Kinnevik Earnings Call: Valuation Hit, Discipline Rises

Kinnevik AB (($SE:KINV.B)) has held its Q1 earnings call. Read on for the main highlights of the call.

Kinnevik’s latest earnings call struck a cautious but constructive tone as management confronted sharp valuation hits while outlining firm steps to protect capital. Net asset value dropped 22% on the back of severe multiple compression and write-downs, yet executives stressed strong operating momentum in key holdings and a disciplined plan to preserve liquidity and optionality.

Operational strength in core health and software holdings

Health investees delivered 28% year-on-year revenue growth in Q1 and lifted EBITDA margins by 3 percentage points, showing solid progress despite tougher funding conditions. Software names fared even better on operations, with 32% revenue growth and a 7-point margin improvement, suggesting that portfolio fundamentals remain intact even as market valuations fall.

Enveda milestone underscores value in Health & Bio cluster

Within the health portfolio, Enveda reached a major inflection point by completing a Phase Ib trial for its lead candidate, which showed efficacy above the current standard of care and encouraging safety. The move into Phase II trials marks a material value-creation step and reinforces Kinnevik’s thesis around its Health & Bio cluster despite broader sector markdowns.

Robust liquidity underpins roughly SEK 5bn of dry powder

Kinnevik closed the quarter with SEK 7.5 billion in cash and a clear intent to safeguard that position for the benefit of the next CEO. After reserving around SEK 1 billion for several years of management costs and capping follow-on funding, management expects to preserve roughly SEK 5 billion in discretionary investment capacity for future opportunities.

Cost-cutting program sharpens capital stewardship

Management is pushing through a substantial cost-reduction plan to align its own expense base with weaker valuations and lower investment activity. From a 2025 management cash cost baseline of SEK 313 million, the group aims to reach a steady-state level of SEK 200 million per year by 2027, implying a reduction of about 35% with restructuring costs booked mainly in 2026.

Strict cap on follow-on funding to protect balance sheet

To avoid overcommitting capital to an existing portfolio facing valuation headwinds, Kinnevik’s board and management set a ceiling of SEK 1.5 billion for follow-on investments over the coming years. This cap, explicitly framed as a limit rather than a budget, is designed to preserve optionality and ensure cash is not locked into challenged sectors or assets.

Selective deployment and limited net investment in Q1

Capital allocation in the quarter reflected this disciplined stance, with only modest net investment activity. Kinnevik participated with EUR 20 million in a funding round for hospitality software firm Mews, and after factoring in a real estate sale, net investments amounted to just SEK 116 million, leaving the net cash position broadly unchanged at SEK 7.5 billion.

Streamlined reporting and greater NAV clarity

The group overhauled its reporting format to make the portfolio easier to track for investors navigating volatile markets. The quarterly report was trimmed from roughly 40 pages to about 20, while NAV disclosure now includes last-transaction values and a historical pro forma view under the new sector structure to improve transparency around valuation drivers.

Deal activity still validates parts of private portfolio

Despite the downbeat market backdrop, Kinnevik pointed to meaningful transaction evidence across its unlisted assets as a check on valuations. Over the last 12 months, deals have covered about 46% of the private portfolio by value, and these transactions occurred at a weighted average 9% premium to the preceding NAV marks, offering some comfort on underlying pricing.

Sharp Q1 hit to NAV and private valuations

The headline numbers for the quarter were undeniably weak, with NAV sliding 22% to SEK 27.9 billion or SEK 101 per share. The private portfolio suffered a 29% decline, driven largely by lower multiples in comparable public companies and a series of valuation reassessments that forced Kinnevik to rebase expectations across key segments.

Sustained sector derating amid AI and macro pressures

Management linked much of the valuation pain to a broad derating in public software and software-like healthcare names, where indices are down about 20%–25% year-to-date and trading at the lowest multiples in around 15 years. This multiple compression alone translated into a negative SEK 8.3 billion impact on Kinnevik’s private valuations in the quarter, underscoring the power of market sentiment.

Deep declines across software, health and Climate Tech

Within the portfolio, software valuations fell roughly 38% in Q1 and the Health & Bio cluster slipped about 20%, while Climate Tech posted a brutal 56% decline. Individual holdings such as business travel player Perk and expense platform Pleo saw valuation reductions of about 43% and 40% respectively, highlighting how sensitive growth assets remain to shifts in risk appetite.

Exit from Climate Tech as a dedicated focus area

In a significant strategic shift, Kinnevik decided to discontinue Climate Tech as a separate sector focus after repeated setbacks and an inability to meet internal performance expectations. The pivot follows material write-downs, including Stegra being reduced sharply in value, and signals a tighter focus on areas where management believes it has a clearer edge and better visibility on returns.

Valuation ranges widen as transaction marks age faster

The company noted that higher market volatility is not only compressing multiples but also making valuation work more complex and conservative. Fair value ranges have widened, and transaction-based benchmarks lose relevance more quickly, leading Kinnevik to adopt more cautious, and at times substantially lower, marks when prior deal evidence becomes stale.

Portfolio concentration aims meet uncertain exit timing

Management reiterated its ambition to move toward a more concentrated portfolio but conceded that the pace and route to that end-state are still unclear. A portfolio review is under way, yet no specific divestment timetable or exit strategy was presented, leaving investors with uncertainty about how and when Kinnevik will crystallize value or recycle capital.

Macro and policy risks weigh on travel and healthcare assets

Executives highlighted several external risks that could further pressure parts of the portfolio, notably rising oil prices that might depress travel demand and affect holdings like Perk and Mews. They also cited continued uncertainty around U.S. Medicaid and Medicare funding, which is particularly relevant for healthcare investment Cityblock, as well as ongoing AI-driven multiple compression in public markets.

Ongoing volatility extends into second quarter

The unstable environment has not eased since quarter-end, with cloud and AI-related ETFs and peer groups swinging markedly day to day. Management indicated that peer valuations were roughly in line with end-Q1 levels in April but stressed that volatility remains elevated, implying that further valuation noise is likely in the near term.

Guidance points to disciplined costs, capped follow-ons and preserved cash

Looking ahead, Kinnevik’s guidance centers on defending the balance sheet while backing the strongest performers in its portfolio, which are broadly tracking internal plans. The group plans to cap follow-on funding at SEK 1.5 billion, cut management cash costs from a 2025 baseline of SEK 313 million to around SEK 200 million by 2027 and maintain sizeable cash reserves, thereby preserving an estimated SEK 5 billion of discretionary investment firepower.

Kinnevik’s earnings call underscored the tension between improving operational metrics at key holdings and a brutal market-driven reset in valuations across software, healthcare and Climate Tech. Management is tightening costs, capping follow-on spending and exiting weaker areas to preserve cash, leaving investors with a story that is challenging in the short term but increasingly focused and disciplined on capital allocation.