Elliptic Labs: An AI Software Gem in the Making
With high-margin growth and blue-chip customers, this small-cap may not stay under the radar much longer.
I’ve mostly been covering undervalued oil companies so far – but sometimes a different kind of value stands out. One that delivers margin expansion, recurring revenue, and a clear path to scale.
Elliptic Labs (ELABS.OL) is a small-cap Norwegian software company that sits squarely at the intersection of three powerful trends: AI, edge computing, and sustainable device design. With a high-margin, fully software-based platform already deployed in over 500 million devices, it’s quietly becoming a critical enabler of the next generation of AI-native consumer electronics – while compounding growth and profitability from an asset-light model.
In 2024, Elliptic Labs doubled its revenue to NOK 132 million, achieved positive EBITDA for the first time, and ended the year with NOK 76 million in cash and no long-term debt. More importantly, it enters 2025 with long-term contracts in hand and a growing footprint among global smartphone and laptop OEMs – including multiple Top-5 manufacturers.
The Model: Scalable, Asset-Light, High Margin
Elliptic Labs licenses its AI Virtual Smart Sensor Platform™, which replaces traditional hardware sensors with software. The company generates:
Fixed license revenues from minimum guarantees,
Royalties on shipped units as volumes exceed thresholds,
And benefits from zero cost of goods sold – everything is software.
Each new product launch, model expansion, or additional sensor per device represents incremental, high-margin revenue.
Growth Catalysts
Laptops gaining traction: Elliptic launched on 15 laptop models in 2024 and added 8 more in early 2025, including its first with dual AI sensors. Lenovo’s Aura lineup now features Smart Share—powered by Elliptic’s AI Virtual Tap Sensor™—as a flagship feature.
Smartphone contract momentum: In March, Elliptic signed a new expansion deal with a Top-3 global smartphone OEM (most likely Xiaomi), covering 11 additional models and bringing the total to 41 new smartphone models under contract so far in 2025.
Multi-sensor upsell: Devices are increasingly shipping with two or more AI sensors, lifting per-unit revenue and deepening customer lock-in. This shift is central to Elliptic’s strategy of growing value per model – not just model count.
Mid-Term Financial Potential
Based on internal guidance and recent contract momentum, Elliptic Labs is projecting strong growth in both revenue and profitability. The chart below illustrates the company’s mid-term potential through 2027.
With a current share price of NOK 9.66 and 105.3 million shares outstanding, Elliptic’s market cap sits at ~NOK 1.02 billion. After subtracting net cash of NOK 76 million, enterprise value (EV) is roughly NOK 944 million.
On 2026E:
EV/EBITDA = ~4.2x
On 2027E:
EV/EBITDA = ~2.7x
These multiples are low for a software company with this level of growth and margin expansion.
Why It Matters
Most AI investment stories revolve around datacenter-scale infrastructure or hyperscalers. Elliptic Labs is different: it's building an AI-native edge software business, with tangible revenue, blue-chip customer relationships, and expanding operating leverage.
It's rare to see a company:
With deep AI IP,
Semi-recurring software revenues,
Global distribution already live,
And this kind of forecasted profitability.
At NOK 9.66/share, it’s trading well below what most software or AI-native peers would command at this growth trajectory.
For investors used to paying 8–12x EBITDA for less scalable companies, Elliptic’s current valuation—at 4–5x 2026E EBITDA—offers very significant upside.
Hidden gem? Maybe not for long.
Disclaimer: This article is for informational and educational purposes only and does not constitute investment advice. Always conduct your own research or consult a financial advisor before making investment decisions. The author may hold positions in the mentioned securities.