Revenue came in just below our estimates, with Subscription revenues at SEK44.8 (+6.7% and 57% of total sales). Ad-hoc from clients were somewhat below estimates, while ad-hoc sales from non-subscription clients surprised positively. The EBIT adjusted for one-off costs for the cost-saving program was SEK5.2m, corresponding to an EBIT margin of 7%. After the quarter, Nepa decided to close down its not profitable APAC subsidiary, which accounted for 3% of total sales. Nepa stated in the conf call that its core profitability in both subscriptions and consulting projects is now on a good level, making the company less dependent on large ad-hoc projects to show profitability.

The EGM revealed that Hanover Investors, a UK-based private equity firm, is Nepa's largest shareholder, with 19.3% of the capital. Currently, it holds nine investments. Six of the nine current investments are public to private, i.e., companies bought out from a listed environment. So, the investment strategy is clear: Hanover Investors is an active private equity/buyout firm taking listed companies private. Last, the current investment made in Nepa is considerably smaller than a typically sized investment for Hanover Investors, whereas a bid on Nepa would better align with previous investments.

Following the Q4 report, we make small adjustments to sales and maintain our EBIT margin of 10-11% for 2024-2027e. Redeye estimates Nepa to be trading at 6x and 4x FCF for 2024e and 2025e, respectively. Following our changes, we maintain our Base Case of SEK50, Bull Case of SEK80, and Bear Case of SEK24.