pay for outright. Garmin sells the marine electronics that go on almost everything that floats. Rolls-Royce, through its MTU engines, sits in the propulsion of large yachts among many other things. Grand Banks builds at the more traditional motor yacht end.

Then there is a whole cluster tied to one specific input: advanced materials and marine coatings. Chugoku Marine Paints, AkzoNobel and PPG all supply the paints and coatings that every hull needs. Gurit, Hexcel and Toray supply the composites and carbon fibre that make large, light, structurally demanding builds possible, and this is the same carbon fibre story behind those big sailing yachts I mentioned earlier, where the structural engineering is the whole flex. These are the picks-and-shovels names, the trouble being that for almost all of them, marine is only a sliver of a much larger and unrelated business, which is precisely why they did not make the main list.

So treat this section as a research starting point rather than a set of recommendations. The pure-play, large-yacht-exposed names are the four I covered in depth. Everything here is a wider, more diluted way to bet that the entire pyramid, from the billionaire at the top to the upper-middle-class family chartering a catamaran at the bottom, keeps growing.

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The Thesis

So now the real question. What actually makes this opportunity interesting? Stating that the number of mega yachts and the amount of luxury on the water has increased over the past ten years does not, on its own, warrant a thesis. It is what happens from here that matters.

Right now the prevailing narrative in the field goes roughly like this. Things are going well, but we already saw the cyclical peak. Much of the recent spending gets attributed to covid and the liquidity that came with it. And the Iran crisis is read as a material dent in demand. Several of these points are true. But none of them actually weaken the real tailwinds driving the structural increase in demand.

Start with social media. Instagram is not going anywhere. If anything, as more and more younger, Instagram-native people start inheriting and earning serious money, the amount of capital flowing toward yachts increases rather than fades. Then layer on the demographic point from earlier. The number of tech-related millionaires and billionaires is still rising. And here is the part most people miss: essentially every yacht bought so far has been bought by pre-AI-boom wealth. The people getting rich off AI, or off something like SpaceX, have not even had time to start looking at yachts yet. That cohort is coming. Finally, as the industry matures, chartering becomes easier and more accessible than ever, pulling in an entirely new layer of demand from below.

Now look beyond the current tailwinds to what AI and robotics are likely to do to the global economy. I think two things are very probable. First, physical goods like yachts get cheaper to produce. If you have humanoids working around the clock on production lines, output stops being constrained by human labour capacity and becomes constrained mainly by energy. Second, and just as important for the long run, wealth keeps polarizing. As network effects and data moats compound across an AI-driven economy, a slice of society gets richer and richer. I am personally not very optimistic about the middle class in relative terms. So focusing on the very top of the pyramid, the mega yacht end, feels like the smarter approach rather than betting on the broad base.

To summarize what I think makes this opportunity real, there are two things happening at once. Most investors believe the sector is just seeing a short cyclical boom, fuelled by covid, that will fade. I think that read is wrong. The mechanism, as I see it, runs more like this: the more pictures and cultural relevance yachting accumulates, the more people are willing to overspend and pour their excess wealth into it. Yes, there may well be a local cyclical top. But I am having a genuinely hard time seeing how all this recent AI-driven wealth does not, at some point, find its way to mega yachts.

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End Note

My personal view is that this sector is likely to prove very durable over the long term. Demand should continue climbing higher and higher. But at the same time, it is vital to stay focused on brand, because without a strong brand the margins are impossible to defend. On that front the current valuations look compelling.

The one thing to keep in mind is that the wealth driving this demand is highly sensitive to broader market moves. So while I believe this sector is a great place to park money over the long run, these stocks are also likely to take a beating in any serious market downturn. The two things are not in conflict. You can love the structural story and still expect a brutal drawdown if equities roll over, because the marginal yacht buyer feels the stock market in his bones.

If you liked this writeup, please share it. It helps surprisingly much. And if you have any questions, just ask.

NFA. This writeup is for informational and entertainment purposes only and reflects my personal opinions, not investment advice. I am not a licensed financial advisor. Everything here may contain errors, and nothing should be taken as a recommendation to buy or sell any security. The companies mentioned are ones I find interesting, and I may hold positions in some of them. Always do your own research and consult a qualified professional before making any investment decision. You alone are responsible for your money.

This write up maps the companies positioned to capture that volume. The goal is to identify the biggest winners of the coming IPO boom, the institutions sitting at each choke point as private wealth converts to public liquidity.

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The volume moves in predictable stages. Shares must list, then clear and settle, then the proceeds must be advised, allocated, and in many cases spent on status goods. Each stage has a narrow set of institutions already positioned at the bottleneck. The question for each name is whether it captures more revenue from the added flow or whether fee pressure strips the gains away before they arrive.

One mechanism makes the point. When a single SpaceX-style listing triggers index inclusion inside fifteen trading days, passive vehicles have no choice but to buy. That forced purchase does not depend on sentiment or analyst upgrades. It is mechanical. The same mechanical quality runs through custody hand-offs, margin calculations, and the advisory conversations that follow. Once shares sit inside an established platform, extracting them means rewriting permissions, tax lots, and reporting frameworks that took years to build. That friction is the moat.

The new shares do not arrive as a blank slate. They land inside a permissioned surface that already knows the client’s full picture, processing larger checks at the same negotiated margins. The rest of this piece works through that surface stage by stage and names the stock at each one.

The bear case that has kept multiples depressed

The prevailing fear is straightforward. Advisors already expect to charge less than 1 percent on accounts above five million dollars, with average fees for clients above ten million dollars sitting near 66 basis points. Commission revenue across the industry is projected to drop from 22.8 percent of total revenue in 2024 to 16.6 percent by 2026. If the same pattern holds after the largest IPOs in history, the incremental AUM may simply arrive at lower unit economics.

A second concern compounds the first. One marquee deal that slips or disappoints could trigger a broad de-rating across any name tied to capital markets activity. Financials have already experienced multiple compression even while earnings growth has remained resilient. Platforms that rely on listing fees or episodic trading spikes face the additional risk that the entire wave arrives later or smaller than current pricing assumes.

I have watched the same logic applied to earlier cycles. When valuations for anticipated mega-deals compress in advance, secondary platforms and wealth franchises often de-rate together even if their core custody or clearing volumes stay flat. The fear is not irrational; it simply assumes the new wealth will behave like ordinary inflows rather than concentrated liquidity events that force re-pricing across multiple product lines at once.

The compression numbers themselves come from advisor surveys that predate the current IPO calendar. They reflect client pushback on value delivered, not an absence of assets. That distinction matters when the assets arrive in sudden, outsized blocks rather than steady drips.

Why the same shift expands rather than destroys the revenue pools

History offers a clearer template. When online trading reached 37 percent of retail equity volume by 1998, many assumed full-service brokers would lose their clients. Merrill Lynch still held 1.5 trillion dollars in private-client assets by the end of 1999 while the exchanges recorded record trading volumes. The new channel did not replace the old one; it expanded total activity and left the largest incumbents with larger balance sheets.

The ETF transition followed the same pattern. Active managers were expected to lose share permanently. Instead the largest asset managers acquired ETF platforms early and now control 74 percent of U.S. equity ETF assets, with BlackRock’s iShares alone exceeding 5.4 trillion dollars. In both cases the infrastructure that moved the assets captured the economics of the shift rather than watching them migrate elsewhere.

The 1990s tech IPO wave produced the same result at even larger scale. Newly public founders routed liquidity into wealth-management relationships and alternative allocations. Exchanges collected elevated listing and trading fees while overall assets under management expanded across the system. The mechanism is identical today: the banks that underwrite the IPOs already sit inside the syndicates, the exchanges already run the index-inclusion rules, and the wealth platforms already hold the custody relationships.

What changed this time is speed and scale, and the first proof point has already printed. SpaceX priced on June 11 and began trading on the Nasdaq on June 12 under the ticker SPCX, raising 75 billion dollars at a 1.77 trillion dollar valuation — the largest listing in history, run through a syndicate of nearly every major bank with Goldman Sachs and Morgan Stanley as leads. Those two alone earned a combined 500 million dollars in underwriting commissions on the deal. The stock opened at 150, closed its first day up 19 percent, and has since climbed toward 200, carrying the market value above 2.5 trillion dollars within a week. OpenAI and Anthropic have both since filed confidential S-1s of their own — Anthropic on June 1, OpenAI on June 8 — queuing up the next two legs of the same wave. The fee pool from each deal lands inside institutions that also own the downstream wealth and alternatives franchises. The same entities that price the IPO stand to advise the proceeds.

The parallel that keeps surfacing is how regulatory gates concentrate rather than disperse the flow. Every new issuer must still file through established underwriters and list on venues with fast-entry index rules already in place. Those gates do not multiply with each wave; they simply process larger volumes at the same structural margins.

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Here is the map

The flow follows five linked clusters. Exchanges and listing venues collect fees at the moment of entry and index inclusion. Brokers and trading platforms monetize the subsequent order flow, custody, and margin. Wealth and private banks capture recurring advisory fees once the proceeds sit in client accounts. Alternative asset managers receive fresh allocations into credit, real estate, and private equity. Luxury houses capture the high-margin, discretionary purchases that follow large liquidity events.

A single founder who sells five percent of a newly public company can trigger activity across every cluster in sequence. The same institutions handle each step because the regulatory, compliance, and relationship layers required to move that capital at scale already sit inside them.

Permissioned surfaces offer a useful frame rather than products. An issuer cannot reach index inclusion without choosing a listing venue that already maintains fast-entry rules. A newly liquid shareholder cannot move large blocks without a prime broker that already holds the necessary regulatory permissions. Those surfaces do not multiply when new wealth arrives; they simply process higher volume at margins that were already negotiated years earlier.

The same surfaces also determine where value pools. Once a client relationship includes both private-share custody and public-market execution, the cost of switching rises because the new provider must replicate tax-lot history, margin agreements, and reporting frameworks simultaneously. That replication cost grows with the size of the liquidity event, not the number of providers.

Exchanges and listing venues

$NDAQ operates the primary listing venue and index ecosystem that captures both the initial listing fee and the data revenue that follows. The street narrative treats it as a straightforward beneficiary of any IPO wave, with recurring revenue from listings and market data already priced in. What actually happens is more structural. Nasdaq’s fast-entry rule now places any top-40 market-cap company into the Nasdaq-100 within fifteen trading days of listing. Passive funds must buy the shares. That forced buying raises switching costs for issuers who want index visibility and strengthens the exchange’s pricing power over data and listing packages.

$ICE runs the NYSE and a diversified set of trading and data businesses. The consensus view sees narrower direct exposure to pure-tech IPOs. The reality is steadier: listing fees and data subscriptions compound with any expansion in equity wealth, and the exchange already clears and settles the majority of U.S. securities volume. Both venues sit at the first mandatory choke point.

The parallel worth watching is how index inclusion turned a one-time listing fee into a permanent rebalancing flow. Once the shares enter the Nasdaq-100, every passive vehicle rebalances on a schedule that cannot be avoided. That recurring mechanical demand sits outside the control of either the issuer or competing venues.

The same rule set also limits substitution. An issuer seeking immediate passive ownership cannot simply choose a venue without equivalent fast-entry mechanics; the index methodology itself channels flow to the established player.

Brokers and trading platforms

$HOOD monetizes retail trading volume and new account formation. The prevailing narrative positions it as a high-beta play on IPO excitement. Volume-driven revenue does rise directly with wealth-rotation events, yet the platform’s low switching costs and thin differentiation leave durability lower than pure listing venues.

$IBKR scales commissions and margin lending with trading activity from newly wealthy clients. Its global reach and sophisticated order-routing technology give it a durable position in institutional flow that pure retail platforms lack. The same technology stack that routes retail orders also handles the more complex crosses required when large employee liquidity events hit the tape.

$SCHW combines retail brokerage scale with custody and now private-market access after acquiring Forge. The street sees it as a steady wealth winner. The acquisition embeds the firm deeper into pre-IPO flow, raising client stickiness at the exact moment liquidity events accelerate. Once a client’s private shares sit inside the same interface that already holds their public brokerage account, moving the relationship requires replicating both the private-market data feed and the integrated tax reporting. That integration raises switching costs precisely when the volume of such clients is about to increase.

The competitive force at work is substitution threat. A pure retail platform can lose flow to any lower-cost interface, while an integrated custody-plus-private platform forces any competitor to rebuild the entire data and compliance layer before the client can move.

Wealth and private banks

$MS wealth-management and investment-banking arms both stand to gain. The consensus story emphasizes direct exposure to IPO and private-market activity. Morgan Stanley’s acquisition of EquityZen extends that reach into secondary trading of pre-IPO shares, raising barriers around client relationships that competitors without similar platforms cannot easily replicate. The same client who once traded private shares on a standalone venue now does so inside an account that also offers margin, estate planning, and direct underwriting access.

$GS private-wealth franchise serves ultra-high-net-worth tech clients through the same relationships that lead the underwriting syndicates. The integrated model keeps the firm inside both the fee pool at issuance and the ongoing advisory relationship. When a founder liquidates a portion of a newly public stake, the conversation about allocation often begins with the banker who already knows the cap table.

$BAER focuses on Swiss UHNW advisory directly tied to liquidity events. Earnings pressure and regulatory overhang have created a valuation gap, yet the structural link to cross-border tech wealth remains intact. Swiss private banks have long served as the default venue for non-U.S. founders seeking stable, multi-currency wealth structuring; that preference does not disappear simply because the shares become public.

What strengthens these platforms is the accumulation of context. Each liquidity conversation adds tax-lot history, family-office preferences, and allocation patterns that later advisors must replicate from scratch. The barrier is not the product; it is the accumulated permissions and memory inside the relationship.

Alternative asset managers

$BX receives allocations into credit, real estate, and private-equity funds from newly liquid wealth. The consensus positions it as the prime vehicle for deployment. Scale advantages in raising and deploying large mandates offset fee compression elsewhere; the platform that can absorb the largest checks tends to keep them.

The same logic that drove 1990s founders into alternatives applies here at larger dollar amounts. A single liquidity event can generate nine-figure checks that only the largest alternative platforms can deploy without moving market prices against themselves. That capacity becomes a self-reinforcing barrier: larger checks flow to the managers already equipped to receive them.

The force at work is barriers to entry through deployment capacity. Smaller managers cannot absorb the same check size without market impact, so the largest platforms receive the flow by default. That advantage compounds with each successive wave rather than eroding.

Luxury status beneficiaries

$RMS, $MC, and $RACE sit at the final stage where status consumption occurs. Hermès and LVMH capture high-margin discretionary purchases; Ferrari does the same at the ultra-luxury end. The spend is not core to any of them, yet it is recurring, high-margin, and directly linked to liquidity events that have no natural ceiling in the near term.

These names function as the final confirmation layer rather than the primary driver. When newly liquid capital seeks visible signals of arrival, the marginal purchase tends to land at the scarcest brands. That behavior is culturally sticky and price-insensitive in the upper tail, which is exactly where concentrated IPO proceeds concentrate.

The parallel here is simple. Status goods do not require ongoing relationships or regulatory permissions; they require only recognition. That recognition already exists inside the brands that survived prior wealth waves, so incremental spending flows to them without new competitive entry.

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Safer anchors versus asymmetric bets

The more durable compounders sit where switching costs and regulatory barriers are highest. $SCHW, $ICE, and $NDAQ combine scale with structural mandates that new entrants cannot easily displace. $RMS adds pricing power through brand scarcity that survives macro shocks.

Higher-beta expressions include $BX, $MS, and $BAER, where inflows or execution can move results materially but where outcomes also depend on the timing and size of the actual IPO proceeds. $HOOD offers the purest activity beta yet the lowest durability if competition intensifies.

The distinction matters because the mechanical flows I described earlier—index inclusion, custody hand-offs, margin calculations—land first inside the platforms that already maintain regulatory licenses and data integrations. Those platforms are the anchors. The higher-beta names capture the variable portion of the same flow but must re-win the client at each liquidity event.

The same logic separates the two groups on pricing power. Anchors can maintain or even widen margins because clients face real replication costs; higher-beta names compete more directly on price or convenience and therefore absorb more of the documented fee compression pressure.

The bet

This is no longer a hypothetical. SpaceX is already public — it listed on June 12 at a 1.77 trillion dollar valuation and now ranks among the largest companies in the country, with its fifteen-trading-day path into the Nasdaq-100 already running. OpenAI and Anthropic have both filed confidential S-1s and are queued behind it. Index-inclusion mechanics have already been updated to accelerate mega-cap entries. The underwriting fee pools alone run into hundreds of millions per deal. Yet the market continues to price the downstream infrastructure as if that liquidity might never arrive or might arrive at permanently lower margins. The historical pattern and the concrete mechanics already in place suggest the opposite outcome.

The gap between the mechanical triggers already coded into index rules and custody systems and the valuation multiples that still reflect fear of fee compression alone stands out as most asymmetric. The compression is real, yet it applies to a larger base of assets that must travel through fewer hands. That combination has produced durable revenue expansion in every comparable cycle I have studied.

The bet therefore rests on sequence rather than sentiment. The shares must list before they can be advised, allocated, or spent. Each mandatory step already routes through institutions whose permissions and integrations predate the current wave. Those institutions do not need to win new clients; they need only process larger volumes inside relationships that already exist.

Not financial advice. This content is for informational and educational purposes only and reflects my own opinions, not a recommendation to buy or sell any security. I am not a licensed financial advisor. Do your own research and consult a qualified professional before making any investment decision. I may hold positions in the securities discussed.

The mechanics are straightforward once the jargon is stripped away. Agents cannot operate in a vacuum. They need permissions that survive employee turnover, audit trails that regulators can follow, and a single source of truth that does not reset every time a new model appears. The company that already owns those controls inside an enterprise gains a structural advantage. New point solutions must fight for access; the existing orchestration layer simply extends its reach.

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Historical precedent shows the pattern. When Adobe replaced perpetual licenses with Creative Cloud subscriptions, revenue climbed from $4.4 billion to $19.4 billion while recurring revenue crossed 90 percent. The model did not weaken. It became stickier because the customer’s work now lived inside a persistent environment. Microsoft’s move from on-premise servers to Azure produced the same outcome: a $75 billion run rate at 39 percent growth even as legacy server revenue declined. Incumbents that control the environment where work happens tend to expand total value rather than lose it.

Genesys offers another concrete parallel. Its PureCloud platform migrated contact-center customers from on-premise licenses to cloud delivery and recorded nearly 530 percent year-over-year revenue growth in the first three quarters after the shift, with customer wins rising 115 percent. The feared displacement never materialized because the new model concentrated governance and workflow execution inside one governed system. The same logic applies when agents replace seats: the layer that already enforces compliance and maintains context captures the expanded activity.

Consider what happens when the number of actors inside a system multiplies by an order of magnitude. An enterprise that once tracked a few hundred human users now tracks thousands of agents that each carry their own permissions, decision histories, and cross-references to other agents. The cost of fragmentation rises sharply. A single missed audit trail or conflicting memory state can invalidate an entire quarter of automated work. That requirement does not favor lightweight newcomers. It favors the systems already wired into the enterprise’s compliance fabric and data backbone. The shift therefore does not flatten value; it concentrates it where the rules and the records already live.

The feared collapse

The bear case starts from a simple observation: one agent can replace dozens of licensed users. Seat-based ARR therefore looks fragile. If pricing shifts to $2 per conversation or $0.99 per resolved ticket, the predictable cash flow that justified high multiples disappears. Gross margins that sat at 78 to 82 percent could compress into the low sixties once inference and observability costs run through every workflow. The market has already acted on that fear.

Between January and February 2026 roughly $2 trillion in software market value vanished. Atlassian shares fell 35 percent after the company reported enterprise seat counts declining for the first time in its history. Salesforce dropped 28 percent on similar concerns. The SaaS Capital Index median ARR multiple compressed from 7.0x to 3.8x even though many companies continued to post double-digit revenue growth. Valuations now embed the assumption that the underlying business model itself is broken.

ServiceNow illustrates the dislocation cleanly. Subscription revenue grew 21 to 22 percent year over year, yet the stock halved from its 2025 peak. Investors priced the risk that agentic automation would erode the very workflows the platform monetizes. The narrative treats consumption pricing as inherently more volatile and less valuable than the seat model it replaces.

The same compression hit broader indices. The iShares Expanded Tech-Software ETF fell more than 21 percent year to date and roughly 30 percent from its September 2025 peak by March 2026, even as names such as Adobe continued reporting positive revenue growth. The selloff priced in model obsolescence rather than adaptation.

Salesforce revenue growth slowed to a consensus 9.6 percent for fiscal 2026 while the stock traded down more than 26 percent year to date and over 40 percent from its highs. Public SaaS companies reported AI-driven gross margin resets from the 78-82 percent range into the 60-70 percent band as inference, evaluation, and observability costs scaled with every automated workflow. The sector de-rating exceeded historical shocks even though fundamentals showed resilience in top-line expansion. The prevailing view treats these margin pressures and seat declines as terminal rather than transitional.

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The orchestration layer

The same forces that threaten per-seat revenue strengthen the platforms that already manage identity, permissions, and memory. Agents do not roam freely inside large organizations. They are forced through controlled environments because the cost of mistakes is too high. Microsoft Entra Agent ID automatically assigns unique identities to agents built in Copilot Studio or Azure AI Foundry. ServiceNow’s Knowledge Graph and CSDM extensions give agents a shared, auditable view of enterprise processes. Once agents operate inside that layer, switching costs rise because the accumulated context and governance rules cannot be ported without recreating months or years of work.

Consumption pricing on top of these platforms expands revenue per workflow rather than shrinking it. Salesforce Agentforce reached $800 million in ARR, up 169 percent year over year, with 60 percent of bookings coming from existing customers expanding usage inside the CRM data layer. Intercom Fin hit nine-figure ARR at $0.99 per resolved ticket. Hybrid subscription-plus-usage models have shown 31 to 38 percent higher growth than pure subscription arrangements. The agent does more work, the platform records more activity, and the customer pays for outcomes rather than headcount.

The thought experiment clarifies the mechanism. Imagine an IT department that once managed 5,000 human seats and now manages 50,000 agents. Every agent must pass through the same permissions and memory layer to avoid compliance failures. That requirement concentrates value in the platform that already owns those controls. The alternative—scattered point solutions—creates audit gaps and version conflicts that enterprises will not tolerate. Data gravity therefore pulls agents inward, not outward.

Adobe and Microsoft supply the historical parallel. Both faced the fear that their old models would collapse. Both absorbed the shift and grew total revenue substantially. The orchestration layer that survives does not merely replace seats; it becomes the place where the new volume of agent activity is governed and monetized. ServiceNow’s May 2025 AI Platform launch added an AI Agent Fabric for cross-vendor coordination with Microsoft, NVIDIA, Google, and Oracle, deepening the same gravitational pull inside one governed system. ServiceNow’s April 2025 Cisco partnership further embedded secure AI adoption at enterprise scale. The pattern repeats: governance requirements and integration depth turn the feared volume increase into a moat rather than a threat.

Here is the map

A quick word on where these names come from, because they are not cherry-picked. Before writing a word of this piece I mapped the entire theme: 607 companies screened across 218 value-chain nodes and 985 supplier-customer edges, with all 244 public names scored on theme exposure and criticality. Fourteen made the cut. The chart below is the whole field — the grey cloud is everything that touches the theme, and the gold dots past the gate are what survived.

The agent value chain breaks into four clusters. Workflow orchestration platforms embed and run teams of agents inside existing enterprise processes. Vertical process platforms add agentic capabilities to industry-specific data and compliance requirements. Billing and observability layers capture usage volume and monitor agent behavior at scale. Data and decision platforms supply the persistent memory and long-running logic that agents need to operate across time. Value pools where governance, memory, and workflow execution already intersect because those are the constraints that become more binding as agent counts rise.

Walmart’s experience with e-commerce offers a useful analogy for how the clusters interact. Traditional retailers feared pure online players would strip away margin. Instead, the companies that already controlled physical inventory, customer data, and fulfillment absorbed digital channels and grew omnichannel revenue. The same pattern appears here: the platforms that already sit at the intersection of workflow, compliance, and data capture the incremental agent activity rather than losing it to new entrants.

The four clusters are not interchangeable. Workflow orchestration carries the highest switching costs because agents inherit the process maps and exception rules already built inside the system. Vertical platforms add domain-specific barriers that general tools cannot replicate without recreating regulatory logic. Billing layers convert every additional agent action into a metered event. Data and decision layers supply the memory that prevents agents from hallucinating or losing context after reorganizations. The clusters reinforce one another: an agent that runs inside a governed workflow also generates billable events and requires durable memory. The company that owns two or more of these layers compounds the advantage.

Workflow Orchestration Platforms

$NOW ServiceNow runs the workflows that IT, HR, and customer service organizations already use. Its platform now hosts pre-built teams of agents that execute inside the same governed environment. The consensus view treats the stock as exposed to seat erosion; the shares halved from the 2025 peak despite 21 to 22 percent subscription growth. What is actually happening is that governance mandates and the Knowledge Graph requirement force agents into ServiceNow’s orchestration layer rather than allowing them to operate independently. Switching costs rise because the accumulated process context and audit trails sit inside one system. The business profile strengthens.

$CRM Salesforce positions Agentforce as the operating system for agentic work on top of its CRM data. The street narrative sees slowing core growth offset by AI monetization hopes, with the stock well below 2025 peaks. The concrete development is that Agentforce ARR reached $800 million with 60 percent of new bookings from existing customers expanding inside the trusted data platform. Salesforce processed 19 trillion tokens and delivered 2.4 billion Agentic Work Units across Agentforce and Slack. Agents increase the volume of activity that must be recorded and governed; the platform that already owns the customer records captures that expansion. Pricing power moves from seats to outcomes without losing the data gravity that keeps customers inside.

$PATH UiPath converts its RPA foundation into the execution fabric for autonomous agents. Consensus views it as legacy automation threatened by newer AI tools. In practice, agents multiply the number of workflows that require reliable orchestration and auditability. The automation layer becomes the default runtime for those workflows, raising switching costs and platform value rather than eroding them. Enterprise deployments that once required separate tools now converge on a single governed runtime because compliance and exception handling cannot be fragmented.

$PEGA Pegasystems supplies low-code workflow and decisioning platforms used for CRM and ERP processes. The market narrative often treats it as a mature vendor in a crowded field. What the agentic shift actually does is embed decision agents directly into existing case management flows. Switching costs increase because the accumulated business rules and outcome histories live inside the platform; moving agents elsewhere requires rebuilding those rules from scratch. Barriers to entry rise because new entrants lack the production decisioning logic already tuned to regulated processes. The profile strengthens as agent volume scales inside the same low-code environment.

$HUBS HubSpot provides CRM and marketing automation to mid-market companies. The consensus frames the business around seat-based marketing and sales tools. In reality, its workflow automation directly supports agentic actions such as lead qualification and campaign orchestration. The platform that already owns customer data and campaign history becomes the natural home for agents that act on that data. Switching costs rise because agent actions inherit the existing lead scoring and nurture sequences. The business strengthens as agents increase the frequency and precision of those sequences without requiring new integrations.

Vertical Process Platforms

$DSY Dassault Systèmes supplies 3D and PLM environments where aerospace and automotive teams already model products. Agentic simulation and generative design agents now run inside the same model. Domain-specific data gravity intensifies because regulatory and engineering compliance rules are embedded in the platform; agents cannot bypass them without creating certification risk. The business strengthens as the volume of simulated work increases inside a single governed system.

$SGE Sage Group delivers accounting and HR software to small and mid-sized businesses. Agentic bookkeeping agents handle ledgers natively. SMB customers lack the resources to stitch together multiple point solutions, so the platform that already manages compliance and financial records absorbs the new agent activity. Switching costs remain high because the ledger history and regulatory filings sit inside one environment.

$TNE Technology One provides ERP systems to public-sector and higher-education institutions. Agentic workflow agents manage compliance processes that carry statutory requirements. The vertical specialization creates barriers that general platforms cannot easily replicate; agents must respect those rules or the output becomes unusable for audits. The profile improves as agent volume grows within the existing compliance layer. Removing this platform would stall agentic ERP rollouts at more than 200 institutions that rely on its specialized statutory controls.

$TEMN Temenos supplies core banking SaaS to tier-two banks. Its Infinity platform now includes agentic advisory and operations modules. The market narrative positions it as a traditional banking vendor. What actually occurs is that regulatory reporting and customer advisory rules are already codified inside the system. Agents that advise on accounts or execute operations must operate within those rules or produce outputs that fail audits. Switching costs therefore rise sharply; a new platform would require re-encoding decades of compliance logic. The business profile strengthens because agent volume increases inside a vertical moat that general orchestration layers cannot easily replicate.

$APPN Appian supplies low-code BPM platforms for enterprise process automation. Consensus views it as one of several BPM vendors. The agentic shift embeds agent orchestration directly into existing case and workflow engines. The platform that already owns process definitions and exception paths becomes the execution layer for agents that follow those paths. Barriers to entry increase because accumulated process knowledge cannot be ported without recreating the underlying logic. The profile strengthens as agent counts scale inside the same governed BPM environment.

Billing & Observability Layers

$ZUO Zuora operates the billing infrastructure that converts usage into revenue. Consumption pricing for agents directly increases the number of billable events the platform records. The consensus treats the company as niche subscription software. The reality is that hybrid models combining subscription with usage have already demonstrated 31 to 38 percent higher growth when agents replace seats. Pricing power moves in Zuora’s favor because every additional agent conversation becomes a metered transaction inside its system.

$DT Dynatrace supplies observability across enterprise stacks and has integrated explicit agentic monitoring capabilities. As agent counts rise, the volume of actions that must be tracked and explained increases. The platform that already sits inside existing monitoring workflows captures that incremental activity without requiring new integrations. The business strengthens because observability becomes a non-discretionary requirement rather than an optional add-on. Enterprises cannot tolerate unexplained agent decisions in regulated environments; the layer that already provides that visibility absorbs the new demand.

The interaction between billing and observability creates a reinforcing loop. Every agent action that generates a billable event also generates telemetry that must be explained. The company that owns both layers captures the full margin on both the usage and the explanation. New entrants would need to replicate both the metering engine and the monitoring fabric simultaneously, raising the capital and integration cost of displacement.

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Data & Decision Platforms

$PLTR Palantir’s AIP platform runs persistent agents on enterprise data. The core value is long-running logic that maintains context across organizational changes. Agents require exactly this form of durable memory and decision auditability. The platform that already owns the data foundation becomes the place where those agents operate, raising barriers to substitution. The market narrative often frames the stock around government contracts, yet the same memory and decision layer applies directly to commercial agent deployments where context must survive reorganizations.

$ESTC Elasticsearch provides vector memory and Agent Builder tools that let customers construct custom agents on top of search and observability data. The market narrative positions the stock as a data foundation that benefits from AI traction yet trades well below highs. What is actually happening is that agentic workloads need reliable context retrieval and reranking; the layer that supplies those capabilities sees increased usage as agent volume grows. The profile strengthens because memory and context become central rather than peripheral. The Q4 FY2026 launch of Agent Builder and Elastic Workflows explicitly targets this requirement.

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Safer anchors versus asymmetric bets

$NOW and $CRM sit on the durable side of the risk curve. Both already operate at large scale inside regulated environments where governance requirements are non-negotiable. Agent volume expands inside platforms that customers cannot easily exit without recreating years of process history and compliance records. The valuation compression prices the opposite outcome. ServiceNow’s partnerships with infrastructure providers and Microsoft’s Entra identity layer further lock agents into these controlled environments.

$PATH and $ZUO represent higher-leverage expressions of the same shift. UiPath’s automation layer becomes the runtime for thousands of new agent workflows; Zuora’s billing engine scales directly with conversation volume. Both carry smaller current footprints than the largest orchestration platforms, so the upside depends on execution in a still-forming market. The asymmetry is larger, but so is the sensitivity to adoption timing and competitive response. The same logic applies to $PLTR and $ESTC, where persistent memory and context retrieval become non-discretionary as agent counts scale.

$PEGA, $APPN, and $TEMN occupy an intermediate position. Each owns vertical or process-specific logic that general platforms cannot replicate quickly. Their smaller scale relative to the largest names creates more operating leverage if agent adoption accelerates inside their domains, yet they still benefit from the same governance and memory requirements that protect the larger anchors. The risk curve therefore runs from the broad orchestration platforms at the low end to the specialized vertical and decisioning platforms at the higher end, with the common thread that all of them already sit inside the constraints agents cannot bypass.

The bet

The platforms that absorb agents into governed, persistent systems of record capture more value per workflow than the seat-based model ever did. Current valuations price the opposite outcome. The dislocation that erased $2 trillion in market value between January and February 2026 created the entry point. The companies that already own the controls agents cannot bypass will compound from here. The historical pattern from Adobe’s subscription transition, Microsoft’s Azure pivot, and Genesys’s cloud migration shows that the layer enforcing governance and memory expands rather than contracts when the underlying work model changes.

The asymmetry is straightforward once the mechanics are clear. The market has marked down the entire sector on the assumption that volume will migrate to new, lighter tools. The evidence from identity mandates, compliance requirements, and data gravity points the other way. Agents multiply the number of actions that must be governed and remembered. The platforms that already perform that governance and memory absorb the multiplied activity at higher switching costs and with consumption-based pricing that scales revenue rather than caps it. That gap between the priced-in fear and the mechanics of agent deployment is the opportunity.

Emil Hartela Investing is a reader-supported publication. I map bottlenecks and themes like this one; supply chains, pure plays, and the names the market hasn’t connected yet.

Disclaimer: This is my own research and opinion for informational purposes only — not financial advice, and not a recommendation to buy or sell anything. Many names here are small- and micro-cap or non-US listed, which carries elevated risk. I hold positions in some of them, so assume I am biased. Figures may contain errors or be out of date. Do your own research. DYOR. NFA.

In the May edition of the Haypp Group web traffic breakdown we can see some abnormally large growth. For those new to the series, this is where I track Haypp's websites to front run earnings and generate alpha. The correlation between web traffic and revenue is extremely high. Let's dive right into it.

Core — Mature Nordic

Core markets are showing some pretty flat behavior for Q2. There isn’t really anything super special going on here. Last quarter was a surprisingly strong period for Haypp core markets and some moderate to flat growth is likely where we will land in Q2. It could even be slightly down depending on how June develops. But to sum it up, this quarter for core markets is stability following the rapid growth seen in Q1.

snus.com — Norway

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The Markets

Today’s markets are showing more and more signs of being in an unsustainable place. Anything connected to semis and AI has either run up several hundred percent in a few years, or it is trading at all time lows as the market decides entire categories, SaaS being the obvious one, are about to be made worthless. Rarely have I seen so much conviction priced into so many names in both directions at once.

My investing style has always been contrarian to some extent. Yes, valuation and cashflow are key; however, so is the market’s perception of reality. I don’t believe for one second that good investing comes down to being better at analysing how fundamentals are going to develop. Instead the value lies in the divergence between where fundamentals will actually go and what everyone else thinks. That gap is where the money is, and right now it is unusually wide.

The reason it is so wide comes down to one thing the market is still struggling to price; for the first time we are not automating physical work, we are automating cognition itself. The last great boom, the internet, connected everything but never really moved the productivity needle. This time is different. I have a hard time seeing how disconnecting thinking from humans doesn’t lead to enormous productivity gains long term, and an equally hard time seeing how it doesn’t reshape who, and what, actually holds value in the economy. That second part is the one almost nobody is underwriting properly.

Layered on top of that is a world coming apart at the seams. I don’t think many price the Iran disruption and global unrest realistically. Europe is struggling, key value chains that feed into Asia are severely weakened, and trust is deteriorating globally. So we have the single most powerful productivity force in a century colliding with the most fragile geopolitical backdrop in decades, and the market is trying to hold both in its head at the same time. It isn’t doing it well.

From this worldview I will walk through every position I hold, have held, and am considering holding; which names are insulated from all of this, which ones quietly benefit, and the one or two that frighten me more than I would like to admit.

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This post is about those companies, and specifically the hidden ones found in Finland.

Unlike their counterparts elsewhere in the world, these names have traded flat for the past few years, some of them down. But they sit on the same bottlenecks. And if the buildout plays out the way the rest of the sector is already pricing in, they have the same potential to see large gains as the spending works its way down the chain.

A note before we start: this is a survey of a cluster I find interesting, not a set of price targets. Some of the international names these get compared to have run well ahead of their fundamentals, and I’ll flag where the Finnish ones have real warts too. The point isn’t that these are guaranteed to follow. It’s that the attention has rotated through the US, Sweden, and Germany and largely skipped Finland, despite the same structural setup.

Canatu: the pick-and-shovel inside the lithography machine

Start with the one I’ve done the most work on. Canatu is a Vantaa-based deep-tech company that’s been quietly building since 2004. That long, boring history is the whole reason nobody owns it: it spent most of its life in the lab, and it’s only now hitting the point where the science turns into revenue. The market hasn’t repriced it because, until recently, there was nothing to reprice.

The first-principles case is simple. Making advanced chips runs through one chokepoint: EUV lithography machines, built only by ASML. Inside each machine sits a consumable part that protects the most expensive component, and as the machines get more powerful, the old version of that part stops working. Canatu makes the technology for the new version. So without getting into the chemistry, the position is this: the AI buildout needs chips, the chips need these machines, the machines need this part, and the current materials are hitting a wall. Canatu sits exactly on that wall.

What makes it a business rather than just a clever product is the model. Canatu doesn’t manufacture and ship the part itself. It sells a reactor to a partner, sells the proprietary inputs that only it can supply, and then collects a royalty on every single unit the partner produces. One sale turns into three revenue streams, and the best one, the royalty, recurs forever with almost no cost or manufacturing risk attached. They carry none of the capital burden of building factories around the world; the partner does. Canatu just owns the IP and clips a fee off everything that comes out. That’s the kind of capital-light, high-margin, recurring structure that, if volumes scale, becomes very valuable very fast.

It’s not theoretical anymore. The model went live in October 2025 when a Korean partner, FST, took a commercial license. The interesting wrinkle: Samsung owns a stake in FST. So Canatu is effectively plugged into Samsung’s supply chain without ever appearing as a direct supplier, which is about as good as it gets for a company this size.

Now the honest part, because the bull case usually overstates it. Canatu is not the only player here. Mitsui, the established incumbent, is developing a competing version of the same part with its own backing. So the right way to think about Canatu is not “irreplaceable monopoly.” It’s the other door. The entire chip supply chain relying on one supplier for a critical consumable is exactly what makes the big fabs nervous, nobody wants a single point of failure on something that gates their most expensive equipment. Canatu is the credible independent alternative, and the only one offering partners a way to make this in-house under license rather than buying from a competitor. In a market this strategic, being the trusted second source isn’t a consolation prize. It’s a structurally excellent place to sit, and the licensing model means even winning a modest share compounds into real money over time.

A few things to keep honest. The payoff got pushed from 2027 to 2030, so this is a multi-year hold, not a quick flip. The company still loses money (2024 revenue was €22M, up 62%, but it ran a €5M net loss) because it’s spending to build capacity, which is normal at this stage but demands patience. And the share count is the detail most holders miss: thanks to how the company came public, more shares get issued as the price rises, so the realistic fully-diluted figure is closer to 44-46 million than the ~34 million your broker shows. If you’re doing the math, use the bigger number.

The most recent signal is the one I’d weight most. In May, Dr. Maximilian Slawinski took over as CEO, coming from Soitec, a company whose entire competence is taking advanced semiconductor materials from “we can make a little” to “we can make a lot.” That is exactly the problem Canatu has to solve next. Moving from one-off deliveries into real commercial volume is a different skill than inventing the technology, and they just hired someone who has done precisely that. For a company at this specific inflection, it’s the right hire at the right time.

Aspocomp: the tiny re-shoring bet

Aspocomp is a different kind of idea, smaller, scrappier, and riskier, but it sits in front of a real tailwind that the big banks have started naming out loud.

The first-principles case starts one layer away from the chips themselves. Everything in an AI server has to sit on something, and that something is a printed circuit board. As the boards get denser and more complex to handle AI workloads, they’ve quietly become a constraint of their own. Goldman’s spring 2026 supply-chain work flagged PCBs and the laminates underneath them as one of the genuine bottlenecks in the buildout, with prices climbing 30%-plus a year and shortages they don’t expect to clear before 2027. So this isn’t a Finnish curiosity. It’s a global chokepoint that a major bank has put in writing, and Aspocomp is one of the few European names that plays in it.

Here the interesting part isn’t really the company, it’s the geography. Almost all of this production sits in Asia. Europe has been trying, through the Chips Act and now its successor, to drag critical supply chains back onshore so the continent isn’t fully dependent on imports for the things that matter most, defense electronics, semiconductors, aerospace. A PCB maker with an actual European plant and defense and semiconductor qualifications is exactly the kind of supplier that policy is designed to favor. That’s the core of the bet: not that Aspocomp out-competes the Asian giants on cost, but that Europe increasingly needs a domestic option and is willing to support one.

And there’s early evidence the demand is real. In its most recent quarter the company posted a record order book, with the bulk of new orders coming from the semiconductor and defense segments and part of the backlog stretching into late 2027, unusually long visibility for a company this size.

Now the warts, and they’re real. This is a genuinely tiny company, a market cap around €30 million, with a single plant. Recent results have been bumpy: even as orders hit records, sales actually dipped and margins compressed hard, dragged down by low-margin contracts signed earlier and a literal equipment breakdown that hurt output. That’s the risk in one picture, the order book says one thing, the income statement says another, and the gap between them is execution. Scaling a small single-site manufacturer into a hundred-million-euro revenue company, which is their stated long-term ambition, is hard, capital-hungry, and exactly the kind of thing small caps stumble on. None of that is hidden; it’s why the stock is where it is.

So I’d frame Aspocomp honestly: not a chokehold story like Canatu, and not a clean compounder. It’s a “right place as Europe re-shores, in a category the banks are now flagging” bet, in a name small enough that almost nobody is looking. Worth watching, not pounding the table.

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Modulight: the photonics wildcard

The third name is more of a wildcard, and I’ll keep it shorter because I’m earlier in my own work here. Modulight is a Tampere laser company that’s been around since 2000. The core business today is medical lasers, mostly for cancer treatment and eye conditions, a real, revenue-generating business, not a story stock. But the part that’s interesting in this context is that it runs its own vertically integrated facility in Finland, doing semiconductor fabrication, laser assembly, and optical calibration all under one roof. That’s an unusual amount of capability for a company this small, and it gives it a genuine foothold in photonics, with early exposure to defense optics, quantum, and semiconductor applications.

The first-principles appeal is the same shape as the others: a small European company with real manufacturing capability in an area where the world is increasingly worried about depending on Asia. And there are two things I like about how it’s built. First, the balance sheet is genuinely strong, mostly equity, a net cash position, and enough runway to fund itself toward profitability without being forced to raise money and dilute holders, which is rare for a company at this stage. Second, it’s quietly shifting toward a recurring “pay-per-treatment” model, where it earns a fee every time one of its hospital systems runs a procedure, rather than just selling a machine once. That’s the kind of model that compounds if it scales.

Here’s the honest framing, though, and it’s why I’d hold this one at arm’s length for now. Modulight sits a step further from the current AI and semiconductor boom than Canatu or Aspocomp. Its revenue today is medical. The photonics, defense, quantum, and semiconductor angles, the parts that would tie it directly into the trade everyone’s chasing, are early-stage optionality, not the core of the business yet. So the bull case is more diffuse: you’re backing a well-run, profitable niche company that happens to hold several call options on hot themes, rather than a pure-play sitting squarely on a named bottleneck.

That cuts both ways. It makes Modulight less obviously a rotation beneficiary than the other two. But it also means that if attention swings toward European photonics and defense optics under the same re-shoring logic, a small, profitable, vertically integrated laser maker in a NATO country is exactly the kind of name that could catch outsized interest in a hurry. Worth watching, and worth a proper deep dive, which I’ll do before I say anything stronger.

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Nokia: proof the rotation is real

I’ll end with the one everybody already knows, because it’s the proof of concept for everything above. Nokia spent a decade as a byword for a Finnish tech champion that lost its way, the phone company that missed the smartphone, then a telecom-equipment also-ran trading sideways for years. The kind of name nobody on FinTwit wanted to touch.

And then it re-rated, hard. Not on the old telecom story, but because the market reframed it as an AI-infrastructure play. The acquisition of Infinera plugged Nokia directly into optical networking, the systems that move data between and inside the data centers AI runs on, and suddenly its order book and guidance started reading like a different company. The stock has roughly doubled off its lows as investors repriced it from a legacy equipment vendor into something exposed to the same buildout that’s lifting everything else in the supply chain.

The point isn’t to pitch Nokia here, it’s already been found, and a doubled stock is a different risk-reward than an undiscovered one. The point is what it demonstrates. A large, sleepy, unloved Finnish tech name sat flat for years while the AI trade raged everywhere else, until the market finally connected it to a bottleneck it was actually exposed to. Then it moved fast.

That’s the whole thesis of this post in one example. The attention rotates. It went through the US hyperscalers, then the picks-and-shovels names, then Sweden and Germany, and at each step it eventually reached the companies sitting on a real bottleneck, regardless of how boring or overlooked they’d been. Nokia is the Finnish name where that has already happened. Canatu, Aspocomp, and Modulight are names where, on the same logic, it largely hasn’t yet.

I’m not promising it will. Plenty of these setups never get their moment, and I’ve tried to be honest above about where each of these has real warts, execution, dilution, timing, size. But the structural pattern is hard to ignore: the same bottleneck themes that have repriced names across the US, Sweden, and Germany are sitting, mostly undiscussed, on a handful of Finnish balance sheets. Nokia shows what it looks like when the market finally notices. The rest of the cluster is still waiting.

That’s the bet. Not that any single one of these is a sure thing, but that the gap between “same bottleneck, same tailwind” and “a fraction of the attention” is exactly the kind of inefficiency worth being early to.

Disclaimer

This post is for informational and educational purposes only. It is not financial advice, an investment recommendation, or an offer or solicitation to buy or sell any security. I am not a licensed financial advisor, and nothing here is tailored to your individual circumstances, risk tolerance, or objectives.

I hold positions in some of the companies discussed, so I am not impartial. The names covered here are small-cap and micro-cap stocks listed on Nordic exchanges, which carry elevated risk: low liquidity, high volatility, wide spreads, limited analyst coverage, and real potential for permanent loss of capital. Several are not yet profitable and may need to raise capital, diluting existing shareholders.

Some figures and claims in this post draw on company filings, third-party analyses, and external market data that I have not independently verified in every case, and which may contain errors or become outdated. Forward-looking statements and any scenario or valuation figures are inherently uncertain and should not be relied upon as predictions.

Do your own research. Verify everything independently, and consider consulting a qualified financial professional before making any investment decision. You alone are responsible for your investment choices.

DYOR. NFA.

At the start of the war I sold out of most of my biotech book, rotated into cash, and took a handful of smaller tail positions: $LYB, $WEAT, $BAK and a few others, mostly expressed through options. Those worked out far better than I had any right to expect. Most of them ran up over 100%, and with the clock ticking on the options, I closed them out and started hunting for the next thing.

I think I have found two very compelling names. Here is the origin story.

The current market is dominated by AI capex. Photonics stocks have risen wildly. Part of me wants to partake in all of these exciting technologies, because I have managed to spot AI trends before every investor poured into them in the past. Companies like Google and Nebius Group are key examples. But unlike photonics today, those stocks were extremely cheap when I bought them. Photonics is not.

So I recently started searching for AI-related bottlenecks, trying to work out where all of this capex is actually going. I asked Grok to help me uncover emerging AI capex spend. It came back with several names, most of them clustered around the same theme. The first one I came across was Accelsius, which you get exposure to via $INV. Accelsius is essentially a bet on AI data center cooling demand.

As data centers become more power-hungry on the back of next-gen chips, the nature of cooling demand is shifting. Today, if you want to cool a data center, you are most likely using air cooling, essentially mimicking how a modern building is cooled, just at far larger scale. There are several problems with this.

First, cooling a data center with air means you need fresh water to cool that air, and we all know local communities are increasingly worried about their fresh water supply. Second, and more fundamental, air cooling can only get you so far before it hits a hard physical ceiling on how much heat can be pulled off a chip. That ceiling sits around 280 watts of thermal design power, and modern AI chips have blown well past 700.

The solution is liquid cooling, and it can be done two ways: either by heating the fluid up, or by letting it boil. Most of the market is currently focused on heating over boiling, because the technology is more mature. But looking at the physics and the trajectory of power demand per chip, two-phase cooling, where the fluid is boiled to extract the heat, becomes inevitable. And the thing being boiled is not water but engineered dielectric fluids and refrigerants that vaporize around 50C, which is exactly where the chemistry comes in.

Yesterday I wrote all my thoughts on $INV in a longer piece that I will link below. In short, the company is building the two-phase cooling solution, but getting comfortable with the management and the execution is another thing entirely. Luckily, there is a far safer way to bet on this market than $INV. So that is what I bought instead.

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Selling shovels in the cooling gold rush

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I found the name in a slightly unusual way. I asked Grok for several interesting bottleneck theses outside of photonics, ones that have not yet been hyped to the same degree. The original thesis traces back to AAIG, and there is a fairly active X community forming around the name that has helped me orient myself as I dug in. I also subscribed to MVC Investing after someone in the comments mentioned they were looking into the name as well. So this is not a lone-genius writeup; it is me building on a thread others started and trying to take it deeper. Go check out both and Investing's work.

Let us jump straight into it, starting with the technology and the sector as a whole, because that is what explains why this opportunity exists in the first place.

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Why This Opportunity Exists: The Cooling Bottleneck

Billions upon billions are being poured into data centers right now, and the pace is only accelerating. The reason is straightforward once you accept the premise that AI demand is real and durable. It is not just chatbots. Inference at scale, agentic AI that runs long chains of reasoning and calls tools in the background, and the emerging wave of physical AI in robotics and autonomous systems all share one trait: they are enormously compute-hungry, and that hunger compounds. Training a model is a one-time burst, but inference and agentic workloads run continuously, around the clock, across millions of users and tasks. If you believe that future is arriving, then you believe the demand for compute, and therefore for the physical infrastructure that compute runs on, is going to keep climbing for years. That belief is what is driving the capex wave, and it is the foundation everything else in this writeup rests on.

But compute does not exist in a vacuum, and this is where it gets interesting, because the build-out is starting to run into hard physical constraints. The first is power. Electricity demand from data centers is rising fast enough that it is straining grids, pushing up local power prices, and turning into a genuine political issue in the regions where these facilities cluster. The second is water, and this one is sharper than most investors appreciate. There is a growing movement against data centers at the local level, precisely because of how much electricity and water they draw from the communities around them. We have already seen public hearings and local opposition over facilities consuming the water supply that towns rely on, and a meaningful number of new data center projects are effectively stalled because of exactly these power and water concerns. So the constraint is not abstract. It is showing up as stalled permits, community pushback, and rising input costs.

This is the backdrop for what has become a kind of frenzy on X and across the investing world: the hunt for the bottleneck. If compute demand is going to explode but the build-out keeps hitting physical walls, then the companies that sell the picks and shovels, the ones that relieve those bottlenecks, become extraordinarily valuable. The most popular version of this hunt has been photonics, where the names have already been bid up aggressively. It feels like half of the platform has gone into bottleneck-finding mode, with accounts like Serenity leading the charge on the silicon and photonics side. The logic is sound: find the chokepoint, find the company that widens it, and you have found a structurally advantaged business.

This thesis is not about photonics, though. It is about cooling, and specifically about the bottleneck inside the bottleneck. Goldman Sachs has named liquid cooling one of the primary constraints in the data center market, and once you understand the physics of why, it becomes hard to unsee.

Start with how a data center actually works at the physical level. You have rows of racks, each rack filled with chips, and those chips run on electricity. Electricity in means heat out; it is a law of physics, not a design choice. Every watt of power a chip consumes becomes a watt of heat that has to be removed, or the chip throttles, fails, or melts. For most of the history of computing, this heat has been handled the way you would cool a room: with air, supported by water-based systems. You chill the air, blow it across the chips, capture the heat, and reject that heat to the outside, very often by evaporating water in cooling towers. That evaporation is the crux of the water problem. It is not that the chips drink water, it is that the traditional method of getting rid of their heat consumes enormous quantities of it by evaporating it into the atmosphere.

So here is the first reason this trade is interesting. Water is a finite resource, the political and regulatory pressure against data centers consuming it is mounting, and the traditional cooling approach is directly in the crosshairs. Something has to change in how these facilities reject heat, and that pressure is creating a forced migration toward new approaches.

The first step in that migration is liquid cooling, and the version most widely deployed today is what is called single-phase direct-to-chip. Instead of cooling the air in the room, you bring liquid directly to the chip. You run cold plates over the hot components, circulate a coolant through them in a closed loop, the coolant absorbs the heat directly at the source, carries it to a cooling unit called a CDU, dumps the heat, and cycles back. The key word is closed loop. Because the coolant recirculates rather than evaporating away, single-phase liquid cooling dramatically reduces a facility’s reliance on outside water. That solves the environmental and siting problem to a large degree. And it solves a second problem at the same time: liquid carries heat away far more effectively than air, so you can pack chips much more densely and run hotter, higher-power processors than air could ever keep up with. For the current generation of AI hardware, single-phase direct-to-chip is the workhorse, and it is genuinely good at its job.

But there is a deeper layer, and this is where the real opportunity lives. Single-phase cooling has a ceiling, and the chip roadmap is heading straight for it. The problem is in the physics of how single-phase works. It removes heat by warming up the liquid, which is called sensible heat, and a given volume of liquid can only absorb so much energy before it gets too hot to keep cooling effectively. To remove more heat, you have only one real lever: move more liquid, faster. And that lever breaks down in three compounding ways as chips get hotter.

First, the penalties of pumping faster do not scale linearly. The pressure you need rises with roughly the square of the flow speed, and the pumping power rises with roughly the cube. So doubling the flow to cool a hotter chip can cost you around four times the pressure and closer to eight times the power. Each generation of hotter chip makes the next increment of cooling disproportionately more expensive. Second, that faster flow creates real mechanical wear: erosion of the channels, stress on pumps, tubing, and connectors, and higher maintenance and failure risk. Third, and most fundamentally, there is a hard wall. Past a certain heat density at the chip surface, no amount of faster flow helps, because the limiting factor stops being how fast you move the liquid and becomes how fast heat can cross from the chip surface into the fluid at all. Beyond that point single-phase simply cannot keep a chip safe, regardless of how much water you throw at it. The consensus figure is that single-phase direct-to-chip becomes unviable somewhere around 2,500 watts per chip, and the chip roadmap is moving toward and past that line.

This is where two-phase cooling enters, and the distinction is the whole thesis. Two-phase works much like single-phase, with one transformative difference: instead of merely warming the coolant, it boils it. You circulate a dielectric fluid, a liquid engineered to be electrically safe so it can touch sensitive components, over the chip, and at the hot surface that fluid boils and turns to vapor. The vapor travels to a condenser, releases its heat, condenses back to liquid, and returns to do it again, all in a sealed closed loop. The reason this matters is a piece of physics worth internalizing: boiling a liquid absorbs vastly more energy than simply heating it. The energy a fluid soaks up when it changes phase from liquid to vapor, called latent heat, is on the order of several times greater per unit of fluid than what it absorbs by warming up alone. So two-phase can pull far more heat off a chip with far less fluid flow, which sidesteps the exact wall that single-phase runs into. It is not a marginal improvement. It is a different regime of heat removal, and it is the reason essentially every other high-heat industry, from power generation to refrigeration, relies on phase change rather than simple convection.

Put simply: as chips keep getting hotter, the industry runs out of room with single-phase, and two-phase is the architecture that picks up where it leaves off. That transition, from air, to single-phase liquid, to two-phase, is the bottleneck this writeup is about, and the company at the center of it is where we turn next.

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Meet the Company: Innventure and Accelsius

The asset that matters here is Accelsius. Innventure is the listed shell that lets you get exposure to it. That framing is worth holding onto from the start, because almost everything interesting about this opportunity lives inside the operating company, while the thing you actually buy on the market is the parent. We will get into what that structure means later. For now, the point is simple: when people talk about the $INV thesis, what they are really talking about is Accelsius.

So what is Accelsius? It is an Austin-based company commercializing two-phase, direct-to-chip liquid cooling for data centers, the exact architecture described in the previous section. It was founded in 2022 by Innventure, which operates as a create-and-operate platform that takes promising technology, builds a company around it, and scales it. Accelsius is the cooling business that emerged from that model, and it has become the centerpiece of the entire Innventure story.

The technology has serious provenance, and this is one of the more important and underappreciated facts about the company. Accelsius’s core two-phase cooling technology originated from research done at Nokia’s Bell Labs, one of the most credentialed industrial research institutions in the world. Crucially, Accelsius did not merely license this technology. It bought the underlying patents outright from Nokia, through a patent purchase agreement, while other software and know-how is licensed alongside it. Owning the foundational patents rather than renting them is a materially stronger intellectual property position, and the Bell Labs lineage gives the technology a pedigree that is rare for a company this young. The science had been developed at Bell Labs over several years but never productized, and Accelsius was built to take it to market.

The product line is branded NeuCool, and it is worth understanding what they actually sell, because it spans several layers of the cooling stack. At the chip level, the system uses what are effectively boiling cold plates, mounted directly onto the hot components, where the dielectric refrigerant nucleates into vapor before traveling to a coolant distribution unit to condense and cycle back. On the capability front, Accelsius has demonstrated some of the most impressive thermal numbers in the industry: in testing, its cold plate handled 4,500 watts on a GPU-socket test vehicle, reportedly the highest documented load for direct-to-chip liquid cooling, and notably the cold plate did not reach its own limit, the test equipment simply ran out of power. That figure matters because it shows headroom well beyond where single-phase gives out and well beyond current chip generations.

On the product side, the line includes the IR150, an integrated rack that combines the cooling and the IT space into a single plug-and-play enclosure rated to 150 kilowatts, designed for straightforward deployment without redesigning a facility’s plumbing, and the MR250, a row-based coolant distribution unit rated to 250 kilowatts and beyond, which Accelsius has described as the first in a planned series of increasingly powerful multi-rack systems with higher-capacity units on the roadmap. The system runs on a low-global-warming-potential, minimal-PFAS dielectric refrigerant, which matters given the environmental and regulatory backdrop. In short, Accelsius is one of a very small number of companies delivering true two-phase direct-to-chip cooling at rack scale today, with a credible product family already in the market and bigger systems in development.

Now the ownership and capital picture, because this is where the story gets its strategic weight. The most important recent event was Accelsius’s funding round, which closed with Johnson Controls leading and Legrand participating. The round valued Accelsius at roughly 665 million dollars post-money, and Innventure’s economic stake in Accelsius sits in the region of 43 percent, which is the figure to anchor on when you think about how much of Accelsius’s value flows through to the listed parent. Innventure consolidates Accelsius in its financials, so when you look at Innventure’s reported revenue, you are largely looking at Accelsius’s revenue.

The identity of those backers is the part worth dwelling on, because strategic investors are a different signal from financial ones. Johnson Controls is a roughly fifty-billion-dollar building systems and HVAC giant with deep relationships in the facilities and mechanical infrastructure of large buildings, exactly the layer where data center cooling lives. Legrand owns rack power distribution brands like Raritan and Server Technology and has strong penetration in data center rack infrastructure, particularly in Europe. So the two investors are not passive check-writers hoping for a markup. They are operators who bring distribution, manufacturing credibility, and customer access, and Legrand in particular has framed the relationship as a pillar of its data center strategy, with the two companies collaborating on integrating two-phase cooling into rack infrastructure. When giants like these put capital and their own reputations behind a small company’s technology, it is a stronger validation than a venture fund writing a check, because they are staking their customer relationships on the technology working.

Innventure itself is the publicly traded entity, and Accelsius is its flagship, though not its only, operating company. The parent also holds other ventures, including AeroFlexx in packaging and Refinity in advanced materials, but the overwhelming share of investor attention, and of the thesis, is on Accelsius and the cooling opportunity. That concentration is deliberate on the part of most people following the name, because cooling is where the large, near-term, AI-driven opportunity sits.

So to summarize the asset before we get into how to think about valuing it: Accelsius is a two-phase direct-to-chip cooling company with technology bought outright from Nokia Bell Labs, a product family already shipping across rack and row formats, industry-leading demonstrated thermal performance, a roughly 665 million dollar post-money valuation from its latest round, two major strategic backers in Johnson Controls and Legrand, and Innventure as the roughly 43 percent owner and the listed vehicle through which public investors get exposure. That is the thing at the center of all of this. The next question is how you actually put a value on something like it, and that is where most people, in my view, reach for the wrong tool.

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How to Value Something Like This: The Make-or-Buy Lens

The first thing I did when I started modeling Accelsius was the obvious thing: I tried to map out their revenue. Management is guiding for a 100 million dollar run rate by the end of the year, which means roughly 8 to 9 million dollars of revenue in December, exiting at that pace. Full-year 2026 revenue is likely to land somewhere around 30 to 40 million. On top of that, management has said they see a pipeline supporting something like eight times their 2026 revenue plan, which points to a pipeline north of 200 million dollars. The trouble is that it is genuinely hard to pin down how much of that pipeline actually converts to sales, and over what timeframe. So the revenue model gives you a rough shape, but not a foundation you would want to build a valuation on.

Once you get past the next year or so, management has not told us much, so you are forced to reach for industry TAM figures and sector growth rates. The number that gets quoted repeatedly is a roughly 40 billion dollar cooling TAM by 2033. But here is the thing: estimating how Accelsius fits into that TAM picture does not actually help very much, in my opinion. Saying they land at, say, 20 percent market share is just guessing. This is a startup. Picking a share number a decade out and multiplying it by a TAM is the kind of math that feels rigorous and is really just optimism with a calculator. So I do not think the conventional revenue-and-share model is where the real signal is.

Instead, there are only two things I think you can actually rely on when looking at Accelsius, and both come from outside the company’s own projections.

The first is industry validation from the players who set the standards, namely the chipmakers, NVIDIA and AMD. Two-phase is still in its early innings, and it is genuinely unclear exactly when the threshold gets crossed where single-phase no longer cuts it. It could be 2028, it could be later, it could be earlier. What matters is that we get confirmation from the reference designs that NVIDIA and AMD publish, because their roadmaps dictate what the entire ecosystem builds around. If Jensen comes out and says two-phase cooling is inevitable for the 2028 generation, we have a dramatically clearer picture than we have today. Until the chipmakers bless it, two-phase adoption is a question of when, and the chipmakers are the ones who answer that question.

The second thing to watch is what the incumbents are doing, and this is the heart of how I think you should value this asset. I will get into the competitive picture in detail later, but for now the exercise is to put yourself in an incumbent’s seat. The big cooling players are mostly doing air and single-phase today. But they know perfectly well that as chips get hotter, they will have to move to better cooling solutions. So they face a simple question: make or buy. Should they build two-phase technology in house, or acquire a company that already has it?

Building it in house takes real time and effort. These are large companies with plenty of capital, so money is not the constraint. Time is. Two-phase is a different engineering discipline, and developing it from scratch, designing, testing, and iterating through the reliability qualification that mission-critical cooling demands, takes several years. My guess is that they do not have those years to spare, and here is why. Once chips cross the threshold where single-phase can no longer cool them efficiently or economically, there will be a scramble, a window of a few years where everyone needs two-phase at once. We are already seeing the beginning of this. As I mentioned, two of Accelsius’s own investors are already strategic players who have chosen to buy in rather than build. And when you look at Accelsius’s main competitor, ZutaCore, you see the identical pattern: the incumbents circling that company also chose to buy exposure rather than develop their own. So far, essentially every major player that has looked seriously at this field has decided to bet on either Accelsius or ZutaCore, rather than join the game as a builder.

When you combine the make-or-buy logic with the future TAM of the sector, you start to get a much better picture of what an asset like Accelsius could be worth. The right question is not “what revenue will Accelsius book in 2030.” It is “how much would an incumbent be willing to pay to be in the two-phase cooling game at all.” And bear in mind the structural setup: there are several incumbents who will need two-phase, and not many companies actually making it yet. More buyers than assets is exactly the condition that drives prices up.

If you look at other sectors that have seen rapid valuation increases over the past few years, a common pattern emerges: incumbents go on acquisition sprees in the early innings of commercial sales, right at the proof inflection where the technology is de-risked but adoption has not yet ramped. Accelsius is not quite at that point yet, but we are starting to get closer to peak incumbent demand for the technology. The incumbents will look at a 40 billion dollar market and think, we need to be part of this, what are we willing to pay to participate. They obviously need upside on the purchase, but a 40 billion dollar market that is still growing can plausibly support well more than 40 billion in total value creation across its players. So it is not hard to see how an incumbent could be willing to pay several billion dollars for an asset that lets them play in that market, or even into the tens of billions if you want to be really optimistic about the scramble.

This is why the hype around Innventure is growing. Innventure owns roughly 43 percent of a potentially multi-billion-dollar company, and that ownership is being acquired through a listed vehicle that currently trades at a fraction of what that stake could be worth if the make-or-buy scenario plays out. It is genuinely easy to construct a scenario where Innventure is worth several hundred percent more than it is valued at today. The make-or-buy logic gives the story a floor that no revenue forecast could, because it does not require Accelsius to win the open market on its own merits, only to remain one of the few buyable ways into a market everyone will need to be in.

That is the bull case at its strongest. But there are some important things to keep in mind that complicate it, and those are what I want to focus on next.

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The Good, the Bad, and the Ugly

So far we have concluded that there is a large opportunity ahead of Accelsius, potentially valuing the company at multiple billions in the future. Innventure’s stake in that is roughly 43 percent. So it is not too big a stretch to see Innventure valued at double or triple where it trades today, somewhere in the 10 to 20 dollar range, if the scenario plays out. That is the part that gets people excited, and I think it is genuinely plausible.

But there are multiple risks and several things that make the story considerably less sexy than the headline. It is worth going through them honestly, because the difference between a good outcome and a bad one here runs straight through these issues. I will take them as the good, the bad, and the ugly.

The good, or at least the manageable. The first thing to internalize is that you only own 43 percent of Accelsius, and the rest of Innventure is other companies, namely AeroFlexx in packaging and Refinity in advanced materials. These other positions in the Innventure portfolio are interesting ventures, but they are ventures, which means they carry the same trait every venture does: the potential to require more capital and bring more dilution to the whole. When I value Innventure, I would not assign a large amount of value to the businesses beyond Accelsius. Yes, they might be worth 100 million or so collectively, but they also carry the potential to dilute a similar amount as they get funded. So I treat them as roughly a wash, neither a hidden treasure nor a disaster, just not the reason to own this. The reason to own this is Accelsius, and everything else is secondary.

The bad. The first real problem with Innventure is, obviously, dilution. We have already seen a great deal of it over the past year, and it is hard to see how, over the long term, there would not be more. This happens at two levels: at the holding company level, as Innventure raises capital to fund operations, and inside the holdings themselves, as Accelsius and the others raise their own rounds. Cumulatively, this can have a large impact on returns for anyone who wants to own this for a few years or more. A thesis can be completely correct on the technology and the eventual buyout and still deliver disappointing per-share returns if the share count keeps climbing in the meantime. This is the single most important thing for a long-term holder to keep front of mind, and it is the reason the capital structure matters as much as the technology.

The ugly. In 2021 there was a Hindenburg short report that painted a very negative picture of Innventure, focused largely on PureCycle, one of its ventures. This report came out around the time PureCycle went public, and before Innventure itself was listed. Like most short reports, it was aggressively negative, and short sellers are not neutral parties. But setting the tone aside, it identified some patterns that have, to some extent, repeated, and those patterns are worth understanding rather than dismissing.

The first pattern to be aware of is management’s tendency to make bold revenue claims and strong projections. With PureCycle, Innventure repeatedly signaled that the company was close to an inflection point and that revenues would soon be far higher. The useful thing about a five-year-old claim is that you can now fact-check it. Looking at PureCycle today, roughly five years later, it generates barely any revenue. Back in 2021, many investors listening to the inflection talk were modeling PureCycle making billions in revenue around now. In reality it is doing a couple of million, orders of magnitude below the guidance-era expectations. The lesson is straightforward: the management commentary should not be taken at face value. If Innventure’s management says they are at an inflection point, it is far better to wait for the proof than to take their word for it.

The second focus of the report was the team’s poor track record of taking portfolio companies to market. Most of their past ventures have gone bankrupt, and the report argued that they have consistently taken companies public too early. The pattern is related to the first point: the management comes across as highly opportunistic and quite promotional, spending a lot of time and effort making each venture look like the next big thing.

Now I want to address these claims directly, because the honest answer is more nuanced than either “ignore it” or “avoid the stock.”

First, on governance, something important has recently changed. An activist investor, Ascent Capital Partners, took a stake of around 7 percent and sent a pointed public letter to the board. The letter was sharply critical, essentially saying its patience had run out, and it made specific demands: materially cut corporate overhead, stop funding ventures beyond Accelsius until things stabilize, redirect capital into Accelsius, and reconstitute the board with more independent, experienced operators. Over the following weeks, the company responded substantively. It added new directors, published a formal capital allocation framework, and made meaningful cost cuts, with general and administrative expenses coming down significantly. The activist subsequently followed up with a public letter of support. This matters, and it is a genuine positive, because the activist pressure pushed the company toward exactly the disciplines that address the biggest concern here, namely overhead and dilution, and it tightened the focus onto Accelsius as the priority. Engaged shareholders forcing better capital discipline is precisely what you want to see in a holdco that has historically been criticized for the opposite. One honest caveat: an activist who has done well on the position has every incentive to declare victory, so the support letter is encouraging rather than a clean bill of health. But the direction of travel on governance is clearly better than it was.

On the Hindenburg report itself, my honest view is that it is largely correct in arguing that Innventure’s management should not be trusted completely. Where I think the report overreaches is in using failed ventures as evidence of poor performance, because on average ventures tend to fail; that is the nature of the model, and a string of failures is not by itself an indictment. You underwrite a venture platform on whether the winners are big enough to cover the losers, not on the body count. But, and this is the part I cannot wave away, it does worry me when a team consistently jumps on hype cycles and markets its story so aggressively that it repeatedly misses its own targets. I would much rather back a team that gives projections you can trust and then beats them quietly. So the management question is a real mark against the name, and I am not going to pretend otherwise.

But here is the most important thing, and it is the reason none of the above is disqualifying. Accelsius has its own management. Innventure has a parent-level management team whose record is, let us say, mixed. But Accelsius, the operating company that actually matters, is run by a separate team, and that team looks considerably stronger. So the promotional-parent concern and the quality of the operating business are two different questions, and conflating them is a mistake in either direction. The next section is where I want to dig into the Accelsius team and the company’s recent activity, because that is what gives the clearest picture of whether the operating business is the real thing the bull case needs it to be.

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The Accelsius Team and the Evidence on the Ground

If the parent-level management is the part of this story that gives reason for caution, the Accelsius operating team is the part that gives reason for confidence, and the contrast is sharp enough that it deserves its own section. This is a separate group of people, with a different profile, and they are the ones actually building and selling the product.

Start with the CEO, Josh Claman. He is not a promoter cut from the create-and-operate mold; he is a career data center and enterprise technology operator with around thirty years in the industry. His background includes senior leadership at Dell, where he ran large multi-billion-dollar units including serving as general manager of Dell UK and heading enterprise business for the Americas, along with time at companies like NCR and AT&T. That is precisely the kind of profile you want selling infrastructure into the same enterprise and hyperscale buyers Accelsius is targeting; he has sat on the other side of those tables for decades.

The technical bench is the part that should reassure you most, because it directly answers the question of whether the technology is real. The CTO, Dr. Richard Bonner, is a genuine two-phase thermal specialist: 18 years in thermal product development, over fifty published papers, five US patents, a former AIChE Transport and Energy Processes Division Director, and a PhD in chemical engineering from Lehigh. This matters enormously in context, because one of the sharpest criticisms in the Hindenburg report about a different Innventure venture was that the team lacked deep domain expertise in the relevant science. Here, the opposite is true: the person leading the technology is an actual boiling and two-phase heat transfer expert. The supply chain side carries serious hardware-scaling pedigree as well; the supply chain lead spent 12 years at Dell running server supply chain planning, with prior engineering experience on NASA’s Orion program at Lockheed Martin, which is exactly the discipline a company needs when its bottleneck is manufacturing scale rather than invention. The broader finance and operations leadership brings backgrounds from companies like Dell and National Instruments that are known for scaling hardware revenue from millions into billions.

So the picture of the operating team is a credible, operator-and-engineer group with real data center, two-phase, and hardware-scaling expertise. That is a meaningful rebuttal to any lazy dismissal of Accelsius as just another over-marketed Innventure venture. The parent carries the promotional history; the operating company is run by people who look like they know exactly what they are doing.

Now to the evidence on the ground, because credentials matter less than what a company is actually doing, and over the past year Accelsius has put out a steady stream of milestones and signals that, taken together, are more substantive than I expected when I started digging. Let me walk through them.

On products and performance, the company brought its NeuCool line to general availability, including the IR150 integrated rack launched at Data Center World and the MR250 row-based CDU launched at the OCP Global Summit, where management explicitly described it as the first in a planned series of increasingly powerful systems with higher-capacity units on the 2026 roadmap. On raw capability, the demonstrated 4,500 watts per socket result, where the cold plate did not reach its own limit and the test rig ran out of power first, remains one of the most impressive thermal numbers publicly shown in direct-to-chip cooling.

On third-party validation, this is where the signals get genuinely interesting, and a lot of it comes from sources most investors never bother to read. Independent engineering analysis, attributed to Jacobs, has put numbers on the efficiency case: in a modeled 10 megawatt data center, two-phase direct-to-chip showed roughly 35 percent lower annual operating expense and around 12 percent lower five-year total cost of ownership versus single-phase, with no change in capital expenditure. That matters because it is an outside firm rather than the company validating the economics.

On deployments and channel, Accelsius has a named deployment at a large data center campus through DarkNX, a 300 megawatt project that stands as the single biggest named deployment in the space. It has placed equipment at Equinix’s co-innovation facility in Ashburn, the data center capital of the world, which means the technology is being shown to essentially every major operator that passes through. And the partnership with Legrand is visibly operational rather than just a press release: at Dell Technologies World, Accelsius exhibited its IR150 inside Legrand’s booth, showing the two-phase rack alongside Legrand’s power and networking gear, which is the strategic investment actually manifesting on a trade-show floor.

Perhaps the most striking single signal came from a separate event entirely. Accelsius was featured as a technology partner at the ribbon-cutting for a major server vendor’s customer solutions center, a facility of exactly the kind where that vendor walks its own enterprise customers through validated technology. The company’s own marketing lead posted about it, and the imagery showed the cooling technology on display in the vendor’s innovation lab. I want to be careful here, because this is validation and exposure rather than a disclosed supply contract, and it should not be inflated into one. But being placed in front of that vendor’s customer base, in that vendor’s own facility, is a meaningful step for a company this size, and it is not the kind of thing that happens to a business that is all marketing and no substance.

Then there is the hiring data, which is the kind of primary research that almost nobody does and that I find genuinely revealing. You can learn a lot about where a company thinks it is going by who it is paying to hire. Accelsius has been staffing like a company preparing for a production ramp, not like a lab still searching for product-market fit. It brought on a global commodity manager, a role whose entire purpose is to lock down annual component supply contracts, which you create when you have forward order visibility, not when you are running pilots. It has a manufacturing operations function at the VP level, unusual at this revenue stage, along with production and shift roles and systems engineers with hardware and aerospace backgrounds. None of that is an organization you build on speculation. You build it against demand you can see coming.

And there is a constant drumbeat of independent commentary reinforcing the direction. Data center industry voices have been writing about “building for a two-phase future” as the prospect of one-megawatt racks comes into view, and the IR150 launch drew a wave of posts from infrastructure professionals calling it a significant step for AI-ready cooling. Even Accelsius’s own deployment partner, DarkNX, has publicly framed two-phase as core to building AI environments that can handle both current high-density chips and future Rubin-class infrastructure without major redesigns later. When a customer is talking publicly about future chip generations, that is the kind of forward signal you want to see.

None of this is a contract, and none of it is revenue at scale. It is validation, channel activity, credentialed leadership, and hiring that all point the same direction. But that is exactly the point: in a pre-inflection business, the progression is the signal, and the progression here is consistent and improving. The operating company is doing the things a real company on the cusp of an inflection does. Whether that converts into the outcome the bull case needs is the open question, and it is what the final section is about.

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The Competition and the Industry Picture

I have referred to the competitive landscape a few times, so let me lay it out properly, because understanding who Accelsius is actually up against, and where the whole industry sits on the adoption curve, is essential to judging the thesis.

At the leading edge of two-phase direct-to-chip, this is effectively a two-horse race between Accelsius and ZutaCore. ZutaCore is the other credible pure-play two-phase company, and like Accelsius it is backed by serious strategic investors, in its case Carrier, alongside a hyperscaler server ODM and others, which gives it a strong direct line into hyperscaler design-in. Both companies have credible technology and early deployments, and crucially neither has yet landed the named, high-volume hyperscaler contract that would settle the race. So the outcome is genuinely open, and the two are not even competing on quite the same axis, which is the most useful thing to understand about the matchup.

There are two different ways to measure cooling performance, and Accelsius and ZutaCore have each pulled ahead on a different one. The first is per socket, meaning how much heat you can pull off a single chip. Here Accelsius leads: it has demonstrated 4,500 watts on a socket-level test vehicle, the highest documented figure for direct-to-chip, and the cold plate did not reach its own limit. ZutaCore’s HyperCool has been certified to cool up to roughly 2,800 watts per processor, which is formidable but lower. This is the chip-level headroom that matters most as the next chip generations push socket power up, because it is the axis on which single-phase physically gives out. The second measure is per unit, meaning how many racks one cooling unit can serve. Here ZutaCore currently leads: in late 2025 it announced end-of-row coolant distribution units rated at 1.2 and 2 megawatts, which serve many racks from a single centralized box. Accelsius’s row-based unit, the MR250, is rated at 250 kilowatts, with higher-capacity systems promised for 2026 but not yet shipped.

So the honest current state is that Accelsius leads on chip-level thermal performance while ZutaCore leads on system-level capacity per unit, and they are partly optimizing for different buyers. Accelsius’s integrated, plug-and-play products are well suited to enterprise, colocation, and neocloud players who want to adopt incrementally without redesigning a facility. ZutaCore’s high-capacity end-of-row units are aimed more squarely at hyperscale-density greenfield deployments. Which approach wins the early volume depends on whether the near-term buying comes from hyperscalers building from scratch or from a broader set of operators retrofitting and adopting rack by rack. It is worth being clear-eyed here: on the specific metric of capacity per cooling unit, which several knowledgeable observers argue is what ultimately decides the winner at the hyperscale frontier, Accelsius is currently behind, and the higher-capacity unit it has promised for 2026 is one of the more important things to watch.

It is also worth saying that this will not be a two-company market forever. The physics is known, and as the field matures more players will be able to enter, whether established thermal names or new entrants. There are already adjacent and emerging players in two-phase and advanced direct-to-chip beyond these two. But at the leading edge today, with shipping general-availability products, named deployments, and strategic backing, Accelsius and ZutaCore are clearly the front pair, and notably almost every incumbent that has looked seriously at the space has chosen to back one of them rather than build, which is the make-or-buy dynamic in action.

Now the bigger competitive reality, which is that the real near-term competition is not the other two-phase company at all; it is single-phase. The single-phase incumbents are the ones with the installed base, the relationships, and the mature products today, and they are formidable. The market leaders here, names like CoolIT, Vertiv, and Schneider, already ship single-phase coolant distribution units at very high capacity. CoolIT’s largest row CDU is rated at 2 megawatts and has been deployed at scale, enough to cool many of the densest current-generation AI racks. So when you compare Accelsius’s 250-kilowatt row unit to a 2-megawatt single-phase unit, the gap looks enormous, but a good chunk of that is a product-class difference, an integrated rack and an early row CDU versus a mature high-capacity row product, rather than a pure capability gap. Still, the takeaway is real: single-phase is not a weak incumbent waiting to be displaced. It is a capable, entrenched technology that is being actively stretched to handle more, and it is the thing two-phase has to displace, not merely outperform on paper.

This is what makes the S-curve and the timing question the crux of the entire thesis. Two-phase is sitting at the transition from early commercial deployments into qualification: products just generally available, first named deployments landing, hyperscaler engagement at the proof-of-concept stage, and the current flagship chips still specified for single-phase. The reason single-phase is still the default is that it can be stretched further by brute force, pumping more fluid faster, even though the penalties of doing so rise steeply. So the key question is when the crossover arrives, the point where single-phase genuinely cannot keep up economically and two-phase becomes necessary rather than optional. The honest answer is that nobody knows precisely. It could be 2027, 2028, or later, and estimates keep moving. The chip roadmaps are the accelerant, and the single most important confirmation would come from the chipmakers themselves: if NVIDIA or AMD bless two-phase in their reference designs, the architectures the whole ecosystem builds around, that is the signal that the crossover is locked in. A reference-design win, or a public statement from the chipmakers that two-phase is the path for a given generation, would change the picture far more than any company press release. Watching the reference designs is, in my view, the clearest leading indicator there is.

The photonics comparison is instructive here, and it cuts in two directions. Photonics is the other great AI-bottleneck story, and its valuations have already popped hard, with names reaching multi-billion marks well before the revenue arrived. That tells you frontier-hardware valuations can run years ahead of adoption. But it also tells you that two-phase cooling has not yet had its photonics moment. The story has not gone fully hot, which means, if you believe the direction of travel, this sits earlier in its narrative cycle than photonics did, with arguably a clearer physical forcing function behind it. The flip side, and the genuine risk, is timing: if single-phase keeps getting stretched and the crossover slips out to 2029 or beyond, you are holding a cash-burning, diluting company while you wait for an inflection that keeps receding. That is the central risk of being early, and it is why the dilution discussed earlier matters so much. Being right on the technology and wrong on the timing can still cost you.

One last thread worth pulling, because it points to other ways to play this theme that may be safer than Innventure. Regardless of which cooling company wins, all two-phase systems need an engineered dielectric fluid to boil, and that fluid is a high-value, recurring consumable. The market for these fluorinated coolants is essentially a duopoly between Solstice Advanced Materials, ticker SOLS, the business spun out of Honeywell’s advanced materials arm, and Chemours, ticker CC. These are the coolant suppliers, the picks-and-shovels one layer below the cooling vendors, and they benefit whichever two-phase company wins, and indeed benefit from the broader liquid cooling shift generally. The catch is that both are large, diversified chemical companies where data center cooling fluid is only a slice of the business, so they are not pure plays, and the upside per dollar invested is more muted. But that is precisely the trade-off: they are slower, safer, more diversified bets that capture the theme without the binary technology risk and the holdco baggage that come with Innventure. For an investor who believes in the cooling bottleneck but does not want to underwrite a single early-stage company wrapped in a holding structure, the coolant names are a genuinely more conservative way to express the same view. I find them less exciting and lower-variance, which is exactly why they are worth mentioning: not every way to play a theme has to be the highest-beta one.

With the competitive and industry picture laid out, the final question is what actually moves this from here, which catalysts to watch and how I am thinking about positioning. That is where I will close.

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What I Am Watching and How I Think About Positioning

So where does all of this leave me. I want to close with the catalysts I am actually watching and how I think about expressing the trade, because the thesis is only useful if it connects to decisions.

Let me start with the question I have spent the most time on, which is how to express this at all, and specifically whether options make sense. The honest answer right now is that they mostly do not. The options chain for Innventure is poor. The contracts are expensive, the implied volatility is high, and the name does not have proper long-dated LEAPS. What that means in practice is that if you buy the options currently available, you are effectively betting that the stock rises by something like 100 percent within a few months, because anything less and the cost and time decay eat you alive. That is a brutal bar. You can be completely right on the direction and the eventual outcome and still lose on the option simply because the move did not happen fast enough.

To use the options, in other words, you essentially have to bet on market discovery and rerating rather than on a specific news catalyst landing in your window, and that is a genuinely hard thing to time. I will say that the signs of that kind of rerating are not absent. There has been a lot of activity around the name on X, and my own writing on it has drawn a good amount of engagement, which suggests the story can spread and the stock could rerate on hype and attention before any single hard catalyst arrives. But even granting that, the options being this expensive means they are not the ideal way to express the view. You are overpaying for the privilege of being right on a tight clock.

That mostly leaves pure stock, and when it comes to sizing I think you have to remember what this actually is: a venture. The sensible way to invest in a venture is to start small and add as the picture clarifies and the winner reveals itself, rather than going in large on conviction before the evidence is in. So my current thinking, if one wants to play the name at all, is a smaller position first, and then reassess around October, which is when I expect the next meaningful product catalyst, and decide from there whether the picture has improved enough to add. I would also note that, as covered earlier, SOLS and CC are genuinely attractive alternatives for expressing the broader cooling theme with far less single-company and holding-company risk, and for some investors those are the better vehicle entirely.

Now the catalysts themselves, in rough order of how much they would move the story.

The first is the product roadmap, and specifically the higher-capacity unit. I expect Accelsius to announce something around October, possibly earlier, that addresses the hyperscaler segment better than the current line does, following the launch cadence of the past year. If that lands, it closes the per-unit gap to ZutaCore and the single-phase incumbents and materially strengthens the competitive position. If October passes without it, that is a mild negative signal that the roadmap is slipping.

The second, and potentially the most powerful, is a chipmaker reference design. I think there are decent odds that within the next six months we see something like an AMD reference-design announcement, or comparable industry commentary, that validates two-phase for a specific high-power deployment. A reference-design win from NVIDIA or AMD is the single clearest confirmation that the crossover is locked in, because it is the chipmakers, not the cooling vendors, who dictate what the ecosystem builds around. This is the catalyst I would weight most heavily as a leading indicator.

The third is future funding rounds, which could act as a very strong rerating moment in their own right. If Accelsius announces it has completed new financing at, say, a 1.5 billion dollar valuation, the listed parent should see its implied value rise more or less instantly, because that is a fresh, market-set mark on the asset that Innventure owns a large slice of. A priced-up round is the cleanest way the private value gets crystallized into something the public market can point to.

The fourth is straightforward commercial progress: more named contracts on the scale of the 300 megawatt deployment, and crucially, whether booking growth breaks out of its current level rather than staying flat. Bookings accelerating is the proof that the pipeline is converting, and a named, high-volume hyperscaler contract would be the milestone that genuinely settles the bull case.

And the fifth, which is more of a slow-burn macro catalyst, is the environmental and water backlash. If states or regulators begin to say, in effect, that you cannot build new air-cooled or water-hungry data centers, the demand for liquid cooling would rise rapidly, and more investors would catch wind of the story. We are already seeing stalled projects and local opposition over power and water; if that hardens into actual policy, it becomes a forcing function that pulls the whole adoption curve forward, and a two-phase, water-free solution sits right in the path of that shift.

So that is the watch list: the October product cadence, a chipmaker reference design, a priced-up funding round, named contracts and booking acceleration, and the regulatory water backlash. Any one of them moving in the right direction strengthens the case; the reference design and the funding round are the two I think would rerate it hardest.

As for how I think about it overall, the thing complicating this for me is not the technology, which I find genuinely compelling, but the structure. Buying Accelsius directly as a pure play would be far easier to stomach. The added Innventure holding-company layer, with its dilution history and the promotional track record covered earlier, is what gives me pause, and it is the reason I would treat any position here as venture-style: small to start, sized to survive the dilution, and added to only as the catalysts confirm the picture. The honest conclusion is that this is a genuinely interesting, genuinely risky situation where the technology and the make-or-buy logic are the draw and the capital structure and timing are the risk. Whether those balance out in your favor depends a great deal on the catalysts above, which is exactly why I am watching them rather than reaching for the spreadsheet.

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Disclaimer: Nothing in this post is financial advice. I am not a financial advisor, and this is not a recommendation to buy or sell any security. It is my own research and opinion, shared for informational and entertainment purposes only. I may hold positions in the names mentioned, and those positions can change at any time without notice. Everything here could be wrong, including the facts, the assumptions, and the conclusions. Do your own research, consider your own circumstances, and consult a licensed professional before making any investment decision. Small, early-stage, and thinly traded names like the ones discussed here carry a real risk of permanent and total loss.

Haypp Group can be modelled using web traffic to a very high degree. I have consistently managed to make accurate predictions on Haypp Group’s revenue based on the web traffic of their several sites; the correlation between Similarweb panel visits and reported revenue sits at a Pearson r of roughly 0,94 on a YoY basis across the last nine quarters. In other words, when the platform’s visit footprint moves, group revenue moves with it almost one-for-one.

Previously I have mainly done quarterly web traffic updates, but I figured that doing monthly updates might be interesting to follow; it enables an earlier read into the quarter and also highlights interesting dynamics that would otherwise be missed.

And this month, the dynamics are unusual. April is showing the largest moves I have ever seen in Haypp’s web traffic data; one site has nearly doubled YoY and the Growth segment as a whole is tracking at a pace that, if it holds, would imply a step-change in quarterly revenue. At the same time, the Core segment is pulling in the opposite direction, which raises a real question about how the segments balance out at the group level.

So what is actually driving this? Is the explosive Growth reading the start of a structural shift, or noise off a soft Q1 base? And how should the Core pullback be interpreted against a Q1 that ran hot? Let’s dive into how the first month of Q2 looked.

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Core — Mature Nordic

In April the Core markets did not see much growth; so far we are mainly just seeing decline. At first glance this might look worrisome to someone who hasn’t looked at the stats before, but monthly swings are always large. Further, as haypp.com is both Growth and Core to some extent, this Core breakdown doesn’t factor in how haypp.com is doing; that will be covered in the Growth segment. Lastly, Q1 was a very strong quarter for the core market, and thus it makes the Q2 data look weak in comparison.

nettotobak.com — Sweden

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The headline numbers

Revenue $73,9M, up 10% YoY, at the top end of guidance. Non-GAAP operating profit $2,4M (3% margin) vs a $1,3M loss in Q1’25, also at the top end. Normalized FCF $6,6M, the 10th consecutive positive quarter. Non-GAAP diluted EPS $0,01 vs -$0,03 last year.

Guidance raised on the low end

Full year 2026 revenue guided to $307M–$315M (was $305M–$315M). Non-GAAP operating profit raised to $17M–$19M (was $16M–$19M). Q2 guided to $74,5M–$76,5M, implying around 8% YoY at the midpoint, with the H2 ramp doing the heavy lifting.

Multi-year contracts now 64% of ARR

Up from 52% in Q1’25 and 42% in Q1’24. Enterprises are locking SMWB in as infrastructure, not a discretionary tool.

RPO at $298M, up 18% YoY

Growing nearly 2x revenue growth. 70% expected to recognize within 12 months. The gap between bookings and recognized revenue mechanically forces revenue acceleration as bookings convert.

NRR stabilized; underlying point-in-time metrics already improving

Reported NRR 98% all customers, 103% for $100K+ ARR customers. Both flat for two quarters. Management explicitly disclosed that the trailing four-quarter average is masking improvement that has already happened in the underlying quarterly numbers. GRR hit a two-year peak in Q1.

$100K+ ARR customers grew to 461; average account value a new high at $383K

Both count and intensity expanded simultaneously. Customer base is moving up-market.

One of the two deferred LLM contracts closed in Q1

The second is still in the pipeline alongside multiple other large deals. Dedicated LLM/OEM sales team is the structural change.

MCP integration launched with ChatGPT

Same architecture as the Claude MCP connector announced last quarter. SMWB is now embedded directly into the two largest LLM platforms. Manus partnership also expanded with bidirectional MCP.

ChatGPT ads measurement product launching this quarter

Management claims SMWB is the first company in the world to bring LLM ad measurement data to market. New revenue line, no direct competitor.

Retail Intelligence and Ad Intelligence launched in March

Retail Intelligence covers 650+ retailers. Ad Intelligence covers paid media across search, social, display, with LLM ads being added now.

CEO Ofer announced he is stepping down by mid-2027

His 20-year milestone. External search starting now with a top executive search firm. He stays through the transition. No change to strategy, operations, or financial outlook.

Customer count metric is being retired

Total logo count (6,038, down 1% QoQ) is being replaced by $25K+ ARR cohort disclosure (1,840 customers, +2% YoY, $132K average account value, +9% YoY). The new cohort is 86% of ARR.

Buyback floated but no decision

$65M cash, no debt, accelerating FCF. Management said capital allocation is on the table once FCF strengthens further.

Now to the webcast details and what they actually mean.

AI and the LLM training pipeline

It really seems like SMWB is doing well on the AI data licensing side. One deferred LLM contract closed in Q1, a seven-digit deal with an existing big tech customer. The second large contract is still being worked, with multiple other large deals in the pipeline alongside it. A dedicated LLM and OEM sales team is now running point on this category. Or Offer on the call: “We started the year with a dedicated team only focusing on this large language model and original equipment manufacturer opportunities and they really executing very well.”

Worth remembering that part of why Semrush was bought at such a premium was the data itself. The data is the asset, not the dashboard. SMWB closing LLM training contracts is the cleanest possible validation that this data has structural commercial value to the AI buildout. If the data was generic or substitutable, LLM labs would not be writing seven-figure checks for it. The fact that they are, and that the pipeline keeps growing, points directly at the same thesis that justified the Semrush price tag.

Pricing model: consumption is working

CBO Maoz Lakovski clarified that SMWB does not price by seats and has not for a while; pricing is data access plus consumption layered on top. The shift is working. Or Offer addressed margins directly: “I think the margin are similar or even better in this consumption model because there’s no UI. So every time historically when customers used to buy data from us or API first they become more sticky and retention was better. But also they’re much more profitable because it’s more integrated into the workflow. So you need less customer success people to support those customers and they’re more sticky and there’s no UI on top of that.”

So consumption pricing means less platform overhead, fewer CS headcount, deeper workflow integration, and better stickiness. For an AI agent economy where agents do not buy seats but do consume data, SMWB’s monetization model is already structurally aligned with what’s coming. This is the kind of architectural advantage that does not show up in a single quarter but compounds for years.

NRR turnaround

This is the most important mechanical signal in the print. Reported NRR is a trailing four-quarter average. Or Offer: “The NRR we reporting to the street is the four-quarter average of NRR and we’re already seeing an improvement with our NRR and GRR in the past two quarters. That is not fully seen yet in the average. So we already know that the NRR is going to be better going forward.” And on GRR specifically: “the GRR that we saw in Q1 was the strongest in the last two years and we also, we didn’t of course share Q2 yet but we also seen the strength of the GRR continuing to be very strong in Q2.”

The 103% NRR for $100K+ customers is mathematically at or near the trough. The next 1–2 prints should show the average catching up to the underlying point-in-time improvement. If this plays out, Q1 marks the turnaround quarter for the business. That is the kind of inflection that does not get priced in until it is already in the reported number.

The Manus deepening

Manus deepened its partnership with SMWB today, expanding the data available to Manus AI agents (keywords, search traffic, incoming and outgoing referrals, landing pages, popular pages) and adding MCP server access for joint customers. The new data is available to all Manus Pro subscribers without additional setup. The fact that an AI agent platform chose to deepen rather than diversify, less than 5 months after the initial integration, is a strong signal that the data is genuinely valuable inside agent workflows. Mike Sadler, SVP of AI and Data Partnerships at SMWB: “In January, we gave Manus’s AI agent the ability to see who’s winning online. With this expansion, businesses can put AI agents to work obtaining deeper insights into the signals that turn a traffic snapshot into a strategy.”

If the integration was not generating real usage, Manus would not be widening the data surface. They are. That is a small but real second proof point that SMWB data is becoming infrastructure in the agent economy, not a side feature.

Buyback

Lucas from Needham asked about a buyback. Or Offer’s response: “We did discussed it. We don’t have a specific decision yet and it’s a good stuff to think about going and seeing how the year is progress but it’s definitely something that can be on the table.” He followed up: “Generating normalized free cash flow is a top priority. So we focus on that once we see also this trend picking up, as as mentioned earlier, we will consider all available options of capital allocation.”

My personal take is that the cash is more likely to be used for M&A and product investment than for buybacks. Management has been explicit about a disciplined M&A strategy focused on bolt-ons that strengthen the data asset or accelerate scale. With $65M in cash, no debt, and accelerating normalized FCF, capital priorities point toward consolidation moves. That said, a modest buyback is not off the table, especially if the stock stays cheap into H2. Worth noting the PMI hire as well; bringing in someone to drive Post-Merger Integration discipline points at a company that is preparing to deploy capital into acquisitions, not return it.

CEO stepping aside

Or Offer announced he will step down by mid-2027 at his 20-year service milestone. The framing was personal and durable: “My promise to myself and to my wife was always that When I reached 20 years of service, I realign my priorities and spend more time with my family.” This is not a forced exit; it is a founder hitting a life milestone he set for himself 20 years ago. He is staying through the transition and repeated three times that strategy, operations, and financial outlook are unchanged.

The question now is who replaces him. The search has been confirmed as external: “It will be external search and now that we announced to the street we can probably start the search. We’re ready. And top executive search firm is starting work today.” That is a meaningful variable. An enterprise SaaS veteran with strong commercial chops could accelerate the AI re-rating; a finance-oriented operator could slow it. Until the successor is named, this is an overhang on the multiple but not on the underlying business.

Retail Intelligence is the understated addition

Retail Intelligence covers 650+ retailers, combining Amazon IQ with Cross-Retail IQ across product mix, availability, pricing, competitive positioning, and emerging trends in a single intelligence layer. E-commerce is getting brutally competitive; brands and retailers are hungry for unified data that cuts through the fragmentation of marketplaces. This is the kind of product that quietly compounds over multiple quarters as customers discover they need it. It also fits naturally into the multi-product expansion narrative driving the NRR recovery.

I think this is going to be a sleeper hit. The combination of cross-retail coverage plus the existing customer base plus the AI Studio interface means SMWB can sell this into existing accounts with minimal friction. Expect this to show up meaningfully in the upsell motion over 2026.

Sales and marketing efficiency

S&M expense fell to 39% of revenue in Q1’26 from 44% in Q1’25, while revenue grew 10%. Lower spend, better productivity, more output. Or Offer was clear on the call that sales productivity has improved for the third consecutive quarter, with two separate commercial teams (new sales and expansion) both performing well. This ties directly into the GTM rebuild that has been underway for over a year; the team is now showing through in the numbers. Stronger productivity at lower S&M intensity is exactly what you want to see in a business approaching scaled profitability.

Other relevant

G2’s Spring 2026 report awarded SMWB 90 badges, with leadership recognition in 7 key categories including AEO, competitive intelligence, content analytics, SEO tools, digital advertising intelligence, market intelligence, and paid search intelligence. Independent validation of product leadership across the categories that matter most for the AI data thesis.

Deferred revenue grew to $117M from $112M sequentially. Cash and equivalents at $65M down from $72M at year-end, mainly due to a $6,5M payment for business combinations. Operating cash flow was thin at $0,2M but the normalization adjustment for that same $6,9M business combination payment is what brings normalized FCF up to $6,6M. Worth understanding that the FCF number is doing some work via add-backs this quarter.

Net take

The thesis got stronger, not weaker. AI data licensing is closing real deals. Consumption pricing is working and the margin structure is improving under it. NRR is mechanically set up to inflect over the next 1–2 prints. Manus deepening, ChatGPT MCP, and the ChatGPT ads measurement product all point to SMWB data becoming foundational to AI workflows. Retail Intelligence is a sleeper. Sales productivity is normalizing on lower spend. The new risk is the CEO transition, which is a real overhang but not a thesis-breaker.

Q2 print is the next catalyst window. Reported NRR should tick up, the second LLM deal may close, the CEO shortlist may emerge, and Q3 guidance will tell you whether the H2 ramp is real. There is value in the data; the market just hasn’t priced it yet.

Thoughts going forward

If one believes in the fact that SMWB data will be more valuable in the AI landscape, not less, this was a great quarter. At the current EV/S the stock is genuinely cheap. There are multiple ways where things could go right; either they just continue executing on the AI pivot and larger customers and re-price once the AI thesis is understood, or they get bought at a nice premium in the near term. I am pretty sure there are multiple companies that would love the data and the edge they can get in the AI race.

The setup is asymmetric. On the upside, you have a business with locked-in revenue acceleration through RPO conversion, a mechanical NRR inflection that is already happening in the underlying numbers, a consumption pricing model structurally aligned with the agent economy, dual MCP integration across Claude and ChatGPT, and a first-mover position in LLM ad measurement. Each of these alone is worth something; together they describe a company whose data is becoming infrastructure for the next wave of computing.

On the downside, the floor is meaningfully higher than the multiple suggests. Ten consecutive quarters of positive normalized FCF, 80% gross margins, $65M in cash with no debt, 64% of ARR locked in multi-year contracts, and a customer base moving up-market. The business does not need a heroic outcome to compound from here. It just needs to keep doing what it is already doing.

The acquisition optionality is real. Strategic buyers who would benefit from owning the data layer include large data and analytics platforms looking to defend their relevance in an AI-native world, advertising and media measurement companies that need digital intelligence to stay competitive, large enterprise software vendors that want to embed market intelligence into their workflows, and the LLM labs themselves who already pay seven-figure sums for the training data. A private equity buyer with a roll-up thesis around digital data and AI measurement would also see the math work, especially given the FCF profile and the multi-year contract base providing predictable cash flow.

The CEO transition actually slightly increases acquisition probability. Founder-led companies are harder to buy; a founder who has just announced his departure window is a different dynamic. Whether intentional or not, the next 12–18 months are a structurally easier period for a strategic buyer to make a move.

The path I am underwriting is the organic one. Continued execution on the AI pivot, the second LLM deal closing, NRR inflecting in the reported number over the next 1–2 prints, Retail Intelligence quietly compounding, and the market eventually catching up to what the leading indicators have been saying for two quarters. The acquisition outcome is a free option on top.

Either way, the data has value. At this multiple, you are not paying for it.

Disclaimer

Not financial advice. I own SMWB and am clearly biased. Do your own work, form your own thesis, size your own positions. I am not your fiduciary and this post is not a recommendation to buy, sell, or hold any security. Markets can stay irrational longer than any thesis can stay intact; the bull case I laid out can be wrong, and the risks I flagged can be larger than I think. If you act on anything written here without doing your own independent work, that is on you.

The GLP-1 Pivot’s Immediate Sting

International revenue surged 969% YoY to $78.2M, offsetting an 8% YoY decline in U.S. revenue, but $33M in restructuring charges tied to the GLP-1 pivot still dragged the headline print into a narrow miss. This recap breaks down the Q1 FY2026 numbers, checks my pre-earnings model’s accuracy, and reflects on what the results mean going forward. Remember, none of this is investment advice; I’m sharing my independent read as always.

Headline Numbers from the Print

Hims & Hers reported Q1 FY2026 revenue of $608.1M. That marked +3.8% YoY growth but a -1.6% QoQ dip. GAAP EPS came in at -$0.40, hit by $33M in one-time restructuring charges.

Gross margin compressed to 65.0%, down from 73% in the prior-year quarter. Subscribers grew to 2.584M, up 9.0% YoY. Monthly ARPU slipped to $80, a 6.0% YoY decline.

Free cash flow stayed positive at $53.0M. The revenue print narrowly missed the pre-print EODHD consensus of $616.9M; EPS also fell short, largely from those charges.

How My Pre-Earnings Call Stacked Up

My pre-earnings model had Q1 FY2026 revenue at $614.9M. The company reported $608.1M, a gap of $6.8M or 1.12% MAPE; I overshot slightly.

Consensus from EODHD sat at $616.9M pre-print; their error was $8.8M or 1.44% MAPE. My estimate edged out the Street this time, but single-quarter accuracy is noisy; the real test is consistency over multiple prints.

Web traffic grew 15.5% QoQ to 23.7M visits. That signal captured the demand strength well.

FDA restrictions on compounded semaglutide were a key risk; those drove the $33M charges and the 8% YoY U.S. revenue decline. The Hers brand traffic surge provided the expected offset; this drove the 969% YoY international growth.

App installs softened in February-March, hinting at the 6% YoY ARPU drop to $80, but my model didn’t fully bake in the mix shift’s depth. The international offset proved stronger than I anticipated, contributing to my slight overshoot.

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Management’s Take on the Drivers

Management pinned the quarter’s drag on the pivot from compounded GLP-1 drugs to branded options like Novo Nordisk’s Wegovy. That shift triggered $33M in one-time restructuring charges, including $28M in write-downs on obsolete ingredients.

Subscribers climbed 9% YoY to 2.584M, showing healthy demand. ARPU fell 6% YoY to $80 as the mix moved away from high-margin compounded GLP-1 toward lower-priced branded and other offerings.

Geographic shifts stood out: international revenue exploded 969% YoY, while U.S. revenue dropped 8% YoY where the GLP-1 pause hit hardest. Free cash flow held at $53M despite the costs; adjusted EBITDA halved to $44.3M from $91.1M a year ago.

The lab testing rollout continues, with scaling planned through 2026 and 2027.

Breaking Down the Segments

United States

U.S. revenue landed at $529.9M, down 8.0% YoY. This segment, 87.1% of total, bore the brunt of the compounded GLP-1 pause. Traffic data showed flat Hims brand visits; the decline tied to regulatory restrictions on semaglutide.

The strategic shift to branded GLP-1 hit ARPU here hardest. App installs softened late in the quarter, signaling the product transition’s drag.

Rest of World

Rest of World revenue hit $78.2M, up 969.0% YoY. At 12.9% of total, this surge offset U.S. weakness as international scaling ramps.

Hers brand traffic jumped from 8.8M to 11.6M visits; this drives the growth story. The mix shift shows expansion potential beyond domestic headwinds.

Forward Guidance and Implications

Management guided Q2 revenue to $680M–$700M, above pre-print consensus. For full-year FY2026, they raised the range to $2.80B–$3.00B from the prior $2.70B–$2.90B; second-half acceleration is coming.

They expect a return to profitability in 2027 as GLP-1 transition costs fade. The lab testing platform rolls out with commercial scaling targeted through 2026 and 2027.

International scaling is working; the raised guide shows confidence in monetization ramps. U.S. stabilization will be key to watch amid the pivot.

Stock Move and Market Chatter

Shares dropped roughly 13.0% in after-hours trading from the $29.14 regular-session close on 2026-05-11, with prices ranging from $25.08 to $25.55.

Chatter on X split evenly. Bulls pointed to the raised full-year guidance to $2.8-3.0B, 969% YoY international revenue growth, and subscriber additions to 2.584M as thesis positives. They highlighted the Novo Nordisk partnership; not a pilot; and $53M free cash flow as signs of long-term health.

Bears focused on the revenue miss, -$0.40 EPS, 8% YoY U.S. revenue decline, and gross margin drop from 73% to 65%. They flagged adjusted EBITDA halving to $44.3M and ARPU sliding 6% as structural risks from the GLP-1 pivot.

The debate centers on execution in shifting to branded GLP-1, sustaining international momentum, and reversing U.S. trends into Q2.

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Reflections on This Print

This print surprised me with the international offset’s strength; 969% YoY growth masked more U.S. pain than I modeled. Flagging FDA risks paid off, capturing the $33M charges, but I underestimated their ARPU impact.

My model edged consensus with 1.12% MAPE versus 1.44%, thanks to traffic signals nailing subscriber growth. The miss came from not weighting international data heavier amid the pivot.

Going forward, I’ll recalibrate ARPU for mix shifts and bake in one-time charges explicitly for regulatory transitions. The key watch item is U.S. revenue stabilization above $529.9M in Q2 as branded GLP-1 ramps.

Prediction vs Actual Breakdown

My pre-earnings estimate was $614.9M; the company reported $608.1M, a gap of $6.8M or 1.12% MAPE. Consensus was off by $8.8M or 1.44% MAPE. This quarter my model edged out the Street, but one print is just a data point—plenty to tune going forward.

Key Metric into Q2

Watching U.S. revenue for signs of stabilization above $529.9M in Q2, as the GLP-1 branded pivot ramps and aims to reverse the 8% YoY decline from Q1.

A speculative note from the author

So here is what I think of the company as an investment.

I think bears don’t understand that there is genuinely a lot of growth ahead of the firm. My web traffic data for Q2 so far already points to a print at the high end of guidance, and I think it’s possible they even exceed it; potentially around 720 mil in Q2. Long term, I think the company will boast a meaningfully bigger revenue base than today.

But here is what I think the bulls get wrong.

The business model doesn’t support massive margins. You have substantial sales and marketing costs, ongoing SBC, and persistent R&D spend. That realistically means you have to accept an owner yield somewhere around 10% at steady state. Modeling anything higher is reckless. The output of this is that Hims is still slightly expensive even post the Q1 earnings dip.

So here is how I am looking at the stock. Wait and see if it goes even lower, say into the 10 to 20 USD range, and then potentially prepare to buy options ahead of a strong future print like Q2 is likely to be. But at today’s prices the stock doesn’t really make much sense compared to other names in the opportunity set.

Disclaimer: This research is informational and not personalized investment advice. Outputs blend alternative data with a disciplined internal workflow; figures are directional and may change as new information arrives. Past accuracy does not guarantee future results.

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Haypp first landed on my radar roughly two years ago; I took a small starter position and added on the way up in the 110 SEK range. Then came the hits; a ZYN shortage; a US lawsuit; and a revoked license in Sweden. The stock halved. That is when I leaned in. By then I had enough conviction and understanding to size it as a real position; so I kept buying into the lows.

Fast forward to today and that decision aged well; but I think this is just the beginning. Most people in the world still do not know what nicotine pouches are; many have never tried them. That will likely change. In my view the category can 30x over the next twenty years; and Haypp is positioned to capture a meaningful share of that growth.

If you read my original deep dive, several things have shifted since then:

• Media & Insights has continued rising in importance and is increasingly central to the thesis

• France banned nicotine pouches; a reminder of regulatory fragility in EU expansion markets

• The FDA updated its guidelines on nicotine pouches

• The UK vape division was wound down

• ZYN returned to the US sites via the direct PMI agreement

• Segmentation was unified into two segments; Growth and Core

• The short-term profitability narrative has shifted

• Some of the wider hype in the sector has calmed down

What does Haypp do?

Haypp is an e-commerce business that sells nicotine pouches, snus, and vapes across Sweden; Norway; DACH; the UK; and the US. They buy finished products from a range of suppliers including Philip Morris, British American Tobacco, Turning Point Brands, and others; then sell directly to consumers through their portfolio of websites.

This is a low-margin retail model; Haypp currently runs at roughly 19 percent gross margin. In practice a customer adds one or more cans to the cart on a site like Snusbolaget or Haypp; pays online; and Haypp earns a few bucks per order. The parcel arrives a few days later; repeat purchases drive the engine.

Do not confuse low margin with low quality; Haypp is far from a boring e-commerce shop with no moat.

Each time Haypp sells a can of nicotine pouches and books a small retail margin, a second asset compounds in the background; data. Every order captures structured signals; brand and SKU; flavor and strength; format and pack size; price paid and discount; device and channel; delivery choice; location; reorder cadence. Over time this builds longitudinal cohorts that show how real customers move from trial to habit; which flavors they switch to; how strength preferences evolve; what promotions change behavior; and when baskets expand.

Haypp Media & Insights turns that stream into products; paid reports; custom analyses; and decision support for suppliers and regulators. Typical outputs include new-product screening; flavor and strength optimization; price elasticity curves; subscription propensity; promotion lift; and age-gating friction metrics. For suppliers like Philip Morris, British American Tobacco, and Turning Point Brands this is scarce and valuable; most in-store sales flow through intermediaries that do not expose consumer-level behavior. Haypp sees the shopper at the edge; at SKU and click level; across markets; in something close to real time.

This means Haypp, in addition to e-commerce, has a secondary business layered on top that is highly profitable; the result is an e-commerce model with a huge structural data advantage. Haypp is the largest online nicotine-pouch retailer in every market it operates in. Right now the Media & Insights business generates almost 10% of revenue; margins are at least half of that; giving Haypp roughly a 5% cost advantage on selling nicotine pouches purely from data collection.

Why nicotine pouches?

To understand Haypp and why it’s interesting, you have to understand the opportunity in nicotine pouches. Everyone has heard of nicotine; mostly in a negative way; the “addictive ingredient” in tobacco; and yes, it’s been used as a bug killer. Both are true. However, nicotine itself does not seem to be very toxic to humans at typical consumer exposures; it is highly addictive; cheap; and there’s work suggesting improved cognitive capacity for some users; e.g., people with ADHD often report better focus.

In a nutshell, we have a cheap product that is highly addictive and seems to have minimal downside for many users; yes, there are health risks; but they aren’t drastic enough for most consumers to care; after all, every piece of candy you eat “kills” you in the long run.

What we have here is a product that is superior in almost every way. Consumers prefer it; regulators prefer it; companies prefer it. For users it’s cleaner; discreet; cheaper; easier to live with. For companies it carries better unit economics; longer cash-flow runways; and supports higher valuations. For regulators it’s a practical harm-reduction path that moves smokers into nicotine pouches.

The category is also evolving fast on the product side. Pouch tech has seen a remarkable amount of innovation in recent years; new flavor systems, faster release profiles, slimmer formats, moisture engineering, and improved fit under the lip. What looked like a commoditized product a few years ago is now an active R&D field where suppliers compete on real differentiation.

The regulatory backdrop is more mixed than two years ago. The FDA in the US has continued to refine its guidelines, with the federal stance leaning toward pragmatic harm reduction. France went the other way and banned nicotine pouches outright. The UK has moved toward strength caps that will limit higher-nicotine SKUs. Brussels keeps floating new proposals and member states keep interpreting them differently. The direction of travel is not a straight line; expect setbacks alongside the progress.

But the market is still early. Tobacco still dominates; globally there are far more smokers than pouch users. That is about to change. Look at Sweden and Norway; you see mass switching. Smoking is too harmful and no longer socially accepted. My view: the nicotine-pouch market is set to grow at an incredible pace until smokers are essentially gone. For investors that implies around 20% CAGR over the next decade; with some markets growing far faster right now.

Websites and Markets; Brand-by-Brand

Haypp Group runs 16 sites under 11 brands, selling snus, nicotine pouches, and vapes. Many brands serve several markets through localized sites, which is why the site count and brand count differ.

Operations are now split into two segments. The Core segment includes Sweden and Norway, where snus and nicotine pouches are well established and form the backbone of Haypp’s profitability. The Growth segment covers Germany, Austria, Switzerland, the United Kingdom, the United States, and the vape business through VapeGlobe DE. This is a meaningful change from the old three-segment structure; the previous Emerging segment is gone. VapeGlobe UK was wound down, VapeGlobe DE was folded into Growth, and vapes also sit inside Core through Haypp’s wider catalog where regulation allows. The simpler structure better reflects how the business actually runs today.

The difference between Growth and Core is surprisingly large; it is a central part of the Haypp thesis. In Core markets like Sweden and Norway, usage is mature; repeat rates are high; order patterns are predictable. Growth markets look very different. New pouch users often start light; roughly one can per week. After a couple of years many settle into a daily habit; that shift alone turns a customer into a 7x heavier consumer without Haypp adding a single new user.

This cohort maturation drives powerful compounding. As light users age into heavy users, baskets get bigger; reorder frequency rises; subscription uptake improves; fulfillment routes densify; CAC payback shortens. The same customer base can deliver step-function growth in volumes and gross profit as behavior shifts from trial to routine. That is why the US and UK matter so much; they are still converting early cohorts, while Core already sits near steady state.

This structure allows Haypp to balance stable cash flow from mature markets with expansion into new, high-growth geographies and categories. Core secures the base, Growth drives the long-term opportunity.

Next, I will quickly go over each brand.

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Haypp

Haypp is the group’s flagship in Europe; one brand running localized sites for the UK, Germany, Austria, and Sweden. In segment terms it straddles Core and Growth; Sweden belongs to Core; the UK, Germany, and Austria belong to Growth. Over the last year Haypp has been among the fastest growers in the portfolio.

By focus, Haypp is primarily a nicotine-pouch banner. Germany and Austria are pouch-first markets. The UK is also pouch-led even though the catalog is broad; pouches anchor the proposition.

Snusbolaget

Snusbolaget is Haypp Group’s Swedish flagship in the Core segment; it sells traditional snus and also offers nicotine pouches. It is currently the largest site by sales; but its share has been shrinking as nicotine pouches take market share across the portfolio; it likely will not remain the largest over time.

Snusnetto and Nettotobak

Snusnetto and Nettotobak sit in Sweden within the Core segment; both are snus-led with some DIY supplies and nicotine pouches. Snusnetto is very small; traffic has plummeted over the last year; it almost looks like Haypp is phasing the site out.

Nettotobak is mid sized; but web traffic has dropped sharply; suggesting sales are close to half of what they were two years ago. Net read: these two look like legacy coverage for niche customers rather than growth engines.

Norway cluster (Snushjem, Snuslageret, Snus.com)

Segment: Core; Location: Norway.

These sites are Norway-focused; snus first with nicotine pouches alongside. The market is mature but still posting decent growth; not explosive, but better than steady-state. Norway is also a great case study of a highly regulated market; strict presentation and marketing rules shape how these sites operate and grow. You cannot show products the way you can elsewhere. That makes the Norway cluster doubly interesting; it delivers reliable contribution and serves as a real-world template for how Haypp executes when the regulatory environment tightens. Any future rule changes could materially shift visibility; conversion; and growth.

Snusmarkt

Segment: Growth; Location: Switzerland.

It is one of the smaller sites; among the weaker performers by traffic and sales. That makes it interesting strategically; it shows how Haypp fares when entering a market later; with more competition; and tighter rules. The offer is snus led with nicotine pouches available; repeat purchase driven; more signal than scale for the group.

Northerner

Northerner serves the United States; the United Kingdom; Germany; and Austria; with the US as the clear anchor. The focus is nicotine pouches; snus is offered where allowed. By web traffic it is now roughly tied with Nicokick as one of the two largest sites in the group. With the US nicotine-pouch boom accelerating and Haypp’s US operations scaling, Northerner has substantial upside from here.

Nicokick

Nicokick serves the United States; segment is Growth; focus is nicotine pouches. It is currently tied with Northerner as the top site by web traffic in the group, and is likely to become number one by sales as US adoption continues to accelerate. The brand faced a temporary setback from ZYN supply constraints; with ZYN back through the direct PMI agreement, Nicokick is the clearest near-term upside lever in the portfolio.

VapeGlobe

VapeGlobe sits in the Growth segment; market is Germany after the UK arm was wound down. Sales are still small but growth is rapid. Most people ignore this part of the business; yet it could become a meaningful contributor over time. Strategically it lets Haypp test its playbook in a different category; generating valuable learnings on CAC, merchandising, and age-gating that can feed back into the core. Keep an eye on it.

Market outlook and where Haypp goes next

Haypp already spans a wide range of countries and segments; the runway is still long. The clearest near-term growth sits in the US and the UK; nicotine-pouch adoption is compounding and the e-commerce playbook scales well. Sweden and Norway are steady profit engines; culturally entrenched oral nicotine; predictable reorders; disciplined operations.

DACH shows momentum but not dominance. Germany is the hinge; winning it will take sustained commitment on content, logistics, and local execution. The hesitation is regulatory; with rules in flux, Haypp has been reluctant to fully commit the resources needed to break through. Once EU clarity improves; expect a firmer push.

Central and Southern Europe remain uncertain; policy is the bottleneck. Without clearer EU and national frameworks, the risk-adjusted return on new launches is lower than doubling down where demand and rules are already workable. France’s outright ban is a reminder of how brittle the EU map can be.

Asia is the strategic swing. Gavin (CEO) answered my question about Asia like this: “Asia is ready but Haypp isn’t.” Translation; the opportunity is real, but spreading the organization too thin would dilute execution in the US and Europe. The likely path is sequence, not sprawl; establish unambiguous US leadership first, then make targeted entries or acquisitions in select Asian markets once the operating model can support it.

Strategy

The flywheel; how Haypp compounds

Think of Haypp as two businesses working together; a retailer that ships cans and a data company that learns from every order. When a new customer lands on a site and buys a trial mix, Haypp captures clean, structured signals; brand; flavor; strength; can size; price paid; delivery choice; reorder timing. That dataset grows with each purchase; across countries; across months; across thousands of cohorts.

Data turns into targeting. The sites learn which SKUs convert first-time buyers; which flavors people switch to on order three; when a user is most likely to accept a subscription; which delivery options reduce failed handoffs. Search results and recommendations improve; promotions are timed to actual reorder windows; landing pages reflect what works in that country. Conversion rises; churn falls; fewer clicks are wasted.

Targeting lifts value per customer. Baskets get a bit larger; reorder frequency ticks up; subscriptions smooth demand; returns drop. Lifetime value rises; payback periods shorten; paid channels can be pushed harder without destroying contribution. The same traffic produces more gross profit.

Higher customer value creates supplier leverage. With predictable volumes and precise demand signals, Haypp negotiates better terms; earlier allocations; co-op budgets for launches; exclusives in some cases. Media & Insights adds another lever; suppliers pay for reports that help them tune flavors and strengths; regulators buy category overviews; this offsets retail costs. M&I is increasingly central to the thesis; my view is that over time it goes from a useful sidecar to one of the main profit engines of the group.

Leverage funds price and speed. Buying terms improve; pick paths get denser; last-mile rates step down; working capital turns faster. Haypp can offer sharper prices; free shipping thresholds; quicker delivery windows; and it can do this sustainably because unit costs are falling as scale rises. The operational layer is being upgraded behind the scenes; Haypp has been moving more and more of its fulfillment to fully automated warehouses; same-day delivery is being tested in the US; and the UK is set to come online with a fully upgraded warehouse this summer.

Price and speed bring more customers. Better value wins trials; reliability builds habit; authority in search compounds; direct traffic climbs; CAC mixes down as organic grows. The brand becomes a default choice for the category in each market it serves.

Regulation and trust lock the gains. Age checks; KYC; product presentation limits; and local tax rules are handled cleanly; errors and failed deliveries drop; approval rates improve. That competence is hard to copy at scale; it lowers friction for users and for suppliers that want a compliant online channel.

More customers feed more data; targeting improves again; supplier terms tighten again; operations get denser again. The loop repeats. Over time the gap between Haypp and followers widens; not because the storefront looks different, but because the engine behind it keeps getting smarter; cheaper; and faster with every can sold.

Media & Insights; from sidecar to second pillar

Media & Insights deserves its own treatment because the trajectory matters. Today it generates close to 10% of revenue at materially higher margins than the retail business. That share is set to grow. Suppliers like Philip Morris, British American Tobacco, and Turning Point Brands are increasing their spend; the category is hiring AdTech and retail media roles; and Haypp has been steadily expanding the product set beyond manual reports.

What we know today is that M&I sells reports, custom analyses, and decision support, and that Haypp has been investing in AdTech infrastructure including Kevel-based ad serving. What we do not know yet, and what management has not detailed publicly, is how far the self-serve side will go. My read on the direction is that the model evolves toward something closer to a programmatic retail media network; brands buying audiences, sponsored placements, and experiments through a platform rather than through a person. That would mirror the Amazon Ads playbook applied inside a regulated nicotine vertical, where suppliers already pay for shelf placement and consumer data and Haypp is the only place where they can do both at scale online. I want to be clear that this is the direction I think the business is heading; it is not a capability Haypp has confirmed in detail.

If that path plays out, M&I becomes the part of the business with the highest structural margins and the cleanest software-like scaling. Over time I expect it to drive a disproportionate share of group profit; the retail business funds the moat, M&I monetizes it. Even if self-serve takes longer or lands in a more limited form, the report and insights revenue alone keeps M&I as the highest-margin layer of the group.

First-mover advantage, SEO, and GEO

Haypp is far larger than the next online competitor in every market it serves; typically by more than five times. Being first created default destinations for pouches and snus; people recognize the site names; trust them; return; and recommend them to friends. That familiarity compounds into brand searches and direct traffic that competitors cannot easily replicate.

The search playbook is simple and aggressive; own the highest-intent queries so the top two or three Google results point to Haypp. When those positions are secured, almost all purchase-intent traffic flows to Haypp first. The company prioritizes organic growth; country-specific category pages; brand hubs; FAQs; buyer guides; clean information architecture; fast load times; and tight internal linking. Google rewards sites that keep users engaged and convert visits into purchases; strong dwell time and conversion feed back into ranking strength and make future wins easier.

Importantly, SEO and the emerging GEO work (generative engine optimization; how product information shows up inside LLM answers and AI search) is handled in-house. That is unusual for a retailer this size; most outsource. Keeping it internal means the team can iterate on schema, content, and structured data fast as Google’s algorithms and the LLM answer engines shift; it also keeps the most strategic part of customer acquisition under Haypp’s own control. As discovery moves from ten blue links to AI-generated answers, the companies that get cited inside those answers will compound the way SEO winners did over the last two decades; Haypp is building for both worlds in parallel.

An AI-assisted content system keeps product pages accurate at scale; when stock, pack size, strength, flavor name, or imagery changes, the underlying product data updates page copy and attributes across locales quickly and consistently. Fewer stale pages; fewer mismatches between site and warehouse; a steady stream of fresh, structured information that search engines and LLMs can parse and trust.

Combine first-mover authority, trusted brands, and disciplined SEO and GEO capture and you get a moat. Competitors must spend years earning links and building helpful content while starting from behind on brand trust and type-in traffic. Ads are constrained in this category, so you cannot simply buy your way to parity. Haypp keeps publishing, updating, and compounding; the result is a discovery funnel that routes most high-intent traffic to Haypp regardless of whether the user is searching on Google or asking an LLM.

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Competition

Haypp is significantly larger than the next online player in its key markets; in organic nicotine-pouch visibility it is about 4,4x bigger in the UK; 4,5x in Sweden; 5,3x in the USA; and 7,4x in Norway. Outside these, the pattern is similar; Haypp usually leads by a wide margin across its footprint.

There is also a grey market. Unlicensed sites pop up; skip age checks; and undercut prices for a while. Gavin has said the grey market is not a real concern; these actors tend to run into payment, logistics, or regulatory problems and disappear. That dynamic has strengthened recently. The FDA has been actively cracking down on unauthorized pouch products and grey-market sellers in the US; other markets have moved in the same direction. The net effect is a cleaner playing field for compliant operators; the cost of doing things right falls relative to the cost of cutting corners, which structurally favors Haypp.

Even among licensed rivals, short bursts of growth often come from pouring cash into marketing and discounts rather than from any lasting advantage. Some may look strong for a quarter or two; without a real edge they struggle to sustain it.

Direct competition is not what people usually ask about; the common questions are these: why wouldn’t Amazon sell nicotine pouches; can manufacturers go direct online; and couldn’t grocery delivery just add pouches to the basket.

Amazon first. Listing pouches would force strict age-gating at checkout and ID checks at delivery; warnings and record-keeping; and ongoing policy risk for a tiny revenue line relative to the rest of the marketplace. Extra verification steps cut conversion; compliance exposure rises; the payoff is minimal. The rational move for Amazon is to avoid the category.

Manufacturers next. PM briefly offered direct ordering; PM ended it. Going DTC creates channel conflict; undercutting retail partners looks like unfair treatment and strains distribution relationships. It also pushes brands outside their competence; high-performing e-commerce requires SEO; KYC; payments; fulfillment; and customer support at scale. Even with big budgets, the ROI is questionable when brick-and-mortar already delivers reach and margin.

Grocery delivery last. In theory a Whole Foods-type service could add pouches; in practice they would need age-gating at the point of sale and ID verification at the door; plus compliant product presentation and record-keeping. The operational burden and failure rates overwhelm thin per-can economics. Digital ID could make verification smoother over time; but generalist grocers would still struggle to match Haypp on price; assortment depth; and the structural data advantage that tunes merchandising and repeat behavior.

Management

Gavin O’Dowd; who he is and why he matters

Gavin O’Dowd has led Haypp Group since 2017. He is a chartered management accountant educated at Waterford Institute of Technology who started his career at Accenture and PwC before moving into nicotine at British American Tobacco, where he spent more than a decade across group corporate finance, CFO Iberia, and as general manager for Sweden and Norway. That mix of finance discipline and operating experience in Haypp’s core category is the spine of his profile.

On ownership, he is not a hired gun with no skin in the game. As of 4 March 2026, he holds 859.691 shares and 155.000 warrants, placing him among the top ten owners. Worth noting; over the last twelve months he has actually been a meaningful net buyer. The biggest single sale was historical and conducted at a price well above current levels; since then he has been adding, with insider data showing him as the largest buyer among insiders in the trailing year. That is a signal worth weighing.

O’Dowd is also a very visible operator. He fronts earnings calls and capital-markets presentations and regularly appears at category conferences like GTNF and ATNF to discuss regulation, harm reduction, and the e-commerce channel for oral nicotine. The consistent message: SEO and first-mover advantages, building the insights business, tightening compliance, and sequencing geographic expansion rather than chasing headlines.

The throughline in his background is relevance. He ran P&Ls in Scandinavia when pouches and snus were already mainstream and understands the regulatory texture that defines Haypp’s day-to-day. He has lived the budgeting, portfolio, and channel conflicts faced by large manufacturers and now works the other side of the table as their most important online retail partner in multiple markets. That combination of category literacy and retailer pragmatism is rare.

My notes from watching him across interviews and webcasts: he is a neutral describer of events who does not sugarcoat setbacks or overhype wins. He is quick and specific on details, often answering with operational context rather than slogans, which signals he is on top of the numbers and the levers. He reads as a strong, active leader who keeps pushing the company forward without theatrics. Given Haypp’s size, he is a heavy hitter in this niche; credible with suppliers and regulators, comfortable with the public markets, and effective at aligning the organization around a clear playbook.

In short, O’Dowd brings exactly what Haypp needs at this stage; a finance-trained operator from within the nicotine world who is fluent in regulation, comfortable with sharp execution in e-commerce, and aligned with owners through a meaningful equity stake.

Other key leaders; the bench has shifted

Since the last deep dive the executive bench has reshuffled meaningfully, and the pattern tells you exactly where management thinks value gets created.

COO and Deputy CEO is now Jonas Kolehmainen, effective January 9, 2026. He joined Haypp in March 2024 as Chief Supply Chain Officer; before that he was CEO of PostNord TPL with over a decade of retail logistics experience at Apoteket, Granngården, Sportamore, and DHL Freight Sweden. He holds no shares but has 127.500 warrants.

Svante Andersson, the previous COO and a Haypp veteran since 2017 (originally CFO), transitioned in the same announcement to become President of the UK business. The UK is Haypp’s strongest European growth opportunity and is set to grow further as new legislation is finalised this year or next; putting one of the most experienced internal operators in charge of that P&L is a strong signal. He is not gone; he is now running one of the two most important markets in the group.

President US is now Gabriel De Prado, also effective January 9, 2026. He previously served as Haypp’s CCO across six countries; before that he spent years at BAT leading strategic planning, consumer insights, and commercial execution across international markets. Read the two appointments together; Haypp pulled its two most senior commercial and operational leaders into the US and UK President roles on the same day. The US and UK becoming standalone P&Ls under dedicated Presidents tells you exactly where the next decade of value gets created.

CFO Peter Deli remains in place; he brings GE, AmRest, and BAT finance pedigree and holds roughly 215.000 warrants.

Head of Legal & External Affairs Markus Lindblad anchors regulation and public affairs; he holds about 192 shares and 192.000 warrants.

Below the named executive management, the US team has been built out aggressively. Issa Abuaita joined as Head of Legal and Laura-Leigh Oyler as VP Regulatory Affairs in mid-2025; May Pan was appointed E-Commerce Director and UK Business Unit Manager in July 2025. These hires reflect Haypp’s two strategic priorities; scaling the US and tightening regulatory and operational competence as the company moves from small cap into something bigger.

Recent insider activity

This is worth a separate flag. Over the last 90 days Haypp has seen net insider buying of roughly 6,1 million SEK, with the CFO, CEO, and another senior executive among the buyers in March. Insider buying at depressed prices after a meaningful drawdown is the kind of signal that gets discounted by markets but tends to age well. Insiders rarely buy for a single reason; the simplest explanation is usually that they think the stock is mispriced relative to what they see internally.

Board and key insiders

Haypp’s board is small, hands-on, and unusually owner-heavy for a listed company this size. The board consists of six ordinary members.

The chair is Lars-Johan Jarnheimer, best known for chairing Ingka Holding (IKEA’s parent) and Telia Company. He also chairs Arvid Nordquist, Elite Hotels, and Grimaldi Industri, and sits on the board of Stillfront Group. He brings big-company governance, brand, and telecom-scale operating experience. He joined as chair in 2025 and holds 10.000 shares as of 9 March 2026.

Founder Linus Liljegren sits on the board and remains a major shareholder, holding 1.960.301 shares through a partly held company. His presence keeps founder discipline in the room. Alongside him is long-time backer and operator-investor Patrik Rees, who holds 3.635.323 shares through company and has been on the board since 2016. Between them you have deeply aligned owners who think in years, not quarters.

Deepak Mishra adds global nicotine and strategy depth. He spent years at McKinsey, then served as Chief Strategy Officer at Philip Morris International and later led PMI’s Americas region. He is independent and holds no shares, which keeps him clean on conflicts while bringing top-tier category insight.

Adam Schatz brings e-commerce and listed-company operating chops. He is President and CEO of Nuent Group; previously CFO, then CEO, of BHG Group. He is independent and holds 2.000 shares.

Helena Juhlin Pink rounds out the digital edge on the board; she has senior brand and marketing experience from Soundtrap/Spotify (Head of Brand) and OMD Sweden (CEO), and currently holds board positions at Forte Digital, Avoki, and Mobile Interaction. She is independent of major shareholders, holds 1.000 shares.

What stands out is the mix; two materially invested insiders who know the playbook intimately (one founder, one owner-operator), and three more recently added independents who cover governance at scale (Jarnheimer), nicotine strategy (Mishra), and e-commerce scale-up plus digital marketing (Schatz, Pink). Add a CEO who is a top-ten shareholder and you get tight alignment. The net effect is a board that looks overpowered for the size of the company, in a good way; heavy experience, real skin in the game where it matters, and enough independence to challenge management without drifting into bureaucracy.

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Key risks

Haypp Group has many good sides; ignoring the risks would be foolish. I have referenced some risks in other sections; here I will go over the main risks I personally see and consider the gravest.

First: health-narrative and policy shock

First I’ll start with a key risk; new studies or public statements by powerful people could stall the nicotine-pouch boom. Today most people treat pouches as relatively harmless; but long-term data is limited; a single high-profile study showing unexpected adverse effects could slow adoption and invite tighter rules. There is also the risk that influential officials decide they dislike pouches for non-evidence reasons; that happens when decision-makers are uninformed. Haypp engages regulators to educate and align; yet regulators sometimes make poor calls; as we have seen with France’s outright ban and Austria’s reclassification of pouches as tobacco products. France is the clearest cautionary tale of how quickly an entire market can be closed; it can happen elsewhere, and the risk should not be underestimated.

Second: littering and optics risk

On adverse regulatory shifts; the main risk I see is public littering. Nicotine pouches are turning up everywhere; streets; parks; golf courses. For some reason people treat used pouches differently from other trash like cans and wrappers; they just drop them; and they tend to sit where they land for a long time. The danger is obvious; policymakers may decide to act against pouches based on littering optics rather than health evidence. That action could be a tax; a local or national ban; disposal rules; or broad awareness campaigns. This worries me long term because it only takes a few high-profile complaints or photos to trigger reactions that slow adoption even if the underlying health case for pouches stays intact.

Third: the EU, the US, and the FDA

The US currently looks friendly for nicotine pouches; the federal stance is pragmatic harm reduction. The FDA has continued to refine its approach throughout 2025 and 2026. The key recent developments: in January 2025 the FDA authorized 20 ZYN products through PMTA; in December 2025 six on!PLUS variants from Altria became the first decisions out of the FDA’s accelerated nicotine pouch pilot program; and on May 8, 2026 the FDA issued new guidance saying it will not prioritize enforcement against unauthorized pouches and e-cigarettes whose marketing applications have been under review for 180+ days. That last one matters; it tells industry the FDA is conserving enforcement resources to focus on the worst illicit actors while letting legitimate manufacturers under review keep operating. The direction is constructive overall, though several US states have proposed or enacted pouch-specific taxes (a proposed 75% wholesale tax in New York is the most aggressive example), so local exceptions will keep popping up.

The EU is the wildcard. Brussels keeps floating new rules and member states interpret them differently; flavor limits; strength caps; online presentation; age checks; taxes; even delivery rules. France went all the way to a full ban. Austria reclassified pouches as tobacco products and will restrict sales to licensed tobacconists from mid-2026, prompting Haypp to exit the market entirely (less than 1% of group revenue). That mix can change quickly and is a key risk to monitor over the coming years.

The good news is that there is plenty of information to track; consultations; draft texts; agency notes. Haypp also publishes periodic updates on its outreach in the EU; engaging with policymakers and explaining why pouches are better for public health than smoking. Keep an eye on EU-level proposals and how Germany and other countries choose to implement them.

Fourth: search behavior is shifting

Another risk worth flagging is changing search behavior. ChatGPT and other LLMs are taking share from Google; there may come a point where traditional SEO loses relevance and new rules apply. I have downgraded this risk versus my last writeup; Haypp has clearly leaned into GEO (generative engine optimization) in-house and is investing in being cited inside AI-generated answers, not just ranked in classic search results. Their structural advantages (clean product data; fast catalog updates; owned customer relationships via email, subscriptions, and direct traffic) translate well into the LLM-first discovery world. The risk has not disappeared; but it looks more contained than it did six months ago.

Fifth: when no rules become the risk

One more risk that no one talks about enough is the absence of regulation and enforcement. If there are no real rules; or no one enforces them; the grey market can run rampant; operators skip age verification; permits; taxes; and product presentation standards; and undercut everyone on price. In that world Haypp carries the cost of doing things properly while unlicensed sellers don’t; margins compress; customer trust erodes; and the category becomes less profitable over time. Regulation is Haypp’s friend up to a point; sensible, enforced rules level the playing field and support sustainable unit economics; the lack of them does the opposite. Recently the FDA and other authorities have been more active in cracking down on unauthorized products and the worst illicit actors, which moves the dial in the right direction.

Sixth: mainstream retail entry with digital ID

The most talked-about risk is new entrants. If a major grocer like Whole Foods enables pouch delivery alongside groceries; and digital ID makes age verification instant; the convenience advantage narrows fast. In that scenario generalist retailers could leverage existing baskets; dense delivery networks; and loyalty programs to pull share; especially in the US. Haypp would face real market share pressure if mainstream delivery becomes seamless for age-restricted products.

Seventh: online channel risk

Selling age-restricted products online is still new; regulators are figuring it out. Standards for checkout verification; delivery ID checks; record-keeping; and product presentation are not uniform yet. That means rules can change quickly; a new guideline or an agency memo can add friction or limit what is allowed online.

So far the direction has been workable; most authorities accept that online sales with robust age-gating can be safer and more auditable than in-person cash sales. It is also common sense; in a modern economy you should not have to buy age-restricted items only in person. Still, the channel carries risk; extra verification steps can raise costs and lower conversion; couriers and payment processors add their own policies; and a few jurisdictions may tighten rather than loosen.

Net of it; the online channel is moving the right way, but it is not settled. Haypp needs to keep proving that its systems are strict; reliable; and easy to audit, so the default policy choice remains to allow compliant online sales.

Eighth: supplier concentration and US category dynamics

The final risk I worry about is supplier concentration. ZYN dominated the US pouch market for years and that gave Philip Morris real leverage over Haypp; allocations, pricing, and timing could swing results in ways Haypp could not fully control. That picture is improving. ZYN has lost share over the last year as new entrants like On!Plus, Velo, and Zone scaled up; PMI’s own Q1 2026 reporting showed ZYN shipment volumes down 23,5% even as offtake grew 10%, reflecting channel inventory normalization and a more competitive landscape. The US market is becoming structurally healthier with more suppliers competing for shelf space and consumer attention. Rule of thumb: the more suppliers, the better for Haypp; the more diversified the supplier mix, the less any single allocation event can swing a quarter.

Related to this is the US category slowdown over the last twelve months. After several years of explosive growth, US pouch volumes for the broader category have cooled. Part of that is natural deceleration as the category moves from explosive early growth into broader adoption. Haypp’s own US numbers have continued to grow strongly (nicotine pouch volumes up 40% group-wide in Q1 2026, with the US and UK as the primary drivers), but the category-level slowdown is real and worth tracking. If the broader US growth rate keeps decelerating, it would compress the long-term upside even if Haypp keeps gaining share.

Closing the risk section

Those are the main risks I personally focus on; of course there is also the risk of competition; management execution; cybersecurity; and similar issues that every company faces. I have tried to touch on some of those elsewhere in this post as well.

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Capital allocation

Haypp currently plans to reinvest essentially all cash back into the business; and will likely keep doing so beyond 2028; there is too much value to capture globally. Buybacks and dividends are on the table only when internal returns and M&A no longer clear a high hurdle. My speculation is that within roughly three years a larger share of free cash flow will be directed to acquisitions; Asia presents huge opportunities and would extend growth while improving diversification.

I also expect modest buybacks at some point to offset the dilution from ongoing incentive programs; the dilution is not massive, but the question of how necessary it is will soon become relevant. Overall, I think the team is skilled in capital allocation; I do not see a reason to fear misallocations.

Web traffic and nowcasting

This is where most of my work on Haypp has gone over the last year. I have built two parallel models for nowcasting Haypp Group’s quarterly revenue: a hand-made model that triangulates web traffic across all of Haypp’s sites with seasonality and mix adjustments, and a machine learning model that takes the same underlying signals and runs them through a more systematic framework.

The track record has been better than I expected. Over the last four quarters both models have landed within a tight band of reported revenue, and the precision keeps improving as I add data and refine the methodology. The Q1 2026 print is the cleanest example yet: actual reported revenue came in at 1.104 MSEK; my hand-made model predicted 1.106 MSEK; the ML model (pre segment change) predicted 1.103,5 MSEK. Both within 1% of the actual number. That is unusual for any equity, let alone a small cap.

What makes Haypp uniquely well-suited to web-traffic nowcasting is the channel structure. Haypp is a pure-play online retailer with no offline channel masking the signal; nearly every cent of revenue passes through a site I can monitor. The category is also high-frequency repeat purchase, which smooths out noise; and the data feeds I rely on (SimilarWeb as the primary, DataForSEO and SEMrush as cross-checks) all converge on the same underlying truth. The result is a small-cap stock where you can effectively read the quarter weeks before the report drops.

This matters for two reasons. First, in a name this volatile, knowing where the print will land before the market sees it is a meaningful informational edge. Second, the nowcast also tells you something about the trajectory inside the quarter; if web traffic is accelerating into the back half, the next quarter looks different than if it is fading. Most investors in Haypp are reading the press releases; the nowcast lets you read the company.

If you want to follow Haypp closely, this is the part of my work that pays off most directly. I publish monthly updates on Haypp’s web traffic and quarterly nowcasts ahead of earnings; subscribe to never miss a post.

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Valuation

Valuation; how to think about it

I am not doing a full valuation here; instead I want to lay out the assumptions that matter if you build your own DCF. Start with margins. Picking apart today’s margins is not very useful; the focus should be on where they land in five years. Right now the goal is to win the market; the lower Haypp can price, the faster online takes share from the whole category. Pushing margins too early just slows that process; I see no reason to do that yet.

So what could margins look like later. My view is that the Media & Insights layer lets Haypp capture profits far above typical retail; add in regulatory know-how at scale and the operating leverage from search; and you get a setup where normalized margins can be surprisingly high for an online reseller. My base case is a 10 percent net margin in steady state. The structural advantages that Haypp’s data brings make that level achievable in my view.

The longer-term case is even stronger. As M&I scales from sidecar to second pillar, the profit pool tilts toward higher-margin revenue with software-like operating leverage. I believe that over time M&I alone can drive Haypp to a 10% FCF yield run-rate at maturity; not as a stretch case, but as a realistic outcome of what the data layer is structurally capable of producing once the self-serve and programmatic side scales. Combine that with the retail engine that funds the moat, and you get a business that looks very different from a typical online reseller.

For sizing revenue growth I treat it like a big Fermi problem. A mature user can consume up to one can per day; the practical average is likely closer to one every second day. The product is superior to cigarettes in almost every way; so it is reasonable to assume that a similar share of the population that once smoked will use nicotine pouches in the future. That implies 20 percent of the population or more; with adoption spread across both genders, which widens the addressable base.

Remember that Haypp also sells vapes; but the main driver is pouches. Then layer in the lag effect between total category growth and online penetration. The United States has roughly 3 percent online penetration today; Sweden sits around 36 percent; simply closing part of that gap can create multi-year growth spurts for Haypp even before total category growth is considered.

Given this setup I would not be surprised if Haypp exceeds its own 18 to 25 percent CAGR target; at minimum the high end looks achievable. That range likely fits a longer horizon; near-term years can overshoot as cohorts mature and online mix catches up. I am very optimistic; in my view the global market will rise above USD 100 billion over time.

Discount rate and multiple; what the FDA shift changes

Discount rate is tricky. Haypp is a small cap on First North; liquidity is thin; the business carries real regulatory and execution risk; so a high WACC is reasonable. There are no clean comparables; beta-based formulas will mislead; and peer sets do not help much. I personally use a discount rate close to 20 percent.

What is changing is the multiple the market can credibly assign. The FDA’s posture through 2025 and 2026 (PMTA authorizations for ZYN and on!Plus, the accelerated pouch pilot, and the May 2026 enforcement guidance) materially de-risks the US category at the federal level. That matters for valuation because regulatory tail risk has historically been the single biggest reason investors apply punitive multiples to Haypp. As that tail compresses, the discount required to hold the stock compresses with it. A more constructive US regulatory backdrop opens the door to a higher steady-state multiple than what the market currently uses.

The simple valuation case

Here is the simplest version of the case. Haypp’s own 2028 financial targets imply roughly 8.000 MSEK in revenue at the midpoint of their growth range, with an adjusted EBIT margin of 5,5% (+/- 1,5%). At those numbers you get adjusted EBIT in the ballpark of 440 MSEK at the midpoint; somewhere between 320 and 560 MSEK across the range.

Apply a 15 to 20 times multiple (reasonable for a business with a long growth runway, structurally improving margins, an M&I layer with software-like scaling, and a de-risking regulatory backdrop) and you get a market cap somewhere around 6.600 to 11.200 MSEK. That is roughly 3x the current valuation. And this is before you give any credit to the longer M&I FCF trajectory or to upside above the 2028 targets, both of which I think are realistic.

Where the value actually sits

Almost all of the DCF value lives in the US and UK. Sweden and Norway are profitable cash generators but mature; they do not move the long-term valuation needle. Germany, Austria, and Switzerland are interesting optionality, but the combination of regulatory friction (France is the worst case, Austria is the most recent example) and slower adoption means they sit second-tier in the model.

The US and UK are different. They are early in the category curve, they have constructive (US) or improving (UK) regulatory backdrops, and online penetration is still a fraction of where it will land. They are also more profitable per customer than most assume, because competition is thinner. In mature markets like Sweden, Haypp competes against entrenched offline incumbents and other online specialists; in the US and UK, the competitive landscape is much weaker, which means better unit economics, cleaner basket economics, and faster payback on customer acquisition. The US and UK do not just drive volume growth; they drive a profitability mix shift that pulls group margins up structurally.

S-curve modelling

When valuing Haypp, I find it useful to think in terms of logistic growth curves. In practice, this means estimating when each market will hit peak growth, while also making assumptions about online penetration and margin development. With these three components (market growth, channel penetration, and profitability) you can build a rough framework that mirrors the natural S-curve of adoption.

From there, you discount the theoretical cash flows for each region and layer on scenario adjustments, such as the potential for outright bans in certain countries. This approach does not give a single-point valuation but a structured way of framing the upside and downside paths. I plan to write a separate Haypp valuation blog that dives deeper into this methodology.

Valuation summary

All in all, I think Haypp has more growth ahead than most investors expect, and its long-run margin potential is stronger than the market is pricing in. The 2028 targets alone, applied at a reasonable multiple, support roughly a 3x re-rating from today. The longer-term M&I trajectory adds another layer on top. And the US and UK concentration of value means a single year of strong execution in those two markets can change the picture materially.

There is a simple case to be made that this stock can deliver roughly 30% annualised returns over the next three to four years. That does not require heroic assumptions; it requires Haypp to hit something close to its own targets and the market to assign a multiple that reflects the de-risking US regulatory backdrop and the M&I trajectory. Neither of those feels like a stretch.

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Important events

When looking at Haypp it is important to remember this is a business where negative headlines show up regularly: lawsuits, license reviews, shipping restrictions, supplier hiccups. That noise is part of the category. In this section I cover the ongoing and recent items that actually matter for Haypp and what they change, if anything.

The FDA shift; the most important regulatory development

The single most important development since my last deep dive is the FDA’s evolving posture on nicotine pouches. The agency has been steadily building a constructive framework.

In January 2025 the FDA authorized 20 ZYN products through the PMTA pathway; the first time nicotine pouches received marketing authorizations. In December 2025 the agency authorized six on!Plus variants from Altria as the first decisions out of its accelerated nicotine pouch pilot program, completing the review in record time. Then on May 8, 2026 the FDA issued new guidance saying it will not prioritize enforcement against unauthorized pouches and e-cigarettes whose marketing applications have been under review for 180 days or more. The message to industry is clear: legitimate applicants under review get to keep operating while the FDA focuses enforcement on the worst illicit actors.

Taken together, this is a meaningfully more constructive backdrop than what was in place six months ago. The FDA is operating as a pragmatic harm-reduction regulator at the federal level; pouches are being authorized in batches; the pilot program is accelerating future decisions; and enforcement resources are being directed at the grey market rather than at compliant operators. For Haypp this lowers regulatory tail risk in the most important growth market in the world.

Some US states will keep going their own way (the proposed 75% wholesale tax in New York is the most aggressive example), so local exceptions will continue to pop up. But the national stance does not look hostile; it looks supportive.

ZYN supply normalized; the supplier mix is healthier

When I wrote the original deep dive, Haypp had just secured a direct distribution agreement with Philip Morris to bring ZYN back to Nicokick and Northerner. That has now played through. ZYN is fully restored on the US sites, the direct PMI relationship has held, and the supplier mix has materially diversified. On!Plus from Altria, Velo from BAT, Zone, and other brands have scaled aggressively over the last year, taking share from ZYN and reducing the single-supplier risk that defined Haypp’s US business in 2024 and 2025.

PMI’s own Q1 2026 reporting showed ZYN shipment volumes down 23,5% as channel inventories normalized, while ZYN offtake (actual consumer purchases) grew 10%. This noise is to be expected as the market matures; the underlying picture is that the US category is becoming structurally healthier with more suppliers competing for shelf space. That is a better world for Haypp.

The new US division

Effective January 9, 2026 Haypp established the US as a standalone P&L under a dedicated President; Gabriel De Prado, the group’s former CCO, moved into the role. This is more than a title change; it reflects the strategic reality that the US is now the largest single growth opportunity in the group, and management is organizing around that reality. The same announcement moved Svante Andersson into the President of UK role; in one stroke Haypp put its two most senior commercial and operational executives in charge of its two highest-priority growth markets.

France ban came into effect; Belgium and Netherlands remain closed

The French ban came into force on April 1, 2026. It bans the manufacture, sale, import, and possession of nicotine pouches. A French manufacturer (EVLB Group) challenged the decree and France’s Council of State partially suspended the manufacturing and export ban pending a full ruling expected by June 2026, but the marketing and retail ban remain in effect. Haypp had no business in France going into this, so the direct revenue impact is zero; the indirect signal is that the EU regulatory landscape remains brittle.

Belgium banned nicotine pouches in 2023 and the Netherlands followed; both markets remain closed to compliant online retailers. This is part of the broader pattern: France, Belgium, and the Netherlands have outright bans; Austria reclassified pouches as tobacco products and pulled them into licensed tobacconist channels from mid-2026, prompting Haypp to exit Austria entirely (less than 1% of group revenue). Germany is using regulatory workarounds; Denmark is moving to flavor restrictions and a 9 mg cap from April 2026; the UK is moving toward a 20 mg cap through the Tobacco and Vapes Bill (Haypp has voluntarily adopted that cap already across its UK e-commerce platforms).

The pattern is clear; EU expansion is hard and getting harder. The US and UK look better and better by comparison.

UK vape division wound down

On January 1, 2026 Haypp exited the UK vape and heated tobacco markets entirely. VapeGlobe UK was wound down so the group could refocus resources on oral pouch products, where the structural growth is stronger and the unit economics are better. VapeGlobe DE remains as the group’s vape footprint and was folded into the Growth segment under the new two-segment structure. This is good capital discipline; vapes were never the core thesis, and freeing up management bandwidth to focus on pouches in the UK and US is the right call.

Sweden license episode; still ongoing, but the impact is small

The Sweden license dispute with the City of Stockholm has continued through the courts. In June 2025 the Administrative Court allowed Snusbolaget Norden AB to continue operating under a warning. That decision was appealed; on January 30, 2026 the Administrative Court of Appeal ruled the other way and upheld the original revocation of the tobacco sales license. Haypp has stated it intends to appeal further to the Supreme Administrative Court.

Two things to remember. First, the dispute covers only traditional tobacco products (snus), not nicotine pouches, which are regulated under a separate 2022 law in Sweden. Second, Snusbolaget Norden AB now accounts for less than 1% of group net sales. The company itself does not expect a material financial or operational impact regardless of how the final appeal resolves. The episode is more important as a signal of how Swedish municipalities interpret age verification rules than as a financial event.

San Francisco lawsuit settled

The San Francisco City Attorney’s lawsuit against Northerner Scandinavia Inc was settled in October 2025 for USD 2,5 million, of which USD 1 million was already reserved. The remaining amount was reported as a comparability affecting item in Q3 2025. This is done; California-related disruption is now in the rear-view mirror, and shipping policies have been adjusted accordingly. Worth noting as context, not as an ongoing risk.

Caffeine pouches; a small but interesting extension

In March 2026 Haypp launched caffeine pouches across its UK and Scandinavian e-commerce sites; the first nicotine-free category in the portfolio. Sales are minimal so far, but the move is strategically interesting. It uses the same fulfillment, age-verification, and merchandising infrastructure to test a wellness-adjacent category that does not carry nicotine regulatory risk. If it scales it diversifies the revenue base; if it does not, it cost very little to find out.

Ownership; who holds the keys

Haypp’s register is tight. The top ten holders control roughly two thirds of capital and votes; the rest sits in broader hands. The largest positions are GR8 Ventures AB (Linus Liljegren’s vehicle, around 12 to 13 percent), Patrik Rees through his company at roughly 12 percent, Fidelity Investments around 10 percent, and Northerner Holding AB around 10 percent. Below that you have Wellington Management, Robotti & Company, Ola Svensson, Erik Selin, CEO Gavin O’Dowd, and Caro-Kann Capital each holding meaningful positions in the low-to-mid single digits.

Two takeaways. First, ownership is concentrated among informed, long-horizon holders who have shown limited interest in selling despite the volatility; that reads as conviction and aligns incentives. Second, float is thinner than the headline market cap implies; with roughly a third of shares in broader hands, the share price can move sharply on both buying and selling pressure.

Volatility and trading dynamics

When looking at Haypp it is important to remember that the stock is volatile. It is not a large company and it trades on First North; access is limited for many investors; liquidity is thin. As a result the share price reacts very strongly to negative headlines; but it usually corrects just as quickly. I have personally added multiple times on larger drawdowns; so far the stock has tended to recover within a week or two after bad news.

The trading is not always rational. Multiples expand and contract aggressively; sentiment swings amplify every move. I would not be surprised to see the stock halve or double in the short term without any real fundamental change.

The stock came down meaningfully from its highs as some of the broader nicotine pouch sector hype cooled. The category as a whole had been priced for continued explosive US growth; when the headline volume numbers slowed and PMI’s ZYN shipments came in noisy through 2025, sentiment across the entire pouch complex compressed. Haypp got dragged down with the sector even though the underlying business kept executing. That is exactly the kind of mispricing that creates entry points; a quality compounder priced like the category, not like the company.

Investor interest; who is watching

I have been writing about Haypp actively for over a year now; interest has been steady and broadening. The watchers fall into two clear groups.

The first group is private investors and smaller boutique funds. Inbound here is consistent and the audience is unusually diverse for a Stockholm small-cap; alongside the natural Swedish private investor base, I see roughly equal engagement from Asia, the US, and the Middle East based on my own conversations.

The second group is more interesting. Real institutional interest comes primarily from funds that are free enough from mandate constraints to go into illiquid small caps; the ones who can actually hold a name like Haypp without forcing index inclusion or daily liquidity. There is a real and slowly growing presence among bigger funds in this bucket; not yet a wall of capital, but a measurable lurking demand. The larger long-only institutions I have spoken with often cannot touch the name yet (market cap, liquidity, First North listing constraints, simple unfamiliarity), but they are watching. When any of those constraints ease (a main-market uplisting being the most obvious unlock) that audience can convert into real flows fast.

The pattern reminds me of the early phase of any small cap that eventually re-rates; the smart money is already positioned or watching, and the broader institutional base is waiting for the green light.

Catalysts

Since my last writeup the catalyst stack has shifted meaningfully. Here are the ones I think actually drive the next leg of the story.

First catalyst: uplisting from First North to the main Swedish market

This is the single most important near-term catalyst and I think it is likely to come reasonably soon. An uplisting from Nasdaq First North to Nasdaq Stockholm’s main market is transformational for a name like Haypp; broader broker access, improved liquidity, tighter spreads, and crucially, the ability for larger funds with mandate constraints to actually build positions. A lot of the real institutional money I described in the previous section is sitting on the sidelines specifically because Haypp is on First North. That barrier removes itself the day Haypp uplists.

In my view Haypp is approaching the threshold where re-rating risk tilts firmly to the upside. The stock can grind higher in anticipation, and a single uplisting announcement could flip the story into wider recognition and substantial valuation expansion. This is the catalyst I would not want to be short into.

Second catalyst: the FDA impact and category reheating

The FDA’s May 8, 2026 enforcement guidance, on top of the on!Plus authorizations in December 2025 and the broader ZYN PMTA work through 2025, materially de-risks the US category at the federal level. Regulatory tail risk has been the single biggest reason the entire nicotine pouch complex has traded at compressed multiples; as that tail compresses, the discount the market applies to the whole category should compress with it.

I think it is quite likely that the category as a whole reheats as the FDA’s pragmatic harm-reduction posture makes pouches genuinely investable for a wider base of institutional capital. New products keep getting authorized, demand keeps growing, and the regulatory backdrop keeps improving. When sector multiples expand, Haypp expands with them; when they expand and Haypp is also executing, you get the multiplicative effect.

Third catalyst: Swedish retail flows and First North sentiment

Haypp’s share price is sensitive to Swedish retail investor flows. When Swedish small caps go in favor, Haypp gets pulled up with them; when they go out of favor, it gets pulled down disproportionately. The First North index as a whole has come down brutally from its pandemic-era peaks, which mechanically depresses every name on the venue regardless of fundamentals. Any meaningful return of risk appetite to Swedish small caps is a structural tailwind for Haypp specifically. This is not a fundamental catalyst, but it is a real one; sentiment in the Swedish retail base shifts faster than most people expect, and when it shifts, illiquid First North names move violently.

Fourth catalyst (longer dated): a US listing

A US listing is genuinely transformational but it is not a near-term event. My view is that this likely sits in the 2028 to 2029 window, when group revenue is large enough to support the additional costs of being dual-listed and US-mix is large enough to make it economically obvious. When that listing eventually happens, it unlocks an entirely different investor base; US retail participation, US institutional access, and a re-rating to multiples that reflect US growth-stock peers rather than Stockholm small caps. Worth keeping in the calendar but not something to underwrite the next eighteen months around.

Risks to the catalyst path

The risks have not disappeared. Supplier concentration remains, even though the mix is healthier than it was a year ago; if something goes wrong with PMI or ZYN again, the stock sells off. Sector risk still matters; if tobacco or pouch multiples compress, Haypp gets dragged down regardless of execution. Litigation and regulatory headlines will continue to surface from time to time, and given Haypp’s illiquidity, drawdowns can overshoot fundamentals badly.

The simple case

Today Haypp trades around 1x sales. The combination of the First North uplisting, the FDA-driven sector reheating, the eventual US listing, and Haypp’s own execution toward its 2028 targets points to a credible 2 to 3x re-rating path. If the company keeps printing clean US growth and margins hold up as expected, the market can quickly shift from treating Haypp like a First North micro-cap to paying up for what it actually is: a growth compounder with structural data advantages and a long runway in two of the best nicotine pouch markets in the world.

Where to start if you want to dig in

If you are interested in Haypp and wonder where to start, I strongly recommend their Capital Markets Day presentations; they consistently contain the highest signal-to-noise ratio of any material the company puts out. Many of the visuals and frameworks in this blog originated there. Next, work through the recent quarterly reports and earnings calls. For something more niche, find one of the more recent fireside chats on YouTube; Robotti has hosted several and there are quite a few if you search for Haypp Group.

Beyond Haypp’s own materials, the most useful ongoing coverage you will find anywhere is on my Substack. I publish monthly web traffic updates, quarterly nowcasts ahead of earnings, and ad-hoc pieces whenever something material happens with the name. If you want to follow Haypp seriously, subscribing is the simplest way to stay current.

Closing thoughts

Writing this updated Haypp deep dive has been a useful exercise. A lot has changed since the original; the segment structure was unified, the executive bench reshuffled, ZYN supply normalized, the FDA materially de-risked the US category, France banned, Austria followed, the UK vape division was wound down, and the company kept executing through all of it. The thesis is intact and in several ways stronger than it was six months ago.

There is still a huge amount about Haypp that gives me conviction, and I could keep writing for much longer. If I missed anything important, ask me.

On a personal note

I will keep covering this name closely. Right now is one of the more interesting moments to be following Haypp in the last two years; the stock is not euphorically priced, the sector hype has cooled, and several real catalysts are stacking up just out of view. That combination (a quality compounder with structural advantages, trading at a reasonable valuation, with multiple legitimate paths to re-rating) does not appear often in this kind of name. I plan to be writing about Haypp consistently through the next phase of the story, so if you want to follow it with me, subscribing now puts you in front of the next round of updates.

Disclaimer

This is not financial advice; for informational and educational purposes only; not a recommendation to buy or sell any security. I am currently long Haypp Group (HAYPP); I may buy, sell, or change my position at any time without notice. I am not compensated by Haypp or any competitor; all opinions are my own. Estimates and forward-looking statements are based on my assumptions; they can change; outcomes may differ. Do your own research; consult a licensed advisor before acting. Investing involves risk; past performance is not indicative of future results. Accuracy and completeness are not guaranteed.

Probably the biggest problem any company faces is knowledge loss and value retention in its employees. Companies can suffer massive losses from a few key people retiring or being poached by competitors. Key strategies get lost, or worse, acted on blindly by the next person taking over. Over time the constant churn of employees makes companies rot. This is especially true in larger companies, where complexity compounds. Why are things done the way they are? Who is in charge of this? Where is that decision documented? Nobody knows, because the person who knew left in 2019.

The solution to this problem is pretty straightforward in theory but hard to offer as a service. You need a layer that sits above the employees themselves. A persistent operational substrate that captures how the company actually works; the approvals, the rules, the routing, the exceptions; and keeps it intact regardless of who comes and goes. A harness for the company.

There is one publicly traded business that has been quietly building exactly this for over twenty years. It is so well positioned to own this layer for the next several decades that I believe it will eventually become one of the most valuable companies on earth. That company is ServiceNow.

In this deep dive I will walk through every aspect of the thesis in detail; what they actually sell, why the harness framing matters, how the agentic transition accelerates rather than threatens the moat, where the real risks lie, and why I believe the market is currently mispricing the entire setup.

What ServiceNow Actually Does, and How They Make Money

Before getting to the thesis, it is worth slowing down and explaining what this company actually sells. ServiceNow has a branding problem; not in the sense that the brand is weak, but in the sense that the brand is so generic that almost nobody outside of large enterprise IT has any clear picture of what the product is. So let me strip away the marketing language and explain it plainly.

ServiceNow sells a workflow engine. That is the simplest possible description and it is more or less the whole truth. Every large company runs on thousands of recurring sequences of decisions; an employee asks for access to a system, a server fails and someone needs to fix it, a customer files a complaint, a new hire joins, a vendor gets onboarded, a security alert fires. Each of these is a workflow. In most companies, these workflows live in a chaotic mess of emails, spreadsheets, Slack threads, and tribal knowledge. ServiceNow gives the company one place to encode all of them, with proper approval chains, audit trails, integrations to every other system, and a single interface for the people involved.

The platform underneath all of this is called Now Platform. It includes a configurable database that models everything in the company; every employee, every laptop, every server, every contract; plus a no-code workflow builder that lets the customer encode “when X happens, do A, then route to B for approval, then trigger C in SAP, then log the result.” On top of this platform, ServiceNow has built five major product lines that they sell as separate modules.

The original and still largest module is IT Service Management, usually shortened to ITSM. This is the system the IT helpdesk runs on. When your laptop breaks at a Fortune 500 company and you submit a ticket, that ticket almost certainly lives in ServiceNow. ITSM handles the full lifecycle of IT support; incident management when something breaks, change management when production systems are being updated, problem management when something keeps breaking, and request fulfillment when employees need access to new systems. This is where ServiceNow started in 2004 and it remains the foundation of most customer relationships. People pay for ITSM because the alternative is running IT support out of email and shared mailboxes, which works for a startup and falls apart at scale.

The second module is IT Operations Management, or ITOM. If ITSM is about the human-facing tickets, ITOM is about understanding the actual technology underneath. ITOM discovers every server, database, and application running in the company, maps how they depend on each other, and monitors their health. The data structure that holds all of this is called the CMDB, the Configuration Management Database. When the company’s trading platform goes down at 3am, ITOM tells the engineers which underlying server failed and which downstream systems are affected. People pay for ITOM because in a company with twenty thousand servers across three clouds and a hundred internal applications, nobody can actually keep that map in their head.

The third module is Customer Service Management, or CSM. This is the same workflow engine pointed outward at customers instead of inward at employees. When a customer of a telco files a complaint, or a corporate customer of a software vendor opens a support case, CSM routes it, tracks it, escalates it, and connects it to the underlying systems needed to resolve it. This is ServiceNow’s direct attack on Salesforce Service Cloud and Zendesk, and it is strategically important because it is where the company expands beyond its IT origins into the broader enterprise.

The fourth module is HR Service Delivery, sometimes called HRSD or just HR. Same workflow engine, applied to HR. When employees ask “what is my parental leave policy,” “I need to update my emergency contact,” “I am referring a candidate,” HRSD handles the case management, knowledge base, and routing. Note that this is not a replacement for Workday; Workday is the database of employees and payroll, HRSD is the service and workflow layer that sits next to it. People pay for HRSD because the HR team is otherwise drowning in email asking the same fifty questions over and over.

The fifth module is Security Operations, or SecOps. Workflow engine pointed at the security team. When the company’s security tools flag a potential intrusion, SecOps automates the response; pull the threat intelligence, check if the affected machines are critical, route to the right analyst, trigger containment actions, log everything for the post-mortem. People pay for SecOps because security teams cannot scale linearly with the threat surface, and orchestration is the only way to keep up.

Across these five modules there is a horizontal layer worth understanding called App Engine. This is the low-code part of the platform that ServiceNow sells to customers who want to build their own custom workflow applications, beyond the prepackaged modules. Large enterprises end up with hundreds of custom apps built on Now Platform; for managing legal contracts, tracking facilities maintenance, running internal R&D processes, whatever the customer needs. App Engine competes head-on with Microsoft Power Platform and Salesforce Platform.

Sitting on top of all of this for the last two years is the AI layer, branded as Now Assist and increasingly as Otto following the Knowledge 2026 conference. This generates incident summaries, drafts responses, accelerates the workflow builder, and increasingly executes work autonomously through AI agents. ServiceNow has also introduced AI Control Tower to govern AI agents across the enterprise and Action Fabric to let external agents (Claude, Copilot, custom-built ones) trigger ServiceNow workflows through a Model Context Protocol server. This AI layer is sold as separate SKUs on top of the base modules, which matters enormously for the financial story because it is the primary vehicle for ARPU expansion in the next five years.

Now to how the money actually flows. ServiceNow is a subscription business. Customers pay annual contracts, typically priced per-user-per-month, with separate SKUs for each module they activate. A typical large customer starts with ITSM for a few thousand users, then over time adds ITOM, then HRSD, then CSM, then SecOps, then layers in Now Assist on top of all of it. Total contract values for the largest customers run into the tens of millions of dollars per year. The company reported trailing twelve month revenue of roughly fourteen billion dollars and they have been growing in the high twenties annually, which for a business of this scale is genuinely remarkable.

But the number that matters most is not revenue or growth. It is net revenue retention, which measures how much existing customers expand their spend year over year. ServiceNow consistently reports this above 125%, and at the top end of the customer base it is meaningfully higher. Said plainly, every existing customer spends roughly a quarter more next year than this year, before any new customer wins. That metric is the entire business in one number. It tells you that the typical customer experience is not “we bought ServiceNow and that was that,” it is “we bought ServiceNow for IT and now we keep finding new things to put on it.”

Which brings us to the stickiness. This is the part most analysts understate. ServiceNow is not sticky because it is good software, although it is. ServiceNow is sticky because of what the customer encodes into it over time. The first year a bank rolls out ServiceNow, they configure ITSM to match their support process. The second year they add HR workflows for onboarding. The third year they integrate it with their compliance system. The fourth year they build twenty custom apps on App Engine for their trading desk. The fifth year they encode their entire change management policy with seventeen approval gates that match their regulatory requirements. By year seven, the company runs on ServiceNow in a way that is impossible to replace without ripping out and rebuilding the operational logic of half the company.

This is why gross retention rates at ServiceNow run above 98%. Customers do not leave. They cannot leave. The platform is not just storing their data; it is storing the encoded shape of how they actually work. Replacing it would mean rewriting the company’s operating procedures from scratch, retraining tens of thousands of employees, and rebuilding integrations to every other system in the stack. No CIO has the budget, the political capital, or the appetite to do that voluntarily. The few cases where companies have tried have generally failed and ended with the company quietly returning to ServiceNow.

This combination, broad cross-sell across five modules, an AI layer that creates a new monetization vector on top, net revenue retention above 125%, and gross retention above 98%, is what produces ServiceNow’s financial profile. It is a business that is mathematically very hard to break once it is installed, and that compounds organically through expansion even before the company wins a single new logo. The harness, in other words, is also a very good business model.

Next I will walk through the bull thesis, and after that risks and deeper due diligence. But before that, a quick note.

I am an independent stock researcher. I publish deep dives on a small handful of companies and track them alongside my own portfolio. I specialize in research that is borderline obsessive, and I run a highly concentrated book; the kind where every name has to earn its slot against the others. If that style of work is what you are looking for, subscribe to the Substack for ongoing updates on $NOW and for new ideas outside of this name as they come.

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Now to the bull thesis.

The Bull Thesis

Imagine a future where every large company on earth has not just thousands of human employees doing their daily work, but also millions of AI agents running alongside them, each handling their respective tasks end to end. This is not a hypothetical. It is already happening. More and more teams are getting more and more done with agents that complete real work, not just suggest it.

The main problem this creates is not capability. It is coordination. Auditing what was done and by whom. Tracking how different parts of the organization interact with each other. Understanding which agent is operating under which permissions, with which context, and answering to which human. Thousands of employees and millions of agents running in parallel creates a coordination problem that no large enterprise has the infrastructure to solve today.

This is where ServiceNow comes in. What they are building, piece by piece, is exactly that infrastructure. A harness for the agentic enterprise. The same way you currently need a small harness to run a few AI agents inside a single team or function, ServiceNow is building it at the scale of the entire organization. The substrate that holds everything together as the moving parts multiply.

There are four structural trends pushing every large organization toward needing this kind of harness, and each of them is independently durable. Together they form the strongest version of the bull case.

The first trend is rising organizational complexity. As network effects and stronger moats have concentrated capital and revenue in fewer and fewer companies, the number of sub-tasks, processes, integrations, and dependencies inside those companies has grown almost exponentially. The more moving pieces a system has, and the more rapidly it evolves, the more demand there is for a layer that holds the substrate together. This is not a trend that is going to reverse. Complex systems walk toward entropy by default; the only way to keep them functional is to add coordination infrastructure on top. The demand ServiceNow has captured over the past two decades came from the complexity introduced by computers, the internet, and the proliferation of SaaS tools each speaking their own language. The next leg of demand comes from AI and agents being integrated into organizations at a scale that makes the previous wave of complexity look small.

The second trend is the maturity of big tech and the broader push for efficiency. The companies that built and scaled aggressively over the past twenty years are now in a different phase. Investors are demanding more efficiency, higher returns on invested capital, and tighter operating leverage. Management teams are responding by automating tasks and reducing headcount where possible. We are already seeing this play out across multiple sectors. The end state of this efficiency push is not “fewer people doing the same work.” It is “the same work being done by a mix of humans and agents, with the harness deciding which one runs which task.” That harness has to come from somewhere. ServiceNow is the most obvious candidate.

The third trend is the aging workforce and the institutional knowledge cliff. This one is less talked about but in some ways the most important. As more and more senior employees approach retirement at large enterprises, those companies face a knowledge loss problem at a scale they have never had to manage before. Processes that have been run for thirty years by the same person, with all the context and exception handling living inside that person’s head, need to survive the transition to the next generation. Spending the last productive years of a senior employee’s career explaining to their replacement how every process works is slow, wasteful, and lossy; a meaningful percentage of the knowledge does not survive the handoff. By encoding those processes into a system that intelligently tracks each task and maps how it interacts with the rest of the organization, companies can compress that transition time and preserve the operational logic. The harness becomes the institutional memory.

The fourth and most important trend is that agents themselves require a harness to work properly. For an AI to operate effectively inside a large organization, it needs context. We are already at the stage where agents can perform long-running tasks and contribute meaningfully to real work. But a major unresolved problem is ownership. If an agent sits under a single person, isolated from the wider organizational context, you are not getting the full value of the agent. To get the full value, the agent needs the freedom to operate the way a competent employee operates; talking to other employees, talking to other agents, accessing the systems it needs, escalating when it should. The risk in that freedom is that without a proper harness, auditability and accountability become impossible. Companies need to know how much each agent is spending, what it is doing, what assumptions it is operating under, and on whose authority. No CIO is going to deploy autonomous agents at scale without that infrastructure in place. The harness is not a nice-to-have for the agentic enterprise. It is the precondition for it.

To summarize the bull thesis, what we are looking at is a future where the demand for a company harness that allows for seamless AI integration alongside human employees will be vital and rapidly growing. The four trends driving this demand, complexity, the efficiency push, the knowledge cliff, and agent governance, are each large on their own. Stacked together, they form one of the most durable demand tailwinds in enterprise software for the next decade. There is essentially no plausible scenario in which a large organization decides not to implement this kind of layer. The only open questions are who builds it and how much they get to charge for it.

ServiceNow is the incumbent answer to both questions. Whether they can hold that position is what we will look at next, when we move to competition and risks.

Competition

With a massive opportunity comes strong competition. In a technical sense, ServiceNow likely has hundreds of companies competing with them across different parts of the business. However, for the bull thesis, meaning the question of which company will become the dominant harness inside large enterprises, only a handful of companies are actually relevant. These companies have the size, existing moats, and customer relationships that are hard to replace and that give them a real edge in the race. All of them are credible competitors, and I will now try to cover each of them in an unbiased way; first by laying out why they could pose a real threat, then by explaining why I believe ServiceNow is still favorably positioned to win.

Microsoft

Microsoft is the most credible threat by a wide margin. Their attack on the harness layer is built on three stacked pieces. Power Platform is the workflow engine. Copilot Studio is the agent builder. Microsoft 365 plus Azure is the distribution moat. The pitch to the customer is direct and powerful; if your employees already live in Teams, Outlook, and SharePoint, and your developers already live in Azure, why pay for a separate harness when Microsoft can fold the whole thing into the existing bundle.

The case for Microsoft as the eventual winner is real. They have 400 million paid Microsoft 365 seats, which is structural distribution that nobody else in this race can match. They have been steadily expanding Power Platform into territory that overlaps directly with ServiceNow, including process mining, agent orchestration, and prebuilt agents for HR, IT, and customer service workflows. Their bundling power means they can effectively give workflow capabilities away alongside M365 and Azure renewals, which makes the cost comparison favorable on paper. For mid-market customers and newer enterprises that never built a deep ServiceNow installation, Microsoft has a genuine shot.

The case for why ServiceNow still wins comes down to the depth of encoded enterprise workflow at the largest, most complex, most regulated customers. Power Platform is excellent for relatively simple, departmental, often Microsoft-centric automations. It is significantly weaker at the deeply governed, regulator-grade, cross-system, decades-encoded workflow logic that runs at a global bank or a Fortune 100 manufacturer. Twenty-two years of accumulated complexity at a Tier 1 bank cannot be casually rebuilt in Power Platform; the workflows span SAP, Workday, Oracle, custom systems, and ServiceNow’s own modules, with compliance audit trails and approval chains tied to specific regulatory frameworks. Microsoft can theoretically rebuild this. They have not, and the customers that have tried have generally ended up either supplementing Power Platform with ServiceNow or building so much custom code that the cost advantage evaporates.

There is also a useful structural tell. Microsoft Copilot Studio ships with deep connectors into ServiceNow. The Employee Self-Service Agent ships with prebuilt ServiceNow integrations. Microsoft is implicitly acknowledging that they cannot displace ServiceNow from the workflow execution layer in the short term. Their actual play is to own the conversational and productivity layer and gradually pull execution back into Power Automate over time. That works in some accounts and not in others, and it does not threaten the harness position in the largest, most complex enterprises in the world; which is precisely where the harness is most valuable.

The honest summary on Microsoft. They will win the productivity agent battle. They will win at mid-market and at customers where Microsoft is already the dominant stack. They will not, in the next five to seven years, displace ServiceNow at the harness layer of large regulated enterprises, and that is exactly the customer base where the harness thesis pays off.

Salesforce

Salesforce is the second credible threat, narrower than Microsoft but more directly competitive in the modules they overlap on. Their attack is concentrated in Customer Service Management, where Service Cloud has long been the incumbent, and where Salesforce has now layered Agentforce as the agentic AI offering. Marc Benioff has been openly aggressive about positioning Agentforce as the platform for autonomous customer service agents, and Salesforce has the largest installed base in customer-facing service software.

The case for Salesforce as a real threat is straightforward. They own the customer-facing workflow incumbency. They have a massive sales-led customer base. They are extending inward toward employee-facing workflows in the same way ServiceNow is extending outward toward customer-facing service. The two companies are running mirrored expansion strategies and they meet most directly in CSM, which is one of ServiceNow’s fastest growing modules.

The case for why ServiceNow still wins this race is more nuanced than the Microsoft argument. Salesforce is not building a harness; they are building a stronger CRM stack with agents on top. That distinction matters because customer service tickets in many large enterprises ultimately depend on resolving an underlying technical or operational issue. When a corporate customer calls because their banking platform is down, the ticket may start in Service Cloud, but the resolution requires touching the incident, the change management record, the affected systems, and the field service dispatch; all of which sit in ServiceNow at most large enterprises. ServiceNow’s pitch is that you should run the entire loop on the harness rather than handing off between two platforms. Increasingly, that pitch is winning at the largest, most operationally complex customers.

The honest summary on Salesforce. They will continue to be a real headwind on ServiceNow’s CSM growth rate, particularly in pure customer-facing service deployments where the operational complexity is low. They are not building a harness, and the harness thesis does not turn on the CSM module specifically. ServiceNow loses some CSM deals and the bull thesis still works.

Workday

Workday is the smallest of the three threats today but worth flagging because the trajectory is right. They are the system of record for HR and finance at most large enterprises, and they have been steadily extending into HR service delivery and financial workflow automation. That puts them in direct competition with ServiceNow’s HRSD module and increasingly with their finance workflow ambitions.

The case for Workday is rooted in data ownership. They argue, with some logic, that if they already hold the employee data and the financial data of record, they should be the natural place to run workflows on top of that data. For customers where Workday is deeply entrenched, this argument resonates and ServiceNow has lost some HRSD deals as a result.

The case for why ServiceNow still wins is structural. Workflow logic is fundamentally different from data of record, and the same workflow engine should run across HR, IT, finance, customer service, security, and custom domains. You cannot solve the harness problem if you only own one vertical’s data. Workday’s architecture and DNA are oriented around being a system of record, not a system of action; that is what they are good at and what they will continue to be good at. The two companies are largely complementary at the scale of large enterprises, and most customers buy both.

The honest summary on Workday. They are a real but contained threat in the HRSD module specifically. They are not building a harness, and they are not architecturally positioned to do so. ServiceNow loses some HRSD deals at Workday-heavy accounts and the bull thesis still works.

Smaller players and Palantir

A note on the second tier of competitors. Atlassian Jira Service Management, BMC Helix, Ivanti, and Freshservice all compete with ServiceNow in IT service management at the lower end of the market. They take some helpdesk share at mid-market and smaller enterprises. None of them are remotely positioned to become the harness for a large enterprise; their architectures, customer bases, and product depth are not in the same league.

Palantir deserves a separate note because investors familiar with both names will inevitably ask. Palantir is not a competitor to ServiceNow in any meaningful sense. They are solving a different problem at a different layer of the enterprise. Palantir’s Foundry and AIP are decision support and intelligence layers that fuse data and let humans or agents reason over it for hard, high-stakes problems; defense, supply chain optimization, clinical trial monitoring, and similar. ServiceNow is the operational substrate that runs the recurring, governed, auditable execution of work across the entire organization. The cleanest framing is that Palantir is the brain and ServiceNow is the spine. The largest enterprises in the world increasingly run both, and the products complement each other far more than they compete. Anyone framing this as a Palantir-versus-ServiceNow trade is misreading the architecture.

The race overall

This is a real, ongoing race, and the heat will only increase over the next several years as the agentic enterprise becomes the default architecture. Microsoft, Salesforce, and Workday are each formidable in their own zones. Each has a credible angle of attack on some part of ServiceNow’s surface area.

But ServiceNow has the strongest head start and the clearest vision of what the harness actually needs to be. Twenty-two years of encoded workflow at the largest enterprises in the world. The deepest cross-functional module footprint of any platform in this space. The most credible AI control tower and agent governance story. And, crucially, the only architecture in this race where workflow is the entire product rather than a feature bolted onto something else.

The competitive landscape does not invalidate the harness thesis. It sharpens it. The race is real, and ServiceNow is leading it.

Next up we will take a look at the team and leadership to determine skin in the game and important connections.

Leadership and Skin in the Game

For ServiceNow to get to the next stage, strong leadership and skin in the game are vital. In this section I will go over the key figures in the company, insider ownership patterns, and the key signals that either support or weaken the bull thesis.

Fred Luddy, the founder and Chairman

ServiceNow was founded in 2003 by Fred Luddy, working alone out of his home in San Diego. Luddy had previously been the Chief Technology Officer of Peregrine Systems, an enterprise IT software company that had collapsed a year earlier. Rather than retire, Luddy started ServiceNow at the age of 49, famously telling colleagues he could not wait until 50 because he had decided 50 was too old to start a company.

The original vision was characteristically unfashionable. Luddy was not trying to build a category-defining IT product. He was trying to build a generalizable workflow platform in the cloud, which essentially nobody understood at the time. To get the platform adopted, he layered an IT service desk product on top of it because that was a pain point customers could feel and pay for. The IT service desk became ITSM, ITSM put ServiceNow on the map, and the underlying platform became the substrate everything else has been built on for the past two decades. The harness, in other words, was Luddy’s actual original vision, and the IT module was just the wedge to get it sold.

Luddy served as CEO from 2004 to 2011, then stepped aside voluntarily when the company needed an operator to scale the sales motion. He moved into product development, then into an advisory role in 2016, and became Chairman of the Board in 2018. He still holds a meaningful family-trust stake in the company and remains the cultural anchor; Bill McDermott routinely references Luddy as the source of the “humble, customer-first” culture that runs through ServiceNow’s 27 000 employees.

What is worth flagging here is that ServiceNow is one of the very few enterprise software companies where the founder handoff actually worked. Most founders either cling on too long and become a drag, or hand off and the culture rots. Luddy did neither. He stepped back at the right time, kept his identity tied to the company through governance and equity rather than through running it, and let a series of best-in-class operators take the company through each scaling phase. That is a rare pattern and it is itself a signal of organizational health.

The CEO succession nobody talks about

Before getting to the current CEO, the succession history at ServiceNow is worth pausing on because it is unusually clean and tells you something about the quality of the underlying business.

Luddy was followed by Frank Slootman, who ran the company from 2011 to 2017 and took it public in 2012. Slootman is now the CEO of Snowflake and is widely considered one of the most ruthlessly effective enterprise software operators alive. He was followed by John Donahoe, the former CEO of eBay, who ran ServiceNow from 2017 to 2019 and is now CEO of Nike. Donahoe was followed by Bill McDermott, the former CEO of SAP.

Stop and notice the pattern. Every CEO of ServiceNow has been a top-tier operator who went on to lead another major public company afterward. ServiceNow has effectively become a CEO factory. That does not happen at average businesses. It happens at businesses that attract elite talent because the underlying platform is doing something genuinely important, and where the bench and the board are deep enough to keep the succession working. The leadership pipeline itself is a piece of evidence for the bull thesis.

Bill McDermott, the current CEO

Bill McDermott took over as CEO in late 2019 and added the Chairman title in October 2022. He is American, born in New York in 1961, and his career trajectory through enterprise software is among the most impressive of any operator in the industry.

He spent the early part of his career at Xerox, where he climbed into senior sales and management positions. From there he moved to Gartner as President, then to Siebel Systems as Executive Vice President during the period when CRM was being defined as a category. He then joined SAP America, where his performance got him appointed the first American co-CEO of SAP in 2010 and then sole CEO. During his tenure at SAP, the market capitalization went from roughly 39 billion to 163 billion dollars. He led SAP’s transition to the cloud, which is exactly the kind of platform-shift execution that ServiceNow now needs to pull off with the agentic transition.

McDermott left SAP in 2019 with a specific mandate at ServiceNow; take the company from 3,5 billion in annual revenue to 10 billion. He hit that mark and kept going. Annual revenue under his tenure has gone from 3,5 billion in 2019 to roughly 13,3 billion in 2025, with the company on track to exceed 15 billion this year. The company has more than tripled in revenue under his leadership while also entering the Fortune 500 and consistently winning best-place-to-work and most-trusted-business rankings. Whatever you think of the stock, the operating execution has been exceptional.

McDermott’s personal style is worth understanding because it shows up in how the company is positioning for the agentic era. He is a relentlessly customer-focused, narrative-driven CEO who is willing to make bold strategic claims publicly and then drive the company to deliver on them. His Knowledge 2026 framing of ServiceNow as the “AI control tower for business reinvention” is exactly the kind of high-conviction, slightly-ahead-of-the-product positioning that built SAP’s cloud transition. He is also notably aggressive about defending the company in public; in May 2026 he gave a Fortune interview pushing back hard on the “SaaSpocalypse” narrative that has driven the stock down, calling the bear case nonsense and arguing ServiceNow is on a path to a trillion dollar market cap.

The honest assessment of McDermott is that he is exactly the right CEO for this phase of ServiceNow’s life. He is not a founder. He does not pretend to be. He is the operator hired to take a great platform and turn it into a defining enterprise software company, and his track record at SAP says he is one of perhaps three or four people on the planet qualified to do this job at this scale.

Gina Mastantuono, the CFO

It is worth flagging the CFO because in a business with this much expansion and so many capital allocation decisions, the CFO matters more than usual. Gina Mastantuono joined ServiceNow as CFO in January 2020, brought in by McDermott shortly after he started. She has been the financial architect of the revenue tripling, the margin expansion, and the recent aggressive share buyback program. She is widely respected in the enterprise software CFO community and represents continuity in the financial discipline the company has been known for.

The skin-in-the-game signal

This is where the leadership story gets most interesting and where you want to pay attention as an investor.

McDermott is a hired-gun CEO, not a founder, and his direct equity stake reflects that. He owns a meaningful amount of stock in absolute dollar terms, but it is not founder-level ownership and would not be the strongest skin-in-the-game story on its own. If this is where the analysis ended, you would have to call leadership ownership a moderate signal and move on.

What changes the picture is what happened in early 2026. As ServiceNow’s stock came under heavy pressure on growth deceleration concerns and “SaaSpocalypse” fears, several things happened in quick succession. McDermott bought roughly 3 million dollars of stock on the open market in late February. At the same time, he, the CFO Mastantuono, the Chief People and AI Enablement Officer Canney, and the Special Counsel Elmer all cancelled their previously planned 10b5-1 stock sale arrangements. McDermott has also publicly stated that more than 90 percent of ServiceNow employees are buyers of the company’s stock.

This pattern is what you actually want to see. A hired-gun CEO who has already made his fortune does not need to put 3 million dollars of personal capital into the open market unless he genuinely believes the stock is mispriced. Cancelling pre-arranged sale plans is not a costless action; it is a public commitment to hold through whatever the market is doing. The simultaneous behavior across the senior team suggests this is not one person’s gut call but a coordinated read on where the business is headed versus where the stock is priced.

For the bull thesis, this is the strongest single piece of leadership evidence. The team running the company is not behaving like a team that thinks the harness thesis is broken. They are behaving like a team that thinks the market is wrong and is willing to put their own money behind that view at exactly the moment most investors are running the other direction.

Summary of the leadership story

The leadership story for ServiceNow has three layers. The founder, Fred Luddy, built the right thing for the right reasons and handed it off cleanly while keeping the cultural and governance anchor in place. The succession of operator CEOs, Slootman to Donahoe to McDermott, has consistently attracted the best enterprise software talent in the world, and each handoff has been clean. The current CEO, McDermott, is the rare operator with both the track record and the mandate to take the company through its next defining phase, and he is putting his own capital behind that mandate at exactly the moment doubters are loudest.

For a thesis that depends on a fifteen-year compounding horizon, the leadership question is essentially whether you trust these people to allocate capital intelligently and execute through the agentic transition without losing the cultural and architectural discipline that built the company. On the evidence available, the answer is yes.

Next we will look at the financial profile and the valuation question; specifically whether the market is currently pricing the harness thesis or just the workflow business.

Valuation and Financials

The price action and the SaaSpocalypse

To understand where ServiceNow’s valuation sits today, you have to understand why the stock has done what it has done. Shares of ServiceNow are down 39 percent this year and off more than 55 percent from their 52 week high. Despite the company beating guidance every quarter, raising forward outlook, growing free cash flow at over 30 percent annually, and announcing a doubling of revenue targets to 30 billion by 2030, the stock has gone almost straight down. This is one of the most extreme dislocations between operating performance and stock price in large cap enterprise software in recent memory.

The reason is a market wide narrative that has come to be called the SaaSpocalypse. The argument runs like this. The last twenty years of SaaS valuations were built on per seat subscription pricing, where every additional employee was an additional license. Generative AI threatens that model at the root. If agents replace seats, ARPU collapses. If customers can build internal AI tools that replicate SaaS functionality at marginal cost, switching costs evaporate. The entire seat based subscription economy, in this view, is heading toward a structural reset. Investors have been pricing in that reset across the SaaS complex, and ServiceNow, as one of the largest and most expensive seat based SaaS businesses, has taken some of the heaviest punishment.

Here is the part of the SaaSpocalypse argument that is correct. SaaS businesses that do not see meaningful upside from AI, particularly the ones whose primary value proposition is being a static system of record or a forms based productivity tool, are genuinely going to get crushed. AI either eats their use case or commoditizes it. Many mid cap SaaS names trading at ten or fifteen times revenue with unclear AI angles deserve significant multiple compression. The narrative is not entirely wrong.

Where the narrative gets ServiceNow specifically wrong is that ServiceNow is not a static SaaS business. ServiceNow benefits more from AI, not less. The harness thesis explains why. As enterprises deploy more AI agents, they need more workflow infrastructure to govern, audit, and orchestrate those agents. Every additional agent in the enterprise is a new node that needs a harness underneath it. ServiceNow does not get smaller as agents proliferate; ServiceNow gets bigger, because the surface area of work that needs governance expands rather than contracts. The market has been pricing ServiceNow as if it were the same as a CRM tool that may get replaced by a Copilot agent. It is not the same thing. The dislocation between the narrative and the underlying business is exactly where the opportunity lives.

Where the multiples actually sit

ServiceNow is not cheap on a price to sales basis. The current TTM P/S sits at 6,74 with EV/Revenue at 6,54. For context, the average S&P 500 company trades at roughly 2,8 times sales, and most established large cap software businesses sit somewhere between 5 and 10. So this is squarely in the premium software bucket but nowhere near the extreme end. Palantir, by comparison, trades at a market cap above 320 billion on roughly 4,5 billion in revenue, putting its P/S in the 70s. ServiceNow trades at less than one tenth of Palantir’s revenue multiple while generating roughly three times the revenue and growing at over 20 percent.

The earnings multiple is where the picture gets more nuanced and where investors need to be careful. On a GAAP basis, ServiceNow earned roughly 1,76 billion in net income on TTM revenue of 13,96 billion. Against a market cap of 94 billion, that is a trailing GAAP P/E of 54,3. That is rich by any standard. The forward non GAAP P/E, which strips out stock based compensation and acquisition related amortization, sits at 21,7. That is the figure most sell side analysts and management point to, and it is reasonable for the growth profile, but it papers over the real economic cost of SBC. The honest investor should hold both numbers in mind. The gap between 21,7 and 54,3 is essentially the SBC issue, which we will examine in detail in a moment.

The cleanest valuation lens is on free cash flow. ServiceNow generated 4,58 billion in free cash flow in 2025, growing 34 percent year over year, and is now running at a TTM rate of 4,63 billion. Against a 94 billion market cap, that is a free cash flow yield of 4,9 percent. For a business growing free cash flow at over 30 percent annually, with a customer base that essentially does not churn and a net cash balance sheet, that yield is genuinely attractive. Most quality compounders trade at FCF yields closer to 3 percent. ServiceNow is being priced as if it were a much lower quality business than it actually is.

It is worth flagging that the GAAP operating margin of 13,7 percent is low for a software business of this scale and quality. Microsoft runs at over 45 percent. Oracle is north of 30 percent. Adobe is at 35 percent plus. The gap is almost entirely the SBC line. ServiceNow does not yet show up as a high margin business on a GAAP basis, which is part of why traditional value investors have stayed away. The bull case requires accepting that the cash flow is real and the SBC, while expensive, is a known and decreasing drag rather than a structural problem.

Growth has been remarkably consistent

The financial profile that makes the current dislocation so striking is the consistency of growth. Under McDermott, ServiceNow has grown subscription revenue from 3,5 billion in 2019 to 13,3 billion in 2025, with revenue compounding at roughly 24 percent annually over that stretch. The Q1 2026 print showed subscription revenue growing 22 percent year over year, accelerating from 19,5 percent the prior quarter. Guidance for full year 2026 sits at 15,74 to 15,78 billion, implying continued growth in the low 20s.

What anchors this growth is net revenue retention, which has consistently sat above 125 percent across multiple years. The reason is the encoded workflow stickiness discussed earlier; every workflow a customer builds increases switching costs, and every additional module adopted increases ARPU. The other side of that retention story is what the company calls its renewal rate, which has been disclosed at 98 percent for each of the past three years in the 10-K. Customers do not leave. They cannot leave. The business is not just growing; it is growing in the most defensible way possible, by deepening relationships with customers who have nowhere else to go.

The other forward looking growth anchor is the remaining performance obligation. Total RPO of 27,7 billion as of Q1 2026 grew 25 percent year over year, with current remaining performance obligations of 12,64 billion representing revenue expected in the next 12 months. Total RPO sitting at roughly twice annual revenue is a powerful lock on near term forecasts. Revenue is essentially already booked; the question is execution and renewal, not demand.

Stock based compensation and the buyback offset

This is where the bull case has to be honest. SBC ran at 1,96 billion in 2025 and is on a TTM run rate of about 2,03 billion as of Q1 2026. That is roughly 14,7 percent of revenue in 2025 and trending to about 14,5 percent on the latest TTM numbers. Five years ago, in 2020 and 2021, SBC was 19,2 percent of revenue. The 5 year average is 17,4 percent.

Two things matter in that history. First, the absolute level. SBC at 14 to 15 percent of revenue is high by mature large cap standards. Microsoft and Oracle run SBC at 4 to 6 percent. Salesforce runs at 9 to 11 percent. Snowflake runs above 40 percent. Workday runs at 16 to 19 percent. ServiceNow sits in the middle of the high growth enterprise software peer group. Second, the trend. SBC as a percentage of revenue has been declining steadily for four years, from 19,2 percent in 2020 to 14,7 percent in 2025. That trajectory matters more than the absolute level, because it tells you the dilution drag is structurally improving over time as the company scales, even though absolute dollar SBC continues to grow.

The offset is the share buyback program, which has accelerated dramatically. ServiceNow spent 0,70 billion on buybacks in 2024, then 1,84 billion in 2025. In Q1 2026 alone the company repurchased 2,23 billion of stock, more than the entire 2025 program. On a trailing twelve month basis, buybacks now total 3,77 billion against SBC of 2,03 billion. That is no longer managing dilution. That is meaningful net share count reduction. The Board has authorized an additional 5 billion under the share repurchase program in January 2026, bringing total available headroom to 9,5 billion, and the company announced a 2 billion accelerated share repurchase shortly after.

The honest framing is that the buyback program has moved through three phases. From 2020 to 2023, buybacks were modest and barely covered SBC. In 2024 and the first half of 2025, the company stepped into actively managing dilution. From late 2025 onward, the company has been aggressively buying back shares at a rate that materially exceeds SBC, which is the right behavior for a CEO who believes the stock is mispriced relative to the long term thesis. For a long horizon shareholder, this is the trajectory you want to see.

The balance sheet

ServiceNow runs a clean, conservative balance sheet. Cash and short term investments sit at 5,18 billion as of the most recent quarter. Long term debt sits at roughly 1,49 billion plus around 0,91 billion in capital lease obligations, but cash and short term investments comfortably exceed total debt, leaving the company in a net cash position of roughly 0,5 billion. There is no leverage risk, no refinancing risk, and no near term liquidity concern. For a business of this size and growth profile, the balance sheet is a strength rather than a constraint.

How they think about M&A

ServiceNow has become genuinely acquisitive over the past few years, and the pattern is worth understanding because acquisitive software companies have a habit of destroying value when they get the philosophy wrong. ServiceNow has so far gotten it mostly right, and the M&A history tells you something about how management thinks.

The pattern is consistent. ServiceNow does not buy companies for their revenue. They buy companies for capabilities that extend the harness. The acquisition logic is almost always about plugging a specific gap in the platform that would otherwise take two or three years to build internally. The acquired company’s revenue is essentially incidental. Some recent examples make the pattern clear.

Moveworks, acquired in late 2025 for roughly 2,85 billion, brought a conversational AI front-end and an enterprise search capability that ServiceNow now positions as the AI-native employee experience layer. The strategic logic was that as AI agents proliferate, the conversational entry point to the enterprise becomes valuable real estate, and Moveworks had built a real product there with real customers.

Armis, acquired in early 2026 for roughly 7,75 billion, added cybersecurity asset visibility, particularly for IoT and operational technology environments. This extends the SecOps module and the CMDB into a part of the enterprise that ServiceNow’s traditional discovery tools could not reach. Armis is also creating most of the near-term margin headwind being discussed on earnings calls; roughly 75 basis points of operating margin and 200 basis points of FCF margin in 2026, normalizing by 2027.

Veza, acquired in 2025, brought identity and access governance capabilities. The strategic logic ties directly into the AI Control Tower story; if you are going to govern AI agents at the enterprise level, you need to know who has permission to do what, and Veza’s product gave ServiceNow that capability natively.

Element AI earlier in the cycle, plus a series of smaller AI tooling acquisitions, brought AI engineering talent and specific model capabilities that became the foundation of Now Assist.

The unifying pattern across all of these is the same. ServiceNow is buying the capabilities required to build the agentic harness, not buying revenue or scale. McDermott has been publicly explicit that this is the discipline; he said on a recent earnings call that ServiceNow walked away from acquisitions when prices got irrational and that the company’s priority is product completeness, not topline growth through deals.

The math also looks reasonable. ServiceNow has spent roughly 10 billion on acquisitions over the past two years, against a balance sheet with 5 billion in cash and growing free cash flow generation. The pace is meaningful but not reckless, and the company has not had to issue debt or stock to fund any of it.

There are two genuine risks in the M&A story worth flagging. First, the integration burden is real. Each acquisition takes 12 to 24 months to fully integrate into the platform, and during that period the acquired teams need attention, the products need replatforming onto the Now Platform, and customer overlap creates account management complexity. With four meaningful acquisitions in two years, the integration backlog is heavier than it has been at any prior point in ServiceNow’s history. Second, the larger ServiceNow gets, the more tempting it becomes to use M&A to paper over slowing organic growth. Other large enterprise software companies have walked into this trap (the historical comparisons here are not flattering; SAP and Oracle both went through phases where M&A was a substitute for organic innovation rather than a complement to it). ServiceNow has not shown this pattern yet, but the risk increases as the company scales.

For now the discipline looks intact. The acquisitions plug specific capability gaps, the prices have been reasonable, the strategic rationale is consistent, and the integration is being managed openly with clear margin guidance to investors. This is the right pattern from a long-horizon shareholder perspective.

Dividends

ServiceNow does not pay a dividend and has not signaled any intent to start. Capital return runs entirely through buybacks. For a business still growing in the low 20s with significant reinvestment opportunities and an active acquisition pipeline, this is the correct choice. Dividend yield investors should look elsewhere; this is a compounding capital appreciation story, not an income story.

Gross margins and the trajectory

GAAP gross margin has held in a tight range of roughly 77 to 79 percent across the past five years. Non GAAP gross margin sits at roughly 82 to 83 percent. Subscription gross margin specifically runs at 81 to 83 percent on a GAAP basis and 85 to 86 percent on a non GAAP basis. These are best in class enterprise software gross margins.

The recent trend has been a slight compression on GAAP gross margin, primarily driven by acquisition related amortization (Armis being the most recent contributor) and to a lesser extent by AI infrastructure costs as Now Assist scales. Management has guided to 81,5 percent subscription gross margin for the full year 2026, with the Armis acquisition creating roughly 25 basis points of headwind. None of this materially changes the underlying picture. ServiceNow is an extraordinarily high margin business and will remain one. The gross margin profile is not a concern.

Operating leverage and R&D

This is one of the more underappreciated parts of the financial profile. GAAP operating margin has expanded from 4,4 percent in 2020 to 13,7 percent in 2025, more than a tripling over five years. Non GAAP operating margin has moved from roughly 24 percent in 2020 to roughly 30 percent in 2024 and 31,5 percent guided for 2026. The business is producing genuine operating leverage even while R&D investment has been climbing in absolute terms.

R&D spending was 2,96 billion in 2025, up 16 percent year over year. As a percentage of revenue, R&D has been remarkably stable in a 22 to 24 percent range across the past six years, which is appropriate for a platform business that is actively building out an AI layer. ServiceNow is not coasting; it is reinvesting heavily while still expanding margins, which is the textbook profile of a quality compounding software business.

The biggest operating leverage has come from sales and marketing. S&M spending fell from 41 percent of revenue in 2020 to 33 percent of revenue in 2025. That is the classic SaaS maturity curve playing out exactly as it should; as the install base grows and renewals carry more of the revenue load, the cost of acquiring each incremental dollar of revenue declines. G&A has shown similar leverage, falling from 10 percent of revenue in 2020 to 8,5 percent in 2025. These two lines together explain most of the GAAP operating margin expansion over the past five years and they have substantial room to keep compressing.

The 2030 target and what it implies

In May 2026, at the company’s Financial Analyst Day, ServiceNow laid out a target of 30 billion in subscription revenue by 2030. McDermott called this the bear case during the presentation, with a 32 billion upside scenario presented as well. The company is currently doing approximately 16 billion in subscription revenue this year and has 27,7 billion in remaining performance obligations, approximately double its annual revenue.

Doubling subscription revenue from 16 billion to 30 billion over four years requires a roughly 17 percent compound annual growth rate. Given that the company has been growing subscription revenue in the low 20s recently, the 30 billion target is genuinely conservative on current trajectory. The CFO noted that in 2021, the company set a five year target of 15 billion and is on track to beat it by half a billion dollars, organically. Management has a track record of setting ambitious targets and then beating them. The 30 billion number is more likely a floor than a ceiling.

The other important number from Financial Analyst Day was that AI products are expected to represent more than 30 percent of annual contract value by 2030, up from low single digits today. If that materializes, it answers the SaaSpocalypse question directly. ServiceNow would have demonstrated that AI is additive ARPU on top of existing seat based revenue, not a replacement for it.

Running some simple multiples

This is where the relative value gets interesting. If you assume ServiceNow hits 30 billion in subscription revenue by 2030 (their bear case), and add a reasonable 1,5 to 2 billion of professional services revenue on top, total revenue lands around 32 billion. Apply the historical FCF margin of roughly 32 percent and you get free cash flow of roughly 10 billion in 2030.

At today’s 94 billion market cap, that implies a forward 2030 FCF multiple of roughly 9,4. For a business that will still be growing over 15 percent annually at that point with the kind of customer stickiness ServiceNow has, 9,4 times FCF four years out is not just cheap; it is genuinely undemanding. A reasonable terminal multiple for a business of that quality and growth profile is somewhere between 25 and 35 times free cash flow. At 30 times FCF on 10 billion of FCF, the implied 2030 market cap is 300 billion. From today’s 94 billion, that is a triple over four years before considering buybacks.

Now consider the upside scenarios. If the harness thesis is correct and the market eventually starts pricing ServiceNow not as a workflow company but as the operational substrate of the agentic enterprise, multiples could rerate dramatically. Investors today are paying 70 plus times revenue for Palantir, which has a less defensible business at much smaller scale. There is no fundamental reason ServiceNow could not see a multiple rerate toward 12 to 15 times revenue if and when the agentic transition is recognized as a tailwind rather than a threat. At 15 times revenue on 32 billion of 2030 revenue, the implied market cap is closer to 480 billion. That would be a roughly five times return over four years on today’s price.

The honest framing of the bull math is this. The downside case is that ServiceNow continues to compound revenue and FCF at 15 to 20 percent for the next four years and the multiple stays where it is, which still produces a roughly 70 to 100 percent return through earnings growth alone. The base case is that the multiple modestly rerates as the SaaSpocalypse narrative breaks and the company delivers on the 30 billion target, producing a 2 to 3x return. The bull case is that the harness thesis becomes consensus, multiples rerate aggressively, and the stock compounds at 25 to 30 percent annually for the next four to five years.

This is the kind of asymmetric setup that does not come along often in large cap enterprise software. The market is pricing the bear case. The business is delivering the base case. And the long term setup is the bull case. That is the entire valuation argument in three sentences.

Next we will turn to the risks and the deeper due diligence questions that could break this thesis.

Risks and Deeper Due Diligence

No thesis is complete without honestly enumerating what could break it. The harness framing is compelling, the financials are strong, and the leadership is among the best in enterprise software, but a long horizon investment thesis still needs to survive scrutiny on what could go wrong. This section walks through the risks I take most seriously, ordered roughly by how much they actually keep me up at night.

Stock based compensation as a structural drag

The first risk is the one already covered in the financials section but worth flagging again as a risk rather than just a feature of the financial profile. SBC at 14 to 15 percent of revenue is the single largest gap between the GAAP and non GAAP picture, and it is the reason traditional value oriented investors have stayed away from the name. If the trend of declining SBC reverses, or if the buyback program slows for any reason, dilution becomes a meaningful drag on per share returns. Management has signaled commitment to the buyback ramp, but capital allocation decisions are reversible. This is not a thesis breaker but it is a permanent bear talking point that will keep some investors out of the stock.

Key person risk and the McDermott question

Bill McDermott was 58 when he took the CEO role in late 2019, which makes him roughly 64 or 65 today. That is not old by CEO standards (Buffett is in his 90s, Larry Ellison is in his 80s, Dimon is 69) but it is worth flagging because McDermott is genuinely critical to the next phase of ServiceNow’s story in a way that is rare. He was hired specifically to take the company through the agentic transition and to scale toward 30 billion in revenue by 2030. If something happens to him or if he decides to step back before that journey is complete, the stock would react sharply.

There is a specific health note worth being honest about. McDermott lost his left eye in a household accident in 2015, when he slipped on stairs while carrying a glass of water and a shard of glass injured his eye. He underwent a long surgical recovery and returned to running SAP shortly afterward. There is no public indication of any current health concern. But anyone evaluating key person risk on a CEO of his age and centrality to the thesis should be aware of his medical history.

The mitigant is the deep bench. ServiceNow’s track record of CEO succession (Slootman to Donahoe to McDermott) suggests the board and leadership pipeline can handle a transition. Gina Mastantuono as CFO and President is a credible internal succession candidate. Fred Luddy is still Chairman. The company has handled three CEO transitions cleanly, and the cultural anchor Luddy provides is itself succession insurance. Still, in the near term, McDermott is the face of the company and the architect of the current strategy. His departure for any reason would be a meaningful negative event.

Reflexivity in the equity funding model

This one is more subtle and worth taking seriously. ServiceNow’s compensation model depends meaningfully on equity to attract and retain talent, like every other large enterprise software company. When the stock is rising, equity grants are a powerful retention and recruiting tool because employees see their unvested stock appreciating. When the stock is falling, the same equity grants become less effective because employees worry about declining value, and the company has to issue more shares at lower prices to deliver the same dollar amount of compensation.

This creates a reflexive loop. If the stock continues to fall, SBC as a percentage of revenue could rise rather than continue its downward trend, because the company would need to issue more shares to cover the same compensation expense. That would in turn push GAAP earnings further down, deepen the SaaSpocalypse narrative around the name, and push the stock lower. The current dynamic of accelerating buybacks against declining SBC could reverse if equity sentiment around the name does not improve.

The reverse is also true. If the stock starts to recover, the equity compensation model becomes self reinforcing in the opposite direction. Fewer shares issued for the same dollar expense, lower SBC as a percentage of revenue, less buyback offset needed, and the GAAP picture improves. This is part of why management has been so aggressive about defending the stock publicly and buying back shares; they are trying to break the negative reflexive loop before it embeds.

For a long horizon investor, this risk is real but not unique to ServiceNow. Every high growth software company faces the same dynamic. The question is whether ServiceNow’s underlying business is strong enough to break out of the negative loop on its own, which I believe it is, but it is not guaranteed.

AI platform hostility and squeezed input costs

This is one of the more interesting forward looking risks and one that is not yet being priced. ServiceNow’s Now Assist and Otto products are increasingly built on top of frontier AI models from external providers. The Knowledge 2026 conference made clear that ServiceNow is integrating Claude from Anthropic and OpenAI’s models alongside its own NowLLM. This works beautifully today because the AI providers want enterprise distribution and ServiceNow gives it to them.

The risk is that this dynamic shifts. If OpenAI, Anthropic, or Microsoft decide that the enterprise workflow layer is strategically valuable enough to compete in directly, they could squeeze ServiceNow’s input costs by raising API prices, restricting access to leading models, or going after ServiceNow’s customers directly with their own competing offerings. Microsoft is the most obvious risk because they own both a frontier model partnership with OpenAI and a competing workflow stack in Power Platform. OpenAI has been increasingly direct about wanting to own the enterprise relationship, not just be a model provider. Anthropic has a deep partnership with ServiceNow today, but partnerships shift.

The mitigant is that the harness layer, the actual workflow execution and governance infrastructure, is much harder to replicate than the AI model layer. ServiceNow can swap one frontier model for another with limited customer impact. The customer cares about workflow orchestration and audit, not which underlying model summarizes a ticket. ServiceNow’s MCP server architecture announced at Knowledge 2026 is essentially a hedge against this exact risk; it makes ServiceNow model agnostic so that no single AI provider can hold it hostage. Still, this is a real watch item over the next three to five years.

Broader AI narrative cooldown

Worth taking seriously and probably the risk I think about most actively. The AI infrastructure trade has been one of the strongest equity narratives of the past three years. NVIDIA has carried the broader market. TSMC, Broadcom, and the semiconductor ecosystem have been priced for continued exponential growth. Recent signals suggest that growth is slowing. TSMC has been moderating its near term capex outlook. Some semiconductor valuations are at levels that historically have only been sustainable in extreme bubble conditions.

If the AI narrative cools off broadly, the market historically does not discriminate well in the early phases of the rotation. In 2001, after the dotcom peak, the market sold everything internet related regardless of the underlying business quality. Cisco, Sun, and Oracle all dropped 70 to 90 percent despite being real businesses. ServiceNow could absolutely take collateral damage in that kind of environment, even though the harness thesis is more durable than most AI tagged businesses. A 12 to 18 month period of multiple compression across the entire AI complex would push ServiceNow lower regardless of fundamentals.

The way to think about this is not whether to own ServiceNow, but how much to own. If the AI narrative breaks broadly, you want enough conviction in the underlying business to add to the position rather than cut it. ServiceNow is one of the few names in this space where I am confident the operating performance will eventually pull the stock up regardless of what the broader narrative does, but the path could be uncomfortable.

Federal government exposure and DOGE

ServiceNow has a meaningful federal business that has been a quiet contributor to growth for several years. That exposure has become a near term risk. The Department of Government Efficiency has been aggressively pruning federal software contracts in 2026, and federal agencies have been scrutinizing legacy SaaS spend in favor of cheaper, often AI native, alternatives. ServiceNow’s federal business growth has slowed measurably as a result, and analyst commentary in early 2026 has flagged this as one of the primary near term overhangs on the stock. Stifel cut its price target from 180 to 135 in April 2026 specifically citing weaker federal spending.

The mitigant is that ServiceNow’s federal business is still growing in absolute terms (net new ACV in federal grew over 30 percent year over year in Q3 2025) and the federal use cases ServiceNow serves are deeply embedded in agency operations. DOGE can slow procurement cycles and force renegotiation but is unlikely to actually rip out installed deployments. The bigger question is whether the federal contraction is a one to two year timing issue or a structural shift in how federal IT spending allocates. I lean toward the former, but it is worth watching closely.

Middle East deal slippage and geopolitical drag

Q1 2026 results flagged 75 basis points of subscription revenue growth headwind from delayed closings of large on premise deals in the Middle East due to the regional conflict. Management has guided cautiously for the rest of 2026 to reflect continued geopolitical uncertainty. This is a pure timing issue, not a structural one; the deals are not lost, just delayed. But timing matters for quarterly prints, and the market has been punishing any near term miss against the SaaSpocalypse backdrop. A second or third quarter of similar slippage would extend the drawdown even though the long term thesis would be unaffected.

US fragmentation from global powers

A risk that gets less attention than it should is the broader trend of geopolitical fragmentation between the United States and other major economies. ServiceNow is an American enterprise software company that runs critical workflow infrastructure for global customers. If trade tensions, data sovereignty requirements, or outright sanctions force European, Asian, or Middle Eastern customers to move toward domestic alternatives, ServiceNow’s international revenue base is exposed.

This is not a near term risk. But it is the kind of slow moving structural pressure that could compress international growth over a five to ten year horizon. The mitigant is that ServiceNow’s competitors at the harness layer are all also American (Microsoft, Salesforce, Workday), so a fragmentation scenario is more about reduced TAM than market share loss. There is no meaningful European or Chinese competitor at the harness layer today, which is both a strength (no immediate displacement risk) and a weakness (a fragmenting world cannot easily be served by any of the current incumbents).

M&A and buyout risk

This one is technically not a downside risk for shareholders, but worth flagging. At a 94 billion market cap, ServiceNow is large enough that very few acquirers could absorb it. Microsoft, Oracle, Alphabet, Amazon, Meta, and possibly SAP are essentially the only realistic candidates. Regulatory approval for any of these acquirers buying ServiceNow would be extremely difficult given antitrust scrutiny on big tech. The probability of a takeover at this size is very low.

If it did happen, it would likely be at a meaningful premium to current prices, which would reward shareholders but would cap the long term upside that the harness thesis implies. From a long horizon perspective, the better outcome is that ServiceNow remains independent and compounds value over the next decade. A buyout would be a near term win and a long term opportunity loss.

Other risks worth flagging

A few smaller items worth knowing about. The CJ Desai departure as President in 2024 raised some concerns about product strategy continuity, though the bench has handled it well. The Armis and Moveworks acquisitions are creating near term margin headwinds (roughly 75 basis points of operating margin and 200 basis points of FCF margin in 2026) that will normalize by 2027 but are creating optical noise in the meantime. Customer concentration is not a meaningful risk; the largest customer is well below 5 percent of revenue. Currency exposure is real because international is roughly 35 percent of revenue, and the dollar has been volatile, but management hedges actively and discloses constant currency growth rates that are typically within 100 to 200 basis points of reported.

What I deliberately did not include in this risk section is anything around accounting or governance concerns, because despite the elevated multiple and high SBC, there are no credible short reports against the company, no material accounting questions raised by major activist short sellers, and no governance red flags in the 10-K. ServiceNow has been a public company for over thirteen years and has consistently passed audit and disclosure scrutiny. That is not nothing.

What would actually make me sell

This is the question every honest thesis section should answer. I would reduce or exit my ServiceNow position if any of the following happened.

First, if the renewal rate disclosed in the 10-K dropped meaningfully below 98 percent for two consecutive years, the harness thesis is broken because the encoded workflow stickiness is not as strong as I believe.

Second, if McDermott departed for non-routine reasons and the succession was not handled cleanly within six months, I would reassess whether the company can still execute the agentic transition on the timeline the bull case requires.

Third, if Microsoft or a competitor managed to displace a Tier 1 financial services or government customer from ServiceNow in a public reference deal, the moat assumption is wrong.

Fourth, if SBC as a percentage of revenue reversed and started rising sustainably, indicating the company cannot retain talent without paying ever higher equity costs.

Fifth, if a major short report from a credible activist surfaces with substantive accounting or governance concerns that survive initial scrutiny.

None of these are happening today. All of them are worth watching.

Net risk assessment

The honest summary is that the risks to the ServiceNow thesis are mostly timing and sentiment risks rather than fundamental business risks. The harness thesis could be wrong but the evidence is strong. The competition is real but no one is actually building a competing harness. The financials could disappoint in any given quarter but the multi year trajectory is one of the most consistent in software. The biggest actual danger is that the market continues to misread the agentic transition as a threat and the stock stays rangebound for longer than a typical investor’s patience.

For the kind of investor who can hold through multi quarter narrative dislocations, the risk reward setup is unusually attractive. For investors who need quarterly performance to validate every position, this is a difficult name to own right now and probably will remain so until either the SaaSpocalypse narrative breaks definitively or the agentic transition shows up clearly in financial results.

Next we will close with a summary of the thesis and a conclusion on positioning.

Summary

The harness thesis is the cleanest articulation of why ServiceNow should be one of the most important companies in the world over the next decade. Every large enterprise will need a substrate that holds together the operational logic of the business as humans, integrations, and AI agents all execute work in parallel. Twenty two years of encoded customer workflows, deeply governed integrations, and the strongest cross functional module footprint in enterprise software make ServiceNow the structurally favored candidate to own that layer. The recent Knowledge 2026 announcements around AI Control Tower, Action Fabric, and the model context protocol server are not pivot moves; they are the natural extension of what ServiceNow has been building since 2003.

The leadership story is among the best in software. Fred Luddy built the right thing for the right reasons and handed it off cleanly. Bill McDermott is one of the few operators on earth qualified to take the company through the agentic transition, and his recent open market stock purchases and the cancellation of executive sale plans signal he believes the stock is mispriced relative to where the business is heading. The competitive landscape is real but no one else is actually building a harness; Microsoft, Salesforce, and Workday are each building something else with workflow as a feature.

Worth highlighting one independent endorsement that lands with weight. At Knowledge 2026 in early May, Jensen Huang appeared on stage alongside McDermott and made the explicit case that the agentic transition is one of the largest software opportunities in history and that it runs through ServiceNow. Huang is not just a partner endorsing a partner; Nvidia itself runs its employee workflows on ServiceNow, and Huang publicly described a future where physical robots, factory automation, and the entire industrial economy are governed through ServiceNow. There are very few people on earth whose track record on identifying technology shifts is as strong as Huang’s. When he tells you publicly that an enterprise software company is going to be central to the next phase of AI, that is a signal worth weighting heavily. It is not a substitute for doing your own work, but it is one of the strongest endorsements an outside operator could give.

A few honest caveats worth holding in mind. The stock is not dirt cheap if you look at it on traditional multiples alone. A trailing GAAP P/E of 54 and a price to sales ratio of nearly 7 are still premium multiples by most measures. The SaaSpocalypse narrative could continue to drag the stock lower in the near term. The federal headwinds and Middle East deal slippage are real and could extend beyond a quarter or two. The broader AI complex could see a sharp narrative reset that pulls everything related down with it. ServiceNow could fall further from here, and any honest investor in the name needs to be prepared for that possibility.

But step back from the noise and consider what is actually being offered. There is essentially not a single large company on earth that would not benefit from what ServiceNow is building. Every Fortune 500 needs better workflow infrastructure. Every enterprise deploying AI agents needs a governance layer. Every aging organization facing knowledge transfer challenges needs a way to encode operational logic. Every company facing margin pressure needs a substrate that can let humans and agents execute work side by side. The total addressable market is essentially the operating model of the global enterprise economy, and the company best positioned to capture it is trading at a free cash flow yield approaching 5 percent with a balance sheet in net cash and a CEO actively buying his own stock.

If the harness thesis is right, ServiceNow is one of the most underpriced large cap software businesses in the market today. If the harness thesis is wrong, you still own a 30 percent FCF growth business at a reasonable multiple with best in class retention and a strong balance sheet. The asymmetry is what makes this an unusually attractive setup for a long horizon investor.

That is the full thesis as I see it today.

Disclaimer: This post is for informational and educational purposes only and reflects my personal views as of the date of publication. It is not financial advice, investment advice, or a recommendation to buy, sell, or hold any security. I am not a licensed financial advisor. I may hold a position in $NOW or in any other security mentioned in this piece, and my position may change at any time without notice. You are responsible for your own investment decisions and should do your own research or consult a licensed advisor before acting on anything you read here. Past performance does not guarantee future results.

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The story is one of momentum continuing rather than something dramatically new. Core is steady and predictable, Growth is accelerating, and Media and Insights is quietly doing more work in the gross margin line than the headline suggests. EBIT came in soft as expected, weighed down by deliberate investment in the US and UK ahead of the larger opportunity. Management reiterated they are on track for the 2028 targets and even hinted that Q1 momentum is carrying into Q2.

Below I will go through the most important points from the report and the webcast, then circle back to how my pre-earnings revenue predictions held up.

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A few months back I realised SimilarWeb is a listed company. Further; it has come down significantly from its peak; the kind of chart that makes a stock look distressed at first glance. But distressed and broken are two different things. I think there might be a real opportunity here; so I decided to write a proper deep dive on the trade idea.

Disclaimer

Nothing in this piece constitutes financial advice. This is my personal research and opinion for informational purposes only. Always do your own due diligence before making any investment decision.

What Does SimilarWeb Do?

SimilarWeb is a digital intelligence platform. At its core it measures what is happening across the internet; who is visiting which websites; where they come from; how long they stay; and what they do next. It does this across hundreds of millions of digital properties globally and packages that data into a platform that different types of customers use for different purposes.

The customer base is broad but falls into a few natural clusters.

Enterprise marketing and strategy teams use SimilarWeb to benchmark their own digital performance against competitors; understand which channels are driving growth in their category; and identify market share shifts before they show up in reported financials. A consumer goods company wanting to know whether a competitor is gaining ground in organic search or paid acquisition before the next earnings call is a typical use case.

Investors and financial analysts use it as alternative data for nowcasting revenue; predicting earnings surprises; and tracking consumer demand trends in real time. Web traffic and app engagement data has a meaningful lead time advantage over reported financials; which is why it has become a standard tool in quantitative and fundamental research workflows.Sales intelligence teams use it to identify prospects; score leads by digital footprint; and prioritise outreach based on signals like traffic growth; tech stack changes; and hiring patterns.

Retail and e-commerce teams use it for category management; tracking Amazon market share; and understanding where online shoppers are going across the purchase funnel.

What every customer is fundamentally buying is the same thing: visibility into the digital behaviour of markets; competitors; and consumers that they cannot observe directly. SimilarWeb is the measurement layer sitting underneath all of that; and the data asset that makes it possible is a proprietary blend of ISP-level data partnerships; browser panel data; direct measurement relationships; and first-party analytics integrations that has taken over a decade and hundreds of millions of dollars to assemble.

The Downfall of SimilarWeb

SimilarWeb listed on the NYSE in May 2021 at $22 per share; valuing the company at roughly $1.65 billion at IPO. At its peak shortly after listing the stock touched nearly $25. Today it trades around $2.50; a decline of approximately 90% from its highs.

The collapse in valuation is a combination of several compounding factors.

The first is simply post-IPO multiple compression. SimilarWeb listed at the peak of the SaaS valuation cycle; when growth software companies routinely traded at 15 to 20x revenue. As interest rates rose through 2022 and 2023 that multiple framework collapsed across the entire sector. SimilarWeb went from being priced as a high-growth data platform to being repriced as a mid-growth SaaS business; and the valuation followed.

The second is the retention problem. SimilarWeb’s net revenue retention has lingered around 98%; below the 100% threshold that signals a healthy expanding customer base. For a SaaS business this is a meaningful red flag; it means existing customers are not growing their spend fast enough to offset those who downgrade or leave. New customer acquisition is carrying the entire growth burden; which is an expensive and fragile way to grow.

The third is competitive pressure. SemRush has grown aggressively into adjacent territory; building a broader platform that competes directly for marketing intelligence budgets. With better brand recognition among practitioners and stronger NRR; SemRush has attracted a higher valuation multiple and more investor confidence; making the comparison unflattering for SimilarWeb.

Finally there is the AI threat narrative. The market has begun questioning whether AI-driven search disruption could erode the web traffic signals that SimilarWeb’s platform is built on; and whether newer AI-native tools could commoditise the intelligence layer SimilarWeb currently owns. That uncertainty has added a structural discount on top of the operational headwinds.

The result is a stock that looks genuinely distressed; trading at under 1x trailing revenue with a market cap of roughly $230 million against a business doing $283 million in annual revenue.

Turnaround Pitch

For SimilarWeb to meaningfully recover and reclaim a fraction of its lost market cap; several things have to go right simultaneously.

Retention has to improve. The core SaaS business needs to stop bleeding at the margins; meaning existing customers need to expand their spend rather than flatline or downgrade. Without that the growth engine is entirely dependent on new logo acquisition; which is expensive and increasingly competitive.

They need to nail the AI narrative. Not just in investor presentations; but in actual product and revenue. The market needs to see the AI data licensing business convert from lumpy one-time deals into recurring contracts; and the GEO measurement suite needs to demonstrate real enterprise adoption. The story is compelling. The numbers need to follow.

And they need to be differentiated enough from competitors that they have room to breathe. If SimilarWeb is perceived as a slightly worse version of what Adobe now owns in SemRush; the stock stays where it is. If the market comes to understand that SimilarWeb is measuring something fundamentally different and more comprehensive; the repricing can be significant.

In the sections that follow I will walk through each of these dimensions in detail; what the company is actually doing; what the data shows; and whether this is a knife worth catching.

The Potential Turnaround Drivers

I think SimilarWeb is in the right position to make a meaningful comeback. Let me walk through why.

Artificial Intelligence: Threat or Tailwind?

The market has largely framed AI as a threat to SimilarWeb. I think that framing is wrong; or at least incomplete.

SimilarWeb has spent over a decade scraping and measuring the web at scale. The data asset they have built is genuinely hard to replicate; and the proof of that is in the margins. An 80% gross margin business is not something you build without a defensible underlying asset. That data is now becoming more valuable; not less; as foundational model companies need high-quality; proprietary; continuously updated web behavioural data to train and evaluate their models. SimilarWeb is already selling into this market. The financial scale is still modest but the strategic significance is not.

The more interesting AI angle however is what is happening on the demand side among SimilarWeb’s existing customers. Every marketing team; every brand; every e-commerce operator that previously asked “how do we rank on Google” is now asking a set of entirely new questions. Are LLMs recommending our products to users? Why does Grok recommend us while Claude does not? Are our competitors ahead of us in AI-driven discovery? Where is our share of voice across ChatGPT; Gemini; Perplexity; and DeepSeek? These are not hypothetical future questions. They are being asked in boardrooms right now; and budgets are beginning to follow.

It is also worth understanding the relationship between SEO and GEO. SEO largely feeds GEO. The content; authority; and structured data signals that determine Google rankings are the same signals that AI engines use to decide which brands to cite in generated responses. For the foreseeable future SEO and GEO are not competing priorities; they are layered ones. This means SimilarWeb’s existing SEO intelligence product does not become obsolete; it becomes the foundation layer of a broader measurement stack.

But the truly compelling implication is the emergence of an entirely new market: GEO intelligence. Attribution is increasingly happening inside LLM responses rather than through tracked clicks and search rankings. Brands will need to understand and influence those channels the same way they learned to understand and influence Google. And here is where the complexity argument becomes very powerful as an investment thesis.

Measuring SEO meant scraping Google and Bing. Two surfaces. Relatively contained. Measuring GEO means tracking ChatGPT; Claude; Gemini; Grok; Perplexity; DeepSeek; and whatever surfaces emerge next. Each one has different citation behaviour; different content preferences; different update frequencies; and different referral patterns. The network complexity does not double or triple relative to SEO measurement. It multiplies by an order of magnitude. There are vastly more interactions to measure; more integrations to build; and more interpretation required to make the data actionable.

That complexity is not a problem for SimilarWeb. It is an opportunity. Complexity creates value. The harder the measurement problem; the higher the willingness to pay for someone who can solve it. If SimilarWeb successfully builds out its GEO intelligence segment; it will not be building something comparable in size to what the SEO intelligence market was. It will be building something significantly larger; because the problem is significantly harder and the number of surfaces to monitor keeps expanding. The GEO market at maturity could dwarf the SEO software market that SemRush and SimilarWeb have been competing in for the past decade.

SimilarWeb already has dedicated traffic trackers for ChatGPT; Claude; Gemini; Grok; Perplexity; and DeepSeek as distinct product lines. They have an AI Share of Voice Monitor; AI Citation Analysis; AI Prompt Analysis; and AI Sentiment Analysis already in market. This is not a roadmap item. It is a live product suite that is already ahead of what any competitor has assembled. The market has not priced this in.

It is also worth noting that the financial industry’s appetite for alternative data is growing rapidly and SimilarWeb is positioning itself directly in that flow. The company recently deepened its partnership with Bloomberg; embedding its web traffic and digital intelligence data directly into the Bloomberg Terminal. This means that every institutional investor; analyst; and portfolio manager using the Terminal now has access to SimilarWeb’s data as part of their standard research workflow.

The strategic significance of this goes beyond the direct revenue it generates. Bloomberg Terminal users are among the highest-paying data consumers in the world. Getting embedded into that workflow is not just a distribution win; it is a credibility signal. It puts SimilarWeb’s data in front of the exact audience that will pay a premium for reliable alternative data signals; and it creates a natural expansion path as more investors come to rely on web traffic and app data as a standard input into their equity research process. As alt data becomes table stakes in institutional investing rather than a niche advantage; SimilarWeb’s Terminal presence means they are already inside the workflow before the demand fully arrives.

Confirmation of the Value

The most important external data point for this thesis landed recently. Adobe announced the acquisition of SemRush; SimilarWeb’s closest competitor; for $1.9 billion in cash.

SemRush and SimilarWeb have slightly different product profiles today but they are competing for increasingly overlapping budgets and are on a collision course for the same enterprise marketing intelligence market. The fact that Adobe; one of the largest marketing software companies in the world; decided to pay a significant premium to own a web intelligence asset tells you something important about how the category is being valued by strategic buyers.

The numbers make the mispricing obvious. SemRush has revenues of roughly $450 million and was acquired at approximately 4.3x revenue. SimilarWeb has revenues of $283 million and trades at roughly 0.8x revenue. Adobe did not pay 4.3x revenue for SemRush’s current earnings. They paid it for the GEO opportunity; the data moat; and the strategic positioning in a world where digital discovery is fragmenting across AI surfaces. The exact same logic applies to SimilarWeb. The market just has not done that math yet.

This is however a two-sided sword. On one side the Adobe deal confirms that SimilarWeb is likely meaningfully undervalued based on the strategic value of its data asset and its GEO infrastructure. On the other side the deal signals that the GEO race is intensifying significantly. Adobe bringing its distribution; balance sheet; and enterprise relationships behind SemRush creates a well-resourced competitor. In a winner-takes-most measurement market; the losers get left behind entirely. The stakes just got higher.

The question then is whether SimilarWeb can compete. I went through their hiring activity and product architecture in detail and the picture is more promising than the stock price implies. The technical language in their job descriptions points to deep integration with foundational model companies; not surface-level partnerships. They already have live product lines tracking six major AI surfaces simultaneously. Their agreement with Manus AI; subsequently acquired by Meta; serves as an early blueprint for embedding SimilarWeb data into autonomous agent workflows. These are early signals; but they point in the right direction.

The market is currently in wait-and-see mode on the AI contracts specifically. Several large deals were delayed last quarter and it remains unclear how recurring these contracts will ultimately be. That uncertainty is legitimate and is part of why the stock sits where it does.

One further point worth making about the AI tailwind that goes beyond GEO. AI-assisted development has produced a staggering volume of new apps; SaaS products; and digital businesses. The App Store is expanding at a pace that would have been unimaginable a few years ago. As it happens SimilarWeb has app analytics. More apps and more SaaS competition means more operators who need an edge on their competitors. More brands entering crowded digital markets means more demand for the kind of competitive intelligence SimilarWeb provides. The vibe coding era does not just create more things for SimilarWeb to measure. It creates more customers who need the measurement. Both sides of that equation benefit SimilarWeb.

Summarizing the Turnaround Thesis

The core of the thesis is straightforward. SimilarWeb sits at the intersection of two compounding tailwinds; the explosion of GEO as a new measurement category and the growing demand for proprietary web behavioural data from AI companies. If executed well; either of these alone could meaningfully re-rate the stock. Together they represent a genuinely transformative opportunity for a company that already owns the underlying data infrastructure required to win in both.

The entry point makes the asymmetry compelling. At roughly 0.8x trailing revenue with $72 million in cash and no debt; the market is pricing in very little optionality. You are essentially paying for a semi-functional SaaS business and getting the GEO infrastructure; the AI data licensing pipeline; the Bloomberg Terminal integration; and a decade of proprietary data accumulation for close to free. The Adobe-SemRush deal has established what a strategic buyer is willing to pay for a comparable asset; and the gap between that implied valuation and where SimilarWeb trades today is significant.

The Risks

The first risk is one I already touched on: winner-takes-all dynamics could end up destroying SimilarWeb entirely. But this is a risk you have to accept if you want the big return. The way I see it the stock can either go to zero or become something ten times bigger. There is not much middle ground in a market where the dominant measurement layer captures most of the value and the losers become irrelevant.

The second risk I think deserves to be taken seriously is the company’s culture and commercial practices. Looking at Glassdoor the sales organisation is clearly not a happy place. This likely explains a meaningful portion of the poor NRR numbers. Management has also acknowledged that their current product packaging is outdated and does not allow existing customers to scale their usage aggressively enough. If they cannot fix the sales and account management function they will lose the GEO race regardless of how good the underlying data is. Winning new contracts and expanding existing ones requires commercial execution; and right now that is the weakest part of the business.

A further concern is funding. SimilarWeb currently has a decent cash position but winning the GEO intelligence race could turn out to be expensive. If the stock continues to drift lower; raising capital becomes increasingly dilutive and difficult. Reflexivity works against you here; a lower stock price makes it harder to fund the future; which makes the stock go lower.

And finally privacy regulation is a real and underappreciated risk. The EU is already moving aggressively to restrict how behavioural data can be collected and used. The US could follow with its own framework. Stricter privacy laws mean higher compliance costs; constrained data sourcing; and a potentially narrower moat. The data asset that makes SimilarWeb valuable today is partly dependent on data collection practices that regulators are actively scrutinising.

A Final Note

I think this opportunity is worth keeping a very close watch on. I am genuinely close to pulling the trigger and initiating a position. The upcoming earnings call and how the rest of this year develops will be decisive; particularly whether the delayed AI contracts close; whether NRR shows any signs of improvement; and whether the GEO product suite starts generating meaningful traction in enterprise accounts.

I will continue to monitor the situation closely and publish my findings on the name as the story develops.

If you found this piece useful feel free to share it; and consider checking out some of my other work. Thank you for reading.

For those new here, Haypp Watch is a recurring series where I track Haypp Group’s web traffic; the number of users browsing Haypp Group’s websites. I then apply different methods to translate that traffic into revenue estimates ahead of reported results, with the aim of identifying potential alpha.

Disclaimer

This is not financial advice. The methods used in this analysis are experimental and rely on a limited historical dataset. Web traffic based modeling has clear limitations, particularly during periods affected by supply disruptions, regulatory changes, and segment restructurings. Forecasting results should therefore be interpreted as directional signals rather than precise predictions, and they may change as new information becomes available.

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What changed in the segmentation

Before going into the actual prediction, it is worth explaining what changed on the reporting side, because it directly affects how the model has to be set up.

Haypp Group is dissolving the Emerging segment as a standalone reporting unit. The pieces that previously sat there are now being absorbed into the two remaining segments. In simplified terms, Swedish vape is moving into Core, while German vape and heated tobacco are moving into Growth. Q1 2026 is the first live quarter under this restructured reporting setup.

That sounds clean on paper, but in practice it has real implications for how I model the business. Several of the smaller sites that used to be lumped together as Emerging now have to be allocated more carefully. The UK vape wind down, which was already a complicating factor in the previous version of this blog, now lands inside the Growth segment rather than as part of a separate Emerging line. That means Growth will look slightly noisier than the underlying Nordic and US dynamics alone would suggest, even though the core engines of that segment are unchanged.

The good news is that the group total is unaffected by all of this. The reshuffle is a reporting change, not a business change. It just changes where things show up.

Backdrop

Q1 is shaping up to be another interesting quarter for Haypp Group, although for different reasons than in Q4. The broad picture is still constructive. Total tracked daily traffic across Haypp Group’s main sites remained strong in Q1 and came in modestly above the Q4 average. That may not sound dramatic on its own, but it matters in the context of what sits underneath the headline number: several of Haypp’s most important sites continued to perform well, and the US recovery story appears to be extending into the new quarter.

The most important development is once again the US. Nicokick remained at a high level throughout the quarter and averaged clearly above Q4, while Northerner also showed notable strength toward the end of the period, including some very strong weekly readings. That matters because the return of ZYN likely did not fully flow through in Q4. A continued normalization of product availability should still support customer inflows in Q1, especially as former users gradually return to the category rather than all reappearing immediately in one quarter. In other words, the US tailwind likely did not end with Q4. It may still be building.

Outside the US, the picture remains healthy across most of the core business. Sweden continues to look strong, with Snusbolaget still operating at a very high level and Snuslagret also showing solid improvement versus Q4. Haypp’s multi market site performed well too, adding to the impression that demand remains firm across the broader platform. Norway was somewhat more mixed, but still directionally positive overall, with both Snus and Snushjem holding up reasonably well.

The previously Emerging part of the business is where the picture becomes more complicated, and now that complexity is split between Core and Growth rather than sitting in its own bucket. The UK vape wind down, which now formally drags on Growth, is a real headwind that does not show up cleanly in traffic data. Some of the smaller sites still show decent activity, but they no longer roll up the way they used to. That makes part of the reading less clean than usual, even though the overall direction is still positive.

There is also one thing worth flagging that sits above the segmentation shuffle entirely: Media & Insights. This part of the business continues to look like an increasingly meaningful contributor, and Q1 is likely to benefit from incremental contract activity here. I will not anchor too strongly on a specific number, but it is worth saying upfront that M&I is one of the reasons the revised total ends up slightly higher than the previous version of this blog implied.

Taken together, Q1 looks like a quarter where the core growth story remains intact. Traffic strength has been broad enough to support another good quarter, and the US segment still appears to have more room to benefit from the return of ZYN. At the same time, the quarter is not perfectly clean from a modeling perspective. The new segmentation, the UK vape wind down, and some site level noise all add complexity. Still, the overall setup looks constructive, especially because the strongest signals are once again coming from the markets that matter most.

Below is an overview of how traffic developed across Haypp Group’s main sites during the quarter.

What the market thinks

Before presenting my own results, it is worth looking at outside expectations.

Earlier in the cycle, I ran a public poll on X asking what readers thought Haypp Group’s Q1 2026 revenue would come in at. Based on the response distribution, the implied expected value was roughly 1 062,5 MSEK, with most votes clustered in the 1 025 to 1 075 MSEK range.

That said, the sample was very small, so this should not be read too aggressively. Chatter around Haypp on X has also been quieter than normal lately, likely reflecting how the nicotine pouch hype has cooled after very elevated valuations across the sector. In many cases, that kind of quieter setup is not a bad sign for future price action.

There also appears to be at least one analyst estimate out there north of the poll number, although I have not verified whose estimate that is.

As in previous quarters, I still put more weight on the web traffic data than on loose market expectations. In the next section, I compare that market backdrop with the outputs from my own models, restated to fit the new segment structure.

Core market prediction (revised)

Starting with the new Core segment, the picture remains constructive, and arguably a little firmer than before now that Swedish vape sits inside it.

My estimate for Core comes in at 752,3 MSEK. The main driver here is unchanged from the previous version of this writeup: traffic across the key Nordic sites remained strong, with particularly solid performance from Snusbolaget and continued strength across the broader Nordic footprint. The reclassification of Swedish vape into Core does not change the underlying demand picture, but it does provide a marginally larger and more stable base from which to grow.

Overall, my base case is that Core revenue comes in clearly above the comparable Q4 level.

Growth segment prediction (revised)

The Growth segment is now a more complicated bucket than it used to be, because it absorbs both the strong US dynamics and the structurally weaker UK vape wind down, plus the German vape and heated tobacco pieces.

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Most investors look at Haypp and see a low-margin online nicotine retailer trading at 0,7x sales, growing top-line at ~25% CAGR, with a thin EBIT margin. The bull case is that it’s cheap on a sales basis and the US market is opening up. That framing is fine, but it’s incomplete in a way I hadn’t fully appreciated until I went through their open job postings and cross-referenced them against what management has been saying.

The short version: Haypp isn’t building a better ecommerce business. They’re building a retail media network. The hiring pattern, the technology choices, and the language in the job descriptions all point to a deliberate, multi-year transformation of M&I from a high-margin data subscription bolt-on into something structurally closer to Amazon Ads at small scale. If they pull it off, the unit economics of the entire group change, and the right way to value Haypp shifts from “ecommerce multiple on consolidated revenue” to a sum-of-parts where the M&I piece carries a software/ad-tech multiple.

This isn’t a thesis I can prove from current financials. M&I is still reported as roughly 10% of revenue inside the consolidated number, and management hasn’t broken out its margin profile separately. But the operational evidence is unusually clear, and the trajectory is the kind of thing that gets ignored until segment-level disclosure forces the market to acknowledge it.

Below, I’ll lay out what I found, what M&I actually is today, what they appear to be building, and why I think the right way to think about Haypp is no longer just as a nicotine retailer.

NFA. This is my own analysis for entertainment purposes; do your own research before making any investment decisions.

The backstory

Haypp Group runs 16 e-commerce sites across 7 countries, selling nicotine pouches and snus. Total revenue is around SEK 4 billion, growing at an 18-25% CAGR target through 2028, with about 1,1 million active consumers.

But Haypp doesn’t just sell pouches. They also run a business unit called Media & Insights (M&I), which currently accounts for around 10% of revenue and grows at roughly 2x the rate of the rest of the group. M&I is the part of Haypp that has driven most of the gross margin expansion over the past two years; the consolidated gross margin has gone from 14,3% in Q2 2024 to 19,2% in Q2 2025, and management has explicitly attributed a meaningful share of that uplift to M&I.

So what is M&I actually doing today? It splits into two pieces.

The Insights piece. Haypp sits on a dataset that effectively does not exist anywhere else: every transaction by ~1,1 million age-verified online nicotine consumers across 16 sites in 7 countries. They know exactly which products switch to which, how price elasticity varies by market, which flavors are gaining share in real time, what percentage of ZYN buyers also try VELO, repeat rates by SKU, basket composition, and conversion rates by brand. There is no Nielsen for online nicotine. The offline scanner data captured by IRI/Circana, the kind shown in the WhiteWillowResearch tweet I recently saw, only covers physical retail. Haypp packages this data into reports and dashboards and sells it on contract to the six big brand owners (PMI, BAT, Altria, JTI, Imperial, and Swedish Match before PMI absorbed it), to regulators, and to researchers. This is essentially a syndicated data product, structurally similar to what NielsenIQ sells to FMCG companies. The revenue model is recurring contracts; the cost structure is mostly the analytics team that produces the data plus a small commercial team. Once the pipeline is built, each new contract is almost pure margin.

The Media piece. Brand owners pay Haypp for premium placement on Haypp’s owned properties: featured product slots on category pages, sponsored placements on the homepage, dedicated landing pages for new flavor launches, email campaigns to existing customer cohorts, and supplier-funded promotional pricing on key SKUs. This is closer to traditional retailer co-op marketing or trade marketing dollars. It’s high-margin because Haypp owns the inventory and doesn’t pay anyone to acquire the audience (97% of traffic is organic, marketing costs run below 1% of revenue). But the deals are manually negotiated, not programmatic. They aren’t measured with ad-tech-grade attribution. They aren’t bought through a self-service interface. Each campaign is essentially a custom project.

So today’s M&I is a data subscription business plus a manually-sold on-site media business. Both pieces are attractive on their own, both are growing, and together they explain why the consolidated gross margin keeps expanding. Nothing about this is hidden; management talks about M&I on every earnings call, and the Capital Markets Day 2025 deck makes the 10% revenue / 2x growth disclosure explicit. This is the visible part.

The interesting part is what they appear to be building next, and that’s where the LinkedIn search comes in.

What the LinkedIn search revealed

Haypp’s public job board (which mirrors what they post on LinkedIn) currently shows around 11 open roles. What stood out is that several of them describe a retail media platform under active construction, using technical vocabulary that doesn’t show up in earnings reports. Three roles in particular tell the story.

Retail Media Lead (Stockholm). This is the central role. The JD asks for someone with 8+ years of experience in “Retail Media, AdTech, or E-commerce strategy” with a “strong understanding of ad servers, SSP/DSPs, and first-party data activation”. The mission, in their words, is to “scale our current offering into a world-class advertising network” across all 16 platforms. Responsibilities include partnering with Tech and Product teams to “implement new ad formats (on-site, off-site, and social) and improve self-service capabilities”, and working with the Data team to “refine audience segmentation and attribution modelling”. This is not a marketing role. It is a product and platform role that uses the technical vocabulary of programmatic advertising.

Global Paid Co-Marketing Lead (Stockholm). The mission here is to design “the global paid co-marketing roadmap” that balances Haypp’s brand identity with “supplier-specific visibility across paid marketing channels”. Translated: take supplier media budget and deploy it through paid channels off Haypp’s own properties, with Haypp orchestrating the spend. This is the operational equivalent of an off-site DSP function, the same capability Amazon DSP provides for brands advertising off Amazon.

Retail Media Ad Ops Specialist (Stockholm). This role is explicitly being hired to “build and own our ad operations function from the ground up”. An ad ops function is the operational backbone of an ad platform; the people who manage campaign trafficking, creative QA, performance reporting, and the day-to-day running of advertiser accounts. The phrase “from the ground up” is the most important one in the entire job board: it tells you the operational layer of the platform doesn’t fully exist yet.

Underneath these three, there’s a supporting cluster of data and engineering hires (Internal Analytics Manager, Senior Data Analyst, Data Engineer, Head of Engineering) that build the data infrastructure any ad platform depends on. Individually unremarkable; collectively they’re the technical foundation the retail media stack sits on top of.

A few things make this set of roles particularly revealing.

First, the technical vocabulary. SSP/DSP, ad server, first-party data activation, attribution modelling, audience segmentation, self-service capabilities; this is the language of Amazon Ads, Walmart Connect, and Criteo. It is not the language of a retailer’s marketing department. Combined with the fact that Haypp has already deployed Kevel (the leading white-label ad server for retailers building their own ad networks), this is the technology stack of a retail media platform under active construction.

Second, the org shape. Hiring a global lead, an off-site orchestration role, and an ops specialist simultaneously is exactly the shape of an ad platform org chart in its first year of build-out. Hiring just one of these would suggest scaling existing capability. Hiring all three at once suggests building something new and treating it as a strategic priority.

Put together, the LinkedIn evidence describes a company in the late-foundation, early-productization stage of building a retail media network. The data infrastructure is in place. The ad server is deployed. The org around it is being hired. The self-service interface and the off-site DSP capability appear to be the next 12-24 months of work. None of this is mentioned explicitly in earnings reports beyond the high-level “Media & Insights is growing 2x” disclosure, but the operational footprint is unambiguous.

That gap between the operational footprint and what the financial reporting currently shows is the interesting investment angle, and it’s where I’ll go next.

The opportunity

To understand why this matters, you have to understand the unusual position the big nicotine brand owners are in. PMI generates around $37 billion in revenue annually, BAT around £27 billion, Altria around $20 billion. Companies of that size would normally spend somewhere between 6% and 10% of revenue on marketing. PMI alone is therefore working with a global marketing budget likely in the range of $2-4 billion. The combined nicotine industry’s marketing budget across these six brand owners runs into the tens of billions of dollars annually.

The problem is they have almost nowhere to spend it.

TV is heavily restricted or outright banned in most markets through the US Master Settlement Agreement and equivalent rules in Europe. Print is dying and most major publications won’t accept nicotine advertising even where it’s legal. Out-of-home is being progressively banned in city after city. Meta prohibits all nicotine product advertising, full stop. Google heavily restricts nicotine ads on Search and YouTube. TikTok prohibits it. Influencer marketing is blocked by both platform policies and PMI’s own internal rules, which prohibit using social media influencers in the US or anyone under 35 in marketing materials. The giant platforms where every other consumer goods company spends the bulk of their digital budget are categorically closed to nicotine.

So where does the money actually go today? A fragmented mess of channels: owned media on age-gated brand sites, a small handful of endemic publishers, retail co-op deals with c-store chains for shelf placement, sponsorships of motorsports and adult-oriented events, and a meaningful amount of underspent budget that sits idle because there’s nowhere efficient to put it. None of this offers the targeting, attribution, or scale that PMI’s media team would get on Meta if Meta took their money.

Haypp currently captures only a tiny slice of this budget. M&I is around SEK 400 million in revenue, split across the six brand owners, mostly through manually-negotiated insights contracts and on-site placements. Against a combined nicotine marketing budget that runs into the tens of billions, Haypp is capturing on the order of 1-2% of the industry’s available digital marketing dollars, despite running the only large-scale, age-verified, attributable digital nicotine consumer audience in the world. The constraint isn’t supplier willingness to spend; the constraint is that Haypp’s current model can only handle so many bespoke deals at once.

This is where self-service changes the shape of the business. The reference example most investors will know is Reddit. For years Reddit had a perfectly functional ad business that was bottlenecked by manually-negotiated direct deals with big brands. The economics were fine but the growth was slow because every dollar of revenue required a salesperson. When Reddit invested seriously in self-service infrastructure (specifically the auction-based Ads Manager that lets any advertiser set up a campaign without ever speaking to a Reddit employee), advertiser counts went from a few thousand managed accounts to hundreds of thousands of self-serve accounts, and ad revenue scaled in a way that wasn’t possible under the old model. The same dynamic played out at Meta in the early 2010s, at Pinterest after their 2018 self-serve launch, and at every retail media network that has matured. Self-service doesn’t just make existing advertisers more efficient; it brings in advertisers and campaign types that the manual sales motion couldn’t economically support. The long tail of smaller suppliers, regional variants, and challenger brands like Lucy, Rogue, On!, and Black Buffalo can buy their way in once the minimum spend drops from “negotiate a six-figure quarterly deal” to “log in and run a 5,000 SEK test campaign next week.”

The honest caveat is that it’s not entirely clear from the outside how much self-service Haypp has already built. The Retail Media Lead JD talks about “improving self-service capabilities”, which suggests some baseline exists, but the Ad Ops Specialist being hired “from the ground up” suggests the operational layer underneath is incomplete. The Kevel deployment provides the ad-serving infrastructure but Kevel is a toolkit, not a turnkey product; building a true self-service buyer interface on top of Kevel is itself a multi-quarter engineering project. My best read is that Haypp is somewhere in the middle of this transition, with parts of the stack functioning and parts still being built. The exact state isn’t visible from public disclosure.

What you can say with confidence is that the direction is unambiguous. They are building the architecture that converts a manually-sold, sales-capacity-constrained media business into an auction-based, software-scaled platform that big brand owners can deploy meaningful budget into without Haypp adding headcount proportionally. In a category where those brand owners have tens of billions of marketing dollars and almost nowhere compliant to spend them, the difference between capturing 1-2% of that budget and capturing 5-10% of it is the difference between Haypp being a small Nordic ecommerce retailer and Haypp being something materially different.

The valuation case

Here’s where the thinking gets interesting.

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