Fortnox - Encouraging start of the M&A journey
Q4 sales 0% vs. ABGSCe, but EBIT was 11% above We raise our estimates due to the inclusion of Offerta Positive outlook for the coming years Strong ending to 2020; sales grew 23% y-o-y Fortnox delivered Q4 sales of SEK 188m (0% vs. ABGSCe), corresponding to y-o-y growth of 23%. The customer intake of 16,000 exceeded our forecast of 14,000.
This suggests that the market remain healthy and that Fortnox’s churn rates remain low (despite the pandemic’s impact on the economy). Opex was 10% below our forecast and was down 1% y-o-y. This led to an 11% EBIT beat versus our forecast, with adj.
EBIT growing 35% y-o-y for a margin of 35. 9%. Fortnox sent out a press release in conjunction with the report, in which it announced the agreement to acquire the Swedish services intermediary company Offerta.
The price tag was SEK 300m (of which SEK 10m in cash and SEK 290m in Fortnox shares), corresponding to 2020 EV/s and EV/EBIT of 3. 5x and 22. 2x, respectively.
The potential deal is subject to BOD authorisation. We raise our ’21-‘23e sales and EBITA forecasts by 5-9% We are encouraged by the acquisition and see good opportunities in terms of synergies ahead. Offerta is a scalable marketplace, meaning that adding more volume to the platform should attract more demand, and drive high-margin revenues.
Fortnox, with its 367,000 customers, has a lot of volume. We make relatively small changes to our underlying estimates, but raise our ’21e-’22e sales and EBITA by 7-9% and 5-7% following the inclusion of Offerta. Although we expect low synergies in the near term, we assume material contribution from H2’20 and beyond.
We forecast 2025 sales of SEK 2. 8bn (32% ’20-‘25e CAGR) Increased M&A activity was one of the strategic highlights that Fortnox management talked about on its CMD on 15 Jan. We think that the acquisition of Offerta marks a good start of its M&A journey, and we expect more M&A in due course, although this is not included into our forecasts.
In addition to that, we c.
