Raketech: Headwind in affiliation
Research Update
2024-05-17
07:15
Analyst Q&A
Closed
Hjalmar Ahlberg answered 3 questions.
Redeye updates on Raketech after its Q1-results where performance was softer than expected, mainly driven by a Google update which impacted Casumba negatively. Follwing the new guidance that was updated in connection with the publication of preliminary results on May 1, we adjust our estimates and we have lowered our 2024-26E EBITDA by 15-20%. On the back of the lowered estimates, we also reduce our base case valuation to SEK35 (SEK40).
Hjalmar Ahlberg
Anton Hoof
Raketech reported revenue of EUR19m and adjusted EBITDA of EUR5.1m for Q1 2024, which was in line with the preliminary numbers announced on May 1. Our estimates ahead of the announcement of preliminary results stood at EUR21m and EUR5.1m, respectively. While results were lower than forecasted, cash flow was strong at EUR6.5m. Earnouts of EUR13m were settled in the quarter, while the balance sheet remains solid with a net debt of EUR2.8m at the end of Q1 2024.
On the back of negative impact from the Google update which resulted in lower traffic and revenue generation from Casumba assets, Raketech revised its guidance from EUR24m-26m to EUR20m for 2024E. While this is a setback for the company after strong performance in 2020-23, we believe the outlook remains positive with continued growth in Sub-affiliation and upside potential from geographic expansion.
As we align our 2024E estimates to the new guidance, we have lowered our 2024E EBITDA by around 20%. Looking into 2025-26E, we see continue growth potential, albeit from a lower base and EBITDA estimates are lowered by 15-18%. Long-term assumptions remains unchanged, but on the back of the lower estimates our base case is reduced to SEK35 (SEK40). Our base case implies c6-7x EV/EBITDA 2024-25E while the share currently trades at c2-3x EV/EBITDA 2024-25E (including earnouts).
| EURm | 2022 | 2023 | 2024e | 2025e | 2026e |
| Revenues | 52.6 | 77.7 | 77.5 | 88.6 | 98.7 |
| Revenue Growth | 26.6% | 47.6% | -0.3% | 14.4% | 11.4% |
| EBITDA | 20.0 | 23.2 | 19.9 | 24.4 | 27.8 |
| EBIT | 12.4 | 11.3 | 8.7 | 16.4 | 25.8 |
| EBIT Margin | 23.5% | 14.5% | 11.2% | 18.5% | 26.1% |
| Net Income | 8.3 | 6.6 | 5.3 | 13.6 | 23.2 |
| P/E | 8.1 | 9.5 | 7.3 | 3.3 | 1.9 |
| EV/EBITDA (inc. earnout) | 4.1 | 4.5 | 2.9 | 1.8 | 1.1 |
Raketech reported revenue of EUR19.0m and adjusted EBITDA of EUR5.1m for Q1 2024. This was in line with the preliminary numbers announced on May 1, following a Google update that impacted the business negatively. Our estimates ahead of the announcement of preliminary results, stood at EUR21.3m and EUR5.1m, respectively. Coming to the performance per segment and region, all saw somewhat lower topline than expected. Direct costs were lower than expected however, driven by a strong gross margin in Sub-affiliation which was disclosed for the first time this quarter. Opex was largely in line with our forecast, albeit with lower employee costs (adjusted for restructuring costs of EUR0.8m) while other costs were slightly higher than expected. The company saw good cash flow of EUR6.5m, supported partly by working capital changes. Raketech settled earnouts of EUR13.0m during the quarter, and following this, the closing balance of remaining earnouts stood at EUR33.9m at the end of Q1 2024, The balance sheet remains strong where the net debt, excluding remaining earnouts, stood at EUR2.8m at the end of Q1 2024.
Disclosures and disclaimers