Fortnox - CMD reveals further growth opportunities
New ’25 goals: 700k customers & ARPC of SEK 300 Focus ahead is on growth and not margins Lots of organic growth opportunities, with M&A on top New financial targets presented Today, Fortnox hosted its first CMD since it became listed, where its management announced new financial targets over the coming five years. While it did not disclose any EBIT margin target (previously 20% margin target), management will seek to reach 700,000 customers and an ARPC of SEK 300/month by 2025. As a reference, it ended Q3’20 with 251,000 customers and an R12m ARPC of SEK 168. If it were to reach its target, it would see 2025 sales of about SEK 2.
5bn, corresponding to a ’19-‘25 sales CAGR of ~30%. Management was clear on the fact that it will prioritise growth over further margin-expansion ahead, and seek to recruit an additional 200 employees in 2021. Several new growth opportunities The management outlined several growth opportunities that are expected to support its financial targets, where its ARPC goal will be reached by increasing the usage of its products, meaning that price hikes are not included in the current business plan.
Besides continued traction for its core areas (Accounting, Billing, People and Financing), Fortnox is now investing in its three new growth areas: Insights (bring back insights to its customers), Connect (improve connection of various types of products/components) and Integration Services (utilising integration opportunities, e. g. with its marketplace).
Regarding the customer intake target, it has identified ~1. 5m addressable companies in Sweden (1. 2m registered companies + 0.
4m unregistered companies). Improving relationships with the accounting bureaus and a significantly enhanced offering will facilitate Fortnox reaching its goal. Fortnox has not included any geographical expansion in its business plan.
Expect M&A ahead; -0. 7x 2020e NIBD/EBITDA Fortnox also mentioned that it will likely conduct M&A ahead. It will primarily look for smal.
