Fortnox - Expect a good end to a strong year
Bankruptcies remain low; +14,000 customers expected Q4e organic sales growth of 23% y-o-y CMD due on 15 Jan – we expect to see new goals Solid customer intake, but COVID-19 burdens transac. sales For Q4’20, we expect a continued high customer intake of 14,000 q-o-q (vs. 16,000 in Q4’19), supported by the fact that the number of SME bankruptcies remains low. While our estimated y-o-y sales growth of 23% is a strong metric, it represents a slowdown compared with previous quarters (e.
g. +28% in Q3 and +32% in Q2), mainly due to decelerating growth rates for its customer base (amid the law of larger numbers). While we think that Fortnox’s transaction-based revenue will remain burdened in Q4 due to the second wave of the pandemic, we forecast ARPC of SEK 175/month, up SEK 7 q-o-q, mainly driven by seasonality.
We make minor estimate changes We only make minor estimate changes and forecast Q4 sales and EBIT of SEK 188m and SEK 61m, respectively, giving an EBIT margin of 32. 3%. While the incremental adj.
EBIT margin has exceeded 40% for seven subsequent quarters, we foresee a Q4 figure of 30%. This is due to challenging comps and the fact that Fortnox grew its headcount by 39 in Q3, entailing higher opex. That said, we believe that the recent investments in personnel will enable Fortnox to capture further growth in the coming quarters.
Among other things, we expect further traction for its financial vertical, while we also think that the company will go live with several other new initiatives (e. g. relating to its integration platform).
New targets will address the long-term growth story On 15 Jan CET 14. 00, Fortnox will host its first CMD since the IPO. We expect its management to map out its strategy going forward; especially with comments around its financial vertical, its integration platform, and possibly also around the M&A topic.
In addition, we expect Fortnox to announce new financial goals, plausibly including a sales growth rate (e. g. 25% sales growth.
