Fortnox: Solid Momentum Contiunes

Research Update

2024-10-28

06:40

Redeye takes a positive stance towards Fortnox following a solid Q3 report, with strong net customer intake and solid cost control being the highlights. While trading at a premium valuation, we believe Fortnox deserves a standout valuation for several reasons, such as a market-leading position, wide moats, solid growth, and high margins. We leave our underlying forecasts roughly unchanged.

Fredrik Nilsson

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Review of Q3 2024

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Net Customer Intake Tailwind Sustained

The net customer intake was 13,000 (10,000), which was higher than our expectation of 10,000 and is the highest level seen in a Q3. It follows the positive trend seen in recent quarters with accelerating absolute net customer intake. While we expect most of the future growth to come from ARPC increases, a strong net customer intake is encouraging, as it indicates Fortnox continues to gain market share. Total sales was SEK523m (415), corresponding to 26% growth y/y – 25% organic growth. The outcome matched our forecast. In the Q3 report, management disclosed the growth mix, which we are happy to see. For Q3 y/y figures, price adjustments contributed by 7%, new customers by roughly 8% and increased usage by about 10%.

Strong Underlying Margins

EBIT was SEK235m, corresponding to an EBIT margin of 44.9% (45.4). Our forecast was SEK231m and 40.0%, and the 2% beat follows lower OPEX. EBITDA – CAPEX was SEK242m (154), slightly above our forecast of SEK239m. However, excluding the SEK13m in one-offs, the underlying EBITDA-CAPEX margin was impressive at 48.8% - although Q3 tends to be strong due to vacations. Following the divestment of Offerta (Fortnox will own 49% of the new company, though, with an option of acquiring another 3%) with ~zero margins, we expect higher margins from Q4 and onwards.

Base Case Unchanged at SEK73 (73)

Following roughly unchanged forecasts, we leave our Base Case at SEK73 (73). At ~16x sales 2025e, Fortnox is the highest-valued business among Nordic Listed SaaS. We believe Fortnox deserves a standout valuation for several reasons, such as a market-leading position, wide moats, solid growth, and high margins.

Key financials

SEKm20232024e2025e2026e2027e
Revenues1,669.02,065.22,449.92,962.33,575.0
Revenue Growth28.6%23.7%18.6%20.9%20.7%
EBIT672.0849.81,147.01,456.61,812.3
EBIT Margin41.0%41.7%47.4%49.7%51.2%
EV/Revenue21.919.616.313.210.6
EV/EBIT53.547.034.326.520.8
Net Debt-514.0-825.8-1,432.2-2,174.3-3,091.3
ARR12761521181321112462
ARR Growth23%19%19%16%17%
EBITDA - CAPEX6678241,0941,3611,678
EBITDA - CAPEX Margin40.6%40.4%45.3%46.4%47.4%
EV/ARR28.226.321.718.315.3
EV/EBITDA - CAPEX53.948.536.028.422.5
NWC/R12mSales3.8%7.4%7.4%7.4%7.4%

Review of Q3 2024

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Contents

Review of Q3 2024

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