ARR growth remains strong, with an FX-adjusted growth of 17% y/y and an annualized q/q growth of 23.9% - compared to 21% in Q3. Thus, the solid momentum in organic ARR growth continues. Management saw increased activity in the market by the end of 2023 and has an optimistic view of 2024. Thus, we believe 2024 will feature market conditions good enough to support Vertiseit in growing its FX-adjusted ARR by ~20% annually. EBITDA – CAPEX was SEK 14.4m (5.3) compared to our forecast of SEK 4.1m. The beat was due to strong System sales – with healthy gross margins – and lower OPEX. With a H2 2023 EBITDA – CAPEX margin of ~13%, we can conclude that Vertiseit is back on track profitability-wise.

With the release of this Q4 report, we have a full year of SaaS metrics for Grassfish and Dise. During 2023, Vertiseit had a churn of 5.5% and an NRR of 109%. While Vertiseit’s R12m numbers are healthy, interestingly, the numbers have been improving gradually throughout 2023. For example, in Q4, on an annualized basis, churn was a mere 2.8%, and the NRR was a solid 114%. According to management, the improvement is mostly due to stronger market conditions. Although the SaaS metrics can vary a bit from quarter to quarter, we believe the positive trend is encouraging.

We increase our Base Case to SEK 42 (39) following the slight increase in forecasts and higher confidence in Vertiseit reaching solid profitability. We increase our sales and EBITDA – CAPEX forecasts by 4-5% and 3-4% respectively for 2024-2025. Trading at 16x and 11x EBITDA – CAPEX for 2024e and 2025e respectively, we believe Vertiseit remains an interesting case combining a large global market, ~20% organic ARR growth, and a strong profitability trend.