Fortnox
Fortnox - Slowdown in sales growth, but stellar margins (ABG Sundal Collier)

2020-10-22 19:00
71% incremental EBIT margin is impressive
We make minor changes to our estimates
Strong foundation for continued profitable growth
-2% sales miss, but EBIT was 6% above our forecast
While Fortnox Q3 sales of SEK 175m were -2% vs. ABGSCe at SEK 179m, EBIT was SEK 82m for a margin of 47% (vs. 40% in Q3’19); this corresponds to 6% above our margin forecast and +49% y-o-y. As such, Fortnox achieved an incremental margin of 71%, which once again demonstrates the company’s highly scalable business model. In addition, owing to supportive market conditions (low bankruptcy rates, solid demand for cloud-based solutions, etc.), customer intake was 10,000 q-o-q (ABGSCe 11,000), which we think was solid. The only real negative impact that the company experienced from the pandemic has been in its transaction-based sales, which the company reports had started to return to normal levels by the end of the quarter.

Sales miss mainly related to Fortnox Finance
The Q3 sales miss against our forecast was due to a lower ARPC than expected, mainly due to slowing growth in Fortnox Finance compared with Q2. We know that Fortnox Finance sales can be lumpy on a quarterly basis, and we therefore leave our 2020-2022 sales forecasts largely intact. Although the Q3 EBIT margin impressed us, the headcount increase of 39 was above our forecast. Because of this, together with our assessment that Fortnox will continue to keep its investment high in the coming years, we also keep our margin assumptions largely unchanged for 2020-2022e.

We expect Fortnox to present its new financial targets in Q4
We reiterate our assessment that Fortnox has built a foundation for continued strong, profitable growth over the coming years. Our 2022 EBIT forecast of SEK 417m corresponds to a ’19-‘22e EBIT CAGR of 34%. The company did not include any new financial targets in its Q3 report, and we therefore expect these to be presented in Q4. On our new 2021 estimates, Fortnox’s share is trading at 20x EV/sales and 53x EV/EBIT.


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Fortnox - I dag

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