IAR Systems eyes rapid growth as 'Internet of Things' gives boost

IAR Systems, which provides software for the programing of processors in embedded systems found in a wide range of products such as home appliances and elevators, has a target since 2011 of growing 10-15 percent per year in local currency.

"In the board room we have made it clear that we definitely want to have a higher growth ambition, considering Internet of Things," Stefan Skarin, IAR Systems' Chief Executive since 2009, told Reuters.

"We want a yearly growth rate of at least 20 percent."

In November, research firm Gartner estimated that 5.5 million new "things" will get connected every day in 2016, and earlier this year IDC predicted that the IoT market would triple to $1.7 trillion by 2020

While the "Internet of Things" has been discussed in technical circles for many years, it is not until recently that it has started gaining real traction in commercial applications.

Examples of connected things could include home devices such as a thermostat or a washing machine, which can be controlled from a distance with the help of a smartphone app.

Skarin, a fishing aficionado originating from northern Sweden, said he didn't expect IoT revenues to affect the group's topline in a material way until 2017.

IAR Systems has teamed up with Japan's Renesas, which was the world's top auto chipmaker until the merger of NXP Semiconductors and Freescale this year, to get a foothold in the IoT market.

Renesas recently entered the market with the launch of its Renesas Synergy Platform, which simplifies the creation of IoT innovations and contains development tools from IAR.

Shares in IAR Systems have more than doubled this year boosted by expectations linked to IoT and a steady earnings increase. The software group has benefited from a digitalization trend for several years.

The group posted net sales of 80 million crowns ($9.4 mln) in the third quarter, up from 65 million in the corresponding period last year. Operating profit was 25 million crowns, corresponding to an operating margin of 31 percent.

Skarin said it would also be conceivable that the operating margin target of 20 percent could be raised, but that growing earnings through revenue growth was higher on its list of priorities.

(Reporting by Oskar von Bahr; editing by Niklas Pollard)