Sales in line but Q3 EBIT was 13% vs. ABGSCe

Lower investments than in H1 drove strong margins

We expect cons. to raise ’21-‘23e EBIT by 5-3%.

Q3 results
Sales SEK 236m (-0.5% vs ABGSC 238m and -0.9% vs cons 239m), EBITDA SEK 124m (10.9% vs ABGSC 111m and 11.7% vs cons 111m), EBIT SEK 102m (13.3% vs ABGSC 90m and 12.8% vs cons 90m), PTP SEK 100m (13.4% vs ABGSC 89m and 11.5% vs cons 90m), EPS SEK 1.30 / share (14.7% vs ABGSC 1.13 / share and 15.4% vs cons 1 / share).

Q3 thoughts
Q3 customer intake of 10,000, slightly below our forecast at 12,000. Fortnox Core saw sales of SEK 191m (-1.8% vs. ABGSCe), +26% y-o-y, while Fortnox Finance reported sales of SEK 28m (+8.7% vs. ABGSCe), +6% y-o-y. The adj. EBIT margin was 43.1% (vs. 47.1% in Q3’20). As previously mentioned, the contraction stems from the fact that transaction-based sales have not yet fully recovered, coupled with increased investments in the internal platform, and margin-dilutive acquisitions. That said, the margin was well-above our forecast, and showed strong sequential improvements (31.1% margin in Q2) due to lower investments in the quarter. Fortnox says that the pandemic’s negative impact was significantly lower in the end of the Q3, which we think bodes well for further improvements Q4.

Valuation and estimate changes
Based on the Q3 report alone, our ’21-’23 EBIT estimates would rise by 4-2%. On our unrevised estimates, Fortnox’s share is trading at 70.5x ‘22e EV/EBIT. Furthermore, the share is up 27% YTD, which compares to -13% YTD for other Nordic SaaS peers.

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