Strong Q2 expected: 34% sales growth y-o-y…

…driven by solid market conditions

Q2 report due on 20 Aug

A pure growth story
Fortnox has rarely reported weak quarterly numbers. For Q1’15-Q1’19, quarterly y-o-y sales growth averaged 41%, with the lowest result for this period being +25% y-o-y growth in Q1’15. Fortnox was also able to report strong growth during the financial crisis (albeit from low numbers in absolute terms). We assess that Swedish SMEs have increasingly demanded cloud-based solutions during the pandemic outbreak (e.g. due to working from remote), and thus estimate that Q2’20 has been a good quarter for Fortnox on this basis.

Estimates up on low default rates in Q2
While some of our concerns regarding increased default rates and a lower number of newly started companies remain for H2’20, data from UC and Bolagsverket demonstrate that the market was healthy during Q2. This, together with our assessment of increased demand for cloud-based solutions, sees us raise our Q2’20e net customer intake from 11,000 to 13,000. As such, we raise ’20-‘22e sales and EBIT by 1-2%. Furthermore, we see an APRC of SEK 172, which translates into Q2e sales of SEK 173m (+34% y-o-y). We estimate Fortnox to scale well on its costs, in which we see an EBIT of SEK 59m, representing a margin of 34% and y-o-y growth of 47%.

48x ‘21e EV/EBIT, ’19-‘22e EBIT CAGR of 32%
Fortnox’s share has risen 54% YTD and is now trading at 48x ’21 EV/EBIT and a P/E of 64x on our new estimates. Fortnox is well-capitalised and we now look for increased M&A activity.

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