Formpipe: Another quarter with improved margins - ABG

Solid Q3 report – margins continue to improve
We make small revisions to '24e-'25e EBIT
Share is trading at 23x-15x '24e-'25e EV/EBIT


6% sales miss, but EBIT was in line

Formpipe delivered a solid set of Q3 numbers, with sales growth +5% y-o-y while the margin continued to expand on easy comps and the recent slowdown in investments. Although sales were -6% vs. our estimate, this was chiefly explained by lower delivery sales (low-margin revenue) in both Private (-56% y-o-y) and in Public DK (-39% y-o-y), as recurring revenues were largely as expected (+22% y-o-y). As such, adj. EBIT of SEK 13m for a margin of 11% (vs. 5% in Q3'22) was in line with our estimate. We see SaaS ACV as the most important metric to track, as it drives future SaaS sales, and was SEK 9m (vs. ABGSCe SEK 8m), up from SEK 7m in Q3'22. The figure was also hurt by a churn due to financial difficulties for two US banks, which implies that the gross ACV saw solid improvement in Q3. This was encouraging, as ACV has recently seen pressure from macro headwinds.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/formpipe/Equity-research/2023/10/formpipe---another-quarter-with-improved-margins/