Fortnox - Q1 to show continued strong customer intake
Q1 report due 28 April Q1e: sales of SEK 200m (+25% y-o-y), EBIT SEK 72m Growth rates likely to pick up in the coming quarters We expect a robust customer intake of +16,000 q-o-q Fortnox reports its Q1 results on 28 April. We expect a continuation of its strong customer intake momentum, and forecast +16,000 customers q-o-q. We expect ARPC of SEK 178 (vs. SEK 167 in Q1’20), resulting in Q1e sales of SEK 200m, up 25% y-o-y.
While opex was down 1% y-o-y in Q4, opex comps are now getting tougher. We forecast opex to grow +15% y-o-y in Q1, which together with our sales estimate leads us to expect an EBIT of SEK 72m (36% y-o-y, 36.1% margin). We keep our forecasts intact We keep our forecasts largely intact ahead of the numbers.
Bankruptcy levels for Swedish SMEs have remained low, while the pandemic and subsequent lockdowns continue to drive high demand for cloud-based solutions. Still a long runway for growth After four consecutive quarters of decelerating y-o-y growth, we expect growth rates to pick up in Q1’21e and onwards. This is partly due to the acquisition of Offerta, but we also expect the organic growth rate to improve amid Fortnox’s recent product launches (with more to come, according to management).
Offerta should be a good fit for Fortnox, based on the fact that the cross-selling opportunities are large. We expect flat growth for Offerta in 2021e (vs. 2020), but think that Fortnox can reap sales synergies in 2022e and beyond, leading to strong growth for Offerta.
Given that Offerta offers a digital marketplace, it supports the generation of margin-accretive revenue streams for the group in conjunction with sales growth. Moreover, Fortnox’s strong balance sheet (-1.0x ‘21e NIBD/EBITDA) gives the company ample room to pursue further M&A. Based on the current headroom, we estimate that M&A could add 60% to our 2021 sales (assuming companies are acquired at 3x EV/s).
Fortnox’s share currently trades at 26x EV/sales and 74x EV/EBIT on 2021e..