Elm: Deep Dive

PIF owns 67% of Elm and the author works at SALIC, a PIF portfolio company.

The short version

A common view of Elm is that it is the government's tech arm, with one customer, the state, paying most of the bills. In my view that worry points at the wrong risk.

The state is not Elm's main payer. Private parties paid 67.2% of 9M-26 revenue. That line includes SAR 288m from government-related entities such as PIF companies. Without them, non-state payers were about 63.5%.

In Q3-26 alone, government revenue fell 30.5% and private revenue rose 37.9%. Businesses and individuals pay Elm per transaction or per subscription for Absher, Muqeem, Tamm, Yakeen, Nusuk and Fasah.

The real concentration is permission. Each of those products runs on a government licence and government data. The data agreements were not exclusive at IPO.

Since January 2024 a 10-year agreement with the Ministry of Interior (MOI) and SDAIA covers products worth about 42% of 2023 revenue. It pays the government "a percentage of revenue". The percentage is not public.

So the government plays two roles. It is a customer that is shrinking as a share of sales. It is also a cost that is growing.

Elm paid government entities SAR 1,429m in 2025, up from 643m in 2022. That cost was 21.2% of digital revenue in 2025 and 19.5% in 9M-26. In my model it is the biggest margin lever in the stock, and Elm does not set it.

Three more points worth knowing:

• Two PIF cash flows of almost the same size. PIF raised about SAR 3,379m selling Elm shares in 2022. In 2025 Elm paid PIF SAR 3,386m for Thiqah, a business that lost money in 2024 and 2025. I found nothing that links the two amounts.

• Old debts are growing in riyals. Debts over a year old doubled from SAR 664m in 2020 to SAR 1,357m in 2025. As a share of the book they fell from 43% to 31%. Government receivables rose 5.6% in 9M-26 even as government revenue fell, though they fell 7.0% in Q3.

• Guidance has slipped twice. Elm missed its 2025 growth and margin guide. In November 2026 it cut the 2026 revenue guide from 17-19% to 14-16%.

Key numbers (5 Nov 2026 close, SAR 598.5)

• Market cap SAR 47.9bn on 80m shares. Net cash SAR 3.15bn. EV about SAR 44.7bn (market cap less net cash).

• TTM P/E 20.0x. EV/EBITDA 16.5x. Dividend yield 1.5%.

• 9M-26 revenue +17.0%, net profit to parent +18.4%, EBIT margin 24.7%.

• Share price 53.6% below the January 2025 peak of SAR 1,289.

• Model value per share: base SAR 643.6, upside 804.2, downside 386.2. Probability-weighted SAR 619.4, 3.5% above the price.

My view: fairly priced, and the key input is set by the counterparty. If the price is read through the government share alone, it implies 22.5% of digital revenue, against 20.0% in my base case. That is close to the 22.7% of 2024.

The same price could also mean lower growth, so this is one reading, not a fact about the market. In my view the edge is not in debating digital growth. It is in tracking one line of the related-party note every quarter.