Fortnox
Fortnox - Growth is there, so is scalability (ABG Sundal Collier)
2019-04-24 22:07
Solid quarter that aligns with our expectations
A strong order book bodes well for a good ’19e
13.1x EV/S on ’19e, shrinking to 8.5x in ’21e
Q1’19: sales +39%, EBIT +70%; minor deviation to ABGSCeAt SEK 113.5m in sales with 16,000 new customers (-1.6%, respectively, 0% vs. ABGSCe), we conclude that Fortnox starts 2019 with yet again a strong report that also aligns with our expectations. EBIT, which also includes an impairment of SEK 2.3m related to one of the company’s old applications, grew 70% on a LFL-basis. To us, this is further evidence of the scalability in the company’s business model. Compared to Q1’18, the customer intake decreased by 1,000 in absolute terms. This is, however, not a data point that makes us raise any concerns, as it is simply a function of a maturing market. As we have argued before, this leads us to shift our focus to the ARPU, which came in at a solid SEK 143.
Order book of SEK 366m, up 63% y-o-y
In conjunction with scrutinising the customer intake, APRU and EBIT, we have lately laid further weight on the order book. For two consecutive quarters, we have seen a significant ramp-up in this metric. This stems from a maturing customer base (i.e. more modules per customer) as well as Fortnox’s decision to bundle some of its modules. In Q4’18 and Q1’19, the y-o-y growth in the order book even exceeded the y-o-y sales growth, which has rarely been the case in Fortnox’s history. The combination of this and a continued solid customer intake implies another good year in 2019, we believe. Even so, as the report came in with smaller deviations to ABGSCe, we make modest estimate revisions. We raise sales and EBIT for ’19e by ~1%, respectively.
Share is trading at 13.1x EV/S, a nick below key peer (Xero)
The share currently trades at 13.1x EV/S and 40x EV/EBIT on our revised ’19 forecast. This is in the upper end of a historical f12m EV/EBIT view (see graph pg. 7), but we think this forecast does not incorporate Fortnox’s fully potential of raising prices
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